source: Caselaw Access Project

author: By the Court. Mason, J.

license: Public Domain

text:
    Platt v. Gilchrist, Graham, and others.
    It is no defence to a suit to foreclose a mortgage, that the mortgage was given for a part of the purchase money of the premises mortgaged, on their conveyance with warranty by the mortgagee to the mortgagor ; and that a suit has been commenced against the mortgagor or one claiming under him, for a recovery of the premises, under a title paramount to that of the mortgagee, which suit is pending and undetermined.
    A court of equity will not in any case restrain the collection of unpaid purchase money, secured by a mortgage, until after eviction by a superior title.
    The weight of authority is, that after eviction, equity will not interfere in such a case, unless there are covenants of title in the deed to the purchaser.
    (Before Duer, Mason, and Campbell, J.J.)
    June 22;
    Sept. 22, 1849.
    This was a hill to foreclose a mortgage. The suit was transferred from the supreme court. The defendant Graham alone appeared and answered. It appeared by her answer, to which there was no replication, that the mortgage was executed to the plaintiff by the defendant Gilchrisi, for a part of the consideration of the mortgaged premises, which were conveyed simultaneously, by the plaintiff to Gilchrist with covenants of warranty: That Gilchrist subsequently conveyed the same premises to Graham (who is in possession), with covenants qf warranty, subject to the mortgage: And that a suit had been brought in the supreme court in equity, against Graham, by persons claiming to recover the whole mortgaged premises under a title paramount to that of the plaintiff, which suit is pending and undetermined, and of which the plaintiff had notice. The answer insisted that the plaintiff ought not to be permitted to proceed in his suit to a foreclosure and sale, until the pending suit, adverse to his title, should be finally determined, and it should be thereby ascertained whether he conveyed a good title to Gilchrist. The cause was heard on hill and answer.

      C. J. De Witt for the plaintiff.

      Dan, Marvin, for the defendant.
   By the Court. Mason, J.

The question presented for decision is, whether a suit to collect unpaid purchase money secured by bond and mortgage, will he enjoined and restrained by reason of proceedings having been commenced by a third party to recover the premises under an adverse title.

It may he useful to see, in the first place, how this question stands upon authority.

The earliest case in this state is that of Bumpus v. Platner decided by Chancellor Kent, in 1814, and reported in 1 Johns. €J. It. 213. That was a bill filed to enjoin the defendant from foreclosing a purchase money mortgage, on the ground that the grantor had no title, and that the.consideration of the mortgage had therefore failed. He had conveyed with warranty, and no suit had been brought by any person, claiming by title para^ mount. The chancellor remarked, that it was said to be very difficult to extract from the books what the rule of equity is upon this point of failure of consideration after the agreement is executed, hut that it might be safely said that there is no cause of relief on this ground, when possession has passed and com tinned without any eviction at law under a paramount title ; and that it would be without precedent, and dangerous in principle, to arrest and bar the recovery of the debt while the purchaser is still in possession under the purchase deed, and there has been no eviction at law.

This same question came up before him again in the case of Abbott v. Allen, in August, 1817, 2 J. C. R. 519. That, too, was a bill for relief against a bond and mortgage given for the consideration money of the mortgaged premises, on the ground that the title to the land was bad, or at least questionable, so that the plaintiff could not raise money on the security of the land, or sell it. Ho suit, however, had been brought for the recovery of the premises. The chancellor there said, “ if there be no fraud in the case, the purchaser must resort to his covenants, if he apprehends a failure or defect of title, and wishes relief before eviction.” And again: “ If there be no fraud, and no covenants taken to secure the title, the purchaser has no remedy for his money even on a failure of title. This is the settled' rule at law, and I apprehend that the same prevails in equity.” “ I know of no case in which this court has relieved the purchaser where there was no fraud and no eviction. All the cases that I have looked into, proceed on the ground of a failure of the title duly ascertained.”

This would seem to be decisive, and yet in this same case he remarks, “ that it would lead to great inconvenience, and perhaps abuse, if a purchaser in the actual enjoyment of land, and when no third person asserts, or takes any measures to assert, a hostile claim, can be permitted, on a suggestion of a defect or failure of title, and on the principle of qma timet, to stop the payment of the purchase money and all proceedings to recover it.” This language certainly favors the idea that such permission might perhaps be granted to a purchaser, if a third person should actually assert, or even take measures to assert, a hostile claim. And accordingly we find, that about a fortnight after-wards, in the case of Johnson v. Gere, (2 J. C. R. 546,) the same learned chancellor carried out the idea, and granted an injunction to stay proceedings on a bond and mortgage given for purchase money, on the express ground that an ejectment suit had been commenced to recover the mortgaged premises by a third party, claiming under a paramount title. “ The defendant,” said he, “ is entitled, and it will be his duty to defend the ejectment suit, and until that suit is disposed of, he ought not to recover the remaining money due on the bond.” The premises had been conveyed with warranty. This decision, it is true, was on an ex parte application, and it does not appear what was the further disposition of the case; but it was given so soon after the elaborate opinion in Abbott v. Allen, that he must be considered as intending to qualify and restrict the general expressions it contained, and as meaning to extend the interference of the court to a case like the present.

In the case of Leggett v. McCarthy, (3 Edwards’ Ch. R. 126,) Vice-Chancellor McCoun says, “ until the defendant has been evicted, or an action to deprive him of the possession has been commenced, as in Johnson v. Gere, the court of chancery will not interfere to stay proceedings on his bond and mortgage; and later still, Mr. Justice Bronson, in the case of Edwards v. Bodine, (26 Wend. 114,) says, in reference to the case then before the court, u if there was a serious question about the title, and a suit had been acinicdly commenced to recover a portion of the land, chancery might enjoin the respondents from proceeding at law to collect the whole amount of the mortgage debt until the title had been tried, and in such a case, where the proceedings to collect the mortgage debt are commenced in chancery, that court might, perhaps, stay the foreclosure until there had been a trial at law and he cites the case of Johnson v. Gere, in support of his position. In two cases in New Jersey also, cited by the counsel on the argument, Shannon v. Marselis, (Saxton’s R. 425,) and Van Waggoner v. McEwen, (1 Green’s Ch. R. 412,) the case of Johnson v. Gere is mentioned by the court with approbation. It is to be observed, however, that in none of these cases did the ' precise point in Johnson v. Gere, arise; and consequently the observations of the various judges, although entitled to high respect, as proceeding from learned and experienced jurists, have not the weight of authority.

On the other hand, the broad proposition laid down by Chancellor Kent, in Bumpus v. Platner, and repeated by him, after a minute and careful examination, in Abbott v. Allen, to wit, that in the absence of fraud, no relief will be granted in this court, against the collection of a bond and mortgage for purchase money, where possession has passed and continued, without an eviction at law, under a paramount title, has been repeatedly sanctioned and confirmed in the courts of this state. See particularly Chesterman v. Gardner, (5 J. C. R. 29;) Bates v. Delavan, (5 Paige 300;) Denston v. Morris, (2 Edw. Ch. R. 37;) Leggett v. McCarthy, (3 Ib. 124;) Withers v. Morrell, (3 Ib. 560.)

One other case in this state remains to be noticed. That of Banks v. Walker, (2 Sandford’s Ch. R. 344.) That was a bill to foreclose a mortgage given by the defendant to the plaintiff’s testatrix to secure a portion of the consideration money. One branch of the defence was, that an action of ejectment had been commenced by a person claiming by a title paramount to that under which the defendant held, and that the suits were at issue and pending when the bill was filed. The only difference between that case and the present is, that the purchaser in that case had taken no covenants to secure the title. But the decision was not put on that ground; on the contrary, the court held that it could make no difference whether there were covenants or not. The learned vice-chancellor examined the various cases on the subject, and came to the conclusion that there was no authority upon which he could sustain the defence, and that there was authority against it which was conclusive upon him. To which it may be added, that Chancellor Kent, in the last edition of his Commentaries, (vol. 2, p. 473,) lays down the rule as he had done in Bumpus v. Platner and Abbott v. Allen, and refers not only to them but to Banks v. Walker, as authority, while he takes no notice of Johnson v. Gere.

The only English case we have met with bearing directly on this point, is that of Thomas v. Powell, before Lord Eosslyn, in 1794, (2 Cox’s Oh. Cas. 394.) In that case, the real estate of a testator had been sold for the payment of his debts. A purchaser of one of the estates, to the amount of £14,000 and upwards, had entered into possession, approved of the title, and accepted a conveyance. He had paid the purchase money into court, under the common order that it should not be paid out without notice to him. An application being made to the court for an order to apply this purchase money to the payment of the testator’s debts, the purchaser opposed it, on the ground that the tenants of the estate had been served with a writ of right, at the suit of a person who claimed the whole estate under an adverse title, and he insisted that the money ought not to be paid out of court during the pendency of the suit by which he might be evicted; that the court would at any time stop it for the purpose of doing' justice to the purchaser. To this it was replied, that though the purchaser would not be compelled to take a doubtful title, yet after the title had been accepted and the conveyance executed, the transaction was complete, and the court could not impound the money, on any apprehension of the purchaser; but if he were actually evicted, he must resort to the covenants in his deed. The Lord Chancellor, after some days’ consideration, said, the court having given the purchaser possession, and a conveyance under the title which he himself had approved, had done all it could for the purchaser, who could not be heard at that stage of the business to object to the application of the purchase money.

The principle of this case is in entire accordance with that of Banks v. Walker, while the facts are much stronger in favor of the purchaser than in that case, or in the case now before the court:

The ground on which the interference of the court is claimed in cases of this sort, after eviction, is, that it is manifestly unjust to compel a man by process of law to pay for that of which the law has deprived him. Whether the court will interfere, even in such cases, where the purchaser has taken no covenants for title, does not appear to be clearly settled, though the weight of authority seems to be against such interference. (Bates v. Delavan, 5 Paige 300.) And it would certainly seem to be contrary to established principles. Courts of equity do not make new contracts for parties, or relieve them from the effects of those which they have fairly and deliberately made. They will interfere in cases of fraud, of accident, or mistake, but then it is on the ground either that there was no valid contract, or that the contract actually made, by reason of accident or mistake, is different from the real intentions of the parties. Li the one case, they declare the contract absolutely void: in the other, they make it what the parties originally intended it to be, if it can possibly be carried into effect according to their intent. But 'they never introduce a new stipulation into the agreement, and especially one which the parties themselves might have introduced had they thought proper. A striking illustration of this doctrine is to be found in the refusal to interfere in the case of an express covenant to pay rent, after the premises, in consideration of which the rent is agreed to be paid, have been destroyed by fire. It is well settled that a tenant can have no relief in such a case; that a court of equity is bound to put the same construction on such a covenant, and to give it the same effect that a court of law would do.

In the ordinary case-of a sale of land, the possibility that the title may fail, is a consideration that enters into the views of both purchaser and seller. If the purchaser does not wish to assume the risk of the title, he protects himself by covenants. If he assumes the risk, he accepts the deed without covenants, and receives his equivalent in the diminution of the price. When the very thing occurs, the hazard of which he has taken upon himself, and for which he has received an equivalent, it would be anything but equitable to restrain the collection of the unpaid purchase money. It would be throwing upon the seller, the very loss the risk of which he had declined to assume; and be making him, contrary to the intention of the parties, the guarantor of the title, at least to the extent of the sum due. (See Gouverneur v. Elmendorf 5 J. C. R. 79.)

Where there are covenants for title, however, courts of equity interfere upon another principle, viz. to prevent circuity of action. Indeed, it would seem that in such cases a total failure of consideration, even at law, might, upon the same principle, after eviction, be pleaded in bar to a suit to recover the consideration money. (Tallmadge v. Wallis. 25 Wend. 107, 116.)

If these views are correct, a court of equity ought not in any ease to restrain the collection of unpaid purchase money before eviction; not where there are no covenants for the title, because relief could not be granted, even if eviction had taken place; nor where there are covenants, because the principle on which alone the court is justified in interfering, does not apply until after eviction.

There is also this further objection, which has been already alluded to. It would be varying in an important particular the contract of the parties. The purchaser in this case, promised to pay the purchase money at stipulated periods, and the seller covenanted, that if at any time the title should fail, and the purchaser be evicted by a paramount title, he would refund the purchase money with interest. The possibility that the title might fail, and the purchaser be evicted, was in the minds of the parties. They might also have provided, that in case of a claim being made by title paramount before actual payment of the consideration money, the right of the vendor to call for its payment should be suspended. But this they have not thought proper to do, and this court can with no more propriety add such a clause to the contract, and suspend the collection of the purchase money, than it can suspend the collection of rent expressly covenanted to be paid, upon the destruction of the buildings, where the parties have not themselves provided against it.

The court, moreover, if it interfere at all, must do so upon the simple fact of a claim having been made by suit, without reference at all to the character of the claim.

This court cannot try the title. Nor can it speculate upon the probabilities of the result of a suit, and grant or refuse relief according to a crude notion it might entertain as to the validity or invalidity of the adverse title. It is easy to see how dangerous the adoption of such a principle would be—what a temptation it would hold out to the bringing of actions by collusion in order to stay foreclosures, and how greatly it would affect the value of mortgage securities of this character.

Tliis decision may operate severely on the defendant in this case, and especially if the adverse claim shall turn out to be well founded ; but a contrary decision would operate with severity on the plaintiff, if the title shall prove good. He is, moreover, only pursuing his legal remedy for a debt admitted to be due, while the defendant has all the protection for which she stipulated' in the event of the title proving defective. She has the covenants of the defendant, Gilchrist, who is, as she states in her answer, abundantly responsible; and she would also be entitled, in case of eviction, to the benefit of the covenants of the plaintiff, contained in his deed to Gilchrist.

We feel bound to say, that neither upon principle nor authority, can we interfere to stay the plaintiff’s proceedings in this case.

He is entitled to the usual decree for foreclosure and sale.


author: By the Court. Campbell, J.

text:
    Peck and others v. Elder and others.
    Different persons, owning separate tenements, affected by a nuisance, may join in a suit to restrain its continuance by an injunction.
    Where during the pendency of a suit for a perpetual injunction against a business alleged to be a nuisance, the defendants are tried and convicted on an indictment for a nuisance in respect of such business ; the record of their conviction is prima facie evidence in behalf of the plaintiffs, and conclusive, unless the defendants prove that there was a material change in the manner of conducting the business, intermediate the commencement of the suit and the finding of the indictment.
    The conviction is admissible, without any supplemental bill setting it forth.
    The erection of a building in a city, avowedly for the purpose of carrying on a trade which is a nuisance, may be restrained by injunction.
    A melting-house in a city, for the purpose of trying animal fat from the slaughterhouses, is presumptively a nuisance to the inhabitants in its vicinity ; and a general denial that it is a nuisance or offensive, will not suffice to justify the dissolution of a ^preliminary injunction.—-Per Walworth, Chancellor, in the principal case.
    To entitle parties to such an injunction, it is not necessary that they shj^ld reside on premises affected by the, nuisance. It suffices that the nuisance is calculated to diminish the value of their property, by preventing good tenants from occupying it, or by destroying its value for building lots.—Per Chancellor Walworth, S. C.
    (Before Duer, Mason, and Campbell, I. J.)
    June 19, 20, 22;
    Sept. 22, 1849.
    The bill in this cause was filed in the late court of chancery, before the vice-chancellor of the first circuit, in Hovember, 1844, by Elisha Peck, John 0. Merritt, Anson G. Phelps, Runyon W. Martin, and Richard A. Reading, against Robert Elder and four others, in order to restrain them from erecting and putting in operation a large fat-melting establishment at the comer of Fourth street and First Avenue, in the city of New York. The complainants were severally the owners of tenements, which they alleged would be injuriously affected by the proposed erection, as follows: J. 0. Merritt owned three houses and lots in Fourth street, adjoining the site of the melting-house; R. W. Martin owned a valuable three-story dwelling-house, opposite Merritt’s; E. Peck owned five similar dwelling-houses on Second Avenue, within six hundred feet of the site; A. G. Phelps owned twelve similar houses on Second Avenue, six on Fourth street, and eight on Fifth street, besides several vacant lots, all within six or eight hundred feet of the same site, (though he resided in a distant part of the city;) and R. A. Reading owned and occupied a like house, on First Avenue, within six hundred feet.
    The bill stated that Elder was the president, and the other defendants were, with him, the trustees of the Butchers’ Melting Association, a voluntary association of butchers in the city of New York, organized for the purpose of conducting, on a large scale, the melting of the fat and tallow from animals slaughtered by the butchers of the city generally. That for this purpose the association had bought a plat of ground at the north-west corner of Fourth street and First avenue, being seventy-three feet one and a half inches in front, on the avenue, and one hundred feet deep, the title of which was conveyed to three of the defendants; that the association were about to erect thereon a very large and extensive melting-house, and had commenced excavating the cellar rtherefor, and building the cellar walls. That the complainants and others similarly affected, in number two hundred and sixty persons, presented a written remonstrance to the defendants, against the proposed establishment, which the defendants entirely disregarded, and the association, with full knowledge thereof, directed them to go on and erect the building, and use it for a melting-house. The bill then alleged that a melting-house in a city is an intolerable nuisance, eminently offensive to the neighboring population. It is accompanied by noisome, noxious, and offensive stenches and smells; the stench of the vapor and smoke being a source of serious offence, discomfort, and annoyance, for more than half a mile from the trying vats or kettles, especially in a dense atmosphere, when the vapor descends and alights on houses, clothing, and furniture, in light greasy particles, making an oily stain like that of lamp-black wiped off with a cloth; and that the stench makes many persons sick, and occasions them to vomit. The bill charged that the proposed melting establishment, if erected and put in operation, would be a grievous and unwholesome nuisance to the whole neighborhood, and would materially injure and impair the value of the complainants’ property before mentioned. That the stockholders in the association were so numerous, that it was impracticable to ascertain all their names, or make them all defendants. The bill prayed for a perpetual injunction against constructing the melting-house, and from using it for the purpose of melting and trying the fat and tallow of animals, and for abating the nuisance, if established, and for general relief. It also prayed a preliminary injunction, to the same effect.
    The vice chancellor, (McCoun, Y. 0.) granted a preliminary injunction expan°te, on filing the bill; but soon after modified it on the application of the defendants, so as to permit them to erect their intended building. The defendants then put in an answer on oath, denying among other things, that a melting-house, or establishment for the trying and melting of tallow, and the fat of animals, in a city, is an intolerable nuisance; or that it is of necessity a nuisance; or that the business is of necessity in any manner an offensive trade or business; or that when conducted in a proper manner, the same may or opght to be interdicted by law. They alleged that the business can be so conducted as not to be a nuisance or offensive; that the location was a suitable and proper one, the neighborhood being in a great degree unimproved. That a large number of slaughter-houses are, and long have been, in full operation in that neighborhood, and various other establishments sometimes claimed to be offensive. They insisted that they have a perfect right to erect their proposed building and maintain it as a melting-house.

      A replication was filed to the answer. The defendants moved on their answer to dissolve the injunction, and the motion was granted by Vice Chancellor McCoun in June, 1845. The complainants appealed to the chancellor. While this appeal was pending, the defendants completed their melting-house and put it into operation on the very extensive scale originally contemplated. The following proceedings thereupon ensued: First. The grand jury indicted the defendants for carrying on the establishment, on the ground that it was a public nuisance. The indictment was removed from the general sessions to the oyer and terminer, and was tried in the latter court in April, 1846, when the defendants were found guilty, and a very small fine was imposed upon them by the court. Second. A resident of the neighborhood then filed a bill before the chancellor, and obtained an injunction against the same defendants, against their further conducting the business. They disregarded this injunction; but after being heavily fined for their "contempt of court by the chancellor, on the 24th of August, 1846, they discontinued the business, and removed their fixtures from the building in question.
    In August, 1846, the chancellor decided the appeal from the order dissolving the injunction in this cause, reversed the order, and restored the injunction.

    In May, 1849, the cause was transferred into this court from the supreme court, and it was brought to a hearing in June. The complainants introduced and proposed to read in evidence the record of the conviction of the defendants for the nuisance, in the oyer and terminer, before mentioned. The defendants’ counsel objected to the evidence, on the ground that it did not hear upon the issue, because it was found and tried long after the issue in this suit was joined, and ought to have been brought forward by a supplemental hill; also that it was not conclusive upon the fact of nuisance.
    The Court held the evidence to be admissible, and sufficient to show that at the time of the indictment, the defendants’ establishment was a nuisance. But that the defendants might prove, if they could, that there was a material alteration in the manner of conducting the melting business, between the time of filing the hill and that of the finding of the indictment.
    The complainants then read the record of the indictment in evidence, and proved their several ownership of the property mentioned in the hill, and other facts which had been put in issue.
    The defendants’ counsel also raised the objection, that the complainants were improperly joined as parties, being owners in severalty of distinct parcels of land, and having no joint or common interest in any one parcel within the range of the alleged nuisance.
    The Court overruled this objection, and held that the' complainants might join, in the suit to obtain a perpetual injunction, though not to recover damages.
    The causo was then submitted to the court on the arguments of the counsel.

      D. P. Hall and D. D. Fields for the complainants,
    referred on the hearing, to Reid v. Gifford, Hopk. R. 416; Murray v. Hay, 1 Barb. Ch. R. 59; Catlin v. Valentine, 9 Paige 575; 1 Denio 528; 4 Ibid. 311; 2 J. C. R. 162, 272; 6 Ibid. 439; 2 Story’s Eq. Jur. § 920 to 928; 4 Hawk’s Rep. (N. C.) 382; 4 Leigh’s R. 569; 6 Paige 536; 16 Ves. 342; 2 Wils. Ch. R. 101; 2 Russ. 121; 3 Mylne & Keen 169; 8 Simons 193, 272; 2 Phill. Ch. R. 209; 15 Shaw & Dunlop’s Session Cases 775.

      H. F. Clark, for the defendants,
    cited Earl of Ripon v. Hobart, Cooper’s Sel. Cas. 343; 6 Paige 554; 1 Clarke’s Ch. R. 336; 18 Ves. 211; 19 Ibid. 616; Ambler 158; 5 Metc. 125; Jeremy’s Eq. Jur. 310.

       On this occasion the following opinion was delivered:—
      The Chahceleor.-—This is an appeal from an order of the vice chancellor of the first circuit dissolving an injunction. The objection that different persons owning separate tenements, which are injuriously affected by a nuisance, cannot join in a suit to restrain such nuisance, is untenable. The case of Reid and others v. Gifford, Hopk. Rep. 416, decided by Chancellor Sandford in 1825, is the other way. So far as the bill seeks merely to restrain by injunction, a nuisance which is a common injury to each and every of the complainants, there is no good reason why they should not all be permitted to join in one suit, instead of multiplying cases by bringing several distinct suits.
      That the court of chancery has jurisdiction to restrain nuisances which are injurious to the property of individuals, is now too well settled to admit of discussion. And the facts stated in the bill in this case, show that the carrying on such an offensive business in the neighborhood of the residence of individuals, must necessarily be injurious to their property, and render the enjoyment thereof unsafe to health. And it is of no consequence whether the complainants reside on their property or not. It is sufficient that the nuisance is calculated directly to diminish its value, by preventing its being occupied by the complainants or by good tenants who are able and willing to pay the rent, or to destroy the value of the property as building lots.
      The answer denies that the melting-house is a nuisance, but it does not, as it could not, deny the fact that the melting of animal fat in such quantities, in such a place, must be offensive to the senses of the masses of the community, though persons by long use may become so accustomed to an unwholesome smell as to prevent its making them actually sick.
      The general denial, under the circumstances of this case, was not therefore sufficient to justify the dissolution of this injunction ; but it should have been retained to the hearing, except so far as it had been modified by the previous order. The order-appealed from must therefore be reversed with costs; and the injunction must be retained until the hearing. The proceedings are remitted to the vice chancellor of the first circuit.
      2). P. Hall, for the complainants.

        H. F. Claris, for the defendants.

         See Brady v. Weeks, 3 Barb. Supreme Court R. 157, that a slaughter-house in a city is prima, facie a nuisance, and an injunction will be retained, though the defendant deny on oath that it is a nuisance. Per Paige, J., at the New York special term, May, 1848. Also see Howard v. Lee, post.

   By the Court. Campbell, J.

This bill was filed to prevent the erection of a melting-house on the 1st Avenue, in the city of Hew York. The injunction granted at the time the bill was filed, was afterwards modified so far as to allow the erection of the building, and also the commencement of the melting business. Afterwards, the defendants were indicted, convicted, and fined for maintaining and carrying on this business, which was thus adjudged a serious nuisance. After the conviction, the defendants discontinued the melting business at this place. We are now asked to decree a perpetual injunction. On the part of the defendants, it is among other things alleged, that the bill was prematurely filed. We think not. The erection of a building for the purpose of carrying on an offensive business, and which has been adjudged a nuisance, was threatened. In the case of Catlin v. Valentine, 9 Paige 315, the facts were almost precisely the same as in this. The injunction was sustained by the chancellor, and we entirely concur in the opinion delivered by him. Using the word melting-house for slaughter-house, we might adopt his opinion as our opinion in this case.

The defendants have discontinued the melting business at this place, and if they do not wish to restore the nuisance, a perpetual injunction can do them no harm. The verdict of the jury, and the conviction of the defendants, show that the complainants were right in their apprehensions, and were justified in filing their bill. We entertain no doubt as to the power of the court to interfere by injunction, and prevent the establishment of nuisances of this character. We have the power to prevent, as weE as to remedy evils. At the same tune, we are free to admit, that the power shoidd be exercised with great caution. We have looked into the cases cited by the defendants, and esj>eeially the case of the Earl of Ripon v. Hobart, reported in 3d Mylne & Keen 169, and which was so strongly relied upon on the argument; and we ijhink it supports the views taken by us as to the power of the com’t, and which indeed, may be considered as settled in our own and the English courts.

It is not necessary now to discuss again the questions relative to the admission of the record of conviction, and of the capacity of the complainants to file this biE. These questions were decided at the hearing.

A perpetual injunction must issue, with costs to the complainants.


text:
    Grinnell, Minturn & Co. v. Suydam and others.
    One who advances money to another on a hill of exchange drawn by him against a shipment of flour, and besides the bill of exchange, receives as security the bills of lading of the flour, has no claim for re-imbursement of his advance, (on the exchange being refused acceptance, and the flour falling short of meeting the advance,) against third parties unknown to him when he made the advance, although they owned half of the shipment, and intrusted it to the drawer of the exchange, on his agreement to advance to them, and although he had advanced to them beyond the value of their interest.
    There is no privity of contract between the lender and such third parties, nor any ground of lien upon the fund which came to them from the drawer of the exchange, or upon his claim against them for the excess of his advances.
    Though possession is not necessary to the existence of an equitable lien, it is necessary-that the property or fund be distinctly traced.
    A fund is not thus traced, when it has gone into the general bank account of the recipient, and after being mixed with funds from other sources, is disbursed by him in his general business; although the party sought to be charged, received advances from him in the course of his contemporary disbursements.
    The doctrine of equitable lien has no application to a fund advanced to the drawer of a bill of exchange, on the security of the exchange, and of a pledge of bills of lading transferred by the drawer.
    (Before Düee, Masoií, and Campbeil, J. J.)
    July 12 ;
    Sept. 22, 1849.
    This cause was brought to a hearing on the bill, and the answers of the several defendants. The facts, so far as they need be stated for the determination of the cause, were briefly as follows:
    In the month of June, 1847, Edward J. Mann agreed to purchase of Suydam, Sage & Co. one half interest in a large quantity of flour about to be shipped from Mew York to London, and to make advances to them on the other half. He then applied to the plaintiffs, merchants in Mew York, to cash his bills on London to the amount of £5,000, or thereabouts, and to secure them by indorsing over the bills of lading of the entire shipment. The proposal was acceded to, the money advanced to Mann upon his bills of exchange, and the bills of lading duly indorsed over to the plaintiffs.
    Both the bills of lading and of exchange were forwarded to Messrs. Baring, Brothers & Co., at London, who, upon the failure of the drawee to pay the bills of exchange, took possession of the flora1, and sold it at a considerable loss—the net proceeds not producing sufficient to repay the plaintiffs’ advances.
    These advances were made to Mann in different sums, on different days, and deposited by him when received to his credit in the bank where he kept Ms account, and used and employed in his business.
    In like manner, the sums which Harm paid to Suydam, Sage & Co., were paid at different times by cheeks, and in. sums of various amounts. Ho distinction was made in the payments,, whether on account of his half interest purchased from them, on on account of the advances agreed to be made1 te> them, on their-half, hut they were made generally on account,, and together-exceeded by about $1,000, the whole amount Han.® received from the plaintiffs.
    In consequence of the loss on the sales of the flomySuydkm,, Sage & Co. became indebted to Haim, for his over advance1 om their one half, the claim for which Mann, assigned to one Vernon, as a security for a liability incurred on his account, and Vernon assigned the same to the defendants, Goodhue & Oq., who were also made parties to the suit.
    The plaintiffs claim to have an equitable lien on the gum thus due by Suydam, Sage & Oo. to Mann, inasmuch (they say in their hill) as the money so advanced by Mann, to them upon their moiety of the flour, was, as they believe and charge, a poiv tion of the money advanced hy the plaintiffs to Mann upon the bills of exchange; and they pray that Suydam, Sage & Co. may be decreed to pay to them the difference, whatever it may he, between the advances made to them hy Mann, and tfp prch ceeds of the one half of the flour belonging to them,

      J. L. Wendell, for the plaintiffs,

      A. 8. Johnson, for Mann, and Goodhue & Co,

      Q. H. J. JBowdom, for Suydam, Sage & Co.
   By the Court. Mason, J.

It is not pretended in this case, that there was any privity of contract between the plaintiffs and Suydam, Sage & Co. The transaction out of which the claim originated, was between the plaintiffs and Edward J. Mann. The negotiation was with him alone, and the money was advanced to him on security which he furnished. Suydam, Sage & Co, appear not to have had anything to do with the loan made by the plaintiffs. They came under no obligation with regard to it, nor is it anywhere alleged that it was made on their credit. On the contrary, the plaintiffs stipulated for the possession and control of the property, in addition to the personal security of Mann upon the biñs, and they received all they asked for. It is true that, as between Mann and Suydam, Sage & Co., the latter were the owners of one half of the flour; but as between the plaintiffs and Mann, he was the owner of the whole. He had the control of the whole, and he was the only party dealing with or responsible to the plaintiffs.

The ground taken in the bill and on the argument was, that the facts of the case established an equitable lien in favor of the plaintiffs, upon the sum due by Suydam, Sage & Co. to Mann. It is essential,.however, to a lien, that the subject matter of it be identified. At common law, a lien is the right to retain the possession of personal property, until moneys due on or secured by it shall be paid. If the possession is lost, the lien is gone; and although in equity possession is not necessary to the existence of a lien, yet it is necessary that the property or fund be distinctly traced. If the lien is on moneys, in the hands of a particular individual, it is not enough that you know to whom the moneys have been paid. You must be able to follow them, and show that they have been kept as a distinct and separate fund. The leading eases on this point are collected in Hutchinson v. Reed, 1 Hoffman’s Ch. R. 316, 336. So that even were this a case to which the doctrine of equitable lien could apply, it would be necessary for the plaintiffs to show that the moneys which they paid to Mann, were received and retained by Suydam, Sage & Co. As soon as they were mingled in general account with the other funds either of Mann, or of Suydam, Sage & Co., the lien was gone.

How, the facts are, that Mann received the moneys from the plaintiffs, at different times, in different amounts, and as an advance on the whole of the flour; that he mixed and used them with his other moneys in his business, treating them as he lawfully might, as his own moneys; that he made payments to Suydam, Sage & Co., at different times and in different amounts, both on account of his half interest in the flour which he had purchased, and on account of the advance which he had agreed to make on the other half, and without distinguishing at the time of payment, on what account they were made; and that he thus paid to them upwards of $7,000 more than he received from the plaintiffs. It would, therefore, be a sufficient answer to any claim on the ground of lien, that the identity of the fund on which it might have been claimed has been lost.

But we apprehend that the doctrine of equitable lien has no application to this case; and that, even if the plaintiffs could trace the identical bank bills which Mann received, to the defendants, Suydam, Sage & Co., and could prove them to be now in their possession, the plaintiffs would not be entitled to them by virtue of any lien.

“ Liens in equity,” Mr. Justice Story observes, (2 Story Eq. Juris. § 1217,) “ arise from constructive trusts. They are therefore wholly independent of the possession of the thing to which they are attached as a charge or incumbrance.” To say, then, that the plaintiffs had a lien on these moneys, for any sum in which the property hypothecated to them might prove insufficient for their reimbursement, would be to say that when they came into the hands of Mann or of Suydam, Sage & Co., they came subject to that incumbrance, which the plaintiffs would have a right to enforce ; and a right on the one side, implies an obligation on the other. If the plaintiffs were entitled to a lien or incumbrance on the fund, or, in other words, Mann, or Suydam, Sage & Co. were bound to hold it in trust for the satisfaction of that incumbrance, they could not then use the fund or any part of it as their own, without being guilty of a breach of trust. The lien would extend to the whole, as it could not be known beforehand what might be the extent of the deficiency. The property held by virtue of the bills of lading might be entirely lost. The simple statement of the proposition, it appears to us, carries with it its own refutation. The very object of a borrower in effecting a loan upon a hypothecation of property, either personal or real, is to obtain money to be used by him at his pleasure. When received, it is Ms money, and not the money of the lender, or clothed with a trust, or subject to a lien in Ms favor. If it were not Ms own, the whole object of the borrower would be defeated, and the money of no use to Mm. Hor does the lender look to any other security, than that of the property and the personal responsibility of the borrower. . He satisfies himself that the property is sufficient at the time, and if it should prove insufficient, he falls back with a personal claim on the borrower; not upon any idea of lien, but by virtue of the obligation contracted for the re-payment of the money at the time it is advanced. Were it once held to be law, that a lender of money could enforce a lien for it against every person who could be proved to have received it or any portion of it, from the borrower, no man would be safe in receiving payment of any debt. The money might have been raised by bond and mortgage, or by an advance on personal property, and the party who should receive it from the borrower might be involved, ere he was aware, in a suit claiming the money so received. Such a doctrine would have, it must be admitted, the merit of novelty; but that, we apprehend, is its only merit.

The bill must be dismissed with costs.


author: By the Court. Duer, J.

text:
    Palmer, Special Receiver v. Yates and others.
    A banking association, organized under the general banking law, may, by its articles of association and by-laws, divide the business it is authorized to transact, into several distinct departments, and constitute a separate board of directors for each department ; or may intrust to a separate committee of the directors, the exclusive charge of each department, clothing that committee with all the powers of a board, in relation to the business which its department embraces.
    Where, by the articles of association of a trust and banldng company, the directors, as a board, were empowered to make such by-laws, rules, and regulations for the management of the business of the company and the government of themselves, their officers, and agents, as they might think expedient, not inconsistent with law and the articles; in pursuance of which authority, the directors made a by-law, declaring that the business of the company should be conducted under two divisions ; the first to embrace the business relating to bonds, mortgages, and other securities ; and the second, the business of discount and deposit; held, that such bylaw was neither inconsistent with law, nor with the articles of association.

      Held also, that these two divisions were meant to cover the whole business of the company, and consequently that the words “ the business,” in the first division, must be construed to mean all business relating to the subjects therein mentioned; and therefore that they included the transfer and assignment, as well as the taking, of mortgages and other securities.
    Under the articles of association and by-laws of The North American Trust and Banking Company, the committee of the board of directors on investments and finance had power, by resolution, to authorize the transfer of a bond and mortgage belonging to the company, to trustees, in trust to receive the payment of the bonds of the company.
    A resolution of such committee of investments and finance, is to be deemed a resolution of the board of directors, within the meaning of the section of the statute forbidding the transfer by a moneyed eoiporation of its effects, exceeding one thousand dollars in value, unless authorized by a previous resolution of its board of directors.
    A resolution of the board of directors, recognising and sanctioning a transfer of secu rities 'previously directed by the finance committee to be made, is a sufficient compliance with the statute, upon the maxim ratihabitio priori mandato <zquiparatur.

    When a prior authority is rendered necessary by a statutory provision, the want of such an authority may be supplied, and the act impeached be rendered valid, by proof of its adoption by the person by whom it might have been authorized.
    Although a resolution of a board of directors, ratifying an assignment made by the president without authority, may not have any retroactive force, yet the assignment is valid from the time that the sanction of the board has thus been given to it.
    Every person who, for any consideration that the law judges to be valuable, has acquired, directly or indirectly, a legal or equitable title or interest, by an assignment or transfer from a moneyed corporation, is to be deemed a purchaser, within the meaning of the exception contained in the section of the statute prohibiting the transfer of the effects of a moneyed corporation, which declares that no conveyance, assignment, or transfer, is to be constmed as void “ in the hands of a purchaser for a valuable consideration and without notice.”
    Within this definition, every assignee of a bond and mortgage, whether the assignment is made to him directly, or to a trustee for his benefit and security, and whether it is made absolutely or as a collateral security, is included.
    Hence, where a banking company issued its sterling bonds, to a large amount, and assigned certain bonds and mortgages to trustees, in trust, to secure the payment of such bonds ; held, that the holders for value of the sterling bonds, as they acquired an immediate beneficial interest in all the securities that had been assigned in trust for the payment of those ■ bonds, became, in effect, the assignees and purchasers of every bond and mortgage embraced in the assignment.
    Circumstances may exist, which will impose upon a purchaser from a moneyed corporation the duty of inquiry, and operate, when he neglects to inquire, as constructive notice. But the mere fact that he is a purchaser, is not constructive notice. As a general rule, in order to charge him, actual notice must be proved.
    In all cases where the duty to inquire exists, the law, in the absence of proof to the contrary, presumes inquiry to have been made, and charges the party upon whom the duty rests, with a knowledge of all the facts that the inquiry, if made, would have revealed to him.

      ft seems that a director of a moneyed corporation, or banking association, should never be permitted to deny his own knowledge of the lawful transactions of the company, or of any matter which, in the discharge of his duties, he was bound to know; if by such denial, the lights of a third person, an innocent dealer with the company, may be prejudiced or affected.
    (Before Doer, Mason, and Campbell, J. J.)
    June 5, 6, 7, 13,14;
    Sept. 22, 1849.
    Bill to foreclose a mortgage. The suit was originally commenced in the court of chancery, before the vice-chancellor of the first circuit. On the adoption of the new constitution, the cause passed into the supreme court, and was thence transferred to this court, in pursuance of the act of March 24,1849. The bill was filed against Henry Tates, the mortgagor, and against Joseph D. Beers and Thomas Gf. Talmadge, successively presidents, Lewis Curtís, Richard M. Blatchford, and JohnL. Graham, trustees, and David Leavitt, receiver, of The Horth American Trust and Banking Company. The bill was taken as confessed, against all the defendants, except Tates, for want of an answer. Tates put in an answer, and a replication thereto was filed and proofs taken. The opinion of the court shows all the material facts in the case.

      (r. N. Titus, B. W. Bormey, and W. 0. Noyes, for the plaintiff.
    I. The plaintiff’s title to the bond and mortgage in question is perfect, and is deduced from two sources:—1. From the trustees, Curtis, Blatchford, and Graham, under the assignment ¡majp to them on the 1st day of February, 1840, by the Rorth A rn Ariuan Trust and Banking Company. 2. From the company directly, through its receiver, Mi’. Leavitt, under the assignment made by him in pursuance of the orders of 16th December, 1842, and 4th September, 1843. So that as the title was either in the trastees or in the receiver, the plaintiff’s title |s indisputable.
    TT. Thp. yalidity of the bond and mortgage, and the defendant’s liability to pay, independently of the question of set off, are' not disputed; and if the defences of payment of one third by stock, and of the set off, are not sustained, the plaintiff is entitled to a decree.
    HI. The defence that one third of the amount of the bond and mortgage, was paid by the assignment of stock to Messrs. Codwise & Young, under the agreement with the company of 11th March, 1841, is not sustained.
    IV. The defence of set off, founded upon the Yates Trust notes to the amount of $13,000, obtained of Strong and Davis, and their assignment to the defendant of the claims for which those notes were delivered to them, is not available.
    V. The claim to set off $7500, founded upon the Yates Trust notes for that amount delivered to the defendant, or upon the consideration for which those notes are alleged to have been given, cannot prevail. 1. If that sum was paid or advanced at all for the use of the company, it was long after the assignment of the bond and mortgage to the trustees, and after the defendant had notice of such assignment. 2. If the company was subject to the provisions of the revised statutes in regard to “ moneyed corporations,” and to the general laws of the state applicable to such corporations, then the loan or advance was for an illegal purpose under those provisions. 3. The company had only such powers as were expressly conferred by the general banking law, or were necessary to the exercise of such express powers. . It was prohibited by the revised statutes from exercising any corporate powers, except such as were enumerated in the general banking law. 4. The defendant was not therefore entitled to set off the $7500 alleged to have been advanced in January, February, and March, 1841, in aid of the Yates Trust and for the Yates Trust notes.
    VI. There should therefore be a decree for the plaintiff, for the whole amount due on the bond and mortgage, (less the interest indorsed on the bond,) and the costs of the suit.

      S. Sherwood, for the defendant, Yates.
    I. The plaintiff’s title to the bond and mortgage executed by Tates, is derived through the receiver, appointed Sept. 21,1841, and not otherwise. This right gives him the same right as belonged to the company on the 30th day of August, 1841, when the order was granted against the company. The bond was then paid in fall—thus:
    One third amount of certain stock transferred, 111 shares at 75 o^, being as per agreement to apply,....... $8,325
    Money loaned and notes taken as collateral, directly by Mr. Tates, say Dec. 1841, . 7,500
    Mohey loaned indirectly by Davis, say Feb. 1841. Papers in May, 1841, . . . 3,000
    Like, by Geo. D. Strong, and coming through Davis, say March, 1841. Papers in May, . 10,000
    II. The title set up through the trastees is invalid. The assignment to Curtis, Blatchford & Graham, dated Eeb. 1st, and recorded 28th April, 1840, without any resolution of the board of directors, and without consideration, is void. “ So conveyance, assignment, or transfer, not cmthorized by a previous resolution of its board of directors, shall be made” “ of any of its effects.” (1 Rev. St. 591, § 8.)
    ILL The transfer of the 111 shares of stock, by the direction of the company, was a valid consideration for the covenant of the 11th March, 1841, on the part of the company to endorse upon the bond of Mr. Tates $8,325. (1.) The transfer of the stock to trustees who, under the direction of the company, were to substitute it for other securities, with other parties, was a valid transaction which did not vitiate the contract of the company to make the endorsement. (2.) The transaction does not come within the evils designed to be provided against by the legislature; nor does it fall within the provisions of the by-laws of the company. (19 Wend. 563 ; 21 Wend. 95,173; 3 Yiner’s Ah. 89.)
    IY. The loans by the defendant are equitable offsets, if the notes of the company are invalid; and the consideration money assigned to the defendant by Davis and by Strong, can in like manner be properly set off in equity. (19 Wend. 1.)
    Y. The president of the company, when applied to by Mr. Tates, said the transactions of Davis and Strong were founded upon valid and full consideration. If the suit was in the name of the company it would be conclusive, and is equally so in the name of the receiver. It would be an estoppel in pais. The defendant having acted upon it in good faith, the company could not deny the statement. Mr. Talmadge, the president, was a witness to the assignment by Strong to Mr. Yates, and pretended no set off against Strong. This is an equitable estoppel.
    The resolution of the committee of finance, of 30th June, 1841, upon the written application of Mr. Yates, constituted an agreement which it was competent for the company to make by their committee, and which the defendant may in equity 'enforce. The committee were appropriate officers, having charge of such settlements and liquidations. The transaction was just and equitable, and this court ought to sustain it.
   By the Court. Duer, J.

This is a bill for the foreclosiu’e of a mortgage, for securing the payment of 25,000 dollars, executed and delivered by the defendant, Henry Yates and his wife, in September, 1838, to The Horth American Trust and Banking Company, an association organized under the general banking law of this state. The consideration of the mortgage was the nominal amount, or par value, of two hundred and fifty shares in the capital stock of the company, for which the defendant, Yates, as an original associate, had subscribed; and the legality of the consideration, and consequently the original validity of the mortgage, is not impeached or denied. It is, however, contended, that the debt which the mortgage purports to secure, has been in effect extinguished by an actual payment of one third of the amount, and by a set-off exceeding the residue to which the mortgagor is said to be entitled, and which is composed of various sums of money, alleged to have been due to him, from the company, when, in consequence of its insolvency, a general receiver of its property and effects was appointed.

The title of the plaintiff to enforce the payment in this suit, of whatever amount may appear to be due upon the mortgage, is just as unquestionable, as the validity of the mortgage. This title is derived from two sources, one or the other of which must be valid. In the early part of 1840, the bond and mortgage of the defendant, together with - a large amount of other securities, were assigned by the company to Lewis Curtis, Richard M. Blatchford, and John L. Graham, in trust, to secure the payment of certain sterling bonds to be issued by the company ; and if this assignment were void, all the securities which it embraced, upon the dissolution of the company, became the property of the general receiver. The trustees, however, and the general receiver, in compliance with certain orders of the late coiu-t of chancery, have united in an assignment of all these secm’ities to the plaintiff, who, by virtue of another order of the same court, was appointed a special receiver, with authority to collect the amount, and enforce the payment of securities placed in his hands. These facts have all been established by the requisite proofs, and are not contested.

In an ordinary case, it would be needless to inquire whether the real title of the plaintiff is derived from the trustees, or the general receiver; but owing to the peculiar nature of the defence in this suit, this inquiry is, in our judgment, certainly proper, and perhaps necessary. If the assignment to the trustees were valid, and the defendant is chargeable with actual or constructive notice of its existence, prior to the transactions, upon which his defence is founded, the whole of his defence will be excluded, and a decree such as the plaintiff asks, must of necessity follow. And upon this supposition, it will be unnecessary, and, as we think, inexpedient to consider, whether as against a title, derived solely from the general receiver, the defence could be sustained. The questions which the suit, if founded solely upon the title of the general receiver, would involve, may and probably will arise in other cases; and from the nature of these quesions, we are unwilling to commit ourselves by any intimation of opinion, in relation to any of them, until it shall become our duty to decide them.

The only questions, therefore, that we propose to consider, and in relation to which any explanation of our views will be necessary, are, first, whether the assignment to the trustees, Curtis, Blatchford, and Graham, was operative and effectual; and, second, whether the defendant is to be charged with notice of that assignment, at any time before all or any of the transactions upon which he founds his defence.

The validity of the assignment is denied, upon the single ground, that, contrary to the provisions of the revised statutes, it was unauthorized by any previous resolution of the board of directors of the company. (1 R. S. eh. 18, Tit. 2, sec. 8, page 591.) In considering this objection, we shall assume that those provisions of the revised statutes which relate to moneyed corporations are applicable, so far as without inconsistency they may be applied to associations organized under the general banking law; but it is proper to add, that the position we assume is regarded by us as far more questionable than it seems to have been considered in the cases, reported and unreported, to which we were referred upon the argument. Whether these banking associations are corporations at all, in the sense of the revised statutes, and whether the general banking law does not include all the provisions, restrictions, and liabilities, to which the legislature meant that the associations organized under the law, their directors and officers, shoidd be subject, are questions upon which we forbear to express any opinion, but which we hold ourselves at liberty to examine, and shall feel it our duty to examine with the care and attention which their importance demands, if they shall arise in any case in which it will be necessary to decide them. We think that no decision of controlling and paramount authority has hitherto been made in relation to either of them, unless that of the court of errors in Warner v. Beers may be so construed.

Conceding, however, that the views of the defendant’s counsel upon these doubtful questions are correct, we are still of opinion that the objection upon which they relied cannot be sustained, first, because the assignment to the trustees was in fact authorized in the mode that the statute requires; and, second, because the want of such an authority would not, in this case, be construed to render void the assignment.

It cannot be doubted that a banking association under the general law, may, by its articles of association and by-laws, divide the business it is authorized to transact into several distinct departments, and constitute-a separate board of directors for each department; or which is the same thing, may intrust to a separate committee of the directors the exclusive charge of each department, clothing that committee with all the powers of a board, in relation to the business which its department embraces ; and it is exactly this course that the original associates of the ¡North American Trust and Banking Company actually followed in organizing the company. ' By the second section, article 10, in the articles of association, the directors as a board are empowered to make such by-laws, rules, and regulations for the management of the business of the company and the government of themselves, their officers, and agents, as they may think expedient, not inconsistent with law and the articles of association.

It is not denied that the by-laws which were produced and given in evidence were duly made in pursuance of this authority, and we are clearly of opinion that they are neither inconsistent with law nor with the articles of association. The first section in the first article of these.by-laws, declares that the business of the company shall be conducted under two divisions. The first division to embrace the business relating 'to bonds, mortgages, and other securities; and the second, the business of discount- and deposit, that is, the banking business, strictly so called. It is plain that these divisions were meant to cover the whole business of the company, and consequently that the words “ the business,” in the first division, must be construed to mean all business relating to the subjects there mentioned, and therefore, that they include the transfer and assignment, as well as the taking of mortgages and other securities. The second section in the same article establishes two departments, corresponding with the preceding divisions, and places them under the immediate supervision and direction of two distinct committees, and then, in connexion with the fourth section in the same article, gives to the committee of the first department, denominated the committee of investments and finance, the exclusive charge of all the business belonging to the first general division of the ' business of the company; not, it is true, making this delegation of power in expréss words, but in language that was evidently meant to be thus understood, since otherwise a portion of the business of the company would remain, for which, as not falling under either department, no provision whatever is made—contrary to the manifest purpose of dividing and distributing the whole. Any doubts, however, that might still remain upon the question, whether it was intended that the committee of investment and finance should have power to direct the transfer of securities, are effectually removed, by the clear and explicit language in the third section of the second article of the by-laws, which declares that the president shall have power to assign, as well as to cancel and discharge “ all mortgages, judgments, and other instruments, held by him in trust for the company, with the approbation and sanction of the committee of investments and finances,” thus mating the sanction of the committee equivalent to a resolution of the board of directors; or, more properly, constituting the committee such a board, in relation to this, as well as all other business which they are authorized to supervise and direct.

The construction that we have now given to the articles of association and by-laws of this company, is by no means novel. It was adopted and acted upon by the supreme court in this district, sitting as a court of equity, in the case of David Leavitt, the General Receiver, v. Richard M. Blatchford and others. Tn that case, an assignment of certain securities of the company, made by the president, which had no other prior sanction than a resolution of the committee of investments and finance, was held to be valid, and the decision was made upon the express ground, that, in the division of all the business of the company, made by its by-laws, all the general powers of the directors over the finances, (meaning undoubtedly exclusive of the funds employed in banting), were conferred upon and might be exercised by this committee. Upon this ground, it was held that this committee had not only the power by its separate action to borrow money, but to secure the repayment of the moneys borrowed, by directing an assignment of securities in trust for the lenders; which is exactly the transaction upon which the title of the plaintiff in this case, as derived from the trustees, is founded.

Nor is this the only authority to which we may appeal, although alone it would he sufficient to justify, if not control, our decision. In the case of the Farmers’ Loan and Trust Company v. Wm. Blake and wife, Chancellor Walworth, in affirming the decree of the vice chancellor of the fourth circuit, expresses very clearly his opinion, that an assignment of a bond and mortgage, made by the president of the St. Lawrence Bank, an association under the general law, was valid, upon the ground that it sufficiently appeared from the evidence, that it had been made with the knowledge and approbation of a majority of the finance committee; and that by the by-laws of the bank, the sanction of this committee was alone necessary to authorize the act. The by-law of this bank is set forth in the opinion of the Vice-Chancellor Willard, and it corresponds exactly in its terms with those of the third section in the second article of the by-laws which we have read.

If then a resolution of the committee of investments and finance, must be deemed a resolution of the board of directors, within the meaning of the statutes, and such is our decision, the objection that the assignment to the trustees, of the bond and mortgage of the defendant, was an unauthorized act, and therefore invalid, falls to the ground, for that such a resolution was actually passed, has not been denied. It was adopted, as appears from the book of minutes produced in evidence, on the 30th April, 1840. ' It creates a new trust for 500,000 dollars, called the first half million trust, by authorizing an issue of the bonds of the company, payable in London, to the amount of 500,000 dollars, in the form previously adopted in a trust for one million of dollars, to be secured in a similar manner by a pledge of bonds and mortgages ; and for the purpose of securing the payment of the bonds, so to be issued, it directs the officers of the company, to select bonds and mortgages upon property in this state, to the amount of 600,000 dollars, and authorizes the president to transfer the same to Messrs. Blatchford, Curtis, and Graham, the trustees named in the former trust. The assignment and trust deed, produced and read upon the hearing,, are regarded by us as evidence of the execution of the powers and • authority which this resolution confers, since it is from this resolution, that the act of the officers of the company in selecting the bonds and mortgages to be pledged for the payment of the bonds of the company, and that of the president in transferring by assignment to the trustees, the securities thus selected, which include the bond and mortgage of the defendant, derive their validity. It may be, that the necessary papers had been previously executed; but until this resolution was passed, they had not, nor were they designed to have, any operation or effect. We are satisfied that, until then, there was no actual transfer to the trustees, but that the change of title and possession followed and were a consequence of this resolution.

, It is not necessary, however, to place our determination of the question we have considered solely or at all upon the grounds that have been stated; for, admitting that a resolution of the entire board of directors was necessary to give validity and effect to the assignment, by the president, a resolution, that we hold to be not only sufficient, but conclusive proof of the knowledge and assent of the board, was adopted, and has been given in evidence.

It was adopted on the 15th June, 1840, and its terms are so material, that they require to be fully stated.

Resolved, That the finance committee be authorized to transfer to Messrs. R. M. Blatchford, Lewis Curtis, and John L. Graham, in trust, bonds and mortgages, not exceeding $1,800,000, as a security for the bonds of the company, payable in three years, for not exceeding 331,500 pounds sterling, with 6 per cent, interest, payable in London, and that the said committee be authorized to add any amount of secmities that may be required to render the said bonds negotiable.”

That this resolution directly refers to the million, and half million trusts that had been previously created by the finance committee, and that the meaning is, that 1,200,000 dollars of the bonds and mortgages, which the committee are directed to transfer, should be held by the trustees, under the first trust, and the residue under the second, cannot be doubted, and has not been denied; but that the true import and effect of the resolution may be understood, there are other facts to which it is necessary to advert. Although each of these trusts as created was expressed in dollars, yet the bonds of the company which they were intended to secure were sterling, and amounted in the aggregate, those under the million trust to £225,000, and those under the half million to £112,500, making together the £337,500 mentioned in the resolution. These bonds were payable in London, and the intention was, that they should be transmitted to the correspondents and agents of the company in that city, Messrs. Palmer, Mackillop, Dent & Co., for negotiation or sale. It is certain, however, that none had been negotiated, nor probably transmitted, at the time of the passage of this resolution. This fact is not only apparent on the face of the resolution, since otherwise an issue of other bonds to the full amount that was originally meant to be secured, would not have been directed, but was established by other evidence. Hence, although when this resolution was passed, the assignment and trust deeds relative to each trust had been executed, and the bonds and mortgages allotted to each probably delivered to the trustees, yet the entire subject was still under the absolute control of the company and its directors. The bonds and mortgages, although in the hands of the trustees, were the property of the company alone. The whole beneficial interest and the whole power of disposition were vested in them, and until other ¡persons should acquire an interest as holders for value of the bonds of the company, the trustees were bound to obey implicitly, the resolutions and instructions of the board of directors. That board, so long as things remained in this condition, had an absolute right to revoke and annul the trusts, and reclaim all the securities that they embraced, and this right, of necessity, comprehended that of changing and modifying the trusts, in their discretion; while the relation to the company in which the trustees then stood, imposed upon them the duty of holding the securities in their hands upon any new terms or conditions that the directors might choose to declare. Hence the resolution of the 15th June was adopted by the board, in the exercise of an authority that they unquestionably possessed, and its necessary legal effect was to alter and modify the original trusts in two important particulars; first, by substituting bonds of the company, payable in three years, as the objects of the trusts, in the place of bonds payable in seven years, to which the trust deeds as executed alone referred; and second, by setting aside in effect the selection of bonds and mortgages that had been made by the officers of the company, and committing the whole subject of the choice and appropriation of the securities that each trust should embrace, to the discretion of the finance committee. We are satisfied that this resolution has been fully executed, and that it is only by a reference to its terms that the powers of the trastees, and the nature of their title, can be ascertained and defined.

■It has been proved, that the only bonds of the company that have been issued, and the payment of which the trusts before created could operate to secure, in conformity to the terms of the resolution, were payable in three years from their date; and although it does not appear that the finance committee, in the exercise of their discretion, made any alteration in the securities previously assigned, or any addition to their number, this is only a proof that its members were satisfied with the selection of bonds and mortgages already made, and therefore ratified and confirmed it; but we are clearly of opinion, that the title of the trustees to the bonds and mortgages they were thus permitted to retain, is just as certainly to be referred to the discretion and choice of the finance committee, acting under the resolution of the 15th June, as it must have been to substituted bonds and mortgages, had those first assigned been wholly withdrawn. It is the assent of the finance committee, acting under the resolution, that alone gave effect to the prior assignment.

It is evident that the facts which have now been stated, constitute a full reply .to the objection that was strenuously insisted on by the counsel for the defendant, namely, that the resolution of the 15th June, being subsequent in date to the assignment, could not be relied on as evidence of a compliance with the terms of the statute, which expressly require a “ previous resolution.” This resolution was previous to any assignment that either was, or was intended to be, operative and effectual. It was previous to any assignment that, under the state of facts that then existed, could operate, or was designed to operate, as a transfer of the property of the company. Until this resolution was passed, the assignment was nominal, formal, and lifeless. It derived, from this resolution alone, its vitality and force; and upon this resolution alone, the title of the trustees, and of the plaintiff as their representative, is actually founded.

Were the circumstances of this case, however, such as they were supposed to be by the defendant’s counsel; were it true that the resolution of the 15th June must be regarded as subsequent to the assignment; yet, thus construed, it would be amply sufficient to repel the objection founded upon the statute, since upon the narrowest construction it is impossible to deny that the resolution recognises and sanctions the trust previously created; and this sanction is all that the statute in. its just construction requires. We are fully convinced that the sound and most reasonable maxim of the common law, “ RatihabiUo priori mmdato rngm/pa/rai/u/r^ that a subsequent ratification is equivalent to a prior authority, (i. e. gives the same validity to an act that upon the ground of a want of authority is sought to be impeached,) a maxim borrowed from the Roman law, and now an element in the jurisprudence of every civilized nation, is just as applicable to this case as to any other to which it has ever been applied. We believe this maxim to be universal in its application, since we have been unable to discover that there is or can be any exception from the reasons upon which it is founded. It is a mistake to suppose that the word “ previous,” in the statute, creates such an exception. In every case to which the maxim is or can be applied, a previous authority is necessary to give an immediate validity to the act that is alleged to be confirmed ; the very words of the maxim imply that this necessity exists, and whether it arise from a rule of the common law, or a provision in a statute, must be immaterial. By the rule of the common law, a previous mandate or order is just as necessary to make the act of a person assuming to be an agent, binding upon the principal, as by the terms of this statute, a previous resolution of the board of directors to make the act of the president binding upon the corporation; and we know no reason why it is not just as competent to the directors to adopt and ratify the unauthorized act of the president, as to the principal, that of his agent. The rule of law and of good sense that gives the power of confirmation, is as applicable to the one case as to the other. It is just as reasonable in the one case as in ithe other, that the act thus confirmed, although previously void, should no longer be subject to impeachment.

Hor is it necessary to rest' our opinion upon the reasons that have been stated. It has been repeatedly decided, that when a prior authority is rendered necessary by a statutory provision, the want of such an authority may be supplied, and the act impeached be rendered valid, by proof of its adoption by the person by whom it might have been authorized. An act of parliament, which is still in force in England, (28 Geo. HI. ch. 56.,) declares, that where an insurance is made by an agent, the name of the principal, or of the person who has received the order to insure, must be inserted in the policy; and it is admitted, as the plain and necessary import of the words of the statute, .that where the policy is in the name of an agent, the absence of a previous order to insure, received by him, renders the contract inoperative and void.

There is a single case, in which Lord Ellenborough doubted whether the words of the statute are not so express and imperative, as to exclude the evidence, when no previous order is shown, of a subsequent adoption of the policy, (Bell v. Jansen, 1 M. & S. 201;) but the doubts of his lordship do not appear to have been shared by his learned brethren, and the law is settled by many successive decisions, that the adoption by the principal of an insurance made by a voluntary agent, supplies the want of a previous order to insure, and renders the contract valid in its origin. (Wolff v. Hardcastle, 1 Bos. & Pull. 316; Sterling v. Vaughan, 11 East 619; Hagedorn v. Oliverson, 1 M. & S. 485; Routh v. Thompson, 12 East 274; Lucena v. Crawford, 2 New Rep. 269.) The terms of our statute are not more plain and positive than those of the English act of parliament, and if the construction given to the latter is not unjust or unreasonable, we are justified in following it.

It is not, however, necessary to say that a resolution of a board of directors, ratifying an assignment made by the president without authority, has any retro-active force. It is sufficient to say, that the assignment is valid, from the time that the sanction of the board has thus been given to it; and we are quite certain that in saying this, although we may not follow the words of the statute in their literal sense, we fully satisfy their meaning and policy.

We have deemed it expedient to reply fully to the objections we have been considering, in order that we might explain our views as to the true construction of a very important statutory provision ; but were there no evidence in this case of a previous or subsequent resolution of the board of directors, sanctioning the act of the president, it would still be necessary to hold, according to our understanding of the facts and the law, that his assignment to the trustees, of the bond and mortgage of the defendant, was valid and effectual, from the time that the bonds of the company, which the assignment was meant to secure, came into the hands of holders, for a valuable consideration and without notice. We think that it appears clearly, from the evidence, that Messrs. Palmer, Macldllop, Dent & Co., became such holders, and as such became entitled to the protection of the statute, as embraced within the exception, which declares that no conveyance, assignment, or transfer, is to be construed as void, in the hands of a purchaser for a valuable consideration and without notice.” It will not be supposed that the words “ in the hands,” must be literally construed, so as to exclude the possession of a trustee or agent; nor that the word “ purchaser” is to be understood, in its limited popular sense, as applying only to a person who derives his title from an-actual sale. Every person who, for any consideration that the law judges to be valuable, has acquired directly or indirectly, a legal or equitable title, or interest, by an assignment or transfer from a moneyed corporation, is to be deemed a purchaser, within the meaning of the statute; and within this definition every assignee of a bond and mortgage, whether the assignment is made to him directly or to a trustee for his benefit and security, and whether it is made absolutely or as a collateral security, is plainly included. Hence the holders for value of the sterling bonds of the company, which the half million trust was created to secure, as they acquired an immediate beneficial interest, in all the securities that had been assigned in trust for the payment of those bonds, became, in effect, the assignees and purchasers of every bond and mortgage that the assignment embraced. To deny these positions, is in effect to say that there can be no purchaser for a valuable consideration where a trust intervenes. The trustee is not such a pm-chaser, because from him no consideration proceeds, nor the cestui que trust, because to him no such title is given as the law requires.

It appears from the testimony of Mr. Murray, who acted as the agent of the company in London in 1840-41, that none of the bonds of the company belonging to the half million trust, were ever sold in market; but that, during the summer and autumn of 1840, they were from time to time transferred to Palmer, Mackillop, Dent & Co., as a portion of their security for a very large debt antecedently owing to them from the company. When they consented to accept these bonds, they gave up to Mr. Murray for the benefit of the company, other securities, principally state stocks, at least of equal value, which were then in their hands ; and it is needless to refer to the decisions to show, that by the surrender of these securities, they became the purchasers of the bonds for a valuable consideration. It is not to be doubted, that they became so just as certainly and effectually, as if the whole sum for which the bonds were given, had been advanced by them in cash when they received them. By the same act, they became the purchasers of the bonds and mortgages, included in the half million trust, held by the trustees; and from that time, every one of these mortgages was, in judgment of law, in their hands.

It is equally certain that they became such purchasers without notice, that is, without notice of any fact by which the validity of their title could be affected. So far from believing or suspecting that the statute had been violated, they were solemnly assured, and doubtless believed, that its provisions had been fully complied with. The recital in the trust deed, a counterpart of which was in their possession, contains the assurance to which we refer; and had they not thoroughly believed this recital to be true, there is no hazard in saying they would never have consented to accept the bonds; they would never have parted with the state stocks, had a suspicion of its falsity entered their minds.

As the imputation of actual notice is thus effectually disproved, it remains only to consider whether upon any grounds Palmer, Mackillop, Dent & Co. are chargeable with notice by construction of law, that is, whether the facts of the case suggest any principle upon which the doctrine of constructive notice—a very reasonable doctrine when properly understood—can be justly applied to them. It has been frequently said, and in the recent case of Johnson v. Bush, (3 Barbour’s Chan. Rep. 201) the argument was pressed by the defendant’s counsel with much ingenuity and force, that as the statute forbids any transfer of the property and effects, exceeding a limited value, of a moneyed corporation, not authorized by a previous resolution of the board of directors, every purchaser from such a corporation is bound to ascertain whether the title which he receives is sanctioned by the provisions of the law, and if he omit to inquire, and the fact prove to be otherwise, is chargeable with notice. He is bound to know, and is presumed to know, that a resolution of the board is necessary, and is therefore, at his peril, bound to know whether it was actually passed. The argument is specious, and but for the exception which the statute contains, would be conclusive. But for this exception, the duty to inquire would, in every case, attach upon a purchaser, and his omission to inquire would charge him, in every case, with a knowledge of the facts that an inquiry would have disclosed. But we cannot listen to an argument that, if admitted to prevail, would reduce the exception in the statute to a dead letter, and render the promise it holds forth to purchasers, a delusion and a mockery. If the duty to inquire exist in any case, it must in all; and in all, the omission to inquire must be followed by the same consequences, and hence there is no possible case to which the exception, in favor of purchasers without notice, would be found to apply. That there may be purchasers without notice, the words of the exception necessarily imply; the argument would prove that there can be none. We believe that the words of the statute have a meaning that must be followed, and therefore reject an argument that robs them of all possible significance. We are not to be understood as meaning to say, that circumstances may not exist that will impose the duty of inquiry upon a purchaser from a moneyed corporation, and operate, when he neglects to inquire, as a constructive notice; but it is quite certain, that the mere fact that he is a purchaser, is not constructive notice, and that, as a general rule, in order to charge him, actual notice must be proved.

It may possibly be thought that there is another ground upon which the imputation of notice to Palmer, Mackillop, Dent & Co. may be legally rested. It may be said, that the trustees were their agents, and that the rule of law is positive, and without excejDtion, that notice to an agent is notice to his principal. We are very far from thinking that notice to trustees selected and appointed by the Company, could operate as notice to the innocent purchasers of the bonds; but this is a question that we refuse to consider, since we are satisfied that the trustees are no more chargeable with notice, than the purchasers whom they represented. Hot only is there no evidence of the fact, but its admission would convict them of a very gross fraud, in becoming parties to a trust deed, containing a recital, which they knew to be false, and which could only have been meant to deceive those for whom they consented to act, and whose rights and interests they solemnly agreed to protect. Hone other than the clearest and most incontrovertible proof would justify us in saying that such a fraud was committed or meditated; and we should do violence to our own convictions, if we uttered a word by which the imputation might seem to be countenanced. We reject it utterly; there is no more reason for doubting the perfect good faith of the trustees, than that of the purchasers. If the purchasers were deceived and mistaken, so were the trustees.

We have said all, perhaps more than all, that was necessary to be said upon the questions we have considered. Having shown that the assignment to the trustees was authorized or sanctioned by the board of directors, or if not so authorized or sanctioned, was rendered valid by subsequent facts; the next inquiry is, whether there is such evidence that the defendant-had notice of the assignment, as must preclude us from admitting, in whole or in part, the defence upon which he has relied. The rule of law, which is indeed familiar and elementary, is not disputed; that the assignee of a debt, from the time that the assignment is known to the debtor, is the creditor to whom alone the debt must be satisfied, so that his right to enforce its payment, can never be affected by any subsequent transaction between the debtor and his original creditor. In respect to the assignee, every such transaction is “ res inter alios actaP In the present case, it has been distinctly and very properly admitted, that if the assignment is valid, the defendant’s certain knowledge of its existence in March, 1841, must exclude the larger portion of the credits to which he has claimed to be entitled. Upon this supposition, the controversy is limited to the single sum of 7,500 dollars, which has been treated as a loan, or, more -properly, as the aggregate of several loans made by the defendant to the company, in the months of January and February, 1841. The next, in order of time of the credits that are claimed, is the sum of 8,325 dollars, the value, at seventy-five per cent., of one hundred and eleven shares in the capital stock of the company, which it is alleged that the defendant transferred, and the company agreed to accept, as a payment of that amount of the capital sum secured by his mortgage; and the date of this payment is the 1st March, 1841. His right to be credited by the company with the two remaining sums of 3000 and 10,000 dollars, if it in fact exists, it is clear, from the evidence, was acquired subsequently to the agreement in relation to the shares of stock, and probably not sooner than in May, 1841. The agreement between him and the company, in relation to the transfer of the stock, and its acceptance as a payment, was produced - and read in evidence, signed by the president of the company and by the defendant. It refers expressly to the assignment and trust deed, and recites that the bond and mortgage of the defendant, together with others, had been previously assigned to Blatchford, Curtis & Graham, in trust for the holders of the bonds of the company, and as -a pledge to the holders for the payment of those bonds, and that the trustees were willing to receive the shares of stock at the rate agreed upon, in payment of one third of the principal sum due upon the bond and mortgage of the defendant, provided the holders of the bonds of the company should approve thereof in wilting.

During the hearing, it was for a time insisted that the written approval of the bond-holders had been obtained; but in the result, it was proved to our entire satisfaction, that it had been deliberately withheld. Although the refusal of the bondholders, Pahner, Maekillop, Dent & Co., to consent to the proposed arrangement, rendered the agreement as to them inoperative and void, it could not impair the positive evidence which it affords of the defendant’s knowledge and admission of their rights ; and hence not only the payment to which their assent was refused, but the credits which the defendant has claimed, arising from subsequent facts, must of necessity be rejected.

The only question, therefore, is, whether the defendant is to be charged with notice of. the assignment of his bond and mortgage, at any time prior to the month of January, 1841, so as to exclude a set off of the sums which it is said that he advanced to the company in that and the succeeding month. This inquiry will not long detain us. We shall not say that there is conclusive proof of the actual knowledge of the defendant ; but we feel no difficulty or doubt in saying, that the evidence raises a presumption of his knowledge, that, in a court of equity, he could never be allowed to contradict. The fact may possibly be otherwise, but upon the evidence, we are bound to presume that he was himself a party to the transfer of his bond and mortgage to the trustees, and that the trustees derived their title, if not from his individual act, certainly from an act in which he co-operated. The resolution of the board of the 15th June, 1840, furnishes the evidence to which we refer, and all that we have now said is a necessary consequence of the construction that we have already given to that resolution. The defendant was present as a director, at the meeting of the board at which it was adopted, and was then chairman of the finance committee, npon which the resolution imposed the duty of selecting and transferring the bonds and mortgages, or other securities, which the million and half million trusts were respectively meant to include. The duty thus imposed upon him, and which, by his assent to the resolution, he consented to assume, we must presume that he discharged. He must, therefore, have examined with care, for such was plainly his duty, all the bonds and mortgages then in the hands of the trustees, for the purpose of determining whether others should be added or substituted, or the trustees be permitted to retain them for the purposes for which they were originally assigned; he must, therefore, have ascertained that his own bond and mortgage was in the number of those then held by the trustees ; and must either have given his own consent to their retaining it, or must have known that by the act of the committee they were permitted to do so. Hor is this all. Had it been admitted and proved that the defendant never acted under the resolution of the 15th June, and had no personal knowledge of the action of the committee of which he was chairman, his voluntary ignorance—an ignorance arising from his violation or neglect of a certain known duty—would furnish no excuse and constitute no defence. He was bound to make the inquiry, that, in the absence of contrary proof, we have presumed him to have made; and in all cases where the duty to inquire exists, the law charges the party upon whom it rests, with a knowledge of all the facts that the inquiry, if made, would have revealed to him. It is upon this principle that the doctrine of constructive notice, both in law and equity, mainly rests, and we doubt whether a case has occurred, in which the principle has been applied with more manifest reason, or more conclusive force.

Could we even reject from our consideration the resolution of the 15th June, there are other grounds upon which, with entire satisfaction to our own minds, we should place our decision. We doubt whether a director of a moneyed corporation or banking association, should ever be permitted to deny his own knowledge of the lawful transactions of the company, if by such denial the rights of a third person, an innocent dealer with the company, may be prejudiced or affected. We doubt whether he should be permitted to deny his knowledge of any transaction which, in the discharge of his duties as a trustee of the stockholders and creditors, and a guardian of their property and interests, he was bound to know. But the defendant was not merely a director of this banking association. He was, as already stated, chairman of the finance committee, and to this committee the investment, management, and care of the capital of the company were specially, intrusted. That committee was bound to know in what manner and in what securities the capital was invested, and to permit none of the securities in which it was invested to be withdrawn, unless replaced by other securities of equivalent value. Hor can we understand why the duties thus imposed upon the committee, ought not to be considered as attaching personally upon each of its members. It is true, that a'committee cannot act as such, until its members are convened, but the knowledge necessary to its action, each member is bound to possess.

The bond and mortgage of the defendant were an investment of a portion of the capital of the company; but they ceased to be such when they were withdrawn from the charge of the finance committee, and assigned to the trustees; nor could the finance committee, without a violation of duty, have permitted this withdrawal and transfer, unless other securities, which they deemed to be of equal value, were then substituted. Hence, as we must presume that the finance committee performed its duty, the facts of withdrawal, transfer, and substitution must have been known to its members, and as no ground for a distinction can be stated, it is to each of them that this knowledge must be imputed. Could we admit that the presumption of notice to the defendant, arising from these facts, might be repelled, no evidence to repel it has been given. It is true, that the answer contains a denial of notice, but the answer is not under oath, nor is the denial responsive to any allegation in the bill. It is not, therefore, evidence in itself, and it is wholly unsupported by proof. We can lay no stress upon the circumstance that the defendant continued to pay the interest upon his mortgage to the officers of the company, at its banking-house, during a considerable period after the mortgage had been assigned to the trustees, for, by an express provision in the trust-deed, the company was entitled to receive the interest upon all the mortgages assigned, until default was made in the payment of its own bonds. A payment of interest, consistent with the assignment, is of no weight, as repelling the presumption of the defendant’s knowledge of the fact.

We give no opinion upon the question, whether the defence that has been set up, or any portion of it, could have been allowed to prevail, had this suit been brought by the general receiver, or could only have been maintained upon his title; hut as the case stands, and for the reasons that have been given, the defence as a whole, and in all its parts, must he overruled.

The plaintiff is entitled to the usual decree, with costs.

       Now reported in 5 Barb. S. C. E. 9, and 3 Comst. 19.

         See Cary 1 v. McElrath, S. P. in the other branch of the court; the second case post.