(5orn?U Earn Btl^tittl Eibtar^ 3 1924 052 878 125 'm <\ Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924052878125 ILLUSTRATIVE CASES ON EQUITY JURISPRUDENCE SELECTED BY HARRY B. 0UTCHINS Dean of the Department of Law of the University of Michigan AND ROBERT E. BUNKER Professor of Law in the University of Michigan ST. PAUL WEST PUBLISHING CO. 1902 COPTKIQHT, 1902, BT WEST PUBLISHING COMPANY. '•-,?'•' TABLE OF CONTENTS. MAXIMS OF EQUITY. Page 1. Southern California R. Co. v. Ruther- ford 3 2. Rees v. City of Watertown 5 3. Dibrell v. Carlisle 9 4. Speidel v. Henrici 15 5. Hawker v. Moore 17 6. Economy Sav. Bank v. Gordon 19 7. Rice T. Rice 23 8. Comgtock V. Johnson 26 9. Brown, Bonnell & Co. v. Lake Superior Iron Co 27 10. Eleakley's Appeal 30 11. Kahu V. Walton 31 12. Craig v. Leslie 38 13. Wyman v. Ft. Dearborn Nat. Bank of Chicago 43 14. Stinchfield v. Milliken 46 15. McLarren v. Brewer 48 16. Clements v. Tillman 50 17. Hart v. Sansom 52 18. Adams v. Messenger. 54 PENALTIES AND FORFEITURES. 1. Bwing V. Litchfield 56 2. Craig v. Hukill 59 3. Kunkle v. Wherry 60 4. Jaquith t. Hudson 61 5. Keeble v. Keeble 67 2. 3. 4. 5. 6. 7. 8. 9. 10. 1. PRIORITIES AND NOTICE. Heyder v. Excelsior Building & Loan Phillips V.' Phiilips." .'..'..'.....'...'.... Kuapp V. Bailey Kirsch v. Tozier Knobloch V. Mueler Mayor, etc., of City of Baltimore v. Whittington Williamson v. Brown Thomas v. Burnett Pringle v. Dunn Deason v. Taylor LIS PENDENS. Houston T. Timmerman »7 EQUITABLE ESTOPPEL. Horn V. Cole Dickerson v. Colgrove Continental Nat. Bank v. National Bank of Commonwealth Galbraith t. Lunsf ord Starry v. Korab ELECTION. 100 107 110 114 119 Penn v. Guggenheimer . Fitzhugh V. Hubbard . . . Wilbanks v. Wilbanks. . Rogers t. Jones Konvalinka t. Schlegel. Reed t. Dickerman. . . . . 120 125 126 128 129 131 SATISFACTION. Strong V. Williams .... Deichman v. Amdt De Witt V. Yates , HUTCH.& BUNK.EQ. 133 135 137 Page 4. Edwards v. Rainier's Ex'rs 139 5. Roquet v. Eldridge 143 6. Rogers v. French 14o 7. Clark v. Jetton 148 CONVERSION AND RECONVERSION. 1. Craig V. Leslie 38 2. Keep v. Miller 150 3. Wheless v. Wheless 153 4. Prentice v. Janssen 156 ACCIDENT. 1. Kopper T. Dyer 159 2. Patton V. Campbell 164 3. Brewer v. Herbert 166 MISTAKE OF LAW^. 1. Hunt V. Rousmanier's Adm'rs .... 170, 175 2. Jordan v. Stevens 181 3. StafCord v. Fetters 184 4. Green v. Morris & E. R. Co 186 5. Griswold v. Hazard 190 6. Marshall v. Westrope 201 7. Renard v. Clink 205 8. Titus V. Rochester German Ins. Co. . . 206 9. Erkens v. Nicolin 209 MISTAKE OF FACT. 1. Grymes t. Sanders 210 2. Riegel v. American Life Ins. Co 214 3. Newton v. Tolles 218 4. Dambmann v. Schulting 220 5. Conner v. Welch 223 6. Park Bros. & Co. v. Blodgett & Clapp Co 227 MISTAKE— PAROL EVIDENCE TO CORRECT. 1. Walden v. Skinner 231 2. Metropolitan Lumber Co. v. Lake Supe- rior Ship Canal, Railway & Iron Co. 237 3. Hitchius v. Pettingill 239 4. Hunter v. Bilyeu 241 5. Glass V. Hulbert 247 6. Davis V. Ely 255 FRAUD — JURISDICTION OF EQUITY. 1. Miller v. Scammon 258 2. Buzard v. Houston 261 3. Teft v. Stewart 264 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. ACTUAL FRAUD. Hicks V. Stevens 266 Stimson v. Helps 270 Mitchell V. McDougall 272 Southern Development Co. of Nev.gda V. Silva -. . . 275 Prewett v. Trimble i»*0 Hadcock v. Osmer 282 Borders v. Kattleman 285 Dambmann v. Schulting 220 Neill V. Shamburg 287 Porter v. WoodrufE 289 Virginia Land Co. v. Haupt 295 Zahn V. McMillin 297 (iii) Iv TABLE OF CONTENTS. CONSTBUCTIVE FRAUD. Page 1. Phillips V. Pulleu 301 2. Rakestraw v. Lanier 303 3. Cowee v. Cornell 309 4. AUore v. Jewell 313 5. Greene v. Roworth 316 6. Brown v. Pierce 31W 7. Francis t. Wilkinson 3^4 8. Ross V. Oonway 3]^8 9. Tate v. Williamson 330 10. Price v. Thompson 338 11. Elmore v. .Tohnson 336 12. Solinger v. Earle 344 13. Hanover Nat. Bank of Oity ol New Tork V. Blake 346 14. Chandler v. HoUingsworth 350 EXPRESS TRUSTS. 1. Hutchins v. Van Vechten 357 2. Urann v. Coates 359 3. Bates v. Hurd 361 4. McVay v. Mc Vay 363 5. Dauser v. Warwick 365 6. Tobias v. Ketchum 367 EXPRESS TRUSTS — PRECATORY W^ORDS. 1. Warner v. Bates 370 2. Hess V. Singler 373 3. Clay v. Wood 375 EXPRESS TRUSTS— VOLUNTARY TRUSTS. 1. Richards v. Delbridge 378 2. Young V. Young 380 3. Webb's Estate, In re 385 4. Martin v. B'unk 386 5. Beaver v. Beaver 389 6. Bath Sav. Inst. v. Hathorn 393 TRUSTS— ACTIVE AND PASSIVE. 1. Kirklaud v. Cox 397 POVTERS IN TRUST. 1. Delaney v. McCormack 399 TRUSTS— PUBIilC OR CHARITABLE. 1. Jackson v. Phillips 402 2. Allen v. Stevens 423 3. Hunt V. Fowler 430 RESULTING TRUSTS. 1. Skellenger's Elx'rs v. Skellenger's Ex'r.. 434 2. Bond V. Moore 436 3. Gould V. Lynde 438 4. Botsford v. Burr 439 5. Dyer v. Dyer 444 6. Cook V. Patrick 447 7. Hagan v. Powers 451 CONSTRUCTIVE TRUSTS. 1. Ferris v. Van Vechten 453 2. Little v. Chadwick 457 8. Slater v. Oriental Mills 458 4. Nonotuck Silk Co. v. Flanders 460 5. American Sugar Refining Co. v. Fanch- er 463 6. Oavin v. Gleason • . 467 7. Newton v. Porter 469 8. Mitchell v. Read 472 9. Ryan v. Dox 480 10. Edwards v. Oulbertson 48o 11. O'Hara, In re 487 12. Curdy v. Berton 493 DUTIES AND LIABILITIES OF TRUS- TEES. Page 1. Weall, In re 496 2. Hun V. Gary 499 3. King V. Talbot 503 4. Lamar v. Micou 507 5. Simmons v. Oliver 516 6. Harvard College v. Amory 518 7. Bentley v. Craven 522 8. Munsou V. Syracuse, G. & C. R. Co. . . . 523 9. Rich V. Black 527 10. Bent V. Priest 529 11. Cook V. Gilmore 534 12. Schell, In re 535 13. Van Alen v. American Nat. Bank 537 14. Waterman v. Alden 541 15. Barker's Trusts, In re 546 MORTGAGES. 1. Chick V. Willetts 547 2. Barrett v. Hinckley 549 3. Ladue v. Detroit & M. R. Co 554 SUBROGATION. 1. MtnsL Life Ins. Co. of Hartford v. Town of Middleport 560 SPECIFIC PERFORMANCE OF CON- TRACTS. 1. Pusey V. Pusey 565 2. MoUineux's Case 566 3. Hall V. Warren 567 4. Rindge v. Baker 570 5. Adderly t. Dixon 576 6. Hodges V. Kowing 577 7. Porter v. Frenchman's Bay & Mt. D. Land & Water Co 579 8. Bumgardner v. Leavitt 580 9. Welty V. Jacobs 584 10. Jones V. Newhall 587 11. Fothergill v. Rowland 54)0 12. Danforth v. Philadelphia & C. M. S. L. R. Co 593 13. Southern Exp. Co. v. Wesitern North Carolina R. Co 595 14. McCauU V. Braham 598 15. Clarke v. Price 603 16. Lumley v. Wagner 605 17. Montague v. Flockton 613 18. Donnell v. Bennett 618 19. Wm. Rogers Mfg. Co. v. Rogers 620 20. Metropolitan Exhibition Co. v. Ewing. . 622 21. AUegheny Base Ball Club v. Bennett. . 626 22. McGowin v. Remington 628 23. Prospect Park & C. I. R. Co. v. Coney Island & B. R. Co 632 24. Willard v. Tayloe 635 25. Fish v. Leser 641 26. Stone v. Pratt 643 27. Thompson v. Winter 645 28. Falcke v. Gray -. . . 646 29. Brewer v. Herbert 166 30. Paine v. Meller 650 31. Gould V. Murch 652 32. Marks v. Tichenor 653 33. Bostwick v. Beach 654 34. Lewis v. Hawkins 656 35. Bissell v. Heyward 658 36. Wetzler v. Duffy 660 37. Phinizy v. Guernsey 662 38. Leonard v. Crane 666 39. Graybill v. Braugh 668 40. Hall V. Hall 670 41. Kelsey v. Crowther 672 42. Combs v. Scott 673 43. Frame v. Frame 677 44. Cheney v. Libby 686 45. Chicago, M. & St. P. R. Co. v. Durant 692 46. Haffey v. Lynch 684 47. Gotthelf v. Straaahan 697 48. Corbin v. Tracy 700 49. Hicks v. Turck 702 TABLE OF CONTENTS. Page 50. Gage v. Fisher 704 51. New England Trust Co. v. Abbott 711 52. Conger v. New York, W. S. & B. R. Co 714 53. Ross V. Parks 715 54. Johnston v. Trippe 717 55. O'Connor v. Tyrrell 721 56. Grubb v. Starkey 723 INJUNCTIONS. 1. Rogers Locomotive & Machine Works V. Erie R. Co 725 2. Whitecar v. Michenor 729 3. Watson v. Sutherland 732 4. McHenry v. Jewett 734 5. Steinau v. Cincinnati Gas-Light & Coke Co 735 6. Manhattan Manufacturing & Fertiliz- ing Co. V. New Jersey Stock- Yard & Market Co 738 7. Godfrey v. Black 740 8. McOlurg, Appeal of , 742 9. William Rogers Mfg. Co. v. Rogers. . 620 10. Lumley v. Wagner 605 11. Grand Rapids School Furniture Co. v. Haney School Furniture Co 744 12. O. & W. Thum Co. v. Tloczynski 746 13. Buncombe v. Felt 751 14. Griffith v. Hilliard 753 15. Wheelock v. Noonan 755 16. Wilson V. City of Mineral Point 757 17. Gardner v. Trustees of Village of New- burgh 758 18. Sherry v. Perkins 761 19. Vegelahn v. Guntner 764 20. Hamilton Brown Shoe Co. v. Saxey. .. 770 21. Crawford v. Tyrrell 773 22. Weinstock, Lubin & Co. v. Marks 774 REFORMATION. 1. Purvines v. Harrison 779 2. Welles v. Yates 781 CANCIXULTION. Page Town of Venice v. Woodruff 789 RECEIVERS. 1. Booth V. Clark 788 2. Davis V. Gray 795 3. Flowers, In re 806 4. Semple v. Flynn 807 5. Simmons Hardware Co. v. Waibel 808 6. Schuyler's Steam Towboat Co., In rt . . 811 7. St. Louis, K. & S. R. Co. v. Wear. ... 814 8. Childers v. Neely 824 9. Fechheimer v. Baum 828 10. Ogden City v. Bear Lake & River Wa- terworks & Irrigation Co 835 11. Whitney v. Hanover Nat. Bank 836 12. State of Montana v. Second Judicial District Court of Silver Bow County 840 13. Merchants' & Manufacturers' Nat. Bank of Detroit v. Kent Circuit Judge 846 14. Mercantile Trust Co. of New York v. Missouri, K. & T. R. Co 849 15. Belding v. Meloche 853 16. Marshall & Illsley Bank v. Cady 855 17. Wiedemann v. Saun 858 18. Stetson v. Northern Inv. Co 860 19. First Nat. Bank v. Illinois Steel Co. . . 862 20. Central Trust Co. v. New York City & N. R. Co 867 21. Farmers' Loan & Trust Co. v. Grape Creek Coal Co 870 22. Hanna v. State Trust Co 872 23. Howarth v. EUwanger 877 24. Wyman v. Eaton 879 25. American Biscuit & Mfg. Go. v. Klotz 882 26. Haywood v. Lincoln Lumber Co 885 27. Bank of Florence v. United States Sav- ings & Loan Co 888 28. Oolton V. Drovers' Perpetual Building & Loan Ass'n 890 20. Bailey v. Pittsburg Coal R. Co. 804 CASES REPORTED. Paga Adams v. Messenger (17 N. E. 491, 147 Mass. 185) 54 Adderley v. Dixon (1 Sim. & S. 607) 576 JEtna Life Ins. Co. of Hartford v. Town of Belmont (8 Sup. Ct. 6^, 124 U. S. 534) 560 3i;tna Life Ins. Co. of Hartford v. Town of Middleport (8 Sup. Ct. 625, 124 U. S. 534) 560 j50tna Life Ins. Co. of Hartford v. Town of Milford (8 Sup. Ct. 625, 124 tJ. S. 534) 560 Allegheny Base-Ball Club v. Bennett (14 Fed. 257) 626 Allen V. Stevens (55 N. B. 568, 161 N. Y. 122) 423 AUore v. Jewell (94 U. S. 506) 313 American Biscuit & Mfg. Co. v. Klotz (44 Fed. 721) 882 American Sugar-Refining Co. v. Fancher (40 N. B. 206, 145 N. Y. 552) 463 Andrews v. Weall (42 Oh. Div. 674) 496 Bailey v. Pittsburgh Coal R. Co. (21 Atl. 72, 139 Pa. 213) 894 Bank of Florence v. United States Savings & Loan Co. (16 South. 110, 104 Ala. 297) 888 Barker's Trusts, In re (1 Ch. Div. 43) 546 Barrett v. Hinckley (14 N. B. 863, 124 111. 32) 549 Bates V. Hurd (65 Me. 180) 361 Bath Sav. Inst. v. Hathorn (33 Atl. 836, 88 Me. 122) 393 Beaver v. Beaver (22 N. B. 940, 117 N. Y. 421) 389 Belding v. Meloche (71 N. W. 592, 113 Mich. 223) 853 Bent V. Priest (86 Mo. 475) 529 Bentley y. Craven (18 Beav. 75) 522 Bissell V. Heyward (96 U.S. 580, 24 L. Bd. 678) 658 Bleakley's Appeal (66 Pa. 187) 30 Bond V. Moore (90 N. C. 239) 436 Booth V. Clark (17 How. 322, 15 L. Ed. 164) 788 Borders v. Kattleman (31 N. B. 19, 142 111. 96) 285 Bostwick V. Beach (12 N. B. 32, 105 N. Y. 661) 654 Botsford V. Burr (2 Johns. Ch. 405) 439 Brewer v. Herbert (30 Md. 301, 96 Am. Dec. 582) 166 Brown v. Pierce (7 Wall. 205) 319 Brown, Bonnell & Co. v. Lake Superior Iron Co. (10 Sup. Ct. 604, 134 U. S. 530) 27 Bumgardner v. Leavitt (13 S. B. 67, 35 W. Va. 194) 580 Buzard v. Houston (7 Sup. Ct. 249, 119 U. S. 347) 261 Cavin v. Gleason (11 N. E. 504, 105 N. Y. 256) 467 Central Trust Co. v. New York City & N. R. Co. (18 N. E. 92, 110 N. Y. 250) 867 Chandler v. Holliugsworth (3 Del. Ch. 99) 350 Cheney v. Libby (10 Sup. Ct. 498, 134 U. S. 68, 33 L. Bd. 818) 686 Chicago, M. & St. P. R. Co. v. Durant (46 N. W. 676, 44 Minn. 361) 692 Chicago, M. & St. P. K. Co. v. Hospes (46 N. W. 676, 44 Minn. 361) 692 Chicago, M. & St. P. R. Co. v. Staples (46 N. W. 676, 44 Minn. 361) 692 Page Chicago, M. & St. P. E. Co. v. Union De- pot St. R. & T. Co. (46 N. W. 676, 44 Minn. 361) 692 Chick V. Willetts (2 Kan. 384) 547 Childers v. Neely (34 S. B. 828, 47 W. Va. 70) 824 City of Baltimore v. Whittington (27 Atl. 984, 78 Md. 231) 83 Clark V. Jetton (5 Sneed, 229) 148 Clarke v. Price (2 Wils. Ch. 157) 603 Clay V. Wood (47 N. B. 274, 153 N. Y. 134) 875 Clements v. Tillman (5 S. B. 194, 79 Ga. 451) 50 Colton V. Dover Perpetual Building & Loan Ass'n of Baltimore (45 Atl. 23, 90 Md. 85) 890 Combs V. Scott (45 N. W. 532, 76 Wis. 662) 673 Comstock V. Johnson (46 N. Y. 615) 26 Conger v. New York, W. S. & B. R. Co. (23 N. B. 983, 120 N. Y. 29) 714 Conner v. Welch (8 N. W. 260, 51 Wis. 431) 223 Continental Nat. Bank v. National Bank of Commonwealth (50 N. Y. 575) 110 Cook V. Gilmore (24 N. B. 524, 133 111. 139) 534 Cook V. Patrick (26 N. E. 658, 135 III. 499) 447 Corbin v. Tracy (34 Conn. 325) 700 Cowee V. Cornell (75 N. Y. 91) 309 Craig V. Hukill (16 S. E. 363, 37 W. Va. 520) 59 Craig V. Leslie (3 Wheat. 563-576) 38 Crawford v. Tyrrell (28 N. E. 514, 128 N. Y. 341) 773 Curdy v. Berton (21 Pac. 858, 79 Cal. 420) 493 Dambmann v. Schulting (75 N. Y. 55)... 220 Dauforth v. Philadelphia & 0. M. S. L. R. Co. (30 N. J. Eq. 12) 593 Danser v. Warwick (33 N. J. Bq. 133) ... 365 Davis V. Ely (10 S. B. 138, 104 N. 0. 16) 255 Davis V. Gray (16 Wall. 203) 795 Deason v. Taylor (53 Miss. 697) 96 Deichman v. Arndt (22 Atl. 799, 49 N. J. Eq. 106) 135 Delaney v. McCormack (88 N. Y. 174) 399 De Witt V. Yates (10 Johns. 156) 137 Dibrell v. Carlisle (48 Miss. 691) 9 Dickerson v. Colgrove (100 U. S. 578) 107 Donnell v. Bennett (22 Ch. Div. 835) 618 Duncombe v. Felt (45 N. W. 1004, 81 Mich. 332) 751 Dyer v. Dyer (2 Cox, Oh. 92) 444 Dyer v. Kopper (9 Atl. 4, 59 Vt. 477) 159 Economy Sav. Bank v. Gordon (45 Atl. 176, 90 Md. 486) 19 Edwards v. Culbertson (16 S. E. 233, 111 N. 0. 342) 485 Edwards v. Rainier's Bx'rs (17 Ohio St. 597) 139 Elmore v. Johnson (32 N. E. 413, 143 111. 513) 336 Erkens v. Nicolin (40 N. W. 567, 39 Minn. 461) 209 Ewing V. Litchfield (22 S. B. 362, 91 Va. 575) ; 56 Falcke v. Gray (4 Drew. 651). 646 . HUTCH.& BUNK.BQ. (vl) CASES REPORTED. Til Paga Farmers' Loan & Trust Co. v. Grape Creek Coal Co. (50 Fed. 481) 870 Fechheimer v. Baum (37 Fed. 167) 828 Ferris v. Van Vechten (73 N. Y. 113) 458 First Nat. Banl< of Joliet v. Illinois Steel Co. (51 N. B. 200, 174 111. 140) 862 Fish V. Leser (69 111. 394) 641 Fitzhugh V. Hubbard (41 Ark. 64) 125 Flowers, In re (1 Q. B. Div. 14) 806 Fothergill v. Rowland (L. R. 17 Bq. 132) 590 Frame v. Frame (9 S. B. 901, 32 W. Va. 463) 677 Francis v. Wilkinson (35 N. E. 150, 147 111. 370) 324 Gage V. Fisher (65 N. W. 809, 5 N. D. 297) 704 Galbraith v. Lunsford (9 S. W. 365, 87 Tenn. 89) 114 Gardner v. Trustees of Village of New- burgh (2 Johns. Ch. 162) 758 Glass V. Hulbert (102 Mass. 24) 247 Godfrey v. Black (17 Pac. 849, 39 Kan. 193) 740 Gotthelf V. Stranahan (34 N. E. 286, 138 N. Y. 345) 697 Gould V. Lynde (114 Mass. 366) 438 Gould V. Murch (70 Me. 288) 652 Grand Bapids School Furniture Co. v. Haney School Furniture Co. (52 N. W. 1009, 92 Mich. 558) 744 Graybill v. Braugh (17 S. E. 558, 89 Va. 895) 668 Green v. Morris & E. R. Co. (12 N. J. Eq. . 165) 186 Greene v. Roworth (21 N. E. 165, 113 N. Y. 462) 316 Griffith V. Hilliard (25 Atl. 427, 64 Vt. 643) 753 Griswold v. Hazard (11 Sup. Ct. 972, 141 V. S. 260) 190 Grubb V. Sharkey (20 S. E. 784, 90 Va. 831) 723 Grymes v. Sanders (93 U. S. 55) 210 Hadcock v. Osmer (47 N. B. 923, 153 N. Y. 604) 282 Haffey v. Lynch (38 N. B. 298, 143 N. Y. 241) 694 Hagan v. Powers (72 N. W. 771, 103 Iowa, 593) 451 Hall T. Hall (16 N. E. 896, 125 111. 95) 670 Hall V. Warren (9 Ves. 605) 567 Hamilton-Brown Shoe Co. v. Saxey (32 S. W. 1106, 131 Mo. 212) 770 Hanna v. State Trust Co. (16 C. C. A. 586, 70 Fed. 2) 872 Hanover. Nat. Bank of City of New York V. Blake (37 N. B. 519, 142 N. Y. 404) . . 346 Hart T. Sansom (3 Sup. Ct. 586, 110 U. S. 151) 52 Harvard College v. Amory (9 Pick. 446) . . 518 Hawker v. Moore (20 S. E. 848, 40 W. Va. 49) 17 Haywood v. Lincoln Lumber Co. (26 N. W. 184, 64 Wis. 639) 885 Hess V. Siugler (114 Mass. 56) 373 Heyder v. Excelsior Building Loan Ass'n No. 2 of City of Newark (8 Atl. 310, 42 N. J. Eq. 403) 69 Hicks V. Stevens (11 N. E. 241, 121 111. 186) 266 Hicks V. Turck (40 N. W. 339, 72 Mich. 311) 702 Hitchins v. Pettingill (58 N. H. 386).... 239 Hodges V. Kowing (18 Atl. 979, 58 Conn. 12) 577 Horn V. Cole (51 N. H. 287) 100 Houston V. Timmerman (21 Pac. 1037, 17 Or. 499) 97 Howarth v. Bllwanger (86 Fed. 54) 877 Howarth v. Kent (86 Fed. 54) . 877 Howarth v. Woodworth (86 Fed. 54) 877 Hun V. Gary (82 N. Y. 65) 499 Hunt V. Fowler (12 N. E. 331, 17 N. B. 491, 121 III. 269) 430 Hunt V. Rousmaniere's Adm'rs (1 Peters, 1) 175 Paga Hunt V. Rousmanier's Adm'rs (8 Wheat. 174) 170 Hunter v. Bilyeu (30 111. 228) 241 Hutchins v. Van Vechten (35 N. B. 44G, 140 N. Y. 115) 357 Jackson v. Phillips (14 Allen, 539) 402 Jaquith v. Hudson (5 Mich. 123) 61 Johnston v. Trippe (33 Fed. 530) 717 Jones V. Newhall (115 Mass. 244) 587 Jordan v. Stevens (51 Me. 78) 181 Kahn v. Walton (20 N. E. 203, 46 Ohio St. 195) 31 Keeble v. Keeble (5 South. 149, 85 Ala. 552) 67 Keep V. Miller (6 Atl. 495, 42 N. J. Bq. 100) 150 Kelsey v. Crowther (27 Pac. 695, 7 Utah, 519) 672 King V. Talbot (40 N. Y. 76) 503 Kirkland v. Cox (94 111. 400) 397 Kirsch V. Tozier (38 N. E. 375, 143 N. Y. 390) 76 Knapp V. Bailey (9 Atl. 122, 79 Me. 195) 74 Knobloch v. Mueler (17 N. E. 696, 123 111. 554) 79 Konvalinka v. Schlegel (9 N. E. 868, 104 N. Y. 125) 129 Kopper V. Dyer (9 Atl. 4, 59 Vt. 477) 159 Kunkle v. Wherry (42 Atl. 112, 189 Pa. 198) 60 Ladue v. Detroit & M. B. Co. (13 Mich. 380) 554 Lamar v. Micou (5 Sup. Ct. 221, 112 U. S. 452) 507 Leonard v. Crane (35 N. B. 474, 147 111. 52) 66C Lewis V. Hawkins (23 Wall. 119, 23 L. Ed. 113) 656 Little V. Chadwick (23 N. B. 1005, 151 Mass. 109) 457 Lumley v. Wagner (1 De Gex, M. & G. 604) 605 McCaull v. Braham (16 Fed. 37) 598 McClurg, Appeal of (58 Pa. 51) 742 McGowin v. Remington (12 Pa. 56) 628 McHenry v. Jewett (90 N. Y. 58) 734 McLarren v. Brewer (51 Me. 402) 48 McVay v. McVay (10 Atl. 178, 43 N. J. Bq. 47) 363 Manhattan Manufacturing & Fertilizing Co. V. New Jersey Stock- Yard & Market Co. (23 N. J. Eq. 161) 738 Marks v. Tichenor (4 S. W. 225, 85 Ky. 536) 653 Marshall v. Westrope (67 N. W. 257, 98 Iowa, 324) 201 Marshall & Illsley Bank v. Oady (77 N. W. 831. 75 Minn. 241) 855 Martin v. Funk (75 N. Y. 134) 386 Mercantile Trust Co. of New York v. Mis- souri, K. & T. R. Co. (36 Fed. 221) 849 Merchants' & Manufacturers' Nat. Bank of Detroit v. Kent Circuit Judge (5 N. W. 627, 43 Mich. 292) 846 Metropolitan Exhibition Co. v. Ewing (42 Fed. 198) 622 Metropolitan Lumber Co. v. Lake Superior Ship-Canal, Railway & Iron Co. (60 N. W. 278. 101 Mich. 577) 237 Miller v. Scammon (52 N. H. 609) 258 Mitchell V. McDougall (62 111. 498) 272 Mitchell V. Read (61 N. Y. 123) 472 Mollineux's Case (Latch, 172) 566 Montague v. Flockton (L. R. 16 Eq. 189) 613 Munson v. Syracuse, G. & C. R. Co. (8 N. B. 355, 103 N. Y. 58) 523 Neill V. Shamburg (27 Atl. 992, 158 Pa. 263) 287 New England Trust Co. v. Abbott (38 N. B. 432, 162 Mass. 148) 711 Newton v. Porter (69 N. Y. 133) 469 viu CASES REPORTED. Pags Newton v. Tolles (19 Atl. 1092, 66 N. H. 136) 218 Nouotnck Silk Co. v. Flanders (58 N. W. 383, 87 Wis. 237) 460 O'Connor v. Tyrrell (30 Atl. 1061, 53 N. J. Eq. 15) 721 Ogden City v. Bear Lake & River Water- works & Irrigation Co. (55 Pac. 385, 18 Utah, 279) 835 O'Hara, In re (95 N. Y. 403) 487 O. & W. Thum Co. v. Tloczynski (72 N. W. 140, 114 Mich. 149) 746 Paine v. Meller (6 Ves. 349) 650 Park Bros. & Co. t. Blodgett & Clapp Co. (29 Atl. 133, 64 Conn. 28) 227 Patton v. Campbell (70 111. 72) 164 Peun V. Guggenheimer (76 Va. 839) 120 Phillips V. Phillips (4 De Gex, F. & J. 208) 71 Phillips T. PuUen (16 Atl. 9, 45 N. J. Eq. 5) 301 Phinizy V. Guernsey (36 S. E. 796, 111 Ga. 346) 662 Porter v. Frenchman's Bay & Mt. D. Land & Water Co. (24 Atl. 814, 84 Me. 195). . 579 Porter v. Woodruff (36 N. J. Eq. 174). ... 289 Prentice v. Janssen (79 N. Y. 478) 156 Prewett v. Trimble (17 S. W. 356, 92 Ky. 176) 280 Price V. Thompson (1 S. W. 408, 84 Ky. 219) 333 Pringle v. Dunn (37 Wis. 449) 91 Prospect Park & C. I. R. Co. v. Coney Island & B. R. Co. (39 N. E. 17, 144 N. Y. 152) 632 Purvines v. Harrison (37 N. E. 705, 151 111. 219) 779 Pusey V. Pusey (1 Vern. 273, White & T. Lead. Cas. Eq. 1109) 565 Rakestraw v. Lanier (30 S. E. 735, 104 Ga. 188) 303 Reed v. Dickerman (29 Pick. 146) 131 Rees V. City of Watertown (19 Wall. 107) 5 Renard v. Clink (51 N. W. 692, 91 Mich. 1) 205 Rice V. Rice (2 Drew. 73) 23 Rich V. Black (33 Atl. 880, 173 Pa. 92) . . 527 Richards v. Delbridge (L. R. 18 Eq. 11) . . 378 Riegel v. American Life Ins. Co. (25 Atl. 1070, 153 Pa. 134) 214 Rindge v. Baker (57 N. Y. 209, 15 Am. Rep. 475) 570 Rogers v. French (19 Ga. 316) 145 Rogers v. Jones (3 Ch. Div. 688) 128 Rogers Locomotive & Machine Works v. Erie R. Co. (20 N. .1. Eq. 379) 725 Rogers Mfg. Co. v. Rogers (20 Atl. 467, 58 Conn. 356) 620 Roquet v. Eldridge (20 N. E. 733, 118 Ind. 147) 143 Ross V. Conway (28 Pac. 785, 92 Oal. 632) 328 Ross V. Parks (8 South. 368, 93 Ala. 153) 715 Ryan v. Dox (34 N. Y. 307) 480 St. Louis, K. & S. R. Co. v. Wear (36 S. W. 357, 135 Mo. 230) 814 Schell, In re (53 N. Y. 263) 535 Schuyler's Steam Towboat Co., In re (32 N. E. 623. 136 N. Y. 169) 811 Semple v. Flynn (10 Atl. 177) 807 Sherry v. Perkins (17 N. E. 307, 147 Mass. 212) 761 Simmems v. Oliver (43 N. W. 561, 74 Wis. 633) 516 Simmons Hardware Co. v. Waibel (47 N. W. 814, 1 S. D. 488) 808 Skellenger's Ex'rs v. Skellenger's Ex'r (32 N. J. Eq. 659) 434 Slater v. Oriental Mills (27 Atl. 443, 18 R. L 352) 458 Solinger v. Earle (82 N. Y. 393) 344 Southern California R. Co. v. Rutherford (62 Fed. 796) 3 Pag* Southern Development Co. of Nevada v. Silva (8 Sup. Ct. 881, 125 U. S. 247).. . 275 Southern Exp. Co. v. Western North Car- olina R. Co. (99 U. S. 191) 595 Speidel v. Henrici (7 Sup. Ct. 610, 120 U. S. 377) 15 Stafford v. Fetters (8 N. W. 322, 55 Iowa, 484) 184 Starry v. Korab (21 N. W. 600, 65 Iowa, 267) 11» State V. Second Judicial District Court of Silver Bow County (39 Pac. 316, 15 Mont. 324) 840 Stelnau v. Cincinnati Gas-Light & Coke Co. (27 N. E. 545, 48 Ohio St. 324) 735 Stetson V. Northern Inv. Co. (70 N. W. 595, 101 Iowa, 435) 860 Stimson v. Helps (10 Pac. 290, 9 Colo. 33) 270 Stinchfield v. Milliken (71 Me. 567) 46 Stone V. Pratt (25 111. 16) 643 Strong V. Williams (12 Mass. 391) 133 Tate V. Williamson (2 Ch. App. 55) 330 Teft V. Stewart (31 Mich. 367j 264 Thomas v. Buruett (21 N. E. 352, 128 111. 37) 89 Thompson v. Winter (43 N. W. 796, 42 Minn. 121) 645 Thum Co. V. Tloczynski (72 N. W. 140, 114 Mich. 149) 746 Titus V. Rochester German Ins. Co. (31 S. W. 127, 97 Ky. 567) 206 Tobias v. Ketchum (32 N. Y. 319) 367 Tolles V. Newton (19 Atl. 1092, 66 N. H. 136) 218 Town of Venice v. Woodruff (62 N. Y. 462) 785 Urann v. Coates (109 Mass. 581) 359 Van Alen v. American Nat. Bank (52 N. Y. 1) 537 Vegelahn v. Guntner (44 N. E. 1077, 167 Mass. 92) 764 Virginia Land Co. v. Haupt (19 S. E. 168, 90 Va. 533) 295 Walden v. Skinner (101 U. S. 577) 231 Warner v. Bates (98 Mass. 274) 370 Waterman v. Alden (32 N. E. 972, 144 111. 90) 541 Watson V. Sutherland (5 Wall. 74) 732 Weall, In re (42 Ch. Div. 674) 496 Webb's Estate, In re (49 Cal. 541) 385 Weinstock, Lubin & Co. v. Marks (42 Pac. 142, 109 Cal. 529) 774 Welles V. Yates (44 N. Y. 525) 781 Welty V. Jacobs (49 N. E. 723, 171 111. 624) -....584 Wetzler v. Duffy (47 N. W. 184, 78 Wis. 170) 660 Wheelock v. Noonan (15 N. E. 67, 108 N. Y. 179) 755 Wheless v. Wheless (21 S. W. 595, 92 Tenn. 293) 153 Whitecar v. Miehenor (37 N. J. Eq, 6) 729 Whitney v. Bank of Greenville (15 South. 33, 71 Miss. 1009) 836 Whitney v. Hanover Nat. Bank, two cases (15 South. 33, 71 Miss. 1009) 836 Wiedemann v. Sann (31 Atl. 211) 858 Wilbanks v. Wilbanks (18 111. 17) 126 Willard v. Tayloe (8 Wall. 557) 635 Wm. Rogers Mfg. Co. v. Rogers (20 Atl. 467, 58 Conn. 356) 620 Williamson v. Brown (15 N. Y. 354) 85 Wilson V. City of Mineral Point (39 Wis. 160) .' 757 Wyman v. Eaton (77 N. W. 865, 107 Iowa, 214) '. .'879 Wyman v. Ft. Dearborn Nat. Bank (54 N. E. 946, 181 111. 279) 43 Young v. Young (80 N. Y. 422) .... 380 Zahn V. McMillin (36 Atl. 188. 179 Pa. 140) 297 ILLUSTRATIVE CASES ON EQUITY JURISPRUDENCE HtrrCH.iBimK.BQ. (1)* MAXIMS OF EQUITY. SOUTHERN OALIPORNIA RY. CO. v. RUTHERFORD et al. (62 Fed. 796.) Circuit Court, S. D. California. June 30, 1894. Suit by the Southern California Railway- Company, a corporation of the state of Cali- fornia, against C. C. Rutherford and others for injunction. W. J. Hunsaker, for complainant. ROSS, District Judge. Time does not ad- mit of an extended statement of the facts of the case or of the reasons for awarding the injunction applied for. The bill shows, among other things, that the complainant railway company is one link in a through line of road extending from National City, San Diego county, Cal., to the city of Chicago, in the state of Illinois, engaged in the trans- portation, among other things, of interstate commerce and the mails of the United States; its connecting roads being the At- lantic & Pacific and the Atchison, Topeka & Santa F6 Railroad Companies. That there is a valid existing contract between the com- plainant company and its connecting com- panies and the Pullman Palace Oar Com- pany by which all regular passenger trains running over the said through line of road, including that of the complainant, carrying the mail and passengers, shall carry Pullman cars. That the defendants are in the em- ploy of the complainant company, and were employed by it to, among other things, handle and operate its trains so engaged in carrying the United States mail and passen- gers and freight between National City, Cal., and Chicago, 111., and to and from interme- diate points, and from the time of their em- ployment up to the time of the commission of the acts complained of by the complain- ant were duly accustomed to handle and operate such trains, including Pullman cars. That subsequently the defendants, although remaining in the employment of the com- plainant company, refused, and still refuse, to handle or operate any train of cars of the complainant company to which a Pullman car Is attached; and because of the dis- charge by the receivers in possession and control of the Atchison, Topeka & Santa F6 Railroad Company of certain employes of theirs for refusing to handle or operate any train of that road to which a Pullman car is attached, the defendants to the present bill, while remaining in the employment of the complainant company, refused, and still refuse, to handle or operate any of the trains of the complainant company engaged in car- rying the mail of the United States and In the aforesaid interstate commerce, which their, regular and accustomed duties as such emplbygs required, and still require, them to operate and handle. Undoubtedly, in the absence of a valid existing contract obligat- ing the defendants to remain in the employ- ment of the complainant company, they would ordinarily have the legal right to quit the employment and cease work at any time. But the bill alleges that the defendants con- tinue in the employment of the complainant company, and yet refuse lO perform their regular and accustomed duties as such em- ployes; and it further shows that such re- fusal subjects and will continue to subject the complainant to a multiplicity of suits and to great and irreparable damage, in that there is an existing valid contract requiring complainant to attach a Pullman car or cars on all of its through trains for the carriage of passengers and the mail, and also retards and interrupts the complainant in the trans- mission of the United States mail and the in- terstate commerce aforesaid. It is manifest that for this state of affairs the law — neither civil or criminal — affords an adequate remedy. But the proud boast of equity is, "Ubi jus, ibi remedium." It is the maxim which forms the root of all equitable decisions. Why should not men who re- main in the employment of another perform the duties they contract and engage to per- form? It is certainly just and right that they should do so, or else quit the employ- ment. And where the direct result of such refusal works irreparable damage to the em- ployer, and at the same time interferes with the transmission of the mail and with com- merce between the states, equity, I think, will compel them to perform the duties per- taining to the employment so long as they c:ntinue in It. If I unlawfully obstruct by a dam a stream of flowing water, equity, at the suit of the party injured, will compel me by Injunction, mandatory in character, to re- move the dam, and, prohibitory in charac- ter, from further interfering with the flow of the stream; and If I unlawfully erect a wall shutting out the light from another, equity will compel me to tear it down, and to refrain from further interference with the other's rights. It is true that such cases are not precisely like the present one, yet the principle upon which the court proceeds In such cases is not substantially different. And if it be said that there Is no exact precedent for the awarding of an injunction in the present case, I respond, In the lan- guage of the court in the case of Toledo, etc., Ry. Co. v. Pennsylvania Co., 54 Fed. 751: "Every just order or rule known to equity courts was born of some emergency, to meet some new conditions, and was there- fore, in its time, without precedent. If based on sound principles, and beneficent results follow their enforcement, afCording necessary relief to the one party without im- posing illegal burdens on the other, new remedies and unprecedented orders are not unwelcome aids to the chancellor to meet the constant and varying demands for equi- table relief." Moreover, the rights of the public in a case of this sort should be considered. "Railroads," said the supreme court in the MAXIMS OF EQUITY. case of Joy v. St. Louis, 138 U. S. 50, 11 Sup. Ct. 243, "are common carriers, and owe du- ties to the public. The rights of the public in respect to these great highways of com- munication should be fostered by the courts; and it is one of the most useful functions of a court of equity that its methods of pro- cedure are capable of being made such as to accommodate themselves to the develop- ment of the interests of the public, in the progress of trade and traffic, by new methods of intercourse and transportation." For the reasons thus hastily and briefly stated, I shall award an injunction requir- ing the defendants to perform all of their regular and accustomed duties so long as they remain in the employment of the com- plainant company, which injunction. It may be as well to state, will be strictly and rigidly enforced. MAXIMS OF EQUITY. RBES V. OITT OF WATBRTOWN. (19 Wall. 107.) Supreme Court of the United States. 1873. Mr. Justice HUNT delivered the opinion of tiie court. Tliis case is free from the objections usual- ly made to a recovery upon municipal bonds. It ia beyond doubt that the bonds were Issued by the authority of an act of the legis- lature of the State of Wisconsin, and in the manner prescribed by the statute. It is not denied that the railroad, in aid of the con- struction of which they were issued, has been built, and was put in operation. Upon a class of the defences interposed in the answer and in the argument it is not necessary to spend much time. The theories upon which they proceed are vicious. They are based upon the idea that a refusal to pay an honest debt is justifiable because it would distress the debtor to pay it. A vol- untary refusal to pay an honest debt is a high offence in a commercial commu- nity and is just cause of war between na- tions. So far as the defence rests upon these principles we find no diflSculty in overrul- ing it. There is, however, a grave question of the power of the court to grant the relief asked tor. We are of the opinion that this court has not the power to direct a tax to be levied for the payment of these judgments. This power to impose burdens and raise money is the highest attribute of sovereignty, and is exercised, first, to raise money for public purposes only; and, second, by the power of legislative authority only. It is a power that has not been extended to the judiciary. Especially is it beyond the power of the Fed- eral judiciary to assume the place of a State in the exercise of this authority at once so delicate and so important. The question is not entirely new in this court. In the case of Supervisors v. Rogers,* an order was made by this court appointing the marshal a commissioner, with power to levy a tax upon the taxable property of the county, to pay the principal and interest of certain bonds issued by the county, the pay- ment of which had been refused. That case was like the present, except that it occurred in the State of Iowa, and the proceeding was taken by the express authority of a statute of that State. The court say: "The next question is as to the appointment of the marsl)al as a commissioner to levy the tax in satisfaction of the judgment. This de- pends upon a provision of the code of the State of Iowa. This proceeding is found in a chapter regulating proceedings in the writ of mandamus, and the power is given to the court to appoint a person to discharge the duty enjoined by the peremptory writ which the defendant had refused to perform, and for which refusal he was liable to an at- tachment, and is express and unqualified. The duty of levying the tax upon the tax- able property of the county to pay the princi- pal and interest of these bonds was specially enjoined upon the board of supervisors by the act of the legislature that authorized their issue, and the appointment of the mar- shal as a commissioner in pursuance of the I above section is to provide for the perform- ance of this duty where the board has dis- obeyed or evaded the law of the State and the peremptory mandate of the court." The State of Wisconsin, of which the city of Watertown is a municipal corporation, has passed no such act. The case of Supervisors V. Rogers is, therefore, of no authority in the case before us. The appropriate remedy of the plaintiff was and is a writ of man- damus.f This may be repeated as often as the occasion requires. It is a judicial writ, a part of a recognized course of legal pro- ceedings. In the present case it has been thus far unavailing, and the prospect of its future success is, perhaps, not flattering. However this may be, we are aware of no authority in this court to appoint its own officer to execute the duty thus neglected by the city in a case like the present. In Welch v. St. Genevieve * at a Circuit Court for the district of Missouri, a tax was ordered to be levied by the marshal under similar circumstances. We are not able to recognize the authority of the case. No counsel ap- peared for the city (Mr. Reynolds as amiaus curice only) ; no authorities are cited which sustain the position taken by the court; the power of the court to make the order is disposed of in a single paragraph, and the execution of the order suspended for three months to give the corporation an oppor- tunity to select officers and itself to levy and collect the tax, with the reservation of a longer suspension if it should appear advis- able. The judge, in delivering the opinion of the court, states that the case is without precedent, and cites in support of its de- cision no other cases than that of Riggs v. Johnson County,** and Lansing v. Treas- urer-X The first case cited does not touch the present point. The question in that case was whether a mandamus having been issued by a United States court in the regu- lar courae of proceedings, its operation could be stayed by an injunction from the State court, and it was held that it could not be. It is probable that the case of Supervisors y. Rogers^ was the one intended to be cited. This case has already been considered. The case of Lansing v. Treasurer (also cited), arose within the State of Iowa. It fell within the case of Supervisors v. Rogers, •7 Wallace, 175. tRiggs V. Johnson County, 6 Wallace, 193. *10 Am. Law Reg. (N. S.) 512, Fed. Gas. No. 17,- 372. **6 Wallace, 166. t9 Am. Law Reg. (N. S.) 415, Fed. Gas. No. 16,588. S7 Wallace, 175. 6 MAXIMS OF EQTTITY. and was rightly decided because authnrized by the express statute of the State of Iowa. It offered no precedent for the decision of a case arising ia a Stale where such a statute does not exist. These are the only authorities upon the power of this court to direct the levy of a tax under the circumstances existing.in this case to which our attention has been called. The plaintiff insists that the court may accomplish the same result under a differ- ent name, that it has jurisdiction of the per- sons and of the property, and may subject the property of the citizens to the payment of the plaintiff's debt without the intervention of State taxing ofiBcers, and without regard to tax laws. His theory is that the court should make a decree subjecting the indi- vidual property of the citizens of Watertown to the payment of the plaintiff's judgment; direct the marshal to make a list thereof from the assessment rolls or from such other sources of information as he may obtain; re- port the same to the court, where any objec- tions should be heard; that the amount of the debt should be apportioned upon the sev- eral pieces of property owned by individual citizens; that the marshal should be directed to collect such apportioned amount from such persons, or in default thereof to sell the property. As a" part of this theory, the plaintiff argues that the court has authority to direct the amount of the judgment to be wholly made from the property belonging to any in- habitant of the city, leaving the citizens to settle the equities between themselves. This theory has many difliculties to en- counter. In seeking to obtain for the plain- j tiff his just rights we must be careful not to j invade the rights of others. If an inhab- itant of the city of Watertown should own i a block of buildings of the value of $20,- 000, upon no principle of law could the whole of the plaintiff's debt be collected | from that property. Upon the assumption that individual property is liable for the pay- ment of the corporate debts of the munici- pality, it is only so liable for its proportion ate amount. 'The inhabitants are not joint and several debtors with the corporation, nor does their property stand in that relation to the corporation or to the creditor. This is not the theory of law, even in regard to tax- ation. The block of buildings we have sup- posed is liable to taxation only upon its value in proportion to the value of the entire property, to be ascertained by assessment, and when the proportion is ascertained and paid, it is no longer or further liable. It is discharged. The residue of the tax is to be obtained from other sources. There may be repeated taxes and assessments to make up delinquencies, but the principle and the general rule of law are as we have stated. In relation to the corporation before us, this objection to the liability of individual property for the payment of a corporate debt is presented in a specific form. It is of a statutory character. The remedies for the collection of a debt are essential parts of the contract of indebt- edness, and those in existence at the time it is incurred must be substantially pre- served to the creditor. Thus a statute pro- hibiting the exercise of its taxing power by the city to raise money for the payment of these bonds would be void.* But it is otherwise of statutes which are in existence at the time the debt is contracted. Of these the creditor must take notice, and if all the remedies are preserved to him which were in existence when his debt was con- tracted he has no cause of complaint.f By section nine of the defendant's charter it is enacted as follows: "Nor shall any real or personal property of any inhabitant of said city, or any individual or corporation, be levied upon or sold by virtue of any exe- cution issued to satisfy or collect any debt, obligation, or contract of said city." If the power of taxation is conceded not to be applicable, and the power of the court is invoked to collect the money as upon an execution to satisfy a contract or obligation of the city, this section is directly applicable and forbids the proceeding. The process or order asked for is in the nature of an execu- tion ; the property proposed to be sold is that of an inhabitant; of the city; the purpose to which it is to be applied is the satisfaction of a debt of the city. The proposed remedy is in direct violation of a statute in existence when the debt was incurred, and made known to the creditor with the same solemnity as the statute which gave power to contract the debt. All laws in existence when the contract is made are necessarily referred to in it and form a part of the measure of the obligation of the one party, and of the right acquired by the other.| But independently of this statute, upon the general principles of law and of equity jurisprudence, we are of opinion that we can- not grant the relief asked for. The plaintifE invokes the aid of the principle that all legal remedies having failed, the court of chancery must give him a remedy; that there is a wrong which cannot be righted elsewhere, and hence the right must be sustained in chancery. The diflSeulty arises from too broad an application of a general principle. The great advantage possessed by the court of chancery is not so much in its enlarged jurisdiction as in the extent and adaptabil- ity of its remedial powers. Generally its jurisdiction is as well defined and limited as is that of a court of law. It cannot exercise jurisdiction when there is an adequate and complete remedy at law. It cannot assume control over that large class of obligations called imperfect obligations, resting upon •Van HofEman v. City of Quincy, 4 Wallace, 535. tCooley, Constitutional Limitations, 235, 337. tCooley, Constitutional Limitations, 285. AIAXIMS OF EQUITY. conscience and moral duty only, unconnected with legal obligations. Judge Story says,f "There are cases of fraud, of accident, and of trust which neither courts of law nor of equity presume to relieve or to mitigate," of which he cites many instances. Lord Tal- bot says:J "There are cases, indeed, in which a court of equity gives remedy where the law gives none', but where a particular remedy is given by law, and that remedy bounded and circumscribed by particular rules, it would be very improper for this court to take it up where the law leaves it, and extend it further than the law allows. " Generally its jurisdiction depends upon legal obligations, and its decrees can only en- force remedies to the extent and in the mode by law established. With the subjects of fraud, trust, or accident, when properly be- fore it, it can deal more completely than can a court of law. These subjects, however, may arise in courts of law, and there be well disposed of.* A court of equity cannot, by avowing that there is a right but no remedy known to the law, create a remedy in violation of law, or even without the authority of law. It acts upon established principles not only, but through established channels. Thus, as- sume that the plaintiff ia entitled to the pay- ment of bis judgment, and that the defend- ant neglects its duly in refusing to raise the amount by taxation, it does not follow that this court may order the amount to be made from the private estate of one of its citizens. This summary proceeding would involve a violation of the rights of the latter. He has never been heard in court. He has had no opportunity to establish a defence to the debt itself, or if the judgment is valid, to show that his property is not liable to its payment. It is well settled that legislative exemptions from taxation are valid, that such exemptions may be perpetual in their duration, and that they are in some cases be- yond legislative interference. The proceed- ing supposed would violate that funda- mental principle contained in chapter twen- ty-ninth of Magna Charta, and embodied in the Constitution of the United States, that no man shall be deprived of his property without due process of law — that is, hemust be served with notice of the proceeding, and have a day in court to make his defence.** "Due process of law (it is said) undoubt- edly means in the due course of legal pro- ceedings, according to those rules and forms which have been established for the protec- tion of private rights. "(| In the New Eng- land States it is held that a judgment ob- tained against a town may be levied upon and made out of the property of any inhab- itant of the town. The suit in those States is brought in form against the inhabitants tl Equity Jurisprudence, S 61. tHeard v. Stanford, Cases Tempore Talbot, 174. •1 Story's Equity Jurisprudence, $ 60. **Wastervelt v. Gregg, 13 New York, 309. lib. of the town, naming it; the individual Inhab. itants, it is said, may and do appear and de- fend the suit, and hence it is held that the individual inhabitants have their day in court, are each bound by the judgment, and that it may be collected from the property of any one of them.* This is local law pe- culiar to New England. It is not the law of this country generally, or of England.|| It has never been held to be the law in New York, in New Jersey, in Pennsylvania, nor, as stated by Mr. Cooley, in any of the West- ern States.*! So far as it rests upon the rule that these municipalities have no common fund, and that no other mode exists by which demands against them can be enforced, he says that it cannot be considered as ap- plicable to those States where provision is made for compulsory taxation to satisfy judgments against a town or city.§ The general principle of law to which wo. have adverted is not disturbed by these references. It is applicable to the case be- fore us. Whether, in fact, the individual has a defence to the debt, or by way of ex- emption, or is without defence, is not im- portant. To assume that he has none, and therefore, that he is entitled to no day in court, is to assume against him the very point he may wish to contest. Again, in the case of Emerio v. Gilman, before cited, it is said: "The inhabitants of a county are constantly changing; those who contributed to the debt may be non-residents upon the recovery of the judgment or the levy of the execution. Those who opposed the creation of the liability may be sub- jected to its payment, while those, by whose fault the burden has been imposed, may be entirely relieved of responsibility. . . . To enforce this right against the inhabitants of a county would lead to such a multiplicity of suits as to render the right valueless." We do not perceive, if the doctrine con- tended for is correct, why the money might not be entirely made from property owned by the creditor himself, if he should happen to own property within the limits of the cor- poration, of sufficient value for that pur- pose. The diflBculty and the embarrassment aris- ing from an apportionment or contribution among those bound to make the payment we do not regard as a serious objection. Con- tribution and apportionment are recognized heads of equity jurisdiction, and if it be as- sumed that process could issue directly against the citizens to collect the debt of the city, a court of equity could make the appor- tionment more conveniently than could a court of law.f •See the oases collected In Cooley's Constitu tional Limitations, 340-245. I Russell V. Men of Devon, 8 Term R. 667. H See Emeric v. Gilman, 10 California, 408, where all the cases are collected. {Cooley's Constitutional Limitations, 340. tl Story's Equity Jurisprudence, § 470 and on- wards. 8 MAXniS OF EQUITY. Wt apprehend, also, that there Is some confusion in the plnintiH's proposition, upon which the present jurisdiction is claimed. It is conceded, and the autliori- ties are too abundant to adiriit a question, that thero is no chancery jurisdictioa where there is an adequate remedy at law. The writ of mandamus is, no doubt, the regular remedy in a case like the present, and or- dinai'iiy it is adequate and its results are satisfactory. The plaintiff alleges, however, in the present case, tliat he has issued such a writ on three different occasions; that, by means of the aid afforded by the legisla- ture and by the devices and contrivances set forth in the bill, the writs have been fruit- less ; that, in fact, they afford him no remedy. The remedy is in law and in theory ade- ([uate and perfect. The difficulty is in its execution only. The want of a remedy and the inability to obtain the fruits of a remedy are quite distinct, and yet they are con- founded in the present proceeding. To il- lustrate: the writ of habere facias posses- sionem is the established remedy to obtain the fruits of a judgment for the plaintifl in ejectment. It is a full, adequate, and com- plete remedy. Not many years since there existed in Central New Yorlccombinatious of settlers and tenants disguised as Indians, and calling themselves audi, who resisted the execution of this process in their counties, and so effectually that for some years no landlord could gain possession of his land. There was a perfect remedy at law, but through fraud, violence, or crime its execu- tion was prevented. It will hardly be argued that this state of things gave authority to in- volie the extraordinary aid of a court of chancery. The enforcement of the legal remedies was temporarily suspended by means of illegal violence, but the remedies remained as before. It was the case of a miniature revolution. The courts of law lost no power, the court of chancery gained none. The present case stands upon the same principle. The legal remedy is ade- quate and complete, and time and the law must perfect its execution. Entertaining the opinion that the plaintiff has been unreasonably obstructed in the pur- suit of bis legal remedies, we should be quite willing to give him the aid requested if the law permitted it. We cannot, however. And authority for so doing, and we acquiesce in the conclusion of the court below that the bill must be dismissed. Judgment affirmed. MAXIMS OF EQUITY. 9 DIBRELL V. CARLISLE et al. (48 Miss. e91.) Supreme Court of Mississippi. 1873. Appeal from) chancery court, Oliickasaw county; Bradford, Chancellor. The coraplainant in the com-t below, Charles C. Dibrell, filed his bill to the April term, 1868, alleging that on the 4th Decem- ber, 1866, William F. Walker, then largely indebted in a sum exceeding $60,000 to his wife, Eliza R. Walker, on account of her separate estate, executed and delivered a deed of conveyance to one Thomas J. Denton, a citizen of said county, and his successors in office, as trustee for said Eliza, and the heirs of her body, by which he granted, bar- gained, and sold to said trustee certain real and personal property particularly described in the bill, and states its value at $29,942, and that it was intended to be, and was received by the parties as, a payment to that extent on the Indebtedness of Walker to his wife. The deed is filed as an exhibit to the bill. It is further stated in the bill that Denton, the trustee, accepted the trust, entered im- mediately upon the discharge of his duties, residing within a few miles of the property transferred to him, ready at all times to do and perform all acts contemplated in the deed, until the 4th March, 1868; that on the 6th of March, 1868, under the provisions of said deed, the complainant was duly and legally appointed as successor to said Den- ton by the probate judge of said county; that on the 20th March, 1867, the said Wil- liam F. Walker, confederating with Henry G. Humphries and E. K. Carlisle, commis- sion merchants and citizens of Mobile, Ala.,, to divest the said Eliza of her equitable in- terest in said lands, induced her to execute jointly, with her husband, a mortgage on said lands, to secm-e the payment of an as- serted debt of $7,337.64, which the said Wil- liam F. had contracted with said Humphries & Carlisle, maturing on the 10th December, 1867; that said deed of mortgage authorized Carlisle & Humphries, in default of pay- ment of said debt, upon giving 30 days' no- tice, to sell said lands at auction and divest the title from the trustee and the said Eliza, and forever bar her equity of redemption. The mortgage is filed as an exhibit to the bill. It is further charged that said Humphries & Carlisle were fully apprised of the true condition of the title to the land when they affected the negotiation; that they were ex^ pressly notified of the deed of trust first mentioned, and knew that the property they were seeking to Incumber was trust prop- erty, settled upon the said Eliza and the heirs of her body; that she was ignorant of the legal effect to be given to the deed of mortgage by the draftsman; that but a small portion of the debt daimed was for her family supplies and necessaries, wearing ap- parel of herself or children, or their educa- tion, or household furniture, or carriages and horses, buildings on her land and premises, or repairs thereof, or materials, work, and labor for the benefit and improvement of her separate estate. The bill "protests against another clause of the said deed of mortgage, as being not only manifestly against his rights, but in direct violation of the deed from said Walk- er to complainant's predecessor"; alleges that the land in the deed is estimated at $20,750; that indebtedness in the mortgage is $7,337.- 64, far less than the value of the land; charges that, since the execution of the mortgage, said William F. has i lid $1,800 or $2,000 to Carlisle & Humphries, which should have been credited on said Indebted- ness, and that the mortgage provides that the surplus from the land sale shall be paid to Walker and wife, and not to the trustee, the complainant. The bill further states that said Humph- ries & Carlisle, by their agent and attorney, J. N. Carlisle, Esq., have advertised the lands for sale under the mortgage, and also about 6,000 bushels of corn, on the second Monday in March, 1868. A copy of the advertise- ment is filed as an exhibit. II. G. Humphries, E. K. Carlisle, J. N. Carlisle, and William F. Walker are made defendants, and injimction, etc., prayed for to restrain the sale. There is also a prayer for discovery, by Humphries & Carlisle, of the amount due them, and that on final hear- ing the injunction be made perpetual, that the mortgage be canceled. On the 6th March, 1868, the chancellor In- dorsed on the bill his fiat for injunction, up- on the complainant entering into bond with sureties in the sum of $2,000. The bond was given, and writs of injunction and subpoena Issued. Exhibit No. 1, referred to in the bill, is as follows: "The State of Mississippi, Chickasaw Coun- ty. This indenture, made and entered Into this 4th day of December, 1866, between William' F. Walker, of the first part, Eliza R. Walker, his wife, of the second part, each of the county and state aforesaid, and Thomas J. Denton, of the same county and state, of the third part, witnesseth: That the said party of the second part, having been the owner In her own right at the time of her marriage. In the year of our Lord one thousand eight hundred and fifty-three, with the said party of the first part, of a large personal estate, which was received by, con- trolled, possessed, used, and enjoyed by him, as hereinafter set forth, that is to say, thirty- three negro slaves, which went into his pos- session on the first day of January, 18-54, and were worked and controlled in raising cotton, etc., and whose hire was worth as stated," etc. The deed then proceeds to give the names and value of the hire of each 10 MAXIMS OF EQUITY. negro for eleven years, the aggregate hire valued at $31,250, and continues: "And the said party of the second part having received large sums of money from the separate es- tate of the said Eliza, as foUovfs: The sum of fifteen thousand dollars on the first day of January, 1854; seven thousand dollars on the 1st July, 1855, and six thousand dollars on the 1st July, 1866, amounting to twenty- eight thousand dollars; and the said Wil- liam F. having assumed the entire manage- ment and control of the separate estate of the said Eliza, and vi^ith the funds realized from the proceeds raised by her negro slaves as aforesaid, and with the cash received by him as above set forth, he purchased real and personal property as hereinafter describ- ed and valued, that is to say," etc. The deed here describes the tract of land in con- troversy, and a number of mules, horses, ■wagons, carriage and harness, farming uten- sils, carpenters' and blacksmiths' tools, house- hold and 'kitchen furniture, jewelry, plate, stock hogs, etc., valued at $8,192, and pro- ceeds: "And the said William F. being anxious to secure, so far as he has the abil- ity to do so, the payment of this debt he owes to his wife, amounting to the sum of sixty-two thousand two hundred and fifty dollars, takiug the hire of the negro prop- erty as the basis of his liability for their use and employment. Now, in consideration of the premises, and for and in consider- ation of the sum of ten dollars, paid by the said party of the third part, the receipt of which is hereby acknowledged, the said par- ty of the first part hath granted, bargained, and sold, and by these presents doth grant, bargain, and sell, unto the said party of the third part, all the real and personal prop- erty above described, to wit" (giving de- scription of land and personal property be- fore referred to) : "In trust, nevertheless, for the use, benefit and behoof of the said party of the second part and the heirs of her body forever, who are to retain the possession, management, direction, and control of the property conveyed. The said trustee or his successor, to be designated by the judge of the probate court of the county and state aforesaid, in term time or in vacation, to take such possession or direction as may then be necessary for faithfully carrying out this trust according to its true intent and meaning, such as bringiag and defending suits, executing bonds, signing papers, or ap- pointing an attorney in fact to do and per- form whatever may be necessary and proper to be done in protecting and defending the said estate to the party of the second part and the heirs of her body." The deed then states that the propert.v conveyed, valued at $29,942, "is intended to be to that extent in part payment of the sum of $62,250, the amount admitted to be due," etc., and con- cludes with warranty of title, etc. Exhibit No. 2 of the bill is in the words and figures following: "The State of Mississippi, Chickasaw Coimty. This deed of mortgage, made the this 20th day of March, 18G7, between W. F. Walker, with E. R. Walker, his wife, both of the county of Chickasaw and state of Mississippi, of the first part, and E. K. Oar- lisle, with H. G. Humphries, commission merchants, of Mobile and state of Alabama, of the other, witnesseth: That whereas the said W. F. Walker, with B. R. Walker, his wife, are indebted to the said E. K. Carlisle and H. G. Humphries in the sum of seventy- three hundred and thirty-seven dollars and sixty-four cents, said sum of money being advanced to said W. F. Walker and E. R. Walker on their crop of cotton, to be raised in and during the year. Anno Domini, 1867, on the plantation under tlie superintendence of W. F. Walker, Jno. D. Poyner, and Thos. McCarthy. Said sum of money is further secured by their certain promissory notes, bearing date the nineteenth day of January, A. D. 1867, for the said sum of seventy- three hundred and thirty-seven dollars and sixty-four cents, subscribed with their hands and delivered to the said E. K. Carlisle and H. G. Humphries, whereby the said W. F. Walker and E. R. Walker promised to pay the said Carlisle & Humphries, or order, seventy- three hundred and thirty-seven dollars and sixty-four cents, on or before the nineteenth day of December, 1867, for value received. And whereas, the said W. F. Walker and E. R. Walker, his wife, are willing to give this deed for satisfaction of what may be due and unpaid to the said Carlisle & Humphries on the nineteenth day of December, 1867, next: Therefore the said W. B\ Walker and E. R. Walker bargain, sell, alien, and convey to the said Carlisle & Humphries all those tracts or parcels of land situated and lying in the county of Chickasaw and state of Mississippi, known and described as the west half of section twelve, in township thirteen, range five east, and the west half of section thirteen, township thirteen, range five east, containing six hundred and seventy acres, more or less; also convey all the cotton crop that is raised on said lands or plantation un- der the direction or superintendence of W. F. ^Yalker, John D. Poyner, and Thomas Mc- Carthy, which said cotton is to be shipped to said Carlisle & Humphries aforesaid as soon as is practicable after ginning and baling the same; to have and to liold the same with all the rights and appurtenances to the said Car- lisle & Humphries, their heirs, executors, and administrators. But this conveyance is upon condition, if the said W. P. Walker and E. R. Walker shall, on or before the nineteenth day of December, 1867, well and fully pay the said sum of money, then this deed is to cease and to be void; but if after that day said sum, with any part thereof, be unpaid, then It shall be lawful for the said Carlisle & Humphries, or their legal representative, after giving thirty days' notice by advertise- ment in some newspaper in Chickasaw coun- MAXIMS OF EQUITY. 11 ty of the cause, day, and place of sale, to proceed to sell at puMic auction at Okolona the mortgaged property, or a sufflclency thereof, for cash to the highest and best bid- der, and out of the proceeds, after defraying the cost of advertisenient and sale, they may retain the full amount of mortgage money due, and if there be a surplus they are pres- ently to pay it to W. F. Walker and E. K. Walker, or their legal representatives, and to make to the vendee or vendees a deed of conveyance, transmitting the quit of purchase of all right, title, or interest of the parties and their heirs, or of all claiming under them, and thereupon all the right and title of the W. F. Walker, -with E. R. Walker, his wife, to redeem, shall be as effectually bar- red and foreclosed as if upon a decree in equity; and the said W. F. Walker, with B. R. Walker, his wife, hereto put their names and seals, the day and date aforewritten. "[Signed] W. F. Walker. [Seal.] "E. R. Walker. [Seal.]" Carlisle & Humphries filed their answer, averring that they knew nothing of the ex- istence of the debt alleged to be due Eliza R. Walker by W. F. Walker, her husband, except what they learn from the said exhibit No. 1 in the bill, and that they believe the debt fictitious; that there was no valid con- .fideration in law or equity passing from said Eliza to said W. F. Walker for the convey- ance; that said conveyance is fraudulent and made with the Intent to defraud the cred- itors of said W. F.: that ttie appointment of T. J. Denton as trustee was merely nominal, and for the better serving to cloak and con- ceal the said property and more effectually defrauding the creditors of the said W. F.; that said Denton, under a provision in the deed of trust, appointed the said W. F. his attorney in fact, clothing him with full pow- er to act in all things pertaining to said trusteeship, as if he, the said W. F., had been trustee; that the said W. F. executed the said mortgage in the bill mentioned as such attorney in fact; that the complainant, C. 0. Dibrell, ignoring the action of his pre- decessor, Denton, filed his bill with the in- tent to deprive respondents of their rights and powers vested in them as mortgagees; that said T. J. Denton, being aware of the execution of said attorneyship to W. F. Walk- er, refused to join in said bill of complaint, but, actuated by the dictates of honor and honesty, declined entering into such fraudu- lent interference with respondents' rights; denies all confederating by Carlisle & Humphries to defeat Mrs. Walker's interest in said lands; denies inducing her to Join her husband in executing the mortgage; al- leges that the mortgage was made by W. F. Walker, as attorney in fact for the trustee and by Mrs. Walker, freely and voluntarily, without any persuasion, and by her so ac- knowledged In a private examination by an officer authorized to take such acknowledg- ment; denies all knowledge of the trust un- der which Mrs. Walker held the lands, and supposed W. F. Walker fully empowered to convey or incumber them. Respondents assert that the $7,337.64 was money actually advanced to the said W. F. Walker and his wife during the year 1867, for the necessary supplies of the plantation of said Walker and wife, and believe that it was used for them and their children; denies that the property mortgaged is and was worth $20,750, but insists that its value at the date of the mortgage and now does not exceed respondents' debt; denies that the execution of the mortgage was against the rights of the trustee, Dibrell; alleges that W. F. Walker was notoriously acting as the agent of his wife, and with the knowledge and consent of Denton, trustee; that, if the allegations in complainant's bill be true, said Walker, under false and fraudulent pre- tenses, obtained respondents' money; that said Walker and wife have never paid but $873.20, and this amount was duly credited on the debt. Respondents say that they are led to believe that Dibrell, complainant, through the solicitation and procurement of W. F. Walker, accepted the appointment of trustee, and, without a knowledge of what his predecessor had done, has filed this bill and made the representations and allegations therein from false representations of W. F. Walker; that Dibrell's action is in direct contravention of the action of his pj-edeces- sor, Denton; that W. F. Walker's interest is not with respondents as defendants in this suit, but identified with the complainant; and that he cunningly devised his joinder with respondents as defendant for fraudu- lent purposes. Respondents insist that the advances made by them were solely on the credit of Mrs. Walker and her children, the beneficiaries of the pretended deed of trust, and for their benefit and use, and not on the credit of W. F. Walker; that he was insolvent and unable to obtain credit at the time; that the writ of injunction was illegally issued because of the want of good sureties on the bond; that said bond has no date and bears no evidence of having been duly executed as the law di- rects; that the flat only requires a bond for $2,000, whilst the amount of indebtedness enjoined is $6,464.36, and the bond is not in double the sum so enjoined. The mortgage referred to in the bill as Exhibit No. 2 is made an exhibit in the an- swer also. Another exhibit to the answer consists of an account of the debts due by W. F. and Eliza Walker to Carlisle & Humph- ries, showing balance of $7,337.64. Exhibit C is as follows: "The State of Mississippi, Chickasaw Coun- ty. To whom these presents may come, greeting: Know ye that I, Thos. J. Denton, reposing entire confidence in the probity and integrity of W. F. Walker, a citizen of the county of Chickasaw and state of Mississippi, do by these presents constitute him my true 12 MAXIMS OF EQUITY, and lawful attorney in fact for me as trus- tee, appointed under a deed executed by the said Walker in favor of Eliza R. Walker and the heirs of her body as cestui que trust, on the 4th day of December, 1866, conveying real and personal property valued at $29,- 942, and in my name to sign all papers, bonds, affidavits, contracts, and to make, do, and perform all and every act necessary or proper to be made, done, or performed for the protection of said trust estate, or for carrying out the true intent and meaning of said trust deed, and to every act in the premises which I could do if personally present, and I hereby ratify and confirm whatever he may lawfully do in the premises. Given under my hand and seal this the 4th day of December, 1866. "[Signed] T. J. Denton. [Seal.]" This power of attorney was acknowledged and recorded in Chickasaw county. J. A. Orr and Harris & Withers, for appel- lant. Gholson & Hooper, James T. Harrison, and George L. Potter, for appellees. PEYTON, J. This was an injunction bill brought by the appellant in the chancery court of Chickasaw county to restrain the appellees, B. K. Carlisle and H. G. Humph- ries, from executing a power of sale contain- ed in a mortgage given to them by William P. Walker and Eliza R. Walker, his wife. The material facts of the case are these: William F. Walker, being indebted to his wife, Eliza R., in a large amount of money, on the 4th day of December, 1806, conveyed to one Thomas J. Denton certain real and personal estate situated in the said county of Chickasaw, in this state, in trust for the use of the said Eliza R. Walker and the heirs of her body forever, which deed of con- veyance was duly acknowledged and record- ed. That on the 20th day of March, A. D. 1867, the said William P. Walker and EHiza R., his wife, made and executed their deed of mortgage of six hundred and seventy acres of the land, covered by the said deed of trust, to said Carlisle & Humphries, to secure the payment of a promissory note for $7,337.64, made by said Walker and vs^ife, dated the 19th day of .January, 1807, and payable to said Carlisle & Humphries on the 19th day of December, 1807. The said mortgage deed, which was duly acknowledged and recorded, gives to the mortgagees a power of sale of the mortgaged property in default of payment of the note at maturity. The note not having been paid, the mort- gagees were proceeding to sell the property, when they were enjoined from so doing by the appellee, who was appointed trustee, un- der a power in the deed creating the trust estate, to succeed the original trustee, who had resigned the trust. The appellees, Carlisle & Humphries, in their answer, admit the conveyance in trust as set forth in the bill of complaint, but deny that there was any valid consideration there- for, and insist that it was made to hinder, delay, and defraud creditors. They admit the execution of the mortgage stated in the bill, and Insist that they had a right to sell the mortgaged property to pay the amount due on the debt therein specified. They aver that the amount specified in the said note and mortgage was actually advanced by them to the said W. P. and E. R. Walker for the necessary supplies of the plantation of the said Walker and wife, and that they be- lieve that the said money was used by the said Walker and wife for the use and benefit of the said E. R. Walker and her children, and that the advances were made solely on the credit of Mrs. E. R. Walker, and not on that of her husband, who was insolvent and unable to obtain credit at the time the ad- vances were made. The appellees, Carlisle & Humphries, mov- ed the court below to dissolve the injunction on bill, answer, exhibits, and proofs. TTie motion was sustained and the injunction dis- solved. And from this decree the cause Is brought to this court by appeal on the part of the appellee. This record presents three important ques- tions for our consideration: (1) What interest does Mrs. Walker take under the conveyance to a trustee for the use of herself and the heirs of her body for- ever? {2) Where the wife has joined with her husband in a mortgage of her separate estate to pay the debt of her husband, can the cor- pus of that estate, under the existing laws, be subjected in a court of equity to the pay- ment of such debt? (3) Is the separate estate of Mrs. Walker liable in equity to the payment of the debt specified in the mortgage or any part there- of? The first question involves the construction of the limitations in the deed creating the trust estate. It is a common maxim that equity follows the law: Bquitas sequitur legem. Where a rule of the common or stat- ute law is direct and governs the case with all its circumstances or the particular point, a court of equity is as much bound by it as a court of law, and can as little justify a de- parture from it. A court of equity cannot disregard the canons of descent. In general, in courts of equity, the same construction and effect are given to perfect trust estates as are given by courts of law to legal es- tates. The Incidents, properties, and conse- quences of the estates are the same. The same restrictions are applied as to cresfting estates and bounding perpetuities and giving absolute dominion over property. The same modes of construing the language and limita- tions of the trusts are adopted. 1 Story, Eq. (Redf. Ed.) pp. 53-55, § 64. The words "heirs of the body," in the coni- veyance of a legal estate, are words of lim- itation of the estate to the donee, and not words of purchase for the heirs of the body. MAXIMS OF EQUITY. 13 Warren v. Haley, Smedes & M. Oh. (U7. These words create an estate in fee tail, which, by our statute, is converted into an estate in fee simple. Rev. Code, p. 307, art. 3. And, if it be true that the same modes of construing the language and limitations of trust estates are adopted as apply to legal estates, we cannot resist the conclusion that Mrs. Walker takes, under the terms of the deed, the entire trust estate absolutely. With regard to the second question it may be remarked that it is a familiar rule of eq- uity jurisprudence that general debts or gen- eral personal engagements of a married wo- man, contracted during coverture, are not chargeable upon her separate estate; and, un- less a feme covert who contracts a debt or enters into an engagement designs that such engagement or debt shall constitute a charge upon her separate estate, a court of equity will not entertain jurisdiction to enforce payment thereof out of such separate estate. When real property is conveyed absolutely to the separate use of a married woman, she can dispose of the trust estate only in the mode and manner prescribed by the instru- ment creating the trust estate, and, if none be prescribed and limited therein, then in ac- cordance 'With the provisions of the statute. Prior to the adoption of our present Code, in 1857, it has been repeatedly decided by this court that the wife may bind the corpus of her separate estate, by deed in trust or mortgage, as a security for the debts of her husband. James v. Fisk, 9 Smedes & M. 144; Sessions v. Bacon, 23 Miss. 272; Arm- strong V. Stovall, 26 Miss. 280; Kuss v. Win- gate, 30 Miss. 445; Stone v. Montgomery, 35 Miss. 83-105; Prewett v. Land, 36 Miss. 495. Since the adoption of the Code, a married woman has no power to incumber the corpus of her separate estate by deed of trust, mort- gage, or otherwise, for the debt of her hus- band, but only the Income thereof. The stat- ute expressly provides that no conveyance or incumbrance for the separate debts of the husband shall be binding on the wife beyond the amount of her income. Rev. Code, p. 336, art. 23. This is a wise provision intend- ed to secure to the wife the enjoyment of her separate estate against any possible con- tingency of loss through the fraud, force, or undue influence of her husband. The solution of the third question depends upon the facts of the case as they may be developed and established by the evidence. With a view to the more beneficial enjoy- ment and productiveness of the separate es- tate of a married woman, the law has pro- vided that all contracts made by the husba.nd and wife, or by either of them, for supplies for the plantation of the wife, or for the employment of an agent to superintend the planting operations, may be enforced, and satisfaction had out of her separate estate. And all contracts made by the wife, or by the husband with her consent, for family supplies or necessaries, wearing apparel of herself and children, or for their education, or for household furniture, or for carriage and horses, or for buildings on her land or premises, and the materials therefor, or for work and labor done for the nse, benefit, or improvement of her separate estate, shall be binding on her, and satisfaction may be had out of her separate property. Rev. Code, p. 336, art. 25. And it has been decided that a married woman is liable on a promissory note given by her for a horse purchased by her for the supply and use of her plantation. Robertson v. Ward, 12 Smedes & M. 490. This adjudication was made under the act of 1846, which made the income only of her separate estate liable to the payment of the debt. And, under the act of 1857, this court has decided that the wife is liable out of the corpus of her separate estate to the payment of a note given by herself and husband for money advanced for the purpose of purchas- ing supplies for her plantation, and which was actually applied to that purpose. Bow- man V. Thomas E. Helm. These cases are regarded as coming within the equity of the respective statutes under which the debts were contracted. It results, therefore, from this view of the law, that Mrs. Walker is liable to payment out of her separate estate for the amount of supplies furnished by Carlisle & Humphries for her plantation, and for the amount of the money advanced by them to Walker, or Walker and wife, for the purchase of sup- plies for her plantation, or the improvement of her separate estate, and which were ac- tually applied to that use and purpose. And for that portion of the debt secured by the mortgage, which was not applied to these purposes, she is liable to payment out of the income only of her separate estate. The record contains no evidence as to what por- tion of the debt secured by the mortgage was for supplies actually furnished by Car- lisle & Humphries for the plantation of Mrs. Walker, or which was applied to the pur- chase of such supplies. Nor is there any proof as to what amount of the money ad- vanced by Carlisle & Humphries was applied by Walker to his own use. The most appropriate remedy of Carlisle & Humphries will be found in a court of equity, in which an account can be taken of what portion of the note secured by the mortgage was for supplies for Mrs. Walk- er's plantation, and what part of the money was advanced by them for the purchase of such suppUes, and which was actually so applied, and what part of the same was used by Walker for his own pui-poses. When these facts are ascertained, the court will made a decree in accordance with the prin- ciples above laid down, subjecting the sep- arate estate of Mrs. Walker to sale to pay for the supplies for her plantation, and de- creeing that the trustee of the estate and Mrs. Walker pay to Carlisle & Humphries 14 MAXIMS OF EQUITY. the amount of the debt, secured by the mort- gage, found due them by "V^'illiam F. Walk- er, out of the income of her separate estate. It is insisted by some of the counsel of the appellees that the mortgage was void because the trustee did not join in the mortgage deed. This was not necessary. In a case free from fraud or undue influence, a married woman can bind her separate property without the trustees, imless their assent be made neces- sary by the instrument which gave that property. And in the case at bar the charge made upon the separate estate by the wife is totally unrestrained by the deed creating the trust estate, and is valid and binding, and a court of equity is bound to enforce it, so far as to subject the separate estate to the payment for supplies for carrying on the wife's plantation, and so far as she was surety for her husband, and had mortgaged her property to pay his debt, to subject the rents, issues, and profits of her separate es- tate to the payment of that debt. With respect to the duty of trustees in relation to real property, it is still held, in conformity to the old law of uses, that per- nancy of the profits, execution of estates, and defense of the land, are the three great prop- erties of the trust. Therefore a court of chancery will compel trustees (1) to permit the cestui que trust to receive the rents and profits of the land; (2) to execute such con- veyances as the cestui que trust shall direct; (3) to defend the title of the land in any court of law or equity. Tiff. & B. Trusts, 815. A cestui que trust may lawfully dispose of his trust estate, notwithstanding his title is contested by the trustee, for the latter can never disseize the former of the trust estate; but, so long as it continues, the possession of the trustee is treated, at least in a court of equity, as the possession of the cestui que trust. Balser v. Whiting, 3 Sumn. 475, Fed. Cas. No. 787. It is insisted that the power of sale con- tained in a mortgage deprives the mortgagor of his equity of redemption, and therefore cannot rightfully be exercised. The principle seems to be now well established, though after great doubt and discussion, that a clause may legally he inserted in the mort- gage deed empowering the mortgagee, upon breach of condition, to make sale of the mortgaged premises, to pay his debt from the proceeds, and account with the mortgagor for the balance. The power of sale is to apply solely to the remedy, and not to Impair any right of the mortgagor. The power of sale does not bar the mortgagee's right to foreclose by judicial proceedings. The rem- edy is cumulative merely, and in no respects affects the jurisdiction or proceedings of a court of chancery. 1 Hil. Mortg. 128, 129. And such sale, made after the law day or breach of condition, and in pursuance of the terms of the mortgage, vests in the pur- chaser all the title conveyed by the mort- gage, free from the right of redemption. There Is nothing in the record tending in any way to impeach the validity of the mortgage. There Is no evidence of any un- due influence or improper conduct or con- trol on the part of the husband to obtain the wife's assent and signature to the mort- gage deed. And the debt in question was not incurred for the husband alone, or for unworthy purposes. It was for money ad- vanced and articles supplied, partly for the family, partly for the use of Mrs. Walker, and partly for the beneflt of the trust es- tate. We can, therefore, perceive no good reason why the mortgage should not be en- forced against the separate estate or its in- come, according to the nature, extent, and character of the liability, when ascertained by proof. It is objected that the mortgagees had no right to sell the corn advertised, under the power of sale contained in the mortgage deed, for the reason that there was no corn mortgaged. This objection is well taken, for it is very clear that the mortgagees can sell under the power only the property covered by the mortgage. For the reasons set forth in this opinion, we think the court below erred in dissolving the injunction. The decree must therefore be reversed and cause remanded. MAXIMS OF EQUITY. 15 SPEIDBL et al. v. HBNRTOI. (7 Sup. Ct. 610, 120 U. S. 377.) Supreme Court of the United States. March 7, 1887. Appeal from the Circuit Court of the United States for the Western District of Pennsylvania. Wm. Keinecke, Geo. Hoadly, E. M. John- son, and Edwd. Colston, for appellants. George Shiras, Jr., for appellees. GRAY, J. This bill was filed against the trustees of the Harmony Society, an unin- corporated association of persons living to- gether as a community, by a former member of the society, claiming a share in property in the hands of the trustees. The bill is sought to be maintained on the ground that the trust vs^as not a charity. In the legal sense, and the members of the society were equitable tenants in common of the property held In trust. The learned counsel for the appellants differ in their views of the trust; the one insisting that It was unlawful, be- cause founded in fraud and against public policy, and should therefore be dissolved; and the other contending that It was a law- ful and continuing trust. We have not found it necessary to consider which of these is the sound view, because we are of opinion that the plaintiff did not show him- self to be entitled to invoke the interposi- tion of a court of equity. As a general rule, doubtless, length of time is no bar to a trust clearly established, and express trusts are not within the stat- ute of limitations, because the possession of the trustee is presumed to be the possession of his cestui que trust. Prevost v. Gratz, 6 Wheat. 481, 497; Lewis v. Hawkins, 23 Wall. 119, 126; Railroad Co. v. Durant, 95 U. S. 576. Bnt this rule is. In accordance with the reason on which It is founded, and as has been clearly pointed out by Chan- cellor Kent and Mr. Justice Story, subject to this qualification: that time begins to run against a trust as soon as it is openly dis- avowed by the trustee Insisting upon an ad- verse right and interest which is clearly and unequivocally made known to the cestui que trust; as when, for instance, such transac- tions take place between the trustee and the cestui que trust as would, in case of tenants in common, amount to an ouster of one of them by the other. Kane v. Bloodgood, 7 Johns. Ch. 90, 124; Robinson v. Hook, 4 Mason, 139, 152, Fed. Cas. No. 11,956; Baker V. Whiting, 3 Sum. 475, 486; Oliver v. Piatt, 3 How. 333, 411. This qualification has been often recognized In the opinions of this court, and distinctly aflBrmed by its latest judg- ment upon the subject. Willlson v. Wat- kins, 3 Pet. 43, 52; Boone v. Chiles, 10 Pet. 177, 223; Seymour v. Freer, 8 Wall. 202, 218; Bacon v. Rives, 106 U. S. 99, 107, 1 Sup. Ct. 3; Phllippi v. Philippe, 115 U. S. 151, 5 Sup. Ct. 1181. In the case of an implied or con- structive trust, unless there has been a fraudulent concealment of the cause of ac- tion, lapse of time is as complete a bar in equity as at law. Hovenden v. Annesley, 2 Schoales & L. 607, 634; Beckford v. Wade, 17 Ves. 87. In such a case. Chief Justice Marshall repeated and approved the state- ment of Sir Thomas Plumer, M. R., In a most Important case In which his decision was affirmed by the house of lords, that, "both on principle and authority, the laches and non-claim of the rightful owner of an equitable estate, for a period of 20 years, (supposing It the case of one who must with- in that period have made his claim in a court ; of law, had It been a legal estate,) under no disability, and where there has been no fraud, will constitute a bar to equitable re- lief, by analogy to the statute of limitations, if, during all that period, the possession lias been under a claim unequivocally adverse, and without anything having been done or said, directly or Indirectly, to recognize the title of such rightful owner by the adverse possessor." Elmendorf v. Taylor, 10 Wheat. 152, 174; Cholmondeley v. Clinton, 2 Jac. & W. 1, 175, and 4 Bligh, 1. Independently of any statute of limitations, courts of equity uniformly decline to assist a person who has slept upon his rights, and shows no excuse for his laches in asserting them. "A court of equity," said Lord Camden, "has always refused Its aid to stale demands, where the party slept upon his rights, and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience, good faith, and reasonable diligence; where these are wanting, the court is passive, and does nothing. Laches and neglect are al- ways discountenanced, and therefore, from the beginning of this jurisdiction, there was always a limitation to suits In this court." Smith V. Clay, 2 Amb. 645, 3 Brown, Ch. 640, note. This doctrine has been repeated- ly recognized and acted on here. Piatt v. Vattier, 9 Pet. 405; McKnight v. Taylor, 1 How. 161; Bowman v. Wathen, 1 How. 189; Wagner v. Baird, 7 How. 234; Badger V. Badger, 2 Wall. 87; Hume v. Beale, 17 Wall. 336; Marsh v. Whitmore, 21 Wall. 178; Sullivan v. Railroad, 94 U. S. 806; Godden v. Klmmell, 99 U. S. 201. In Hume v. Beale, the court, in dismissing, because of unex- plained delay in suing, a bill by cestuls que trust against a trustee under a deed, ob- served that It was not important to deter- mine whether he was the trustee of a mere dry legal estate, or whether his duties and responsibilities extended further. 17 Wall. 348. See, also. Bright v. Legerton, 29 Beav. 60, and 2 De Gex, F. & J. 606. When the bill shows ui>on its face that the plaintiff, by reason of lapse of time and of his own laches, is not entitled to relief, the objec- tion may be taken by demurrer. Maxwell V. Kennedy, 8 How. 210; National Bank v. Carpenter, 101 U. S. 567; Lansdale v. Smith, 106 U. S. 391, 1 Sup. Ct. 350. 16 MAXIMS OF EQUITY. The allegations of this bill, so far as they are material to the defense of laches, are in substance as follows: The Harmony So- ciety is a voluntary association, formed in 1805 by the plaintiff's parents and other heads of families, who had emigrated from Germany under the leadership of one Rapp, and become subject to his control in both spiritual and temporal affairs. In that year, Rapp, for the purpose of acquiring absolute dominion over their means and mode of liv- ing, falsely and fraudulently represented to them that they could not be saved from eternal damnation except by renouncing the plan of a separate home for each family, j'ielding up all their possessions, as had been done by the early Ohristians, and laying them at the feet of Rapp as their apostle, to be put into a common fund of the society, and thenceforth living as a community under his control, receiving in return only the neces- saries of life; and they. Induced by and re- lying on his false and fraudulent representa- tions, immediately yielded up all their pos- sessions to the common fund of the society, and placed the fund in his lieeping as their trustee, and thenceforth lived as a commu- nity or common household, submitted them- selves and their families to do for the com- munity such worli as he directed, allowed the avails thereof to form part of the com- mon fund, and relinquished to him and his successors in the leadership of the commu- nity the management of the trust fund and the control of their own persons and those of their wives and children, and received only the necessaries of life in return. Rapp received and accepted the trust fund, and all the accretions to it by the work of the in- habitants of the community or otherwise, not as his own, but in trust for the members of those families and the contributors to the fund, and for their common benefit; and al- ways, up to his death in 1847, recognized and aclinowledged said trust, and disclaimed any greater interest in the fund than that of any other contributor, and any other right to its management and control than by vir- tue of his leadership of the community. In 1807 Rapp obliged his followers to abjure matrimony, and thenceforth did not permit them to marry in the community, and com- pelled any one about to marry to leave it. The plaintiff was born in the community in 1S07, and was reared in and as a part of it, xmder Eapp's teachings and control, and faithfully worked for it from the age of 12 to the age of 24 years, and allowed the avails of his work to become part of the common fund, and received in return nothing but the necessaries of life, which were of far less value than the avails of his work; and in 1831, being about to marry, had to leave and did leave the community. The trust fund so received and accepted by Rapp, with its profits, interest, and accretions, now amounts to $8,000,000, and yields an annual income of $200,000, and is held by the defendants on the same trust on which Rapp held it in his life-time; and neither Rapp nor the de- fendants ever rendered any account to the plaintiff or to the beneficiaries of the fund, although the plaintiff, before bringing this suit in May, 1882, demanded of the defend- ants an account and a settlement of his share. The trust on which Rapp, and the defendants as his successors, held the com- mon fund of the Harmony Society, is de- scribed in one place in the bill as "for the members of said families and the contribu- tors of said fund, and for their common ben- efit;" that is to say, as is clearly explained by what goes before, in trust for their com- mon benefit as a community, living together in the community, working for the com- munity, subject to the regulations of the community, and supported by the cpmmu- nity. This was the "said trust," which, as the bill afterwards alleges, Rapp, up to his death, and his successors, until the bringing of this suit, "always recognized and ac- linowledged." The constant avowal of the trustees that they held the trust fund upon such a trust is wholly inconsistent with and adverse to the claim of the plaintiff that they held the fund in trust for the benefit of the same persons as individuals, though withdrawn from the community, living by themselves, and taking no part in its work. The plaintiff, upon his own showing, with- drew from the community in 1831, and never returned to it, and, for more than 50 years, took no step to demand an account of the trustees, or to follow up the rights which he claimed in this bill. If he ever had any rights, he could not assert them after such a delay,— not on the ground of an express and lawful trust, because the ex- press trust stated in the bill, and constantly avowed by the trustees during this long pe- riod, was wholly inconsistent with any trust which would sustain his claim; not on the ground that the express tx'ust stated in the bin was unlawful and void, and therefore the trustees held the trust fund for the ben- efit of all the contributors in proportion to the amounts of their contributions, because that would be an implied or resulting trust, and barred by lapse of time. In any as- pect of the case, therefore, if it was not strictly within the statute of limitations, yet the plaintiff showed so little vigilance and so great laches, that the circuit court rightly held that he was not entitled to re- lief in equity. It is proper to add that this decision does not rest in any degree upon the judgments of the supreme court of Pennsylvania and of this court, in the cases cited at the bar, in favor of the trustees of the Harmony Society in suits brought against them by other members, because each of those cases differed in its facts, and especially in show- ing that the society had written articles of association, which are not disclosed by this bill. Schriber v. Rapp, 5 Watts, 361; Baker v. Nachtrieb, 19 How. 126. Decree affirmed. MAXIMS OF EQUITY. 17 HAWKER V. MOORE et al. (20 S. E. 848, 40 W. Va. 40.) Supreme Court of Appeals of West Virginia. Bee. 8, 1894. Appeal from circuit court, Harrison county. Bill by Owen Hawker against Wilson Moore and others. From a decree for plain- tiff, defendant Moore appeals. Affirmed. J. Philip Clifford, for appellant John Bas- sel, for appellee. HOLT, J. In this case the circuit court of Harrison county, by decree entered on the 27th day of January, 1893, set aside as fraud- ulent the deed made by appellant, Wilson Moore, on the 1st day of September, 1880, to Elam F. Piggatt, for the 2.5 acres of land mentioned, and decreed the sale thereof to pay plaintiff's judgment, from which defend- ant Moore obtained this appeal. The facts are as follows: On the 15th day of October, 1880, the Merchants' National Bank of West Virginia, at Clai-ksburg, was the holder of a promissory note given to the bank by James Hawker, the principal there- in, and the defendant Wilson Moore, and plaintiff, Owen Hawker, as his sureties, and the bank on that day obtained a judgment thereon against the three parties named. James Hawker, the principal, was insolvent, and plaintiff, Owen Hawker, was compelled to satisfy and pay the judgment. Therefore plaintiff was entitled to contribution from his cosurety, defendant Moore, of one-half tha amount of the judgment thus paid, and to that extent to be substituted to the judgment lien of the bank against his real estate. Where one has been compelled to pay the debt of another, equity, as far as it can be done without just ground of complaint on the part of others, substitutes him to all the rights and remedies of the creditor against such debtor. This doctrine of subrogation has been applied freely in this state, and to its full extent, upon the general principles of equity, without the aid of any statute; and, having taken this correct view in the begin- ning, there has so far never been any need of any statute to correct any misstep in improp- er restraint of its application upon the sup- position that a debt once paid must there- after be treated as nonexistent under all cir. cnmstances, and to all Intents and for all purposes. The doctrine, as it has been ex- pounded and applied in our courts, has noth- ing of form, nothing of technicality, about it; and he who, in administering it, would stick in the letter, forgets the end of Its cre- ation, and perverts the spirit which gave it birth. It is the creature of equity, and real essential justice is its object. Enders v. Brune (1826) 4 Rand. (Va.) 438, 447; McNiel V. Miller (1887) 29 W. Va. 480, 2 S. B. 335; Robinson v. Sherman (1845) 2 Grat. 178; 2 Bart. Suit in Eq. 1051. The doctrine is em- HUTCII.& BUNK.BQ.— 2 Inently calculated to do exact Justice between persons who are bound for the performance of the same duty or obligation, and is one, therefore, which is much encouraged and protected. "Equality is equity" is on this branch its maxim. It springs naturally out of the two equities of contribution and exon- eration, and is in fact one of the means by which those equities are enforced. Bisp. Pr. Eq. (4th Ed.) § 335; Dering v. Earl of Win- ch elsea, 1 Cox, 318; Pendlebury v. Walker, 4 Younge & C. Exch. 441; Steel v. Dixon, 17 Ch. Div. 825; Brett, Lead. Cas. in Mod. Eq. (2d Ed.) 285, notes. See Ferguson v. Gibson, L. R. 14 Eq. 379; Forbes v. Jackson, 19 Ch. Div. 615, under the mercantile law amend- ment, Act 19 & 20 Vict. c. 97, § 5; 2 Beach, Mod. Eq. Jur. § 809. Here the plaintiff has paid off the judgment, and asks the court to give him the benefit of the creditor's lien. Who can object to this? Who is injured by it? Not the bank, for they have received their debt from the plaintiff, and justice binds them to give the plaintiff their vantage ground. Not the principal debtor, for he is insolvent, and has no interest in the matter. Not the cosurety, for it is by his fault that plaintiff had to bear, in the first instance, the whole burden. If he had paid his half, and equality is equity, there would have been no occasion to ask the court to compel him to pay; and it does not lie with him to say that plaintiff shall not occupy a vantage ground that enables him, by process of law, to en- force the performance of this duty. The oth- er creditors cannot complain, for the debt has in truth not been paid, because not paid by the one ultimately bound, but by others, who became his unwilling creditors in due course of law. But if there should be any one who, by any rule of strict law, or in equity and good conscience, stands on higher ground, or for any reason has a better right, he will not be displaced, or his right disturbed; for that is' the essence of the doctrine. See Pott v. Na- thans (1841) 1 Watts & S. 155; Eddy v. Trav- er (1837) 6 Paige, 521; Gross v. Davis, 87 Tenn. 226, 11 S. W. 92, and 10 Am. St. R. 635, notes; Sheld. Subr. (2d Ed.) § 137; Id., p. 209, § 140; 24 Am. & Eng. Enc. Law, p. 189; Thomas v. Stewart (1888) 117 Ind. 50, 18 N. E. 505; Crumllsh's Adm'r v. Improve- ment Co., 38 W. Va. 390, 18 S. B. 456, and 23 L. R. A. 120, note 7; Dugger y. Wright (1888) 51 Ark. 232, 11 S. W. 213. It would answer no useful purpose to take up the testimony and show that it justifies the decree complained of. The fair conclu- sion to be drawn is that the deed of Sep- tember 1, 1880, from defendant Moore to E. P. Piggatt, conveying the tract of land of 25 acres in the bill and proceedings mention- ed, was made by Moore to hinder and delay his creditors; and that Piggatt took it, was holding it for him, on some sort of secret trust, the full terms of which do not appear. But Moore continued to occupy and use the 18 MAXIMS OF EQUITY, land as his own, as he had always done, without the payment of any rent; and after B. F. Piggatt's death this tract of 25 acres was, by reason thereof, treated as not be. longing to his estate, and was omitted when partition came to be made of his lands among his heirs. Therefore the decree complained of is affirmed. MAXIMS OF EQUITY. 19 ECONOMY SAV. BANK v. GORDON et al. (45 Atl. 176, 90 Md, 486.) Court of Appeals of Maryland. Jan. 10, 1900. Appeal from circuit court of Baltimore city; Henry Stockbridge, Judge. Suit by Douglas H. Gordon and others against the Economy Savings Bank and oth- ers. Decree for complainants. Defendant bank appeals. Reversed. Argued before McSHERRY, C. J., and PAGE, FOWLER, BOYD, SCHMUCKER, and BRISCOE, JJ. Daniel L. Brinton, for appellant. Arch. H. Taylor, E. P. Keech, Jr., and Foster & Foster, for appellees. SCHMUCKER, J. On July 30, 1897, Cecil R. Atkinson executed a mortgage upon a warehouse owned by him, on South Howard street, in Baltimore city, to Alonzo J. Steers, which recited that he was indebted to Steers "in the full sum of fifteen thousand dollars, payable February 10th, 1898," and that it was executed to secure the; payment of this debt, with interest thereon. The mortgage was in due form, was regularly acknowledg- ed, and had attached to it a proper affidavit as to the bona fides of the consideration therein stated, and it was recorded on the day after its date. No note accompanied the mortgage, but it contained a covenant to pay the mortgage debt and interest. About the same time Steers, the mortgagee, applied to the American National Bank to lend him $6,000, offering to assign the mort- gage as security for the loan. Schott, the cashier of the bank, explained to him that a national bank could not lend money upon real-estate security, but informed him that the appellant savings bank, of which he (Schott) was treasurer, had some money on hand, and would lend him $5,000 upon the mortgage, if the security proved to be am- ple, but the matter must first be referred by the appellant to a committee, who would investigate and report upon the security. Steers assented to the terms suggested by Schott, and a committee from the appellant went upon the mortgaged premises and ex- amined them, and reported favorably upon the loan, provided there were no incum- brances upon the property prior to the mort- gage. The matter was then referred by the appellant to its attorney to examine the ti- tle. Steers placing the mortgage in Its hands for that purpose. The attorney examined the title, and reported favorably upon it, whereupon the appellant, on August 6, 1897, lent the $5,000 to Steers, and at the same time took from him an assignment of the mortgage as security for the loan. The $5,- 000 so loaned was given to Steers in the check of the appellant to his order upon the American National Bank, in which the appel- lant had on deposit at that time more than the. amount of the check. Steers indorsed the check to the Eastern Electric Company, which at once deposited it to its own credit In the bank upon which it was drawn, and the $5,000 was passed to the credit of the electric company, and charged to the appel- lant upon the books of the bank. The money was then used by the electric company, to the extent of $2,000, in the payment of a loan which had been made by one Myerdlck upon a previous unrecorded assignment of the Atkinson mortgage, and the remaining $3,000 was almost entirely paid to the Amer- ican National Bank in satisfaction of obliga- tions due to it by the Eastern Electric Compa- ny or by George H. Atkinson, a brother of Cecil R. Atkinson, the mortgagor. Steers subse- quently assigned his equity in the $15,000 mort- gage to one C. S. Hlnchman as collateral se- curity for a loan of $2,000. It appears from the record that Cecil R. Atkinson, the mort- gagor, and his four brothers, William J., George H., Harry, and Richard P., were pro- moters by profession, and together operated and controlled the Eastern Electric Company and other kindred corporations, all of which proved to be speculative enterprises, and soon became insolvent and passed into the hands of receivers. Steers, who was put upon the stand by the appellees, testified that the consideration for the $15,000 mortgage from Atkinson to him consisted of $10,000 of Best Telephone Company bonds and $5,000 of Best Telephone Company stock, which he had let Atkinson have prior to the execution of the mortgage; but his testimony was so in- consistent and contradictory in its different portions that It cannot be accepted as re- liable. The whole testimony touching the consideration for the mortgage leads to the conclusion that there was no substantial con- sideration for It, but that it was executed to provide a means of raising money to assist the Atkinson brothers in staving off the im- pending insolvency of the Eastern Electric and Best Telephone Companies, and the oth- er enterprises which they were then attempt- ing to keep afioat. On December 29, 1897, nearly five months after the loan of the $5,- OOO to Steers by the appellant, and the as- signment to the latter of the mortgage, Douglas H. Gordon, one of the appellees, ob- tained a judgment for $5,442.30 against the mortgagor, Cecil R. Atkinson, and his broth- er William J. Atkinson, on a note given by them to him on November 13, 1896, for a loan which he then made to them upon Best Telephone Company bonds and stock as col- lateral. Gordon testified that at the time he made this loan William J. Atkinson stated that his brother Cecil R. owned the Howard street warehouse, and he (Gordon) suggested that he be given a mortgage on the ware- house as security for the loan about to be made by him. W. J. Atkinson declined to procure the mortgage, saying that it would injure his brother's credit, but stated that Gordon would have the benefit of the proper- 20 MAXIMS OF EQUITY. ty by having its owner, Oecil R. Atliinspn, upon the note. Gordon testified that he re- lied on this statement of William J. Atlvinson in making the loan. Harry W. Boureau, the other appellee, obtained a judgment for $503.- 80 against William J. Atliinson and Cecil R. Atlsinson on September 29, 1897. On Decem- ber 18, 1897, after Boureau had obtained his judgment, and after Gordon had sued the At- kinsons, but before he had gotten his judg- ment, the appellees instituted the present case, which is a creditors' suit in eqaity against the appellant, Cecil R. Atkinson, Steers, and Hinchman. The bill of complaint alleged that the mortgage from Atkinson to Steers, and the successive assignments of it by him to the appellant and Hinchman, were all without consideration and fraudulent, and prayed to have them declared void. The ap- pellant answered the bill, denying its mate- rial allegations, and setting up its title to the mortgage to the extent of the $5,000 loaned on it, and interest, as a bona fide purchaser for value, without notice of any infirmity in it. Neither Hinchman nor Steers answered, and a decree pro confesso was entered against them. The case against the appellant camt regularly to a hearing, and the court below at first filed an opinion sustaining the appel- lant's claim; but upon a rehearing of the case the learned judge changed his views of the case, and filed another opinion, of a con- trary tenor, and signed the decree appealed from, denying the appellant's claim to a lien on the property, and directed it to be sold for the benefit of the creditors of the mortgagor. In his second opinion the learned judge held, upon the authority of the Cumberland Coal & Iron Co. Case, 42 Md. 598, that tlie appel- lant, although he found it to be a bona fide purchaser for value of the mortgage, without notice, was not entitled to a lien for its loan to Steers, and interest, made upon the faith of the mortgage, because the latter, not being accompanied by a negotiable obligation, was a mere chose in action, which the appellant must be treated as having taken subject to all equities that might have been urged against it in the hands of Steers, the mortgagee. Under the facts of the case, the appellant must be regarded as a bona fide purchaser for value of the mortgage, without notice. It ad- vanced its $5,000 upon the mortgage in the ordinary course of business, after a careful inquiry into the value of the property, and an investigation of the title upon the public rec- ords. It was not concerned in the disposition made by Steers of the borrowed money, not one dollar of which went baclf into its hands, or was expended for its benefit. It was not put upon inquiry as to the bona fides of the mortgage by the fact that Schott, its treasur- er, was also cashier of the American National Bank, where Steers and the Eastern Electric Company and one or more of the Atkinson brothers kept their accounts, and that he~ might have seen by an examination of the books of the bank what disposition was made of the borrowed money. There was in fact nothing in the use made of the money to sug- gest any infirmity in the mortgage. The next question to be determined is, what are the rights of the appellant, as such bona fide purchaser, against the claims of the appellees? As there was no attempt by Steers to assign the mortgage debt to one person, and the mortgage to another, we are not called upon to consider the relative equities of one who claims as assignee of the debt, and an- other who claims as assignee of the mortgage, as the court were in the cases of Clark v. Levering, 1 Md. Ch. 178, and Byles v. Tome. 39 Md. 461, which were in part relied on by the appellees. What we have to consider is the attitude of the appellant, as the bona fide purchaser of both debt and mortgage, towards the creditors of the mortgagor, who were such at the time the mortgage was made. The mortgage was not given to secure an actual indebtedness of $15,000, as It professes on its face to have been. Its execution was evi- dently a means adopted by the parties to it to clothe Steers, the mortgagee, with the ap- pearance of a good title to a large debt secured by a valid mortgage, in order to enable him to raise money upon it. It was not fraudu- lent, in the sense that its execution had been procured by fraud, misrepresentation, or con- straint practiced on the owner of the land who executed it, as was the case in Bank v. Copeland, 18 Md. 305, and Cumberland Coal & Iron Co. V. Parish, 42 Md. 598, in each of which the defrauded mortgagor was protected in equity against the assignee of the fraudu- lent mortgage. In the present case the execu- tion of the mortgage was the voluntary and deliberate act of the mortgagor, from which he had no equity to be relieved, even as against the mortgagee. Snyder v. Snyder, 51 Md. 77; Cushwa V. Cushwa's Lessee, 5 Md. 44. We have therefore no question before us of sub- jecting the rights of the appellant, as assignee of the mortgage, to any equities to which the assignor would have been liable in favor of the mortgagor; for here it is plain that there were no such equities. The present mortgage is to be regarded as fraudulent only in the sense that, having been made to secure a simulated, and not a real, indebtedness, it operated to hinder, delay, or defraud the cred- itors of the mortgagor, and was therefore ob- noxious to the provisions of the statute of 13 Eliz. c. 5. The real question in the case i^ thus narrowed down to a comparison of the relative strength of the claims on the mort- gaged property of the appellant, as assignee of the specific lien of the mortgage, and the appellees, as subsisting general creditors of the mortgagor, having reduced their debts to judgments after the assignment of the mort- gage had been made. If the conveyance un- der consideration had been a fraudulent deed, instead of a mortgage, the right of the appel- lant, as a bona fide purchaser, to a lien on the property for the $5,000 advanced, and in- terest, could not seriously be questioned. MAXIMS OF EQUITY. 21 Cone V. Cross, 72 Md. 102, 19 Atl. 391; Hull V. William Deering & Co., 80 Md. 432, 31 Atl. 416; Hinlile v. Wilson, 53 Md. 293; Worthington v. Bullitt, 6 Md. 198. The broad- er and more general proposition that a bona fide purchaser, without notice, uuder a deed from a fraudulent grantee, talies a good title, which is not impaired by the fact that judg- ments were obtained against the fraudulent grantor prior to the conveyance by the fraudu- lent grantee, is well sustained by authority. 4 Kent, Comm. 464; Sleeper v. Chapman, 121 Mass. 404; Phelps v. Morrison, 24 N. J. Eq. 195; Totten v. Brady, 54 Md. 170; Swan v. Dent, 2 Md. Ch. Ill (note 9, Brantly's Ed.); Wait, Fraud. Conv. § 369. In the case of Banli V. Brooke, 40 Md. 257, the title of a bona fide purchaser of a mortgage note to the lien of the mortgage securing it was upheld against the suit of the creditors of the mort- gagor, although It was admitted that the note and mortgage had been given in prejudice of the rights of his creditors, and would have been void as against t*iem in the hands of the mortgagee. The fact that the mortgage in that case was accompanied by a promissory note distinguishes it from the case at bar, but the circumstance of the negotiability of the mortgage debt was not expressly men- tioned or dwelt upon in the court's opinion. See, also, Danbury v. Robinson, 14 N. J. Eq. 218, 219. A bona flde mortgagee from a fraudulent grantee has in a number of cases been held to be entitled to protection, to the extent of the debt due him, against the creditors of the fraudulent grantor, upon the ground that a mortgagee is to be treated as a purchaser, to the extent of his Interest, within the mean- ing of the term "purchaser" as used in stat- utes such as that of .13 EJiz. c. 5; and this where the mortgage was not accompanied by a negotiable instrument. Ledyard v. Butler, 9 Paige, 186, 137; Murphy v. Briggs, 89 N. Y. 451; Shorten v. Dralie, 38 Ohio St. 70; Moore v. Bank, 55 N. Y. 41. If the mortgage in the present case had been made directly from Cecil R. Atkinson to the appellant, no ques- tion could be made by Atkinson's creditors as to the appellant's lien upon the mortgaged property to the extent of the money advanced bona fide upon the faith of the property at the time the mortgage was made. When, therefore, Atkinson clothed Steers with the appearance of a good mortgage title of rec- ord to the property, for the purpose of enabl- ing him to raise money upon the mortgage, and the appellant, relying upon this appear- ance of good title in Steers, after a careful examination of the public records, and a fail- ure to find any prior incumbrances upon the property, parted with its money in good faith, it is entitled to the favor of a court of equity in the consideration of the relative equities of the parties to the controversy. This court, in Seldner v. McCreery, 75 Md. 296, 23 Atl. 643. said, "Where title Is perfect on its face, and no known circumstances exist to impeach it or put a purchaser on Inquiry, one who buys bona fide and for value occupies one of the most highly favored positions in the law." The appellant did not trust to the personal responsibility of the mortgagor, but lent its money upon the faith of the particular prop- erty covered by the mortgage, and required an assignment of the mortgage at the time of so doing. On the contrary, the appellees trusted to the mortgagor, or to such other col- laterals as he lodged with them; and the ap- pellee Gordon, although he knew when he lent his money that Cecil R. Atkinson owned the Howard street warehouse, did not insist upon having a lien on it for his loan, but deliberately relied, so far as the warehouse was concerned, upon his rights as an ordinary creditor of its owner. The equities of the ap- pellant are at least equal to those of the ap- pellees, and, having the' legal title to the warehouse, it has the stronger claim thereon, under the familiar principle that where equi- ties are equal the legal title must prevail. Pom. Eq. Jur. § 417; Wait, Fraud. Conv. § 370; Townsend v. Little, 109 U. S. 512, 3 Sup. Ct. 357, 27 L. Ed. 1012; Black v. Cord, 2 Har. & G. 103; Bassett v. Noteworthy, 2 Lead. Cas. Eq. (4th Am. Ed.) 1. In Dyson v. Simmons, 48 Md. 214, it was held, upon the authority of many cases there cited, tha: If a party makes, or affects to make, a mortgage which proves to be defective by reason of some in- formality or omission, even on the part of the mortgagee himself, the conscience of the mortgagor is bound, and equity will recognize and enforce the lien of the defective mort- gage, and give it precedence over the sub- sisting creditors of the mortgagor, and also over judgments obtained against him after the date of the mortgage. General creditors have no lien on the property of the debtor, and a judgment is only a general lien, and is for that reason subordinate to the prior spe- cific equitable lien of such a defective mort- gage. The case at bar does not come direct- ly within the principle asserted in the last- mentioned case, but it is certainly one in which, by reason of its peculiar facts, the conscience of the mortgagor was especially bound to the appellant; and we think that the same course of reasoning might well be applied, within proper limits, to the appel- lant's protection. This court has frequently been called upon to assert and define the rights of the credit- ors of a grantor, as against a conveyance made by him which, by reason of inadequacy or want of consideration, or even by design, operated to hinder, delay, or defraud them. The court has not hesitated to strike down such conveyances at the suit of the creditor, holding that one cannot make a voluntary con- veyance of his property, as against the rights of subsisting creditors, nor can he, as against such creditors, sell It for a consideration that bears no adequate relation to its real value. When, however, in such cases, the rights of parties, evea if they were the Immediate 22 MAXIMS OF EQUITY. grantees under the conveyance, who had in good faith parted with value in reliance upon the conveyance, have had to be measured against those of the creditors, it has uniform- ly been held that, in order to do full justice to all the parties in such cases, a court of equity, in setting aside the deed, will allow it to stand as security for the consideration ac- tually paid, and apply the balance to the pay- ment of the vendor's debts. These proposi- tions were distinctly upheld in the cases al- ready cited of Cone v. Cross, Hull v. William Deering & Co., Hinkle v. Wilson, and Worth- ington V. Bullitt. We regard the principle of the last-mentioned cases, in none of which was the position of the party claiming under the conveyance strengthened by any element of negotiability in the subject-matter of the thing assigned to him, as properly applicable to the one at bar. The mortgaged property should be sold, and the proceeds of sale, after deducting proper expenses, applied first to the payment of the $5,000 lent by the appellant to Steers, with interest thereon, and then to the payment of the creditors of Cecil R. Atkinson, the mortgngor, who have come or may cnrae into the case, according to their legal priori- ties. We do not mean by this decision to disturb the authority of the Cumberland Coal & Iron Co. Case, upon which the learned judge be- low mainly relied in changing his opinion, nor *hat of the Copeland Case. In each of those cases the issue on trial was between the own- er of property, who had been fraudulently in- duced to execute a mortgage upon it, and an assignee of the fraudulent mortgage, and they were both cases of flagrant fraud in fact. The rights of the creditors of the grantor were not in issue in either case. In the Cumberland Coal & Iron Co. Case the court asserted the proposition that the transfer of a mortgage is so far within the rule which applies to choses in action, that when the as- signment Is made without the concurrence of the mortgagor, as in that case, the assignee takes subject to the same equities and de- fenses to which the assignor was liable. We do not, however, understand the court, by what was said in that opinion, to intimate that, when the equities in behalf of the cred- itors of the mortgagor in such a case came to be asserted, their claims would be en- forced, without regard to the proposition, so frequently upheld by this court in setting aside fraudulent conveyances at the suit of the creditors of the grantor, that, in order to do justice to all parties in such cases, the con- veyances will be allowed to stand as security for the consideration actually paid on the faith of it by the party holding the legal title under it. Decree reversed, and cause re- manded for further proceedings in accordance with this opinion. MAXIMS OF EQUITY. 23 RICE et al. v. RICE et al. (2 Drew. 73.) High Court of Chancery. Dec. 15, 16, 1853. E. F. Smith, for plaintiffs. Mr. Elmsley and J. V. Prior, for defendants. The VIGE-CHANcaEJLLOR took time to consider, and on the 12tli January delivered the following judgment: The question to be decided In this case is whether the equitable interest of the plain- tiffs in respect of the vendor's lien for unpaid purchase money is to be preferred to the equitable Interest of the defendant Ede as equitable mortgagee. What is the rule of a court of equity for determining the preference as between per- sons having adverse .equitable interests? The rule is sometimes expressed in this form, "As between persons having only equitable Interests, qui prior est tempore potior est jure." This is an incorrect statement of the rule, for that proposition Is far from being universally true. In fact not only is it not universally true as between persons having only equitable Interests, but It is not uni- versally true even where their equitable In- terests are of precisely the same nature, and in that respect precisely equal, as in the com- mon case of two successive assignments for valuable consideration of a reversionary in- terest In stock standing in the names of trustees, where the second assignee has given notice and the first has omitted It. Another form of stating the rule is this, "As between persons having only equitable interests, if their equities are equal, qui prior est tempore potior est jure." This form of stating the rule is not so obviously incorrect as the former; and yet even this enunciation of the rule (when accurately considered) seems to me to involve a contradiction, for, when we talk of two persons having equal or unequal equities, in what sense do we use the term "equity?" For example, when we say that A. has a better equity than B., what is meant by that? It means only that, according to those principles of right and justice which a court of equity recognizes and acts upon, it will prefer A. to B., and will interfere to enforce the rights of A. as against B., and therefore it is impossible, (strictly speaking) that two persons should have equal equities, except in a case in which a court of equity would altogether re- fuse to lend its assistance to either party as against the other. If the Court will inter- fere to enforce the right of one against the other on any ground whatever,— say on the ground of priority of time,— how can it be said that the equities of the two are equal? 1. e., in other words, how can it be said that the one has no better right to call for the in- terference of a court of equity than the other? To lay down the rule therefore with perfect accuracy, I think it should be stated in some such form as this, "As between per- sons having only equitable interests, if their equities are in all other respects equal, prior- ity of time gives the better equity, or qui prior est tempore potior est jure." I have made these observations, not of course for the purpose of a mere verbal criti- cism on the enunciation of a rule, but in or- der to ascertain and illustrate the real mean- ing of the rule itself, and I think the mean- ing is this, that, in a contest between per- sons having only equitable interests, priority of time is the ground of preference last re- sorted to, i. e., that a court of equity will not prefer the one to the other, on the mere ground of priority of time, until It finds upon an examination of their relative merits that there is no other sufficient ground of prefer- ence between them, or, in other words, that their equities are in all other respects equal, and that, if the one has on other grounds a better equity than the other, priority of time is immaterial. In examining into the relative merits (or equities) of two parties having adverse equitable interests, the points to which the court must direct its attention are obviously these, the nature and condition of their re- spective equitable interests, the circumstan- ces and manner of their acquisition, and the whole conduct of each party with respect thereto. And in examining into these points it must apply the test, not of any technical rule or any rule of partial application, but the same broad principles of right and justice which a court of equity applies universally in deciding upon contested rights. Now in the present case each of the par- ties in controversy has nothing but an equita- ble interest; the plaintiffs' interest being a vendor's lien for unpaid purchase money, and the defendant Ede having an equitable mort- gage. Looking at these two species of equitable interests abstractedly, and without reference to priority of time, or possession of the title deeds, or any other special circum- stances, is there anything in their respective natures or qualities which would lead to the conclusion that in natural justice the one is better, or more worthy, or more entitlPd to protection than the other? Each of the two equitable interests arises out of the forbearance by the party of money due to him. There is, however, this differ- ence between them, that the vendor's lien for unpaid purchase money is a right created by a rule of equity, without any special con- tract. The right of the equitable mortgagee is created by the special contract of the par- ties. I cannot say that in my opinion this constitutes any sufiicient ground of prefer- ence, though, if it makes any difference at all, I should say it is rather in favor of the equitable mortgagee, inasmuch as there is no constat of the right of the vendor to his lien for unpaid purchase money uutil it has been declared by a decree of a court of equity, whereas there is a clear constat of the equi- 24 MAXIMS OF EQUITY. table mortgagee's title immediately on the contract being made; but I do not see in this any sufficient ground for holding that the equitable mortgagee has the better equi- ty. So far, then, as relates to the nature and quality of the two equitable interests ab- stractedly considered, tliey seem to me to stand on an equal footing; and this I con- ceive to have been the ground of Lord El- don's decision in Mackreth v. Symmons, 15 Ves. 329, where, in a contest between the vendor's lien for unpaid purchase money and the right of a person who had subsequently obtained from the purchasers a mere con- tract for a mortgage, and nothing more, he decided in favour of the former, as being prior in point of time. If, then, the vendor's lien for unpaid pur- chase money, and the right of an equitable mortgagee by mere contract for a mortgage, are equitable interests of equal worth in re- spect of their abstract nature and quality, is there anything in the special circum- stances of the present case to give to the one a better equity than the other? One special circumstance that occurs is this, that the equitable mortgagee has the possession of the title deeds. The question therefore arises, between two persons having equitable interests of equal worth, does the possession of the title deeds by one of them give him the better equity? In Foster v. Blackstone, 1 Myl. & K. 307, Sir John Leach, M. R., says, "A declaration of trust of an outstanding term, accompanied by n delivery of the deeds creating and continuing the term, gives a better equity than a mere declaration of trust to a prior Incumbrancer." That is a case in which the two parties have equitable interests in the term of precisely the same nature, viz., a declaration of ti'ust of the term without an actual assignment; and there the delivery of the deeds to the subsequent incumbrancer gives him the bet- ter equity. To the same effect is the de- cision in Stanhope v. Lord Verney, according to Lord St. Leonards' view of it, as reported in Butl. Co. Lift. p. 290, 1 Mylne & K. note 1, § 15 (which seems a more satisfactory re- port than that in 2 Eden, 81). Lord St. Leonards, 3 Sugd. Vend. 218, ' states it thus, "In Stanhope v. Earl Verney, Lord Xorthing- ton held that a declaration of trust of a term In favour of a person was tantamount to an actual assignment, unless a subse- quent incumbrancer, bona flde and without notice, procured an assignment, and that the custody of the deeds respecting the term, with the declaration of the trust of it in favour of a second incumbrancer, was equivalent to an actual assignment of it, and therefore gave him an advantage over the first incumbrancer, which equity could not take from him." The same doctrine appears to be recognized by Lord Eldon in Maun- drell v. Maundrell, 10 Ves. 271, where he says, "It is clear, with regard to mortgagees and incumbrancers, that If they do not get in the satisfied term in some sense, either taking an assignment, makuig the trustee a party to the instrument, or taking possession of the deed creating the term, that term can- not be used to protect them against any per- son having mesne charges or incumbrances," implying that taking possession of the deed creating the term would confer on a subse- quent incumbrancer such right of protection by means of the term. We have here, then, ample authority for the proposition, or rule of equity, that as between two persons whose equitable interests are of precisely the same nature and quality, and in that respect precisely equal, the possession of the deeds gives the better equity; and, applying this rule to the present case, it appears to me that, the equitable interests of the two par- ties being In their nature and quality of equal worth, the defendant having posses- sion of the deeds has the better equity, and that there is, therefore, In this case, no room for the application of the maxim, "Qui prior est tempore potior est jure," which is only applicable where the equities of the two par- ties are in all other respects equal. I feel all the more confidence in arriving at this conclusion inasmuch as it is in accordance with the opinion expressed by Lord St. Leonards in his work on vendors and pur- chasers; and I have no doubt that in Mack- reth V. Symmons, if the equitable mortgagee had, in addition to his contract for a mort- gage, obtained the title deeds from his mort- gagor. Lord Eldon would have decided in his favour. I must, however, guard against the sup- position that I mean to express an opinion that the possession of title deeds will in all cases and under all circumstances give the better equity. The deeds may be in the possession of a party in such a manner and under such circumstances as that such pos- session will confer no advantage whatever. For example, in Allen v. Knight, 5 Hare, 272 (affirmed by the Lord Chancellor and report- ed on appeal in 11 Jur. 527), the deeds had been delivered to the first equitable mort- gagee, and by some unexplained means they had got back into the possession of the mort- gagor who delivered them to a subsequent equitable mortgagee. It was insisted by the latter that it must be presumed that it was by the fault or neglect of the first mortgagee that the deeds had got out of his possession, or that at all events the court should direct an inquiry as to the circumstances. But the court held that the onus lay on the second mortgagee of proving such alleged fault or neglect of the first mortgagee; and, as he had failed to prove it, the court could not presume it, nor direct an Inquiry on the sub- ject, and decreed in favour of the first mort- gagee. I think it may be clearly inferred from this case that if the first mortgagee had never had the deeds delivered to him, or if it had been proved that the deeds had got back to the mortgagor through his fault or MAXIMS OF EQUITY. 25 deglect, the decision would have been in fa- vour of the second mortgagee who had the deeds. So the deeds may have come into the hands of a subsequent equitable mortgagee by means of an act committed by another person which constituted a breach of an ex- press trust as against the person having the prior equitable interest. In such a case it would be contrary to the principles of a court of equity to allow the subsequent mortgagee to avail himself of the injury which had been thus done to the party having the prior equi- table estate or interest. Indeed it appears to me that in all cases of contest between persons having equitable in- terests the conduct of the parties and all the circumstances must be talien into considera- tion, in order to determine which has the bet- ter equity; and, if we take that course in the present case, everything seems in favour of the defendant, the equitable mortgagee. The vendors, when they sold the estate, chose to leave part of the purchase money unpaid, and yet executed and delivered to the purchaser a conveyance, by which they declared In the most solemn and deliberate manner, both in the body and by a receipt indorsed, that the whole purchase money had been duly paid. They might still have re- quired that the title deeds should remain in their custody, with a memorandum by way of equitable mortgage as a security for the un- paid purchase money, and, if they had done so, they would have been secure against any subsequent equitable Incumbrance; but that they did not choose to do, and the deeds were delivered to the purchaser. Thus they volun- tarily armed the purchaser with the means of dealing with the estate as the absolute le- gal and equitable owner, free from every shadow of incumbrance or adverse equity. In truth it cannot be said that the purchas- er in mortgaging the estate by the deposit of the deeds has done the vendors any wrong, for he has only done that which the vendors authorized and enabled him to do. The de- fendant, who afterwards tooli a mortgage, was in efCect invited and encouraged by the vendors to rely on the purchaser's title. They had, in effect, by their acts, assured the mortgagee that, as far as they (the vendors) were concerned, the mortgagor had an abso- lute indefeasible title both at law and in equity. Tlie mortgagee was guilty of no negligence. He was perfectly justified in trusting to the security of the equitable mortgage by deposit of the deeds, without the slightest obligation to go and inquire of the vendors whether they had received all their purchase money, when they had already given their solemn assurance in writing that they had received every shilling of it and had conveyed the estate and delivered over the deeds; and I do not think that the fact of the conveyance bearing date only the day before the mort- gage imposed on him any such obligation. The defendant omitted nothing that was nec- essary to constitute a complete and effectual equitable mortgage; and although the mort- gage was taken, not for money actually ad- vanced at the time, but for an antecedent debt, the forbearance of that debt constitutes a full and sufficient valuable consideration. Upon a comparison then of the conduct of the two parties, and a consideration of all the circumstances of the case, and especially the fact of the possession of the deeds, which the mortgagee acquired with perfect bona fides, and without any wrong done to the vendors, I am of opinion that the equity of the mortgagee is far better than that of the vendor, and ought to prevail. I may, in conclusion, venture to make the suggestion that the point now under consider- ation is often put by text-writers in a form calculated to mislead, when it is propounded as a question whether the vendor, in re- spect of his lien for unpaid purchase money, or an equitable mortgagee, ought to be pre- feiTed, or when an opinion is expressed that the one or the other has the better equity. If I am right in my view of the matter, nei- ther the one nor the other has necessarily and under all circumstances the better eq- uity. Their equitable Interests, abstractedly considered, are of equal value In respect of their nature and quality; but whether their equities are in other respects equal, or wheth- er the one or the other has acquired the bet- ter equity, must depend upon all the circum- stances of each particular case, and especial- ly the conduct of the respective parties. And among the circumstances which may give to the one the better equity the possession of the title deeds is a very material one. But if, after a close examination of all these matters, there appears nothing to give to the one a better equity than the other, then, and then only, resort must be had to the maxim, "Qui prior est tempore potior est jure," and priority of time then gives the better equity. 26 MAXIMS OF EQUITY. COMSTOCK V. JOHNSON. (46 N. Y. 615.) Court of Appeals of New York. 1871. CHURCH, C. J. The principal question in this case, involving the construction of the grant of water, was correctly decided in the court below. It is well settled in this State that the terms used in this grant are to be taken as a measure of the quantity of water granted, and not a limitation of the use to the particular machinery specified. ( Wakely V. Davidson, 26 N. Y., 387; Cromwell v. SeMen, 3id., 253.) It was found by the court that, at the time the defendant shut the water off, he asserted that the plaintiff had forfeited his right to the water, and claimed a right to shut it off. In this he was mistaken. In de- priving the plaintiff of the use of the water under an assertion of forfeiture, he rendered himself amenable to the process of the court for the protection of the plaintiff's rights. The judgment enjoining the defendants from depriving the plaintiff of the quantity of wa- ter to which he was entitled under his deed, cannot be disturbed. The only serious ques- tion in the case relates to the use of the buzz saw in front of the mill. Tlie plaintiff did not, by his deed, acquire the title to the land in front of the mill, because the description is limited to the land upon which the mill stands; but he did acquire an easement in such land for the purpose of ingress and egress, and also for the purpose of piling and sawing wood for the use of the mill, as it had been used and enjoyed for forty years. Ev- erything necessary for the full and free enjoy- ment of the mill passed as an incident, ap- purtenant to the land conveyed. (2 Kent's Com., 467; Blaine's Lessee v. Chambers, 1 Serg. & Kawle, 174.) But this would not au- thorize the plaintiff to erect and use ma- chinery upon this land not necessa-ry to the use of the mill, as it bad been used, and would not authorize the use of the buzz saw upon that land. The objection is not that the plaintiff propelled the buzz saw with the wa- ter from the dam, as be had the right to use the water for any machinery and in any place which he was entitled to occupy; but he could not occupy the space in front of the mill for that purpose. At the time the water was shut off by the defendants, it was being used only to propel this saw ; and it is claimed that the defendants were justified in shutting off the water from that machinery; and for that reason the judgment should be reversed, or, at least, that it should be modified so as to restrain the plaintiff from using his buzz saw on the defendants' premises. As we have seen, the judgment against the defendants is fully warranted by the findings; and the ques- tion is, whether any modification should be made against the plaintiff. It is a rule of equity that he who asks equity must do eq- uity. The plaintiff was In fault in using the buzz saw on the defendants' premises. It ia said that this was an independent transac- tion, for which the defendants might have an action; and this was the view of the court below. The rule referred to will be applied when the adverse equity grows out of the very controversy before the court, or of such circumstances as the record shows to be a part of its liistory, or is so connected with the cause in litigation as to be presented in the pleadings and proofs, with full opportunity afforded to the party thus recriminated to ex- plain or refute the charges. (Tripp v. Cook, 26 Wend., 143; McDonald v. Neilson, 2 Cow., 190; easier v. Shipman, 35 N. Y., 533.) All the facts connected with the right of the plaintiff to use the buzz saw were not only spread out upon the record, but were in fact litigated upon the trial, and, as to his strict legal rights, are undisputed; and we cannot say that, but for his use of the saw on the defendants' premises, the water would not have been shut off. Whether this was so or not, the controversy in relation to his right to use the saw was involved in the liti- gation, and was intimately connected with the wrongful act of the defendants; and, be- ing so, it is proper to apply the equitable rule. It is not indispensable to the applica- tion of this rule that the fault of the plaintiff should be of such a character as to authorize an independent action for an injunction against him. The plaintiff, in strictness, was in the wrong in placing his buzz saw in front of the mill. The defendants were in the wrong in shutting off the water, and es- pecially in asserting a forfeiture; and, as both parties are in court to insist upon their strict legal rights, we think substantial justice will be done by modifying the judgment so as to enjoin the plaintiff from using the buzz saw on the land in front of his mill, and, as mod- ified, judgment affirmed, without costs to either party against the other in this court. All concur. Judgment accordingly. MAXIMS OF EQUITY. 27 BROWN, BONNELL & 00. v. LAKE SUPE- RIOR IRON CO. et al. (10 Sup. Ot. 604, 134 U. S. 530.) Supreme Court of the United States. April 7, 1890. Appeal from the circui tcourtofthe Unitea States for the northern district of Ohio. Henry Crawfoid, iov appellant. Francis Wing, C. C. Baldwin, S. Sbellabarger, and J. M. Wilson, for appellees. Brewer, J. On February 20, 1883, two of the appellees, the Lake Superior Iron Company and the Jackson Iron Company, together with the Negaunee Concentrating Company, filed their bill against the appel- lant, in the circuit court of the United States for the northern district of Ohio. The appellant was a corporation, created under the laws of the state of Ohio, and each of the complainants was a creditor; two holding claims evidenced by notes not then due, and the other, the Negaunee Concentrating Company, holding a judg- ment. The prayer of the bill was for tlie appointment of a receiver to take charge of theproperty and assets of the defendant, and for such other and further relief as was proper. On the same day the defend- ant entered its appearance, and accepted service of notice of a motion for the ap- pointment of a receiver; and Fayette Brown was thereupon immediately ap- pointed receiver. On the next day subpcB- na was served on the defendant. On March i!8th a supplemental bill was filed making other parties defendants, and on June 14th an order pro confesso was en- tered against all of the defendants in the original and supplemental bills. On April 23d an order was entered directing all cred- itors to file their claims by petition, and on October 20th nearly every creditor had appeared and filed his petition. On July 17th an order was entered appointing a special master to report on the claims of creditors, and marshal the liens thereof. Up to the 23d of November the appellant made noopposition to the proceeding, and apparently assented to the action which was being taken by the creditors, looking to the appropriation of its property to the payment of their claims. On that day a change took place in Its attitude towards this suit. It went into the state courts, and confessed judgment in behalf of sever- al of its creditors ; and on the 24th deposit- ed in the registry of the circuit court mon- ey enough topayoff thejudgment in favor of the concentrating company, and filed two pleas,— one setting forth the fact of payment, and the other that the original and supplemental bills disclosed that the complainants had a plain, adequate, and complete remedy at law, and that there- fore the court, sitting as a court of equity, had no jurisdiction ; and praying a dis- missal of the bills. Subsequently, on De- cember 18th, it filed a motion to discharge the receiver. This motion was overruled, the pleas seem to have been ignored, the master reported upon the claims present- ed, and on February 28, 1886, the court en- tered a decree which, finding the indebted- ness to be as stated by the master, also what property was in possession of the re- ceiver, decreed that upon default in the payment of those debts the property be sold in satisfaction thereof. From this decree the defendant has brought this ap- peal, and its principal contention is that the circuit court had no jurisdiction what- ever over the subject-matter of the suit, because it appeared upon the face of the bills, original and supplemental, that the complainants had a plain, adequate, and complete remedy at law. As heretofore stated, the bill showed that two of the complainants held claims not yet due, and the third onlya judgment, with no execution. The supplemental bill alleged that execution had, since the filing of the original bill, been issued on that judgment, and returned nulla bona. The original bill, besides disclosing the nature of complainants' claims, set forth that they were proceeding not alone in their own behalf, but in that of all other credit- ors, whose number was so great as to make it impossibleto join them as parties. It then averred the insolvenc.v ot the de- fendant ; that it was engaged in large and various business, manufacturing, and min- ing; that its plant and good- will w^as of great extent and value; and that it em- ployed oi)eratives to the number of at least 4,000; and then alleged as follows: "And your orators further say that vex- atious litigation has been commenced against the said defendaut, and many more such are threatened, and that such litigations are accompanied by attach- ments and seizures of property, and such threatened litigations will also be accom- panied by attachments and seizures, and that such attachments and seizures will give to those creditors who are pursuing them undue and unfair advantage and priority over your complainants, whose claims are not yet due, and make them ir- reparable injury and damage; that if such litigations be further instituted and its property seized in attachment, as it al- ready has been, there is great danger that the valuable property of the defendant will be irreparably injured, and to a great ex- tent destroyed; and your orators say that such seizures and interference with the business and the property of the defendant would wholly destroy the value of the good-will of the company as an asset, and wholly break up its long-established busi- ness, and thereby cause detriment and ir- reparable injury to your orators and all other creditors. And your orators further say that, unless this court shall interfere and protect and preserve the property and assets of said defendant by putting it into the hands of a receiver, the said property will be in great danger of destruction and dissipation by the large number of oper- atives who would necessarily be discharged and left without work or means of obtain- ing it ; and such operatives, by reason of the great distrust they already have, and on account of a fear that they will not in fuljure receive remuneration, will abandon their employment, and thereby cause a stoppage of the extensive business of said 28 MAXIMS OF EQUITY. defendant, to the extent that the creditors of said defendant would not be able to realize one-half of the amount upon the several claims that they would if the said business of the defendant were continued. " The appellees, while admitting the gen- eral rule to be that creditors must show that they have exhausted legal remedies before coming into a court of equity, insist that the bill disclosed a case in equity on two grounds : First, that upon the insolv- ency of acorporation its properties become a trust fund for the benefit of its creditors, which can be seized and disposed of by a receiver, and in equitable proceedings ; and, second, that the vast interests and prop- erties of thiscorporation, with their threat- ened disintegration through several at- tachment suits, justified the interference of a court of equity to preserve, for the ben- efit of creditors, that large value which re- sulted from the unity of the properties. In support of these propositions counsel cite, as especially applicable, Terrj' v. Anderson, 95 U. S. 628; Union Trust Co. v. Illinois M. Ry. Co., 117 U. S. 434, 6 Sup. Ct. Rep. 809; Sage V. Railroad Co., 125 U. S. 361, 8 Sup. Ct. Rep. 887; Mellen v. Iron-Works, 131 U. S. 352, 9 Sup. Ct. Rep. 781; Barbour v Bank, 45 Ohio St. 133, 12 N. E. Rep. 5; Rouse v. Bank, 46 Ohio St. 493, -'-' N. E. Rep. 293. Tit were it conceded that the bill was defective; that a demurrer must have been sustained ; and that the appellant, if it had so chosen to act in the first instance, could have defended its possessitm, and defeated the action, — still the decree of the circuit court must be sustained. Whateverrights of objection and defense the appellant had, it lost by inaction and acquiescence. Ob- viously the proceedings had were with its consent. Immediately on filing the bill it entered its appearance; and the same daj' ft receiver was appointed, without objec- tion on its part. It suffered the bills to be taken pro confesso. It permitted the re- ceiver to go on in the possession of these properties for nine months, transacting large business, entering into many con- tracts, and assuming large obligations, without any intimationof a lack of author- ity, or any objection to the proceedings. After a lapse of nine months, suddenly its policy changed; itcon tested where thereto- fore it had acquiesced. And this, not be- cause of any restored solvency or purpose to resume business, but with the evident intent to prevent the equality among cred- itors which the existing equitable proceed- ings would secure, and to give preference to certain creditors ; for clearly it was the thought of the president of the corpora- tion, himself the owner of a large majority of its stock, whose management had vsrrought its financial ruin, that after the setting aside of the equitable proceedings the lien of the confessed judgments would attach, and thus those favored creditors would be preferred. So the case stands in this attitude : The corporation was insolvent. Its extensive and scattered properties had been brought into single ownership, and so operated to- gether that large benefit resulted in pre- serving the unity of ownership and op- eration. Disintegration was threatened through separate attacks, by different creditors, on scattered properties. The preservation of this unity, with its conse- quent value, and the appropriation of the properties for the benefit of all the creditors equally, were matters deserving large con- sideration in any proper suit. Certain creditors, acting for all, initiated proceed- ings looking towards this end. In such Droceedings the corporation acquiesced. Substantially all of the creditors came in- to the proceedings. After months had passed, much business had been transact- ed and large responsibilities assumed, the corporation, for the benefit of a few cred- itors and to destroy the equality between all, comes in with the technical objection that the creditors initiating the proceed- ings should have taken one step more at law before coming into equity. But the maxim, "He who seeks equity must do equity," is as appropriate to the conduct of the defendant as to that of the com- plainant; and it would be strange if a debtor, to destroy equality and accomplish partiality, could ignore its long acquies- cence, and plead an unsubstantial techni- cality to overthrow protracted, extensive, and costly proceedings carried on in reli- ance upon its consent. Surely no such im- perfection attends the administration of a court of equit.y. Good faith and early as- sertion of rights are as essential on the part of the defendant as of the complain- ant. This matter has recently been before this court in Reynes v. Dumont, 130 U S. 354, 395, 9 Sup. Ct. Rep. 486, and was care- fully considered, and the rule, with its lim- itations, thus stated : " The rule as stated inl Danlell's Chancery Practice, (4th Amer. Ed.) 555, is that if the objection of want of jurisdiction in equity isnottaken in proper time, namely, before the defendant enters into his defense at large, the court, having the general jurisdiction, will exercise it; and, in a note on page 550, many casee are cited to establish that, 'if a defendant in a suit in equity answers and submits to the jurisdiction of the court, it is too late for him to object that the plaintiff has a plain and adequate remedy at law. This objection should be taken at the earliest opportunity. The above rule must be taken with the qualification thatitis com- petent for the court to grant the relief sought, and that it has jurisdiction of the subject-matter.' * * * It was held in Lewis V. Cocks, 23 Wall. 466, that if the court, upon looking at the proofs, found none at all of the matters which would make a proper case for equity, it would be the duty of the court to recognize the fact, and give it effect, though not raised by the pleadings nor suggested by counsel. To the same effect is Oelrichs v. Spain, 15 Wall. 211. The doctrine of these and similar cases is that the court, for its own protec- tion, may prevent matters purely cogniza- ble at law from being drawn into chancery at the pleasure of the parties interested ; but it by no means follows, where the sub- ject-matter belongs to the class over which a court of equity has jurisdiction, and the objection that the complainant has an ad- equate remedy at law is not made until the hearing- in the appellate tribunal, that MAXIMS OF EQUITY. 29 the latter can exercise no discretion In the disposition of such objection. Under the circumstances of this case, it comes alto- gether too late, even though, if taken in limine, it might have been worthy of at- tention. " See, also, Kilbourn v. Sunder- land, 130 U. S. 505, 9Sup. Ct. Rep. 594 ; Uni to the future; and it Is to this, alone, that the language in reference to the one thou- sand dollars applies. Any other construction would do violence to the language, and be at war with the whole subject matter. The damages to arise from the breach of this covenant, from the nature of the case, must be not only uncertain in their nature, but impossible to be exhibited in proof, with any reasonable degree of accuracy, by any evidence which could possibly be adduced. It Is easy to see that while the damages might be very heavy, it would be very diffi- cult clearly to prove any. Their nature and amount could be better estimated by tfie parties themselves, than by witnesses, courts, or juries. It is, then, precisely one of thai class of cases In which It has always been recognized as peculiarly appropriate for the parties to fix and agree upon the damages for themselves. In such a case, the lan- guage must be very clear to the contrary, to overcome the inference of intent (so to fix them), to be drawn from the subject-matter and the situation of the parties; because, it Is difficult to suppose, in such a case, that the party taking the stipulation intended it only to cover the amount of damages actual- ly to be proved, as he would be entitled to the latter without the mention of any sum In the ■ contract, and he must also be sup- posed to know that his actual damages, from the nature of the case, are not susceptible of legal proof to anything approaching their actual extent. That the parties actually in- tended, in this case, to fix the amount to be recovered. Is clear from the language itself,, without the aid of a reference to the sub- ject-matter, "upon the forfeiture of the sum of one thousand dollars, to be collected by the said Hudson as his damages." It is manifest from this language that it was in- tended Hudson should "collect," or, in other words, receive this amount, and that it should be for his damages for the breach of the stipulation. This language is stronger 66 PENALTIES AND FORFEITURES. than "forfeit and pay," or "under tlie pen- alty of," as these might be supposed to have reference to the form of the penal part of a bond, or to the form of action upon it, and not to the actual "collection" of the money. It is, therefore, very clear, from every view we have been able to take of this case, that it ^vas competent and proper for the parties to ascertain and fix for themselves the amount of damages for the breach com- plained of, and equally clear that they have done so in fact. From the uncertain nature of the damages, we cannot say that the sum in this case exceeds the actual damages, or that the principle of compensation has been violated. Indeed, it would have been per- haps difficult to discover a violation of this principle had the sum in this case been more than It now is, though, doubtless, even in such cases as the present, if the sum stated were so excessive as clearly to exceed all reasonable apprehension of actual loss or injtu'y for the breach, we should be com- pelled to disregard the intention of the par- ties, and treat the sum' only as a penalty to cover the actual damages to be exhibited in proof. In this case the party must be held to the amount stipulated in his contract. The second exception, therefore, is not well taken; the court properly refused to charge as requested, and no error appearing in the record, the judgment of the circuit court for the county of Wayne must be affirmed. The other justices concurred. PENALTIES AND FORFEITURES. 67 KEEBLE V. KEEBLE. (5 South. 149, 85 Ala. 552.) Supreme Court of Alabama. Dec. 8, 1888. Appeal from city court, Dallas county; John Haralson, Judge. This was an action brought by the appel- lant, Henry C. Keeble, against the appellee, Julia P. Keeble, as the executrix of E. 0. Keeble, deceased, for the recovery of money alleged to be due the plaintiff by the de- fendant's testator. The defendant pleaded the general issue, payment, accord and satis- faction, and set-off. The only question in the case arose on the instruction given the jury by the court, founded on the facts set out in the seventh plea. The demurrer to this plea vras overruled by the court. It -wsls, in substance, that plaintiff and defendant's tes- tator had been in partnership in the merdan- tile business. Plaintiff sold out to defend- ant's testator, but was employed by the lat- ter as business manager. The terms of the employment imposed on plaintiff the obliga- tion to wholly abstain from the use of in- toxicating liquors, and, in the event he should become intoxicated, that "he should pay, "as liquidated damages," the sum of $1,000. The plea alleged that plaintiff violated his promise to keep sober, and thereby became bound to pay to defendant's testator said sum of $1,000, which sum was offered as a set-off to plain- tiff's demand. Mr. Roy and White & White, for appellant. Pettus & Pettus, for appellee. SOMERVILLE, J. The only question in this case is whether the sum of $1,000, agreed to be paid by the appellant, Henry C. Keeble, to Richard C. Keeble, the testator of the ap- pellee, as mentioned in the written contract of employment between the parties, is to be regarded by the court as a penalty or as liquidated damages. The city court held it, in effect, to be liquidated damages, by char- ging the jury to find for the defendant, if the facts set out in the seventh plea were satisfactorily proved. The solution of this question is one which the courts have often confessed embarrassment in determining. No one rule can be announced which will fur- nish a single test or criterion for all cases, but, in most cases, a multitude of considera- tions are to be regarded in seeking to reach the real intention of the parties. The follow- ing general rules may be deduced from the authorities, each having more or less weight, according to the peculiar circumstances of each case, and the nature of the contract sought to be construed: (1) The court will always seek to ascertain the true and real in- tention of the contracting parties, giving due weight to the language or words used in the contract, but not always being absolutely con- trolled by them, when the enforcement of such contract operates with unconscionable hardship, or otherwise worlds an injustice. (2) The mere denomination of the sum to be paid as "liquidated damages," or as "a pen- alty," Is not conclusive on the court as to its real character. Although designated as "liquidated damages" it may be construed as a penalty, and often when called a "penalty" it may be held to be liquidated damages, where the intention to the contrary is plain. (3) The courts are disposed to lean against any interpretation of a contract which will make it liquidated damages; and, in all cases of doubtful intention, will pronounce the stip- ulated sum a penalty. (4) Where the pay- ment of a smaller sum is secured by an obli- gation to pay a larger sum, it will be held a penalty, and not liquidated damages. (5) Where the agreement Is for the performance or non-performance of a single act, or of sev- eral acts, or of several things which are but minor parts of a single complex act, and the precise damage resulting from the violation of each covenant is wholly uncertain or in- capable of being ascertained save by con- jecture, the parties may agree on a fixed sum as liquidated damages, and the courts will so construe it, unless it is clear on other grounds that a penalty was really intended. (6) When the contract provides for the per- formance of several acts of different degrees of importance, and the damages resulting from the violation of some, although not all, of the provisions are of easy ascertainment, and one large gross sum is stipulated to be paid for the breach of any, it will be con- strued a penalty, and not as liquidated dam- ages. (7) When the agreement provides for the performance of one or more acts, and the stipulation is to pay the same gross sum for a partial as for a total or complete breach of performance, the sum will be construed to be a penalty. (8) Whether the sum agreed to be paid is out of proportion to the actual damages, which will probably be sustained by a breach, is a fact into which the court will not enter on inquiry, if the intent is other- wise made clear that liquidated damages, and not a penalty, are in contemplation. (9) Where the agreement is in the alternative, to do one of two acts, but is to pay a larger sum of money in the one event than in the other, the obligor having his election to do either, the amount thus agreed to be paid will be held liquidated damages, and not a penalty. (10) In applying these rules, the controlling purpose of which is to ascertain the real in- tention of the parties, the court will consider the nature of the contract, the terms of the whole Instrument, the consequences naturally resulting from a breach of its stipulations, and the peculiar circumstances surrounding the transaction; thus permitting each case to stand, as far as possible, on its own merits and peculiarities. These rules are believed to be sustained by the preponderance of ju- dicial decisions. Graham v. Bickham, 1 Am. Dec. 328, and note, pp. 331-340; Williams v. Vance. 30 Am. Rep. 26, and note, pp. 28-36; 1 Pom. Eq. Jur. §§ 440-446; McPherson v. 08 PENALTIES AND FORFEITURES. Robertson, 82 Ala. 459, 2 South. 333; Hooper V. Railroad Co., 69 Ala. 529; Watts v. Shep- pard, 2 Ala. 425; Bish. Cont. § 1452; Curry V. Larer, 7 Pa. St. 470; Foley v. McKeegan, 4 Iowa, 1; Nash v. Hermosilla, 9 Cal. 584; Muse V. Swayne, 2 Lea, 251; 2 Greenl. Ev. § 258. The appellant was in the employment of the appellee's testator as a business manager, at very liberal wages, having been a partner with him In the mercantile business, under the firm name of R. C. Keeble & Go. Al- though he was but an employe, having sold to R. C. Keeble his entire interest in the part- nership business, he remained ostensibly a partner. The terms of the employment, re- duced to writing, imposed on the appellant, Henry Keeble, the obligation, among other duties, "to wholly abstain from the use of intoxicating liquors," and "to continue and re- main sober," giving his diligent attention to the business of his employer, and promising, in the event he should become intoxicated, that he would pay, "as liquidated damages," the sum of $1,000, which the testator, Rich- ard Keeble, was authorized to retain out of a certain debt he owed the appellant. The appellant violated his promise by becoming intoxicated, and remained so for a long time, and acted rudely and insultingly towards the customers and employes of the testator, and otherwise deported himself, by reason of in- toxication, in such manner as to do injury to the business. It is not denied by appellant's counsel that this is a total breach of the prom- ise to keep sober; nor is it argued that the damage resulting from the violation of such a promise can be ascertained with any degree of certainty; nor even that the amount agreed to be paid as liquidated damages, in the event of a breach, is disproportionate to the dam- ages which may have been actually sustained in this case. But the contention seems to be that, inasmuch as it was possible for a breach to ocfcur with no actual damages other than nominal, the amount agreed to be paid should be construed to be a penalty. Unless this view is correct, the application of the fore- going rules to the construction of the agree- ment manifestly stamps it as a stipulation for liquidated damages, and not a penalty. It is argued, in other words, that becoming intoxicated in private, while off duty, would be a violation of the contract, but would be attended with no actual damage to the busi- ness of R. C. Keeble & Co. This fact would, in our opinion, except the case from the oper- ation of the rules above enunciated. There are but few agreements of this liind where the stipulation is to do or not do a particular act, in which the damages may not, accord- ing to circumstances, vary, on a sliding scale, from nominal damages to a considerable sum. One may sell out the good-will of his busi- ness in a given locality, and agree to abstain from its further prosecution, or, in the event of his breach of his agreement, to pay a cer- tain sum as liquidated damages; as, for ex- ample, not to practice one's profession as a physician or lawyer, not to run a steam-boat on a certain river or to carry on the hotel business in a particular town, not to re-estab- lish a newspaper for a given period, or to carry on a particular branch of business with- in a certain distance from a named city. In all such cases, as often decided, it is compe- tent for the parties to stipulate for the pay- ment of a gross sum by way of liquidated damages for the violation of the agreement, and for the very reason that such damages are uncertain, fluctuating, and incapable of easy ascertainment. Williams v. Vance, 30 Am. Rep. 29-31, note; Graham v. Bickham, 1 Am. Dec. 336-338, note; 1 Pom. Eq. Jur. § 442, note 1. It is clear that each of these various agreements may be violated by a sub- stantial breach, and yet no damages might accrue except such as are nominal. The obligor may practice medicine, and possibly never interfere with the practice of the other contracting party; or law, without having a paying client; or he may run a steam-boat without a passenger; or an hotel without a guest; or carry on a newspaper without the least injury to any competitor. But the law will not enter upon an investigation as to the quantum of damages in such cases. This is the very matter settled by the agreement of the parties. If the act agreed not to be done is one from which, in the ordinary course of events, damages, incapable of ascertainment save by conjecture, are liable naturally to fol- low, sometimes more and sometimes less, ac- cording to the aggravation of the act, the court will not stop to investigate the extent of the grievance complained of as a total breach, but will accept the sum agreed on as a proper and just measurement, by way of liquidated damages, unless the real intention of the par- ties, under the rules above announced, de- signed it as a penalty. We may add, more- over, that no one can accurately estimate the physiological relation between private and public drunkenness, nor the causal connec- tion between Intoxication one time and a score of times. The latter, in each instance, may follow from the former, and the one may naturally lead to the other. There would seem to be nothing harsh or unreasonable in stipulating against the very source and be- ginning of the more aggravated evil sought to be avoided. The duty resting on the court. In all these cases, is to so apply the settled rules of construction as to ascertain the legal- ly expressed and real intention of the parties. Courts are under no obligations, nor have they the power, to make a wiser or better contract for either of the parties than he may be sup- posed to have made for himself. The court below, in our judgment, did not err in hold- ing, as it did, by its rulings, that the sum agreed to be paid the appellee's testator was liquidated damages, and not a penalty. Af- firmed. » PRIORITIES AND NOTICE. 69 HEYDER et al. v. EXCELSIOR BUILDING LOAN ASS'N NO. 2 OF CITY OF NEWARK. (8 Atl. 310, 42 N. J. Eq. 408.) Court of Errors and Appeals of New .Jersey. March 5, 1887. C. T. Glen, for appellants. Guild & Lum, for respondents. KNAPP, J. The learned master who de- cided this cause reached the conclusion on the evidence that the purchaser of the prem- ises, and not the mortgagee, should bear the loss incident to the fraudulent cancellation of the mortgage made upon the record prior to the purchase, on the faith of which cancella- tion the buyer parted with the whole pur- chase money believing the property to be un- incumbered. After a careful review of the case, I am led to an opposite result. I am fully impressed with the importance of se- curing due protection to the holders of mort- gage securities, where, in pursuit of the pro- visions of the registry laws, the lien has been made apparent on the record. The security afforded by registry should remain undisturb- ed by a cancellation effected through mis- talie, accident, or fraud of third persons, even if by such cancellation subsequent mortga- gees or purchasers are made to suffer loss. Such after-acquired rights ought not to pre- vail against the just claims of an innocent non-negligent incumbrancer, because the rec- ord has been wrongly effaced. Cancellation of a mortgage on the record is only prima facie evidence of its discharge, and it is left to the owner making the allegation to prove the canceling to have been done by fraud, accident, or mistake. Such proof being made, the mortgage will be established, even against subsequent purchasers or mortgagees without notice. Banking Co. v. Woodruff, 2 N. J. Eq. 117; Harrison v. Railroad Co., 19 N. J. Eq. 488. Between a mortgagee whose mortgage has been discharged of record solely through the unauthorized act of another party, and a purchaser who buys the title in the belief, induced by such cancellation, that the mort- gage is satisfied and discharged, the equities are balanced, and the rights in the order of time must prevail. The lien of the mortgage must remain despite the apparent discharge. But this 13 apart from any default attributa- ble to the holder of the lien. If through his negligence the record is permitted to give notice to the world that his claim is satisfied, he cannot, in the face of his own careless- ness, have his mortgage enforced against a bona fide purchaser taking his title on the faith that the registrj' is discharged. Where one gives to another the power to practice a fraud upon innocent parties, the court will not interfere in his protection at the expense of those who have been deceived and misled by such fraud. What circumstance shall be sufficient to establish negligence, such as shall preclude a mortgagee from a decree establishing his canceled paper, must be de- termined as a question of fact in each par- ticular case, tested by those rules of conduct which men of common prudence usually ob- serve in the care and management of such securities. That it is negligence in the own- er of a mortgage to permit it to be in the custody and control of the mortgagor or own- er of the mortgaged premises, in view of the provisions of our statute of registry, will not admit of denial. Such an occurrence is so unusual, so Imperils the owner, and there- fore so unlikely to happen in business deal- ings, that it was regarded in Harrisop v. Rail- road Co. as ground for the gravest suspicion of the truthfulness of a witness who had tes- tified to such custody by the assent of the owner of the security. The minute of discharge of this mortgage made upon the record by the register ex- pressed, in general form, the fact of cancella- tion. The entry was made upon evidence presented to the register such as the statute has declared to be sufficient authority for so doing. The mortgage was produced by the mortgagor, canceled, and there is no doubt that upon the faith of this cancellation the purchaser took title to the property, and paid the consideration. But it clearly appears that the mortgage was unpaid, and that the act of tbe mortgagor in procuring the entry of the discharge was fraudulent, and without the knowledge or assent of the mortgagee. If this were all of the case, and no default appeared on the part of the mortgagee, not- withstanding the forcible language of the act which declares such minute to be a full and absolute bar to and discharge of the said entry, registry, and mortgage, the riglit of the respondent to the lien of its security should be maintained; and it is solely upon the ground that the respondent is chargeable with negligence which tended to and actual- ly did produce the injury that I think the decree should be reversed. The mortgage was in the possession and under the control of the mortgagor at the time when it was produced for cancellation on the record. How long he had such custody does not positive- ly appear, but the strong inference from the testimony is that it was during the whole time between the registry of the mortgage and its cancellation. Neither the president of the association, nor its treasurer, who had charge of its securities, were able to say that they ever had the actual custody of this mort- gage; and they further declare that the mortgagor, although an officer of the com- pany, had no access whatever to the securi- ties in the possession of the treasurer. It is therefore impossible that he should have ob- tained its possession by means resembling theft. His possession must, I think, be at- tributed either to the assent or to the negli- gence of the officers of the association respon- sible for its securities. If we regard the the- 70 PRIORITIES AND NOTICE. ory that the mortgagor, at the conclusion of his transaction of the loan, fraudulently sub- stituted a copy of the mortgage for the orig- inal paper, and delivered that to the associa- tion, I am still forced to the conclusion that the officers were culpably negligent in per- mitting themselves to be thus imposed upon. The fact that he was the law officer of this body would not justify so implicit a trust in him in the matter of a loan to himself. We must assume that these officers were men of business capacity and sliill. The ti'ans- aetion was in the line of their ordinary du- ties. Indeed, they did not trust to him, but employed other counsel to make searches against his property. In their ordinary trans- actions their habit was to submit to counsel the securities received for loans for inspec- tion and approval. The slightest examina- tion of the paper received by them would have shown it to be but a copy. They sub- mitted it to no legal adviser; they gave It no examination. If it were not intended to be, as was its purport a mere copy, leaving the original in other hands, any degree of care, exceeding the blindest confidence, must have revealed the deception. The theory fails to lead us out of the difficulty. I do not think that any circumstance presented in this case made it the appellant's duty, in order to avail himself of the rights of a bona fide purchaser, to institute personal inquiry of the mortgagee. Any rule placing him under this exaction would embrace every case of a purchase of lands that had ever been sub- ject to mortgage which the record showed to be canceled. Such a rule, it is needless to say, would render this provision of the regis- try act entirely nugatory. A purchaser could then only buy with safety when the registry had been discharged, and an admission of payment obtained from the mortgagee. Doubtless circumstances may, and frequently do, arise to put the purchaser upon Inquiry, and charge him with notice. It seems to me that nothing appears in this transaction which should have put tliis purchaser upon further inquiry. He was permitted to rely upon the record. He did so, purchasing upon the belief that it spoke the fact truly. It was false, but the deception was directly traceable to the culpable negligence of the mortgage owner, and the loss should fall up- on the party chargeable with the fault. The decree below should be reversed, and the bill of complainants be dismissed. PRIORITIES AND NOTICE. 71 PHILLIPS V. PHILLIPS. (4 De Gex, F. & J. 208.) Court of Appeal in Chancery. Jan. 11, 1862. F. O. Haynes, for plaintiff. Mr. Malins and John Pearson, for defendants. Tile LORD CHANCELLOR. When I reserved my judgment at the con- clusion of the argument in this case, it was rather out of respect to that argument than from a feeling of any difBculty with regard to the question that had been so strenu- ously contested before me. The case is a very simple one. The plain- tiff claims as the grantee of an annuity granted by a deed dated In the month of February, 1820, to issue out of certain lands in the county of Monmouth, secured by powers of distress and entry. The annuity or rent charge was not to arise until the death of one Rebecca Phillips, who died in the month of December, 1839, and the first payment of the annuity became due on the 8th March, 1840. The case was argued on both sides on the admitted basis that the legal estate was out- standing in certain incumbrancers, and is still outstanding. Subject to the annuity the grantor was entitled in fee simple in equity. In February, 1821, the grantor in- termarried with one Mary Phillips. On the occasion of that marriage a settlement, dated in February, 1821, was executed, and un- der this deed the defendants claim, and claim, therefore, as purchasers for a valu- able consideration. No payment has ever been made in respect of the annuity. The bill was filed within twenty years, and seelis the ordinary relief applicable to the case. The defendants by their answer insist that the deed was voluntary, and therefore void, under the statute of Eliza- beth, as against them in their character of purchasers for valuable consideration, and they also Insist upon the statute of limita- tions. But in the answer the defense of purchase for valuable consideration with- out notice is not attempted to be raised. At the hearing an affidavit of Mary Phil- lips and another person was produced, de- nying the fact of notice of the annuity at the time of the grant and at the time of the creation of the marriage settlement, and the contention at the bar was that the defense of purchase for valuable consideration with- out notice was available for the defendants under these circumstances, and ought to be allowed as a bar to the claim by the court. The vice chancellor in his judgment refused to admit the defense of purchase for valu- able consideration without notice, and I en- tirely agree with him in the conclusion that such a defense requires to be pleaded by the answer, more especially where an an- swer has been put in. But I do not mean to rest my decision upon that particular ground because I have permitted the argument to proceed with ref- erence to the general proposition, which was maintained before me with great energy and learning, viz., that the doctrine of a court of equity was this, that it would give no relief whatever to any claimant against a purchaser for valuable consideration with- out notice. It was urged upon me that au- thority to this effect was to be foun^ in some recent decisions of this court, and particularly in the case decided at the rolls of Attorney General v. Wilkins, 17 Beav. 285. I undoubtedly was struck with the nov- elty and extent of the doeti-ine that was thus advanced, and in order to deal with the argument it becomes necessary to re- vert to elementary principles. I take it to be a clear proposition that every convey- ance of an equitable interest is an innocent conveyance, that is to say, the grant of a person entitled merely in equity passes only that which he is justly entitled to and no more. If, therefore, a person seised of an equitable estate (the legal estate being out- standing) makes an assurance by way of mortgage or grants an annuity, and after- wards conveys the whole estate to a pur- chaser, he can grant to the purchaser that which he has, viz., the estate subject to the mortgage or annuity, and no more. The subsequent grantee takes only that which is left in the grantor. Hence grantees and incumbrancers claiming in equity take and are ranked according to the dates of their securities; and the maxim applies, "Qui prior est tempore potior est jure." The first grantee is potior, that is potentior. He has a better and superior, because a prior, eq- uity. The first gi-antee has a right to be paid first, and it is quite immaterial wheth- er the subsequent incumbrancers, at the time when they took their securities and paid their money, had notice of the first in- cumbrance or not. These elementary rules are recognized in the case of Brace v. Duchess of Marlborough, 2 P. Wms. 491, and they are further illustrated by the fa- miliar doctrine of the court as to tacking securities. It is well known that if there are three incumbrancers, and the third 'in- cumbrancer, at the time of his incumbrance and payment of his money, had no notice of the second incumbrance, then, if the first mortgagee or incumbrancer has the legal estate, and the third pays him off, and takes an assignment of his securities and a conveyance of the legal estate, he is enti- tled to tack his third mortgage to the first mortgage which he has acquired, and to ex- clude the intermediate incumbrancer; but this doctrine is limited to the ease where the first mortgagee has the legal title, for, if the first moitgagee has not the legal title, 72 PRIORITIES AND NOTICE. the third does not, by the transfer, obtain the legal title, and the third mortgagee, by payment off of the first, acquires no pri- ority over the second. Now the defense of a purchaser for valuable consideration is the creature of a court of equity, and it can never be used in a manner at variance with the elementary rules which have already been stated. It seems at first to have been used as a shield against the claim in equity of persons ha^•ing a legal title. Bassett v. Nosworthy, Finch, Hr-'. 2 White & T. Lead. Cas. Eq. 1, is, if not the earliest, the best early reported case on the subject. There the plaintiff claimed under a legal title, and this circumstance, together with the maxim which I have referred to, probably gave rise to the notion that this defense was good only against the legal title; but there ap- pear to be three cases in which the use of this defense is most familiar: First, where an application is made to an auxiliary jurisdiction of the court by the possessor of a legal title, as by an heir at law (which was the case in Bassett v. Xos- worthy. Finch, 102. 2 White & T. Lead. Cas. Eq. 1), or by a tenant for life for the deliv- ery of title deeds (which was the case of Wallwyn v. Lee, 9 Ves. 24), and the de- fendant pleads that he is a bona fide pur- chaser for valuable consideration without notice. In such a case the defense is good, and the reason given is that, as against a purchaser for valuable consideration with- out notice, the court gives no assistance, that is, no assistance to the legal title. But this rule does not apply where the court ex- ercises a legal jurisdiction concurrently with courts of law. Thus it was decided by Lord Thurlow in Williams v. Lambe, 3 Brown Ch. 264, that the defense could not be plead- ed to a bill for dower, and by Sir J. Leach in Colluis V. Archer, 1 Russ. & M. 284, that it was no answer to a bill for fines. In those cases the court of equity was not asked to give the plaintiff any equitable, as distinguished from legal, relief. The second class of cases Is the ordinary one of several purchasers or incumbrancers, each claiming in equity, and one who is later and last in time succeeds in obtaining an outstanding legal estate not held upon exist- ing' trusts or a judgment, or any other legal advantage the possession of which may be a protection to himself or an embarrassment to other claimants. He will not be deprived of this advantage by a court of equity. To a bill filed against him' for this purpose, by a prior purchaser or incumbrancer, the de- fendant may maintain the plea of pm'chase for valuable consideration without notice, for the principle is that a court of equity will not disarm a purchaser, that is, will not take from him the shield of any legal advantage. This is the common doctrine of the tabula in naufragio. Thirdly, where there are circumstances that give rise to an equity as distinguished from an equitable estate,— as, for example, an equity to set aside a deed for fraud, or to correct it for mistake,— and the purchaser under the instrument maintains the plea of purchase for valuable consideration without notice, the court will not interfere. Now these are the three cases in which the defense in question Is most commonly found. None of them involve the case that is now before me. It was indeed said at the bar that the de- fendants, being in possession, had a legal advantage in respect of the possession, of which they ought not to be deprived; but that is to confound the subject of adjudi- cation with the means of determining it. The possession is the thing which is the sub- ject of controversy, and is to be awarded by the court to one or to the other; but the subject of controversy and tlie means of de- termining the right to that subject are per- fectly different. The argument, in fact, amounts to this, "I ought not to be deprived of possession, because I have possession." The purchaser will not be deprived of any- thing that gives him a legal right to the pos- session, but the possession itself must not be confounded with the right to it. The case therefore that I have to decide is the ordinary case of a person claiming, un- der an innocent equitable conveyance, that interest which existed in the grantor at the time when that conveyance was made; but, as I have already said, that interest was di- minished by the estate that had been pre- viously granted to the annuitant, and, as there was no ground for pretending that the deed creating the annuity was a voluntary deed, so there is no ground whatever for con- tending that the estate of the person taking under the subsequent marriage settlement is not to be treated by this court, being an equitable estate, as subject to the antecedent annuity, just as effectually as if the annuity itself had been noticed and excepted out of the operation of the subsequent instrument. I have no difficulty, therefore, in holding that the plea of purchase for valuable con- sideration is upon principle not at all ap- plicable to the case before me, even if I could take notice of it as having been rightly and regularly raised. We next come to examine the authorities upon which the defense relies. Now, un- doubtedly, I cannot assent to some observa- tions which I find attributed to the master of the rolls in the report of the case of Attorney General v. Wilkins, 17 Beav. 285, but to the decision of that case, as explained by his honor in the subsequent case of Colyer v. Finch, 19 Beav. 5CI0, I see no reasonable ob- jection, and the principles that I have here been referring to are fully explained and acted on by the master of the rolls In the case of Colyer v. Finch, 19 Beav. 500. It is impossible, therefore, to suppose that he in- PEIORITIES AND NOTICE. 73 tended to lay down anything in ttie case of Attorney General v. Wilkins, 17 Beav. 285, which is at variance with the ordinary rules of the court as I have already explained them, or which could give countenance to the argument that has been raised before me at the bar. I have consequently no difficulty in holding that the decree of his honor the vice chancel- lor Is right upon the grounds on which be placed it in the court below, and that also it would have been right if he had considered the grounds which have been urged before me in support of this petition of rehearing. I therefore affirm the decree and dismiss the petition of rehearing; but, inasmuch as the plaintiff sues In forma pauperis, of course it must be dismissed without costs. Mr. Pearson, for appellant, asked for a re- turn of the deposit. The LORD CHANOEILLOR. I think that the respondent should have the benefit of the deposit. You purchase the lib- erty of coming here by the deposit. I do not think that I can give the appellant any fur- ther costs against you, but I can give him the benefit of the deposit which, according to the rules of the court, you have made. There- fore the deposit will be given to him, unless it exceeds the costs of the appeal. 74 PRIORITIES AND NOTICE. KNAPP V. BAILEY. (9 Atl. 122, 79 Me. 195.) Supreme .Tudicial Court of Maine. March 1, 1887. On appeal from decision of single justice at nisi prius, Penobscot county. Bill in equity brought to remove a cloud from the complainant's title, and to redeem the land from an equitable mortgage. The judge at nisi prius rendered a decision in fa- vor of the complainant, and the respondent appealed to the law court. A. W. Paine and 0. P. Stetson, for com- plainant. Davis & Bailey, for respondent. PETERS, C. J. This bill seeks to remove a cloud overhanging the complainant's title to an undivided parcel of land,— in effect, to redeem the land from an equitable mortgage, the allegation being that the debt has been paid. We can have no reasonable doubt of the facts thus far alleged. The defendant's grantor was called as a witness by the com- plainant. The defendant contends that his testimony was inadmissible, and cites cases which sustain the ordinary principle that a grantor cannot dispute with his grantee the title which he has assumed to convey. The objection goes to the testimony, and not to the witness personally. The principle of es- toppel, which is involied, is aimed, not against the witness because he is a grantor, but against any oral testimony to contradict the terms of a deed. As said by .Judge Cur- tis in answer to the same objection: "The facts to be proved were dehors the record, and one witness was as competent, in point of law, [to prove them,] as another." 'Where a grantor is allowed to prove a fact by an- other, he may do so by himself. Holbrook v. Bank, 2 Curt. 246. It is true, as a general rule, that the effect of a deed cannot be controlled by oral evi- dence. But among the exceptions to the rule is that in equity, where the proof is clear and convincing, a deed absolute on its face may be construed to be an equitable mort- gage. In Rowell v. Jewett, 69 Me. 293, this exceptional doctrine was first allowed to have operation in this state. It was fuUy accepted in Stinchfield v. Milliken, 71 Me. 567, where the opinion says: "But the trans- action was In equity a mortgage,— an equlta- able mortgage. The criterion is the intention of the parties. In equity this intention may be ascertained from all pertinent facts, ei- ther within or without the written parts of the transaction. Where the Intention is clear that an absolute conveyance is taken as a security for a debt, it is in equity a mort- gage. The real intention governs." In Iiew- is V. Small, 71 Me. 552, the same doctrine is admitted. It has since been affirmed in other cases, receiving an able discussion in the late case of Reed v. Reed, 75 Me. 264. The effect of many of the older cases In this state has been swept away by this new prin- ciple in our legal system,— a product of the growth of the law, very greatly promoted by legislative stimulation. The present case must be governed by the equitable rule de- clared in the later decisions. Another question presented by the case is whether the statutory provision (Rev. St. c. 73, § 12) which declares that a title of a pur- chaser for a valuable consideration cannot be defeated by a trust, unless the purchaser had notice thereof, means actual or con- structive notice. Section 8 of the same chap- ter requires "actual notice" of an unrecorded deed to defeat a subsequent purchaser's title from the same grantor. The two sections were incorporated in our statutory system at the same time,— in the Revision of 1841. One requires "notice," the other "actual no- tice." We think the difference In phrase- ology may be accounted for partly on the idea that section 8 would be applicable more to law cases, and section 12 more to ques- tions in equity. We can have no doubt that there may be cases of constructive trusts where section 12 would apply. At the same time, where the facts present questions analogous to those ordinarily arising under the other section, we think actual notice would be required; that under either sec- tion, in cases generally, actual notice, as we understand the meaning of the term, would be the rule; and that actual notice applies in the present case. There is a conflict in the cases and among writers as to what is actual notice. Much of the difference is said to be verbal only, — more apparent than real. Certain proposi- tions, however, are quite well agreed upon by a majority of the authorities. Notice does not mean knowledge; actual knowledge Is not required. Mr. Wade describes the modes of proving actual notice as of two kinds. One he denominates express notice, and the other implied. "Implied, which imputes knowl- edge to the party because he is shown to be anxious of having the means of knowledge, though he does not use them; in other words, where he chooses to remain volun- tarily ignorant of the fact, or is grossly neg- ligent in not following up the inquiry which the known facts suggest." Wade, Notice (2d Ed.) § 5. Some writers use the word "im- plied" as meaning constructive, and would regard what is here described to be implied actual notice as constructive notice merely. As applicable to actual notice, such as is re- quired by the sections of the statute under consideration, we think the classification of the author whom we quote is satisfactory. The author further explains the distinction by adding that "notice by implication dilfers from constructive notice, with which it is frequently confounded, and which it greatly resembles, with respect to the character of the inference upon which it rests; construct- ive notice being the creature of positive- PRIORITIES AND NOTICE. 75 law, or resting upon strictly legal Inference, while implied notice arises from inference of fact." It amounts substantially to this: that actual notice may be proved by direct evidence, or it may be inferred or implied (that Is, proved) as a fact from indirect evi- dence,— by circumstantial evidence. A man may have notice or its legal equivalent. He may be so situated as to be estopped to deny that he had actual notice. We are speaking of the statutory notice required under the conveyances act. A higher grade of evidence may be necessary to prove actual notice ap- pertaining to commercial paper. ICellogg v. Curtis, 69 Me. 212. The same facts may spmetimes be such as to prove both construct- ive and actual notice; that is, a court might infer constructive notice, and a jury infer actual notice, from the facts. Tliere may be cases where the facts show actual, when they do not warrant the inference of con- structive, notice; as where a deed is not regularly recorded, and not giving construct- ive notice, but a second purchaser sees it on the records, thereby receiving actual notice. Hastings v. Cutler, 24 N. H. 481. Mr. Pomeroy (2 Eq. Jur. 596, note) sum- marizes the effect of the American cases on the point under discussion in the following words: "In a few of the states the courts have interpreted the intention of the legis- lature as demanding that the personal infor- mation of the unrecorded instrument should be proved by the direct evidence, and as ex- cluding all instances of actual notice estab- lislied by circumstantial evidence. In most of the states, however, where this statutory clause is found, the courts have defined the 'actual notice' required by the legislature as embracing all instances of that species in contradistinction from constructive notice; that is, all kinds of actual notice, whether proved by direct evidence or inferred as a legitimate conclusion from circumstances." The doctrine of actual notice implied by circumstances (actual notice in the second degree) necessarily involves the rule that a purchaser, before buying, should clear up the doubts which apparently hang upon the title, by making due inquiry and investigation. If a party has knowledge of such facts as would lead a fair and prudent man, using ordinary caution, to make further Inquiries, and he avoids the inquiry, he is chargeable with notice of the facts which by ordinary diligence he would have ascertained. He has no right to shut his eyes against the light before him. He does a wrong not to heed the "signs and signals" seen by him. It may be well concluded that he is avoid- ing notice of that which he in reality be- lieves or knows. Actual notice of facts which to the mind of a prudent man indi- cate notice is proof of notice. 3 Washb. Real Prop. (3d Ed.) 335. It must be admitted that our present views are not fully supported by the case of Spof- ford V. Weston, 29 Me. 140, a decision made 40 years ago. But the doctrine has grown liberally since that day, and the correctness of some things pronounced in that opinion is virtually denied in subsequent cases. Por- ter V. Sevey, 43 Me. 519; Hull v. Noble, 40 Me. 459; Jones v. McNan-in, 68 Me. 334. Many cases which affirm the doctrine con- tended for by the complainant, as well as many opposing cases, are cited by the text writers. Wade, Notice, §§ 10, 11, et seq., and cases in notes; 2 Pom. p:!q. Jur. § 603, and notes. The decided preponderance of author- ity supports the position that the statutory "actual notice" is a conclusion of fact capa- ble of being established by all grades of legitimate evidence. As to what would be a sufficiency of facts to excite inquiry no rule can very well estab- hsh. Each case depends upon its own facts. There is a great inconsistency in the cases upon this point. But we are satisfied that in the case before us the defendant must be charged with notice that his grantor held title by what equity must declare to be an invalid deed. He saw the grantor was out of possession. He could have easily ascertained that he never had possession. He. knew that others had controlled the property in many ways for many years. He examined the registry when he discovered the deed in question, and there must have seen evidence of other conveyances inconsistent with its full validity. He purchased the property for $40, while worth, had the title been perfect, nearer $1,000. He took a quitclaim deed; and it is held by some courts that such an instrument of conveyance does not make him a bona fide purchaser without notice (Baker v. Humphrey, 101 U. S. 494), al- though in our system it is a circumstance only bearing on the question (Mansfield v. Dyer, 181 Mass. 200). More than all else, perhaps, the defendant made no inquiry of the grantor whether he had any real title or not, asking no explanations, but insisting to him that he had no valuable title. It is im- possible for us to say, in the light of these impressive illuminating proofs, that the de- fendant purchased without notice. He pur- chased on the basis of a merely nominal title. We would not say that he did not believe he could legally purchase, encouraged, as he was, by the doctrine of the earlier cases, now abrogated; nor do we impute more than a want of caution and of diligence. Men's in- terests spur their judgments to one-sided conclusions oftentimes. The great dramatist makes a character reluctant to acknowledge the situation say, "I cannot dare to know that which I know;" while another, more quick-sighted, because anxious to believe, ex- claims, "Seems, Madam! Nay, it is. I know not seems." One rejects proof on the clear- est facts; the other accepts it on the slight- est. Judgment affirmed. WALTON, DANFORTH, EMERY, POS- TER, and HASKELL, JJ., concurred. 76 PRIORITIES AND NOTICE. KIRSCH et al. v. TOZIEK et al. (38 N. E. 375, 143 N. Y. 390.) Court of Appeals of New York. Oct. 23, 1S94. Appeal from supreme court, general term, fifth department. Action brought by Theodore Klrsch and another against Orange L. Tozier, the Buf- falo Savings Bank, and others, to reinstate a mortgage executed by defendant Lester H. Tozier and wife to defendant Orange L. Tozier, in trust for plaintiffs, to set aside its discharge, and for its foreclosure. The bank held a subsequent mortgage. From a judg- ment of the general term (18 N. Y. Supp. •j.'U) aiflrming a judgment for plaintiffs, de- fendants appeal. Affirmed. This action was brought to reinstate a mortgage executed by the defendant Lester H. Tozier and his wife to the defendant Or- ange L. Tozier, which was made in trust for the plaintiffs, Michael Kirsch and Theodore Kirsch, and for Peter Kirsch, now deceased, minor children of John Kirsch, to set aside a discharge of such mortgage executed by Orange L. Tozier, and for foreclosure of the mortgage and sale of the mortgaged premises for the benefit of the persons named, as ces- tuis que ti'ustent. The lands in question con- sist of 102 acres, situate in the town of Shel- don, Wyoming comity, N. Y., of which John Kirsch died seised in the year 1872. On the 8th day of January, 1873, the defendant Or- ange L. Toziei- was appointed general guard- ian of the infant children, Michael J., Theo- dore and Peter Kirsch. At the time of his death John Kirsch owed debts which, with the Incumbrances upon his real estate, ex ceeded the value of both his personal and real property. Orange L. Tozier and Eliza- beth Kirsch, the latter the widow of the de- ceased, were appointed administrators of the estate of John Kirsch. Subsequently to this it was agreed between them and Les- ter H. Tozier, a son of Orange L. Tozier, that they should purchase the mortgages then ex- isting on the farm, foreclose them, and pro- cm-e a title to the land, and convey the same to Elizabeth Kirsch, who should, in turn, by mortgage thereon, secm-e to Lester H. Tozier the amoimt paid by him, and give a mort- gage upon the farm of $1,000 to these three children. This arrangement was carried out, except that upon a sale of the lands, either by direct purchase at the sale or by deed coming immediately from the purchas- er, Lester H. Tozier became the owner for the consideration, in all, of $1,131.56. There- upon It was further arranged between Or- ange L. Tozier and the widow, Elizabeth Kirsch, that the widow should convey to the then holder of the title, Lester H. Tozier, all her interest in the lands to which she was entitled as widow, and that a mortgage should be executed by Lester H. Tozier to Orange L. Tozier, in trust for the three chil- dren, in the sum of $1,000, one-third thereof payable to each of the three children when he should arrive at age, with interest in tha meantiine. Having received the deed from Mrs. Elizabeth Kirsch, Lester H. Tozier and his wife executed to Orange L. Tozier, in trust for Michael Kirsch, Peter Kirsch, and Theodore Kirsch, "minor children of John JI, Kirsch, deceased," the mortgage in question, dated the loth day of October, 1875, ex pressing a consideration of $1,000 payable as follows: The sum of $333.33 November 13, 1887; the sum of $333.33 March 18, 1891, and the sum of $333.33 October 6, 1892,— with interest, payable annually, from the 1st day of April, 1876. This instrument was deliv- ered to Orange L. Tozier, who caused the same to be recorded in the proper clerk'a office on the 23d day of October, 1875. Tha mortgagee and trustee paid the interest up- on this mortgage to Elizabeth Kirsch, tha mother of the children, in pm-suance of a previous arrangement, until the spring of 1880, since which time no pai't of the princi- pal or interest has been paid thereon by the ti'ustee for the benefit of either of the chil- dren. On the 3d day of September, 1883, Lester H. Tozier and his wife executed and delivered a deed of the farm to Orange L. Tozier, at a consideration, as expressed in the deed, of $4,000, and the record title of such farm has since been in Orange L. To- zier. After acquiring this title, and on the 19th day of Pebmary, 1886, Orange L. To- zier executed and acknowledged a discharge of the mortgage, and caused the same to be recorded in the proper clerk's office on the 0th day of Jlarch, 1886. On the 27th day of January, 1886, before the execution of such discharge, Orange L. Tozier applied to the defendant the Buffalo Savings Bank for a loan of $2,000 upon his fai'm, which applica- tion was granted on the 1st day of Febru- ary, 1886; and on an examination of the title of such farm, submitted to the officers of the bank, there was an abstract certified by the proper clerk of Wyoming county to the effect that Orange L. Tozier appeared to be the owner of the farm. On such ab- sti-act a memorandum of the mortgage sought by this action to be reinstated described the mortgage simply as being given for $1,000 and interest, "in ti'ust for Michael Kirsch, Theodore Kirsch, and Peter Kirsch, minor children of John M. Kirsch, deceased," hav- ing written across the face of the memoran- dum as follows: "Discharged March 9, 1886. E. M. Jennings, Clerk." The defend- ant the Buffalo Savings Bank, at the time of taking its mortgage and advancing the money thereon, had not, either through any of its officers or attorneys, any knowledge or notice of the existence of this mortgage now sotight to be reinstated in this action, except the memorandum on the abstract of title of its discharge, and the constructive notice given by the record of such mortgage. Adolph Rebadow, for appellants. F. 0. Peck, for respondents. PRIORITIES AND NOTICE. 77 ANDREWS, C. J. (after stating the facts). TIio ouly serious question presented on the record ai'ises on tlie claim of the Buffalo Sav- iufis! Bank that it was not chargeable with notice nor put upon inquiry to ascertain that the defendant Tozier had no authority to dis- charge the mortgage in question. The sav- ings hank, when it took its mortgage, had con- structive notice of every fact which could have been ascertained by an inspection of the deeds or mortgages or record in the chain of title. An inspection of the records of the title Co the land upon which Its mortgage was taken would have disclosed the mortgage giv- en by Lester H. Tozier in October, 1875, and that it was given "in trust" for the three mi- nor children of John M, Ku'sch, deceased; that the lands covered by the mortgage were subsequently, in 1883, conveyed by Lester H. Tozier to Orange L. Tozier, the mortgagee named in the mortgage given in trust for the minor children of John M. Kirsch; that after such conveyance, and in March, 1886, Orange L. Tozier, then being the owner of the lands, and also the mortgagee "in ti-ust" in that mortujge, himself executed and caused to be recorded a satisfaction of the mortgage, and that this occurred before any part of the sum secured by the mortgage had become due. There can be no doubt that the satisfaction of the mortgage was, as to the defendant Orange L. Tozier, a breach of trust. The satisfac- tion was without consideration. The ques- tion whether Tozier held the mortgage as tnis- tee impressed with a trust in favor of the three children of John M. Kirsch admits of no doubt. The implication from the nature of the instrument, the character of the bene- liciaries, and the division of the payments in- to ttoee equal parts, payable at specified, but different, dates in the futm'e, is that the in- strument was intended to secm-e to the sev- eral beneficiaries as they became of age an equal share of the sum for which the mort- gage was given. The acceptance by Orange L. Tozier of the mortgage containing the dec- laration of the ti'ust was an acknowledgment of the trust on his part and bomid him to perform it. The trust was expressed in the instniment, although not fully set out in words, and anj' act thereafter done by him In conti-aventiou of the trust was by the com- mon law and by the statute void. Statute of Uses and Trusts (1 Rev. St. 730, § 63). The dischaige of the mortgage was not iut.'uded for the benefit of the infants, but to deprive them of the benefit of the secm'ity, and, as we have said, was a plain breach of trust. The bank knew, or must be presumed to have known, when it took its mortgage, because an examination of the records would have disclosed the facts, (1) tliat the mortgage was taken by Tozier in ti-ust for Infants; (2) that he satisfied it before it became due; (3) that his relation to the property had changed, so that when he executed the satisfaction he was himself the owner of the land, having an adverse interest to those beneficially inter- ested in the security; and (4) that in satisfy- ing the mortgage he was dealing with him- self. Persons dealing with a trustee must take notice of the scope of his authority. An act within his authority will bind the trust estate or the beneficiaries as to third persons acting in good faith and without notice, al- though the trustee intended to defraud the es- tate, and actually 'did accomplish his purpose by means of the act in question. It has fre- quently been held that a peison dealing with an executor, administrator, or trustee, who, from the nature of his office, or by the terms of the trust, has power to satisfy or transfer the securities of the estate, or to vary the in- strument from time to time, is not bound to go further, and ascertain whether in fact the act of the executor or ti-ustee is justified, and that no breach of tnist was intended. It is suffi- cient for his protection that he acts in good faith, and. If the act of the executor or trus- tee is justified by the terms of the power, the party dealing with him is protected. Field T. SchlefCelin, 7 Johns. Ch. 153. But circum- stances were disclosed by the record when the bank took its mortgage which precluded the bank from relying upon the recorded sat- isfaction of the prior mortgage. There was no indication in the mortgage that any power was vested in the trustee, Tozier, to accept payment of the mortgage before it became due, or to vary the trust secm'ity. There was no such aflirmative power conferred upon him in fact, and the case of McPherson v. Rollins, 107 N. Y. 316, 14 N. E. 411, seems to be a de- cisive authority that tliere is no implication of such a power in case of a tmstee of a speci- fied security for the benefit of minors, and no other evidence of his actual authority exists than may be implied from the fact that he is trustee of the securit;)'. The rule declared in that case operated with great severitj^ upon one who, without any actual notice, bought the property upon an official certificate that no lien existed on the premises, paying full value therefor. There the mortgage was giv- en to secm'e the payment of an annuity to the mortgagee, and also annuities to two minors until they should become of age. TTie mort- gagee afterwards, and before the expiration of the minority of the two children, without consideration, assumed to discharge the mort- gage, and the satisfaction was duly recorded. It was held that the ti-ustee had no power to satisfy the mortgage before the termination of the trust, and that the purchaser was not protected. It is difficult to perceive any solid distinction between that case and the present. In McPherson v. Rollins there was no ex- press direction that the mortgage security should remain unchanged dm'ing the term of the tnist. It was given to secure annuities, presumably for maintenance. Here the mort- gage was given to secm'e a gross sum, for the benefit of infants, the shares being payable, as was to be infeiTed, on their severally at- taining full a; ^ There is a very pregnant circumstance in the present case bearing up- 78 PRIORITIES AND NOTICE. on the point of constructive notice. Tlie bank relied upon a discharge by Tozier of a Hen 'leld by him as trustee on his own land. The transaction as disclosed by the record showed that in executing the satisfaction Tozier was dealing with himself, and that the act was in his own interest; and not only so, but that the mortgage was not due. Tozier was act- ing in the double capacity of owner of the land and trustee of a lien thereon for other persons. The transaction was unusual and special, and the savings bank, with knowl- edge of Tozier's relation to the land as owner and trustee, was, we think, bound to inquire by what authority he acted, and, if inquiry had been made, the invalidltj' of the transac- tion would or might have been disclosed. What circumstances will amount to construct- ive notice, or will put a party upon inquiry, is in many cases a question of much difficulty. A purchaser is not required to use the utmost circumspection. He Is bound to act as an ordinarily prudent and careful man would do imder the circumstances. He cannot act in contravention to the dictates of reasonable prudence, or refuse to inquire when the pro- priety of inquiry Is naturally suggested by circumstances known to him. The circum- stances of this case made it, we think, the duty of the bank to inquire in respect to the authority of Tozier to discharge the prior mortgage, and, having failed to do so, it is not entitled to protection as a bona fide purchas- er. Baker v. Bliss, 39 N. Y. 70, and cases cited; Story, Eq. Jur. § 400 et seq. The other questions are satisfactorily disposed of in the opinions of the referee and at general term, and do not require further elaboration. The judgment should be affirmed, with costs. All concur. Judgment affirmed. PRIORITIES AND NOTICE; 79 KNOBLOCH V. MUBLER. (17 N. E. 696, 123 111. 554.) Supreme Court of Illinois. Jan. 20, 1888. Appeal from circuit court, St. Clair county; A. Watts, Judge. George Christian Mueler died March 27, 1870. By his will, dated Mra-ch 14, 1870, his real estate was devised to his sons, George and Solomon. Mueler. The will was admitted to probate, but afterwards, at the January term, 1871, in the circuit court of St. Clair <;ounty, this instrument was, on bill filed for that pm'pose, set aside, and de- clared not to be the will of said deceased. This decree was affirmed by this court. Mueller v. Eebhan, 94 111. 142. On the 27th day of March, 1879, Catharine Rebhau, one of the heirs at law of said George C. Mueler, deceased, filed in the circuit court of St. Clair county her bill for partition of the W. % N. W., and the N. E. N. W. %, of section 28, town 1 N., range 7 W., — alleging the death of said George C. Mueler intestate; that at his death he left him surviving George Mueler and Solomon Mueler, Mar- garite Ehinehardt, and complainant, Cathar- ine Rebhau, his children and only heirs at law, to whom descended in equal parts the said lands; that on the death of said ances- tor, George and Solomon had taken posses- sion of the land jointly, and received the rents thereof until February 29, 1875, when George died, leaving all his property to Solo- mon by his will duly probated, etc., since when said Solomon has received the rents and profits of said land. The bill alleged that Solomon was the owner in fee of the undivided one-half of said lands, and the complainant and Mrs. Rhinehardt were each the owner in fee of the undivided one-fourth part thereof, as tenants in common, and prayed for partition of the land, and that Solomon be required to account for the rents and profits, etc. At the February term, 1880, of said court, said bill was taken as con- fessed as to Mrs. Rhinehardt, and Solomon Mueler and his wife, who was also made a party, filed their answer, admitting the ma- terial allegations of the bill, and consenting to partition of said premises according to the prayer thereof. Subsequently an amended answer and cross-bill was filed, setting up that said Solomon had made lasting and valuable improvements on the land, etc. On hearing, said defendant Solomon admitted in open court the allegations of the bill in re- spect of the interest of the parties as tenants in common, the death and intestacy of the ancestor, and consented to a decree of parti- tion; and a decree declaring the several in- terests of the parties as set up in the bill as heirs at law of said George C. Mueler, deceased, in and to said land, was entered by the court by consent, and commission- ers were appointed to make partition accord- ingly. At the May term, 1880, of said court, on proof that defendant Solomon had pur- chased the interest of his co-defendant, Mar- garite Rhinehardt, the decree was, on his mo- tion, so changed as to require the commis- sioners theretofore appointed to set off to the said Solomon three-fourths, and to the complainant one-fourth, of said land. The issue as to rents and profits and improve- ments was referred to the master for proofs. At the same term the commissioners filed their report, setting o£E to the complainant, Mrs. Rebhau, as and for her one-fourth in- terest in said land, lot 10, as shown in their report, containing 48 acres of the land; and set off the residue of said tracts of land to the said Solomon. Exceptions to the report were filed, which were, at the May term, 1881, overruled by the court, and the report approved by decree duly entered. No writ of error was prosecuted or appeal taken from the decree of partition. At the February term, 1883, of said court, on hearing of the issues as to rents and profits, a decree was rendered in favor of complainant Rebhau for $1,638.97, from which an appeal was prosecuted to the appellate court. On the 8th day of March, 1881, in consideration of $5,050, Mrs. Rebhau, and Emil, her husband, by their warranty deed, conveyed the undi- vided one-fourth part of the premises of which her father died seized, and all their right, title, and interest in the whole of said land, to appellant, Thomas Knobloch; re- serving, however, her rights to rents and profits theretofore accrued. This deed was filed for record March 10, 1881. At the Feb- ruary term, 1882, appellant brought an action of trespass against said Solomon for alleged trespasses upon said 48 acres of land set off to Mrs. Rebhau, and afterwards brought ejectment to recover the same. In March or April, 1883, appellee found a paper dated March 9, 1855, purporting to be the last will and testament of George Christian Mueler, deceased, in and by which the testator de- vised all his land to his two sons, George and Solomon, subject to the payment of $1,500 to Catharine Rebhau. This will was duly admitted to probate. On July 6, 1883, Solomon Mueler, appellee here, filed in the St. Clair circuit court the present bill against appellant, Catharine Rebhau, Emil Rebhau, Margarite Rhinehardt, and Edward Abend, who, prior to the probate of the last will, had been appointed administrator of the es- tate of said George C. Mueler, deceased, substantially setting up the foregoing facts, and praying that said will (1855) stand as the last will and testament of the said George Christian Mueler; that the deed from Cath- arine and Emil Rebhau to said Knobloch be set aside as being a cloud upon complainant's title; that all proceedings in partition re- garding said land, and the stating of an ac- count of rents and profits now pending in the appellate court, and all actions commenced by said Edward Abend as aforesaid, and by said Knobloch, be no further prosecuted; and that the defendants, their attorneys, 80 PRIORITIES AND NOTICE. agents, etc., be perpetually enjoined from taking any furtlier steps in regard to said action. An injunction was granted as pray- ed in the bill of August 2.d. 1883. Appellant answered, setting up that he had purchased in good faith and paid $5,050 for the interest of Mrs. Rebhau in said land, without any notice of any adverse claim or title, and also setting up that complainant, Solomon, is es- topped, by the decree of partition rendered by his consent In open court, from disputing complainant's title. At the September term, 1885, of said circuit court, a decree was en- tered perpetually enjoining the pi'osecution of said suits, and setting aside the deed from Mrs. Rebhau and her husband to appellant as a cloud on. complainant's title. From this decree appellant, Knobloch, alone appealed. W. C. Kueffner and James M. Dill, for appellant. A. R. Halbert, for appellee. SHOPIfl, J., (after stating the facts as above.) The bill in this case seeks to re- move, as a cloud upon the title of appellee, Solomon Mueler, derived under the will of 1855, the deed of Catharine and Emil Reb- hau to appellant; and restrain by injunction the prosecution of an action of ejectment brought by appellant to recover the land par- titioned to Catharine Rebhau in the proceed- ings Instituted by her for partition of the lands of which her father died seized, and to enjoin a certain trespass suit brought for al- leged trespasses upon said land by appellee, and to restrain Mrs. Rebhau from collecting .*1,638.97, decreed as rents and profits in said partition proceeding. Jlrs. Rebhau not hav- ing appealed from the decree against her, the latter branch of the case made by the bill is not before us. When the instrmnent dat- ed March 14, 1870, purporting to be the last will and testament of George C. Mueler, who died March 20, 1870, was set aside upon bill filed for that purpose, it was supposed by all the parties in interest that his estate had de- scended to his heirs at law as intestate es- tate, and letters of administration were granted accordingly. All the parties ac- quiesced in this condition of affairs, and rest- ed in the belief that the property had so descended until the discovery, in March or April, 188.3, 18 years after the death of the ancestor, of the will of the 9th of March, 1855, by which the estate in question was devised to George and Solomon Mueler. The good faith of the parties is not questioned, no fraud or misconduct is alleged, or laches imputed or imputable to any one, on account of the delay in the production of this will, or in any of the proceedings had in respect to the real or personal estate prior to its dis- covery. When Catharine Rebhau, daughter and one of the heirs at law of said George C. Mueler, deceased, on the 22d day of March, 1879, filed her bill for partition of the real estate of which said George C. had died seized; and when Solomon Mueler flled his answer, admitting the intestacy of his father and consenting to the partition to Mrs. Rebhau and Mrs. Rhinehardt, his sis- ters, each a one-fourth part or interest in the land of which their common ancestor died seized, and consented to the decree therefor, the several parties in good faith believed the facts alleged in her bill to be true, and that the land had descended to the four children of George C. Mueler, deceased, in equal parts in fee. It is also equally clear that when api>ellant, Thomas Knobloch, purchas- ed the interest of Catharine Rebhau In said land, and paid her therefor $5,050, that he did so in good faith, relying upon the title of said Catharine as found and declared by the circuit court of St. Clair county in said partition proceeding by the consent of appel- lee. Upon the production and probate of the will of 1855, in April, 1883, it became mani- fest that the title to said land had not in fact so descended to the heirs at law of said George Christian Mueler; but by virtue of that will the legal title thereto, at the death of the testator, vested in the devisees, George and Solomon Mueler, and that by the last will of said George Mueler, who died Feb- ruary 29, 1875, the legal title to the whole of said land became vested in appellee, Solo- mon JIueler. It is apparent that all parties, while acting in good faith, were mistaken, and that the decree of the circuit court, find- ing one-fourth interest of said land in fee in Catharine Rebhau, would not have been en- tered had the court or parties been aware of the true condition of the title to the land. It is said by counsel for appellee that this bill may be maintained, if upon no other ground than as a bill in the nature of a bill of review. This is manifestly a misappre- hension. In neither the frame of the bill, or in the prayer, has the pleader attempted a review of the decree rendered in the partition proceeding of Rebhau against Mueler et al. The bill sets out the tiling of that bill, the decree of partition, and for rents and profits; but it nowhere seeks to reopen that decree, or reverse, impeach, or alter it, or to pro- cure a rehearing of that cause upon the al- leged newly-discovered matter. The prayer is to remove appellant's title, derived there- under, as a cloud upon appellee's title, and to restrain proceedings under that decree with- out reopening it or setting it aside. The whole scope of the bill is to procure the reliel! sought upon the equitable ground of mistake of fact, as to the title at the time of the enti-y of that decree, without in any way in- terfering with it by seeking to enjoin pro- ceedings imder it. The two grounds upon which a bill of review, or bill in the nature of a bill of review, will lie, are: Errors of law, appearing on the face of the decree, without further examination of facts; and new fact or facts, discovered since the de- cree, which are material, and which it was impossible for the party to produce at the time the decree passed. 2 Daniell, Ch. Prac. 1576; 2 Smith, Ch. Prac. 50. Bills contain- PRIORITIES AND NOTICE. 81 ing newly-discovered matter are in the na- ture of original bills, in so far as such new matter presents an issuable fact, and there- fore admits an answer and the formation of an issue; but only so far as it relates to the truth and sufficiency of the alleged new mat- ter, and its admissibility for the purpose of affecting and opening the original decree. Authorities supra; Buffiugton v. Harvey, 95 U. S. 99. The purpose of a bill of the char- acter named is to procure a reversal, alter- ation, or explanation of the former decree. The bill should state the former bill, the pro- ceedings thereon, and the decree rendered by the court, the grievance under the decree of the party presenting the bill, and the error of law or new matter discovered upon which it is sought to reverse, reopen, or impeach it. In bills of review, if the former decree has not been carried into execution, the prayer may simply be that the same may be reversed and set aside; if the former decree has been executed, that the decree be reversed, and the complainant be restored to his former con- dition, or status, as if it had not been ren- dered. In bills in the nature of bills of re- view, Instead of praying the reversal of the former decree, the prayer should be that the cause be reheard in respect to and consider- ing the new matter at the same time it is reheard upon the original bill, etc. 2 Daniell, Ch. Prac. 1581, 1582. The decree of partition rendered at the February term, 1880, and the subsequent de- cree approving the report of the commission- ers rendered at the May term, 1881, of said court, remain unreversed and in full force and effect. The court had jurisdiction of the subject-matter and of the parties, and ren- dered its decree determining the several in- terests of the complainant Catharine Rebhau and appellee, by the consent of appellee, as appears by his answer filed in said cause, and by the recitals in said decree of partition. Decrees of courts of chancery, in respect of matters within their jurisdiction, are as bind- ing and conclusive upon the parties and their privies as are judgments at law; and a de- cree by consent in an amicable suit has been held to have an additional claim to be con- sidered final. Allason v. Starli, 9 Adol. & E. 255. Decree so entered by consent cannot be reversed, set aside, or impeached by bill of review or bill in the nature of a bill of re- view, except for fraud, unless it be shown that the consent was not in fact given, or something was inserted, as by consent, that was not consented to. 2 Daniell, Ch. Prac. 1576; Webb v. Webb, 3 Swanst. 658; Thomp- son V. Maxwell, 95 U. S. 391; Armstrong v. Cooper, 11 111. 540; Cronli v. Trumble, 66 111. 432; Haas v. Society, 80 111. 248; Atkinson V. Manlis, 1 Cow. 693; Winchester v. Win- chester, 121 Mass. 127; Allason v. Stark, 9 Adol. & B. 255; Earl of Hopetoun v. Ram- say, 5 Bell, App. Cas. 69. See, also, note to Duchess of Kington's Case, 2 Smith, I^ead. Cas. *826 et seq. It is the general doctrine HUTCH.& BUNK.EQ.— 6 that such a decree is not reversible upon ap- peal or writ of error, or by bill of review for error. Armstrong v. Cooper, 11 111. 540. No exceptions were taken to the decree of parti- tion, or attempt made in the cause in which it is rendered to vacate or modify it. It is undoubtedly true that, as between the parties and those chargeable with notice, courts of equity will entertain jurisdiction and grant relief, on proper bill filed, from the injurious effects of admissions and confessions of ma- terial facts, made in course of judicial pro- ceedings, in ignorance of the rights of the party making them, where he has been guilty of no negligence, either in the discovery of the fact, or in applying to the proper forum for relief; but such relief can only be granted upon such grounds and for such reasons as would authorize the court to set aside agree- ments or contracts entered into by the par- ties. Attorney General v,. Tomline, 7 Ch. Div. 388; Millspaugh v. McBride, 7 Paige, 509; Furnival v. Bogle, 4 Kuss. 142; The Hiram, 1 Wheat. 440. But it is apparent that the decree in the partition proceedings can only be attacked, reversed, annulled, or set aside by direct proceedings in that case, or upon bill of review, or bill in the nature of a bill of review. If this were not so, however, there is an- other ground upon which the decree must be reversed. It is the well-settled doctrine of this court that no relief will be granted in equity, in cases of this sort, injuriously af- fecting intervening rights acquired in good faith, after the rendition of a judgment or decree, and in reliance thereon. So it has been held that amendments may be made in judicial proceedings, but not so as to affect the intervening rights of third persons accru- ing prior to such amendment. Shirley v. Phillips, 17 111. 473; Coughran v. Gutcheus, 18 111. 390; Sickmon v. Wood, 69 III. 329; 1 Story, Eq. Jur. 166. Relief will not be granted to the prejudice of appellant, if he has an equal equity with appellee, and is equally entitled to the protection of the court. 1 Story, Eq. Jur. 165. As already seen, all the parties to the partition proceedings sup- posed in good faith that ilrs. Rebhau was the owner in fee of the undivided one-fourth of the lands of which her father died seized, and that on the 8th day of March, 1881, ap- pellant purchased her interest in such lands for a full and adequate consideration, with- out notice, actual or constructive, of any de- fect in her title, and in good faith. All the elements to constitute him a bona fide pur- chaser are present; that is, a valuable con- sideration paid, absence of notice, and pres- ence of good faith. 2 Pom. Eq. Jur. § 745. His grantor had, by a court of competent jurisdiction, in a proceeding instituted' to find and declare her interests in these lands, been adjudged, by the consent and admission of appellee, to be the owner in fee of the un- divided one-fourth part thereof, and there was nothing in the record or elsewhere ap- 82 PRIORITIES AND NOTICE. parent to disclose that she, who was thus clothed with apparent legal title, was not the owner in fact of that interest in the land. Nor is it shown or claimed that further in- quiry would then have disclosed anything to cast suspicion upon her title. The defense of a bona fide purchaser had its rise in eq- uity, upon the doctrine that a court of eq- uity acts upon the conscience of Mm against whom relief is sought; and if he has done no wrong, or it would be unconscientious or in- equitable to grant the relief, the court will refuse to exercise its jurisdiction. If, in equity and good conscience, the complainant should not obtain what he seeks, or the de- fendant ought not to suffer what is demand- ed, then the court will withhold its power. In theory, it is said, the defense of a bona fide purchaser presupposes some defect in purchaser's title; but the court refuses to investigate the validity of the title of either party, upon the ground that good conscience does not dictate that he who has dealt hon>- estly, in good faith, and without notice, should be deprived of the legal right he has thereby gained. Id. § 739. There was for- merly much apparent conflict in the adjudg- ed cases as to when the defense of a bona fide purchaser would be availing. In Phillips v. Phillips, 4 De Gex, F. & J. 208, Lord West- bury grouped the cases in which a bona fide purchaser will be protected into three general classes, and reduced the doctrine to a for- mula, which it is said by Pomeroy (2 Eq. Jur. § 742) has been accepted, by subsequent judges almost without exception. The doc- trine thus formulated, so far as appli^ ible here, is: "Thirdly, when there are circum- stances which give rise to an equity, as dis- tinguished from an equitable estate,— as, for example, an equity to set aside a deed for fraud, or to correct it for mistake,— and the purchaser under the instrument maintains the plea of purchase for valuable considera- tion without notice, the court will not inter- fere." Without extended discussion, it is apparent that the bill here filed seeks relief ancillary to the legal estate of appellee. The purpose of the bill is to remove the deed to appellant as a cloud upon appellee's legal title, and to enjoin the assertion of rights by appellant thereunder. The right to the relief sought exists, if at all, upon the equity arising out of the alleged mistake as to the title to said land in the grantor of appellant. This brings the case directly within the rule above giv- en, which is sustained by the weight of mod- ern authority; and, if appellant has made out his defense as bona fide purchaser, he should have prevailed in the court below. The de- cree of partition, as seen, was rendered by a court of competent jurisdiction, having juris- diction of the person and of the subject-mat- ter, and by appellee's consent. Appellant without notice, for full value, and in perfect good faith, acquired the title, sought to be removed as a cloud upon appellee's title, from the party found and declared by that decree to be the owner, and we can perceive no principle upon which a court of conscience can hold that appellant shall lose in conse- quence of the mutual mistake, rather than appellee. It cannot be said that the equi- ties of appellee are superior to those of ap- pellant in respect of the title thus acquired, and, the equities being equal, the court will give no assistance to the legal title, (2 Pom. Eq. Jur. § 742, and cases cited,) but will re- mit the complainant to his remedy at law. It is said, however, that, at the time ap- pellant purchased, the report of the com- missioners had not been confirmed by the court, and that he purchased subject to hav- ing the interest of his grantor, as found by the commissioners, set aside. It is true that exceptions to the report of the commissioners were then pending, but none of the excep- tions questioned the right or title of Cath- arine Rebhau to the undivided one-fourth part of the real estate of which her father died seized. Such exception related simply to the manner of partition, and the conduct of the commissioners in making the same. There was nothing therein to put appellant upon notice or inquiry as to the title of Mrs. Reb- hau. He bought subject, as a matter of course, to having the amount set off to Mrs. Rebhau changed or diminished by subse- quent action of the commissioners, or to have their report set aside by the court; but his purchase was of her interest in the land, which was conceded by appellant and de- clared by the court to be a one-fourth inter- est therein. It is also said by counsel for appellee that appellant may rely upon the covenants of warranty in his deed from the Rebhaus, and therefore the equities are with appellee. It is not shown whether Mrs. Rebhau, and her husband, who joined in the execution of said deed, are solvent or insolvent, and we per- ceive no principle, nor is any suggested by counsel, upon which appellant should be driven to resort to his legal remedy against his gi'antor for indemnity from loss, especial- ly in view of the fact that it is not shown that such remedy would be availing. It will not be proper for us to here discuss or deter- mine the right of appellee to the money paid by appellant for the land in question, or as to whether he has any remedy in respect of the same. We are of opinion that the defense of a bona fide purchaser has been maintained, and, upon both of the grounds indicated, the right of appellee to the relief sought should have been denied, as against appellant, Knobloch, and the bill dismissed as to him. For the error of the court in this regard, the decree, in so far as it affects the appel- lant, Knobloch, will be reversed, and the cause remanded to the circuit court of St. Clair county, with instructions to enter a de- cree in conformity with this opinion, dismiss- ing the bill as to said appellant. PRIORITIES AND NOTICE. 83 MATOR, ETC., OF CITY OF BALTIMORE et al. V. WHITTINGTON. (27 Atl. 984, 78 Md. 2.31.) Court of Appeals of Maryland. Nov. 16, 1893. Appeal from circuit court of Baltimore city. Suit by Jacob Craft Whittington against the mayor and city council of Baltimore and Clarence M. EUinger for injunction. From a decree for complainant, defendants appeal. Affirmed. Argued before ROBINSON, 0. J., and BRISCOE, BRYAN, FOWLER, and Mc- SHERRY, J J. Thos. G. Hayes, Jas. P. Gorter, Wm. S. Bryaa, Jr., and F. W. Story, for appellants. F. O. SlingluCE and T. Wallis Blakiston, for appellee. McSHERRY, J. By section 47, art. 49, of the Municipal Code of Baltimore City, it is enacted, in substajice, that when any lots of ground are chargeable with the payment of taxes, and are subject to ground rents or leases for terms of years, renewable for- ever, the collector shall, in the sale of such lots for nonpayment of taxes, first sell only the leasehold interest, If it should sell for an amount sufficient to pay the taxes, but, if it should not, then that he shall sell the whole fee-simple estate, provided these pro- visions "shall not apply to cases where the books of the city do not disclose the fact that the lot or lots are on lease as aforesaid, or unless the collector shall have actual no- tice of such lease prior to the sale thereof." The city tax collector of Baltimore sold in March, 1891, for the nonpayment of state and city taxes, the fee-simple estate in a lot of ground on Druid HiU avenue, and the mayor and city council became the pur- chaser. The sale was reported to the rarcuit court of Baltimore city, and was ratified in May. 1892. lu October following, the city, through and by its comptroller, sold the lot to Clarence M. Ellinger, to whom it was thereafter conveyed. When the sale was made by the collector, the lot was subject to a lease for 99 years, renewable forever, which was owned by J. Hem-y Weber, and the reversion or fee was owned by the ap- pellee, Whittington. The unpaid taxes were due by the owner of the leasehold estate, but the collector sold the whole fee, without hav- ing first offered, or having attempted to sell, the leasehold, as rectuired by the section of the City Code to which reference has been made. There was no entry on the books of the collector showing that the lot was sub- ject to a lease, and the single question In- volved in the case is whether, when the col- lector made the sale, he had "actual notice" of the existence of the lease. If he hael, the sale was irregular. If it was irresrular, the decree of the circuit court of Baltimore city, restraining by Injtmction the mayor and city council, and its grantee, Ellinger, from dis- turbing the possession of the owner of the reversion, must be affirmed. It appears by the record that In 1883 pro- ceedings were instituted In the circuit court of Baltimore city by Rebecca and Mary Mc- Kaen against J. Henry Weber for a sale of this same leasehold estate under a mortgage thereon executed by Weber in 1881. Mr. T. Wallis Blackiston was appointed trustee to make the sale. He took possession of the property, and collected the rents and profits, but, owing to a depreciation in its value, made no sale of it. In the meantime the gi-oimd rent was regularly paid to the ap- peUee, up to July, 1892, but the state and city taxes for the eight years beginning with 1882 remained unpaid. On the 1st day of December, 1890, Lewis N. Hopkins, city col- lector, filed a petition in the foreclosiu-e pro- ceedings representing that taxes for the years just mentioned were in arrear upon the property "decreed to be sold." The peti- tion further stated that the collector was una- ble to enforce the collection of those taxes by reason of the pendency of the foreclosure proceedings, and it prayed that the trustee might be required to pay the taxes out of the rents theretofore collected from the prop- erty, or that the collector might "be allowed to proceed to coUect said taxes by sale of the property in the ordinary way." This peti- tion was signed by the late Mr. W. A. Ham- mond, "city solicitor, attorney for petitioner," and was sworn to by the deputy city col- lector. Subsequently, an order was passed, requiring the trustee to pay the taxes within five days out of the funds previously collected by him "as rents from the property decreed to be sold," and directing, upon his failure to do so, that the property be sold in the ordi- nary way by the collector. The trustee did faU to pay the taxes, and the collector made, under authority of this order, the sale of March, 1891, already mentioned. It is upon these facts that the appellee relies to show that the collector had "actual notice" oi the existence of the leasehold estate. Notice is of two kinds, — actual and con- structive. Actual notice may be either (■ press or implied. If the one, it is estab- lished by direct evidence; If the other, by the proof of circumstances from which it is inferable as a fact. Constructive notice is, on the other hand, alvsnays a presumption of law. Express notice embraces, not only knowledge, but also that which is communi- cated by direct information, either writtei* or oral, from those who are cognizant of the fact communicated. Wade, Notice, § 6. Im- plied notice, which is equally actual notice., arises where the party to be charged is shown to have had knowledge of such facts and circumstances as would lead him, by th6 exercise of due diligence, to a knowledge of the principal fact. 16 Amer. & Eng. Enc. Law, 790. Or, as defined by the supreme court of Missouri in Rhodes v. Outcalt, 48 84 PRIORITIES AND NOTICE. Mo. 370, "a notice is regarded in law as ac- tual when the party sought to be affected by it knows of the particular fact, or is con- scious of having the means of knowing it, although he may not employ the means in his possession for the purpose of gaining fur- ther information." It is simply circumstan- tial evidence from which notice may be la ferred. It differs from constructive notice, with which it is frequently confotmded, and which it greatly resembles, in respect to the character of the inference upon which It rests; constructive notice being the creature of positive law, resting upon strictly legal presumptions, which are not allowed to be controverted, (1 Story, Eq. Jur. § 399; Tovra- send V. Little, 109 U. S. 504, 3 Sup. Ct. 357,) while implied notice arises from Inference of fact, (Williamson v. Brown, 15 N. Y. 354; Wade, Notice, § 3.) With constructive no- tice we are not now concerned, and it is not pretended that the city collector had express notice, or knowledge personally, of the exist- ence of the leasehold estate. But he be- came a party to the equity proceeding, where- in a decree had been passed directing a sale of the leasehold interest He did more. Ho asked, notwithstanding the decree had been long before signed and enrolled, that be be permitted to sell for the nonpayment of taxes, imder the summary process of dis- traint, the identical property previously do- creed to be sold, and no other or different Interest; and the property which had been thus previously decreed to be sold was not the fee simple, but only the leasehold interest in the lot In question. He obviously knew there was a proceeding pending in the cir- cuit court of Baltimore city, having for Its object the sale of some interest in the prop- erty. He knew, further, the equity proceed- ing interfered with the execution of his dis- traints, and he applied to the court for leave to proceed, in spite of the decree, to sell the same property which had been decreed to be sold. We say he knew these things, and we say so, not because the record shows that he was pereonally aware of them, as mat- ters of actual knowledge, but because the deputy city collector and the collector's at- torney, both of whom were his agents In this transaction, did have such knowledge; the one having sworn to the facts stated In the petition, and the other having signed the pe- tition itself. So both the attorney and the deputy collector knew, or at least were in possession of facts which would necessarily lead, upon the exercise of the slightest dili- gence, to a knowledge or notice, of the exist- ence of the lease. They must therefore be regarded as knowing that which, with ordi- [ nary diligence, they might have known, or I that which they were conscious of having the means of knowing. This result is not a legal presumption, but an Inference of fact, I and it seems to us an Irresistible inference. It 1 would be idle to say that the collector was ; ignorant of facts relating to the title to prop- erty which he was about to sell for the non- payment of taxes, when his deputy, acting for him and In his name, was In full posses- sion of them, or that he did not know the things which his attorney was aware of in that particular proceeding respecting the state of the title; and it would be equally idle to say that the deputy, when he swore to the petition, and the attorney, when he signed it, filed it, and procured a court's order upon It, were not apprised of the character of the es- tate previously decreed to be sold, or were not in a position where they were conscious of having the means of knowing precisely what property the decree affected. At ail events, the exercise of ordinary diligence would most assuredly have informed both of these agents of the collector of every fact which the records in the equity case dis- closed, and among those facts was the mate- rial and Important one that the lot was sub- ject to a lease for 99 years, renewable for- ever. It Is consequently a legitimate infer- ence of fact that both of these representa- tives of the collector knew what the record in the foreclosure case disclosed as to tliere be- ing a leasehold estate in Weber, and not a fee, and this was implied actual notice. No- tice to the attorney, as well as notice to the deputy, was notice to the collector, and was actual, and not merely constructive, notice to him, for the principal is bound by and affected with notice to his agent, and he is equally bound by notice received by his attor- ney in the same transaction. Astor v. Wells, 4 Wheat 466; Reed's Appeal, 34 Pa. St 209; Houseman v. Association, 81 Pa. St 256; Smith V. Ayer, 101 tJ. S. 320. If this were not so, then. In every case where notice is necessary, it might be avoided by simply em- ploying an agent. We are, for the reasons we have given, of opinion that the collector had, through the means we have Indicated, such actual notice of the existence of the lease as to bring him within the proviso quoted from the City Code, and that he w.is therefore not authorized to sell the fee-simple estate until he had first offered the lease- hold for sala It results, then, that the sale made by him was Irregular, and the decree granting the injunction applied for by the ap- pellee must be afllrmed. Decree affirmed, with costs in this court and In the court be- low. PRIOBITIEIS AND NOTICE. 85 WILLIAMSON V. BROWN. (15 N. Y. 354.) Court of Appeals of New York. 1857. The plaintiff was the grantee of fifty acres of land on which there was no recorded in- cumbrance. His grantor purchased the land of the defendant, giving back a mortgage for a part of the purchase price. The defendant commenced to foreclose his mortgage by advertisement, whereupon this action was brought to restrain the foreclo- sure. The other material facts appear in the opinion. D. H. Marsh, for appellant. J. R. Law- rence, for respondent. SELDEN, J. The referee's report. is con- clusive as to the facts. It states, in sub- stance, that the plaintiff had sufficient in- formation to put him upon inquiry as to %he defendant's mortgage; but that, after mak- ing all the inquiry which upon such informa- tion it became his duty to make, he failed to discover that any such mortgage existed. This being, as I think, what the referee in- tended to state, is to be assumed as the true interpretation of his report. The question in the case, therefore, is, as to the nature and effect of that kind of no- tice so frequently mentioned as notice suffi- cient to put a party upon inquiry. The counsel for the plaintiff contends that while such a notice may be all that is required in some cases of equitable cognizance, it is not sufficient, in cases arising under the registry acts, to charge the party claiming under a recorded title with knowledge of a prior un- registered conveyance. He cites several au- thorities in support of this position. In the case of Dey v. Dunham, 2 Johns. Ch. 182, Chancellor Kent says, in regard to notice under the registry act: "If notice that is to put a party upon inquiry be suffi- cient to break in upon the policy and the express provisions of the act, then indeed the conclusion would be different; but I do not apprehend that the decisions go that length." Again, in his Commentaries, speaking on the same subject, he says: "Implied notice may be equally effectual with direct and positive notice; but then it must not be that notice which is barely sufficient to put a party up- on Inquiry." So in Jackson v. Van Valkenburgh, 8 Cow. 260, Woodworth, J., says: "If these rules be applied to the present case, the notice was defective. It may have answered to put a person on inquiry, in a case where that species of notice is sufficient; but we have seen that to supply the place of registry, the law proceeds a step further." A reference to some of the earlier decisions under the registry acts of England will tend, I think, to explain these remarks, which were probably suggested by those decisions. One of the earliest, if not the first of the English recording acts was that of 7 Anne, chapter 20. That act differed from our general regis- try act in one important respect. It did not, in terms, require that the party to be pro- tected by the act should be a bona fide pur- chaser. Its language was: "And that every such deed or conveyance, that shall at any time after, etc., be made and executed, shall be adjudged fraudulent and void, against any subsequent purchaser or mort- gagee for valuable consideration, unless," etc. The English judges found some difficulty at first in allowing any equity, however strong, to control the explicit terms of the statute. It was soon seen, however, that ad- hering to the strict letter of the act would open the door to the grossest frauds. Courts of equit.v, therefore, began, but with great caution, to give relief when the fraud was palpable. Hine v. Dodd, 2 Atk. 275, was a case in which the complainant sought relief against a mortgage having a preference un- der the registry act, on the ground that the mortgagee had notice. Lord Hardwicke dismissed the bill, but admitted that "ap- parent fraud, or clear and undoubted notice would be a proper ground of relief." Again, he said: "There may possibly have been cases of relief upon notice, divested of fraud, but then the proof must be extremely clear." Jolland V. Stainbridge, 3 Ves. 478, is an- other case in which relief was denied. Tlie master of the rolls, however, there says: "I must admit now that the registry is not conclusive evidence, but it Is equally clear that it must be satisfactorily proved, that the person who registers the subsequent deed must have known exactly the situation of the persons having the prior deed, and know- ing that, registered in order to defraud them of that title." Chancellor Kent refers to these cases in Dey V. Dunham (supra) and his remarks in that case, as to the effect, under the registry acts, of notice sufficient to put a party upon inquiry, were evidently made under the in- fluence of the language of Lord Hardwicke and the master of the rolls, above quoted. But the English courts have since seen, that if they recognized any equity founded upon notice to the subsequent purchaser of the prior unregistered conveyance, it be- came necessarily a mere question of good faith on the part of such purchaser. They now apply, therefore, the same rules in re- gard to notice, to cases arising under the registry acts, as to all other cases. It will be sufficient to refer to one only among the modern English cases on this sub- ject, viz.: Whitbread v. Jordan, 1 Younge & C. 303. The plaintiff was a London brew- er, and supplied Jordan, who was a publican, with beer. It was the common practice with brewers in London to lend money to pub- licans whom they supplied with beer, upon a deposit of their title deeds. Jordan had de- posited certain deeds with the plaintiff, pur- 86 PRIORITIES AND NOTICE. suant to this custom. He aftei-ward gave to ODe Boulnois, a wine mercliant, a mortgage upon the property covered by the deeds de- posited, which was duly recorded. Boulnois had notice of Jordan's debt to the plaintiff, and of the existing customs between brewers and publicans, but he made no inquiry of the brewers. The suit was brought to enforce the equitable mortgage arising from the de- posit. Baron Alderson held that the notice to Boulnois was sufHcient to make it his duty to inquire as to the existence of the deposit; that his not doing so was evidence of bad faith; and the plaintiff's right, under his equitable mortgage, was sustained. No case could show more strongly that notice which puts the party upon inquiry is sufficient even under the registry act. The cases in our own courts, since Dey v. Dunham and Jackson v. Van Valkenburgh (supra), hold substantially the same doctrine. (Tuttle V. Jackson, 6 Wend. 213; Jackson v. Post, 15 Wend. 588; Grimstone v. Carter, 3 Paige, 421.) I can see no foundation in reason for a dis- tinction between the evidence requisite to es- tablish a want of good faith, in a case aris- ing under the recording act, and in any other case, and the authorities here referred to are sufficient to show that no such distinction is recognized, at the present day, by the courts. The question, however, remains, whether this species of notice is absolutely conclusive up- on the rights of the parties. The plaintiff's counsel contends, that knowledge sufficient to put the purchaser ujwn Inquiry is only presumptive evidence of actual notice, and may be repelled by shovring that the party did inquire with reasonable diligence, but failed to ascertain the existence of the un- registered conveyance; while, on the other hand, it is Insisted that notice which makes it the duty of the party to inquire, amounts to constructive notice of the prior conveyance, the law presuming that due inquiry will nec- essarily lead to its discovery. The counsel for the defendant cites several authorities in support of his position, and among others the cases of Tuttle v. Jackson and Grimstone v. Carter (supra). In the first of these cases, Walworth, chancellor, says: "If the subsequent purchaser knows of the unregistered conveyance at the time of his purchase, he cannot protect himself against that conveyance; and whatever is sufficient to make it his duty to inquire as to the rights of others is considered legal notice to him of those rights;" and in Grim- stone V. Carter, the same judge says: "And if the person claiming the prior equity is in the actual possession of the estate, and the purchaser has notice of that fact, it is suffi- cient to put him on inquiry as to the actual rights of such possessor, and is good con- structive notice of those rights." It must be conceded that the language used by the learned chancellor in these cases, if strictly accurate, would go to sustain the doctrine contended for by the defendant's counsel. Notice is of two kinds: actual and constructive. Actual notice embraces all de- grees and grades of evidence, from the most direct and positive proof to the slightest cii'- cumstance from which a jury would be war- ranted in inferring notice. It is a mere question of fact, and is open to every spe- cies of legitimate evidence which may tend to strengthen or Impair the conclusion. Con- structive notice, on the other hand, is a legal inference from established facts; and like other legal presumptions, does not admit of dispute. "Constructive notice," says Judge Story, "is in its nature no more than evi- dence of notice, the presumption of which is so violent that the court will not even allow of its being controverted." (Story, Eq. Jur. §399.) A recorded deed is an instance of construc- tive notice. It is of no consequence whether the second purchaser has actual notice of the prior deed or not. He is bound to take, and is presumed to have, the requisite no- tice. So, too, notice to an agent is construc- tive notice to the principal; and it would not in the least avail the latter to show that the agent had neglected to communicate the fact. In such cases, the law imputes notice to the party whether he has it or not. Legal or im- phed notice, therefore, is the same as con- structive notice, and cannot be controverted by proof. But it will be found, on looking into the cases, that there is much want of precision in the use of these terms. They have been not unfrequently applied to degrees of evi- dence barely sufficient to warrant a jury in inferring actual notice and which the slight- est opposing proof would repel, instead of be- ing confined to those legal presumptions of notice which no proof can overthrow. The use of these terms by the chancellor, there- fore, in Tuttle v. Jackson, and Grimstone v. Carter, is by no means conclusive. The phraseology uniformly used, as de- scriptive of the kind of notice in question, "sufficient to put the party upon inquiry," would seem to imply that if the party is faithful in making inquiries, but fails to discover the conveyance, he will be protect- ed. The import of the terms is, that it be- comes the duty of the party to inquire. If, then, he performs that duty is he still to be bound, without any actual notice? The pre- sumption of notice which arises from proof of that degree of knowledge which will put a party upon inquiry is, I apprehend, not a presumption of law, but of fact, and may, therefore, be controverted by evidence. In Whitbread v. Jordan (supra). Baron Alderson laid down the rule as follows: "When a party having knowledge of such facts as would lead any honest man, using ordinary caution, to make further inquiries, does not make, but on the contrary studious- ly avoids making, such obvious inquiries, he must be taken to have notice of those facts, PRIORITIES AND NOTICE. 87 which, If he had used such ordinary diligence, he would readily have ascertained." This very plainly implies tliat proof that the party has used due diligence, but without effect, would repel the presumption. In this case it is true the decision was against the party having the notice. But in Jones v. Smith, 1 Hare, 43, we have a case in which a party, who had linowledge sufficient to put him on inquiry, was nevertheless held not bound by the notice. The defendant had loaned money upon the security of the estate of David Jones, the father of the plaintiff. At the time of the loan he was informed by David Jones and his wife, that a settlement was made pre- vious to the marriage, but was at the same time assured that it only affected the prop- erty of the wife. He insisted upon seeing the settlement, but was told that it was in the hands of a relative, and that it could not be seen without giving offense to an aged aunt of the wife, from whom they had ex- pectations. David Jones, however, after some further conversation, promised that he would try to procure it for exhibition to the defendant. This promise he failed to per- form. It turned out that the settlement in- cluded the lands upon which the money was loaned. Here was certainly knowledge enough to put the party upon inquiry; for he was apprised of the existence of the very document which was the foundation of the complainant's claim. He did inquire, how- ever, and made every reasonable effort to see the settlement itself, but was baffled by the plausible pretenses of David Smith. The vice-chancellor held the notice insufficient. He said: "The affairs of mankind cannot be carried on with ordinary security, if a doc- trine like that of constructive notice is to be refined upon until it is extended to cases like the present." Possession by a third person, under some previous title, has frequently but inaccu- rately been said to amount to constructive notice to a purchaser, of the nature and ex- tent of such prior right. Such a possession puts the purchaser upon inquiry, and makes it his duty to pursue his inquiries with dili- gence, but is not absolutely conclusive upon him. In Hanbury v. Litchfield, 2 Mylne & K. 020, when the question arose, the master of the rolls said: "It is true that when a ten- ant is in possession of the premises, a pur- chaser has implied notice of the nature of his title; but, if, at the time of his purchase, the tenant in possession is not the original lessee, but merely holds under a derivative lease, and has no knowledge of the cov- enants contained in the original lease, it has never been considered that it was want of due diligence in the purchaser, which is to fix him with implied notice, if he does not pursue his inquiries through every derivative lessee until he arrives at the person entitled to the original lease, which can alone convey to him information of the covenants." This doctrine is confirmed by the language of Judge Story in Flagg v. Mann, 2 Sumu. 554, Fed. Cas. No. 4,847. He says: "I admit that the rule in equity seems to be, that where a tenant or other person is in posses- sion of the estate at the time of the pup- chase, the purchaser is put upon inquiry as to the title; and if he does not inquh-e, he is bound in the same manner as if he had inquired and had positive notice of the title of the party in possession." It is still further confirmed by the case of Rogers v. Jones, 8 X. H. 264. The language of Parker, J., In that case is very emphatic. He says: "To say that he (the purchaser) was put upon inquiry, and that having made all due investigation without obtaining any knowledge of title, he was still chargeable with notice of a deed, if one did really exist, would be absurd." If these authorities are to be relied upon, and I see no reason to doubt their correct- ness, the true doctrine on this subject is, that where a purcliaser has knowledge of any fact sufficient to put him on inquiry as to the existence of some right or title in con- flict with that he is about to purchase, he is presumed either to have made the inquiry and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered as a bona fide purchaser. This presumption, however, is a mere inference of fact, and may be repelled by proof that the purchaser failed to discover the prior right, notwithstanding the exercise of proper dili- gence on his part. The judgment should be reversed, and there should be a new trial, vnth costs to abide the event. PAIGE, J. The question to be decided is, whether, under the finding of the referee, the plaintiff is to be deemed to have had at the time of his purchase legal notice of the prior unrecorded mortgage of the defendant. The referee finds that the plaintiff had suffi- cient information or belief of the existence of such mortgage to put him upon inquiry, but that upon pursuing such inquiry to the extent of such information and belief, he did not find that such mortgage existed or had been given. It seems to me that the two findings are inconsistent with each other. If the plaintiff, on pursuing an inquiry to the full extent of his information and behef as to the existence of the jiefendant's mort- gage, was unable to find that it either then existed or had been given, the highest evi- dence is furnished that the information re- ceived or belief entertained by the plaintiff was not sufficient to put him on inquiry as to the existence of such mortgage. The last part of this finding effectually disproves the fact previously found of the sufficiency of notice to put the plaintiff on inquiry. The two facts are utterly inconsistent with each other, and cannot possibly co-exist S8 PRIORITIES AND NOTICE. ■J'he remarks of Parker, J., in Rogers v. Jones, 8 X. H. 264, 269, are directly apposite to the facts found by ttie referee. Judge Parker says: "To say that he (demandant) was put upon inquiry, and that having made all due investigation without obtaining any knowledge of title, he was still chargeable with notice of a deed, if one did really exist, would be absurd." The sound sense of these observations is clearly shown by the princi- ple of the rule that information sufBcient to put a party upon inquiry is equivalent to evi- dence of actual notice or to direct and posi- tive notice. That principle is that such infor- mation will, if followed by an inquiry pros- ecuted with due diligence, lead to a knowl- edge of the fact with notice of which the party is sougjat to be charged. Hence, in all cases where the question of implied notice of a prior unrecorded mortgage or convey- ance arises as a question of fact to be detei^ mined, the court must decide whether the in- formation possessed by the party would, if it had been followed up by proper examina- tion, have led to a discovery of such mort- gage or conveyance. If the determination is that such an examination would have result- ed in a discovery of the mortgage or convey- ance, the conclusion of law necessarily re- sults that the information possessed by the party amounted to Implied notice of such in- strument. But if the determination is the converse of the one stated, the information of the party cannot be held to be an implied notice of the deed or mortgage. These prop- ositions will be found to be fully sustained by authority. (Kennedy v. Green, 3 Mylne & K. 699; 2 Sugd. Vend. 5.j2 [Am. Ed. 1851] marg. p. 1052; 4 Kent, Comm. 172; Insur- ance Co. V. Halsey, 4 Sandf. 577, 578: Id., 8 X. Y. 274, 275; 1 Story, Eq. Jur. §§ 398-400, 400a; Jackson v. Burgott, 10 Johns. 461; Dunham v. Dey, ]5 Johns. .568. 569, in error; Jackson v. Given, 8 Johns. 137; JoUand v. Stainbridge, 3 Ves. 478; Pendleton v. Pay, 2 Paige, 205.) Where the information is suf- ficient to lead a party to a knowledge of a prior unrecorded conveyance, a neglect to make the necessary inquiry to acquir.. .«iuch knowledge will not excuse him, but he will be chargeable with a knowledge of its existence; the rule being that a party in possession of certain information will be chargeable with a knowledge of all facts which an inquiry, suggested by such information, prosecuted with due diligence, would have disclosed to him. (4 Sandf. 578; 3 Mylne & K. 699.) In this case the fact being found by the referee that the plaintiff, after pursuing an inquiry to the extent of his information, failed to dis- cover the existence of the defendant's mort- gage, it seems to me that neither law nor justice will justify us in holding the plaintiff chargeable with implied notice of such mort- gage. The doctrine of notice and its opera- tion in favor of a prior unrecorded deed or mortgage rests upon a question of fraud, and on the evidence necessary to infer It. (4 Kent, Comm. 172.) Actual notice affects the conscience, and convicts the junior purchaser of a fraudulent intent to defeat the prior con- veyance. His knowledge of facts and cir- cumstances at the time of the second pur- chase sufficient to enable him, on due inquiry, to discover the existence of the prior convey- ance, is evidence from which a fraudulent in- tent may be inferred. (15 Johns. 569; 2 Johns. Oh. 190; Jackson v. Burgott, 10 Johns. 4(:2.) Now, if it is ascertained and found as a fact, that the facts and circumstances within the knowledge of the second purchas- er, at the thue of his purchase, were insuffi- cient to lead him, on a diligent examination, to a discovery of the prior conveyance, how upon this finding can a fraudulent intent be inferred, and if not, how can he be charged with notice which implies a fraudulent in- tent? It is not in the nature of things, that a knowledge of the same facts and circum- stances shall, at one and the same time, be held evidence of both innocence and guilt. I thinli the rule well established, that an in- ference of a fraudulent intent on the part of a junior purchaser or mortgagee must, in the absence of actual notice, be founded on clear and strong circumstances, and that such inference must be necessary and unques- tionable. (McMechan v. Griffing, 3 Pick. 149, 154, 155; Hine v. Dodd, 2 Atk. 275; Jack- son V. Given, 8 Johns. 137; 2 Mass. 509; 2 Johns. Ch. 189; 15 Johns. 569; 8 Oow. 264, 266.) For the above reasons, both the judgment rendered on the report of the referee and the judgment of the general term aflirming the same, should be reversed, and a new trial should be granted. Judgment reversed. PRIORITIES AND NOTICE. 89 THOMAS et al. v. BURNETT. (21 N. B. 352, 128 111. 37.) Supreme Court of Illinois. April 5, 1889. Error to circuit court, Randolph county; George W. Wall, Judge. Charles W. Thomas, pro se. James A. Watts, for defendant in error. Shope, J. This was a bill filed by Martha J. Burnett against Charles W. Thomas and the sheriff of Randolph county, to set aside a certiflcate of purchase held by Thomas up- on a 40-acre tract of land owned by the com- plainant, as a cloud on her title, and to en- join the sheriff from making a deed under such certiflcate. Both parties claimed title under .James Burnett, a son of the complain- ant. It is conceded that on the 29th day of March, 1882, Jame:_ Burnett was the owner of the tract of land in controversy, which was inclosed and in cultivation, but upon which there was no house. On that day the complainant, as it is shown, bought the land in good faith from her son for the sum of $1,600. No deed was made until in the month of April following, when James Bur- nett conveyed the land to complainant. No question arises in respect to the payment of the purchase money at the date of the pur- chase. The land had been fenced, and under cultivation for over 20 years. David C. Thompson had for some years acted as the agent of James Burnett, while he was owner, and had rented the land from year to year. The deed to complainant was not recorded until October 22, 188i, and the land stood on the assessment books in the name of James Burnett, until 1885. The complainant, after her purchase, retained Thompson as her agent in respect of this land, who, in August, 1882, rented the land as the complainant's to one Jordan for one year, who raised a crop thereon, and retained possession of the same until in August, 1883, when he surrendered possession to Thompson. In March, 1884, the agent rented the lands to Yagle. At each renting the agent informed the tenants that complainant was the owner of the premises, and that he was renting it for her. A crop was raised on the land each year aft- er 1882 by the tenants of complainant, and the fences were kept in repair by her agent, who collected the rent, and paid the same to her. On the 10th day of October, 1883, Margaret Gilflllen sued out an attachment against James Burnett in the Randolph cir- cuit court returnable to the March term thereof, then following, and this land was levied upon on that day as the property of James Burnett, and a certiflcate of levy duly filed. At the September term, 1884, of said court, said plaintiff in attachment recovered judgment for $2,500 against said Burnett. Special execution was issued thereon, under which, on October 22, 1884, the tract in con- troversy was sold to defendant Thomas, at- torney of the plaintiff in question, for $1,900, and the sheriff delivered to Thomas a certifi- cate of purchase, which is the certiflcate now sought to be set aside. Section 31 of the conveyance act declares that all deeds, etc., authorized bylaw to be recorded, "shall take effect and be in force from and after the time of flling the same for record, and not before, as to all creditors and subsequent purchasers without notice; and all such deeds and title papers shall be ad- judged void as to all Such creditors and sub- sequent purchasers without notice, until the same shall be filed for record." An attach- ing creditor, who levies his attachment with- out notice of a prior unrecorded deed of his debtor, either actual or constructive, acquires a lien, which, if perfected by judgment, exe- cution, sale, and deed, will hold the legal estate as against the grantee in a prior unre- corded deed. Having acquired a lien as an innocent creditor without notice, he will have a right to enforce the same, notwithstanding he may have, subsequently to the levying of his attachment, received notice of the deed. Martin v. Dryden, 1 Gilman, 187; Stribling V. Ross, 16 111. 122; Jones v. Jones, Id. 117; Henderson v. Downing, 24 Miss. 106. Un- less, therefore, the plaintiff in attachment had notice, either actual or constructive, of the unrecorded deed from James Burnett to Mrs. Burnett, the lienthereby acquired must prevail over the rights of the complainant under that deed. The statute makes her deed void as against the attaching creditor if a lien on the property was thereby secured in good faith, and without notice of her rights. Complainant's right to the relief sought de- pends, therefore, upon the fact whether the plaintiff in attachment, at the time of the levy of the writ, had notice of her rights. There is no pretense that she had actual notice of the unrecorded deed, but it is claimed that she had constructive notice, arising from the possession of the land by complainant. Com- plainant took possession after her purchase by her agent and tenants, as we have seen, long prior to the levy of the attachment, and which possession she has ever since retained. It is well settled that actual possession of land by a party under an unrecorded deed is constructive notice of the legal and equitable right of the party in possession. The posses- sion by tenant is the same in all respects as if by the party himself. Franz v. Orton, 75 111. 100; Whitaker v. Miller, 83 111. 381; Coari v. Olsen, 91 HI. 273. It is claimed by plaintiff in error that possession, to have the effect of notice, must be of that character which will arrest attention, and the case ot Lougliridge v. Bowland, 52 Miss. 546, is re- ferred to as sustaining that position. In that case the grantor of the land at the time of the con^yance was in possession of the same by his tenant. After the sale the same tenant continued to hold possession under an agree- ment to pay rent to the grantees. There was then nothing more than a technical attorn- ment by the tenant to the purchaser. And the court held that the mere attornment of the tenant, without any visible change in the 90 PRIORITIES AND NOTICE. character of the holding, was not sufBcient to put a creditor or subsequent purchaser on in- quiry. It is not necessary to the decision of tliia case to express any opinion in respect of the doctrine there announced, for the reason that after the complainant's purchase she through her agent made a lease of the prop- erty to Jordan. This was in August, 1882, and for one year, and under it a crop was raised. The tenant was informed that his landlord was Mrs. Burnett, the complainant. The agent, as before stated, kept the place in repair as her agent, collected the rents, and paid them to her. Here were open, notorious acts of ownership asserted in an unequivocal manner by the complainant. Thompson, the agent, was not himself in possession of the property, but the tenants of complainant were, and it was their possession which constituted notice. It is, however, said that there was no tenant in actual possession at the time of the levy of the attachment, and therefore the plaintiff in error was not chargeable with notice of the unrecorded deed. The tenant's possession of land is that of his landlord. The Jordans occupied the land up to August, 1883, and this was notice to the world of Mrs. Burnett's title, to all intents as if she had oc- cupied it. Actual residence is not essential to continuous possession. If the party is in actual possession of the land, and there are continuous acts of ownership, it is sufficient. Coleman v. Billings, 89 111. 183; Ford v. Marcall, 107 111. 136. The land here in con- troversy was improved, and under fence. In such case, the owner will not lose his posses- sion by failing to be continuously in the actual occupancy or use of the land by him- self or tenant. The fact that a short time may have elapsed between the actual occu- pancy by one tenant, before another tenant takes possession, will not be a loss of posses- sion by the owner. The improvements, the fact that a crop had been raised the previous season, will clearly indicate the possession, and will be sufficient to put others dealing with the property upon inquiry. The attach- ment here was levied October 10, 1883, a short time after the tenants had surrendered posses- sion, to Thompson, complainant's agent, who still continued to act as such agent in taking care of the property, and the plaintiff should have made inquiry before levying her writ of attachment. It is apparent this could have been done, either of the outgoing tenants or of the agent. Any reasonable, prudent man, contemplating a purchase of the prop- erty, would have made such inquiry; and it is clear that an inquiry of the Jordans or of Thompson would have led to notice of the claim of complainant, and of the existence of the unrecorded deed. We think the cir- cumstances are such as to charge the attach- ing creditor with notii-e of the deed from Jaines Burnett lo the complainant. This be- ing so, the circuit court committed no error in granting the relief prayed, and its decree will be affirmed. PRIORITIES AND NOTICE. 01 PRINGLE V. DUNN et al. (37 Wis. 449.) Supreme Court of Wisconsin. Jan. Term, 1875. Appeal from circuit court, Milwaukee coun- ty. Action by one Pringle against Andrew Dunn and wife and others to foreclose a mortgage given to the La Crosse & Mil- waukee Railroad Company to secure a bond of said company for $5,000, payable Jan- uary 1, 1864, said mortgage bearing date April 11, 1854, and alleged to have been re- corded on such date, and afterwards assigned to plaintiff, as a bona fide purchaser for value. There was no record of the assign- ment. The court found that the witnesses to the mortgage did not subscribe it at the time of its execution, but after it had been recorded; that, after such subscription, it was not again recorded; that the plaintiff was the bona fide holder of the bond and mortgage; that the defendants other than Andrew Dunn and wife had no actual knowl- edge of the mortgage, and the recording of the mortgage before it was subscribed was not constructive notice; and dismissed the complaint. Plaintiff appeals. Modified. Mariner, Smith & Ordway, for appellant. Guy C. Prentiss, J. P. C. Cottrill, and John W. Gary, for respondents. COLE, J. Before approaching the legal questions involved In this case, it is neces- sary to determine a question of fact; and that is, does the evidence show that the mortgage sought to be foreclosed was prop- erly attested when first left at the otfice of the register, so as to entitle it to record? There is considerable testimony in the case which tends strongly to prove that the mort- gage had no witnesses when it was record- ed. And the court found as a fact that the mortgage was not subscribed by the wit- nesses Baker and McFarlane at the time of its execution, and before it was tran- scribed upon the records and entered in the general index, but was subscribed by these witnesses after it was recorded, and that it was not again recorded. This finding af- firms one important fact, which is much contested by the defendants, which is the genuineness of the signature of the witness A. J. McFarlane to the instrument. An at- tempt is made to prove, and it is argued that the evidence shows, that McFarlane never signed the mortgage as a witness, and that his signature thereto is a forgery. On this point we will only make the re- mark that we are satisfied from the evi- dence, and especially by an inspection of the writings themselves, of the authenticity of the signature. Whether the mortgage was subscribed by the witnesses at the time of its execution and before it was left at the office for registry is a question of more doubt upon the evidence. The testimony is quite strong and positive that the mortgage had no subscribing witnesses when it was re- corded. But this testimony is contradicted; and, considering the circumstances attend- ing the execution and delivery of the mort- gage, we think the probabilities favor the inference that the instrument was witnessed when it was left for record. According to this view, there was a mistake in transcrib- ing the mortgage upon the record by omit- ting the names of the witnesses. The weight of the evidence, to our minds, supports this inference or conclusion. It is to be observed that the mortgage is perfect and fair on its face, showing two witnesses. A strong pre- sumption fairly arises from the insti'ument itself that it was witnessed at the time of its execution. This presumption is not over- come nor repelled by the testimony offered to show that it was not witnessed at that time. In respect to the degree or quantity of evidence necessary to justify a finding that the subscribing witnesses signed the instrument after it was executed and re- corded, the case would seem to come within the rule laid down in Kercheval v. Doty, 31 Wis. 478, where it is said: "The prop- osition being to set aside or Invalidate a written contract by evidence of a far less certain and reliable character than the writ- ing itself, the greatest clearness and certainty of proof should be required. It is like the cases where the object is to correct or re- form a deed or other instrument on the ground of mistake, or to set aside or rescind it on the same ground; where the rule is that tlie fact must be ti.tablished by clear and satisfactory evidence." The testimony offered to show that the mortgage was not witnessed when executed and before it was recorded falls short of this rule. The fact is not established by clear and conclusive proof that it was not witnessed when ex- ecuted. It would serve no useful purpose to go into a detailed discussion of the evi- dence upon this point, and we shall not do so. It is sufficient to say that, giving to the testimony offered to show that the mort- gage was not witnessed before it was re- ceived for record all the weight to which it is entitled, it fails to establish that fact in a clear, satisfactory manner. Assuming, then, that the mortgage was witnessed when it was left at the office of the register to be recorded, the further im- portant inquiry arises as to what effect must be given to the record as constructive no- tice to subsequent bona fide purchasers for value. This record was in this state. The entry of the mortgage was made in the gen- eral index book, but the full record of the instrument had no subscribing witnesses; and therefore the question is, would such a record operate as constructive notice to subsequent purchasers for value, independent of any actual notice? It Is claimed by the counsel for the plaintiff that the record does and should so operate, notwithstanding the 92 PRIORITIES AND NOTICE. mistake in tlie registration or recording of the instrument in extenso. Tliis presents a question of no little difficulty, which must be solved by the application of general prin- ciples of law to the provisions of our stat- ute. It is a familiar rule that an instrument must be properly executed and acknowledged so as to entitle it to record, in order to make the registry tliereof operate as con- structive notice to a subsequent purchaser. Says Mr. Justice Story: "The doctrine as to the registration of deeds being consti-uc- tive notice to aU subsequent purchasers is not to be understood of all deeds and con- veyances which may be de facto registered, but of such only as are authorized or re- quired by law to be registered, and are duly registered in compliance with law. If they are not authorized or required to be regis- tered, or the registry itself is not in com- pliance with the law, the act of registration is treated as a mere nullity; and then the subsequent purchaser is affected only by such actual notice as would amount to a fraud." 1 Bq. Jur. § 404. See, also Ely v. Wilcox, 20 Wis. 528; Fallass v. Pierce, 30 Wis. 444; X,essee of Heister v. Fortner, 2 Bin. 40; Shove v. Larsen, 22 Wis. 142. and cases cited on page 146. Under our statute, among other requisites, two witnesses are essential to a conveyance, to entitle it to record. The statute requires every register to keep a general index, each page of which shall be divided into eight columns, with heads to the respective columns as pre- scribed; and the duty is imposed upon the register to make correct entries in said in- dex of every instrument received by him for record, under the respective and appro- priate heads, and immediately to enter in the appropriate column, and in the order of time in which it was received, the day and hour of reception; and it is declared that the instrument "shall be considered as re- corded at the time so noted." Rev. St. 1858, c. 13, §§ 142, 143. In Shove v. Larsen, supra, the effect of this index containing correct entries of matters required to be made there- in was considered, and it was held that by force of the statute it operated as construc- tive notice to a subsequent purchaser. In that case the index contained an accurate description of the land mortgaged, but in transcribing the mortgage at large upon the records a mistake was made in the descrip- tion; and it was claimed in behalf of the subsequent purchaser that it was the regis- tration of the instrument at large which alone amounted to constructive notice. But this construction of the statute was not adopted, the court holding that a subsequent purchaser was bound to take notice of the entries in the index, which the law required the regis- ter to make. This result seemed to follow necessarily from the language of the statute, which declared that the instrument should be considered as recorded at the time noted. Time might elapse before the instrument was transcribed at large on the record, or it might be lost, and not transcribed at all, leaving the index the only record of its con- tents. And the manifest Intention of the statute seemed to be to make the index no- tice of all proper entries from its date, and also of the instrument Itself until It was registered in full. The further consequence would seem necessarily to result from this view of the statute that the registration of the conveyance in extenso relates back to the registration in the index, and from thence there is constructive notice of the contents of the instrument. The doctrine of Shove V. Larsen was approved in Hay v. Hill, 24 Wis. 235i but the court refused to make the entry in the index in that case operate as constructive notice, because upon its very face it bore conclusive evidence that it was not made at its date; in other words, the rectitude and integrity of the index were successfully impeached by the index itself. See, also. Insurance Co. v. Scales, 27 Wis. 640. Where there is nothing upon the face of the index to impeach or throw suspicion upon its accuracy, there it would affect a subsequent purchaser with notice of those facts which the law required to appear there- in. Doubtless, a still further consequence fol- lows from this construction of the statute, namely, that where, by some mistake, there is a discrepancy between the proper index entries and the instrument as registered, there each supplies the defects of the other in the constructive notice thereby given; that is, it appears to be the intention of the stat- ute to charge the subsequent purchaser con- sti-uctively with such knowledge as the prop- er index entries afford, as well as with notice of those facts derived from the regis- tration itself. He is presumed to have ex- amined the whole record, and is affected with notice of what it contains. But when the instrument, as registered in full, appears defective in some material and essential parts, which are not supplied by the index entries, what effect, then, must be given the record as constructive notice? This is real- j ly the difficult question in this case. From I the entries in the index it would not appear whether the mortgage was witnessed or not. The presumption from the mere entries them- selves would be that it was witnessed and acknowledged, so as to entitle it to record; but when the mortgage, as registered in full, was examined, it would be found that it had no witnesses, and had no business on the records. As the record itself is only constructive notice of its contents, it is dif- ficult to perceive how it can go beyond the facts appearing upon it, and charge a pur- chaser constructively with knowledge of a fact not in the record. One of the counsel for the defendants states the argument on this point as follows: He PRIORITIES AND NOTICE. 93 insists and claims that the entries in the index books, so fax as they indicated that the mortgage had been filed fox- record, in- dicated also that the mortgage was so ex- ecuted as to entitle these entries of it to be made; but that, when the full record was looked at for all the particulars of the mortgage, and perhaps for the express pur- pose of verifying the entries in the index, it is found that the apparent assertion by the index entries that the mortgage was properly executed was wholly unti-ue, and that the mortgage in fact was no incum- brance. The fact, as truly shown to exist by the full record, overcomes and destroys the false assertion as to the fact in the index. And, it appearing by the insti'ument registered that it was not entitled to record, both the registration and index itself cease to affect the purchaser with constructive no- tice. It is not readily perceived wherein this ar- gument as to the effect of our various pro- visions upon the subject of registration is unsound. The question mainly depends up- on the construction of our own statutes. So far as we are aware, this is the first time the point lias been presented in this court for adjudication. We have derived but little aid from the decisions in other states, for the reason that few of them have similar statutory provisions. We have been referred by the counsel for the plaintiff to two cases in Michigan,— Brown v. McCormick, 28 Mich. 215, and Starkweather v. Martin, Id. 472. In Brown v. McCormick the effect of the reg- istry, as notice to subsequent purchasers, was made to turn upon the curative act of 1861, mentioned in the opinion. In Stark- weather V. Martin the question was, how far the absence, on the registry of a deed, of any mark or device indicating a seal, or of any statement of the register that the orig- inal was sealed, affected the validity of the record entry as evidence of title. The rec- ord entry of the deed was made more than forty years before the cause was decided, by the proper oflicer, and in the appro- priate place for the registry of deeds, under the law permitting the registry of only seal- ed instruments; and the instrument was in the form of a warranty deed, purporting to be acknowledged and dated at a time when it was the common and lawful course to seal conveyances, and contrary to official duty to take the acknowledgment unless the conveyance was sealed, and where the con- clusion, attestation clause, and certificate of acknowledgment of the instrument all spoke of it as under seal. The court said that these facts and incidents, taken together, afforded a very strong presumption that the original was sealed. The doctrine of this case does not seem to have a very strong bearing upon the ques- tion under consideration. It may be said that it was contrary to the duty of the reg- ister to record the mortgage unless It was properly acknowledged and witnessed, and that a presumption arises that he would not have done so. But in answer to this it may also be said that the law made it the duty of the register to record the mortgage unless it was properly acknowledged and witness- ed, and that a presumption arises that he would not" have done so. But in answer to this it may also be said that the law made it the duty of the register to record, or cause to be recorded correctly, all instruments au- thorized by law to be recorded. Section 140, c. 13, Rev. St. 1858. And the presumption that he performed his duty in recording the mortgage correctly is as strong as the pre- sumption that he would not have recorded it unless it was entitled to registry. Ill Shove V. Larsen, a number of cases are referred to which hold that a mistake in re- cording a deed, or recording it out of its order, renders the registration ineffectual as notice to subsequent incumbrancers and pur- chasers. The doctrine of those cases would seem to be applicable to the case before us. The registration and index entries being in- complete, because showing that the mort- gage had no subscribing witnesses, construc- tive notice could not be presumed of such a record; for the principle "that the registry is notice of the tenor and effect of the instru- ment recorded only as it appears upon that record" fully applies. Shepherd v. Burkhal- ter, 13 Ga. 443. See, in addition to the cases cited in Shove v. Larsen, Brown v. Kirkman, 1 Ohio St. 116; Stevens v. Hampton, 46 Mo. 404; Bishop v. Schneider, Id. 472; Terrell v. Andrew Co., 44 Mo. 309; Frost v. Beekman, 1 Johns. Ch. 288. The question, then, arises whether the evi- dence shows that any of the defendants were affected with actual notice of the mortgage. This question, we think, must be answered in the affirmative, so far as the defendants Thomas Maloy and Stanislaus Bartosz are concerned. In the deposition taken on his own behalf, but read as a part of the plaintiff's case. Thomas Maloy distinctly admits that he had heard, when he purchased his lots, that there was a defective railroad mortgage upon them, but that he did not look for it, because his abstract did not show it. It is claimed by one of the counsel for the defendants that this related to the Aiken mortgage, and not to the one upon which this action is brought It seems to us, however, that this is a total- ly inadmissible construction of the testi- mony. He most certainly refers to the mort- gage in suit. And what he had heard about there being a defective railroad mortgage upon the property was sufficient to put him upon inquiry. Parker v. Kane, 4 Wis. 1. "What is sufficient to put a purchaser upon an inquiry is good notice; that is, where a man has sufficient information to lead him to a fact, he shall be deemed conusant of it." 94 PRIORITIES AND NOTICE. Sugd. Veod. (9th London Ed.) p. 335. "In re- gard to the inquiry required of a party, it should be such as a prudent and careful man would exercise in his own business of equal importance. Accordingly, where the mortga- gee is informed that there are charges affect- ing the estate, and is cognizant of two only, he cannot claim to be a purchaser without notice of other charges, because lie believes that the two, which satisfy the word "char- ges," are all the charges upon it. He is bound to inquire whether there are any oth- ers. The rule with respect to the consequen- ces of a purchaser abstaining from making inquiries does not depend exclusively upon a fraudulent motive. A man may abstain from mere heedlessness or stupidity, and be none the less responsible for the consequences; but, if he make reasonable inquiry, and is deterred by a false answer, he is excusable, if it be of a character to delude a prudent man." 1 Story, Bq. Jur. § 400b; Jackson v. Van Valkenburgh, 8 Cow. 260. Independent- ly of the record, llaloj- had notice of the ex- istence of the mortgage, or had a knowledge of such facts as to call for further inquiry. He cannot, therefore, be protected as an in- nocent purchaser for value. The defendant Bartosz must be charged with notice of the mortgage by the recitals in the deed from Tenney and wife to his im- mediate grantor. He was present when that deed was executed and delivered to his uncle. He testifies that he did not know whether anything was said about the railroad mort- gage at that time or not; that he did not un- derstand English very well. The purchase was really made by his uncle for him. And, whether he fully understood the conversa- tion at the time about incumbrances, he must be chargeable with notice of what ap- pears in his chain of title. This clause was in the deed to his uncle; "Said premises are free and clear from all incumbrances except a mortgage to the La Crosse Railroad Co., which I am to save said Bartosz harmless from." The general rule upon this subject is "that, where a purchaser cannot make out a title but by a deed which leads him to an- other fact, he will be presumed to have knowledge of that fact." The following au- thorities are very clear and decisive upon that point: Pitzhugh v. Barnard, 12 Mich. 105; Case v. Erwin, 18 Mich. 434; Baker v. Mather, 25 Mich. 51; Insurance Co. v. Hal- sey, 8 N. Y. 271; Frost v. Beekman, 1 Johns. Ch. 298; Gibert v. Peteler, 38 N. Y. 105; Acer V. Westcott, 40 N. Y. 384; Coles v. Sims, 5 De Gex, M. & G. 1. The clause in the deed referred to the mortgage as an existing in- cumbrance, and he cannot now, in good faith, claim that it is not a lien upon his property. The counsel for the plaintiff claims that tlie defendant McLindon had actual knowl- edge of the existence of the mortgage. It is true, he testified that when he purchased he knew by report that there was a railroad mortgage upon the property, but he says that the report stated that the mortgage was void, \yere he not protected by another prin- cipal, he could not certainly be regarded as a bona fide purchaser. But he purchased from S. S. Johnson, or claims through Johnson, in whom the title stood free from any taint. For the rule is well settled that a purchaser affected with notice may protect himself by purchasing of another who is a bona fide purchaser for a valuable consideration. For a similar reason, if a person who has notice sells to another who has no notice, and is a bona fide purchaser for a valuable considera- tion, the latter may protect his title, al- though it was affected with the equity aris- ing from notice in the hands of the person from whom he derived it. Mr. Justice Story says this doctrine, in both of its branches, has been settled for nearly a century and a half in England. 1 Eq. Jur. § 410. He states an exception to the rule, which was recog- nized and enforced in Ely v. Wilcox, 26 Wis. 91, where the estate became revested in the original fraudulent grantee, when the orig- inal equity was held to reattach to it. There is no pretense that McLindon comes within the exception; and, as a bona fide purchase of an estate for a valuable consideration purges away the equity from the estate in the hands of all persons who derive title under it, he is protected. It is said that it does not appear that Johnson's title was de- rived from the common source. As we un- derstand the bill of exceptions, an abstract was offered in evidence to show title from Bunn, by various intermediate conveyances, to the defendant, which was ruled out on the plaintiff's objection. But perhaps it is a better answer to the objection to say that the plaintiff has made the defendants parties under the general allegation that they claim some interest in or title to the mortgaged premises, which was subject to the mort- gage. This allegation implies that this in- terest was not adverse, but was derived from Dunn, though subsequent in date, and inferior in right, to the plaintiff's mortgage. It was further insisted that the evidence showed that the defendant Mary Maloy had actual notice of the mortgage. We do not think this position is sustained by the tes- timony. It is attempted to charge her with the same actual knowledge her husband had, because he aided her when she made her pur- chase of Martin Maloy. It does not appear that anything was said at this time about the rail- road mortgage, or that she ever had any notice of it. It does not appear, even, that he was acting as her agent in any legal sense; and, besides, if he were, his knowledge, acquired at another time, when not engaged in her business, ought not to be imputed to her. Notice, to bind the principal, should be brought home to the agent while engaged in the business or negotiation of the prin- cipal, and when it would be a breach of trust in the former not to communicate the knowl- edge to the latter. 1 Story, Eq. Jur. § 408, PRIORITIES AND NOTICE. 95 and cases cited in note 1. The evidence fails to bring her within that rule. A numher of other questions were discuss- ed upon the argument; but we believe these observations dispose of all the more impor- tant ones. The judgment of the circuit court as to the defendants Thomas Maloy and Stanislaus Bartosz must be reversed, and the cause re- manded for further proceedings in accord- ance with this decision. It is so ordered. 96 PRIORITIES AND NOTICE, DEASON et al. t. TAYLOR. (53 Jliss. 697.) Supreme Court of Jlississippi. Oct., 1876. Appeal from chancery court, Lincoln coun- ty; Thomas Y. Berry, Chancellor. Bill in equity by Bentonville ' Taylor against J. B. Deason, M. W. Hoskins, and G. W. Hoskins, her husband, Ellen McClen- don and A. D. McClendon, her husband, to recover the balance of the purchase money of certain land, and to subject land to the payment of the same. The bill showed that on February 16, 1872, the complainant sold and conveyed the land in question to J. B. Deason; the deed, which was duly recorded on February 19, 1872, re- citing a consideration of "the sum of $700, to be paid to the party of the first part on or before the first day of July, 1872, by the party of the second part." For the purchase money Deason gave his note, of even date with the deed, as follows: "On or before the first day of July next, I promise to pay Bentonville Taylor, or bearer, the sum of $700, for town lots conveyed by him to me this day. This sum is to be paid in Missis- sippi state certificates of indebtedness at par." After maturity of the note, Deason sold and conveyed the lots to the defendant M. W. Hoskins, and the latter and her hus- band sold and conveyed the same to the defendant Ellen McClendon. When Deason sold and conveyed the lots to the defendant Hoskins, he informed her agent that he had paid Taylor all the purchase money. The defendants demurred to the bill, on the ground that the complainant had no vendor's lien, it appearing on the face of the bill that the consideration for the sale of the lands was not money or United States currency; and because the recital in the deed was not notice to the defendants Hos- kins and McClendon of the complainant's equity. The demurrer was overruled, and an an- swer filed, and upon final hearing a decree was rendered for the complainant for the balance of the purchase money due him, and foreclosing his vendor's lien on the land. The defendants appeal. Sessions & Cassedy, for appellants. Chris- man & Thompson, for appellee. Bentonville Taylor, pro se. CHALMERS, J. We are content with the finding of the chancellor on the facts. If any injustice was done in fixing the amount due, it was to the appellee, and not to the appellants. The fact that the note was dis- chargeable in Mississippi certificates of in- debtedness (known as Alcorn money) did not deprive it of the protection of the vendor's equitable lien. Hai-vey v. Kelly, 41 Miss. 490. In the face of the deed which Taylor exe- cuted to Deason was this recital: "The par- ty of the first part (the vendor), for and In consideration of the sum of $700, to be paid on or before the first day of July, 1872, by the party of the second part" (the vendee i. &c. For this sum of $700, Deason, the ven- dee, executed his note to Taylor, due 1st of July, 1872. The deed was recorded at once,, and Deason took possession of the premises. Without having completed payment in full of the note, Deason sold the premises in 1874 to Hoskins, who subsequently sold to Mrs. McClendon. Both Hoskins and Mrs. ilcOlendon deny actual knowledge, at and before their purchases, that any thing re- mained due to Taylor. Did the law give them constructive notice of Taylor's rights? Nothing is better set- tled than that the purchaser of real estate is bound to take notice of all recitals in the chain of title through which his own title is derived. Not only is he bound by every- thing stated in the several conveyances con- stituting that chain, but he is bound fully to investigate and explore everything to which his attention is thereby directed. Where, therefore, he is informed by any of the preceding conveyances, upon which his own deed rests, that the land has been sold on a credit, he is bound to inform himself as to whether the purchase money has been paid since the execution of the deed. Wise- man V. Hutchinson, 20 Ind. 40; Croskey v. Chapman, 26 Ind. 333; Johnston v. Gwath- mey, 4 Lift. (Ky.) 317.' It is argued, however, that this principle only applies before the maturity of the notes. as shown by the recitals of the deed, and that it will not apply where, as in the case at bar, subsequent purchasers have bought after the notes were past due. It is said that, in such case, the subsequent purchas- ers may rely upon a presumption that the original debt has been paid. We know of no principle which would justify a reliance upon such a presumption, and it is expressly negatived by the cases of Honore v. Bake- well, 6 B. Mon. 67, and Thornton v. Knox, Id. 74. They may rely upon such presump- tion after sufficient time has elapsed to bar the notes, although, in fact, they may have been renewed. Avent v. McCorkle, 45 Miss. 221. It appears In the case at bar that the sub- sequent purchasers knew that Deason had bought the realty on a credit, because they asked him at the time of their purchase if he had paid all the money due Taylor. It was their own folly if they relied upon his assurances. Instead of applying for informa- tion to Taylor, who lived in an adjoining county, and is shown by the bill to be a practising lawyer, well known in Brook- haven, where the lots were situated and all the defendants resided. Decree affirmed. LIS PENDENS. 97 HOUSTON V. TIMatERMAN.i (21 Pac. 1037, Vf Or. 499.) Supreme Court of Oregon. May 3, 1889. Appeal from circuit court, Liinn county. Hewitt <& Bry,ant and Tilman Fojrd, for appellant. /. K. Weatlierford and D. R. N. Blackburn, for respondent. LORD, J. This was a suit to partition cer- tain lands described herein. The defendant denied tliat the respondent had any interest in said lands, and alleged that she was (»he owner in fee-simple, and entitled to the pos- session of the whole of said premises. The plaintiff, in reply, denied tiiis, and alleged afflrmatively that some time in July, 1S84, she commenced a suit against A. J. Houston for a divorce and alimony, and for an equal undivided one-third of the real property then owned by said Houston, and that he was the owner in fee of said real property, which was duly described therein. That the sum- mons in said divorce suit was served on ■ , 1884, and that prior to that time and prior to tlie 26th day of September, 1884, the defendant Timmerman had notice that the complamt for divorce and one-third of said real property had been filed by the plaintiff against her husband. That on the 5th day of February, 1886, a decree was entered, granting a divorce in favor of the plaintiff, and adjudging her to be the owner of the un- divided one-third of said real property, etc. The court below, after a trial of said cause, rendered a decree therein, granting the prayer of plaintiff for partition, except as to the 160 acres of land mentioned therein, and partition was ordered and made on June 26, 1888, and confirmed by the court. The de- fendant Timmerman derived her title to the premises in dispute in this wise: On the 15th day of March, 1880, the plaintiff's hus- band, A. J. Houston, for value, made and delivered his promissory note to the defend- ant Timmerman for the sum of $3,400, with interest at the rate of 10 per cent, per an- num from date; that, the said A. J. Hous- ton failing to pay said note, the defendant Timmerman commenced suit on the 26th day of September, 1884, and caused service of summons to be made upon him on that day, and that on October 27, 1884, the de- fendant Timmermau recovered judgment against the said A. J. Houston for tlie sum oJE $5,463.87, which, on the same day, was duly docketed in the judgment lien doclcet, and thereupon became a lien upon all the real property mentioned in the complaint in this suit. It further appears that on March 19, 1883, said A. J. Houston made and de- livered his promissory note to J. T. Williams for $1,000, with interest from date at the rate of 10 per cent, per annum, payable six months after date, and to secure the pay- ment of the same executed a mortgage, which was duly recorded, upon the 160 acres of land set out in the complaint. The said Houston ' Upon the subject ot lis pendens generally, see note to Newman v. Chapman, 14 Am. Dec. 774-779. HUTCH.& BUNK.EQ.— 7 failing to pay said note, the mortgage was foreclosed against the said Houston and the plaintiff herein. The defendant Timmer- man, however, answered, setting up her judgment, and asked, if the property be sold to foreclose said mortgage, that the over- plus, if any, should be applied in payment of her judgment, and a decree was accordingly so entered, etc.; that execution was issued upon said decree, and said 160 acres was sold to the defendant Timmerman for $2,500; that thereafter, on May 13, 1885,, execution was issued upon said judgment, and the re- mainder of the premises described herein was sold to the defendant Timmerman, and said sale confirmed, and deeds were duly ex- ecuted by the sheriff to said defendant. It will be noticed that the suit of the de- fendant Timmerman to recover the amount due on the note against A. J. Houston, who was then the husband of the plaintiff herein, was commenced after the suit of the plaintiff for divorce against her husband, and that a judgment was recovered and docketed before a decree in the divorce suit was ren- dered, and in which one-third of the real es- tate then owned by the liusband was decreed the plaintiff. It is true, there wiis no direct proof of the date of the service of the sum- mons in the divorce suit; but, as this will not affect the result reached, it is immaterial . The contention is that the defendant Tim- merman was a purchaser pendente lite. There is, however, a preliminary question to be first disposed of, namely, that the appeal was not taken within six months as allowed by law. The answer to this is that the ob- jection relates to the inteilocutory or first de- cree, and not to the final decree, and that, as our own Code does not authorize an appeal from interlocutory judgments or decrees, but only from such as are final, and, the appeal from the final decree being within six months, there was a right of appeal, and the objection, therefore, is unavailing. An examination of the statutes of the two states from which the authorities were read, to the effect that an apjieal might be taken before a final judgment or decree was entered shows that appeals in those states may be taken from interlocutory judgments or de- crees, which, not being the case under our Code, they fail on application. See Freem. Co-tenancy, §§ 519, 527. But to return. Among the ordinances or rules adopted by Lord Chancellor Bacon "for the better and more regular administration of justice" was one which provided that, where a person "comes in pendente lite, and while the suit is in full prosecution, and without any color of allowance, or privity of the court there regularly, the decree bindeth." Chancellor Kent said that a "Us pendens duly prose- cuted and not conclusive is notice to a pur- chaser so as to affeitaud bind his interest by the decree." Strictly speaking, however, the doctrine of lis pendens is not founded upon notice, but upon reasons of public policy, founded upon necessity. "It affects him," said Lord Chancellor Cranwoktii, "not be- 98 LIS PEXDEXS. cause it amounts to notice, but because the law does not allow litigant parties to give to others, pending the litigation, rights to the property in dispute, so as to prejudice the opposite party. * * * The necessities of mankind require that the decision of the court shall be binding, not only on the liti- gant parties, but also on those who derive title under them by alienation made pending the suit, whether such alienees had or had not notice pending proceedings. If this were not so, there could be no certainty that litigation would ever come to an end. " Bel- lamy V. Sabine, 1 De Gex & J. 566. The main purpose of the rule is to keep the sub- ject-matter of the litigation within the power of the court until the judgment or decree shall be entered; otherwise, by successive alienations, its judgment or decree could be rendered abortive, and thus make it impossi- ble for the court to execute its judgments or decree. Hence the general proposition that one who purchases of either party to the suit the subject-matter of the litigation, after the court has acquired jurisdiction, is bound by the judgment or decree, whether he purchased for a valuable consideration or not, and with- out any express or implied notice in point of fact, is sustiiined by many authorities, and disputed by none. E^'ster v. Gaff, 91 U. S. 521; Grant v. Bennett, 96 111. 513; Randall V. Lower, 98 Ind. 261; Daniels v. Henderson, 49 Cal. 242; Blanchard v. Ware, 43 Iowa, 530; Carr v. Lewis, 15 Mo. App. 551; Currie v. Fowler, 5 J. J. Marsh. 145; Ilinrn v. Mill, 13 Ves. 120; 1 Story, Eq. .Jiu-. § 405. The doctrine of lis pendens was introduced in analogy to the rule at common law in a real action "where if the defendant aliens after pendency of the writ, the judgment in the action will overreach such alienation." Sor- rell V. Carpenter, 2 P. Wms. 482. And this may account for the leaning in some of the courts to restrict the application of the rule ■of Us pendens to actions or suits affecting title to real property. McLaurine v. Mon- roe, 30 Mo. 469; Winston v. Westfeldt, 22 Ala. 760; Baldwin v. Love, 2 J. J. Marsh. 489; Murray v. Lylburn, 2 Johns. Ch. 441. But it is hardly considered well settled that it may not witli equal propriety be applied to the sales of chattels. Two things, liowever, seem indispensable to give it effect: (1) That the litigation must be about some specific thing, which must necessarily be affected by the termination of the suit; and (2) that the particular property involved in the suit " must be so pointed out by the proceeding as to warn the whole world that they intermed- dle at their peril." Freem. Judgm. §§ 196, 197. Now, the divorce suit of the plain- tiff was not brought specifically to recover the one-third of the real estate of her hus- band, as was decreed in the divorce proceed- ing. The land was not the subject-matter of the litigation, and the subject of the suit was not to recover title that belonged to the plaintiff. It was incidental and collateral to the divorce proceeding. The court has no jurisdiction to affect the title of the husband to his lands, or decree that one-third of them shall be set apart for her in her own right and title, independent of a decree for divorce. Nor has the plaintiff any title on which to base a suit to recover any portion of the same, except as it comes by force of the statute upon a decree for divorce. A proceeding in divorce is partly in personam and partly in rem, and, in so far as it is to affect the mar- riage status, it is to change a thing independent of the parties, and is a proceed- ing not against the parties in personam, but against their status in rem. 5 Amer. & Eng. Cyclop. Law, "Divorce," 751. The matter upon which the jurisdiction acts is the sta- tus. The marriage is the thing which the suit is brought to dissolve. It is the subject of the litigation; but, as incidental to it, the court may grant temporary nWmony pendente lite, or permanent alimony, when a decree for divorce is rendered. And the general rule is that bills tor alimony do not bind the property of the defendant with lis pendens. 1 Story, Eq. Jur. § 196; Brightman v. Bright- man, 1 R. I. 112; Isler v. Brown, 66 N. C. 556; Almond v. Almond, 4 Rand.(Va.) 662. But the court cannot affect the title of the real property of the defendant in a divorce proceeding until the point is reached that a decree of divorce is to be rendei-ed. Tempo- rary alimony may be granted pendente lite, but the title of the real estate of the defend- ant remains intact, and cannot be affected during the pendency of the proceeding, but only when the proceeding for a divorce has terminated, and a decree rendered that the marriage is dissolved, and then only by force of the statute. Our statute provides: "Whenever a mar- riage shall be declared void or dissolved the party at whose prayer such decree shall be made shall in all cases be entitled to the un- divided one-third part in his or her undivided right in 'fee of the whole of the rfal estate owned by the other at the time of such decree; and it * * * shall be the duty of the court to enter a decree in accordance with this provision." Code Or. § 499. It is " whenever a marriage shall be declared dissolved" that the statute oper- ates, not before, or pendente lite; and the court then becomes authorized, and it is its "duty, " " to enter a decree" for the undivided one-third part in fee of the whole of the real estate "owned by the defendant at the time of such decree" for a divorce. It must be manifest, then, that the primary object of the suit is to affect the marriage relation, — its status; that it is the specific matter in con- troversy to be affected; and that it is only when the status is changed by a decree of di- vorce that the statute operates to divest title "owned" by the defendants, and that it then becomes the duty of the court to enter a de- cree in accordance with its provisions. Nor do the cases cited by counsel sustain his con- tention. In Tolerton v. Williard, 30 Ohio St. 586, the suit was of "double aspect," as said LIS PENDENS. 00 by the court, and was brought to protect her equitable right in property which was the subject of dispute. This property was bought with the wife's money, and she sought a res- toration of lier riglits. The court says: "It is evident that the court in coming to its con- clusion did take these equities into consider- ation, so that the decree may fairly be con- sidered an equitable one in her favor." And again: "In a proceeding like the one under consideration where the wife claims rights in her husband's property other than those aris- ing from the marital relation, and insists up- on them in connection with her claim for ali- mony, the court is fully authorized to pass upon them." In Daniel v. Hodges, 87 N. C. 97, the proceeding was for alimony, and the only property which the husband owned was a lot that the wife sought to have sub- jected to her claim, and was in actual pos- session of it by order of the court when her husband, pending the litigation, conveyed it to another, and the court held, under the ex- ceptional circumstances of the case, that the doctrine of Us pendens applied. There the proceeding was to subject the specific thing to her claim, which the husband attempted to defeat by conveying away the property, and tlie court, while admitting the general doctrine that a lis pendens was not applicable in such cases, said: "We are of the opinion the petition for alimony under the particular circumstances of the case constituted such a lis pendens as affected the purchaser with notice, independent of the actual notice had, and rendered the deeds void." But this has no relevancy to the case at bar. There she sought to subject tlie property to her claim for alimony, and the suit was directed specif- ically against it, and she was put in actual possession by order of the court, and then it was only "under the peculiar circumstances of the case" that the court thought the purchaser from the husband pending the liti- gation was affected with the rule of lis pen- dens. Here there was no alienation of the property, which was only incidentally in- volved, or any charge of any act on the part of the defendant Houston to defeat any right whatever which might accrue to the plaintiff, if the marriage should be dissolved. If the defendant Houston had conveyed away the property to another with the object of defeat- ing her right, upon a decree for divorce, to any interest in his lands, such purchaser may be affected with the rule of lis pendtns in such case; but that is not the question here, and which it will be time enough to decide when properly presented for our considera- tion. The debt which the defendant Hous- ton owed the defendant Timmerman was contracted long before the suit for divorce was commenced, or the cause or ground of the divorce existed, and doubtless the credit was given on the faith of the property, a part of which included the property in dispute, then owned by Houston. There is no pre- tense of any fraud or collusion, or that the debt is not an honest obligation which Hous- ton ought to have paid long before the di- vorce proceeding was instituted. Although the commencement of the divorce suit might result in a decree which would affect the property of the defendant, the property was not the subject specifically of the litiga- tion, and by reason thereof was not with- drawn from such burdens as might be legally imposed upon it for just claims upon judg- ments recovered and docketed against its owner, prior to divesting him of his title by force of the statute under the decree. The defendant Timmerman had the legal right to commence her action to recover the money due on the note of Houston, and the fact that the wife of Houston had instituted proceed- ings for a divorce did not affect that right, but when judgment was recovered thereon, and docketed, by force of law, the lands then owned by him in that county, including the land in dispute, became subject to the lien of such judgment; and, as the facts show that this was before any decree was rendered in the divorce whereby title to such lands could be divested, it follows that whoever took title from him subsequently, either by contract or by operation of law, took said title «tm onere, or subject to the lien of such judgment. It results, as a purchaser of said lands at an ex- ecuLion sale upon such judgment, the defend- ant Timmerman was not affected by or sub- ject to the rule of lis pendens, and her deed thereby rendered invalid. It is true, in the divorce suit the property was described in the complaint and decree, which, since the decision in Bamford v. Bamford, 4 Or. 30, has been deemed essential to reach the prop- erty of the guilty party, but it is apprehended that neither allegation or proof concerning the lands is necessary, but that it is enough and a sufiicient compliance with the latter clause of section 499, Code Or., to say in ef- fect that the party obtaining the divorce is hereby entitled to one-third of the real prop- erty owned by the other, whatever it may be. In this view, if any question arises as to what property was so owned by him, it can be determined by appropriate proceedings for that purpose between the parties interested, much better than in a divorce suit, in which it is neither proper nor convenient that third parties, in order to protect their rights, should be compelled to intervene and become parties to a controversy between husband and wife in a divorce proceeding. Barrett v. Failing, 6 Sawy. 475, 3 Fed. Rep. 471. So that, how- ever we look at the facts of this record, our conclusion is that the decree of the lower court must be reversed, and it is so ordered. 100 EQUITABLE ESTOPPEL. HORN V. COLE et al. (51 N. H. 287.) Supreme Judicial Court of New Hampshire. July Term, 1868. Mr. Fletcher, for plaintiff. Mr. Ray, for defendants. PEllLEy, C. J. There is no complaint tliat the rulings and instructions of the court im the trial were erroneous or improper, pro- vided the evidence warranted the jury in re- turning a verdict for the defendants; and the verdict must stand, if the evidence was com- petent to prove such representations by the plaintiff as would estop him to set up his title to the goods attached to the property of Charles E. Horn. The evidence reported in the ca.se was com- petent to prove that the plaintiff made the representations on the occasion and in the r-ircumstances testified to by Cole; that the plaintiff, though not indebted to Cole, was in debt to others; that Cole, believing the representations to be true, and relying on them as true, caused the goods to be at- tached as the property of Charles E. Horn; and, also, that the plaintiff made these rep- resentations knowing them to be false, with the intention that all persons who were In- terested in the subject should take them to be true, and act on them as such, and with the intention to mislead and deceive all to whom the representations were communi- cated, and induce them to act on them as true; that his intention was to deceive his own creditors, and prevent them from taking the goods as his for the debts which he owed to them. These facts must be taken to have been established by the verdict. But, as there was no evidence that the plaintiff knew Cole had any demand against Charles E. Horn, we cannot infer that the plaintiff had Cole in his mind as an individ- ual whom he meant to deceive by his false representations, or that he had an intent to prevent Cole from taking the goods for a debt which he owed to Cole, as he owed no such debt; and, on the evidence reported, the jury were not at liberty to find that the plaintiff had Cole In his mind as an individ- ual whom he meant to deceive and defraud by inducing him to take the goods for his demand against Charles E. Horn. This rais- es the point, which the counsel for the plain- tiff takes, whether, to estop a party from showing that his representations were false, it is necessary that the false representations should have been intended to deceive and de- fraud tlie individual party who trusted to them and acted on them, provided there was a general iijtention to deceive and defraud all persons who were interested in the subject- matter of the false representations. The ground on which a party is precluded from proving that his representations on which another has acted were false is, that to permit it would be contrary to equity and good conscience. This has been sometimes called an "equitable estoppel," because the jurisdiction of enforcing this equity belong- ed originally and peculiarly to courts of equi- ty, and does not appear to have been fa- miliarly exercised at law until within a com- paratively recent date; and, so far as relates to suits at law affecting the title to land, I understand that in England and in some of the United States the jurisdiction is still confined to courts of equity. Storrs v. Bar- ker, (i Johns. Oh. 166, 168; Evans v. Bicknell, 6 Ves. 174, 178; Pickard v. Sears, 6 Adol. & E. 469. The doctrine, however, is a vei-y old head of equity, and is recognized and applied in a great number of the early cases. Dyer v. Dyer, 2 Ch. Cas. 108; Teasdale v. Teasdale, 13 Vin. Abr. 539; Hobbs v. Norton, 1 Vern. 136; Gale v. Lindo, Id. 475; Huns- den v. Oheyney, 2 Vern. 150; Lamlee v. Hanman, Id. 499; Raw v. Pote, Id. 239; Blanchet v. Foster, 2 Ves. Sr. 2(!4; East In- dia Co. V. Vincent, 2 Atk. 83; Stiles v. Cow- per, 3 Atk. (593; Webber v. Farmer, 13 Vin. Abr. .-)25; 2 Brown, Pari. Cas. 88; 2 Eq. Cas. Abr. 481; Neville v. Wilkinson, 1 Brown, Ch. 543; Storrs v. Barker, 6 Johns. Gh. 160; Strong v. Ellsworth, 26 Vt. 366. JIany of these cases related to underhand agreements in fraud of marriage settlements; but the principle is of general application. 1 Fonbl. Eq. 267, note x. Relief was given according to the circumstances of the case, — sometimes by enjoining suits at law, in which the legal title was set up, and some- times by decreeing conveyances and the can- celling of deeds and other instrtmients; but in all these cases relief was given in equity contraiy to the strict legal rights of the de- fendants. Thus, in the case of an equitable estoppel, a party is not allowed to assert his strict le- gal right because, in the circumstances of the individual case, it would be contraiy to equity and good conscience. Take the pres- ent case for an Illustration. In trover, fol- lowing the legal definition of the action, if the plaintiff proves property in himself and a conversion by the defendant, he has main- tained his action, and is entitled to a ver- dict and judgment. It is conceded that the plaintiff owned the goods, and that the de- fendants converted them. The defense here set up appeals from the strict rule at law to the equitable doctrine that a party shall not be allowed to exercise his legal right of proving the facts, if, on account of his pre- vious declarations or conduct, it would be contrary to equity and good conscience. So in a vvrit of entry; by the technical rules at law, if the demandant proves seisin In himself and a disseisin by the tenant within the time of limitation, he is entitled to judg- ment; but if the demandant, having a dor- mant title to the land demanded, concealed his title, and encouraged the tenant to pur- chase from another, he is not allowed, in our EQUITABLE BSTOPPEL. 101 practice, to set up his legal title, because it would be contrary to equity and good con- science. It thus appears that what has been called an "equitable estoppel," and sometimes, with less propriety, an "estoppel in pais," is prop- erly and peculiarly a doctrine of equity, orig- inally introduced there to prevent a party from taking a dishonest and unconscientious advantage of his strict legal rights,— though now with us, like many other doctrines of equity, habitually administered at law. But formerly the practice was different, and suits at law, the courts being Incapable of giving effect to this equity, were often enjoined where the party insisted on his rights at law contrary to the equitable doctrine, as in Raw V. Pote, Stiles v. Cowper, and Webber V. Farmer, qua supra. It would have a tendency to mislead us in the present inquiry, as there is reason to sus- pect that it has sometimes misled others, if we should confound this doctrine of equi- ty with the legal estoppel by matter in pais. The equitable estoppel and legal estoppel agree indeed in this, that they both preclude from showing the truth in the individual case. The grounds, however, on which they do it are not only different, but directly op- posite. The legal estoppel shuts out the truth, and also the equity and justice of the individual case on account of the suppos- ed paramount importance of rigorously en- forcing a certain and unvarying maxim of the law. For reasons of general policy, a record is held to import incontrovertible verity, and for the same reason a party is not permitted to contradict his solemn ad- mission by deed. And the same is equally true of legal estoppels by matter in pais. Certain acts done out of court and without deed were, by a technical and unyielding rule of law, upheld on like grounds of public pol- icy, and followed always by certain legal consequences. The legal effect of such acts was not permitted to be controverted by proof. Thus, if one accepts a lease and enters under it, he Is estopped to claim any other estate in the land during the term; he can- not show that he owned the land when the lease was made. Estoppels by matter in pais were few in number, and all of this general and well defined character; and they all enforced some technical rule of the law against the truth, and also against the justice and equity of the individual case. Coke, in his examination of the different kinds of estoppel by matter in pais, enumer- ates the following: "By livery, by entiy, by acceptance of rent, by partition, and by ac- ceptance of an estate." Co. Litt. 352a. In Lyon v. Reed, 13 Mees. & W. 309, Parke, B., speaking of legal estoppels by matter in pais, says: "They are but few, and are point- ed out by Lord Coke, Co. Litt. 352a. They are all cases which anciently really were, and in contemplation of law have always continued to be, acts of notoriety no less sol- emn than the execution of a deed, such as livery, acceptance of an estate, and the like. Whether a party had or had not concurred in an act of this sort was deemed a matter which there eould be no difficulty in ascer- taining, and then the legal consequences fol- low." In the authorities which contain the most complete enumeration of the different kinds of legal estoppels and the fullest discussion of the law on the subject, I find no allusion to the equitable estoppel which we are now con^ sidering. All legal estoppels, whether by rec- ord, by deed, or by matter in pais, depended on strict legal rules, and shut out proof of the truth and justice of the individual case. Vin- er, Abr., "Estoppel," passim; Lyon v. Reed, 13 Mees. & W. 809; Freeman v. Cooke, 2 Exch. 658. For this reason, because legal estoppels, whether by record, deed, or matter in pais, shut out proof of the truth and justice of indi- vidual cases, they have been called odious, and have been construed with much strictness against parties that set them up. They were formerly required, like other defences regard- ed as inequitable, to be pleaded with certainty to a certain intent in every particular. If they were relied on by way of averment, and tried by the jury, the jury might find, and according to some authorities were bound by their oath veritatem dicere to find, according to the truth of the case, regardless of the es- toppel. Trials Per Pais, 284; Co. Litt 227a; Com. Dig. "Estoppel," E, 10. The practice is now different, and legal estoppels may be re- lied on, when given in evidence, without being specially pleaded. Legal estoppels exclude evidence of the truth and the equity of the particular case to support a strict rule of law, on grounds of public policy. Equitable estoppels are admitted on the ex- actly opposite ground of promoting the equity and justice of the individual case by prevent- ing a party from asserting his rights under a general technical rule of law, when he has so conducted himself that it would be contrary to equity and good conscience for him to al- lege and prove the truth. The facts upon which equitable estoppels depend are usually proved by oral evidence; and the evidence should doubtless be carefully scrutinized, and be full and satisfactory, before it should be admitted to estop the party from showing the truth, especially in cases affecting the title to land. But where the facts are clearly proved, the maxim that estoppels are odious — which was used in reference to legal estoppels, be- cause they shut out the truth and justice of the case — ought not to be applied to these equitable estoppels, as it has sometimes been, inadvertently, as I think, from a supposed an- alogy with the legal estoppel by matter in pais, to which they have, in this respect, no resem- blance whatever. Lord Campbell, in Howard V. Hudson, 2 El. & Bl. 10; Andrews v. Lyons, 11 Allen, 349, 351. In other cases, where 102 EQUITABLE ESTOPPEL. more attention has been paid to the real nature of this equitable doctrine, it has been held that such estoppels are not odious, and to be construed strictly, but are entitled to a fair and liberal application, like other equitable doctrines which are admitted to suppress fraud and promote honesty and fair dealing, ilellor and Compton, JJ., in Ashpitel v. Bryan, 3 Best & S. 474; Cowen, J., in Dezell v. Odell, 3 Hill, 220; Com. v. Moltz, 10 Pa. St. 530, 531; Buckingham v. Hanna, 2 Ohio St. 557; Van- Eensselaer v. Kearney, 11 How. 326; Preston V. Mann, 25 Conn. 118, 128. In this equitable estoppel, the party is for- bidden to set up his legal title because he has so conducted himself that to do it would be contrary to equity and good conscience. As in other cases of fraud and dishonesty, the circumstances out of which the question may arise are of Infinite variety; and, unless courts at law are willing to abdicate the duty of ad- ministering the equitable doctrine effectually in suppression of fraud and dishonesty, the ap- plication of it cannot be confined within the limit of any narrow technical definition, such as will relieve courts from looking, as in other cases depending on fraud and dishonesty, to the circumstances of each individual case. Certain general rules will doubtless apply, as in other cases where relief is sought on such grounds. But I find myself unable to agree with the authorities where the old maxim that legal estoppels are odious has been applied to this equitable estoppel, and where attempts have been made to lay down strict definitions, such as would defeat the remedy in a large proportion of the cases that fall within the principle on which the doctrine is founded. The doctrine having been borrowed from equity, courts at law that have adopted it should obviously look to the practice in equity for their guide in the application of it; and in equity, the doctrine has been liberally applied to suppress fraud and enforce honesty and fair dealing, without any attempt to confine the docti'ine within the limits of a strict defini- tion. For Instance, the doctrine has not in equity been limited to cases where there was an actual intention to deceive. The cases are numerous where the party who was estopped by his declarations or his conduct to set up his legal title, was ignorant of it at the time, and of course could have had no actual inten- tion to deceive by concealing his title. Yet, if the cu'cumstances were such that he ought to have informed himself, it has been held to be contrary to equity and good conscience to set up his title, though he was in fact ignorant of it when he made the representations. Hobbs V. Norton, Hunsden v. Cheyney, Teas- dale V. Teasdale, qua supra; and Burro wes v. Lock, 10 Ves. 470. So, if the party knew the facts, but mistook the law. Storrs v. Barker, 6 Johns. Ch. 166. Nor is it necessary in equity that the intention should be to deceive any particular individual or individuals. If the representations are such, and made in such circumstances, that all persons interested in the subject have the right to rely on them as true, their truth cannot be denied by the party that has made them against any one who has trusted to them and acted on them. Gale v. Lindo, Webber v. Farmer, qua supra. In the much and well considered case of Preston v. Mann, 25 Conn. 118, 128, Storrs, J., delivering the opinion of the court, says: "The doctrine of estoppel in pais, notwith- standing the great number of cases which have turned upon it and are reported in the books, cannot be said even yet to rest upon any determinate legal test which will reconcile the decisions, or will embrace all transactions to which the general principles of equitable necessity wherein it originated demand that it should be applied. In fact, it is because it is so peculiarly a doctrine of practical equity, tha,t its technical application is so dilHcult, and its reduction to the form of abstract formulas is still unaccomplished." This was said in 185(i, and little has since been done towards extricating the doctrine from the confusion and conflict of authority with which it was then embai'rassed. This, as I think, has been caused by the fact that courts have continued to exercise their ingenuity in the vain attempt to compress a broad doctrine of equity within the narrow limits of a technical definition. The case of Pickard v. Sears, 6 Adol. & H. 469, decided as late as 1837, appears to have been regarded, both in England and in this country, as the leading case at law on this subject. It was trover by the mortgagee of personal goods against the defendants, who were purchasers at a sheriff's sale on execu- tion against the mortgagor. The facts set up in defence were, that the plaintiff was pres- ent at the sale, did not disclose his title as mortgagee, and encouraged the defendants to purchase. The question on trial was as to the property of the plaintiff in the goods, and Lord Denman directed a verdict for the plain- tiff. A rule to show cause why the verdict should not be set aside was made absolute. In delivering the judgment of the court. Lord Denman said: "His [the plaintiff's] ti- tle having been established, the property could only be devested by gift or bale, of which no specific act was even surmised. But the rule of law is clear that where one, by his words or conduct, willfully causes another to believe the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is con- cluded from averring a different state of things as existing at the same time; and the plaintiff might have parted with his interest in the property by a verbal gift or sale, with- out any other formalities that threw technical difliculties in the way of legal evidence. And we think his conduct in standing by and giv- ing a kind of sanction to the proceedings un- der the execution was a fact of such a nature that the opinion of the jury ought to have been taken whether he had not, in point of fact, ceased to be the owner." It is worthy of note that in this suit at law EQUITABLE ESTOPPEL. 103 the court, so late as 1837, after stating the general equitable doctrine, did not venture to put the defence directly on the ground that the plaintiff was estopped by his conduct to prove the truth of the case, but allowed the facts to go to the jury as evidence that the plaintiff, in some undefined and mysterious way, had parted with his property in the goods. So late and so reluctant were the courts to admit in suits at law this defence, which depended on fraud and dishonesty, and which belonged, originally and appropriately, to the jurisdiction in equity. It can hardly be supposed that Lord Den- man, in the statement which he made of this equitable doctrine in reference to the facts of that case, understood that he was laying down a technical definition fixing the limits of the doctrine, and excluding all cases that did not come clearly within the terms which he used on that occasion. Nevertheless, the remarks of Lord Denman have often been treated aa a sort of authoritative text covering the whole ground, which it was the business of courts in later cases to expound and exijlain. And it is curious to observe what different and con- tradictory interpretations have been put on his statement of the equitable doctrine. It has been cited in Massachusetts as authority for decisions in which it has been held that the representations, to estop the party from show- ing they were not true, must have been made with the intent to deceive, and the intent to deceive the party who sets up the defence. Plumer v. Lord, 9 Allen, 455; Andrews v. Ly- ons, 11 Allen, 349. And in California the same case has been relied on for the rule that where a representation comes in any way to the ears of a party, who acts on it, the party making the representation is estopped to deny its truth, unless it had the character of a confi- dential communication. Mitchell v. Keed, 9 Cal. 204. In England it has been treated as a statement of the equitable doctrine made in reference to the circumstances of that case, and not intended as a formal and complete definition. Freeman v. Cooke, 2 Exch. 654; Gregg V. Wells, 10 Adol. & E. 90; Jorden v. Money, 5 H. L. Oas. 212. It would be a laborious and not a profitable task to attempt an analysis of all the recent decisions on this subject. I will briefly advert to some of those which appear to be the most important. In Plumer v. Lord, 9 Allen, 455, it was held that to create an estoppel in pais, the declarations or acts must have been accom- panied with a design to mislead; and Lang- don V. Doud, 10 Allen, 433, is to the same point. In Andrews v. Lyons, 11 Allen, 349, the court went one step further, and decided that the declarations or acts must have been accompanied with a design to deceive the pai'ty who sets up the estoppel, and induce him to act on them; and in this last case it is said that such an estoppel shuts out the truth, and is odious, and must be strictly proved. In Hawes v. Marchant, 1 Cmt. 144, Fed. Cas. No. 6,240, the rule is laid down that to be estopped the party must have de- signedly made admissions inconsistent with the defense or claim which he proposes to set up, and another, with his knowledge and consent, so acted on this admission, that he will be injured by allowing the admission to be disputed; and this mle is cited and apparently approved in Audenried v. Bette- ley, 5 Allen, 382. In these cases. It is to be observed, the court have not been content with saying, in reference to the facts before them, that, if certain things concurred in the case, it would fall within the equitable doctrine, and the party would be estopped, but they have un- dertaken to lay down a strict legal defini- tion of general application, excluding from the operation of the doctrine all cases that do not fall within the terms of the definition. Applying the rule as laid down in Hawes v. Marchant to the present case, if Horn had known that Cole had a demand against Charles E. Horn, had falsely represented to Cole that the goods belonged to Charles, with the design to deceive him and induce him to attach the goods as the property of Charles, and Cole, relying on the representa- tion, had taken the goods as the property of Charles, and as Horn intended, yet if, after he had made the false representation, he did not know that the goods were taken as the property of Charles, and assent that they should be so taken, he would not be estop- ped to set up his own title in the goods. The statement that another party must have act- ed on the false statement with his knowl- edge and assent must mean this, or it can mean nothing; for he could not know that he had acted on it at all until the act was done and accomplished. The remark of Lord Campbell in Howard V. Hudson, qua supra, though not called for by the case, is to the effect that the repre- sentation must have been intended to de- ceive. These authorities would seem to sustain the plaintiff's counsel fully in his position that the false representation must not only be intended to deceive but also to deceive the identical party that acted on them. There are, however, authorities of equal respectability, and in greater numbers, which maintain a different doctrine. In England, the case of Pickard v. Sears does not appear to have been understood as intended to lay down a complete definition of the equitable doctrine excluding all cases that could not be brought within the terms of the remarks made by Lord Denman. In Freeman v. Cooke, 2 Exch. 654, it was held that the term "willfully," used in Pickard v. Sears, was not to be understood in the sense of "maliciously"; and that, whatever a man's real meaning may be, if he so con- ducts himself that a reasonable man would take the representation to be true, and be- lieve it was meant he should act on it, and 104 EQUITABLE ESTOrPEL. he did act on it as true, the party mailing the representation would be equally preclud- ed from contesting its tmth. This is wholly inconsistent with the notion that an inten- tion to deceive is an essential ingredient of the representation, which precludes the par- ty making it from showing that it was false. So in Jorden v. Jloney, 5 H. L. Cas. 212, it was held not to be necessary that the party making the representations should know that they were false; that no fraud need have been intended at the time; but, if the party unwittingly misled another, you must add that he has misled him under such cir- cumstances that he had reasonable ground for supposing that the pei-son whom he was misleading would act upon what he was say- ing. In Gregg v. Wells, 10 Adol. & B. 90, Lord Denman says: "Pickard v. Sears was in my mind at the time of the trial, and the prin- ciple of that case may be stated even more broadly than it is there laid down. A party who negligently or culpably stands by and allows another to contract on the faith and understanding of a fact which he can con- tradict, cannot afterwards dispute that fact In the action against the person whom he has himself assisted in deceiving." This shows that Lord Denman did not himself understand that his remarks in Pickard v. Sears were to be talien as a definition and limitation of the equitable doctrine, for he says the principle of the case might be stat- ed more broadly than it is laid down there, and may include the case of a culpable neg- ligence. So Hobbs V. Norton, 1 A'ern. 136; Hunsden v. Gheyney, 2 Vern. 150; Teasdale V. Teasdale, 13 Vin. Abr. 539; Burrow es v. Lock, 10 Ves. 475,— before cited, show that the practice in equity does not require that there should in all cases be an intention to de- ceive, or even a knowledge that the repre- sentation was false. We come now to the decisions in this coun- try, which give a broader application to this doctrine than those before cited. In Dezell v. Odell, 3 Hill, 221, the general doctrine is said to be that when a party, ei- ther by his declarations or his conduct, has influenced a third lierson to act in a particu- lar manner, he will not be afterwards per- mitted to deny the trath of the admission if the consequence would be to work an injui-y to such third person, and that in such case it must appear— First, that he made an ad- mission which is clearly inconsistent with the evidence he proposes to give, or the claim which he proposes to set up; second, that the party has acted on the admission; third, that he will be injured by allowing the truth of the admission to be disputed. According to this interpretation of the equi- table doctrine, it would seem not to be nec- essary that the representation should be in- tended to deceive, or that the party making it should know it to be false, or ihat il should be intended the i-arty should act on it. who does so in fact, and is deceived by It. The rule of this case has been adopted and followed in Newman v. Hook. 37 Mo. 207; Cai-penter v. Stillwell, 32 Barb. 135; and Eldred v. Hazlett, 33 Pa. St. 310. In Roe V. Jerome, 18 Conn. 138, the gen- eral doctrine is stated to be that where one person, by his words or conduct causes an- other to believe in a certain state of things, and thus induces him to act on that belief, so as injuriously to affect his previous posi- tion, he is concluded from averring a differ- ent state of things as existing at the time; and this rule was followed in the later cases of Gowles V. Bacon, 21 Conn. 451, and Dyer V. Cady, 20 Conn. 563; and in Preston v. Mann, 25 Conn. 118, before cited, it is said that the doctrine did not then rest on any determinate, legal test which will embrace all transactions to which the general princi- ples of equity, in which it originated, de- mand that it should be applied. Buchanan v. Moore, 13 Serg. & R. 304, 30(1. is to the point that, though the party be- lieved his representation to be true, and made it under a mistake, he is estopped to show that he made the representation inno- cently believing it to be true, provided the other party acted on it, and had reason to act on it, as true. So in Strong v. Ells- worth, 26 Vt. 366, it is said by Redfield, C. .T., that he who by his woi-ds or actions, or his silence even, intentionally or carelessly induces another to do an act which he would not otheiTvise have done, and which will prove injurious to him if he is not al- lowed to insist on the fulfillment, may insist on such fulfillment; and that the doctrine of equitable estoppels lies at the foundation of morals. In Mitchell v. Reed, 9 Gal. 204, it was held that where a statement made to a third person is not confidential, but gen- eral, and is acted on by others, the party making the declaration is estopped to deny Its truth; that the intention with which the declaration is made is not material, except, perhaps, where it is confidential. This case and Quirk v. Thomas, 6 Mich. 76, are au- thorities that to work the estoppel it is not necessary the declaration should be made to the party who acts on it, nor in his presence, nor that the declaration should be intended to come to the knowledge of any particular person. In a suit at law to recover damages for a false affirmation that the signer of a note was of age. it was decided, in Lobdell v. Baker, 1 Mete. (Mass.) 193, that it was not necessai-y to allege or prove (hat the defead- ant knew the sign-r was an infaot. Wiide, .T., in delivering the opinion of the comt, said: "A party may render himself ii.nble in an ac- tion lor damages to a I'^arty prejudiced by a false aflirmation, thuugii not made with any fraudulent iureulion." This, it may be sakl, is not directly in point, but the only dif- ference is in the form of the reineily. The principle involved is the same, whether the EQUITABLE ESTOPT'EL. 105 question Is raised in a suit to recover dam- ages for the false representation, or redress is souglit by estopping tlie party to prove the falsehood of the representation. Both cases go on the same genei-al ground that the party is responsible for the consequences of his false representation. There are numerous autliorities thai it is not necessary to the estoppel that the decla- rations or conduct should be intended to de- ceive any particular person or persons; that, if they were intended to deceive generally, or vyere of such a character, and made in such circumstances, that it must have been under- stood they were likely to deceive, and any person using due diligence was in fact de- ceived by them, it is enough. Gregg v. Wells, 10 Adol. & E. 90; Wendell v. Van Rensselaer, 1 Johns. Ch. 353; Adams v. Brown, 16 Ohio St. 78; Dezell v. Odell, 3 Hill, 221; Quirk V. Thomas, 6 Mich. Tii; Mitchell v. Reed, 9 Cal. 204. It has been declared in many cases that this equitable estoppel involves a question of legal ethics, and applies wherever a party has made a representation, by words or con- duct, which he cannot in equity and good conscience prove to be false; and that this kind of estoppel, being a broad doctrine of equity, cannot be limited in application by the tenns of any narrow legal definition. In Canal Co. v. Hathaway, 8 Wend. 483, it is said by Sutherland, J., that the party is estopped when in good conscience and equity he ought not to be permitted to gain- say his admission; and in the same case, by Nelson, J.: "From the means in which the party must avail himself of these estoppels, it is obvious there can be no fixed and settled rules of universal application." And in De- zell V. Odell, 3 Hill, 22.j. Bronson, J., adopting the language of Nelson, J., in Canal Co. V. Hathaway, adds, "It is a question of eth- ics." In Strong v. Ellsworth, 26 Vt. 366, Redfield, J., says the doctrine lies at the foundation of morals. In Lucas v. Hart, 5 Iowa, 415, the court holds that: "In these estoppels there can be no fixed and settled rules of universal application to regulate them as in technical legal estoppels; that in many, and probably in most, instances, whether the act or admission shall operate as an estoppel or not must depend on the cir- cumstances of the case, though there are some general rules which may materially as- sist in the examination of such cases." In the application of these general rules to that case the court decided that the acts and ad- missions of the respondent estopped him from asserting his title to the property in question; that to permit him to do it would be "un- conscionable, and conti'ary to that fairness and honest dealing which courts of equ;:.7 seek ever to promote and encourage." In Frost v. Saratoga Ins. Co., 5 Denio, 154, it is said by Beardsley, C. J., that such an estoppel is a question of ethics, and is al- lowed to prevent fraud and injustice, and exists wherever a party cannot in good con- science gainsay his own acts or assertions. The case of Preston v. Mann, 25 Conn. 118, is strong to the point that this estoppel, de- pending on a broad doctrine of equity, cannot be governed in application by narrow and strict rules of constniction, such as have pre- vailed in legal estoppels In some, if not in most, of the cases, In which it is said that if a party makes repre- sentations intending to deceive the party that acts on them, the equitable estoppel applies, it was not intended, as I think, to lay down a rule excluding all cases that did not fall within the statement made in reference to the facts of the case then under considera- tion; that what is said is not to be taken as a rule to limit and define the doctrine and exclude all other cases. They say, if such and such things concur, "this case will fall within the doctrine"; but they do not intend to say no other cases are within it. For ex- ample, in Kinney v. Famsworth, 17 Conn. 361, Storrs, J., says that "admissions which have been the means, designedly, of leading others to a particular course of conduct, can- not afterwards be conscientiously retracted by one who has made them." He could not have intended to lay down the rule that one would in no case be estopped by a repre- sentation not designed to deceive, because the same judge, in Preston v. Mann, says: "The doctrine is not reduced to the limits of any formula," and, "whatever the motive may be, if one so acts or speaks that the natural consequence of his words or conduct will be to influence another to change his con- dition, he is legally charged with the intent to induce the other to believe and to act on that belief, if such proves to be the result." So Lord Denman, speaking, in Gregg v. Wells, 10 Adol. & E. 90, of his judgment in Pickard v. Sears, says: "The principle of that case may be stated even more broadly than it is there laid down." In this state we have several cases where the general question has been more or less considered. In Wells v. Pierce, 27 N. H. 503, the doctrine of equitable estoppel was traced to its origin in equity, and it was held that if the owner actively encourages the pur- chase of his property from another, he will be precluded from claiming it, though he was not aware of his interest at the time; which is clearly in conflict with the notion that the representation must be accompanied with an intention to deceive. In Davis v. Handy, 37 N. H. 65, the doctrine of Wells v. Pierce was approved and applied. In the recent case of Drew v. Kimball, 43 N. H. 285, one point directly involved was whether it was necessary that the party to be estop- ped should intend to deceive and defraud the individual to whom the representation was made, and who set up the defence; and it was held that it was not necessary. Indeed it seems to me that it would be trifling with a doctrine depending on equity and good con- 106 EQUITABLE ESTOrPEL. science to hold otherwise. So, if a repre- sentation was intended to deceive one man, and it In fact deceived and defrauded an- other. Then, again, if the representation were intended to have one operation, and, as it turned out, deceived and defrauded by another method not contemplated by the party at the time, but still the natural con- sequence of the representation, it would be quibbling with a doctrine depending for its aijplication on the morality of the act to hold that the party would not be answerable for the consequences of his false and fraudulent representation as much as if it had taken effect on the party and in the manner intend- ed. In a case depending on a question of "legal ethics," it would bring down the mor- ality of the law to a very low standard to hold that a party was not liable for the wrong caused by his fraud to one man, be- cause the fraud was contrived against an- other man. In Drew v. Kimball the case did not raise the precise point taken in this case. But, on a full discussion of the general doctrine, and a review of the authorities, the court, adopt- ing the hypothetical case put by Tarke, B., in Freeman v. Cooke, say: "If, whatever a man's intentions may be, he so conducts him- self that a reasonable man would take the representation to be true, and believe it was meant he should act upon it, and he did act upon it, as tnie, the party making the repre- sentation would be equally precluded from contesting its truth. In short, the repre- sentations are to be regarded as willful when the person making them means them to be acted on, or if, without regard to intention, he so conducts himself that a reasonable man would take the representation to be true, and believe it was meant he should act on it." There have been several other cases in this state where this equitable doctrine has been considered and applied. Thompson v. San- born, 11 N. H. 201; Simons v. Steele, 36 N. H. 73; McMahon v. Portsmouth Mut. Fire Ins. Co., 22 X. H. 15; Odlin v. Gove, -il N. H. 473; Corbett v. Norcross, 35 N. H. 99, 115; Richardson v. Chickering, 41 N. H. 380, 385. Though I do not find that the precise point taken here for the plaintiff has been directly decided in any of our cases, yet the genera^ current of our decisions on the sub- ject tends to a liberal application of the doc- trine for the suppression of fraud and dis- honesty, and the promotion of justice and fair dealing. No disposition has been shown In the courts of this state to treat this equita- ble estoppel as odious, and embarrass its ap- plication by attempts to confine it within the limits of a narrow technical definition. We are content to follow where the spirit and general tone of these decisions lead; and they lead plainly to the conclusion that, where a man makes a statement disclaiming his title to property, in a manner and under circum- stances such as he must understand those who heard the statement would believe to be true, and, if they had an interest in the sub- ject, would act on as true, and one, using his own means of knowledge with due dili- gence, acts on the statement as true, the party who makes the statement cannot show that his representation was false, to the in- jury of the party who believed it to be true, and acted on it as such; that he will be lia- ble for the natural consequences of his rep- resentation, and cannot be heard to say that the party actually injured was not the one he meant to deceive, or that his fraud did not take effect in the manner he intended. Our conclusion is that, on the facts which the verdict has established, the plaintiff was estopped to show his representation that the goods belonged to Charles B. Horn to be false, though he did not know that the de- fendant Cole had any demand against Charles E. Horn, and though he had not Cole in his mind as the party whom he meant to deceive. Judgment on the verdict. EQUITABLE ESTOPPEL. 107 DICKERSON V. COLGROVE. (100 U. S. 578.) Supreme Court of the United States. Oct., 1879. Error to the Circuit Court of the United States for the Western District of Michigan. George W. Lawton, for plaintiff in error. M. J. Smiley, for defendant in error. Mr. Justice SWAYNE delivered the opinion of the court. This is an action of ejectment brought by Dlckerson and Wheeler. The latter died during the progress of the suit. The parties agreed in writing to submit the case to the court without the intervention of a jury. The court found the facts. So far as it is necessary to state them, they may be thus summarized: Micajah Chauncey owned the land in controversy. He died on the day of February, 1853, leaving two children, Edmund Chauncey and Sarah Kline. They were his only heirs at law. He is the com- mon source of title of all the parties in this litigation. On the 3d of March, 1858, John Kline and Sarah, his wife, conveyed by war- ranty deed the entire premises to Lowell Morton. The deed was duly recorded on the 6th of March, 1854, and on the 1st of April, 1854, Lowell Morton entered into possession of the premises. He and the defendants have ever since been in actual possession, claiming to own and hold the property as tenants in common. The latter were in possession at the commencement of this suit, claiming title through conveyances from Lowell Morton. Prior to the 1st of April, 1856, Lowell Mor- ton learned that Edmund Chauncey was one of the children of Mica] ah Chauncey, and that he lived in California. Whereupon Low- ell Morton procured Eleazer Morton to write to Edmund Chauncey to learn whether he made any claim to the premises. On the 1st of April, 1856, Edmund Chauncey, still living in California, addressed a letter to his sister, Sarah Kline, then living In Michigan, wherein he disavowed, in strong terms, the intention ever to assert such a claim. The contents of this letter subsequently came to the knowledge of Lowell Morton, who thereafter conveyed to the defendants by warranty deeds. Under these deeds they have since held and claimed title, and have occupied and improved the property. On the 9th of July, 1865, Edmund Chauncey convey- ed the undivided half of the premises, by quitclaim deed, to Orlando B. Dlckerson and James Witherell. On the 1st of May, 1868, Witherell conveyed all his right, title, and in- terest to William W. Wheeler, one of the original plaintiffs. The suit was Instituted on the 6th of March, 1873. Lowell Morton and the defendants had then been In posses- sion eighteen years and eleven months. The court below held as conclusions of law that the action was barred by the statute of lim- itations of Jlichigan of 1863, and by an es- toppel in pais, and gave judgment according- ly. The plaintiff thereupon sued out this writ of error. Both the conclusions of law are relied upon as errors for the reversal of the judgment. Our remarks will be confined to the point of estoppel. This defence Is founded upon the letter of Edmund Chauncey. The contents of the let- ter of Morton, to which it refers, are not given In the finding of facts, but the sub- ject of that letter and the Inquiry which it made appear clearly in the letter of Chaun- cey. He said: "Mr. Morton wrote me a let- ter. He wanted to know If I intended to claim any of the Conger farm" (meaning the premises in controversy). "You can tell Mr. Morton for me, he need not fear any thing from me. Thank God, I am well off here, and you can claim all there. This letter will be enough for him. I intended to give you and yours all my property there, and more if you need it." The phrase, "I Intended to give," etc., implies that he knew his half of the farm had already been sold to Morton, and that he could not, therefore, give his sister, to whom the letter was addressed, any part of that property. It does not appear that there was any other property held by them as coparceners. He says further, that he in- tended to give her more if she needed it. AU this was communicated to Lowell Morton. What was the effect upon him? He was lulled into security. He took no measures to perfect his title, nor to procure any redress from the Klines, who had conveyed and been paid for the whole of the property while they owned but the half. On the contrary, he gave thereafter deeds of warranty to all the defendants, — who are sixty-two in number, — and he and they occupied and Improved the premises down to the commencement of this suit. Between that time and the date of the letter was a period of nearly seventeen years. What improvements were made and how far the property had risen in value are not dis- closed, nor does It appear what stimulated Chauncey to violate his promise and com- mence this attack on the defendants. The estoppel here relied upon is known as an equitable estoppel, or estoppel in pais. The law upon the subject is well settled. The vital principle Is that he who by his lan- guage or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or Injm'y by dis- appointing thfe expectations upon which he acted. Such a change of position is sternly forbidden. It Involves fraud and falsehood, and the law abhors both. This remedy Is al- ways so applied as to promote the ends of justice. It is available only for protection, and cannot be used as a weapon of assault. It accomplishes that which ought to be done between man and man, and Is not permitted to go beyond this limit. It is akin to the principle involved in the limitation of ac- 108 EQUITABLE ESTOPPEL. tious, and does its work of justice and re- )iosp where the statute cannot be invoked. Here, according to the finding of the court, the time of adverse possession lacked but a year and a month of being twenty years,— when it is conceded the statutory bar would have been complete. In Faxton v. Faxon, 28 Jlich. 159, a mort- gagee holding several mortgages prevailed on a son of the deceased mortgagor, then intend- ing to remove to a distance, to remain on the premises and support the family, by assuring him that the mortgages should never be en- forced. The son supported the family, and the property grew in value under his tillage. After the hiiisf of several years the mort- gagee proceeded to foreclose. He was held to be estopped by his assurances upon which the son had acted. The court said: "The complainant may have estopped himself with- out any positive agreement, if he intentional- ly led the defendants to do or abstain from doing any thing involving labor or expendi- ture to any considerable amount, by giving them to understand they should be relieved from the burden of the mortgages. In Hark- ness V. Toulmin, 25 Mich. SO, and Truesdale V. Ward, 24 Mich. 117, this principle was ap- plied, in the former case, to the extent of de- stroying a chattel mortgage, and in the lat- ter, of forfeiting rights under a land con- tract, where parties were led to believe they were abandoned. There is no rule more nec- essary to enforce good faith than that which compels a person to abstain from asserting claims which he has induced others to sup- pose he would not rely on. The rule does not rest on the assumption that he has ob- tained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be serious- ly prejudiced if he is allowed to fall in carry- ing out what he has encouraged them to ex- pect." Cooley, J., was inclined to doubt the sufficiency of the proof, but said, finally: "His" (the mortgagee's) "assurances have un- doubtedly been relied upon and acted upon by the defendants, and, considering the great lapse of time without any claim under the mortgages on the part of the complainant, I am not disposed to dissent from the conclu- sion of my Brethren." The case before us arose also in Michigan. In Evans v. Snyder, 04 Mo. 516, the heirs assailed an adminis- trator's sale. No order of sale could be J'ound. This was held to be a fatal defect. But the supreme court of the state held that where they stood silently by for years, while the occupant was making valuable and last- ing improvements on the property, and re- deeming it trom the lien of the ancestor's debts, they would be estopped from after- wards asserting their claim. Here, as by Judge Cooley, stress is laid upon the lapse of time. This is also a feature of the case in hand. Other authorities to the same effect are very numerous. They may be readily found. It is unnecessary to extend this opinion by re- ferring to them. We think the facts disclosed in the record make a complete case of estoppel in pais. But it is said this objection to the plain- tiff's claim is not available at law, and must be set up in equity. "This is certainly not the common law. Littleton says: 'And so a man can see one thing in this case, that a man shall be es- topped by matter of fact, though there be no writing, by deed or otherwise.' Lord Coke, commenting hereon, gives an instance of es- toppel by matter in fact,— this very case of partition. Co. Litt. 356, § 667. And such an award has been held sufficient to estop a party against whom ejectment was brought. Morris v. Rosser, 3 Bast, 15." Brown v. Wheeler, 17 Conn. 345, 353. In City of Cincinnati v. White's Lessee, 6 Pet. 431, the proprietors of the city plat, in 1789, dedicated the ground between Fi'ont street and the Ohio river to the public for commercial and other purposes. The legal title had not then emanated from the govern- ment of the United States. In this state of things the statute of limitations does not run. White long subsequently acquired the legal title and brought ejectment for the premises. This court said (page 441): "This is a pos- sessory action, and the plaintiff, to entitle himself to recover, must have the right of possession; and whatever takes away this right of possession will deprive him of the remedy by ejectment. Adams, Ej. 32; Starkie, part 4, 505-507." This Is the rule laid down by Lord Mansfield, in Atkyns v. Hoarde, 1 Burr. 119. "Ejectment," says he, "is a possessory remedy, and only competent where the lessor of the plaintiff may enter, and every plaintiff in ejectment must show a right of possession as well as of property." If the plaintiff in the present case was not entitled to possession, how, according to this authority, could he recover? If he had re- covered, and a court of equity would have en- joined him from executing the judgment by a writ of possession, we ask, again, how could he recover in this action? Is not the conces- sion that relief could be had In equity fatal to the proposition we are considering? In Stod- dard V. Chambers, 2 How. 284, it was said by this court: "On a title by estoppel, an action of ejectment can be maintained." We do not overlook the fact that a land claim had been conveyed before it was confirmed by an act of congress to the assignor and his legal rep- resentatives. It was held that on such con- firmation the legal title became vested in the former, "and inured, by way of estoppel, to his grantee and those who claimed by deed under him.'' In that case, as in this, there was no formal transfer of the title. The transfer was made, as under a statute of lim- itations, when the bar is complete, by opera- tion of law. Leffingwell v. Warren, 2 Black, 599. Why may not a like transfer be held to have been made in this case? The reason EQUITABLE ESTOPPEL. 109 given for the rule of inurement and estoppel by virtue of conveyances is, that it avoids circuity of action. Does not the same con- sideration apply, with equal force, in cases of estoppel in pais? Why is it necessary to go into equity in one case and not in the other? It has never been held that the statute of frauds applies to cases of Inurement, and it has been conceded that It does not affect cases of dedication. Where is the difference in principle in this respect between those cases and the one before us? But here this point cannot arise, because the promise relied upon was In writing. In City of Cincinnati v. White's Lessee, supra, this court, speaking of the dedication there in question, said, "The law considers it in the nature of an estoppel in pais, which precludes the original owner from revoking such dedication," and that a grant might have been presumed, "if that had been necessary, and the fee might be considered in abeyance until a competent gran- tee appeared to receive it; which was as ear- ly as the year 1802, when the city was incor- porated." Here there was a grantee capable of taking the fee all the time from the date of tlie letter. The common law is reason dealing by the light of experience with hu- man affairs. One of its merits is that it has the capacity to reach the ends of justice by the shortest paths. The passage of a title by inurement and es- toppel is its work without the help of legis- lation. We think no sound rensou can be given why the same thing should not follow in cases of estoppel in pais where land is con- cerned. This subject has been carefully examined in Bigelow, Estop, pp. 533, 537. The learn- ed author comes to no final conclusion wheth- er in cases like this the defence may be made at law, or whether a resort to equity is neces- sary. The former is our view. Whether the title passed or not, the fact that the plaintiff was not entitled to possession of the prem- ises was fatal to the action. Chauncey conveyed to the plaintiff in error by deed of quitclaim. He is not, therefore, a bona fide purchaser. Piatt v. Oliver, 3 How. 333; May v. Le Claire, 11 Wall. 217. Morton and the defendants were in posses- sion. For both these reasons, he took what- ever title he acquired subject to all the rights, legal and equitable, of Morton and of the de- fendants, who deraigned their titles from the latter. Judgment atfirmed. 110 EQUITABLE ESTOPPEL. CONTINENTAL NAT. BANK v. NA- TIONAL BANK OP COM- MONnVEALTH. (50 N. Y. 575.) Court of Appeals of New York. 1872. Action to recover $63,062.50 paid by plain- -ift' upon a clieek dated May 1, 1860, drawn upon plaintiff by John Ross to the order of J. S. Cronise & Co. The headnote states the facts. Judgment for plaintifC. Luther E. Marsh, for appellant. James Emott, for respondent. FOLGER, J. The jury have found to be a forgery, the veriting on the check, which purports to be a certification thereof by the plaintiff's teller. They have also found that the teller, when resorted to, in effect pro- nounced it genuine. That the plaintiff would be bound by the act of its teller, had he in fact certified the check, is settled. Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125, 69 Am. Dec. 678; 14 N. Y. 623. Nor do we doubt that an admission by him that it was genuine, made on the presentation to him of the counterfeited certification and In- quiry put, also binds the plaintiff. We can see no difference in result, and effect upon others dealing with the check on the strength of that admission, between writing "Timp- son, teller," signifying good, upon a worth- less check, and declaring that the words "Timpson, teller," already there, were writ- ten there by him. In the one case they are his own, and signify good. In the other he adopts them as his own, and so malies them his own, and tlie.y signify good. This was the effect of his admission. And see 53 Me. 103, and Bank v. Crafts, 4 Allen, 447. There seems to be no dispute but that the defendant takes the place of Cronise & Co., and may avail itself of any defense to the action of the plaintiff which that firm of brokers could have made. The question then arises, is the plaintiff, by the other facts presented, estopped from maintaining that in truth the certification was a forgery, and the admission of its tel- ler an innocent mistake? There is no disagreement as to the gen- eral definition of an estoppel in pais. It is agreed that tliere must have been some act or declaration of the plaintiff or of its agent to the defendant's assignors, which so af- fected the conduct of the latter to their injury, as that it would be unjust now to permit the plaintiff to set up the truth of the case to the contrary of its mistaken act or declaration. But the plaintiff insists that there are cer- tain limitations to be put upon this gener- ality. 1st The plaintiff claims that it is neces- sary that its act or declaration must have been made to mislead. To this proposition the plaintiff cites Plck- ard V. Sears, 6 Adol. & E. 469; 33 Eng. Com. Law, 115, where the court say: "Where one by his words or conduct willfully causes an- other," etc. But this word "willfully," used in the decision in that case, has subsequent- ly received judicial comment and limitation. Thus in Freeman v. Cooke, 2 Exch. 654, the court say: "By the term 'willfully,' how- ever, in that rule, we must understand, if, whatever a man's real Intentions may be, he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it, and he did act upon It as true, the party making the representa- tion would be equally precluded from con- testing its truth; and conduct by negligence or omission, where there is a duty cast upon any person by usage of trade or otherwise to disclose the truth, may often have the same effect." So in Cornish v. Abington, 4 Hurl. & N. 549, Pollock, C. B., says: "The jury having found that the defendant, whether inten- tionally or not, led the plaintiff to form an opinion that he was dealing with the defend- ant and induced him to furnish goods to the defendant, the defendant must pay him for them." And referring to Freeman v. Cooke, and Pickard v. Sears, supra, the learned chief baron remarks to the effect that the word "willfully" means nothing more than "voluntarily," and he holds that if the rep- resentation was made voluntarily, though the effect upon the hearer was produced un- intentionally, the same result would follow; and that if a party uses language which, in the ordinary course of business and the gen- eral sense in which words are understood, conveys a certain meaning, he cannot after- ward say that he is not bound, if another so understanding it has acted upon it. Of course, this general language here extractecJ should be read in connection with the fact" of that case to prevent carrying the force o' these words too far. But it is shown that "willfully" and "voluntarily," as used in the definition of an estoppel, are convertible. In Manufacturers' & Traders' Bank v. Hazard, 30 N. Y. 226, it is said that it is aot necessary to an equitable estoppel that the party should design to mislead. Be this dic- tum or rule, we do not find that it has been in this state disputed or questioned. In In re Bahia & S. P. Ry. Co., L. R., 3 Q. B. 584, it is held that if a representation is made with the intention that it shall be acted upon by another, and he does so, there is an estoppel from denying the truth of what was represented to be the fact, and that the case is within the principle of Pick- ard V. Sears, as explained by Freeman v. Cooke, both supra. The word "willful" does not mean malo animo, but so far willfully that the party, making the representation acted upon, means EQUITABLE ESTOPPEL. Ill that it shall be acted upon in that way. Per Compton, J., in Howard v. Hudson, 2 Ell. & Bl. 1. And we hold that there need not be, upon the part of the person making a declaration or doing an act, an intention to mislead the one who is induced to rely upon it. There are cases in which parties have been es- topped where their acts or declarations have been done or made in ignorance of their own rights, not knowing that the law of the land gave them such rights. Here, certainly, there could be no purpose to mislead others, for there was not the knowledge to inform the purpose, and both parties were equally and innocently misled. Storrs v. Barker, 6 Johns. Ch. 166, 10 Am. Dec. 316. Indeed, it would limit the rule much within the rea- son of it, if it were restricted to cases where there was an element of fraudulent purpose. In very many of the cases in which the rule has been ai^plied, there was no more than negligence on the part of him who was es topped. And it has long been held, that where it is a breach of good faith to allow the truth to be shown, there an admission will estop. Gaylor v. Van Loan, 15 Wend. 308. There are decisions where the rule has been stated as the plaintiff claims it. We have looked at those cited by it. It was not necessary to the conclusions of the court in those, that such restriction should be put upon the rule, and we do not think tliat the language employed was used with the inten- tion of making such a limitation, for the facts of the case did not require it. 2d. The plaintiff further claims that Cron- ise & Oo. parted with the gold and took the check before the declaration of the teller was made known to them, and that before an estoppel can be insisted upon, it must ap- pear that they acted in reliance thereupon, or altered their position In consequence thereof, or parted with some value on the faith therein. The fair result of the testimony is, that Ross left the office of Cronise & Co. before the return of their messenger to it from the bank, and Cronise & Co. had then delivered the gold checks. They did not act, after his return, relying upon the declaration of the teller which the messenger brought to them. Assuming, for the present, that they did in reliance upon that declaration refrain from action and left untaken any measures for the aiTest of Ross or the stoppage of payment on the checks he had received; as- suming that it is reasonably probable, that if they had been told by the plaintiff the reverse of what they were told, they would have acted and would have taken those measures; assuming that it is reasonably probable that action and such measures would have prevented the whole or some part of the damage which befell, can it be held that the conduct of Cronise & Co. was so affected to their injury by the declara- tion of the plaintiff as that the defendant may set up the declaration in estoppel of the plaintiff? The proposition contained in this query we understand the plaintiff to resist. And this, because the act, the affirmative act, had been done which changed the posi- tion of Cronise & Oo. toward Boss and the transaction before the declaration was made known to them, and had not been done in reliance upon it. And this is a denial, that after a declaration is made and is relied upon, an omission thereby induced to act and to take such measures as will arrest an impending evil, and an injury resulting from such omission, can be made available as an estoppel. In Howard v. Hudson, supra, Lord Camp- bell, Ch. J., recognizes the existence of the principle, that doing an act and omission to act are the same. And see Helme v. Insur- ance Co., 61 Pa. 107, 100 Am. Dec. 621. In Knights V. Wiffln, L. R., 5 Q. B. 660, the per- son who relied upon the declaration had be- fore it was made and not in reliance upon it, paid his money for property not delivered, but after it was made, relying upon it, took no active course of conduct, remaining con- tent and passive. Had the declaration been the reverse of what it was, which would then have been true, he might have taken active measures tending to retrieve his posi- tion. He rested satisfied in the belief, as a reasonable man, that the property had been passed to him as agreed. And he was damaged. The right of estoppel was there upheld, and it was maintained upon the ground of the plaintiff relying upon the statement and taking no steps further, and of his abstaining from active measures of re- covery in consequence of the statement. It was there held, that acquiescent reliance upon the defendant's statement was an alter- ation of the plaintiff's position. In Bank v. Keene, 53 ^Me. 103, the ques- tion was presented. The plaintiff there held a note purporting to have been signed by the defendant. Hearing that the same was forged, the plaintiff asked the defendant, who, looking at the note, admitted the signa- ture to be genuine. The plaintiff, in reli- ance on that admission, refrained from tak- ing any proceedings against him who passed the note to it, so as to secure payment from him. The insti'uctions to the jury were: That if the plaintiff, relying upon the de- fendant's admission, was induced to refrain from obtaining security by arrest of the one passing the note upon it, or by attachment of his property, and thereby sustained an injury, the defendant would be estopped from denying his signature. This instruction was declared by the court on review to be in harmony with the principles applicable to es- toppels in pais. And see 15 Wend. 308. and Brown v. Sprague, 5 Denio, 545. These cases appear to us to lay down a sound rule. It must be that the conduct of men. which may be influenced by the dec- larations of those with whom they deal, is 112 EQUITABLE ESTOPPEL. not ((iiiliLied to that which is shown by iithrmative and positive acts following upon and induced by those declarations. Conduct is not alone that which is active, positive and affirmative. Conduct, as limited to this inquiry, is the reserve of one's own powers of person and property, and of those means of help which can be summoned from friend- ly or accommodating sources and from the tribunals and officers of justice, and is as often forbearance of their use and quies- cence and contentment ^\'ith affairs as they ure, as action designed to change affairs. And such quiescence and content, induced by false or erroneous statement, may be quite as damaging as any result from ac- tion. It is as bad to fail to recover property gone, when with the knowledge of an exist- ing fact it might have been retrieved, as it is to lose it. And so it is as damaging to rely in quiet upon an untrue statement, to the neglect of using the means of recovery, as it is to rely upon an untrue statement, and by action thereon meet with loss irrep- arable. To hold otherwise, would be to as- sert that the law makes a difference between damage received by action and omission to act, in circumstances precisely similar, save in these elements. When an act produces conduct from which flows injury, it cannot matter whether that conduct be affirmative or negative, active or quiescent. Vi'e assumed, for the purpose of the pre- vious consideration of one branch of the sub- ject, that Cronise & Co. did, in reliance upon the declaration of the plaintiff, refrain from action and leave untaken any measures. The jury have so found the fact, and the finding is sust.-iined by the testimony. We also assumed that it was reasonably prob- able that if they had been told the truth by the plaintiff they would have acted, and have taken measures which would have prevented the whole or some of the injury which be- fell. The jury have found that this assump- tion is well founded. Tliough, as is conceded herein, Ross left the office of the brokers before their messen- ger returned, he had left but a very short time; a time so short that had the plaintiff declared the cei'tiflcation a forgery and the check worthless, there was ground for the jury to find that there was time for the broker's clerk, with his speed of foot, to have gone from the bank of plaintiff to the office of Speyers, there have learned the falsity of Ross' assertion of a delivery of gold to Spey- er, and thence to the office of Cronise & Co., and have delivered his message soon enough for measures to have been decided upon and taken for the stoppage of the payment of the checks at the Bank of New York. We leave out of view for the present the checks iqoon the sub-ti'easury. Nor was it a strained, unnatural nor unjus- tified inference for the jury to make that the clerk would so have done, and that Cronise & Co. would have taken such measures and made stoppage of payment. It was but ap- plying to the facts of the case and to the position of the parties in this transaction, the common knowledge of human nature and its workings under powerful incentives, and at a particular spot in the state and a particu- lar hour of the day when those incentives are pressed in their greatest strength. And from these findings thus authorized, it was a legitimate conclusion that Cronise & Co. suffered injury by the declaration to them of the plaintiff. And if there is nothing else in the case the verdict and judgment are to be sus- tained. The plaintiff insists however that the learned judge at circuit made several errors in his refusals to charge as requested, and in the charge which he delivered to the jury. y\'e will notice all of these instances which are indicated upon the points handed up, alluding to the requests by the numbers given to them in the points. The second, third and fifth requests are already covered by what we have said. The seventh request is: "That the jury cannot speculate upon what might have been done or attempted by Cronise & Co. after the delivery by them of the gold certificates or gold checks to the person calling himself .John Ross, had they been apprised that the certificate was a forgery after such deliv- ery." If by the word "speculate," which is the word of controlling meaning in the request, was meant to guess, or to reason to practical results from unproven prem.ises, doubtless the juiy had no right so to do. And there would have been no error in the learned judge if he had so told the jury. But it would have been in the nature of an abstract proposition not necessarily involved in not growing out of the particular case. Hence it was not error for him to decline to charge, except as he did thereafter charge. He did charge them that Cronise & Co. to set up an estoppel must have had time to stop pay- ment of the gold; that the circumstances must have been such as that they could have done it; that they must have occupied such a relation to the transaction as that they could with reasonable diligence have arrest- ed the crime in its consummation and have secured the gold; that they must have still stood in a position where they could have corrected any act and could have saved the gold. This put the jui-y upon the proper in- quiry. Nor can we concede that at the close of the trial the question of estoppel had be- come one of law only and for the court, as is claimed by the learned counsel for the plaintiff. He admits that there were two questions yet for the jury; whether the cer- tification was forged or not, and whether its genuineness was admitted. And surely it was still a question of fact how much rela- EQUITABLE ESTOPPEL. 113 tlve time had been spent by the respective actors from the moment Ross left the office of Cronise & Co. until the payment of the checks at the Bank of New York, and con- sidering the relative positions of the differ- ent business places, whether in that lapse of time Cronise & Co. under all the circum- stances could have made effectual interpo- sition to stop payment of the checks deliv- ered to him, or have made any successful effort at recaption of the gold if he had re- ceived it. It is claimed that the learned judge erred in charging the jury that the delivery of the gold checks was not in law a delivery of the gold. The points call our attention to that part of the charge in which the language of the judge is: "The delivery of these gold checks on the part of Mr. Cronise, it Is insisted upon, is in law a delivery of the gold. I think that it was not." It is proper to see in what connection this was said. For standing alone or applied to any and every case of a delivery of checks, it might be in some of them erroneous. What was the practical application of it for the minds of the jm-y? The topic then un- der the learned judge's and the jury's atten- tion was whether Cronise & Co. could, un- der the facts of the case, in any proper view of them, be considered as injured by the plaintiff's declaration; and the judge pre- cedes the remark excepted to by saying: "If Cronise, in point of fact, had done all that could be done on his part at that time, and had put himself in such a position that this admission could not affect his action to his prejudice, then the principle of estoppel would have no application to the case so far as he is concerned." Then he tells them, in the remark excepted to, in effect: It is insisted that the delivery of these checks was a delivery of the gold, in law, so that he could not reclaim it; and if he could not reclaim it then he was not injured by the declaration, for there was nothing he could do after such delivery. We may infer, prop- erly, from the words "it is insisted," that all this had passed before the jury in the argu- ment of counsel, either to the jury or to the court, and was a reference thereto. If it should be admitted to be technically inaccu- rate as a statement of law, applicable to all cases, it did not tend to mislead on this oc- casion; and for the purpose for which it was uttered, it was correct. Doubtless the handing over of the checks was a delivery of the gold to fulfill the contract for the sale of it, in accordance with the rules of the brokers' board under which the original par- ties to the transaction acted. But it was not such a delivery as prevented Cronise & Co. from Intercepting the checks at the counter of the Bank of New York, and there forbidding and stopping payment of them. HUTCH.& BUNK.EQ.-8 And this is true, whether the gold be dol- lars, in which to make payment of a debt payable, or a commodity to be ti'ansferred in satisfaction of a contract for the sale and delivery of a chattel. The scope of the re- marks of the court to the jury was that not- withstanding Cronise & Co. had put these checks into the hands of Ross, still they could stop payment of them at the place of payment. And, so considered, it did not mis- lead the jury from the question at issue, or give them an erroneous rule of law by which to dispose of it. The plaintiff claims that even if it should be held that it is estopped to show the truth, as to so much of the gold as was paid to Ross over the counter of the Bank of New York, it should not be as to so much of it as was represented by the checks on the sub- treasury. And if these checks were alone concerned In the transaction, it might be said with force that Ross could have as soon got payment on them and clear escaped, as Harmon, the clerk, could have made his er- rand and returned. But these checks are connected with those on the Bank of New York; and Ross did not depart with the avails of the one until he had got the avails of the othei'. If Ross first went to the sub- treasury and obtained payment, then he aft- erward went to the Bank of New York; and he was there, or to and from there, from ten to fifteen minutes; and this op- portunity for stopping payment of the checks at the Bank of New York was also oppor- tunity for arrest of his person, and obtaining from him the gold got at the sub-treasury. And if it be said that he may have passed away the checks on the sub-treasury in the street to a confederate, still he was at the Bank of New York to be seized, and the coercion of arrest to be used upon him. In 53 Me. 103, arrest is named as one of the means of obtaining security which the plain- tiff had let slip; and in L. R., 5 Q. B. 660, Blackburn, J., goes so far as to say that it needs not that it should appear that any benefit would result from the attempt to se- cure payment, but that the injured party had the right to make that attempt; and losing the exercise of the right by his reli- ance on the declaration, the declarant was estopped. We need not go so far here. Ar- rest and detention of the swindler is a pow- erful means in coercing restoration; and ar- rest and detention were as probably in the power of Cronise & Co. as the stoppage of the payment of the checks at the Bank of New York. The judgment appealed from should be affirmed, with costs to the respondent. All concur except RAPALLO, J., who con- curs as to all but the sub-treasury gold. Judgment affirmed. 114 EQUITABLE ESTOPPEL. GALBRAITH et al. v. LUNSPORD.i (9 S. W. 365, 87 Tenn. 89.) Supreme Court of Tennessee. Oct. 18, 1888. Appeal from chancery court, ECnox county; Henry R. Gibson, Chancellor. Ejectment by J. P. Galbraith and others against B. F. Lunsford; the controversy be- ing as to the location of a division line. In the plot referred to by the arbitrator the line from F to E represents the original bound- ary, and the one which complainant now seeks to have established as the true one. The line from O to P represents the bound- ary as recognized for many years, and al- leged by defendants to have become the boundary by estoppel. Defendant had judg- ment and complainant appealed. Lnckey & Yoe and Pickle & Turner, for complainants. Jesse L. Rogers, for respond- ent. FOLKES, J. This is an ejectment bill, the disposition of which was dependent upon a question of boundary. After answer and proof, the cause was submitted to Mr. Je- rome Templeton, a solicitor of this court, as an arbitrator, who was "to hear and decide the same according to the law and the evi- dence." The award was to be in writing, and was to be made the decree of the court. The arbitrator presented his award, wherein was stated his findings of fact and of law, adjudging that the bill should be dismissed. Complainants excepted to the award, upon the ground that the arbiti'ator manifestly undertook, as he was required by the sub- mission, to decide the case according to law; but that he had misconceived the law, and determined the case contrary thereto, upon the facts as found by him. The chancellor overruled the exceptions, and entered a final decree, making the award the judgment of the court. Complainants have appealed, as- signing as error the action of the court in refusing to set aside the award, and in en- tering decree thereon. Under the submission the arbitrator was judge of the facts and the law, and was not required to give the grounds of his decision; in which event it would have been presumed that he had de- cided according to law. But, having stated his findings of fact, it was proper for the •eoui't to determine, on the exceptions pre- sented, whether the conclusions of law an- nounced by the arbitrator were warranted by the facts as found in a case where, by the terms of the submission, the award was to be in accord with the law. Powell v. Riley, 15 Lea, 153. The proof is not in the record, having properly been omitted, inasmuch as no question was made — if, indeed, any could have been made — as to the correctness of the conclusions of fact reached by the arbitrator. 1 Upon the subject of equitable estoppel gen- erally, see note to this case in 1 L. R. A. &22- 524. We are therefore to consider only the ques- tion propounded in the exception to the award, to wit, that the deductions of law upon the facts as found are contrary to law. The complainants, in support of their ex- ceptions in the court below, now advance the following propositions in their assign- ments of error in this court: (1) "A line which could be easily ascertained by survey, and which had been known, and was lost or overlooked by mutual mistake, was and Is not a doubtful line, that could be agreed upon or fixed, or become the true line, and binding by recognition, because void under the statute of frauds." (2) "Recognition of a line under a mistake of fact, where it was mutual, and either could have discovered the mistake by survey or otherwise, is not bind- ing on either party, and neither party can set up the mistake against the other, by way of estoppel or otherwise; as mistake is as much that of one as the other, and fault, if any, is equal; and, besides, one's admission, made under mistake, will be relieved against in equity, more especially when mistake is mutual." (3) "Recognition of a line, not the true one, will not divest title to land out of a married woman nor minor, by estoppel or otherwise, as a married woman cannot be divested or part with title to land in that way; but more especially when it was by mistake of fact, as well upon the part of her adversary as that of her own, and when either could have easily discovered the mis- take; nor is such married woman or de- scendant estopped to set up the truth, and recover accordingly; and more especially in a court of equity." Robbed of their verbiage, the assignments of error are to the effect (1) that the line or boundary, under the facts as foimd by the arbitrator,— there being, as assumed by the assignments, no bona fide doubt, as to the true line, entertained by both parties,— was not such a doubtful boundary as could be established by parol or acquiescence. (2) That the doctrine of equitable estoppel does not apply at all to the facts as found. (3) And, if applicable, it cannot be effectual, as against married women. Before disposing of these propositions, let us see what are the findings of the arbitra- tor, as shown by the award itself. We quote: "Without going into the details of the proof, I find as follows: "(1) The south boundary line of grant No. 18,417, to Wm. Cox, issued October 3, 1833, Is the line from F to E in plot (Exhibit A) to the deposition of F. W. Galbraith. I fur- ther find that, as an original proposition, the north boundary line of the 250-acre tract— Wm. Cox to Jacob Pate, September 22, 1814 —was the line from I to T, on same plot; and in 1833, when said grant was issued, the two tracts adjoined the lines here above de- scribed,— being the same as far as the latter extended, and being the dividing line of the EQUITABLE ESTOPPEL. 115 tracts. I add that, If I am mistaken as to the true south boundary of said grant, the result would be the same, because the deed— Geo. M. Combs to Wm. Cox, February 10, 1814— covered both tracts, and both parties to this suit derive title from Wm. Cox; and I am convinced the north boundary line of the 250-acre tract Is the line I to T; that is, if not under said grant, certainly under the Combs deed, so far as these parties are con- cerned, Wm. Cox ov^ned the land in contro- versy. "(2) I And that somewhere between Au- gust 11, 1846, and March 28, 185T,— that is, while Presley S. Chesher owned the 250- acre tract, or prior to August 11, 1846,— said dividing line was lost, or at least its location became doubtful. As a consequence, Chesher, between the point, I, and the New Market road, on said plot, cleared and in- closed the land up to and along the line from O to P on said plot, being the disputed line, as defendants claim It. Chesher did this under a claim of right, which, I infer from the circumstances, he thought that was his line. There is a marked line there, not as old as the line from F to E, but still an old line. Further, B. F. McFarland and wife, Sarah M. L. McFarland, a daughter, and the ven- dee of Wm. Cox, made the same mistake. They either forgot or never knew where the true dividing line was, and they clearly rec- ognized the line from O to P as the dividing line between them and Chesher. I find no evidence that Mrs. McFarland ever recog- nized said last-named line before her mar- riage. The deed to her from her father, con- taining the boundaries of said grant, is dat- ed April 16, 1841, and conveys to her by her maiden name. Her marriage was subse- quent, but the date does not appear. On one occasion, while John B. Hopkins owned the 82-acre tract, being the northern portion of the 250 acres,— that is, after November 3, 1866, and prior to 1869, when Mrs. McFar- land died,— she and John E. Hopkins went along the Chesher fence, along the line from O to P, talking about a trade as to Mrs. McFarland's land north of said line. She then recognized said line as the dividing line between her and Hopkins. This is cited as showing the recognition of said line, as de- fendants claim it, was not by B. F. Mc- Farland only, but also by his wife. This recognition extends as far back as 40 years ago, or to 1848. In 1870 the heirs at law of Sarah M. L. McFarland, deceased, recogniz- ed the same line, O to P, when they parti- tioned among themselves the lands Inherited from their mother. When John Neal bought the 82-acra tract from B. F. McFarland, No- vember 3, 1863, and when Hopkins bought the same from Neal, In 1866, said line, O to P, was the dividing line, being lived up to and recognized by McFarland and wife; and we may assume that both Hopkins and Neal bought with that understanding, well justi- fied by the conduct of McFarland and wife. In 1870 the commissioners making partition did the locating of lines; but that only shows the mistake about the division line had be- come the understanding of the neighborhood. By accepting the partition, the heirs showed themselves ignorant of any mistake, so long had it (the line) been recognized. In 1873, John E. Hopkins, desiring to build a new dwelling-house, procured the division line to be run by J. P. Galbraith, the husband of one of the McFarland heirs, who showed him where to build. Several other of the McFarland heirs were then at home in the neighborhood, and must have known of the building of the house, which was on their land, as they claim it now; but was on Hop- kins' land, and just south of the division line, as they must have known Hopkins claimed it. To say the least of It, they were silent when they should have spoken. In 1877, R. M. Barton, Jr., and wife, Jennie M. Barton, the latter being one of the Mc- Farland heirs, by deed called for the Hop- kins division line from O to P. In July, 1877, Barton and wife sold the residue of the land partitioned to the latter to Wm. Galbraith; and some time afterwards, and prior to June, 1882, when Wm. Galbraith filed his bill against John B. Hopkins, the discovery was made that the line, so long recognized and lived up to on both sides as the true division line,— that is, the line from O to P, — was a mistake, and that the true line was from F to E or from 3 to J on said plot. The line from O to P never was con- sistent with the 2d call, 'thence north 10 poles to a stake,' or with the fourth call, 'thence north 44 poles to a stake,' in the deed from McFarland to John Neal, made in 1863. Nor was the same consistent with the calls of the deed from Wm. Cox to Jacob Pate, made September 22, 1814; nor was the same consistent with the oldest marked line on the ground. An accurate survey, at any time, ought to have discovered the true line. But so it was, the parties on both sides the line made a mutual mistake, without taking the trouble of a survey, on which they acted from some time prior to 1848 to some time after 1877. After so long a public acquies- cence, and so many public acts, some by solemn deeds of record on the part of Sarah M. L. McFarland, her husband, and her heirs, under the influence and with the knowledge of which strangers have bought the adjoining land, and built a valuable house thereon worth many more times the value of land involved, can the McFarland heirs now be heard to complain of said mis- take, and be allowed to correct the same? "Where the true locality of the line is doubt- ful, such acts are regarded as furnishing evidence that the line so recognized is the true line; nor are either of the parties at liberty afterwards to abandon such line, al- though the line should afterwards be ascer- tained at a different place. Gilchrist v. Mc- Gee, 9 Yerg. 458, 459, Green, J. See, also, 116 EQUITABLE ESTOPPEL. SleiTiwetlier v. Larmon, 3 Sneed, 446, 448. lu the application of the principle of equi- table estoppel, there is no exception in the case of married women. 2 Herm. Estop. 1232. See, also, Howell v. Hale, 5 Lea, 405; 2 Pom. Eq. Jur. §§ 814-818; Crittenden v. Posey, 1 Head, 320; Stephenson v. Walker, 8 Baxt. 289. And the doctrine applies to infants having such intelligence aa to enable them to comprehend the import of their con- duct. Barham v. Turbeville, 1 Swan, 438. If this authority is doubted, still the only infant affected is llrs. Barton; who with her husband, after her majority, ratified her for- mer recognition of the line so long lived up to. I do not think the case of Wm. Gal- braith v. John E. Hopkins, is res adjudicata, because (1) complainants in this cause (ex- cept Barton's wife) were not parties to that suit; (2) the land involved here was not in- volved in that suit. The subject-matter was not the same. Being clear in my convictions above expressed, without discussing the ques- tion of the statute of limitations, I decide, having considered the ease as arbitrator, ac- cording to the submission made in the case, that complainants' bill be dismissed, with costs. LSigned] Jerome Templeton." We have given the entire award, so that it may be seen what were the findings of fact and of law. The award must be taken as a whole, and not in detached sentences. It will not do to cull out words here and there, and from them argue that the parties , knew where the true line was. The mutual- ity of the mistake, and the ease with which the parties might have discovered the same, had they taken the old deeds and procured the services of a competent surveyor, does not render it any the less a mistake. The fact still remains that there was an honest ignorance of the whereabouts of the true line, and a bona fide recognition of the line indicated on the plot as O to P. If, with full knowledge of the true line, another be fixed by verbal agreement, such agi-eement is within the statute of frauds, and conse quently void; but, where there is doubt or ignorance as to the true locality of the line, a parol agreement, fixing the line between adjoining owners, is not within the statute; and, where satisfactorily established, will be enforced by the courts, notwithstanding it may afterwards be demonstrated that the agreed line was erroneously fixed. And such adjustment may be shown, as well by cir- cumstances and recognition, as by direct evi- dence of a formal agreement, when parties have acted thereon. Houston v. Matthews, 1 Yerg. 116; Gilchrist v. McGee, 9 Yerg. 458: Merri wether v. Larmon, 3 Sneed, 451; Lewallen v. Overton, 9 Humph. 76; Rogers V. White, 1 Sneed, 69; Riggs v. Parker, Meigs, 49; Yarborough v. Abernathy, Id. 420. The cases on this subject are numerous in this state, and citations might be multi- plied; but they clearly make the distinction, and establish the principles as stated above. This being so, It Is not difficult to apply them to the findings of fact made by the arbitrator in the case at bar. We have ad- missions and declarations, we have convey- ances made, and partitions had, calling for the line O tq P. We have long acquiescence on the part of complainants, and those un- der whom they claim', coupled with the ex- penditure of money by defendant in building improvements upon the property In dispute, largely in excess of the value of the land itself, induced not only by what had long been the understanding of the parties as to the location of the line, but by positive point- ing out of the line, with knowledge that the Improvements were then about to be made. And during all this time we have absolute ignorance on the part of the adjoining owner as to the true line; ignorance none the less absolute by reason of the fact that, in the opinion of the arbitrator, it might have easily been removed by a survey. There was no survey, and the honest ignorance remained, until shortly before the filing of the bill in this cause. This is not a case of silence, but of numerous affirmative acts and admis- sions that were calculated to and did in- fluence the conduct of defendants, and which acts and admissions are inconsistent with the claim of title now sought to be set up. The facts as found would seem to make out a case of estoppel, unless the disability of coverture prevents the application of this doctrine, as is strenuously insisted upon by the learned counsel for complainants. Let us see how this Is. The contention is that, as a married woman cannot. In reference to her lands, bind herself by title-bond, power of attorney, contract of sale, or even a deed, without privy examination, and certificate of acknowledgment In a prescribed form show- ing that it was done freely, voluntarily, and understandingly, it would be an anomaly in the law to hold that she might part with her title indirectly, when she had no pur- pose to do so, and when, instead of doing so freely, voluntarily, and understandingly, she was actually in Ignorance, or laboring under a mistake of fact. And cases are cit- ed which seem to sustain the contention. It must be admitted that the cases on this subject are to a certain extent conflicting. But much of the difficulty and confusion Is due to a failure to observe the distinction between the cases which seek, by the doc- trine of estoppel, to validate those contracts of a married woman which by law are de- clared void, and the cases where, in the absence of any contract, and independent of any contract or agreement, her conduct has been held to prevent her from asserting what would otherwise be a right. To the former class belongs the case of Dodd v. Benthal, 4 Helsk. 601. And the language of the judge delivering the opinion In that case, at page 607, where he says: "The complainant be- ing both an Infant and feme covert at tlfe time of the execution of the deed in ques- EJQUITABLB ESTOPPEL, 117 tion, no act of affirmance or disaffirmance in pais on her part during coverture could be binding upon her," etc.,— is correct when con- fined to a contract of a person under dis- ability, which by law is void in consequence of such disability. To the latter class, above referred to, belongs the case of Howell v. Hale, 5 Lea, 405. Here the conduct of the married woman, independent of any con- tract, operates to estop her in the same man- ner and to the same extent as if she were a feme sole. So in the case at bar, while there are facts and circumstances upon which a contract might be implied that would be binding upon a person sui juris, yet there are also such admissions, statements, and conduct on the part of the complainants and their ancestor as are amply sufficient to create an estoppel entirely independent of, and altogether outside of, any idea or claim of a contract. Mr. tomeroy says "that while, upon the question how far the doe- trine of equitable estoppel by conduct applies to married women, there is some conflict among the decisions, the tendency of modern authority, however, is strongly towards the enforcement of the estoppel against married women, as against persons sui juris, with little or no limitation on account of their disability;" and that the decisions to the contrary seem to be in opposition to the general current of authority. Modern Eng- lish cases, as vv^ell as American, are cited to sustain the text. Section 814, and notes. The case of Morrison v. Wilson, 13 Cal. 495, relied on so confidently by counsel for com- plainants, seems to not only deny the ap- plication of- an estoppel in pais to a married woman, but goes so far as to hold that af- firmative fraud on her part will not effect that result. It is sufficient to say of this case that it not only loses sight of the dis- tinction referred to as to the defective exe- cution of a contract, but is directly opposed to our own adjudged cases, so far as the element of fraud is concerned. The doctrine of estoppel has, by courts of this state, been applied to married women and infants. Thus in Howell v. Hale, 5 Lea, 405, she was held estopped by matter in pals. She had by her conduct induced Thornhill to purchase the mortgage debt on her land, leading him to believe that the land should stand liable therefor. This court held her estopped by her conduct to make defense to said mort- gage, whether she might have done so or not, as against the original mortgagee. In Cooley V. Steele, 2 Head, 606, we have a clear case of estoppel in pais applied to a married woman. She had, in a deposition, made a statement, as to title to certain shares, contrary to what she there asserted in the case before the court. This court said: "Complainant would be clearly enti- tled, upon well-established principles, to the relief sought, but for the estoppel created by her oath in the before-mentioned deposition." To the same effect is Pilcher y. Smith, Id. 208, where it Is said: "The legal disability of coverture carries with it no license or privilege to practice fraud or deception on other persons." Estoppel in pais has also been applied to infants by this court. Bar- ham V. Turbeville, 1 Swan, 437; Adams v. Fite, 3 Baxt. 69. In the latter case the court, after finding the weight of the proof in favor of the complainant having been of age at time of the execution of the deed, continuing, said: "Both on the ground of long acquiescence, and of the concealment of the fact that he was not of age, when com- plainant had good reason to know that Ewing was trading with him as sui juris, complainant is repelled, even if he was in fact only twenty years of age when he made the deed." It is true that in the case of Barham v. Turbeville the infant was not merely silent, but actively proclaimed his father's title to the property he subsequent- ly sued for; and the court puts the estoppel upon the ground of actual and purposed fraud, which was right and proper, under the facts of that case. But, so far as the opinion in this case undertakes to hold that actual and positive fraud, at the time of the act set up as constituting the estoppel, is essential to the application of the doctrine of estoppel, it is obiter and unsound, as we shall presently undertake to show. It is also urged that actual fraud must exist before an estoppel can be maintained against one sui juris; and a fortiori before it can be applied to a married woman, if against the latter it can be invoked at all. It is true that there is a theory which makes the essence of equitable estoppel to consist of fraud; but this theory is not sustained by principle nor authority. There are many well-settled cases of estoppel familiar to courts of equity, which do not rest upon fraud; and instances pre admitted, even by the courts, which maintain this theory, which cannot be said to involve any element of fraud, iinless by a complete perversion of language and misuse of terms. The con- fusion to be found in some of the books on this subject is due doubtless to the fact that the fraud referred to has its origin in the effort afterwards to set up rights contrary to the conduct of the party, although at the time of the act constituting the estoppel there was the most perfect good faith. The term, as used in such cases, is, as Mr. Pomeroy ex- presses it, virtually synonymous with "un- conscientious" or "inequitable." It is in this sense that it may be said that it is a fraud or fraudulent to attempt to repudiate the conduct which has induced the other party to act, and upon which the estoppel is predi- cated; but it is entirely another thing to say that the conduct itself— the acts, words, or silence of the party — constituting the estop- pel must be an actual fraud, done with the intention of deceiving. It may therefore be safely said that although fraud may be, and often is, an ingredient in the conduct of the 118 EQUITABLE ESTOPPBI/. party estopped, It Is not an essential element, if the word is used in its commonly accepted sense; and the use of the term is unneces- sary, and often improper, unless applied to the efCort of the party estopped to repudiate his conduct, and to assert a right or claim in contravention thereof. The best-consider- ed cases are in accord with the views above expressed. Bank v. Bank, 50 N. Y. 575; War- ing V. Sombom, 82 N. Y. 601. And although the earlier Pennsylvania decisions generally leaned strongly In favor of the theory that an actual fraud is of the essence of every such estoppel by conduct, it is worthy of note that in the late case in that state of Bidwell V. Pittsburgh, 85 Pa. 4:12, it is said: "It is not necessary that the party against whom an estoppel is alleged should have in- tended to deceive. It is sufficient if he in- tended that his conduct should Induce an- other to act upon it, and the other, relying on it, did so act." 2 Pom. Eq. Jur. §§ 804, 805, et seq. The case of Brant v. Coal Co., 93 TJ. S. 326, pressed upon us by counsel for complainant as establishing the contention that fraud is an essential element in the ap- plication of the doctrine of estoppel, and that it is essential that the party invoking the es- toppel was himself not only destitute of the knowledge of the true state of the title, but also of any convenient or available means of acquiring such knowledge, merits special mention. In addition to what we have al- ready said as to the first proposition, we will be content to adopt Mr. Pomeroy's note upon this case, where, after quoting freely of the opinion, he says: "With great deference to the opinion of so able a judge, I think his error in this passage is evident. It consists in taking a special rule, established from motives of policy for a particular condition of fact, and raising it to the position of a universal rule. Where an estoppel by con- duct is alleged to prevent a legal owner of land from asserting his legal title, courts of equity, in order to avoid the literal re- quirements of the statute of frauds, were driven to the element of fraud in the con- duct as essential. See the text, sections SOS- SOT. The passage quoted from Judge Story Is dealing with this long-settled rule of eq- uity, and not with the subject of equitable estoppel in general. When this special rule is made universal, its inconsistency vrith many familiar instances of equitable estop- pel becomes apparent, and Judge Field is forced to escape from the antagonism by denying that these instances do in fact be- long to the doctrine. If this conclusion be correct, then some of the most Important and well-settled species of the estoppel, uniformly regarded as such by text writers and courts, must be abandoned, and the beneficent doc- trine Itself must be curtailed in its operation to one particular class of cases. This result is In direct opposition to the tendency of ju- dicial decisions, and of the discussion of text writers." See note 1 to section 806, Pom. Eq. Jur., and cases there cited. It is worthy of notice, also, that, in the opinion referred to. Judge Field quotes approvingly from the Pennsylvania case of Hill v. Epley, 31 Pa. 334, language which is practically, to all intents, an abandonment of the extreme position supposed to be maintained in the Brant Case. The language referred to is: "The primary ground of the doctrine is that it would be a fraud in a party to assert what his previous conduct had denied, when on the faith of that denial others have act- ed." The element of fraud is essential either in the Intention of the party estopped, or in the effect of the evidence which he attempts to set up; so that at last the difficulty seems to be in the use of terms, rather than in the true principles controlling the doctrine under consideration. As to the second proposition for which the Brant Case is cited. It is suffi- cient to say that it does not sustain the posi- tion that the mutuality of the mistake, or the possibility of having discovered It, pre- vents the application of the doctrine of es- toppel. It merely asserts the familiar rule that where the party setting up the estoppel knew the true condition of the title, either in fact or in contemplation of law, the doc- ti'ine will not avail him; the fact being in that case, as shown in the opinion, that "he knew he was obtaining only a life-estate by his purchase." This opinion is already too long to allow further elaboration on the question of estop- pel under the facts of this case. It Will, however, not be out of place to add that I find nothing in the numerous reported cases in this state, from Patton v. McOlure, Mart. & Y. 339, down to Allen v. Westbrook, 16 Lea, 251, that makes willful fraud on the part of the party sought to be estopped, in the act constituting the grounds of the es- toppel, essential to the application of the doctrine. We hold, therefore, that there is. In the case at bar, on the facts as found by the arbitrator, every element of an equitable estoppel, and complainants must be repelled. The disability of coverture is not sufficient to defeat this result. Let the decree of the chancellor be affirmed, with costs. EQUITABLE ESTOPPEL. 119 STARRY V. KOEAB. (21 N. W. 600, 65 Iowa, 267.) Supreme Court of Iowa. Dec. 8, 1884. Appeal from superior court of Cedar Rap- ids. Tliis is an appeal from an order in a gar- nishment proceeding discliarging the gar- nishee. Plaintiff obtained judgment against one Joseph Lustick, on which execution issu- ed, and appellee was garnished as a suppos- ed debtor of the defendant in execution. At the proper time he appeared, and answered that he was not indebted to said Lustick in any sum, and that he did not have any prop- erty in his possession belonging to him. Plaintiff filed a pleading controverting this answer, in which it is alleged that in a con- versation had between plaintiff and gar- nishee before the execution was issued, gar- nishee stated that he was indebted to Lustick in a certain sum, and that he would not pay the same to Lustick until plaintiff bad an opportunity to procure the issuance of an execution on said judgment and serve notice of garnishment on him thereunder; and that, relying on this representation, and believing it to be true, plaintiff, at great expense and trouble to himself, procured said execution to issue, and caused the garnishee to be serv- ed with notice of garnishment thereunder, and that the garnishee is now estopped by his representation and conduct from denying that he was indebted to Lusticls; at the time he was served with the notice. The garnishee demurred to this pleading on the ground that it did not show that he was in fact indebted to Lustick when the notice of garnishment was served, and the facts averred in the pleading did not create an estoppel. The de- murrer was sustained, and, plaintiff declin- ing to plead further, judgment was entered discharging the garnishee. Plaintiff appeals. Blake & Hormel, for appellant. Bowman & Swisher, for appellee. REED, J. The purpose of the pleader was undoubtedly to set up in the pleading con- troverting the answer of the garnishee what is denominated an equitable estoppel. The effect of such estoppel is to preclude the party from asserting a strict legal right, on the ground that his assertion of such right, under the circumstances of the case, would be against equity and good conscience. The pleading assumes that at the time the notice of garnishment was served on the garnishee he was not in fact indebted to Lustick, and that on strict legal grounds he was entitled to be discharged. But the claim is that, hav- ing induced plaintiff, by the representation that he was indebted to Lustick, to institute the garnishment proceeding and incur the ex- pense and trouble incident thereto, it would be manifestly unjust and inequitable in him to assert his exemption from liability there- on. And the question presented by the rec- ord is whether, under the facts stated in the pleading, the garnishee is estopped to deny that he is indebted to Lustick. It will be' observed that the representation on which plaintiff claims to have acted in instituting the garnishment proceedings con- sisted (1) in the statement of a matter of fact, viz., that the garnishee was at that time in- debted to Lustick in a certain amount; and (2) in a promise or agreement as to his con- duct in the future, viz., that he would with- hold the amount and not pay it over to Lust- ick until plaintiff would have an opportunity to procure an execution to issue, and notice of garnishment to be served upon him. But it does not appear from the averments of the pleading that the statement as to the matter of fact was not true when it was made; that is, it is not averred that the garnishee was not indebted to Lustick at the time the rep- resentation was made. Some time elapsed between the making of the representation and the service of the garnishment notice, and for anything that appears in the pleading the garnishee may have been ind,ebted to Lustick at the time of the representation, and have paid the amount to him before the notice was served upon him. If those are the facts, the injury and damages which would result to plaintiff in case of the gai^ nishee's discharge would be occasioned, not by his denial of the truth of his statement that he was indebted to Lustick, but by his failure to perform the agreement to retain in his hands the amount of the indebtedness until the notice of garnishment should be served upon him. But an estoppel does not arise from the mere failure of a party to per- form an executory agreement. The doctrine of estoppel is applied to pre- vent the injustice which would result if one who has once asserted the existence of a fact, and thereby induced another to act in the be- lief of the truth of that statement so as to change his previous position, were permitted afterwards to deny its truth. Under such circumstances, and as against the one who made the statement, the law is that it shall be conclusively presumed to be true. Pick- ard V. Sears, 6 Adol. & E. 469. But it is difficult to conceive a case in which one who is sued for the mere failure to perform an executory agreement would be precluded by the law from making any defense against the claims. It may be that plaintiff has a cause of action against the garnishee on the agree- ment; but if so he clearly cannot enforce it in this proceeding. His remedy in that case must be sought in an original action against the party as defendant. In this proceeding, if he can recover at all, he can do so only by showing either tliat the garnishee was indebt- ed to the defendant in execution when the notice of garnishment was served on him, or that such a state of facts existed as that he is estopped to deny that he was so Indebt- ed. The pleading in question, in our opinion, does not show either of these states of fact. Affirmed. 120 ELECTION. TENN et al. v. GXJGGENHEIMER et al. (70 Va. 839.) Supreme Court of Appeals of Virginia. Oct. 16, 1882. Appeal from circuit court, Botetourt county. Bill by Jlax Gugsenlieimer and otliers against William J. Penn, as administrator of Stuart B. Penn and in his own right, Ann S. Penn, and others, to ascertain the interest of William J. Penn in the estate of S. B. Penn, deceased, and to subject the same to judgments of plaintiff against said AVilliam J. Penn. Under the will of Charles B. Penn certain lands were given to his children. He owned a third interest in cer- tain land on James river, known as the "Home Place," the other two-thirds of which belonged to his wife by descent from her father. Under said will he expressed a wish that his wife should retain the "home place," and at her death It should be the property of her son Stuart B. Penn. The widow, in 1850, received the personal estate given to her under the will of her husband, and gave a receipt reciting that she received it "agree- ably to the provisions of his said last will and testament." At the same time the "home place" was put on the land book of the county and assessed for taxes in her name as tenant for life and devisee of her husband. She never renounced the will, nor had dower assigned, but she filed an answer in 1867 to the plaintiff's bill, in which an- swer she denied that she had done anything to divest herself of her two-thirds in the "home place. ' The circuit court entered a decree that the widow had elected to accept the provision in the will of her husband, and that the remainder of the "home place" passed on the death of the said Stuart B. Penn, childless, among others, to the said William J. Penn, who was entitled to an interest of one-fourth, subject to his moth- er's life estate, which Interest was liable to be subjected by his creditors to the satis- faction of their judgment liens. Prom this judgment Ann S. Penn appealed, and, pend- ing the appeal, died. Affirmed. Edmund Pendleton, for Mrs. Ann S. Penn. J. H. H. Piggatt and John J. Allen, for Max Guggenheimer. G. W. & L. C. Hansbrough, for George Skillen Penn and Mrs. Frances L. Mayo. STAPLES, J. The main question in this case turns upon the construction to be giv- en to the will of Charles B. Penn which was admitted to probate at the September term of the county court of Botetourt, in the year 1849. The testator, at the time of his death, was possessed of a valuable real and person- al estate, which he devised and bequeathed to his wife, Mrs. Ann Penn, and to his four children. To his two sons George S. Penn and William Penn he gave severally a tract of land. To Mrs. Mayo, his married daugh- ter, he gave certain real estate and a sum of $10,000 in bank stock. To his wife he be- queathed all his slaves, with the full confi- dence that she would make such disposition of them among his children as should be just and equitable, after retaining such of them as she might desire for her own use during her lifetime. His other personal es- tate he directed to be sold, and the balance remaining, after the payment of his debts, together with the proceeds of any real es- tate not specifically devised, he bequeathed to his wife, with the full confidence that she would divide it among his children as she might deem just and proper. The third clause of the will, which gives rise to this controversy, is as follows: "It is my will and desire that my wife shall retain the home place, and at her death it shall be the property of my son Stuart B. Penn, which I hereby give to him, his heirs, and assigns forever." The home place, thus mentioned by the testator, is a tract of about 820 acres, one- half of which, known as the "lower half," was the property of Mrs. Penn, devised to her by her father. She was also the owner of one-third of the upper half of the tract, derived by descent from her sisters. The testator was entitled to two undivided thirds acquired by purchase in the upper half of the tract. So that his Interest at the time of his "death did not exceed one-third of the entire ti'act. The first question arising under the clause already quoted is whether the testator in- tended to dispose of the entire tract, or whether the will is to be construed as dis- posing merely of his undivided third. If the former interpretation be the true one, it is conceded that it was incumbent upon Mrs. Penn, the widow, to make her election, and that she cannot claim both her own estate and the provision made for her by the will. Before entering into a discussion of that question it will be proper briefly to advert to some of the principles of law governing in such cases. The doctrine of election Is said to rest up- on the equitable ground that no man can be permitted to claim inconsistent rights with regard to the same subject, and that any one who asserts an interest under an instrument is bound to give full effect, as far as he can, to that instrument. Or, as it is sometimes expressed, he who accepts a benefit under a deed or will must adopt the contents of the whole instrument, conform- ing to all its provisions, and relinquishing every right inconsistent with It. In the terse language of Lord Rosslyn In Wilson V. Lord Townsend, 2 Ves. Jr. 697: "You cannot act. You cannot come forth to a court of justice claiming In repugnant rights. When you claim under a deed, you must claim under the whole deed together. You cannot take one clause, and advise the court to shut their eyes against the rest. ELECTION. 121 Suppose, in a will, a legacy is given to you by one clause; by another, an estate of which you are in the possession is given to another. While you hold that, you shall not claim the legacy." 1 Pom. Eq. Jur. &§ 465, 466; 1 White & T. Lead. Cas. Eq. pt. 1, pp. 541, 547, 548; Kinnaird v. Williams, 8 Leigh, 400; Craig v. Walthall, 14 Grat. 518; Dixon V. McCue, Id. 540. In order, however, to raise a case of election, it is well settled the intention on the part of the testator to give that which is not his own must be clear and unmistakable. It must appear from lan- guage which is unequivocal, which leaves no room for doubt as to the testator's design. The necessity for an election can never arise from an uncertain or dubious interpretation of the clause of donation. 1 Pom. Eq. Jur. § 472; 2 Story, Eq. Jur. § 10. It is not necessary, however, that this in- tention should be expressly declared. The dispositions of the instrument, fairly and reasonably interpreted, may of themselves show a clear design on the part of the testa- tor to bestow upon the devisee property wliich in fact belongs to another. As in other cases, the intention may be gathered from the whole and every part of the instrument. The difficulty of ascertain- ing the testator's intent, it is said, is al- ways much greater where he has a partial interest in the estate devised than where he undertakes to dispose of an estate in which he has no interest. In the former case, the presumption is that he intended to dispose of that which he might properly dispose of, and nothing more; and this presumption will always prevail, unless the intention is clearly manifested by demon- stration plain, or necessary implication on the part of the testator to dispose of the whole es- tate, including the interest of third parties. Generally, when the testator has an undivided interest in certain property, and he employs general words in disposing of it, as "all my lands," or "all my estate," no case of election arises from it; for it does not plainly appear that he meant to dispose of anything but what was strictly his own. 2 Story, Bq. Jur. § 1087; 1 Pom. Eq. Jur. § 489. A case of election does arise, however, when the testator, having an undivided or partial interest in an estate, devises it specifically, thus indicating a purpose to bestow it as an entirety. This rule on this subject is thus laid down in 1 Pom. Bq. Jur. § 489. Where the testator proposes to give the whole thing itself, using language which, by reasonable in- tention, must necessarily describe and define the whole corpus of the thing in which his particular interest exists as a distinct and identified piece of property, then an intention to bestow the whole, and not merely the tes- tator's individual share, must be inferred, and a case for an election arises. This rule is mentioned and commented on by Judge Chris- tian in delivering the opinion of this court in Gregory v. Gates, 30 Grat. 83, to which I refer as authority for other views here announced. Now, let us apply these principles to the case in hand. In the first place, there can be no doubt that the tract of land or estate in ques- tion was universally known and described as the "Home Place." It is so spoken of by all the witnesses, by the parties, and it was so de- nominated in all the pleadings. Mrs. Penn, in her answer, describes it as the "Home Place." She speaks of the "upper half of the home place" and the "lower half of the home place." It is scarcely to be supposed that the testator would term it differently from every other person; that he referred only to his partial interest of one-third when by universal consent, usage, and habit, the entire tract was known and recognized as the home place. His language is: "That my wife shall retain the home place, and at her death it [the home place] shall be the property of my son Stuart B. Penn, which I hereby give him, his heirs and assigns, forever." What gives some sig- nificance, at least, to this language is that the mansion house, occupied by the testator and his family for many years, was located, not upon the half in which the testator had an interest of two-thirds, but upon that portion exclusively owned by Mrs. Penn. It was this portion upon which the family resided that might with some propriety be termed the "Home Place," and not the two undivided thirds of one-half, constituting merely a part of the tract. It was said in the argument before this court that the language of the clause now un- der consideration is different from the other clauses of tlie will. For example, that the testator, when disposing of his own property, invariably uses the words, "I give and be- queath," whereas in the present instance he merely expresses the wish that his wife shall retain the home place. This difference of phraseology grows out of the fact that the tes- tator was .carefully defining and limiting an estate to be enjoyed by his wife during her life, and the language used by him was such as he supposed would accomplish the object. He then proceeds to say that it is his will and desire at her death it (the home place) "shall be the property of my son Stuart B. Penn, which I hereby give him, his heirs and as- signs, forever." It is impossible by argument or illustration to add to the force and perspicu- ity of this language. Nothing can be plainer, more direct and comprehensive. The cases of Padbury v. Clark, 2 ilacn. & G. 298; Howells V. Jenkins, 2 Johns. & H. 706; Grosvenor v. Durston, 25 Beav. 97; Grissell v. Swinhoe, L. R. 7 Eq. 291, 295,— in which it was held that the devLsee was bound to elect,— are directly in point and conclusive of the question. The other dispositions made by the testator confirm thoroughly this view of his intention. He gave to his son George S. Penn an estate worth about $11,000, to his son William Penn an estate of the value of $14,000, and to Mrs. Mayo property worth $12,000 or $15,000. The provision made for his wife was more V22 BLECXJON. than sufficient for her support and mainte- nance during her life in the most comfortable and abundant manner. If, however, he de- signed that his son Stuart B. Penn should take the one-thii-d of the home place, subject to the incumbrance of the life estate, the provision for him was wholly inadequate, and dispro- portionate to the benefits conferred upon his other children. On the other hand, if the tes- tator intended that the entire home place should be the property of his son Stuart B. Penn, the period of his enjoyment would be postponed until the death of Mrs. Penn, and the value of the devise would be about equal to the provision for the other children. I am therefore of opinion that by the plain terms of the will Mrs. Penn was put to her election, and that she could not and cannot choose both her own estate and the bequests made in her favor. The next inquiry is, whether Mrs. Penn did, in fact, elect to claim under the will. An election may be Implied as well as ex- pressed. Whether there has been an election must be determined upon the circumstances of each particular case, rather than upon any genei-al principles. 1 White & T. Lead. Cas. Eq. 539, 571, 572. It may be inferred from the conduct of the party, his acts, his omis- sions, and his mode of dealing with the prop- erty. Unequivocal acts of ownership, with knowledge of the right to elect, and not through a mistake with respect to the condi- tion and value of the estate, will generally be deemed an election to take under the will. 1 Pom. Eq. Jur. §§ 514, 515. Lapse of time, al- though not of itself conclusive, yet, when con- nected with circumstances of enjoyment, may be decisive upon the question of election. In Adsit V. Adsit, 2 Johns. Ch. 448, 451, Chancellor Kent said: "Taking possession of property under a wiU or other Instrument, and exercising unequivocal acts of ownership over it for a long period of time, will amount to a binding election." "Positive acts of acceptance or renuncia- tion," says Mr. Justice Story, "may arise from long acquiescence, or from other circumstances of a stringent nature, and are not indispensa- ble." "Again," he says, "it may be necessary to consider whether he [the devisee] can restore other persons affected by his claim to the same situation as if the acts had not been perform- ed, or the acquiescence had not existed, and whether there has been such a lapse of time as ought to preclude the court from entering upon such inquiries upon its. general doctrine of not entertaining suits upon stale demands or after long delays." 2 Story, Eq. Jur. §§ 1097-1098. Where the election Is once made by the party bound to elect, either expressly or im- pliedly, and with full knowledge of all the facts, it binds not only himself, but also all those parties who claim under him, his rep- resentatives and heirs. 1 Pom. Eq. Jur. § 516. Let us apply these principles to the case be- fore us. Upon the death of the testator, in the year 1849, Mrs. Penn continued in the pos- session of the home place until the present time, a period of 30 years. It does not appear that she ever expressed any dissatisfaction with the provisions of the will till the filing of her answer in the cause in the year 1807. In the year 1850 the entire tract was entered upon the commissioner's books of the county and assessed with taxes in her name, as ten- ant for life. Whether this was done by her direction or not, it does not appear. It can scarcely be supposed she was ignorant of a fact disclosed on every tax ticket paid by her. It has been already stated that by the will testator's slaves were given to Mrs. Penn, in full confidence that she would make such dis- position of them among his children as would be just and equitable, after retaining such proportion of them as she might desire for her own use during her life. The residue of the real and personal es- tate was also given to her in trust for the benefit of the children. In the year 1850,— not long after the testator's death,— the ex- ecutors tui'ued over to her the entire person- al estate, including slaves, and took her re- ceipt, stating that this was done in con- formity with the provisions of the will. The executors must therefore have understood that Mrs. Penn had accepted the provision made for her benefit. Upon no other ground would they have been warranted in thus dealing with the assets. The terms of the receipt given by her show that she was per- fectly apprised of the contents of the will, that she knew the condition and value of the property, and that she had united with the executors in fulfilling the intentions and wishes of the testator. Had Mrs. Penn re- nounced the will, as she was bound to do, in order to claim her own estate, she would have been entitled only to one-third of the slaves for life, and one-third of the personal property absolutely. As it was, she received from the executors under the will 49 slaves, of the value of $18,370, and other property, worth between $5,000 and $6,000. The testi- mony shows that Mrs. Penn never made any formal division of the property; that she, however, distributed among her children about 12 of the slaves, retaining the residue in her own possession, for her own use and benefit, until their emancipation in 1865. It is of no sort of consequence that during his lifetime Stuart B. Penn resided at the home place, and managed and controlled all the operations of the estate. This was, of course, done by the authority of Mrs. Penn, and doubtless for the reason that it was more agreeable to her that one of her sons should relieve her of the trouble and re- sponsibility, to which, amid the Infirmities of declining years, she was unequal. She certainly exercised a dominion and owner- ship of the property, to which she was en- ELECTION. 123 titled only under her husband's will, and Tpyhich she could never have assumed unless she intended to conform to its provisions. After this long lapse of time, after this long-continued enjoyment and possession of the estate, and unequivocal recognition of the provisions of the will by receiving the property from the executors, it is too late for Mrs. Penn, at this day, to disclaim the testator's bounty, and assert title to her own estate. The slaves have long since been emanci- pated, the personal property exhausted, and It is now impossible to place the children in the condition they would have occupied had Mrs. Penn in the outset declared her inten- tion to hold her own property. So far from it, It is very clear that she made her election to claim under the will, and that she did so with a deliberate and intelligent choice, and with a full knowledge of all the circumstances, and of her own rights. No possible Injury can accrue to any one from the conclusion thus reached, for Mrs. Penn lived and died in the enjoyment of the estate. She never attempted any other disposition of it. Stuart B. Penn, the devisee, is dead, with- out children, and the estate has passed in due course of law to Mrs. Penn's children. A contrary decision can result only in dis- turbing a condition of things settled and acquiesced In for many years by all parties. I think, therefore, there is no error upon this branch of the case in the decision of the circuit court The learned counsel for the appellant. In his petition for an appeal, and in his argu- ment before this court, has taken the ground that the parties bringing this suit are neither heirs nor purchasers nor beneficiaries under the will of Charles Penn, but judgment cred- itors of William J. Penn, and, as such, in- truders and volunteers, seeking to set aside a family settlement, and to vest in William J. Penn an Interest which he himself does not claim, and to which he never asserted any title. It will not be denied that com- plainants, by virtue of their judgments, have a lien upon all the real estate of their debtor, and that under our statute they may enforce that lien in a court of equity. This right of the complainants, and. In- deed, of all judgment creditors, cannot be affected by any omission of disclaimer on the part of the debtor. According to repeat- ed decisions of this court, when the free- hold has once vested, the owner cannot di- vest himself of the title by any mere parol disclaimer; but he can only do so by deed or some other act sufficient to pass an es- tate. Even had William J. Penn executed such deed, voluntarily relinquishing his title, his creditors would not be bound by it. When the court has once settled that Stuart B. Penn Is entitled to the home place under the will of his father, William J. Penn, as one of his heirs, has an absolute title to his just share or proportion of that estate, and his creditors may not only subject it to satisfaction of their debts, but they may re- sort to a court of equity for the purpose of ascertaining that Interest, and of removing every obstacle in the way of the just en- forcement of their liens. William J. Penn can no more defeat the claims of his cred- itors by a disclaimer of title than he could do so by a voluntary deed, or gift or assign- ment. In Dold V. Geiger's Adm'r, 2 Grat. 98, It was held that choses in action, to which the wife becomes entitled during coverture, are liable to the claims of the husband's cred- itors, and a voluntary relinquishment of the same by the husband, and a settlement upon the wife, before being reduced into posses- sion, will not protect such choses In action from such creditors' claims. Judge Stanard, in answer to an objection similar to the one made here, said: "I think it may safely be laid down as a just deduc- tion from the elementary principles of our law that the general rule is that the rights of property of a debtor, whether in posses- sion or In action, present or reversionary, in law or in equity, and of value adequate to pay his debts, and without which -he is Insolvent, and the payment of his debts must be frustrated, cannot by the mere vo- lition of the debtor, in the form of assign- ment, surrender, or other modes of arrest, pass to volunteers without valuable consid- eration, and be thereby placed In the hands of such volunteers, beyond the reach and secure from the claims of such creditors." This opinion of Judge Stanard, and, Indeed, the decision Itself, constitutes a complete answer to the points made by counsel, and render unnecessary any further discussion of the subject. The next question is whether the circuit court erred In disallowing the account of William J. Penn against the estate of Stuart B. Penn, for money alleged to have been paid by the former as administrator of Stuart B. Penn. The latter died In the year 1857, considerably indebted. William B. Penn qualified as his administrator, and re- moved to the home place, thereafter resid- ing with his mother, the life tenant. There Is no doubt that the net income derived from the estate was appropriated by him to the payment of his brother's debts. The only question is whether this Income was sufficient for that purpose, or whether any part of the Indebtedness was discharged by William J. Penn out of his private means. William J. Penn, in one of his depositions, states that from 1857 to 1860 he realized from the home place an income of $6,196.15, all of which, by the direction of his mother, was applied to the payment of his brother's debts. He further states that Stuart B. Penn had a note In bank of $4,600, for which the witness, at the request of his mother, substituted his own note. The larger por- 124 ELECTION. tion of this latter note was paid off by him in February, 1804, and the balance in 1865, in Confederate money. This, reduced to its actual value in sound money, amounts to a very insignificant sum. In the concluding part of William J. Penn's deposition he expresses the opinion that he has been fully reimbursed for all moneys ex- pended by him in the payment of his brothei-'s debts. Unfortunately for the par- ties setting up this claim, William J. Peun is their witness, and their only witness. They cannot ask the court to discard their own testimony, and enter a decree in their favor upon a case unsupported by proof. I have no doubt, however, that William J. Penn has given an accurate and tnithful ac- count of his transactions and dealings with the estate. The home place was regarded as one of the most valuable estates on James river, yielding a large income annually to its own- ers. A very small portion of its profits was required for the support of Mrs. Penn; the balance passed into the hands of William J. Penn, and I am satisfied that he was fully reimbursed for every dollar appropriated by him for the payment of his brother's debts. The complainants, after the fullest oppor- tunity, have been unable to adduce any tes- timony to the contrary. They are clearly not entitled to a reversal of the decree in the present state of the case, and it is most ap- parent that nothing is to be gained by fur- ther inquiry. Upon the whole, I thiulv the decree of the circuit court should be affirmed. Decree affirmed. ELECTION. 125 FITZHUGH V. HUBBARD. (41 Ark. 64.) Supreme Court of Arkansas. May Term, 1883. Appeal from circuit court, Phillips county; J. N. Oypert, Judge. M. T. Sanders and Tappan & Homor, for appellant. Thweatt & Quarles, for appellee. SMITH, J. William St. Jolin Hubbard died in the year 1878. Just before his death he made his will, which was afterwards duly proved, and which is in the words following: "I bequeath and leave unto my brother, Edward L. Hubbard, the full amount of his indebtedness to me, and the remainder of my property, both personal and real, to my sister, Mrs. Sarah L. Fitzhugh, after paying all of my debts, and my sister to administer without bond." In point of fact Edward L. Hubbard was not then indebted to the testator. He had formerly owed the testator a debt of $4,221.- 61, which was evidenced by note and secur- ed by deed of trust upon real estate; but this debt had been transferred, eight months, before the execution of the will, to Mrs. Sarah L. Fitzhugh. The deed of trust con- tained the usual power of foreclosure Tjy advertisement and sale upon default in pay- ment; and, in case of the refusal of the trustee to act, the sheriflE of Phillips county was empowered to execute it. Cage, the trustee, who was also the drafts- man of the will, did refuse to sell the prop- erty, alleging as his reason that the debt had been satisfied by the provisions of the will, whereupon the services of the sheriff were called into requisition. After due notice he sold and conveyed the lands to Mrs. Fitz- hugh, who brought ejectment. The defend- ant set up as an equitable defense that the deed of trust under which the plaintiff claim- ed title had been canceled, and the debt which it was intended to secure had been released to him by virtue of said will. The cause was transferred to equity. Testimony was taken on both sides, and at the hearing the court required Mrs. Fitzhugh to elect whether she would affirm the will and ac- cept the devise to her, or renounce the same and assert a right to the debt due by Ed- ward L. Hubbard. She elected to take un- der the will. The court thereupon dismissed her complaint, set aside the trustee's sale and conveyance, and canceled Edward L. Hubbard's note and deed of trust. Mrs. Fitzhugh has appealed, and the main ques- tion is whether this is a proper case for the application of the doctrine of election. "An election in equity is a choice which a party is compelled to make between the ac- ceptance of a benefit under an instrument and the retention of some property, already his own, which is attempted to be disposed of in favor of a third party by virtue of the same instrument. The doctrine rests upon the principle that a person claiming under an instrument shall not interfere by title para- mount to prevent another part of the same" instrument from having effect according to its construction. He cannot accept and re- ject the same instrument. It is a doctrine which is principally exhibited in cases of wills. * * * "The most common instance which is put of a case of an election is where a testator gives money or lands to A., and by the same will gives something of A.'s to B. Here A. must elect. He must either give effect to the will by allowing B. to have the property which the testator intended should go to him, or, if he chooses to disregard the will and retain his own property, he must make good the value of the gift to the dis- appointed beneficiary." Bisp. Eq. § 295; see, also, Story, Bq. Jur. § 1076 et seq.; 1 White & T. Lead. Cas. Bq. 342. Here the testator has undertaken to dis- pose of a debt which belonged to Mrs. Fitz- hugh. But he has given her the whole of his own estate. Her conscience is therefore affected by the implied condition annexed to the testator's bounty that, while availing her- self of the will in one direction, she shall not defeat its operation in another. The ultimate question in all such cases is this: Did the testator intend that the dev- isee, upon accepting the benefit conferred up- on him, should acquiesce in the donation of the devisee's own property to another? Hence it becomes important to determine how far parol evidence is receivable to mani- fest such intention. Cage and other wit- nesses were sworn to prove declarations of the testator that in using the language, "in- debtedness to me," he referred to the debt which had been assigned to Mrs. Fitzhugh. In Robinson v. Bishop, 23 Ark. 378, this court expressed its preference to construe wills from their own terms, rather than to take the deposition of the scrivener as to what the testator meant by particular claus- es. Parol evidence is admissible, in this class of causes, to the same extent as in other cases, in aid of the construction of written instruments, and no further. You may show the condition of the subject-matter and the surrounding circumstances, so as to place the court in the position of the testator; but his purpose to put the devisee to his election must appear from the wiU itself. 2 Redf. Wills, 745. But as it was in proof that Edward L. Hubbard owed the testator no other debt, the will can have no reasonable construction without including Mrs. Fitzhugh's debt. The decree below is affirmed. 126 ELECTION. WILBANKS et al. v. WILBANKS. (18 111. 17.) Supreme Court of Illinois. Nov. Term, 1856. Error to circuit court, JefEersoD county. The defendant in error filed bis bill against the plaintiffs, to enjoin the plaintiffs from prosecuting an action of ejectment against Walter S. Akin and David Rotramel, for the recovery of forty acres of land vrhich the defendant In error claims under the will of his father, Robert A. D. Wllbanks, de- ceased. The biU states that R. A. D. Wllbanks, the father, entered the forty acres in the name of his wife, Sarah V. Wilbanks; that she died leaving the plaintiffs In error her heirs at law by her said husband; that the forty acres in dispute were part of the homestead or farm upon which said Wilbanks, the fath- er, and wife resided. That Wilbanks, the father, married a sec- ond time and afterward died, leaving a son, the defendant in error, by his second wife, and made a will bequeathing to his said second wife, for life, the homestead, and at her death willed It to the defendant in error, and that the forty acres were included In the bequest. That the plaintiffs in error were also pro- vided for, one of them (T. J. Wilbanks) hav- ing a specific bequest left to him, of real and personal estate, and that the others were also as to the balance of the real es- tate of the testator undisposed of, made residuary legatees. The defendant In error asl;s that the plain- tiffs be enjoined from prosecuting their ac- tion at law, for the reason that the intestate, by devising the said tract of land to the de- fendant, intended to put the plaintiffs off with what he gave them under the will, and that the plaintiffs ought to elect whether they would refund the value of the land or be perpetually enjoined from prosecuting their action at law. The plaintiffs demurred to the bill gener- ally and specially, and contend that the facts stated In the bill do not warrant the issu- ance of an Injunction against the plaintiffs, because the defendants to the suit at law are not parties; that from the face of the bill they are manifestly proper parties to the proceedings, and for that cause the demur- rer ought to have been sustained to the bill; they also contend that the facts stated in the bill do not show a case of election in equity at all, because: 1st, they were residuary legatees; 2d, Wilbanks, the Intestate, was tenant by the curtesy, and had an interest In the land in question; 3d, because the tes- tator treated the land as his own property; and, 4th, the forty acres of land in dispute are not described In the will at all, and the court will not supply the defect by implica- tion, from the fact that it was within the boundaries of the land bequeathed to his sec- ond wife and the defendant upon her de- cease. The demurrer was sustained. The plain- tiffs stood by their demurrer; but the court ruled them notwithstanding to answer over, which they refused to do. A decree pro con- fesso was entered at September term, 1855, of the Jefferson circuit court, and the plain- tiffs were perpetually and unconditionally en- joined from prosecuting their suit at law. The plaintiffs assign for error, the niling of the court below, on the demurrer, and contend that the demurrer ought to have been sustained to the bill, and that the over- ruling the demurrer and granting the in- junction was erroneous, and that the decree of the court was rendered without any eq- uity whatever to support it; and further, that if the injunction ought to have been awarded at all, it ought to have been award- ed on condition of the plaintiff failing to elect. R. S. Nelson, for plaintiffs in error. D. Baugh, for defendant in error. SCATES, C. .T. The testator in this case disposed of all his estate, both real and per- sonal. The objects of his bounty were ex- clusively those upon whom the law would have cast the estate in case of Intestacy; but whether in the same proportions under the will as at law, does not appear. Whether the provisions of the will are as beneficial as those of the law, or not, the devisees may not therefore disturb or set aside its provi- sions, unless under circumstances which raise a right of election. The widow accepted the devise made to her, which barred her dower; and the heirs as such merely could not avoid the provi- sions of the will, which disposed of the whole estates, real and personal, so far as they belonged to the testator. The legal title to the tract in controversy was not in the testator, but the plaintiffs, his children by a former wife, as heirs to their mother, in whose name the land had been purchased of the United States. The testator devised this tract to his sec- ond wife for life, as a part of his homestead, with remainder to defendant in fee, his son by the second wife. The object of the bill by defendant is to enjoin the plaintiffs from proceeding in eject- ment, to recover the land as heirs at law of their mother, upon the ground that they have devises and bequests made to them by the same will, of which they have ac- cepted, and they cannot, therefore, in equity and conscience be permitted to claim under the will the benefit of the devises and be- quests to them, without giving full effect to it in every respect, so far as they are con- cerned. We think the circumstances clearly pre- sent a case for election (waiving any question of a resulting trust for the husband), and assuming the fact to be as is alleged, that ELECTION. 127 the provisions of the will have been accept- ed, the plaintiffs are estopped in equity and conscience from all claim to this tract of their own, which is given to the defendant. In the general language of the authorities, they may not, at the same time, take under the will and contrary to it. This was the doctrine of the civil law, from whence, doubtless, we derived the rule. But it seems to have been confined to cases of wills by the civil law, while the rule with us has been extended to deeds and other contracts; and it has been held to be the rule at law as well as in equity. The intention of the author of the deed or will to dispose of property which is not his, must be manifest; it is difficult to ap- ply the doctrine of election when the testator has some present interest in the estate dis- posed of, though, not entirely his own; for it might be that he intended to dispose only of his own interest. Yet it Is a question of in- tention, which is to prevail, and will be gathered from the terms of the instrument. An absolute power in the testator to dis- pose of the subject, and an intention to ex- ercise that power, seems in general suflScient to malce a case of election; a devise to the heir, although inoperative, compels him to elect between the estate devised, and claims adverse to the will. The estate descending to the heir under his election to claim against the will, descends subject to the implied con- dition. These principles are extracted from Mr. Swanston's note to Dillon v. Parker, 1 Swanst. 394b. The doctrine of election is very fully and comprehensively laid down in that case and note, and in Gratton v. Haward, 1 Swanst. 413, and note c. See also, Noys v. Mordaunt, 2 Vern. 581; 2 Story, Bq. Jur. §§ 1075-1096; 2 Williams, Ex'rs 1236, section 9 of Election (B) and notes; 1 Eop. Husb. & Wife, 566, note 1; (7 Law Lib. 334.) It has been suggested that the testator here was tenant by the curtesy of this tract of land, and it should therefore be intended and understood that he devised that interest which belonged to him, and not the fee, which was in his children by his first wife. This view of the devise cannot help or ex- plain away the plain and obvious meaning and intention upon the face of the instru- ment; and that was to pass the fee in all the lands disposed of in the will. Besides, this would make the will inoperative as to this tract; for the estate by curtesy termi- nated with the life of the testator, at which time the devise took effect. We cannot in- dulge in a construction that would defeat the intention, make the provision inoperative, or render the will void. Nor can we indirect- ly do the same thing by supiwsing that the testator believed this tract to belong to him; and intended only to dispose of so much as belonged to him. Where such appears to have been the clear Intention of the testator to dispose of so much, and no more than he might own, and the particular property was devised or bequeathed under the impression that it belonged to the testator, then, it may be, that the question of repugnancy and elec- tion might not arise; but the devisee or legatee might take the interest given, with- out surrendering his claim to his own proper- ty. Still the foundation of the doctrine of election is the intention of the testator. So that when he clearly intends to dispose of the property of another, real or personal, al- though the will or deed alone and of itself may be ineffectual, inoperative, or void as a conveyance or sale, yet it affords authentic evidence of the intention of the testator or grantor, and that intention shall be made effectual and prevail to transfer the property of one who accepts a benefit under such will or deed. 2 Story, Bq. .Jur. § 1077. Indeed, in section 1076, Mr. Justice Story illustrates this doctrine of election by putting a case precisely like that before us. If the testator should devise an estate belonging to his son, or heir at law, to a third person, and should in the same will bequeath to his son, or heir at law, a legacy of one hundred thousand dollars, etc., an implied or constructive elec- tion is raised. The son or heir must relin- quish his own estate or the bequest under the will. The party is entitled to a full knowledge of the circumstances, and of the situation and value of the estates or provisions made; and an election made in actual ignorance of material facts will not preclude the party from exercising the right anew upon obtain- ing full information. This record does not show that the election here was without full Ivuowledge of all material facts. But admitting that the plaintiffs may yet make a new election, if they claim, by de- scent and against the will, all the lands and personalty devised and bequeathed to them in the will, they will be liable to make com- pensation to the disappointed devisee to the extent of the value of the devise intended for him. So that equity will lay hold of the devise or bequest renounced, and substitute compensation for the devise or bequest de- feated. See 2 Story, Eq. Jur. and 1 Swanst. above. Whether by renunciation the party for- feits all interest, as in case of estates upon express conditions, or is entitled to any sur- plus after full compensation, as seems to be warranted by the current of authorities, is immaterial here, it seems to us. For its loss to defendant from the midst of his home- stead tract, would cost plaintiffs more in compensation out of their devises than it could be worth to them thus situated and surrounded. And they cannot now assert their title as heirs to their mother, without making compensation to defendant, out of the devises to them in the will. Decree af- firmed. 128 ELECTION. ROGERS V. JONES. (3 Ch. DiT. 688.) High Court of Justice. Aug. 3, 1876. By a marriage settlement dated the lltli of November, 1833, certain messuages and hereditaments (including six cottages in Rhos street, Ruthin) were settled to the use of William Williams for life, with remain- der to the use of his wife, Jane Williams, for life, with remainder to the use of the first and other sons of W. Williams in tail, and for default of such issue to the use of his first and other daughters in tail, and for default of such issue to the use of the heirs of the survivor of them, the said W. Williams and Jane Williams. William Williams, by his will made in 1860, gave to his said wife, Jane Williams, all his real estate during her life, and after her decease he purported to devise '■;ill those six cottages situate in Rhos street" (being part of the property included in the said set- tlement) to his nephew, Thomas Rogers, his heirs and assigns. The testator died in ]8<'iO without issue, and his widow, Jane Williams, became abso- lutely entitled under the settlement to the property therein comprised. In 1864 Thomas Rogers, not being aware of the settlement, sold and conveyed to the plaintiff his supposed reversionai-y interest under the testator's will in the said cottages. In 1875 .Jane Williams died, having ap- pointed the defendants, W. D. Jones and R. P. Davies, her executors. After the death of Jane Williams, the plaintiff first ascertained that she had, in 1872, sold the six cottages in Rhos street to a ptu'chaser for value without notice of the devise in the testator's will. The plaintiff now brought his action against the executors of Jane Williams, and submitted that he was entitled to be indem- nified out of her estate in respect of the loss sustained by him in consequence of the sale of the cottages by the defendant, or that such sale was an election by her to take the cottages against the will of the testator, and that, consequently, the plaintiff, as the per- son injured by such election, was entitled to receive compensation for such Injury out of the other benefits derived by Jane Williams under the will of the testator, for the loss occasioned to the plaintiff by such election, and to have the amount of such benefits as- certained and paid out of her estate. C. C. Ellis & Co., for plaintiff. F. W. Adams, for defendant. Chitty, Q. C, and Mr. Romer, for plaintiff. Cookson, Q. C, and Mr. Bradford, for de- fendant. JESSEL. M. R. The testator in this case gave his real estate to his wife for her life, with remainder as to six cottages, which did not belong to him, to his nephew Thomas Rogers. At the time of the devise the tes- tator's only interest in these cottages was a life estate under the settlement, with a con- tingent remainder if he survived his wife. Under these circumstances a case of elec- tion arises. The doctrine of election is this, that if a person whose property a testator affects to give away takes other benefits un- der the same will, and at the same time elects to keep his own property, he must make compensation to the person affected by his election to an extent not exceeding the benefits he receives. In this case the widow, having elected to take against the will, was bound to make compensation to the plaintiff to the extent of the benefits she received under the will. Therefore, in her lifetime, she might to this extent have been thus made liable. But it is said that the plaintiff's right to be indemnified is lost by the death of the widow. Why? I see no principle upon which her death should exonerate her es- tate. The liability of her estate must now be ascertained, and there must be an in- quiry as to the amount of the benefits which the widow received in her lifetime under the will, and as to the compensation to which the plaintiff is entitled in respect of the loss he has sustained by not getting possession of the six cottages at the death of the widow, so far as such loss does not exceed her benefits under the will. The pleadings to be amended by making T. Rogers coplaintiff. ELECTION. 129 KONVALINKA v. SOHLEGEL et al. (9 N. E. 868, 104 N. Y. 125.) Court of Appeals of New York. .Tan. 18, 1887. Appeal from supreme court, general term, second department. John W. Konvalinka, Henry McCloskay, and W. E. Glover, for appellant, Konvalinka, Bx'r, etc. George Bliss, for respondents, Maria Schlegel and another. ANDREWS, J. The question is whether the widow of the testator is put to her elec- tion between dower and the provision in the will. The estate of the testator consisted of both real and personal property. The will, after directing the payment of the testator's debts and funeral expenses, and after giving to his wife the bedroom furniture in his dwelling-house, and to his children the rest of the furniture therein, proceeds as follows: "All the rest, residue, and remainder of my estate, property, and effects of every nature, kind, and description I give, devise, and be- queath to my executors and executrix here- inafter named, and I authorize and direct them to sell and dispose of the same at such time, and on such terms, as to them shall seem best, and to divide the proceeds there- of equally among my wife and children, share and share alike." There can be no controversy as to the general principles gov- erning the question of election between dow- er and a provision for the widow In the will. Dower is favored. It is never excluded by a provision for a wife except by express words, or by necessary implication. Where there are no express words, there must be, upon the face of the will, a demonstration of the inten- tion of the testator that the widow shall not take both dower and the provision. The will furnishes this demonstration only when it clearly appears, without ambiguity or doubt, that to permit the widow to claim both dow- er and the provision would interfere with the other dispositions, and disturb the scheme of the testator as manifested by his will. The intention of the testator to put the widow to an election cannot be inferred from the extent of the provision, or because she is devisee under the will for life or in fee, or because it may seem to the court that to permit the widow to claim both the provision and dower would be unjust as a family arrangement; or even because it may be inferred or believed, in view of all the circumstances, that, if the attention of the testator had been drawn to the subject, he would have expressly excluded dower. We repeat, the only sufficient and adequate demonstration which, in the absence of ex- press words, will put the widow to her elec- tion, is a clear incompatibility arising on the face of the will between a claim of dower and a claim to the benefit given by the will. We cite a few of the cases in this state show- HUTCH.& BXJNK.EQ.— 9 Ing the general principle, and the wide range of application. Adsit v. Adsit, 2 Johns. Ch. 452; Sanford v. Jackson, 10 Paige, 266; Church V. Bull, 2 Denio, 430; Lewis v. Smith, 9 N. Y. 502; Fuller v. Yates, 8 Paige, 325; Havens v. Havens, 1 Sandf. Ch. 331; Wood v. Wood, 5 Paige, 599. In view of these settled rules, we think the widow in this ease was riot put to her election. The devise to the executors was void as a trust, but valid as a power in trust, for the sale of the lands and a divi- sion of the proceeds, and the lands descend- ed to the heirs of the testator subject to the execution of the power. 1 Rev. St. p. 729, § 56; Cooke v. Piatt, 98 N. Y. 35. It is strenuously urged that, the power of sale being peremptory, it worked an eqluita- ble conversion of the land into personalty, as of the time of the testator's death, and created a trust in the executors in the pro- ceeds for the purpose of distribution, which trust it is alleged is inconsistent with a claim of dower. The doctrine of equitable conversion, as the phrase implies, is a fiction- of equity, which is frequently applied to solve questions as to the validity of trusts; to determine the legal character of the inter- ests of beneficiaries; the devolution of prop- erty, as between real and personal represen- tatives; and for other purposes. It seems to be supposed that there is a necessary repug- nancy between the existence of a trust in real property created by a will and an out- standing dower interest of a widow in the trust property. We perceive no foundation for this contention. If the purposes of a trust, as declared, require that the entire title, free from the dower interest of the widow, should be vested in the trustees, in order to effectuate the purposes of the testa- tor in creating it, a clear case for an elec- tion is presented. Vernon v. Vernon, 53 N. Y. 351. But the mere creation of a trust for the sale of real property, and its distri- bution, is not inconsistent with the exist- ence of a dower interest in the same prop- erty. There is no legal difficulty in the trus- tee executing the power of sale, but the sale will necessarily be subject to the widow's right of dower, as it would be subject to any outstanding interest in a third person para- mount to that of the trustee. In the cases of Savage v. Burnham, 17 X. Y. 577, and Tobias v. Ketchum, 32 N. Y. 327, the widow was put to her election, not because the vesting of the title in trustees was per se inconsistent with a claim for dower, but for the reason that the will made a disposition of the income, and contained other provisions which would be in part de- feated if dower was insisted upon. There is language in the latter case which, discon- nected from the context, may give color to the contention of the appellant. But it is the principle upon which adjudged cases pro- ceed which is mainly to be looked to, be- cause a correct principle is sometimes mis- 130 ELECTION. applied. There is, however, no ground for misapprehension of the meaning of the learned judge in that case, interpreting his language with reference to facts then under consideration. It has frequently been declared that pow- ers of or in trust for sale are not inconsistent with the widow's right of dower. Gibson V. Gibson, 17 Eng. Law & Eq. 349; Bending V. Bending, 3 Kay & J. 257; Adsit v. Adsit, supra; In re Frazer, 92 N. Y. 239. And it was held in Wood v. Wood, 5 Paige, 596, that the widow was not put to her election, where the testator devised all his property to trustees, with a peremptory power of sale, and directed the payment to the widow of an annuity out of the converted fund. The same conclusion was reached, under very similar circumstances, in Fuller v. Yates, 8 Paige, 32.3; and in Re Prazer, su- pra, the widow's dower was held not to be excluded by a provision in the will, although as to a portion of the realty the power of sale given to the executors was peremptory. The general doctrine is very clearly stated by the vice-chancellor in Ellis v. Lewis, 3 Hare, 310: "I take the law to be clearly set- tled at this day that a devise of lands eo nomine upon trusts for sale, or a devise of lands eo nomine to a devisee beneficially, does not, per se, express an intention to de- vise the lands otherwise than subject to Its legal incidents, dower included." This re- mark of the vice-chancellor also answers the claim that the testator, when he described as the subject of the dower, "all the rest, residue, and remainder of my estate," meant the entire title, or the estate as enjoyed by him. A similar argument was answered by Lord Thurlow in Poster v. Cook, 3 Brown, Ch. 347. "Because," he said, "the testator gives all his property to the trustees, I am to gather, from his having given all he has, that he has given that which he has not." The argument that the testator intended equality of division between his wife and children is also answered by the same con- sideration. The proceeds of the testator's es- tate were by the will to be equally distributed. It left untouched the dower of the widow, which he could not sell or authorize to be sold, and which was a legal right not derived from him, and paramount to all others. It may be conjectured, perhaps reasonably in- ferred, that the testator really intended the provision for his wife to be exclusive of any other interest, but so it Is not written in the will, and we are not permitted to yield any force to the suggestion. It is a question of legal interpretation, which has been settled. The judgment should therefore be affirm- ed. All concur. ELECTION. 131 EEED V. DICKEEMAN. (29 Pick. 146.) Supreme Judicial Court of Massachusetts. October Term, 1831. Writ of dower. The following facts were agreed to by the parties. Elijai Reed, the late husband of the de- mandant, died seised in fee of the land describ- ed in the writ. On August 8, 1816, he made his last will, containing the following provi- sions: "I give and bequeath to my beloved wife, Lucy Eeed, and Alice Eeed, my daugh- ter, one-half of my dwelling house where I now live, the southerly part of said house, and the north buttery in said house, during my wife's natural life. Also to my beloved wife I give and bequeath one-half of my in- door movables. I also give and bequeath to my beloved wife one cow, which I order my sons, Solomon and Elijah, to keep for her, or some other in the room of it, free from any expense to her during her natural life. Also I give and bequeath to my wife and my daughter, Alice Eeed, one heifer, a year old last spring, and hereby order my two sons, Solomon and Elijah, to be at one-half the ex- pense of keeping said heifer for their moth- er." The will was proved In September, 1816. Soon after the death of the testator, the demandant selected a cow from the stock on the farm, and that cow, or another in- stead of it, has ever since been kept on the farm for her by her sons, Solomon and Elijah, and she has had the use of it ever since, until within a year past, when she sold it. A heifer was provided for her and Alice by Solomon and Elijah, and was kept by them for their mother until it died, which happened soon after the probate of the will. The demandant has always, since the death of her husband, been in the possession of the indoor movables. She has always lived in that part of the house which was devised to her, and Alice has lived with her. It ap- peared by the records of the probate court that in March, 1829, the judge of probate ap- pointed a committee to set off by metes and bounds and define that part of the dwelling house of the testator unto his widow and Alice, which was devised to them for their use during their natural life, together with the cellar, privileges, and appurtenances; and In April, 1829, the committee made a return, showing their performance of the duty re- quired of them. The real estate of the tes- tator was appraised, soon after his death, at $10,529, and the personal at ?647, his debts amounted to a sum between $3,000 and $3,- 600, the real estate given to Alice was worth $900, one-half of the indoor movables was worth $95, and the fee simple of the whole dwelling house was worth between $1,300 and $1,400. A demand was made upon the defendant, on July 5, 1830, to assign dower to the demandant. On the foregoing facts, or such of them as would be admissible in evidence on a trial before a jury, and on such Inferences as may be legally made from them, the case was submitted to the court, and If, in the opinion of the court, the demandant was entitled to recover, the defendant was to be defaulted; but otherwise, the demandant was to become nonsuit. Mr. Eddy, for demandant. W. Baylies and Mr. Miller, for tenant. MORTON, J. The demandant is clearly entitled to recover her dower, unless she is barred by the provision made for her in the will of Elijah Eeed. In that is given to her a freehold estate In a part of the dwelling house of the deceased, and also certain per- sonal property. The will contains no declara- tion of the testator's intention, whether this was to be in lieu of, or in addition to, the dower of his widow. By St. 1788, c. 24, § 8, "the widow, in all cases, may waive the provision made for her in the will of her deceased husband, and claim her dower, and have the same assigned her In the same manner as though her hus- band had died intestate, in which case she shall receive no benefit from such provision, unless It appears by the will plainly the tes- tator's intention to be in addition to her dower." This Is a material alteration of a rule of the common law applicable to this case. By that rule a devise or bequest to a widow is presumed to be in addition to her dower, unless It clearly appears that it was the intention of the testator that it should be in lieu of dower. The wife has a legal interest in her hus- band's estate, of which she cannot be de- vested without her own consent. After his death she is legally entitled to dower, un- less by some act of her own during his life- time she has barred her right, or after his decease voluntarily relinquished that right. A bequest or devise Is deemed a bounty, and not the payment or satisfaction of a pre-ex- isting debt or obligation. A gratuity cannot extinguish a legal right; hence the common- law rule that a donation in a vyill does not operate as an extinguishment of the right of dower, but is presumed to be a gratuity in addition to the existing legal right, but a donation may be made on a condition, and that condition may as well be the relinquish- ment of the right of dower as the perform- ance of any other act, and if a donation In a wiU be made on the express condition that dower shall not be claimed, or. If it clearly appear from the will that it was the Inten- tion of the testator that the widow should not have both the donation and the dower, then the donation shall be taken to be in lieu of dower, and the widow cannot hold both. She may have her election. She cannot claim un- der the will and adversely to it; but she is not thereby devested of her right of dower, but may have -her election between her dower and the provision made for her in the will. By the clause of our statute just quoted. 132 ELECTION. this presumption of law is reversed, and the provision in the will is deemed to be in lieu of dower, unless it plainly appears that the testator intended it to be in addition to it. In this case there is no express declara- tion that the testamentary provision was in- tended to be in addition to dower, nor can any such intention be inferred from all the will taken together. The inadequacy of the provision alone will not justify such an in- ference. The plaintiff must therefore take the de- vise and bequests in the will, unless she sea- sonably elected to waive them. The statute seems to presume an acceptance. There is some positive act to be done by the widow, indicating her election, before she can be en- titled to dower. The demand required to be made thirty days before an action can be commenced might be considered an election, where no election had previously been made. Within what time shall a widow be holden to waive the provision made for her in the will, or to be bound by it? In New York, the widow shall be deemed to have elected to take the testamentary provision, unless she enters upon or commences a suit for her dower within one year after her husband's death. In Virginia, she is allowed nine months, and in Vermont only sixty days, in which to make her election; and, on failure to do it, she is confined to her dower at com- mon law. Our statute has not fixed any pre- cise time for the election; but doubtless the widow would be holden to have accepted the testamentary provision, unless she waived it in a reasonable time, that the settlement of the estate might be closed and distribution made among the heirs. What shall be deem- ed a reasonable time, not being fixed by stat- ute, cannot be accurately defined by any gen- eral rule, and need not now be discussed. For we are all of opinion that, under the cir- cumstances of this case, the demandant is pre- cluded from waiving the provisions of the will and claiming dower. Fourteen years elapsed after the probate of the will before any demand of dower was made. During the whole of this time she oc- cupied the real estate which was devised to her. The personal property bequeathed to her was received by her, and some of it has been disposed of by her. The benefit of the other provision in the will in her favor had been enjoyed by her. A decree of the probate court has been made, assigning to her by definite bounds that part of the real estate which was devised to her; and the whole es- tate has passed out of the hands of the orig- inal devisees. We think, after all this, it is too late for the widow to waive the provision made for her In the will and claim her dower. It is true that in equity the widow may sometimes be relieved from an improvident election; but this can only be done where some deception or fraud was practiced upon her, or at least where she acted under an ignorance of the facts or a misapprehension of her legal rights. But here is no evidence of any deception, or misapprehension, or even ignorance of the circumstances of the case. The plaintiff chose to regard and carry into effect the provisions and directions contained in her husband's will. No desire to avoid it on her part was known to exist till many years after the death of her husband, and not until the estate had passed from her fam- ily into the hands of strangers. We are en- tirely clear that she cannot now change her determination, waive the provisions of the will, and claim her dower. SATISFACTION. 13:^ STRONG V. WILLIAMS. (12 Mass. 391.) Supreme Judicial Court of Massachusetts. 1815. PUTNAM, J. delivered the opinion of the court. The general rule anciently established in chancery was, that when a testator being in- debted gave to his creditor a legacy equal to, or exceeding the amount of his debt, the leg- acy should be considered as a satisfaction for the debt. The rule has been acknowledged in later cases, but with marks of disapproba- tion, and a disposition to restrain its opera- tion in all cases where, from circumstances to be collected from the will, it might be in- ferred that the testator had a different inten- tion. Haynes v. Mico, 1 Bro. Cha. Ca. 131. Thus where the testator left a sufBcient es- tate, it was determined that he was to be pre- sumed to have been kind as well as just. So if the legacy was of a less sum than the debt; or of a different nature; or upon conditions; or not equally biBneflcial in some one particu- lar, although more so in another. All the cases agree that the intention of the testator ought to prevail; and that, prima facie at least, whatever is given in a will is to be intended as a bounty. But by later cases the courts have not been disposed to understand the testator as meaning to pay a debt, when he declares that he makes a gift; unless the circumstances of the case should lead to a different conclusion. Thus in the case cited for the plaintiff. Brown v. Dawson, 2 Vern. 498, where the wife joined in the sale of her jointure, and the husband gave her a note of 11. 10s. per annum for her life; and afterwards upon an- other such sale he gave her a bond for &l. 10s. per anjp,um for her life; and he after- wards made his will, and gave her 141. per annum for life: the legacy was adjudged to be a satisfaction for the note and bond. Here it will be perceived that the annuity given in the will amounted exactly to the sums se- cured by the bond and note: and the pre- sumption of satisfaction proceeded upon the similitude of the legacy to the debt. 2 Fonbl. 330, in notis. So in the case of Fowler v. Fowler, 3 P. "Will. 353, the general rule was applied. There the husband, being indebted to the wife for arrears due by the marriage settlement, gave her a larger legacy by the will: and it was held a satisfaction of the debt. But it is to be observed that lord chan- cellor Talbot expressed great dissatisfaction with the rule: and it does not appear that any circumstances could be found, to take the case out of its general application. In that case the court refused parole evidence, to prove that the testator intended both should be paid. But cases of this nature must depend upon the circumstances: and there must be a strong presumption, to induce a belief that the testator intended the legacy as a payment, and not as a bounty. 2 Fonbl. 332. Thus where the testatrix had given her servant a bond for 201. free of taxes for her life, and afterwards made her will and gave the serv- ant 20Z. per annum payable half yearly, but said nothing about the taxes, the court held that both should be paid. Atkinson v. Webb, 2 "Vern. 478. — Here the legacy, being not quite so beneficial as the debt, did not raise a presumption that it was intended as a pay- ment. So where the testator having sufBcient as- sets, and having manifested great kindness for the legatee, gave a legacy of a greater amount than he owed, it was holden by lord chancellor Cowper, that the testator might be presumed to be kind as well as just: and he decreed the payment of the legacy as well as the debt. Cuthbert v. Peacock, 1 Salk. 155. It has been holden that a legacy for a less sum than the debt shall never be taken as satisfaction; 2 Salk. 508; and that specific things devised are never to be considered as satisfaction of a debt, unless so expressed. 2 Eq. Ca. Abr. title Devises pi. 21, cited Bac. Abr. Legacies D. So the circumstance, that the testator had devised " that all his debts and legacies should be paid," was holden sufficient to take the case out of the general rule: as where the tes- tator, indebted to his maid servant 1001., by bond for wages, afterwards gave her 500^. lord chancellor King decreed that both should be paid, as the testator had made provi- lion for the payment of his debts. 1 P. "Will. 408, 409. vide note. So where it appeared that the legatee had lived with the testatrix as a servant for twen- ty or thirty years, and she had given her a bond for 2601. and in one montli afterwards she made her will and gave her 500Z. : and in another clause she gave the rest of her servants 51. apiece, but not to Jane Oreese, the legatee; "because," said the testatrix, "I have done well for her before;" and she also made provision for her debts and legacies. Lord Hardwicke thought the circumstances above stated took the case out of the general rule, and decreed the legacy to be no satisfac- tion for the debt. Richardson v. ffreese, 3 Atk. 65; Nicholls v. Judson, 8. P., 2 Atk. 301; Clark v. Sewell, S. P., 3 Atk. 97. So where the testator was indebted for goods on an open account, a legacy for a larger sura was not held a satisfaction: because he might not know whether he was indebted or not; and therefore no presumption was to arise, that he intended merely to pay a debt. Powers Case, 1 P. "Will. 299; 10 Mod. Case No. 201, p. 398. In the case at bar, the consideration for the .legacy appears from the will to have been for the services of the legatee. A presumption that the legacy was intended to be a satisfac- tion of the bond also, must rest on the fact that the bond was given for the same serv- ices: of which fact there is no evidence be- 134 SATISFACTION. fore us. It may have been for a different cause. We can only presume that it was for a lawful one. It appears also from the will, that the tes- tator intended his debts and legacies should be paid, before his residuary legatees should take any thing. The pecuniary legacy to the plaintiff also is not so much as the debt; and therefore cannot be considered as a payment of it. Neither is there any declaration of the testator, that the specific articles given should be considered as a satisfaction of the debt. It appears also that there are sufficient assets. From a consideration of the principles and decisions applicable to this case, we are there- fore all of opinion that the plaintiff ought to recover. B^endant d^aulted. SATISFACTION. 135 DEICHMAN V. ARNDT. (22 Atl. 799, 49 N. J. Eq. 106.) Court of Chancery of New Jersey. Oct. 26, 1891. Action by Delchman against Arndt for the construction of a will. Charles .A. 2^ite/j, for complainant. Wm. M. Davis, for defendant BIRD, V. C. By the bill in this caHe the complainant asks the aid of the court in determining the true construction of the last will of Ann Arndt, deceased, and con- sequently the rights of the legatees and devisees under said will. At the time of her death and of the making of her will she was the owner of a lot of land with a dwelling thereon, in which she resided. Before the making of her will she gave a bond to William M. Davis, the guardian of Harry King Arndt, one of her infant children, conditioned for the payment of $500, with interest. To secure this bond she gave a mortgage upon said house and lot. By her will she devises this house and lot to her son Harry in the following language : " I give to my son Harry King Arndt, absolutely, to be held in trust, however, by my executor hereinafter named, the dwelling-house and lot where- in I now reside, situate on Main street, in Phillipsburg, N. J., until he arrives at the age of twenty-one (21) years; my executor to rent the same, collect the rent, pay all taxes, insurance, services, anH repairs, and the balance remaining to be used for the support and maintenance of my son Har- ry King Arndt, hereinbefore named." Two questions are presented in the bill for consideration, viz.: Is the devise to be regarded as a payment and discharge of the bond, and is the gift to Harry an absolute fee? In this case the testatrix in clear language directs that all of her debts be paid as soon as conveniently can be after her decease. She makes disposi- tion of her personal estate. Including bank- stock, giving a portion thereof to her daughter, a portion to another son, and a portion to the said Harry. The divis- ion of this personal property is not equal, but the extent of inequality is not made apparent. She first gives to her daugh- ter certain household furniture; and, in the second place, to her son Frank cer- tain household furniture; and, in the third place, makes the devise of the house and lot to Harry. She then provides for the protection of her cemetery lot, and gives the three children all of her silver-ware. Immediately after this she directs her ex- ecutor to sell "the balance of my house- hold effects, " and to divide the proceeds thereof between her three children, direct- ing him, however, to hold the share of Harry until he arrives at the age of 21 years. Then she directs her executors to collect the dividends of her 19 shares of bank-stock, and to pay the same towards the support and maintenance of Harry until he arrives at the age of 21 years, at which last-mentioned date he is author- ized to sell the said stock and divide the proceeds between her three children. Not- withstanding this last provision, she au- thorizes her executor to sell all the said shares of bank-stock at snch time or times as he shall think fit, and to iiive.st the proceeds, and pay tlie interest thereof for the support and maintenance of her son Harry until he arrives at the age of 21 years. She then directs that the residue of her estate, "consisting principally of bonds and mortgages and notes, money and stock, should be divided equally be- tween my three children, share and share alike, my executor, however, retaining that portion falling to my son Harry King Arndt until he arrives at the age of twenty-one years. " From this it appears that the testatrix was indebted to the guardian of her son in the sum of $500: that she made her said son both devisee and legatee, imposing a condition upon the devise that the executor should re- ceive the rents and profits until the son arrives at the age of 21 years, for his sup- port and maintenance, and a like condi- tion upon the gift of the legacy ; and that, as the matter stands, both the devise and the legacy are of uncertain value. Where there is nothing to show a contrary in- tention upon the part of the testator, and he directs the payment of his debts, the gift of a legacy is never presumed to have been given for the purpose of discharging a debt due from the testator to the lega- tee. Van Riper v. Van Riper, 2 N. J. Eq. 1 , Heisler v. Sharp, 44 N. J. Eq. 167, 14 Atl. Rep. 624; Rusling v. Rusling, 42 N. .T. Eq.5ut he cannot have relief under his bill as drawn, for it is not adapted to his case. The original bill goes upon the ground that he Is entitled to have his attempted payment of the first installment treated as an actual, seasonable payment; while the supplemental bin sets up a tender of the other install- ment, and aslis that it be adjudged a pay- ment thereof, and that the defendant be decreed to accept and receive the same in full satisfaction and discharge of the decree. But his attempted payment was not pay- ment, and he is not entitled to have it treat- ed as such, because neither the money, nor its equivalent, seasonably came into the hands of the clerk, and Dyer was not bound t) accept and receive his checli as payment, though he might have safely taken the mon- ey after the time expired, if he could have got it; for taking an installment after the time for paying it Is expired does not open the decree as to installments for the payment of which the time has not expired. Smalley V. Hickok, 12 Vt. 153; Gilson v. Whitney, an unreported case in Windsor county a few years ago, ut audivi. Nor was the tender of the second installment effective; for, not having paid the first, he had no legal stand- ing for tendering the second. Redemption is the appropriate relief in this case. Indeed, it is said that whenever a mortgagor is driven to the necessity of fil- ing a bill against the mortgagee, it must be one to redeem, and that the court can relieve him' only by allowing a redemption. Gold- smith V. Osborne, 1 Edw. Oh. 560; Cholmley V. Countess of Oxford, 2 Atk. 267; Lord Langdale in Dalton v. Hayter, 7 Beav. 313. But the bill lacks some of the essential ele- ments of a bill to redeem. It neither offers nor avers a willingness to pay, which is nec- essary by all the authorities. But, inas- much as the orator is entitled to relief, he should not be turned out of court, but al- lowed to amend his bill into a bill to re- deem, if he shall be so advised. Harrigan V. Bacon, 57 Vt. 644. There was no necessity for bringing the cross-bill. The chattel mortgage was not em- braced in the original bill, and so could not be the subject of a decree; and discovery of property subject to it could not aid in de- feuding the original bill. As to the execu- tion of the decree by giving possession, that can be done by summary process. R. L. §§ TOO, 767; Kershaw v. Thompson, 4 Johns. Oh. 609; Ludlow v. Lansing, Hopk. Ch. 231; Valentine v. Teller, Id. 422; Yates v. Ham- bly, 2 Atk. 237. As to the use of the premises pending suit, the defendant would be entitled in respect thereof, if at all, only on failure of the original bill, in which event he could avail himself of his rights by way of claim for injunction damages. And, as to the alterna- tive prayer for foreclosing any remaining equity, that would be the result of any de- cree on the original bill. Nor was there any necessity for bringing in Briggs and Merritt, for they purchased pendente lite, and so will be bound by any decree made. Besides, treating them as entitled to the benefit of their demm'rer, as they were treat- ed at the bar, they are not proper parties to the cross-bill; for new parties cannot be made in that way. A cross-bill, by force of the term, is a bill by a defendant against the plaintiff or other defendants in the same suit, or both. If an orator desires to make new parties, he amends his bill, and makes them, although it be in respect of matters that have transpired since the filing of his bill; though until very recently, in respect of such matters, he would have brought a supplemental bill. If the interest of the defendant requires the presence of new par- ties, he takes his objection for want of them, and the orator is forced to bring them in, or have his bill dismissed; and if, at the hearing, the court finds new parties indis- pensable, it refuses to proceed. These rem- edies cover the whole subject, and a cross- bill to make new parties is not only Irregu- lar and improper, but wholly unnecessary. Shields v. Barrow, 17 How. 130. But if they are not entitled to the benefit of their demurrer because the bill has been taken as confessed as to them, yet Kopper's defense avails for them; for, when the de- fendants are jointly interested, a decree pro confesso as to some merely takes away their standing in court, and disentitles them' to appear or be heard on many questions cer- tainly without an order of court; but the success of the others avails for them, and the bill will be dismissed as to all. 1 Hoff. Ch. Pr. 554; Clason v. Morris, 10 Johns. 524; Frow V. De La Vega, 15 Wall. 552. As to the terms that will satisfy the eq- uitable rights of Dyer. As between the two, it belonged to Kopper to pay the Goddard mortgage, and Dyer stood as his surety in respect thereof. Field v. Hamilton, 45 Vt. 35; Wells v. Tucker, 57 Vt. 223; Comstock V. Drohan, 71 N. Y. 9. Hence Dyer is en- titled to be reimbursed, not only the principal sum that he paid to redeem said mortgage, but his reasonable costs and expenses in that ACCIDENT. 163 behalf In good faith Incurred. Hayden v. Cabot, 17 Mass. 168; Downer v. Baxter, 30 Vt. 467; Hulett v. Soullard, 26 Vt. 295; Com- stock V. Drohan, 71 N. Y. 9. As to the costs of that foreclosure, It suf- ficiently appears that they were properly in- curred, and Dyer is justly entitled to reim- bursement. But, as to the amount paid by him to the insurance company for holding in readiness the money wherewith to re- deem, it does not sufficiently appear that that was such a prudent and necessary thing to do in the circumstances as to entitle him to reimbursement. The mortgage of the prem- ises in question being conditioned to keep the property insured for Dyer's benefit, which Kopper neglected to do, he is chargea- ble with the insurance premium of $75 that Dyer was compelled to pay in 1884, and this was included In the decree. He is also chargeable with the $60.30 paid by Dyer for taxes, as shown by the master's report, as well as with all the other taxes that Dyer has since paid, or that he shall hereafter pay, or become liable to pay, on the property. As Kopper put his bill upon false ground, namely, that he had performed the decree when he had not, Dyer was justified in de- fending it, and should recover his costs; and as Dyer had a right, after the decree became absolute, to deal with the property as his own, he is entitled to the costs of his writ of possession, and of the execution of it. Cree V. Lord. 25 Vt. 498. In Thornhill v. Man- ning, ] Sim. (N. S.) 451, the costs of an ejectment were allowed in a similar case. The decree dismissing the cross-bill is af- firmed; but the decree for the orator in the original bill Is reversed, a.nd the case re- manded, with mandate. l(U ACCIDENT. PATTON et al. v. CAMPBELL. (70 111. 73.) Bupreme Court of Dlinois. Sept. Term, 1873. Bentley, Swett & Quigg, for appeUants. Waite & Clarke, for appellee. CRAIG, J. This was a bill In chancery, filed in the superior court of Cook county, by George W. Campbell, as assignee in bank- ruptcy of the late firm of Durham & Wood, against William Patton and others, to re- cover the value of certain goods which had been replevied by Patton & Co. from Dur- ham & Wood. It appears from the record that on or about the 20th of October, 1870, Patton & Co., of New York, sold Durlham & Wood, of Chi- cago, a bill of goods, amounting to $1,600, on a credit of four months. About the first of November, after the sale, Durham & Wood failed, and Patton & Co. commenced an ac- tion of replevin to recover the goods they had sold. A replevin bond in the penal sum of $1,000, in the usual form, was filed with the papers in the action, and $800 or $900 worth of the goods were replevied. In the fire of October 8th and 9th, 1871, the papers in the case, including the bond, were destroyed. Subsequently the action was dis- missed. The defendants answered the bill, to which replication was filed, the cause was heard on the proofs taken, and decree rendered In favor of complainants for $850. The defendants bring the cause to this court, and seek to reverse the decree on two grounds: First. For the reason a court of chancery has no jurisdiction, the remedy of complain- ants being complete at law. Second. The purchase of goods from Pat- ton & Co., by Dm-ham & Wood, was fraudu- lent, and Patton & Co., upon discovery of the fraud, had the right to rescind the sale and replevy the property. The questions will be considered In the order in which they are raised. The bill in this case is filed to recover upon aD instrument under seal, which had been destroyed. The jurisdiction of a cotttt of equity aris- ing from accident is a very old head, in equity, and probably coeval with its exist- ence. But it is not every case of accident which wiU justify the interposition of a court of equity. The jurisdiction will be maintained only when a court of law can not grant siiitable relief; and where the party has a conscientious title to relief. 1 Story, Eq. Jur., § 79. In case, however, of lost instruments under seal, equity takes jurisdiction, on the ground that, untU a recent period, it was the settled doctrine that there was no remedy on a lost bond in a court of common law, because there could be no profert of the instrument, with- out which the declaration would be defect- ive. The jurisdiction having been assumed and exercised on this groimd. It is stlU re- tained and upheld. 1 Story, Eq. Jur., § 81; Walmsley v. ChUd, 1 Vesey, Sen., 341; Fisher V. Sievres, 65 lU. 99. Under the allegations In the bill In this cause, we think it is well settled that a court of equity had jurisdiction. The remaining question in the case Is, were the goods purchased under such circum- stances as gave the appellants the right of rescission on the ground of fraud, or was there such a fraud practised that the title to the property did not pass to Durham & Wood? The evidence shows that Hart, who was a traveling agent for appellants, called on Dur- ham & Wood, in Chicago, to sell them goods. They examined his samples and told him they wanted to make a large order, and wanted to buy on four months' time. Hart told them, Patton & Co. hardly ever vary from three months' time. Durham remarked, he had bought and could buy of A. T. Stewart & Co., of New York, on four months' time. On tills statement. Hart sold the goods on four months' time. It turned out, on investigation, that Dur- ham & Wood had only bought two biUs of goods of Stewart & Co., and they were sold on thirty days' credit. While it is true the statement made by Durham, that he had bought and could buy goods of Stewart & Co. on four months' time, was false, yet, it does not appear that this statement induced Hart to seU the goods; it only had the effect to cause him to give one month longer credit on the goods than he otherwise would, which did not, in this case, in anywise affect the rights of ap- pellants, for the reason that the failure oc- curred and the goods were replevied witMn less than two months after the sale. It appears, from the evidence, that Hart made no objection to sell the goods on three months' time; he neither asked nor required any repre.sentations from Diu-ham, as to the standing or responsibility of the firm, to in- duce him to seU the goods on a credit of three months. At the time the goods were purchased, it does not appear that Durham & Wood were in failing circumstances. In- solvent, or in any manner pressed by their creditors; for aught that appears they were at that time solvent, and responsible for all their contracts. Neither does it appear that they made any false representations in regard to what they were worth, what property they owned, or the amount of debts they had contracted. It is not shown that the goods were bought with the intent not to pay for them, or with a view to make an assignment. We understand the rule to be, that if a party, knowing himself to be insolvent, or in failing circumstances, by means of fraudu- lent pretenses or representations, purchases goods with the intention not to pay for them. ACCIDENT. 165 but with the design to cheat the vendor out of his goods, such facts would warrant the vendor in rescinding the contract for fraud, and would justify him in recovering posses- sion of the property by replevin, where the goods had not in good faith passed into the hands of third parties. Henshaw v. Bryant, 4 Scam. 97. But the case under consideration does not come within this rule. There is no evidence in this record to show that the goods were bought with any Impure or wrong motives. It is true that, some two months after the purchase of the goods, the parties went into banliruptcy, but this was involuntary, and does not, of itself, show the condition of the firm at the time the goods were bought. Upon a careful examination of the whole record, we are satisfied the decree of the court below was correct, and It will be af- firmed. 1G6 ACCIDENT. BREWER V. HERBERT. (30 Md. 301.) Court of Appeals of Maryland. March 11, 1869. Appeal from circuit court, Washington county, as a court of equity. The bill in this case was filed by the ap- pellee for an Injunction to restrain proceed- ings at law and for the specific performance of a contract. The appellee was the owner of a dwelling house and balf lot of ground situate in Hagerstown, and sold the same to the appellant on the 9th of October, 1865, by their agreement in writing, as follows, to wit: "Articles of agreement made and concluded this 9th day of October, 1865, between F. Dorsey Herbert and John A. K. Brewer, both of Washington county and state of Maryland, witnesseth: That in consideration of the sum of four thousand dollars, to be paid as here- inafter mentioned, the said Herbert has this day sold to the said Brewer his house and half lot of ground, situated on the corner of West Washington and Prospect streets, in Hagerstown; and the said John A. K. Brew- er on his part agrees to pay the said sum of four thousand dollars, as follows: Two thou- sand dollars on the 1st day of April, 1866; and one thousand dollars on the 1st day of April, 1867; and one thousand dollars on the 1st day of April, 1868,— with interest from the 1st day of April, 1866; and the said Herbert doth further agree to give the said Brewer possession of the same on the 1st day of April, 1866, and on payment of the whole purchase money to make a good and sufficient deed for the same, clear of all incumbrances, to the said Brewer. In witness whereof the parties hereto have set their hands and seals on the day and year first above written. "[Signed] F. Dorsey Herbert. [Seal.] "J. A. K. Brewer. [Seal.]" Of the $2,000 to be paid by the agreement on the 1st day of April, 1866, the appellant, at the request of the appellee, paid $1,000 on the 10th day of October, 1865. At the time of sale the said premises were under lease by Herbert to Dr. Berry, whose term expired on the 1st day of April, 1866. The appellee held a policy of insurance for $1,000 on the house at the time of sale, which was allowed by him to expire about the last of January, 1866. On the 5th day of February, 1866, the house was totally destroyed by fire, but without any fault on the part of the appellee or his tenant, Berry. On Monday, the 2d day of April, 1866, the 1st being Sunday, the appellee made a tender of the premises, then a vacant lot, to the appellant, which he refused to receive in its destroyed condition. The appellant hav- ing refused to receive the ground, and holding that the appellee was unable to perform his part of the contract, by reason of the destruc- tion of the house, brought suit on the law side of the court, to recover from the appel- lee the said $1,000, so as aforesaid paid to him. Whereupon the appellee filed the bill In this cause to enjoin said proceedings at law and for a specific execution of the agree- ment. The court below by Its decree enjoin- ed said proceedings at law, and decreed a specific execution. From this decree the present appeal was taken. Before BARTOL, C. J., and GRASON, MILLER, and ROBINSON, JJ. Wm. T. Hamilton, for appellant. A. K. Syester, for appellee. MILLER, J. After the execution of the written contract for the sale of the house and lot, and before the day fixed for delivery of possession and payment of the first install- ment of purchase money, the house was acci- dentally destroyed by fire, without fault of ei- ther party or of the tenant then in posses- sion of the same. The vendor had a fee simple title to the property, and at the proper time, under the contract, offered to deliver possession of the premises in the condition in which they then were. Tliis the vendee re- fused to receive because of the destruction of the house by fire, and the main question in the case is, can he on this ground successfully resist this application in equity by the vendor for a specific performance of the contract? In contracts of this kind between private parties, the vendee is in equity the owner of the estate from the time of the contract of sale, and must sustain the loss if the estate be destroj'ed between the agreement and the conveyance, and will be entitled to any bene- fit which may accrue to it in the interim. This doctrine, notwithstanding the dictum in Stent V. Bailey, 2 P. Wms. 290, to the con- trary, was plainly announced and settled by the decision of Lord Bldon, In Paine v. Mel- ler, 6 Ves. 349, a case very similar In its cir- cumstances to the present, where it was held that if there was no objection to the title of the vendor, or it had been accepted in fact by the vendee before the houses were burned, no solid objection to the bill for specific per- formance could be founded on the mere effect of the accident before conveyance, "for if the party," says the lord chancellor, "by the contract has become in equity the owner of the premises, they are his to all Intents and purposes. They are vendible as his, charge- able as his, capable of being incumbered as his; they may be devised as his; they may be assets; and they would descend to his heir." This decision has always been regard- ed as fixing the true equitable rule in such cases. It was recognized by Sir Thomas Plumer in Harford v. Purrier, 1 Madd. Oh. 287, and In Rawlins v. Burgis, 2 Ves. & B. 387, and by Lord Chancellor Manners in Be- vell V. Hussey, 2 Ball & B. 287. From these and other authorities of equal weight an- nouncing the maxim that equity regards as done that which was agreed to be done is deduced as the established doctrine In equity that from the time the owner of an estate ACCIDENT. 167 enters into a binding agreement for its sale lie holds the same in trust for the purchaser, and the latter becomes a trustee of the pur- chase money for the vendor, and being thus in equity the owner the vendee must bear any loss which may happen, and is entitled to any benefit which may accrue to the estate in the Interim between the agreement and the con- veyance. 1 Sugd. Vend. 228, 388-391; 2 Pow- ell, Cont. 69; Dart, Vend. 114^118; 2 Story, Eq. § 1212. The contract here is not for a sale at a future day; it does not use in this respect prospective or contingent terms. Its language is: The vendor "has this day sold to" the vendee his house and lot, which clear- ly imports a binding contract then executed and consummated. By such terms the title in equity passes from the date of the contract, and if there were nothing else in it there would be no room for argument, for It would be impossible to withdraw the case from the operation of the rule above stated. But It has been earnestly and strenuously urged by the appellant's counsel that as the contract contains an agreement by the ven- dor to deliver possession of the house and lot to the vendee on the 1st of April, 1866, the destruction of the house by fire before that period rendered performance by the vendor of this part of the contract impossi- ble, and he cannot, therefore, either' in law or equity, ask the vendee to perform his part of it; and this circumstance, it is in- sisted, distinguishes the case from those cit- ed, and prevents it from falling within the principle established by them. Let us test the soundness of this argument. The ven- dee knew before and at the time of the con- tract there was a tenant In possession whose term would not expire until the 1st of April, and the first Installment of the purchase mon- ey is made payable on, and interest on the deferred payments runs from, that day. The subject-matter of sale is realty,— a lot of ground with a house upon it, described as a house and lot. The agreement as to deliv- ery is not like the usual covenant by a ten- ant in a lease, to deliver in as good condi- tion and repair as when the contract was made. There is also no difficulty about de- livery, except that the premises were not, as to the buildings upon them, in the same condition as at the date of the contract. The question then resolves itself into this, does the fact of the insertion into a contract like the present for the sale of real estate, of an agreement to deliver possession at a future day, make any difference in the ap- plication of the rule? It is true it does not appear in the cases cited there were in the contracts any stipulations as to delivery of possession at a future day, nor is this cir- cumstance alluded to, but they explicitly say it is the passing of the title in equity which throws the risk of loss upon the ven- dee, and entitles him to accruing benefits. To this, as we have seen, a conveyance is not necessary, nor is payment of the pur- chase money or any part of it; for in Hamp- son V. Edelen, 2 Har. cfe J. 66, this court has decided that "a contract for land bona fide made for a valuable consideration vests the equitable interest in the vendee from the time of the execution of the contract, al- though the money is not paid at that time." See, also, Siter's Appeal, 26 Pa. 180. Nei- ther can possession nor delivery of posses- sion be necessary, for, if the contract had been silent on this subject, the vendor would have had the right to retain possession at least until the 1st of April, when the first in- stallment of the purchase money was paya- ble, and if the vendee had obtained posses- sion before he would have been restrained in equity from exercising any acts of owner- ship prejudicial to the inheritance (Crock- ford V. Alexander, 15 Ves. 138; Reed v. Lukens, 44 Pa. 202); and yet the equitable title would all the while have been in him, subject to his disposition by deed or will, and liable for his debts. If, then, in the ab- sence of a stipulation to deliver at a future day, there is an implied right in the ven- dor to retain possession until that period, and this would make no difference as to the liability of the vendee for an intermediate loss, how can the insertion of such a stipula- tion have in equity any different effect? The whole foundation of this doctrine of equity is that the equitable title and interest passes by the contract of sale, and from the time of its execution, and it contemplates deliv- ery of possession as well aa payment of pur- chase money, and a conveyance at a future period. Hence Sir Edward Sugden and Sir Thomas Plumer both cite, as in exact accord with the decision of Lord Eldon, the rule of the civil law, where the very case is put in the Institutes: "Cum autem emptio et ven- ditio contracta sit, periculum rei venditse statim ad emptorem pertinet, tametsi adhuc ea res emptori tradita non sit: Itaque, si cedes totfe vel aliqua ex parte incendio con- sumptae fuerint— emptoris damnum est, cul necesse est, licet rem non fuerit nactus, pre- tium solvere." In sales of personal property delivery of the goods sold is not necessary to pass the title as between the parties, where the statute of frauds has been grati- fied by giving something in earnest, or pay- ment of the whole or part of the purchase money, or a sufficient note or memorandum in writing of the bargain, and in such case the property is at the buyer's risk before de- livery. Franklin v. Tx)ng, 7 Gill & J. 418. And even where the seller remaining in ac- tual possession agi'ees to deliver the prop- erty at a particular place, and it is destroyed by fire before such delivery, the loss will fall on the purchaser. Terry v. Wheeler, 25 N. Y. 520. Where sales are made under authority of a court, the contract is not re- garded as consummated until it has received the court's sanction or ratification, and there- fore any loss happening before confirmation falls upon the vendor. Ex parte Minor, 11 168 ACCIDENT. Ves. 559; Wagner v. Cohen, 6 Gill, 102. But where a loss occurs after confirmation, by which the contract is consummated, it falls upon the vendee, even though no pur- chase money has been paid, and the vendor remains in possession. This was exisressly decided in Kobertson v. Skelton, 12 Beav. 260, where Lord Langdale also said: "In equity the estate belongs to the purchaser from the date of the order to confirm the re- port, and the right of possession belongs to the vendor till the purchase money, for which it is securitj', has been paid." Again, if we look to the contract itself, and gather there- from the intent of the parties, it is clear from the language used their intention was that the equitable title and interest should pass from the day of its execution. Upon this point its tenns are too positive and ex- plicit to admit of doubt. Delivery of pos- session and payment of purchase money were postponed to a future day for the convenience of each party respectively, and we cannot construe the agreement to deliver into a con- dition that the contract shall be void if there is any change in the state or value of the property on the day of delivery, nor in- terpolate any such words into the instru- ment. AVe are therefore constrained to hold the argument founded on this delivery clause to be unavailing to the appellant. But it is said specific execution of con- tracts is in all cases not a matter of absolute right, but of sound discretion in the court, and as the vendor cannot now deliver the house which was the main Inducement to the vendee to buy, and constituted the chief value of the property, it would be inequita- ble to enforce the contract as against him. If this objection were sound, this doctrine of losses and benefits could never have been established. But, whilst it is conceded an application for specific performance is al- ways addressed to the sound discretion of the court, yet where a conti-act respecting real estate Is in writing, and is in its nature and circumstances unobjectionable, it is as much a matter of course for a court of equi- ty to decree a specific performance of it as it is for a court of law to give damages for a breach of it. Smoot v. Eea, 19 Md. 405; ■ 2 Story, Eq. Jnr. § 751. "The fairness or hardship of a contract, like all its other qualities, must be judged of at the time it was entered into, not by subsequent events." If It was then certain, mutual, fair in all its parts, and for an adequate consideration, it is immaterial that by force of subsequent cir- cumstances it has become less beneficial to one party, unless such change is in some way the fault of the party seeking its spe- cific execution. Revell v. Hussey, 2 Ball & B. 2X8: Lawder v. Blachford, Beat. 526; Webb V. Railway Co., 9 Hare, 129; Low v. Tread well, 3 Fairf. .')41; Fry, Spec. Pert. 93, 88. Adherence to principle compels the courts to overlook the hardship of particular cases. But the doctrine upon which this de- cision rests is founded in strict justice and equity, for whilst the vendee may think it hard to be compelled to pay for that which he cannot have in the condition it was when he purchased, the vendor, with equal jus- tice, might think it hard to lose his money after a bona fide sale of his property, be- cause of an accident accruing to it without fault on his part. It is to be remembered too that whilst the rule burthens the vendee with a loss it also entitles him to all benefits. Thus where a reversionary interest is agreed to be purchased, and lives drop, or one agrees to purchase an estate in considera- tion of a life annuity to the vendor, and the cestui que vie dies, or where there is a sud- den rise in the value of the land from its be- ing required for a public purpose, before con- veyance, in all such cases the vendee reaps the benefit. So in the case before us, if a valuable mine had been discovered on the premises the day after the contract, or by any unforeseen or unexpected circumstances their value had been increased a hundred fold, the benefit would have resulted to the vendee, and the vendor could not have been released from his contract. We cannot, therefore, sustain this objection to the bill. It appears that at the date of the contract the vendor held a policy of insurance upon the house, which by accident he allowed to expire without renewal before the fire, and of this the vendee received from him no no- tice. A similar state of facts existed in Paine v. Meller, and was held to constitute no objection to the vendor's bill. It is ad- mitted there was no understanding between the parties that the vendor should keep the policy alive. They did not contract on any such basis. After the contract the vendee had an insurable interest In the house, and, in the absence of all agreement on the sub- ject, the presumption is he intended to pro- tect himself by insuring In his own name, or to take the risk of a failure to insure. The vendor was not bound to keep up the insur- ance or give notice to the vendee of its hav- ing expired. If the policy had existed at the time of the loss, the vendor could have recovered from the insurance company, but, being trustee of the premises for the vendee, he would be bound in equity to account to the latter for the money so received (Reed v. Lukeus, 44 Pa. 200); but his failure to re- new or to give notice cannot deprive him of his right to enforce the contract of sale. It also appears there was at the date of the contract a judgment against the vendor for $2,363.38, but he had at tliat time enter- ed an appeal from the judgment to the court of appeals, and given an appeal bond with security amply suflicient for that purpose to pay the amount of the judgment with costs, in case he should fail to prosecute his appeal with effect. The authorities are dear that equity will not compel a vendee to take an imperfect or defective title, yet cases of high authority are to be found in which a pe- ACCIDENT. 169 iiuniary charge against which adequate se- curity has been given has been held not to constitute a defect In title, and also where equity has enforced the agreement where a perfect title can be made at the time of the decree. But this judgment thus appealed from, with appeal bond given, does not, in the sense in which courts of equity use the terms, maie this such an imperfect or de- fective or incumbered title as will prevent specific execution, and especially not where the decree itself, as that appealed from in fact does, can protect the vendee by pro- viding that the judgment debt may be paid by him out of the purchase money due on the conti'act and in discharge thereof. We have bestowed upon the case our best care and consideration. We find nothing in the authorities cited by the appellant's coun- sel sufficient to overthrow the doctrine upon which we have based our decision, and can discover no ground upon which, in justice and equity, the appellee can be denied the relief he seeks. The decree must be af- firmed. Decree affirmed. MISTAKE OF LAW. HUNT V. ROTJSMANIER'S ADM'RS. (8 Wheat. 174.) Supreme Court of the United States. March 14, 1823. Appeal from circuit court of Rhode Island. The original bill, filed by the appellant, Hunt, stated, that Lewis Rousmanier, the in- testate of the defendants, applied to the plaintiff, in January, 1820, for the loan of $1,450, offering to give, in addition to his notes, a bill of sale, or a mortgage of his in- terest in the brig Nereus, then at sea, as collateral security for the repayment of the money. The sum requested was lent; and on the 11th of January the said Rousmanier executed two notes for the amount; and on the 15th of the same month, he executed a power of attorney, authorizing the plaintiff to make and execute a bill of sale of three- fourths of the said vessel to himself, or to any other person; and in the event of the said vessel, or her freight, being lost, to col- lect the money which should become due on a policy by which the vessel and freight were insured. TUs instrument contained also, a proviso, reciting, that the power was given for collateral security for the payment of the notes already mentioned, and was to be void on their payment; on the failure to do which, the plaintiff was to pay the amount thereof, and all expenses, out of the proceeds of the said property, and to return the resi- due to the said Rousmanier. The bill fur- ther stated, that on the 21st of March, 1820, the plaintiff lent to the said Rousmanier the additional sum of $700, tailing his note for payment, and a similar power to dispose of his interest in the schooner Industry, then also at sea. The bill then charged, that on the 6th of May, 1820, the said Rousmanier died insolvent, having paid only $200 on the said notes. The plaintiff gave notice of his claim; and on the return of the Nereus and Industry, took possession of them, and offer- ed the intestate's interest in them, for sale. The defendants forbade the sale; and this bill was brought to compel them to join in it. The defendants demurred generally, and the court sustained the demurrer; but gave the plaintiff leave to amend his biU. Hunt v. Ennis, 2 Mason, 244, Fed. Gas. No. 6,889. The amended bill stated, that it was ex- pressly agreed between the parties, that Rousmanier was to give specific security on the Nereus and Industry; and that he offer- ed to execute a mortgage on them. That counsel was consulted on the subject, who advised, that a power of attorney, such as was actually executed, should be taken in preference to a mortgage, because it was equally valid and effectual as a security, and would prevent the necessity of changing the papers of the vessels, or of taking pos- session of them on their arrival in port. The powers were, accordingly, executed, with the full belief that they would, and with the intention that they should, give the plaintiff as full and perfect security as would be given by a deed of mortgage. The bill pray- ed, that the defendants might be decreed to join in a sale of the interest of their intestate in the Nereus and Industry, or to sell the same themselves, and pay out of the pro- ceeds the debt due to the plaintiff. To this amended bill, also, the defendants demurred, and on argument, the demurrer was sustain- ed, and the bill dismissed. From this de- cree, the plaintiff appealed to this court The cause was argued at the last term. Mr. Wheaton, for appellant. Mr. Hunter, for respondents. MARSHALL, O. J., delivered the opinion of the court. The counsel for the appellant objects to the decree of the circuit court on two grounds. He contends, 1. That this power of attorney does, by its own opera- lion, entitle the plaintiff, for the satisfaction of his debt, to the interest of Rousmanier in the Nereus and the Industry. 2. Or, if this be not so, that a court of chancery will, the conveyance being defective, lend its aid to carry the contract into execution, according to the intention of the parties. 1. We will consider the effect of the power of attorney. This instrument contains no words of conveyance or of assignment, but is a simple power to sell and convey. As the power of one man to act for another, depends on the will and license of that other, the power ceases, when the wiU, or this per- mission, is withdrawn. The general rule, therefore, is, that a letter of attorney may, at any time, be revoked by the party who nmkes it; and is revoked by his death. But tills general rule, which results from the na- ture of the act, has sustained some modifi- cation. Where a letter of attorney forms a part of a contract, and is a security for money, or for the performance of any act which is deemed valuable, it is generally made irrevocable, in terms, or if not so, is deemed irrevocable In law. 2 Bsp. 565. Al- though a letter of attorney depends, from its nature, on the wUl of the person making it, and may, in general, be recalled at his will; yet, if he binds himself, for a consideration, in terms, or by the nature of his contract, not to change his will, the law wiU not per- mit him to change It Rousmanier, there- fore, could not, during his life, by any act of his own, have revoked this letter of at- torney. But does it retain its efficacy after his death? We think, it does not. We think it well settled, that a power of attorney, though irrevocable during the life of the par- ty, becomes extinct by his death. This principle is asserted in Littleton (sec- tion 66), by Lord Coke, in his commentary on that section (52b), and in Willes' Re- ports (105, note, and 565). The legal reason of the rule is a plain one. It seems founded on the presumption, that the substitute acts by virtue of the authority of his principal, existing at the time the act is performed; aSTAKE OF LAW. 171 and on the manner in ■which Jie must execute his authority, as stated in Combes' Case, 9 Coke, 766. In that case, it was resolved, that "when any has authority, as attorney, to do any act, he ought to do it in his name who gave the authority." The reason of this resolution is obvious. The title can, regular- ly, pass out of the person in whom It is vested, only by a conveyance In his own name; and this cannot be executed by an- other for him, when it could not, in law, be executed by himself. A conveyance in the name of a person, who was dead at the time, would be a manifest absurdity. This general doctrine, that a power must be executed in the name of a person who gives it, a doctrine founded on the nature of the transaction, is most usually engraft- ed In the power itself. Its usual language is, that the substitute shall do that which he is empowered to do, in the name of his prin- cipal. He is put in the place and stead of his principal, and is to act In his name. This accustomed form is observed In the instrument under consideration. Hunt is con- stituted the attorney, and is authorized to make, and execute, a regular bill of sale, in the name of Kousmanier. Now, as an authority must be pursued, in order to make the act of the substitute the act of the prin- cipal, it is necessary, that this bill of sale should be In the name of Rousmanier; and it would be a gross absurdity, that a deed should purport to be executed by him, even by attorney, after his death; for, the attor- ney is in the place of the principal, capable of doing that alone which the principal might do. This general rule, that a power ceases with \he life of the person giving it, admits of one exception. If a power be coupled with an "Interest," It survives the person giving it, and may be executed after his death. As this proposition Is laid down too positively in the books to be controverted. It becomes necessary to inquire, what is meant by the expression, "a power coupled with an inter- est ?" Is It an interest in the subject on which the power Is to be exercised? or is it an in- terest in that which Is produced by the ex- ercise of the power? We hold it to be clear, that the interest which can protect a power, after the death of a person who creates it, must be an Interest In the thing Itself. In other words, the power must be engrafted on an estate in the thing. The words them- selves would seem to import this meaning. "A power coupled with an interest," Is a power which accompanies, or Is connected with, an Interest. The power and the inter- est are united In the same i)erson. But if we are to understand by the word "interest," an interest in that which is to be produced by the exercise of the power, then they are never united. The power, to produce the interest, must be exercised, and by Its ex- ercise, is extinguished. The power ceases, when the interest commences, and therefore. cannot, in accurate law language, be said to be "coupled" with it. But the substantial basis of the opinion of the court on this point, is found in the legal reason of the principle. The Interest or title in the thing being vested in the person who gives the power, remains in him, unless it be conveyed with the power, and can pass out of him only by regular act In his ovra name. The act of the substitute, therefore, which, in such a case, is the act of the principal, to be legally effectual, must be in his name, must be such an act as the princi- pal himself would be capable of performing, and which would be valid, if performed by him. Such a power necessarily ceases with the life of the person making it But if the interest, or estate, passes with the power, and vests in the person by whom the power is to be exercised, such person acts In his own name. The estate, being In him, passes from him, by a conveyance In his own name. He Is no longer a substitute, acting in the place and name of another, but Is a princi- pal, acting in his own name, in pursuance of powers which limit his estate. The legal reason which limits a power to the life of the person giving It, exists no longer, and the rule ceases with the reason on which It is founded. The intention of the instrument may be effected, without violating any legal principle. This idea may be in some degree Illustrated by examples of cases In which the law is clear, and which are incompatible with any other exposition of the term "power coupled with an interest" If the word "Interest," thus used, indicated a title to the proceeds of the sale, and not a title to the thing to be sold, then a power to A., to sell for his own benefit, would be a power coupled with an Interest; but a power to A., to sell for the benefit of B., would be a naked power, which could be executed only in the life of the per- son who gave It. Yet, for this distinction, no legal reason can be assigned. Nor is there any reason for It in justice; for, a power to A., to sell for the benefit of B., may be as much a part of the contract on which B. advances his money, as if the power had been made to himself. If this were the true exposition of the term, then a power to A., to sell for the use of B., Inserted in a con- veyance to A., of the thing to be sold, would not be a power coupled with an interest, and, consequently, could not be exercised, after the death of the person making it; while a power to A., to sell and pay a debt to himself, though not accompanied with any conveyance which might vest the title in him, would enable him to make the convey- ance, and to pass a title, not In him, even after the vivifying principle of the power had become extinct. But every day's ex- perience teaches us, that the law is not, as the first case put would suppose. We know, that a power to A., to seU for the benefit of B., engrafted on an estate conveyed to 172 MISTAKE OP LAW. A., may be exercised at any time, and is not affected by the death of the person who created it. It is, then, a power coupled with an interest, although the person to whom it is given had no interest in its exercise. His power is coupled with an interest in the thing, which enables him to execute it in his own name, and is, therefore, not depend- ent on the life of the person who created it. The general rule, that a power of attorney, though Irrevocable by the party, during his life, is extinguished by his death, is not af- fected by the circumstance, that testamenta- ry powers are executed after the death of the testator. The law, in allowing a testa- mentary disposition of property, not only permits a wUl to be considered as a con- veyance, but gives it an operation which is not allowed to deeds which have their effect during the life of the person who executes them. An estate given by will may take ef- fect at a future time, or on a future contin- gency, and in the meantime, descends to the heir. The power is, necessarily, to be ex- ecuted after the death of the person who makes It, and cannot exist during his life. It is the intention, that it shall be executed after his death. The conveyance made by the person to whom it is given, takes effect by virtue of the will, and the purchaser holds his title under it. Every case of a power given in a will, is considered in a court of chancery as a trust for the benefit of the person for whose use the power is made, and as a devise or bequest to that person. It is, then, deemed perfectly clear, that the power given in this case, is a naked power, not coupled with an interest, which, though irrevocable by Rousmanier himself, expired on his death. It remains to inquire, whether the appellant is entitled to the aid of this court, to give effect to the Intention of the parties, to subject the interest of Rousmanier in the Nereus and Industry to the payment of the money advanced by the plaintiff, on the credit of those vessels, tlie instrument taken for that purpose having totally failed to effect its object. This is the point on which the plaintiff most relies, and is that on which the court has felt most doubt That the parties intended, the one to give, and the other to receive, an effective security on the two vessels men- tioned in the bill, is admitted; and the ques- tion is, whether the law of this court will enable it to carry this intent into execution, when the instrument relied on by both par- ties has failed to accomplish its object The respondents insist, that there is no defect in the instrument itself; that it contains precisely what it was intended to contain, and is the instrument which was chosen by the parties, deliberately, on the advice of counsel, and intended to be the consumma- tion of their agreement. That in sucn a case the written agreement cannot be varied by parol testimony. The counsel for the appel- lant contends, with great force, that the cases in which parol testimony has been rejected, are cases in which the agreement itself has been committed to writing; and one of the parties has sought to contradict, explain or vary it, by parol evidence. That in this case, the agreement is not reduced to writing. The power of attorney does not profess to be the agreement, but is a collateral instrument, to enable the party to have the benefit of it, leaving the agreement still in full force, in its original form. That this parol agreement, not being within the statute of frauds, would be enforced by this court, if the power of attorney had not been executed; and not being merged In the power, ought now to be executed. That the power being incompetent to its object, the court will enforce the agreement against gen- eral creditors. This argument is entitled to, and has received, very deliberate considera- tion. The first inquiry respects the fact. Does this power of attorney purport to be the agreement? Is it an instrument collateral to the agreement? Or is it an execution of the agreement itself, in the form intended by both the parties ? The biU states an offer on the part of Rousmanier to give a mortgage on the vessels, either in the usual form, or In the form of an absolute bill of sale, the vendor taking a defeasance; but does not state any agreement for that particular se- curity. The agreement stated in the bill is, generally, that the plaintiff, In addition to the notes of Rousmanier, should have specific security on the vessel; and it alleges that the parties applied to counsel for advice re- specting the most desirable mode of taking this security. On a comparison of the ad- vantages and disadvantages of a mortgage, and an irrevocable power of attorney, counsel advised the latter instrument, and assigned reasons for his advice, the validity of which being admitted by the parties, the power of attorney was prepared and executed, and was received by the plaintiff as full security for his loans. This Is the case made by the amended bUl; and it appears to the court, to be a case in which the notes and power of attorney are admitted to be a complete con- summation of the agreement. The thing stipulated was a collateral security on the Nereus and Industry. On advice of counsel, this power of attorney was selected, and giv- en as that security. We think it a complete execution of that part of the agreement; as complete, though not as safe an execution of it, as a mortgage would have been. It is contended, that the letter of attorney does not contain all the terms of the agree- ment Neither would a bill of sale, nor a deed of mortgage, contain them. Neither in- strument constitutes the agreement itself, but is that for which the agreement stipulat- ed. The agreement consisted of a loan of money on the part of Hunt, and of notes for its repayment, and of a collateral security on the Nereus and Industry, on the part of Rousmanier. The money was advanced, the MISTAKE OF LAW. notes were given, and this letter of attorney was, on advice of counsel, executed and re- ceived as the collateral security which Hunt required. The letter of attorney is as much an execution of that part of the agreement which stipulated a collateral security, as the notes are an execution of that part which stipulated that notes should be given. But this power, although a complete securi- ty, diu'ing the life of Rousmanier, has been rendered inoperative by his death. The le- gal character of the security was misunder- stood by the parties. They did not suppose, that the power would, in law, expire with Rousmanier. The question for the consid- eration of the coiurt is this: If money be advanced on a general stipulation to give se- curity for its repayment on a specific article; and the parties deliberately, on advice of counsel, agree on a particular instrument, which is executed, but, from a legal quality Inherent in its nature, that was unknown to the parties, becomes extinct by the death of one of them; can a court of equity direct a new security of a different character to be given? or direct that to be done which the parties supposed would have been effected by the instrument agreed on between them? This question has been very elaborately argued, and every case has been cited which could be supposed to bear upon it No one of these cases decides the very question now before the court It must depend on the principles to be collected from them. It is a general rule, that an agreement in writing, or an instrument carrying an agree- ment into execution, shall not be varied by parol testimony, stating conversations or cir- cumstances anterior to the written instru- ment This rule is recognized in courts of equity as well as in courts of law; but courts of equity grant relief in cases of fraud and mistake, which cannot be obtained in coxurts of law. In such cases, a court of equity may carry the intention of the parties into execution, where the written agreement fails to express that intention. In this ease, there is no ingredient of fraud. Mistake is the sole ground on which the plaintiff comes into court; and that mistake is in the law. The fact is, in all respects, what it was sup- posed to be. The instrument taken, is the instrument intended to be taken. But It is, contrary to the expectation of the parties, ex- tinguished by an event not foreseen nor ad- verted to, and is, therefore, incapable of ef- fecting the object for which it was given. Does a court of equity, in such a case, sub- stitute a different instrument for that which has failed to effect its object? In general, the mistakes against which a court of equity relieves, are mistakes in fact The decisions on this subject, though not al- ways very distinctly stated, appear to be founded on some misconception of fact. Yet some of them bear a considerable analogy to that under consideration. Among these, Is that class of cases In which a joint obliga- tion has been set up in equity against the representatives of a deceased obligor, who were discharged at law. If the principle of these decisions be, that the bond was joint, from a mere mistake of the law, and that the court wlU relieve against this mistake, on the ground of the pre-existing equity, arising from the advance of the money, it must be admitted, that they have a strong bearing on the case at bar. But the judges in the courts of equity seem to have placed them on mistake in fact, arising from the ig- norance of the draftsman. In Simpson v. Vaughan, 2 Atk. 33, the bond was drawn by the obligor himself, and under circumstances which induced the court to be of opinion, that it was intended to be joint and several. In Underbill v. Hoi-wood, 10 Ves. 209, 227, Lord Eldon, speaking of cases in which a joint bond has been set up against the repre- sentatives of a deceased obligor, says, "the court has inferred, from the nature of the condition, and the transaction, that it was made joint, by mistake. That is, the instru- ment is not what the parties intended lu fact. They intended a joint and several ob- ligation; the scrivener has, by mistake, pre- pared a joint obligation." All the cases in which the coiurt has sus- tained a joint bond against the representa- tives of the deceased obligor, have turned up- on a supposed mistake in drawing the bond. It was not until the case of Sumner v. Pow- ell, 2 Mer. 36, that anything was said by the judge who determined the cause, from which it might be inferred, that relief in these cases would be afforded on any other principle than mistake in fact In that case, the court refused its aid, because there was no equity antecedent to the obligation. In delivering his Judgment, the master of the rolls (Sir W. Grant) indicated very clearly an opinion, that a prior equitable considera- tion, received by the deceased, was indis- pensable to the setting up of a joint obliga- tion against his representatives; and added, "so, where a joint bond has, in equity, been considered as several, there has been a credit previously given to the different persons who have entered into the obligation." Had this . case gone so far as to decide, that "the credit previously given" was the sole ground on which a court of equity would consider a joint bond as several, it would have gone far to show, that the equitable obligation re- mained, and might be enforced, after the legal obligation of the instrument had ex- pired. But the case does not go so far; it does not change the principle on which the court had uniformly proceeded, nor discard the idea, that relief is to be granted, because the obligation was made joint, by a mistake in point of fact. The case only decides, that this mistake, in point of fact, will not be presumed by the court, in a case where nc equity existed antecedent to the obligation. 174 MISTAKE OF LAW. where no advantage was received by, and no credit given to, the person against whose estate the instrument is to be set up. Yet, the course of the court seems to be uniform, to presume a mistake, in point of fact, in ev- ery case where a joint obligation has been given, and a benefit has been received by the deceased obligor. No proof of actual mis- tsike is required; the existence of an ante- cedent equity is sufficient. In cases attend- ed by precisely the same circumstances, so far as respects mistake, relief will be given against the representatives of a deceased obligor, who had received the benefit of the obligation, and refused against the repre- sentatives of him who had not received it. Yet the legal obligation is as completely ex- tinguished in the one case as in the other; and the facts stated, in some of the cases in which these decisions have been made, would rather conduce to the opinion, that the bond was made joint, from ignorance of the legal consequences of a joint obligation, than from any mistake in fact The case of Lansdown v. Lansdown, Mos. 364, If It be law, has no inconsiderable bear- ing on this cause. The right of the heir- at-law was contested by a yoimger member of the family, and the arbitrator to whom the subject was referred decided against him. He executed a deed in compliance with this award, and was afterwards relieved against It, on the principle that he was igno- rant of his title. The case does not sup- pose this fact, that he was the eldest son, to have been unknown to him; and if he was ignorant of anything, it was of the law, which gave him, as eldest son, the estate he had conveyed to a younger brother. Yet he was relieved In chancery against this con- veyance. There are certainly strong objec- tions to this decision In other respects; but, as a case in which relief has been granted on a mistake in law. It cannot be entirely disregarded. Although we do not find the naked prin- ciple, that relief may be granted on account of ignorance of law, asserted In the books, we find no case in which it has been decided, that a plain and acknowledged mistake in law Is beyond the reach of equity. In the case of Iiord Irnham v. Child, 1 Brown, Ch. 91, application was made to the chancellor to establish a clause, which had been, it was said, agreed upon, but which had been con- sidered by the parties, and excluded from the written Instrument, by consent It Is true, they excluded the clause, from a mis- taken opinion that it would make the con- tract usurious, but they did not believe that the legal effect of the contract was precisely the same as if the clause had been inserted. They weighed the consequences of inserting and omitting the clause, and preferred the latter. That, too, was a case to which the statute applied. Most of the cases which have been cited were within the statute of frauds, and it is not easy to say, how much has been the influence of that statute on them. The case cited by the respondent's counsel from Precedents In Chancery, is not of this description; but it does not appear from that case that the power of attorney was intend- ed, or believed, to be a lien. In this case, the fact of mistake is placed beyond any controversy. It is averred in the bill, and admitted by the demurrer, that "the powers of attorney were given by the said Rous- manier, and received by the said Hunt, un- der the belief that tbey were, and with the Intention that they should create, a specifla lien and security on the said vessels." We find no case which we think precisely in point; and are unwilling, where the effect of the instrument is acknowledged to have been entirely misunderstood by both parties, to say, that a court of equity is incapable of affording relief. The decree of the circuit court is reversed; but as this is a case in which creditors are concerned, the court, in- stead of giving a final decree on the demur- rer, in favor of the plaintiff, directs the cause to be remanded, that the circuit court may permit the defendants to withdraw their de- murrer, and to answer the bill. Decree: This cause came on to be heard, on the transcript of the record of the cir- cuit court of the United States for the dis- trict of Rhode Island, and was argued by counsel: on consideration whereof, this court Is of opinion, that the said circuit court erred, in sustaining the demurrer of the defend- ants, and dismissing the bill of the complain- ant It Is, therefore, decreed and ordered, that the decree of the said circuit court in this case be, and the same is hereby, re- versed and annulled. And It Is further or- dered, that the said cause be remanded to the said circuit court, with directions to per- mit the defendants to withdraw their de- murrer, and to answer the bill of the com- plainants. MISTAKE OF LAW. 175 HUNT V. KOUSMANIERE'S ADM'KS. (1 Peters, 1.) Suprene Court of the United States. January Term, 1828. (See ante, 170.) Appeal from the circuit court of Rhode Is- land. The appellant filed a bill on the chan- cery side of the circuit court of the United States for the district of Rhode Island, set- ting forth that, in January, 1820, Louis Eousmaniere obtained from him two loans of money, amounting, together, to $2,150; and at the time the first loan was made, Rousmaniere offered to give, in addition to his notes, a bill of sale, or mortgage, of his interest in the brig Nereus, then at sea, as a collateral security for the repayment of the money. A few days after the delivery of the first note, dated 11th of January, 1820, he executed a power of attorney, authoriz- ing the plaintiff to malie and execute a bill of sale, of three-fourths of the Nereus, to himself, or to any other person; and in the event of the loss of the vessel, to collect the money which should become due on a pol- icy, by which the vessel and freight were insured. In the power of attorney, it was recited that it was given as collateral secu- rity for the payment of the notes, and was to be void on their payment; on the fail- ure of which, the plaintiff was to pay the amount and all expenses, and to return the residue to Rousmaniere. On the 21st of March, 1821, an additional sum of ¥700 was loaned, for which a note was taken, and similar power of attorney given, to sell his interest in the schooner Industry; this ves- sel being also still at sea. On the 6th of May, 1820, Rousmaniere died intestate and Insolvent, having paid $200 on account of the notes; and the plain- tiff gave notice of his claim to the commis- sioners of insolvency, appointed under the authority of the insolvent law of Rhode Is- land. The plaintiff, in his bill, alleged, that, on the return of the Nereus and Industry, he took possession of them, and offered the interest of the intestate in them, for sale; and the defendants having forbidden the sale, this bill was brought to compel them to join in it. To this bill, the defendants demurred; and their demurrer was sustained in the circuit court; but leave was given to the plaintiff to amend. An amended bill was then filed, in which it was stated, that it was express- ly agreed between the parties, that Rous- maniere was to give specific security on the Nereus and Industry, and that he offered to execute a mortgage on them. Counsel was consulted on the subject, who advised that the power of attorney, which was actually executed, should be taken in preference to a mortgage, because It was equally valid and effectual as a security, and would pre- vent the necessity of changing the papers of the vessels, or of taking possession of them on their return to port. These securities were, it was alleged, executed, with a full belief that they would, and with intention that they should, give to the plaintiff, as full and perfect a security, as would be given by a mortgage. The defendants having also demurred to the amended bill, the circuit court decided in favor of the demurrer, and dismissed the bill; and an appeal was entered to this court. At the February session, 1823, this court considered that the appellant might be entitled to the relief prayed for in equity, but the respondents were permitted to with- draw their demurrer, and to file an. answer in the court below. 8 Wheat. 174, 5 L. Ed. 589. The answer of the defendants admit- ted the loans of money, and the delivery of the promissory notes, and that but $200 were paid, before the death of the intestate. The execution of the powers of attorney was also admitted, but it was denied that possession of the vessels was taken by the appellant; and they alleged their resistance of the at- tempt to take possession of them. The an- swer also asserted ignorance of any agree- ment for a specific lien on the vessels, ex- cept that imported by the language of the powers of attorney; that they had heard and believed, that the appellant meant to be concerned, as a partner, in a voyage of one of the vessels, which was relinquished, and that afterwards he offered to loan the money on security; upon which, the intes- tate offered to give a mortgage, but the ap- pellant preferred taking the powers of at- torney, to avoid inconvenience, and took the powers of attorney, by advice of counsel. The answer also stated, that a bill of sale of the vessels, dated the day before the death of the intestate, by which the vessels were Intended to be conveyed to one Bate- man, and which the respondents stated, they had heard and believed; was intended to be executed on the evening of that day. The answer also alleged the insolvency of Rous- maniere, and that it existed a long time be- fore his death; which they asserted must have been known to the appellant, and that the intestate resorted to improper modes to keep up his credit. The evidence taken in the case, consisted of the deposition of Mr. Hazard, the counsel who drew the papers, and in which he stat- ed, that they were intended by both parties to have the effect of a specific lien or mort- gage, and he advised them, they would have that effect; and also the deposition of Mr. Merchant, to show that the appellant admit- ted, that the motive by which he was in- duced to make the loan, was to compensate Rousmaniere for the disappointment sus- tained by his not uniting with him in a voy- age of one of his vessels; and, accordingly, an agreement was made, by which the ap- pellant was to let Rousmaniere have a sum of money, and that he was to give a bill of sale of a certain vessel; but that afterwards he refused to take the same, on account of the inconvenience and difficulties which 176 MISTAKE OF LAW. might attend tbe same; aud that he had consulted with Mr. Hazard, upon the sub- ject, who told him, that he could or would draw an irrevocable power of attorney to sell, which would do as well, or words to that effect; and which was accordingly done. The circuit court pronounce a decree, de- claring, that the appellant had no specific lien or security upon either of the vessels, and no equity to be relieved respecting them, and dismissing the bill, with costs; from which decree, an appeal was entered to this court. On the part of the appellant it was con- tended, that the decree ought to be reversed, and a decree entered for the appellant. That the answers to the bill did not respond to the only material facts in the cause; it be- ing fully proved, that the powers of attor- ney were intended to have the effect of a specific lien, the appellant was entitled to the relief he sought, upon the principles laid down in the former decisions of this court. Kimball & Webster, for appellant. Mr. Wirt, Atty. Gen., and Mr. Robbins, for ap- pellees. WASHINGTON, J. This case was before this court in the year 1823, and is reported in 8 Wheat. 174, 5 L. Ed. 589, and was then argued at great length, by the counsel con- cerned in it. After full consideration, it was decided, that the power of attorney given by Rousmaniere, the intestate, to the appellant. Hunt, authorizing him to malje and execute a bill of sale of three-fourths of the Nereus and of the Industry, to himself, or any other person, and in the event of their being lost, to collect the money which should become due under a policy upon them and their freiglit, was a naked power, not coupled with an interest, which, though irrevocable by Rousmaniere, in his lifetime, expired on his death. That this species of security was agreed upon, and given under a misunderstanding by the parties, of its legal character, was conceded in the argument of the cause by the bar and bench; and the second question for the consideration of the court, was, whether a court of equity could afford re- lief in such a case, by directing a new secu- rity of a difiCerent character to be given? or by decreeing ihat to be done, which the parties supposed would have been effected by the instrument agreed upon? After an examination of the cases, applicable to the general question, it was stated by the chief justice, who delivered the opinion of the court, that none of them asserted the najked principle, that relief could be granted, on the ground of ignorance of law. or decided, that a plain and aclinowledged mistake in law, (vas beyond the reach of a court of equity. The conclusion, to which he came, is ex- pressed in the following terms: "We find no case which we think precisely in point; and. are unwilling, where the effect of the instru- ment is acknowledged to have been entirely misunderstood, by both parties, to say, thac a court of equity is incapable of affording relief." The decree was, accordingly, re- versed; but the case being one In which creditors were concerned, the court, instead of giving a final decree on the demurrer. In favor of the plaintiff, directed the cause to be remanded, that the circuit court might permit the defendants to withdraw their de- murrer, .and to answer the bill. After The cause was returned to that court, the demurrer was withdrawn, and an an- swer was filed, in which the defendants, after admitting the loans mentioned in the bills, by the plaintiff to their intestate, and the notes given for the same, by the latter, and their non-payment; asiiert their igno- rance of any agreement between the plaintiff and their intestate, that the former' should have a specific security, other than the pow- ers of attorney, to sell vessels and to collect the proceeds, or, the amount of the policies, in case they should be lost; but express their belief, that the powers of attorney were se- lected by the plaintiff, in preference to the other securities, which were offered by the intestate. The answer further states, that the estate of Rousmaniere is greatly insol- vent, and had been so before his death; that the plaintiff had exhibited and proved his demand, as stated in his bill, before the commissioners of insolvency, duly appointed upon the estate of Rousmaniere; and that his dividend thereon declared, or to be de- clared, the defendants were, and would be ready to pay according to law. The principal deposition, taken in the cause, is that of Benjamin Hazard, counsel- lor at law, who deposes, that he drew the powers of attorney, annexed to the original bill; that on the day the first power was eiecuted. Hunt and Rousmaniere came to his oflice, when the latter stated, that the former had loaned, or agreed to loan, to him, a sum of money, upon security to be given by him, on his interest in the brig Nereus, and that he was desirous the security should be as ample and avajlable to Hunt, as it could be made; that he wished and was ready, to give a bill of sale ot the property, or a mortgage on it, or any other security, which Mr. Hunt might prefer. Both the parties declared, that they had called upon the witness, to request him to draw the writings, and to obtain his opinion, as to the kind of instrument which would give the most perfect security to the lender. That the deponent then told the parties, that a bill of sale, or mortgage, would be good security, but that an irrevocable power of attorney, such as was afterwards executed, would be as effectual aud good security, as either of the others; and would prevent the necessity of changing the vessel's pajyers, and of Hunt's taking possession of the ves- sel, upon her arrival from sea. That the parties then requested him to draw such an instrument, as, in his opinion, woul(} MISTAKE OF LAW. 177 most effectually and fully secure Mr. Hunt; and that the plaintiff frequently asked him, whilst he was drawing the power, and after he had finished, and read it to the parties, if he was quite certain, that the power would be as safe and available to. him, as a bill of sale or mortgage, and that upon his assurances that it was, it was then executed. The witness then proceeds to express his opinion, from his knowledge of the parties, and from their declaration at the time, that Rousmaniere would readily have given an absolute bill of sale of the property or any other security which could have been asked; and that Hunt would not have accepted the one which was afterwards executed, if he had not considered it to be as extensive and perfect a security, in all respects, as an ab- solute bill of sale; and he adds, more posi- tively, that such was the understanding and agreement of both the parties. It appears, by the testimony of this witness, that he drew the power of attorney concerning the Industry, for securirg the second loan made by the plaintiff to Rousmaniere, and that the circumstances attending that transaction, were essentially the same as those which have been stated, in respect to the first loan. We find another deposition In the record, which deserves to be noticed, as it consists of declarations, made by the plaintiff, after the powers of attorney were executed, and may serve, in some measiu-e, to explain the more positive testimony given by Mr. Haz- ard. This witness, William Merchant, de- poses, that after the decease of Rousman- iere, the plaintiff stated to him, and to a Mr. Rhodes, that in consequence of his declining to engage in an enterprise in one of the ves- sels of Rousmaniere, to which he had at one time consented, and of the complaints of Rousmaniere, on that account, he was in- duced to offer to Rousmaniere a loan of money. That an agreement was accordingly made, by which he. Hunt, was to let Rous- maniere have a certain sum on loan, and Rousmaniere was to give him a bill of sale of a certain vessel; but that, afterwards. Hunt, reflecting, that If he took that secu- rity, he would have to take out papers at the custom-house, in his own name, be sub- ject to give bonds for the vessel, and per- haps, be made liable for breaches of law committed by others, he consulted with Mr. Hazard upon the subject; who told him, that he could, or would, draw an irrevoca- ble power of attorney to sell, which would do as well, and which was accordingly done. The cause coming on to be heard in the court below, and that court being of opin- ion, that the plaintiff had no lien or specific security upon these vessels, and no equity to have such lien or security created, against the general creditors of Rousmaniere, dis- missed the bill; from which decree, the cause has been brought, by appeal, to this court. It must be admitted, that the case, AS it is now presented to the court, is not materially variant from that which we for- HUTCH.& BUNK.BQ.— 12 merly had to consider; except in relation to the rights of the general creditors, against the insolvent estate of a deceased debtor, in opposition to the equity which a particular creditor seeks, by this bill, to set up. The allegations of the bills, filed in this cause, which were, on the former occasion admit- ted by the demurrer to be true, are now fully proved, by the testimony taken in the cause. Before proceeding to state the general question, to which the facts in this case give rise, or the principles of equity which apply to it, it will be necessary, distinctly, to as- certain, what was the real agreement con- cluded upon between the plaintiff and the intestate, the performance of which, on the part of the latter, was intended to be secured by the powers of attorney? Was it, that Rousmaniere should, in addition to his notes for the money agreed to be loaned to him by the plaintiff, give a specific and available security on the Nereus and the Industry, or was the particular kind of security selected by the parties, and did it constitute a part of the agreement? It is most obvious, from the plaintiff's own statement, in his amended bill, as well as from the depositions appear- ing in the record, that the agreement was not closed, until the interview between the parties to it, with Mr. Hazard, had taken place. The amended bill states, that the spe- cific security which Rousmaniere offered to give, was a mortgage of the two vessels, for which irrevocable powers of attorney were substituted, by the advice of Mr. Hazard, and for reasons, which it would seem, were approved of and acted upon by the plain- tiff. From the testimony of Mr. Merchant, it would appear, that the security proposed by Rousmaniere was a bill of sale of the vessels, which the plaintiff declined accept- ing, for reasons of his own, uninfiuenced by any suggestions of Mr. Hazard, who merely proposed the powers of attorney as a sub- stitute for the other forms of security which had been offered by Rousmaniere. The dif- ference between these statements is not very material, since it is apparent, from both of them, that the proposed seciu-ity, by Irrev- ocable powers of attorney, was selected by the plaintiff, and Incorporated into the agree- ment, by the assent of both the parties. The powers of attorney do not contain, nor do they profess to contain, the agreement of the parties; but was a mere execution of that agreement, so far as it stipulated to give to the plaintiff, a specific security on the two vessels, in the mode selected and approved of by the parties; to which ex- tent, it was a complete consummation of the agreement. Such was the opinion of this court, upon a former discussion of this cause, In the year 1823, and such is its pres- ent opinion. Upon this state of the case, the general question to be decided, is the same now that it formerly was, and is that which has already been stated. There are certain principles of equity, ap- plicable to this question, which, as general 178 MISTAKE OF LAW. principles, we hold to be incontrovertible. The first Is, that where an Instrument is drawn and executed, which professes, or is intended, to carry into execution an agree- ment, whether in writing or by parol, pre- viously entered into, but which, by mistake of the draftsman, either as to fact or law, does not fulfil, or which violates, the mani- fest intention of the parties to the agree- ment, equity will correct the mistake, so as to produce a conformity of the instrument to the agreement. The reason is obvious: the execution of agreements, fairly and le- gally entered into, is one of the peculiar branches of equity jurisdiction; and if the instrument which is intended to execute the agreement, be, from any cause, insufficient for that purpose, the agreement remains as much unexecuted, as if one of the parties had refused, altogether, to comply with his engagement; and a court of equity will, in the exercise of its acknowledged jurisdiction, afford relief in the one case, as well as in the other, by compelling the delinquent party fully to perform his agreement, according to the terms of it, and to the manifest intention of the parties. So, if the mistake exist, not in the instrument, which is intended to give effect to the agreement, but in the agree- ment itself, and is clearly proved to have been the result of ignorance of some mate- rial fact, a court of equity will, in general, grant relief, according to the nature of the particular case in which it is sought. Wheth- er these principles, or either of them, apply to the present case, must, of course, de- pend upon the real character of the agree- ment under consideration. It it has been correctly stated, it follows, that the instru- ment, by means of which the specific secu- rity was to be given, was selected by the parties to the agreement, or rather by the plaintiff; Rousmaniere having proposed to give a mortgage or bill of sale of the vessels, which the plaintiff, after consideration, and advice of counsel, thought proper to reject, for reasons which were entirely satisfactory to himself. That the form of the instru- ment, so chosen by the plaintiff, and pre- pared by the person who drew it, conforms not, in every respect, to the one agreed upon, is not even asserted in the bill, or in the argument of counsel. The avowed object of the plaintiff was, to obtain a valid security, but in such a manner, as that the legal inter- est in the property should remain with Rous- maniere, so that the plaintiff might be under no necessity to take out papers at the cus- tom-house, in his own name, and might not be subject to give bonds for the vessels, or to liabilities for breaches of law, committed by those who were intrusted with the man- agement of them. That the general inten- tion of the parties was, to provide a security, as effectual as a mortgage of the vessels would be, can admit of no doubt; and if such had been their agreement, the insuffi- ciency of the instruments to effect that ob- ■ject, which were afterwards prepared, would I have furnished a ground for the interposi- tion of a court of equity, which the repre- sentatives of Rousmaniere could not easily have resisted. But the plaintiff was not sat- isfied to leave the kind of security which he was willing to receive, undetermined; hav- ing finally made up his mind, by the advice of his counsel, not to accept of a mortgage, or bill of sale, in nature of a mortgage. He thought it safest, therefore, to designate the instrument; and having deliberately done so, it met the view of both parties> and was as completely incorporated into their agree- ment, as were the notes of hand for the sum intended to be secured. In coming to this determination, it is not pretended, that the plaintiff was misled by ignorance of any fact, connected with the agreement which he was about to conclude. If, then, the agreement was not founded in a mistake of any material fact and if it was executed in strict conformity with itself; we think it would be unprecedented, for a court of equity to decree .another security to be given, not only different from that which had been agreed upon, but one which had been delib- erately considered and rejected by the party now asking for relief; or to treat the case, as if such other security had in fact been agreed upon and executed. Had Rousma- niere after receiving the money agreed to be loaned to him, refused to give an irrevocable power of attorney, but offered to execute a mortgage of the vessels, no court of equity could have compelled the plaintiff to accept the security so offered. Or, if he had totally refused to execute the agreement, and the plaintiff had filed his bill, praying that the defendant might be compelled to execute a mortgage. Instead of an iri-evocable power of attorney; could that court have granted the relief specifically asked for? We think not. Equity may compel parties to perform their agreements, when fairly entered into, ac- cording to their terms; but it has no power to make agreements for parties, and then compel them to execute the same. The for- mer is a legitimate branch of its jurisdic- tion, and in its exercise, is highly beneficial to society; the latter is without its author- ity, and the exercise of it would be not only an usurpation of power, but would be high- ly mischievous in its consequences. If the court could not have compelled the plaintiff to accept, or Rousmaniere to exe- cute, any other instrument than the one which had 'been agreed upon between them, the ease is in no respect altered, by the death of the latter, and the consequent in- efflclency of the particular security which had been selected; the objection to the re- lief asked for, being in both cases the same, namely, that the court can only enforce the performance of an agreement, according to its terms, and to the intention of the par- ties; and cannot force upon them a differ- ent agreement. That the intention of the parties to this agreement, was frustrated, by the happening of an event, not thought MISTAKE OF LAW. 179 yf, probably, by them, or by the counsel who ivas consulted upon the occasion, Is manl- iest. The kind of security which was chosen, would have been equally effectual, for the purpose intended, with a mortgage, had Rousmaniere lived until the power had been executed; and it may, therefore, admit of some doubt, at least, whether the loss of the intended security is to be attributed to a want of foresight, in the parties, or to a mistake of the counsel, in respect to a mat- ter of law,. The case will, however, be con- sidered in the latter point of view. The question, then, is, ought the court to grant the relief which is asked for, upon the ground of mistake arising from any igno- rance of law? We hold the general rule to be, that a mistake of this character is not a ground for reforming a deed founded on such mistake; and whatever exceptions there may be to this rule, they are not only few in number, but they will be found to have something peculiar in their characters. The strongest case which was cited and relied upon by the appellant's counsel, was that of Lansdown v. Lansdown, reported in Mos. 364. Admitting, for the present, the au- thority of this case, it is most apparent, from the face of it, that the decision of the court might well be supported, upon a prin- ciple not involved in the question we are examining. The subject which the court had to decide, arose out of a dispute be- tween an heir-at-law, and a younger member of the family, who was entitled to an estate descended; and this question the parties agreed to submit to arbitration. The award being against the heir-at-law, he executed a -100) shares of the stock of the Credit Mobiller of America, (which stock has been found by the master to have been purchased with the funds of the Credit Mobiller, and which stock, with any divi- dends or profits accrued or to accrue on the same, is hereby declared to be the property of said corporation, subject to the decrees and orders in this cause,) with any interest, divi- dends, rights, benefits, and profits which may have accrued to the said Thomas C. Durant as the holder of the said 5,707 45-100 shares of stock, or any part thereof, and not here- inbefore charged against him, said transfer and delivery to be made to the said Rowland Hazard and Henry Martin, or either of them, as special commissioners, with power, which is hereby granted to said commissioners, forthwith to take such measures, by suit or suits in their own names, or otherwise, as they may be advised is lawful and necessary to enforce such transfer, collection, or de- livery, and said stocks to be held by said commissioners subject to the further order of the court in this cause. •'Fifth. All interlocutory injunctions here- tofore made in this cause, so far as con- sistent with this decree, are declared to be and are hereby made perpetual, and the fur- ther consideration of the cause, and particu- larly as to allowances to the complainants for costs, expenses, and services, and as to the distribution of the funds that may be depos- ited in the registry of the court to the credit of the cause, and also the consideration of any order or decree which may be necessary in the premises against the defendant Thom- as C. Durant, by reason of any default which may be made by him touching any portion of this decree, and also the consideration of any other and further decree herein against or concerning the defendants other than the said Thomas C. Durant, be, and they hereby are, directed to stand over, with leave to any party in Interest, save parties in contempt or parties who may appear to be for any oth- er cause disqualified, to apply at any time for further orders and directions." The bill in case No. 50 was filed September 13, 1881. That suit proceeds upon these grounds: That the bond of August 24, 1868, whereby Griswold became bound, as one of the sureties of Durant, that the latter should "on his part abide and perform the orders and decrees of the supreme court of the state of Rhode Island in the suit in equity of Isaac P. Hazard and others against said Thomas C. Durant and others, now [then] pending in said court," was obtained by fraud, and by concealment from him of facts he was entitled to have communicated to him before he assumed the obligations impos- ed by that instrument; that he intended to sign, and believed, at the time, that he sign- ed, a bond which simply bound him for the appearance of Durant, so that he should be personally amenable to the process and or- ders of the court in the suit brought by Haz- ard; that the execution of the bond in ques- tion was the result of mistake; that the agreement whereby, upon the execution by Durant of a bond, the writ of ne exeat was to be discharged, was made without his knowledge or consent, as was also the order of court in pursuance of such agreement, and was in derogation of his rights; that his pur- pose to become surety only for Durant's ap- pearance to answer the process of the court was well known at the time to the plaintiff and his attorneys, who prepared, and super- vised the execution of, the bond; and that the writ of ne exeat was sued out upon the ground that Durant was about to depart from the state, when, in fact, he only contem- plated coming to the state. Protesting that the legal effect of the bond was that he should be responsible only for the appearance of Durant, so as to be subject to the process of the court in the Hazard suit, and averring his willingness to execute a proper ne exeat bond, he prayed that the bond in question be set aside as having been obtained by fraud, imposition, and mistake, or reformed, as indicated, and that the de- fendants be restrained by injunction from enforcing it in its present shape. The answers of the defendants put in issue the material allegations of the bill. The plaintiff filed a replication, and proofs being taken, and the cause heard, the bill, as al- ready stated, was dismissed. (C. O.) 26 Fed. 135. The action at law, being case No. 53, was commenced March 3, 1883, in one of the courts of Rhode Island, and was removed, upon Griswold's application, to the circuit court of the United States. The declaration set out the bond of August 24, 1868, alleged that Bradford, one of the sureties thereon, was dead, and that Durant had not kept its condition, in that he had not performed the above decree of December 2, 1882, in the equity suit brought by Hazard; whereby the plaintiffs Rowland Hazard, Rowland G. Haz- ard, Anna Hazard, and Lydia Torrey were entitled to have and demand of him the amount of said bond, $53,735. A copy of that decree was made an exhibit In the dec- laration. The defendant Griswold filed ten MISTAKE OF LAW. 193 pleas, each of which was in bar of the ac- tion. One of the pleas made a copy of the proceedings in Hazard's suit a part of it. Demurrers and replications were filed to the pleas, those to the second, third, fourth, fifth, and seventh pleas being special demurrers. By an order entered July 1, 1884, the demur- rers were sustained to the second, third, fourth, fifth, and seventh pleas, the opinion of the court being delivered by Mr. Justice Gray. (0. C.) 21 Fed. 178. Pursuant to a stipulation of counsel, dated November 26, 1883, that the plaintifE might demur specially to the second, third, fourth, fifth, and seventh pleas, and, in case the de- murrers were overruled, reply to those pleas as if no demurrers had been filed, and that amended pleas, if desired, might be filed by the defendant, and in obedience to the order of court requiring the amended pleas to be filed on or before October 15, 1884, the de- fendant, on the 14th of October, 1884, filed amended third, fom-th, fifth, and seventh pleas. The case was subsequently heard on a motion by plaintiff, made November 19, 1884, that the amended pleas be stricken out, and on the 30th of March, 1883, this order was made: "Plaintiff's motion to strike amended pleas from the files is granted." Certain stipulations were made between counsel; among others, one to the effect "that the plaintiffs were able to prove under the decree of the supreme court of Rhode Island, in the equity suit brought by Hazard, an amount of damage in excess of the pena) sum of the bond declared on in this suit." A jury having been waived in writing, the court gave judgment, as of February 12, 1887, against Griswold, for $66,470. The suit in equity No. 51 was brought June 12, 1885. The bill in that case, after refer- ring to the suit in equity brought by Isaac P. Hazard in 1868, showed that, on the 17th of November, 1875, Rowland G, Hazard com- menced a suit in equity in one of the courts of Pennsylvania, against the Credit Mobilier of America and others, which was subse- quently removed to the circuit court of the United States for the eastern district of Pennsylvania, that being the domieile^of the corporation; that in such suit Oliver Ames was appointed receiver of all the goods, chat- tels, rights, and effects of the corporation, and was authorized by the court in Pennsyl- vania to deliver to Durant a deed of release from all actions, causes of action, suits, bills, bonds, writings obligatory, debts, dues, du- ties, reckonings, accounts, sums of money, judgments, executions, extents, quarrels, con- troversies, trespasses, damages, and demands whatever, both In law or equity, which the Credit Mobilier of America then had, or might at any time thereafter have, claim, allege, or demand, against said Durant, for or by reason or means of any matter, cause, or thing whatever; that afterwards, on the 27th day of October, 1881, Ames, under the said authority, and In consideration of the HUTOH.& BUNK.BQ.— 13 execution by Durant of a deed conveying the title to certain lands mentioned in the order of court authorizing the release, delivered to the latter a deed of release, of the kind above indicated, of all sums of money then due or owing to, or thereafter to become due to, said corporation; that the above equity suit in the supreme court of Rhode Island was, and had been, wholly controlled by Rowland G. Hazard; that, notwithstanding the deliv- ery of the above deed to Durant, the latter suit was proceeded with, and the supreme court of Rhode Island rendered a decree re- fusing to allow him to set it up as a bar to the entering of such decree, on the ground that he was in contempt of that court for violation of one of its decrees rendered there- in; and that after the delivery of the deed of release to Durant the plaintiff requested the defendants to surrender the bond of Au- gust 24, 1868, and to abstain from suing him thereon, but they refused to comply with that request. The relief asked was an injunction restraining the defendants from further pro- ceeding in the action at law. Upon a hearing before Judges Colt and Carpenter a demurrer to the bill was sustained, and the bill dis- missed, October 28, 1886, Judge Carpenter de- livering the opinion of the court. (0. 0.) 28 Fed. 597. The bill in case No. 52 was filed June 12, 1885. It assailed the jurisdiction of the su- preme court of Rhode Island over the sub- ject-matter of the suit in equity brought by Hazard, upon the ground that before bring- ing it neither the plaintifC therein, Isaac P. Hazard, nor any other stockholder of the Credit Mobilier of America, requested the managing committee of the board of direct- ors or the stockholders of that corporation to begin legal or equitable proceedings against Durant. The cause was heard upon demur- rer before Judges Colt and Carpenter. The demurrer was sustained, and the bill dismiss- ed, the opinion of the circuit court being de- livered by Judge Carpenter. (C. C.) 28 Fed. 578. James C. Carter, for appellants and plain- tiffs in error. Ellas Merwin and Sam'l'Mad- dox, for appellees and demandants in error. Mr. Justice HARI/AN, after stating the facts in the foregoing language, delivered the opinion of the court. These four cases are so closely connected in their facts, as well as in the questions of law presented for determination, that it is convenient to dispose of them by one opinion. Our attention will be directed first to case No. 50, in which a decree is sought to cancel, or, in the alternative, to reform, the bond of August 24, 1868, executed by Durant as principal, and by Griswold and Bradford as sureties, and to restrain the defendants from suing upon it in its present form. The grant- ing or refusing of such a decree depends, of course, upon the inquiry whether the plain- tiff Griswold has, by eyidence sufflciently 194 MISTAKE OF LAW. clear and convincing, manifested bis riglit to the relief asked. While in respect to some luatters there is a conflict among the witnesses, certain facts and circumstances are clearly established, and may be summarized as follows: Dm-ant, in August, 1868, was a citizen and resident of New York. He went to Newport for a brief stay, and was there on the morninu of Satur- day, August 22d. About noon of that day the suit in which the writ of ne exeat issued was commenced against him. He was then sailing, with several friends, in his yacht on the high seas. The yacht landed at the New- port wharf shortly before 11 o'clock at night. Upon his stepping ashore he was notified by two officers, who had kept continuous watch for him at the wharf during the afternoon, that they had a writ for his arrest,— meaning the above writ of ne exeat,— and that he must go to jail. He accompanied them to that place, one of the counsel of Hazard, Mr. Peckham, following on foit to the sheriff's office. Information of the arrest having been communicated to Mr. H. W. Gray, also a citi- zen of New York, temporarily at Newport, that gentleman went to Griswold, who was his uncle, and begged the latter to go to the jail and become bail for Durant's appear- ance. Griswold had only a slight acquaint- ance with Durant, never having met him un- til the spring of 18G8, and held no personal or business relations of any kind with him. To oblige his nephew, who was Durant's friend, and merely as an act of kindness and courtesy to a stranger, (Griswold then resid- ed in Newport,) he acceded to the request to become bail for Durant's appearance in court, and for that purpose only went to the Jail. Hazard learned, a little before 11 o'clock, that Durant had been arrested as he landed from his yacht, and that owing to the lateness of the hour the sheriff had taken him directly to jail instead of his own office, "as had been previously arranged." He went immediately to the lodgings of one of his attorneys, Mr. Bradley, and caused him "to go and see what could be done to prevent Durant from remaining in jail over Sunday;" authorizing his attorney to use his name "for the purpose of releasing said Durant from jail until Monday, it being regarded as very doubtful whether Durant in the short time then remaining before Sunday would be able to provide the necessary bonds." Shortly after Griswold, accompanied by Gray, reached the jail, the two counsel of Hazard, namely, Bradley and Peckham, ar- rived there, and a few moments later Gov. Van Zandt came in obedience to a message from Durant, conveyed by Bradford, to act as his counsel. Hazard, it seems, did not accompany his counsel to the jail. It was now nearly 12 o'clock. All who were at the jail agree that they were there only because of the arrest of Durant under a writ com- manding the sheriff to take bail from him, in the sum of $5.S.73.5, that he would not go or attempt to go into parts beyond the state without the leave of the court, and. If sucli bail were not given, to commit him to and keep him in jail until he gave bail of his (iwn accord; and, such security being taken, the officer was required by the writ to return a certificate thereof to the court. There is no claim that any one present Avas ignorant of the terms of the writ, or of the extent of the authority of the officer charged with its exe- cution. It is further agreed by all the wit- nesses that there was a conversation at the jail between the lawyers and Durant as to what could be done in order to effect the lat- ter's release. But in this discussion or con- versation Griswold took no part whatever. That much is distinctly stated by Peckham, one of Hazard's attorneys who drew the bond, and supervised the execution of the writ of ne exeat, although he says that the sureties could not "help hearing, if they paid any attention." It is equally beyond dispute that the object of Griswold's presence at the jail was well known to Hazard's attorneys. Just here arises the difference among the witnesses as to what took place at the jail. Detailing what occtu-red according to his recollection at that place, Peckham says: "When I got to the jail I found there Judge Bradley, who had only preceded me there by a minute or two; Mr. Durant; Charles C. Van Zandt, his counsel; Mr. Griswold; Dex- ter Bradford; and a stranger, who was, I presume, Mr. Gray. Mr. Van Zandt and Judge Bradley were already talking about the release of Mr. Durant from custody. Judge Bradley said: 'That is a simple mat- ter. Let him give the bond called for by the writ.' The nature of that bond was briefly explained. Mr. Durant said that it was out oJE the question for him to give it; that he couldn't remain any longer in Rhode Island; that his presence was absolutely de- manded outside of the state, and forthwith; and that he must leave here Monday morn- ing. It was suggested that he might file his answer, and apply for the discharge of the writ immediately; but he said, 'I know what proceedings in court are, and I can't re- main here at all.' It was then proposed that he should give a bond in the same amount marked in the two writs in the two cases, conditioned to abide and perform whatever decrees the court might make against him in those suits. The nature of these proposed bonds was freely discussed by Judge Brad- ley, Mr. Van Zandt, and Mr. Durant, and the fact that they were bonds which would hold the principal and sureties liable to pay money in case Durant should not perform any decree made by the court was comment- ed on by Mr. Van Zandt and Mr. Durant. During all this interview Judge Bradley did all the talking for the complainants, and Mr. Van Zandt and Mr. Durant spoke about equally for their side." The same witness states: "Mr. Van Zandt having conferred with Mr. Durant, and those two having MISTAKE OF LAW. 195 conferred with the sureties, — I mean Mr. Grlswold and Mr. Bradford,— Mr. Van Zandt then announced that they would give the bonds proposed. As it was then very late, it was fiirther agreed that all should meet at my office on the following Monday morn- ing, soon after midnight, and execute the papers. Besides these bonds, it was also agreed that the respective counsel should sign an agreement that upon the bonds be- ing executed the writs of ne exeat should be absolutely discharged. Just at the close of the interview Judge Bradley addressed him- self to all present, isaying that he wished to make sure that all understood the arrange- ment alike, and he stated that Mr. Durant was to give bonds, with Mr. Griswold and Mr. Bradford as sureties, in the sums mark- ed in the writs, to abide and perform all the decrees of the court in the suit; that counsel should sign agreements for the discharge of the writs; that all should meet at my oflSce soon after midnight Monday morning and sign the papers; that in the meantime Mr. Durant w^ould go free from custody upon his word of honor, and he appealed to the sure- ties, saying: 'We rely upon you, gentlemen, to see that he attends.' We then separat- ed. I prepared the papers, and had them lying upon my table when We met, pursu- ant to the arrangement. They were read. Mr. Griswold took an active part at this meetings and. I think, read the papers for himself. The papers were signed without any objection or discussion at that time. Probably we were not together at my office more than ten minutes." Referring to the interview at the jail, Bradley testiiied that nothing was said, to the best of his recol- lection and belief, by any one. conveying the idea that the complainants were to obtain from the defendant only a bail-bond for his appearance; and that "the terms of the bond were expressed so as to exclude the idea that it was merely a bail for appearance, and to provide that it should be a bond to abide and J^erform the order of the court." He further said that the bond "was to be a security," and it was so announced. In all material respects his evidence was in accord with the recollection of Peckham. But there was other evidence which pre- cludes our accepting the version of the af- fair given by those gentlemen. Gray, Gris- wold, Durant, and "Van Zandt, with more or less distinctness, but all emphatically, state that neither at the jail Saturday night, nor at the meeting before daylight on Monday morning, was there a hint, suggestion, or proposition, in any form, that Durant should give bond, vrith sureties, conditioned that he would abide and' perform the decrees that might be rendered in the Hazard suit, or that any bond was talked of except one that would make the sureties responsible simply for his appearance in the state, so as to be subject to the orders and process of the ■court. Gov. Van Zandt testifies, touching the meeting at the jail: "It was proposed by Judge Bradley that Dr. Durant should give bond, with two sureties, which should be substituted for the writ and the writ withdrawn. I then understood from the con- versation that the bond was in the nature of a bail-bond, and that when the sureties de- livered Dr. Durant into the custody of the court, to either perform its orders and de- crees personally, or to suffer such penalties personally as the court might impose, they would comply with the conditions of the bond. Nothing was said in my presence by any person inconsistent with these views." Again, referring to what took place at the time the bond was actually signed, the same witness says: "A bond, prepared by Messrs. Peckham and Bradley, was handed to me as counsel for Mr. Durant; there was some little discussion as to whether it should be made to the sheriff of Nevsrport county, or to the complainants in the then suit. Judge Bradley preferred the latter, and it was so done. I told Mr. Durant that, in my opinion, it was a proper bond to secure his appear- ance in the suit, and the bond was then ex- ecuted. a= * * I heard nothing said by Judge Bradley or ftlr. Peckham, except what I have already stated; I myself told Mr. Durant that, in my opinion, the instrument was, in effect, a bail-bond." Further: "There was nothing said or intimated by any person in my presence or hearing on that occasion to indicate that the bond was a security instead of a surety." The state- ments of Gov. Van Zandt are fully sustained by the depositions of Gray, Griswold, and Durant. In view of this great preponderance of evidence upon the side of the plaintiff, as to what occurred at the jail before the sep- aration of the parties to meet Monday morn- ing for the consummation of the business, the court is not at liberty to accept the ac- count given by the defendants' attorneys of the interview of Saturday night. And we have a strong conviction that the recollection of Griswold, Gray, Dmant, and Van Zandt as to that interview, is sustained by all thf, inherent probabilities of the case. And In saying this we would not be understood as reflecting upon the integrity of Hazard's at torneys. The difference in the recollection of gentlemen, in respect to transactions in which they took part, often happens, with- out any reason to suspect that any of them would intentionally deviate from the line of absolute truth. Such differences existing, the court can only be guided by the weight of the evidence, where the witnesses are in- telligent, of equal credibility, and had equal opportunities to know what occmred. In the first place, it is not at all probable that Griswold would have executed the bond in question, as surety, if he had been informed, or believed, that it bound him absolutely, within the amount specified in such bond, for the payment of any sum adjudged 196 MISTAKE OF LAW. against Diiiant,— almost an entire sti-anger to him. In the next place, we cannot sup- pose that the -counsel who went to the jail to represent the interests of Hazard, had any other purpose In going there except to see that that was, substantially, accomplished which the writ of ne exeat authorized, name- ly, the obtaining of bail that would prevent Durant's departure from the state without the leave of the court, and thus have him, at all times, pending Hazard's suit, subject to its rightful power in respect to any decree to be rendered. That was evidently Brad- ley's purpose, for, according to Peckham's evidence, he suggested that Durant could effect his release by executing the bond speci- fied in the vsrrit. But when the nature of such a bond was explained, and it appeared that the necessity for Durant's being out of the state on Monday rendered that course entirely impracticable, the latter was then inforroed — according to the evidence of Peck- ham— fhat he could file an answer and apply for the discharge of the writ immediately. What was meant by this suggestion? It could have meant but one thing, namely, that it was in the power of Durant to ob- tain, without objection, if not of right, a discharge of the writ, after answering, by executing a bond of some kind. A party ar- rested upon ne exeat may obtain the dis- charge of the writ, upon motion or petition, and after notice, and according to some au- thorities, "it is a matter of coui'se to order the ne exeat to be discharged, upon the de- fendant's giving security to answer the com- plainant's bill, and to render himself amena- ble to the process of the court pending the litigation, and to such process as may be is- sued to compel a performance of the final decree. * * * Or, where the defendant cannot procure such security as will satisfy the sheriff, or if he wishes to leave the state before the termination of the suit, he may apply to the court to discharge the ne exeat upon his giving proper security to answer and be amenable to process; and upon such ap- plication the court will take such security as it may deem suflBcient, and will discharge the sheriff from liability." 2 Barb. Ch. Prac. 655, 656; Mitchell v. Bunch, 2 Paige, 606, (!21; Bray ton v. Smith, 6 Paige, 489, 491; McNamara v. Dwyer, 7 Paige, 239, 244. See, also, Jae. Law Diet. tit. "Ne Exeat Regno;" Johnson v. Clendenin, 5 Gill & J. 463, 481. In He Griswold, 13 R. I. 126, determined September 20, 1880, Griswold, by petition, sought to be discharged from the bond in question on his principal's placing himself within the jurisdiction of the court, and subject to its orders and decrees. He seems to have proceeded, in that case, up- on the ground that he was entitled, of right, to the order of discharge asked. But the supreme court of Rhode Island did not ac- cept that view, observing that it could not regard "a bond to abide and perform the de- cree as equivalent merely to a bond to abide the event of the suit." To du so, the court said, would be to ignore wholly the word "perform" contained In the bond, which, upon its face, appeared to be given by agree- ment of the parties. While it was there said, and properly, that the court may re- quu-e as a condition of the discharge of a writ of ne exeat that the respondent give security to perform the decree,— citing Rob- ertson r. Wilkie, Amb. 177, and Atkinson v. Leonard, 3 Brown, Oh. 218,— it was conceded that "courts will generally discharge a writ of ne exeat upon the respondents giving secu- rity to abide the decree on the hearing of the suit." If Durant had remained in New- port, and, upon filing his answer, had applied for the discharge of the writ of ne exeat up- on his giving bond with security simply to abide the decree, and place himself, when required, within the jurisdiction of the court, it is inconceivable that the state court would, under the circumstances, have denied his application. But it was further said in that case— and this is quite significant in its bear- ing upon another question to be presently adverted to— that, "even if the bond in ques- tion was to be considered as having no other effect than a bond to abide the decree made upon hearing the cause, the petition could not be granted in the present stage of the proceedings. No final decree in the cause has yet been reached." As, therefore, Durant could have filed his answer, and, conformably to the gen- eral rule, have obtained a discharge of the writ upon giving bond, with surety, that he would be amenable to the orders and process of the court; as he could not, con- sistently with his engagements, remain in Rhode Island long enough to have an an- swer prepared, and to move for the dis- charge of the writ, upon sufficient bond to be by him given; and as Hazard and his counsel expressed a desire that Durant should not be held in custody over Sun- day, — what more natural and equitable than that the parties should, by consent, bring about that which Durant must have under- stood from Bradley that he could accom- plish, through the orders of the court, name- ly, h^ve a bond executed with surety com- pelling his presence in the state when re- quired by the orders of the court, or subject- ing his sureties to personal liability If he did not render himself amenable to Its process. If the suggestion that Durant could file his answer and apply to the court for the dis- charge of the writ (of course, upon bond securing his amenability to the process of the court) had been adopted, the plaintiff would not have obtained a bond making the surety absolutely responsible, within the penal sum named in the writ and bond, for a money decree against Durant. It is there- fore unreasonable to suppose that the parties separated Saturday night under an agree- ment that Hazard should have from Durant a bond that would subject Ms sureties to a MISTAKE OP LAW. 197 larger responsibility than was involved in the suggestion made that Durant could ob- tain an order of court for the discharge of the writ. On the contrary, it is more rea- sonable to suppose that the bond which, on Saturday night, was agreed to be executed on the next Monday morning, was cue that would accomplish, by agreement of parties, precisely what Hazard's attorney sliggested that Durant might accomplish by an order of court. The agreement of the parties was thus made to take the place of an order of court, because Durant assured Hazard's attorneys that he could not remain in New- port long enough to make a formal applica- tion for the discharge of the writ upon a proper bond. We are of opinion that, although the con- dition of the bond in question was that Du- rant should "abide and perform the orders and decrees" of the coui-t in suit in which it was given, all the parties, according to the decided preponderance of evidence, intended to, at the time, as an instrument binding the sureties for the appearance of the principal so as to be amenable to the process and de- crees of the court, upon default in which, and not before, were they to be liable to pay the penalty. If the bond means, in law, more than that,— and counsel in this court agree that it does,— the case is one of a mutual mistake, clearly established, as to the legal efCect of the instrument. There was no mistake as to the mere words of the bond; for it was drawn by one of Hazard's attorneys, and was read by Griswold before signing it. But, according to the great weight of the evidence, there was a mistake, on both sides, as to the legal import of the terms employed to give effect to the mutual agreement. In short, the instrument does not express the thought and intention which the parties had at the time of its execution. And this mistake was attended by circum- stances that render it inequitable for the obligees in the bond to take advantage of it. The instrument was drawn by one of Haz- ard's attorneys, and was presented and ac- cepted as embodying tise agreement previ- ously reached. Griswold was unskilled in the law, and took the word "perform" as implying performance in the sense of Du- rant's becoming amenable to the process of the court. He had no reason — unless the recollection of Gray, Durant, Van Zandt, and himself as to what occurred is wholly at fault— to doubt that the bond expressed the real agreement; especially if he heard Van Zandt's statement to Durant, when the latter was about to sign the bond, that it "was, in effect, a bail-bond." A court of equity ought not to allow that mistake, satisfactori- ly established and thus caused, to stand uncorrected, and thereby subject a surety to liability he did not intend to assume, and which, according to the decided preponder- ance of the evidence, there was at the time no purpose to impose upon him. While it is laid down that "a mere mistake of law, stripped of all other circumstances, consti- tutes no ground for the reformation of writ- ten contracts," yet "the rule that an admit- ted or clearly established misapprehension of the law does create a basis for the inter- ference of courts of equity, resting on dis- cretion and to be exercised only in the most unquestionable and flagrant cases, is cer- tainly more in consonance with the best-con- sidered and best-reasoned cases upon this point both Enghsh and American." Snell v. Insurance Co., 98 U. S. 85, 90, 92, 25 L. Ed. 52; 1 Story, Eq. Jur. (Redf. Ed.) §§ ISSe, 138f; Stockbridge Iron Co. v. Hudson Iron Co., 102 Mass. 45, 48; Underwood v. Brock- man, 4 Dana, 309, 316; Jones v. Clifford, 3 Ch. Div. 779, 791, 792; Canedy v. Marey, 13 Gray, 373, 377; Green v. Railroad Co., 12 N. J. Eq. 165, 170; Beardsley v. Knight, 10 Vt. 185, 190; State v. Paup, 13 Ark. 129; 2 Lead. Cas. Eq. pt. 1, 979-984; 2 Pom. Eq. Jur. §§ 843-847. The conclusion reached upon this branch of the case is the only one consistent with fair dealing towards those who were will- ing to become sureties for the appearance of Durant. If it be not justified upon the ground of mistake as to the mutual agree- ment, superinduced by the conduct of the party seeking now to take advantage of it, there could be no escape from the conclusion that the taking of a bond that made Gris- wold absolutely liable as surety, for any amount adjudged to be due from Durant, and not greater than the penal sum named, was, under all the circumstances disclosed, a fraud in law upon him. If the attorneys of .Hazard intended to obtain, by means of a bond, more than he was entitled to by such a bond as the writ of ne exeat called for, and more than the court would ordinarily have given them, upon Durant's application to discharge the writ; If they intended to secure a bond that would make Griswold personally liable, within the penal sum, for any money decree passed against Durant, then a fraud was perpetrated upon him, which entitles him to relief; for, according to the decided preponderance of the evi- dence it must be assumed that Hazard's at- torneys knew that he signed the bond in the belief that, pursuant to the previous tmder- standing, it was one to secm-e Durant's ap- pearance, nothing more, and yet they failed to inform him, at the tim:e, that it was drawn so as to impose upon him a much larger responsibility. Their silence upon that question was, under the circumstances, equivalent to a direct affirmation that the bond meant what Griswold supposed it did. In view of what passed at the jail on Sat- urday night, their duty was, by sufficient explanation, to correct the misapprehension under which he evidently labored. Besides, there can be no doubt, under the evidence, that the agreement to discliarge the writ was reached without consultation with Gris- 198 MISTAKE OF LAW. wold. No one of tbe witnesses states that lie was consulted about that matter, or tliat he was informed as to the legal result of an agreement or order to discharge the writ. He testifies that he knew nothing of any such agreement. So that while Hazard's at- torney, according to his evidence, was pre- paring a bond that would bind Griswokl absolutely to pay any decree, not in excess of t$53,735, that might be rendered against one who was almost a stranger to him, and who, Hazard stated in his bill, was then engaged in hazardous speculations, and was in a precarious condition pecuniarily, he was, as the representative of Hazard, under an agreement with Duraut, of which Griswold had no knowledge, that the writ of ne exeat should be discharged; thus compelling the surety to risk the insolvency of the principal, and putting it out of his power, for his own protection, to surrender the principal, and obtain the cancellation of the bond, as, in that case, the surety might have done, if the bond had been, as he supposed it was, one simply for the appearance of Durant. The concealment of this agreement from Griswold was, under the circumstances, a wrong to him. "The contract of surety- ship," says Mr. Story, "imports entire good faith and confidence between the parties in regard to the whole transaction. Any con- cealment of material facts, or any express or implied misrepresentation of such facts, or any undue advantage taken of the surety by the creditor, either by surprise or by withholding proper information, will un- doubtedly furnish a sufficient ground to in- validate the contract." Again: "If a party taking a guaranty from a surety conceals from him facts which go to increase his risk, and suffers him to enter into the contract under false impressions as to the real state of the facts, such a concealment will amount to a fraud, because the party is bound to make the disclosure." 1 Story, Eq. Jur. §§ 324, 215. To the same effect are Bank v. Cooper, 36 Me. 180, 196; Smith v. Bank, 1 Dow, 272, 292; Railton v. Mathews, 10 Chark & F. 934, 943; Small v. Gurrie, 2 Drew. 102, 114; Phillips v. Foxall, L. R. 7 Q. B. 666, 672; Pidcock v. Bishop, 3 Barn. & C. 605; Adams' Eq. 179. But we do not rest our decision upon any ground of fraud in law or fraud in fact. We acquit the attorneys of Hazard of any desire or purpose to do injustice to Griswold, or to commit a fraud upon him. But we are constrained, by the settled rules of evidence, to hold, as already indicated, that their recollection of the cir- cumstances under which the bond of Au- gust 24th was executed is materially at fault, and that the alleged mistake is established by convincing proof. But it is said that Griswold was guilty of such laches in seeking the relief now ask- ed that he is not entitled to the aid of a court of equity. This position is based prin- cipally upon what Peckham says occurred between him and Griswold in the fall of the year after the execution of the bond. Peck- ham testifies: "About the last of October or the 1st of November, 1868, along that time, I met Mr. Griswold on Thames street, in Newport, near my office. He spoke of this bond as if it were a bail-bond. I said, 'No; it is a bond upon which you may be liable to pay money. If, for example, the court should find a judgment against Durant for any sum of money, and he did not pay It, you could be held for the amount named in these bonds.' He said, 'Well, I guess you are right, but I must see Durant about it. He must do something about it.' I asked him, 'Why, he is rich enough, isn't he?' and Mr. Griswold said, 'Yes; he is rich enough, but he is reckless, and there is no telling- how long such a man may stay rich, and he must give me security.' I would like to add here that I mentioned this to Mr. Honey last winter. Mr. Honey said that he was confi- dent, from conversations he had had with his client, Mr. Griswold, that Mr. Griswold had no recollection of any such conversation with me; and I replied that, if Mr. Griswold did not recollect it, I should hesitate about swearing to it, and that I did not think I would swear to it under those circumstan- ces, and that certainly I would not like to do so. Still I have felt bound to state it here, upon further reflection, with these explanations." If this be a correct state- ment of what passed between Peckham and Griswold, upon the occasion referred to, it is significant as showing that months after the bond \\'as executed Griswold spoke of it as a bail-bond. His declaration, after Peck- ham's explanation of its terms, "I guess you are right," naturally meant no more than a courteous acquiescence, without discussion, in the opinion expressed by one learned in the law. Griswold, while recalling the fact that he expressed to Peckham his belief that it was a bail-bond, denies explicitly that he, on that or any other occasion, ever admit- ted that it was other than a bail-bond. Besides, there was no absolute necessity for Griswold's moving in the matter until after some decree was passed against Du- rant, and until an attempt was made to hold him personally responsible for the amount of the bond. He made an effort in Re Gris- wold, 13 R. I. 125, to be discharged from his bond upon the principal's placing himself within the jurisdiction of the court. But, as we have seen, the court, after declining to discharge the bond, said that, even if the bond in question was to be considered as having no other effect than a bond to abide the decree made upon hearing the cause, the petition for its discharge would not be considered by it until a final decree was passed. The judgment in that case was passed September 30, 1880. Notwithstand- ing this announcement, and doubtless be- cause of the intimation that the bond meant more, in law, than he supposed, Griswold MISTAKE OF LAW. 199 commenced the present suit more than a year before tlie decree was rendered against Du- rant, and before the action at law was brought on the bond. Under the peculiar circumstances of this case, we thinli the defense of laches Is without substantial merit. Whether laches is to be imputed to a party seeking the aid of a court of equity depends upon the circumstances of the par- ticular case. There are no circumstances here that would Justify a refusal to grant the relief asked because of Griswold's delay in iustituting suit to have the bond canceled or reformed. In the view the court takes of this case, the proper decree to make, if Durant were living, would be one reforming the bond of August 24, 1868, so as to make Griswold liable for the penal sum named only in the event that the principal failed to appear and become subject to the orders and de- crees of the court In the suit in which the writ of ne exeat was issued. But such a decree would not now be appropriate. Un- der the circumstances, the only decree that will accomplish the ends of substantial jus- tice is one pei-petually enjoining the prosecu- tion of any action, suit, or proceeding to .make him liable in any sum on or by reason of said bond. We come now to the action at law No. 53, in which there was a judgment against Griswold on the bond of August 24, 1868, for the sum of $66,470. It is assigned for error that the court sustained the demurrers to the original second, third, fourth, and fifth pleas, ordered the amended third, fourth, and fifth pleas to be stricken from the files, and denied the defendant's mo- tions, at the trial, for judgment on his eighth and ninth pleas. It has been assum- ed in argument that the record in this case substantially presents, among other ques- tions, the following: (1) Whether the bond of August 24, 1868, was not obtained by such fraud and concealment as rendered It void as against Griswold. (2) Whether up- on the face of the record of the equity suit in which the order or decree of December 2, 1882, was rendered the court was not with- out jurisdiction of the subject-matter of that suit, the essential object of which, it is ar- gued, was to administer the affairs, and dis- tribute the assets, of a Pennsylvania cor- poration, by means of decrees and orders of a court in Khode Island. (3) Whether sim- ple duress operating only on the principal in the bond could he taken advantage of by the surety. (4) Whether the plaintiffs, not- withstanding the stipulation of Griswold's counsel, at the trial, that they were able to prove, under the decree of December 2, 1882, "an amount of damage In excess of the penal sum of the bond declared on," could main- tain an action on the bond for that or any other sum, until it was ascertained and ad- judged in Hazard's eqmty suit, what distinct part, if any, of the $16,071,059.97 for which Durant was adjudged by the supreme court of Rhode Island to be accountable to the Credit Mobllier of America, actually be- longed, or would be ultimately awarded, to the obligees in the bond. These questions have been argued by the counsel of the respective parties with signal ability, and their importance is recognized. But, in view of the present condition of the record of this case, it is not deemed best now to discuss them. The ground upon which the court below ordered the amended pleas to be stricken from the flies does not appear. It may be that the motion was treated as a formal demurrer (Slocomb v. Powers, 10 R. I. 255), or was granted be- cause, in the judgment of the court, the amended pleas did not materially change the defense as presented in the pleas to which special demurrers were sustained, and were not, therefore, fairly embraced by the stip- ulation made by counsel for their being filed. But, in our judgment, the amended pleas were much broader, as well as more spe- cific in their averments, than were the orig- inal pleas; and the questions arising upon them' could have been more appropriately raised by demurrer. Smith v. Carroll (R. I. July 19, 1890) 20 Atl. 227. We are the more willing to make this disposition of the case, because of the decision in case No. 50 in re- spect to Griswold's liability upon the bond sued on. In view of what has been there said, the discussion of the above questions would seem to be unnecessary. The demurrer to the bill in No. 51 was properly sustained. The error, if any, com- mitted by the supreme com't of Rhode Island in not allowing the release, executed to Du- rant by the receiver in the Pennsylvania court of the Credit Mobllier of America, to be interposed as a defense in the suit brought by Hazard against Durant and oth- ers, could not be corrected by bill in equity, filed by a surety on the bond of August 24th; for the reason, if there were no other, that the release was delivered prior to the judg- ment in the state court constituting the basis of the action at law on the bond. The demurrer to the bill in case No." 52 was also properly sustained. In that case the validity of the proceedings in the su- preme court of Rhode Island, by Hazard against Durant and others, was assailed upon the ground that the bill in that suit did not sufficiently show that any effort had been made by Hazard, the plaintifC therein, and who sued as stockholder, to procure corporate action against Durant by the Cred- it Mobllier of America. It is only necessary to say that this ground presents only a ques- tion of mere error in the judgment of the state court, and does not afEect its jurisdic- tion. The decree in suit No. 50 must be re- versed, with directions to enter a new de- cree perpetually enjoining the defendants therein, and each of them', from prosecut- 200 MISTAKE OF LAW. ing any suit, action, or proceeding against Griswold on the bond executed by him on the 24th of August, 1868, as one of the sureties of Thomas C. Durant; the decrees In cases Nos. 51 and 52 must be atErmed; and the judgment in the action at law No. 53 must be reversed with directions for fur- ther proceedings not Inconsistent with this opinion. Griswold Is entitled to his costs in this court in cases 50 and 53, and the appellees in the other cases are entitled to their costs here as against Griswold. It is so ordered. BRADLEY and BREWER, JJ., did not participate in the decision of this case. MISTAKE OF LAW. 201 MARSHALL et al. v. WESTROPB. (67 N. W. 257, 98 Iowa, 324.) Supreme Court of Iowa. May 18, 1896. Appeal from district court, Slielby county; A. B. Thornell, Judge. Suit in equity to reform a contract of as- signment of certain accounts made by de- fendant to plaintiffs, and to recover on the contract so reformed the sum of $270, being the value of certain machinery delivered by plaintiffs to defendant in consideration of the assignment. The defendant admitted the re- ceipt of the machinery, the assignment of the accounts, and a certain modiflcation of the contract of assignment, but denied each and every other claim of plaintiffs. He also pleaded an election of remedies on the part of plaintiffs, by which they confirmed and elected to stand on the original contract as made. There was a trial to the court, and judgment and decree for plaintiffs. Defend- ant appeals. Reversed. Smith & Cullison, for appellant. Nash, Phelps & Mosier, for appellees. DBBMER, J. In the year 1891, plaintiffs, a copartnership, were engaged in selling farm machinery at the town of Audubon. Defend- ant had for a number of years prior thereto been managing and conducting a farm in Audubon county for his father. On or about March 1st, he moved onto a farm of his own, in Shelby county, intending to cultivate it for his own use and benefit. Desirous of pur- chasing some farm implements, he visited plaintiffs' place of business, with the avowed intention of securing the same. It appears that the defendant was the owner of a stal- lion, which was "stood" for the season of 1890 in Montgomery or Cass counties, by an agent of defendant, under an arrangement by which the parties who received the services of the stallion were to pay a certain amount therefor in the event the mares bred to him were got with foal; otherwise, nothing should be paid. The defendant was the owner of certain claims for services resulting from the use of the stallion, which he proposed to transfer to plaintiffs for the farm machinery he desired to purchase. No agreement was reached at the first interview, but it was ar- ranged that defendant should see if he could purchase the machinery of some other per- son at a lower price, and, if not, it was sup- posed that the negotiations would be renew- ed. About March 27th, the defendant wrote plaintiffs a letter of which the following is a copy: "Marshall & Sharp: I (Ian make the trade in Harlan, but they are not so low in price as you are. Jones would not make the price he stated and furnish the goods he named. Inclosed find assignment for same. Please sign and date, and keep one, and send me one, and let me know by re- turn mail, because I will want to know at once if the deal is closed. I would come over, but my~ housienBiamed to the ground last Saturday night, and I cannot leave. Very truly, O. D. Westrope." In this letter was inclosed a contract for the plaintiffs' sig- nature, the material parts of which are as follows: After stating that plaintiffs had sold certain machinery to defendant, it recites: "That, as payment therefor, the said O. D. Westrope enters into and does hereby assign and transfer to said Marshal & Sharp the following accounts for services of the stal- lion named General Duke, in the year 1890, to wit: [Here follows a list of the accounts, with the amounts of each set out, aggregat- ing the sum of $300.] The said Marshall «& Sharp taking and accepting said accounts in full satisfaction of said claim; the said O. D. Westrope hereby agreeing that all foals not paid for by July 1st, 1891, that he will pay to said Marshall & Sharp such account remaining unpaid, and said account so paid by him to be reassigned to him. Marshall & Sharp. O. D. Westrope. Dated at Audn- bon, la., March 28, 1891." These contracts were signed by appellees as indicated, and one of them (there being two) was returned to appellant, and the other retained by ap- pellees. Afterwards one of the articles call- ed for by the contract was substituted by an- other, and all the goods with the substitute named were shipped to the appellant. But three of the mares served to appellant's horse proved to be with foal, and appellees receiv- ed but $30 from the accounts so assigned. The other accounts never matured, because the. mares did not prove to be with foal. The appellant, being called upon to make pay- ment of the balance of the purchase price, refused, claiming that he had fully perform- ed his contract. The appellees thereupon in- stituted an action at law against the appel- lant, alleging (1) that appellant had procur- ed its signature to the contract by fraud and misrepresentation; (2) that there was an im- plied warranty in the sale of the accounts, to the effect that they were subsisting and enforceable against the parties whose ac- counts they purported to be; and (3) that ap- pellant received the property without any consideration therefor having been paid by him. The appellant made an issue erf fact on the first claim, and demurred to the sec- ond and third. The demurrer was sustained as to the third, and overruled as to the sec- ond. Defendant thereupon answered the sec- ond, pleading that, under the arrangMnents had with those who secured the services of his stallion, it was agreed that nothing should be paid unless the mares were got with foal; that plaintiffs linew of this arrange- ment when they accepted the assignment of the accounts. Thereupon plaintiffs amend- ed their petition by adding another count, in which they claimed that, by mutual mistake, or by mistake on their part and fraud on de- fendant's, the words "foals" was inserted in that part of the contract containing the guar- anty, instead of the word "accounts"; and 202 MISTAKE OF LAW. they asked that the mistake be corrected, aud the contract reformed. A motion was then filed by defendant attacking the petition on the ground of misjoinder. This motion was sustained, but plaintlflfs were permitted to file this last count as an independent action In equity. Certain pleadings were filed attack- ing this equitable pleading, which need not be referred to, and finally the defendant an- swered, admitting the receipt of the goods as alleged, but denying the fi-aud and mistake. He also pleaded that plaintiffs, by the institu- tion of the law action, had confirmed the con- tract, and elected to stand thereon, and that they could not now be allowed to repudiate it; and that the contract was merged in a judgment by which the rights of the parties were fully determined. Defendant also plead- ed that plaintiffs, with full knowledge of the contents of the written contract, and that the word "foals" was used therein, confirmed the same, and elected to stand by the conditions thereof. The plaintiffs filed a reply, denying this last claim of defendant, and also filed a demurrer to that part of the answer plead- ing an election and confirmation. This de- murrer was submitted with the case, and the court, in rendering the decree, sustained the demurrer, reformed the contract as prayed, and rendered judgment tor plaintiffs. De- fendant excepted to the rulings, and appeals. 1. The first point relied upon by appellant is that the court erred in sustaining the de- murrer to that part of his answer pleading election and confirmation. It is said that plaintiffs, by reason of having commepced their suit at law, elected to rely upon the contract, and that they cannot now be al- lowed to change front, and seek to have it reformed. The question presented is not open for our consideration. The suit is an equitable one, triable de novo in this court, upon the issues of fact presented to the low- er court; and, while the appellant might also have the case considered on error, yet, to do so, he must assign the errors of which he complains. Powers v. O'Brien Co., 54 Iowa, 501, 6 N. W. 720; Patterson v. Jack, 59 Iowa, 632, 13 N, W. 724; Hodgin v. To- ler, 70 Iowa, 21, 30 N. W. 1. There is no as- signment of errors, and we cannot, therefore, review the action of the trial court in sus- taining appellees' demurrer. It may not be inappropriate to say, however, that we do not thinlv the facts as pleaded in defend- ant's answer constitute such an election of remedies, or such a claim of right, as pre- vents the appellees from asking for a refor- mation of the contract upon which the suit is founded. 2. The appellees alleged in their petition that the contract of sale "did not express the real contract entered into between plaintiff and defendant, * * • in that the word 'foals' was, by fraud or mistake of the de- fendant, used in the place of the word 'ac- counts,' * * * but that plaintiff, through mistake as to the contents of said instru- ment, believed that the word 'accounts' was used in the said instrument where the word 'foals' is found, and was thereby Induced to sign the said instrument." In an amend- ment to the petition, the appellees said "that either said instrument did not express the intention and real contract of the parties signing the same by reason of the mistake of both parties or of the scrivener drawing the same, or that the defendant fraudulently pre- sented the same to plaintiffs, intending that plaintiffs should be misled thereby, and knowing that plaintiffs were in error as to the terms and to its sufficiency to express the contract between them." It is now in- sisted that the evidence does not sustain ei- ther claim. It seems to us that this is true in so far as it relates to the alleged mistake of fact recited in the original petition. The evidence conclusively shows that both mem- bers of plaintiffs' firm knew when they sign- ed the contract just what it contained. They knew that the word "foals" was used. In- stead of the word "accounts." They talked about the contract with each other before signing it. The defendant says that there was no mistake; that the language used was just as he intended. Manifestly, there was no such mistake of fact as to justify a reformation of the instrument, for the plain reason that neither party was mistaken in regard to what was in fact in the contract. A mistake, to be such as the law will relieve from, must be mutual aud reciprocal. When the contract as executed is just as the par- ties intended to make it, the court has no power to reform it because of mistake of fact. To do so would be making a new contract for the parties, and would also im- pose upon one burdens which he did not in- tend to assume. No coiu't has the power to make a new contract for the parties. It can only do what the parties mutually and mani- festly intended at the time they signed the same. The mistake made, if any, was with reference to the efficacy of the terms used to carry out the intent of the parties, and this is the real claim made by the appellees. We have, then, the question: Will a court of equity reform a contract under such circum- stances? In the case of Lee v. Percival, 52 N. W. 543, we held, following the rule laid down by Prof. Pomeroy in his work on Eq- uity Jurisprudence, that "if, on the other hand, after making an agreement, in the pro- cess of reducing it to a written form, the in- strument, by means of a mistake of law, fails to express the contract which the par- ties actually entered into, equity will inter- fere with the appropriate relief, either by way of defense to its enforcement or by cancellation or reformation, to the same ex- tent as if the failure of the writing to ex- press the real contract was caused by a mistake of fact. In this instance there is no mistake as to the legal import of the con- tract actually made; but the mistake of law prevents the real contract from being MISTAKE OF LAW. 203 emljodied In the written instrument." The counterpart of this proposition announced by Prof. Pomeroy is: "The doctrine is settled that, in general, a mistake of law, pure and simple, is not adequate ground for relief." Section 842. "The rule Is well settled that a simple mistake by a party as to the legal effect of an agreement which he executes, or as to the legal result of an act which he performs. Is no ground for either defensive or affirmative relief. * • * The principle underlying this rule is that equity will not interfere for the purpose of can'ying out an intention which the parties did not have when they entered into a transaction, but which they might or even would have had If they had been more correctly informed as to the law,— if they had not been mistaken as to the legal scope and effect of their trans- action." Section 843. "If an agreement is what it was intended to be, equity will not interfere with it because the parties have mistaken its legal import and efCect." Sec- tion 845. We now have the two rules stated as concisely as general principles may be, and it is next important to determine under which of them this case falls. We have seen that if the parties, at the time they made their agreement,— at the time their minds met, — mutually understood that the defendant was to guaranty all the accounts which he transferred to plaintifEs, but that, in the process of reducing their agreement to writing, they used the word "foals" under the mistaken idea that it was as broad as the word "accounts," then equity will afford relief. But if they made an agreement that defendant should guaranty the foals, under the mistaken idea that this would be a guar- anty of the accounts, then no relief can be granted. It is also a well-settled and oft- repeated rule of law that, before mistakes of either fact or law can be relieved from either affirmatively or negatively, it is es- sential that the proofs be clear, strong, con- vincing, and free from reasonable doubt. Gelpcke V. Blake, 15 Iowa, 387; Clute v. Fra- zier (Iowa) 12 N. W. 327 There is another rule which it may be well to note, as it is relied upon by the appellees in this case. It is as follows: "A mistake which will war- rant a court of equity in reforming a writ- ten contract must be a mistake made by both parties to the agreement, or it must be the mistake of one party by which his in- tentions have failed of correct expression, and there must be fraud in the other party in taking advantage of the mistake, and ob- taining a contract with the knowledge that the one dealing with him is in error as to what are its terms." Bryce v. Insurance Co., 55 N. Y. 243; Wlnans v. Huyck, 71 Iowa, 459, 32 N. W. 422. Another principle which is suggested by appellant may also be stat- ed. It is to the effect that a mistake caused by the want of that care and diligence in the transaction which should be used by every person of reasonable prudence, and the ab- sence of which would be a violation of legal duty, will not be relieved from by a court of equity. Turning now to the evidence, we find that it establishes the following facts: The de- fendant, desirous of purchasiug some farm machinery, visited the plaintiffs, and received from them their lowest and best price there- for. He then offered to exchange some ac- counts in payment or as collateral security for the purchase price. The plaintiffs would not accept these accounts without a guaranty from the defendant, and they so told him. Defendant then said he would be responsible and pay aU accounts that were not paid and turned over to plaintiffs by July 1st. The plaintiffs then said they would accept the proposition. All parties understood at the time the condition of the accounts, — ^that the parties against whom they purported to be were not to be responsible unless the mares proved to be with foal. The defendant wished to do a little more figuring, and said that he was going over to his farm, and would look the matter up a little further, and would write what he concluded to do about the matter. It was further agreed that, if the trade was consummated, the goods should be shipped to defendant over the Rock Island Railroad. The next plain- tiffs heard from defendant was by letter of date March 27, 1891, a copy of which we have already given. When plaintiffs signed the contract which was inclosed in defendant's letter, they understood they were carrying out the arrangements previously made. Some time in September of the year 1891, the plaintiffs ascertained they were not going to receive more than $30 from the accounts which were assigned them, and they called on defendant for payment Defendant put them off from time to time, and finally an- nounced that he intended to stand upon his contract When plaintiffs signed the con- tract, they knew the words it contained, and their mistake, which we are abundantly sat- isfied they made, was as to the legal effect thereof. We feel quite certain that the de- fendant, when he first talked to the plain- tiffs, intended to guaranty all the assigned accounts, and not those only which fully ma- tured. It is not so clear, however, that he, in drafting the contract, intended, by the words used, to make himself responsible for the accounts without reference to the foals. Now, in applying the law to these facts, the first inquiry is, what was the contract as actually entered into by the parties? for It must be remembered that this is not a suit to cancel or set the writing aside, but to make it conform to the real agreement of the parties. If, then, the instrument itself is the contract the parties in fact made, then there is nothing to reform. But if they made a parol contract, — if there was in fact a meeting of the minds of the parties,— and they made a mutual mistake in reducing it to writing, and used terms which did not 204 MISTAKE OF LAW. express the real contract between them, equity will reform the instrument to make it correspond with the contract as actually made. It is apparent from what we have said, as well as from some other circumstan- ces in the case which we cannot take the space to state, that, whUe the parties were making propositions and negotiations with each other for a trade, their minds never in fact met until the plaintiffs signed the writ- ten instrument which was sent for their sig- nature. This was the contract l»etween the parties; and although it did not, for lack of apt words, express what they thought it did, this wns the only agreement they made. It is well to inquire what other contract did they in fact make which should be giv- en force and vitality. The answer is, none. The whole matter as it stood at the end of the personal interview between the parties was in the form of propositions by one to the other. The acceptance by the defendant was not of the offer made him by the plain- tiffs. He in truth sent another proposition when he mailed the contracts signed by him- self.' These contracts were not in accord with the previous negotiations of the parties; but the plaintiffs, when they signed them, knew full well what they contained, and, if any agreement was made, it was the one ex- pressed in the writing. It may be that, be- cause of a mistake of law, the minds of the parties never met. But, if this he conceded, it will not aid the plaintiffs; for they are insisting upon the performance of a contract which they say they did make. They are not suing to avoid an instrument because they never agreed to it. Moreover, if they were asking cancellation or rescission, their own negligence in signing the contract would seem to be a bar to relief of this kind. There is no evidence of fraud of any kind on the part of the defendant. He forward- ed such an agreement as he proposed to make with the plaintiffs, and they, without any kind of imposition, misrepresentation, con- 1 cealment, or other Inequitable conduct on de- fendant's part, signed the instrument with full knowledge of what it contained. The most that can be claimed from the evidence is that the defendant forwarded the instru- ment with intent to induce plaintiffs to be- lieve that it was in accord with the previous negotiations, but this is a mere Inference, which is squarely denied by the defendant. The presumptions are with the defendant, and the rule is well settled that fraud will not be presumed, but must be proved by him who alleges it An insuperable objection to relief on the ground of fraud is the negligence of the plaintiffs in signing the instrument. They had the same means of knowledge as to the legal effect of the words used as the defend- ant; and, if they were mistaken as to the proper legal constniction thereof, it was not due, so far as we can learn from the record, to any fault of the defendant. The case, then, is one of mistake of law, pure and sim- ple, and a court of equity cannot reform it. If we should attempt to do so, we would make a new contract for the parties, and im- pose upon one of them burdens to which he has never assented. While it may seem like a hardship to say that plaintiffs shall not recover for the machinery delivered defend- ant, yet the case is one of mistake of law, in which some person must suffer; "and the law wisely, though sometimes with great ap- parent hardship, leaves it for him to suffer who committed the mistake." These conclusions are supported by the fol- lowing, among other, authorities: Beed v. Root, 59 Iowa, 359, 13 N. W. 323; Moorman V. CoUier, 32 Iowa, 138; Stafford v. Fetters, 55 Iowa, 484, 8 N. W. 322; Baker v. Massey, 50 Iowa, 399; Nowlin v. Pyne, 47 Iowa, 293; Hallam v. Corlett, 71 Iowa, 446, 32 N. W. 449. See, also, the cases cited in the first part of this opinion. It follows from what we have said that the judgment must be reversed. MISTAKE OP LAW. 205 RENARD V. CLINK et al. (51 N. W. 692, 91 Mich. 1.) Supreme Court of Michigan. March 18, 1892. Appeal from circuit court, Charlevoix coun- ty, in chancery; Jonathan G. RamsdeU, Judge. Suit to foreclose a mortgage by Louisa Renard against Alice A. Clink, Eliza S. Fogg, John Nichols, and Walter L. French. Bill dismissed. Complainant appeals. Reversed. Norton & Keat, for appellant. S. H. Clink, for appellees. MONTGOMERY, J. The bill In this cause was filed to foreclose a mortgage executed by the defendant Alice A. Clink to one A. H. Van Dusen, and by him assigned to com- plainant. The other defendants are subse- quent purchasers with notice, after the mort- gage became due. A foreclosure at law was attempted, a sale made, and a deed executed to complainant; but, owing to the fact that the assignment of the mortgage to complain- ant was not of record at the time of said attempted foreclosure, that proceeding proved ineffectual. After the complainant had ob- tained her deed on the foreclosure at law, and before the filing of the present bill, the de- fendant Clink tendered to complainant the amount due upon the mortgage, exclusive of the costs of such former foreclosure; and In this proceeding it is claimed that such tender operated to discharge the lien of the mort- gage. The court below sustained this de- fense, and dismissed the bill. It is made clear by the testimony that the complainant, at the time she refused the ten- der, supposed that she had acquired title by her former foreclosure, and that, notwith- standing this, she was ready to accept the amount of the mortgage, interest, and costs. It also appears that she offered to take the money tendered so far as it would go, but that defendant refused to permit this unless she would accept it In full payment and dis- charge of the mortgage. Under these circum- stances, we think the court below erred in dismissing the bill. Under the repeated rul- ings of this court, a tender of the full amount due upon the mortgage will operate to dis- charge the lien of the mortgage if the tender be refused without adequate excuse. Moyna- han V. Moore, 9 Mich. 9; Eslow v. Mitchell, 26 Mich. 500; Sager v. Tupper, 35 Mich. 134; Stewart v. Brown, 48 Mich. 383, 12 N. W. 499. But In the present case it appears beyond question that the complainant had no purpose of exacting from the defendant any sum be- yond what she believed to be her legal due. While it is a general rule that equity will not relieve against a mistake of law, this rule Is not universal. Where parties, with knowl- edge of the facts, and without any inequita- ble incidents, have made an agreement or other instrument as they intended it should be, and the writing expresses the transaction as it was understood and designed to be made, equity will not allow a defense, or grant a reformation or rescission, although one of the parties may have mistaken or mis- conceived its legal meaning, scope, or effect. Martin v. Hamlin, 18 Mich. 354; Lapp v. Lapp, 43 Mich. 287, 5 N. W. 317. But where a person is Ignorant or mistaken with respect to his own antecedent and existing private legal rights, interest, or estate, and enters In- to some transaction the legal scope and opera- tion of which he correctly apprehends and understands, for the purpose of affecting such assumed rights. Interests, or estates, equity will grant its relief, defensive or affirmative, treating the mistake as analogous to, if not identical with, a mistake of fact. 2 Pom. Eq. § 849, p. 314; Reynell v. Sprye, 8 Hare, 222; Blakeman v. Blakeman, 39 Conn. 320; Whelen's Appeal, 70 Pa. St. 410; Hearst v. Pujol, 44 Cal. 230; Morgan v. Dod, 3 Colo. 551; Cooper v. Phibbs, L. R. 2 H. L. 149; Lansdowne v. Lansdowne, 2 Jac. & W. 205. In Myer v. Hart, 40 Mich. 517, the mort- gagor filed his bill to set aside a mortgage sale, and asked that the premises be relieved from the mortgage lien. The court found that the mortgagee was mistaken as to his legal rights, but was acting In good faith, and refused to enforce the statutory penalty, and decreed that the mortgagor pay the mortgage debt as a condition to relief. In Canfield v. Conkling, 41 Mich. 371, 2 N. W. 191, a bill was filed to set aside a mortgage, and to re- cover the penalty for refusal to discharge it on tender of the amount due. The court found that the tender was sufficient, and say: "He [defendant] was bound to accept the ten- der, and complainant had made out a sufficient case for relief. But the question was one on which he might be mistaken without any serious fault, and we do not think it one where the mortgage ought to be held can- celed without payment; nor is it a case call- ing for the statutory penalty for a willful and knowing wrongful refusal to discharge the mortgage." The decree below should be re- versed, and a decree entered in this court providing for a sale of the mortgaged prem- ises to satisfy the amount due and unpaid up- on the mortgage. The defendant will recover the costs of the court below, and the com- plainant will be entitled to the costs incurred In this court. The other justices concurred. 206 MISTAKE OF LAW, TITUS V. ROCHESTER GERMAN INS. CO. (31 S. W. 127, 97 Ky. 567.) Court of Appeals of Kentucky. May 24, 1895. Appeal from circuit court, Jefferson coun- ty. "To be oflacially reported." Action by XJ. S. Titus against the Roctiester German Insurance Company for rescission of a contract. From a judgment for defend- ant, plaintiff appeals. Reversed. Simrall, Bodley & Doolan, for appellant. Gibson, Jlarshall & Lochre, for appellee. EASTIN, J. This equitable action was brougtit by appellant to rescind a contract made witb appellee by whicli, as alleged, he was induced to accept, in satisfaction of a loss under a policy of insurance issued to him by appellee, an amount equal to one-half of that loss and to one-half of the amount of insurance named in the policy. As grounds of rescission, the petition charges that appellant was ignorant of his legal rights under the policy, and that, through fraud and imposition practiced upon him by appellee's agents, and by willful misrepre- sentations made by them as to his rights un- der the contract of insurance, he was in- duced to accept a part of his claim in satis- faction of the whole. The chancellor sus- tained a general demurrer to the petition, and. appellant declining to plead further, his petition was dismissed, from which ruling this appeal is prosecuted; so that the only question for consideration here is whether or not the facts alleged in the petition, and admitted by the demurrer, are sufficient in equity to entitle appellant to the relief sought. The petition charges, in the fullest and strongest terms, appellant's ignorance of the rights and oWigations of the parties under the policy of insurance, and full knowledge on part of appellee both as to the rights of the parties and as to appellant's ignorance of them, as well as false and fraudulent mis- representations made by appellee's agents for the purpose of deceiving, and which did deceive, appellant, as to the validity of his claim under the policy. It charges, among other things, that appellee fully understood its liability to appellant for the full amount of his loss; that he was ignorant of the law governing his rights and appellee's obliga- tions, while appellee both knew his rights and knew that he was ignorant of them, and with this knowledge, and intending to deceive and defraud him, fraudulently rep- resented to him that, by reason of an incum- brance on a part of the insured property, his entire claim under the policy was forfeited; that these false representations were made to him by appellee for the purpose of de- ceiving and defrauding him; and that by these false and fraudulent representations, and through ignorance of his legal rights, he was induced to accept the sum of $100 in satisfaction of a loss of $800, when, except for these fraudulent representations and his ignorance, he would not have done so. These charges being admitted, it seems to us that the case presented involves something more than an effort to obtain relief purely on the ground of a mistake of law, or mere ignor- ance on part of appellant as to his legal rights under the contract of insurance. It becomes, in addition to this, a case of actual fraud, where, by fraudulent misrepresenta- tions, made for the pm'pose and with the intent to deceive, the known ignorance of one of the parties to the contract has been will- fully taken advantage of, and he has there- by been induced to surrender a valid, sub- sisting right without consideration. It is true that the ignorance relied upon Is an ignorance of law, rather than of facts, and that this is not always or perhaps generally, and when standing alone, available as a ground of relief against an executed con- tract, no matter how inequitable it may be. On this point the decisions of the courts of this country, as well as the Bngtish courts, are by no means uniform; but, in our opin- ion, the weight of authority and the deci- sions of this court would now forbid that a party who, with full knowledge of the ignor- ance of the other contracting party, has not only encouraged that ignorance, and made it the more dense by his own false and fraud- ulent misrepresentations, but has willfully deceived and led that other into a mistaken conception of his legal rights, should shield himself behind the general doctrine that a mere mistake of law affords no ground for relief. This view seems to be upheld by many, if not all, of the modern text writers who are recognized as authority on the ques- tion. Mr. Kerr, in his well-known work, in treating of this subject, tays: "But if it ap- pear that the mistake was induced or en- couraged by the misrepresentations of the other party to the transaction, or was per- ceived by him, and taken advantage of, the court will be more disposed to grant relief than in cases where it does not appear that he was aware of the mistake." Kerr, Fraud & M. pp. 399, 400. And, in his work on Equity, Mr. Bispham lays down this doctrine in even stronger and less uncertain terms. He says: "Where ignorance of the law ex- ists on one side, and that ignorance is known and taken advantage of by the other party, the former will be relieved. More particu- larly will this be so if the mistake was en- couraged or induced by misrepresentations of the other party." Bisp. Eq. § 188. Un- der the admitted facts of this case and the circumstances surrounding and leading up to the mistake relied on here, It Is clearly brought within the text above quoted; and many other authorities to the same effect, including reported cases in many of the states of this Union, might be cited, if it were necessary. We fully recognize the wisdom of that rule MISTAKE OF LAW. 207 -which always Inclines the courts to uphold and enforce the validity of voluntary com- promises and adjustments between parties of tlieir legal differences, when fairly ar- rived at. Nor would any mere ignorance of or mistake in the law governing any doubtful and disputed legal proposition, on part of either of the parties to the com- promise, in the absence of evidence tending to show that he has been overreached or un- fairly dealt with or taken advantage of, and where supported by a good consideration, be sufficient, in our judgment, to justify the rescission of a compromise settlement de- liberately made between parties, standing upon an equal footing, and with full knowl- edge of all the facts. If every mistake of law were sufficient to warrant the inter- ference of the courts, then no compromise of a disputed legal proposition would be final, for in every such case one party or the other to the controversy is mistaken as to the law of the case. Upon the record be- fore us, there may be some question as to how far there was a controversy between these parties over any doubtful legal ques- tion that might have been litigated In court, or exactly what was the nature and extent of the same. It is alleged in the petition that appellee claimed that all rights of ap- pellant under his policy of insurance were forfeited by reason of the existence of an incumbrance upon a part of the insured property; but it is further alleged that ap- pellee, at the time the contract of insurance was m- 'e, "had full knowledge of the same, and, having such knowledge, made the con- tract, and issued the policy aforesaid." This allegation is admitted to be true, and, in the absence of anything further in the pleading pertaining to this point, we are unable to see in this the basis of a doubtful disputed legal proposition which might have been litigated in the courts, or to know ex- actly what controversy was settled by the parties. But waiving the question as to the nature and extent of the controversy be- tween appellant and appellee, and reverting to the character of the compromises which courts will uphold, we now quote from an other text writer, who uses this language, to wit: "Voluntary settlements are so fa- vored that if a doubt or dispute exists be- tween parties with respect to their rights, and all have the same knowledge or means of obtaining knowledge concerning the cir- cumstances involving these rights, and there is no fraud, misrepresentation, concealment, or other misleading incident, a compromise into which they thus voluntarily enter must stand and be enforced, although the final is- sue may be different from that which was anticipated, and although the disposition made by the parties in their agreement may not be that which the court would have de- creed had the controversy been brought be- fore it for decision. Of course, there must not only be no misrepresentation, Imposition, or concealment; there must also be a full dis- closure of all material facts within the knowledge of the parties, whether demand- ed or not by the others." Pom. Eq. Jur. § 850. Under the authorities quoted, it is manifest that the compromise contract sought to be rescinded here is within the control of a court of equity, and may be set aside. And now, referring to the de- cisions of this court, and to the doctrine es- tablished in this state, it seems to up still clearer that the contract complained of, and which was made under the circumstances set forth in the petition and admitted by ap- pellee, cannot be sustained. In an exhaust- ive opinion, in which the authorities were ably reviewed, by Judge Robertson, after re- ferring to the difficulty of determining in every case when a contract was, in fact, made under a mistake of law, it is said: "When it can be made perfectly evident that the only consideration of a contract was a mistake as to the legal rights or obligations of the parties, and when there has been no fair compromise of bona fide and doubtful claims, we do not doubt that the agreement might be avoided on the ground of a clear mistake of law, and a total want, therefore, of consideration or mutuality." Underwood V. Brockman, 4 Dana, 309. In the case of Bay V. Bank, 3 B. Mon. 510, this court re- ferred to and approved the above case, and said: "Upon the whole, we would remark that whenever, by a clear and palpable mis- take of law or fact, essentially bearing upon and affecting the contract, money has been paid without cause or consideration, which in law, honor, or conscience was not due and payable, and which in honor or good con- science ought not to be retained, it was and ought to be recovered back." Both of these cases are cited with approval in the case of Louisville & N. R. Co v. Hopkins Co., 87 Ky. 613, 9 S. W. 497, and the doctrine laid down therein has not been departed from by this court. It will be seen that the ques- tion of fraud did not enter into the decision of either of those cases, but that they are almost entirely based upon the fact that there was no good consideration to uphold the contracts; that it was not a fair com- promise of bona fide and doubtful claims; and that the money was not In law, honor, or conscience payable, and ought not in honor or good conscience to be retained. If, for these reasons, a contract made un- der a clear mistake of law may be set aside, then how much stronger reason is there for annulling the contract under consideration? Not only was this contract, according to this record, as it comes before us, wholly with- out consideration, and not only was the money surrendered by appellant on his claim not due in law, honor, or conscience, and surrendered only under a clear mistake of law, but it is further admitted by the de- murrer that this contract was obtained, and that appellant was induced to surrender one- 208 MISTAKE OF LAW. half of his claim, by the actual false and fraudulent misrepresentations of appellee, knowingly made for the purpose of deceiv- ing and defrauding appellant We are clear- ly of the opinion that the chancellor erred in sustaining the demurrer to the petition. and, for the reasons indicated, his Judgment dismissing appellant's petition is reversed, and the action is remanded, with directions to set aside that order, and to overrule the demurrer, an"! give appellee leave to file an answer. MISTAKE OF LAW. 209 ERKENS V. NICOLIN. (40 N. W. Rep. 567, 39 Minn. 461.) Supreme Court of Minnesota. Nov. 28, 1888. Appeal by defendant from an order of the district court for Scott county, Edson, J., presiding, refusing a new trial after a trial by tbe court. Peck & Brown, for appellant. E. South- worth, for respondent. MITCHELL, J. Action to recover back the money paid by plaintiff to defendant for a quitclaim deed of a piece of land in the village of Jordan. The facts, as disclosed by the evidence, are that defendant platted into lots a tract of land, of which he was the owner, lying between Water street and Sand creek. As shown upon the plat, the north and south lines of the lots extend from Water street to the creek. The distance marked on the plat gave the length of these lines as 80 feet, but the actual distance from Water street to the creek was 110 feet. One of these lots, and the adjoining 35 feet of another, had been conveyed by defendant, according to the plat, to plaintiff or plaintiff's grantor. Subsequently defendant claimed and stated to plaintiff, in substance, that the lots only extended back 80 feet, according to the dis- tance indicated on the plat, and hence that he stiU owned the strip of 30 feet next to the creek. Plaintiff knew that defendant's claim was based wholly upon the theory that the distance given on the plat would control, and hence that his claim of title was in fact but expressions of opinion as to the legal ef- fect and construction to be given to the plat. So far as the evidence shows, defend- ant made this claim in good faith, and honest- ly supposed that his deeds of the lots only conveyed 80 feet. Plaintiff took the matter under consideration for nearly a month, and went to the register's office and examined the plat for himself. He then obtained from defendant and wife a quitclaim deed of all the land down to the creek, and paid there- for the money which he now seeks to re- cover. When he paid the money he knew all the facts, and had the same means of knowl- edge of them which defendant had. The transaction was unaffected by any fraud, HUTCn.& BXJNK.EQ.— 14 trust, confidence, or the like. The parties dealt with each other at arm's length. Plain- tiff was not laboring under any mistake of facts. He took the deed and paid his money under a mistake of law as to his antecedent existing legal rights in the property, suppos- ing that, according to the proper legal con- struction of the plat, the lots were only 80 feet deep. However, under the doctrine of Nicolin v. Schneiderhan, 37 Minn. 63, 33 N. W. Rep. 33, since decided by this court, it is now settled that a deed of lots according to this plat would cover all the land down to the creek, under the rule that distances must yield to natural boundaries called for in a deed. We are vmable to see that this case differs in principle from Perkins v. Trinka, 30 Minn. 241, 15 N. W. Rep. 115, and Hall v. Wheeler, 37 Minn. 522, 35 N. W. Rep. 377. It is unnecessary to enter into any discus- sion of the question (left in great confusion in the books) when, if ever, relief will be granted on the ground of mistake in law alone, or whether there is any difference be- tween mistake of law and ignorance of law, or between ignorance or mistake as to a general rule of law and ignorance or mistake of law as to existing individual rights in tlie property which is the subject-matter of the contract. We hold that money paid under mistake of law cannot be recovered back where the transaction is unaffected by any fraud, trust, confidence, or the like, but both parties acted in good faith, knew all the facts, and had equal means of knowing them, especially where, as was evidently the fact in this case, the transaction was intended to remove or settle a question of doubt as to title. It would be impossible to foresee all the consequences which would result from al- lowing parties to avoid their contracts in such cases on the mere plea of igno- rance or mistake of law affecting their rights. It would be difficult to tell what titles would stand, or what contracts would be binding, if grantors and grantees were at liberty to set up such a plea. This may seem to work inequitably in the present case, but more mischief will always result from at- tempting to mould the law to what seems natural justice in a particular case than from a steady adherence to general principles. Order reversed. 210 MISTAKE OF FACT. GRYMES V. SANDERS et al. (93 U. S. 55.) Supi tvae Court of the United States. Oct. Term, 1876. Appeal from the circuit court of the United States for the eastern district of Virginia. Conway Robinson and Mr. Leigh Robinson, for appellant. Edwin L. Stanton and George M. Dallas, for appellees. Mr. Justice SWAYNE. The appellant was the defendant In the court below. The rec- ord discloses no ground for any imputation against him. It was not claimed in the dis- cussion at the bar, nor is it insisted In the printed arguments submitted by the counsel for the appellees, that there was on his part any misrepresentation. Intentional or other- wise, or any indirection whatsoever. Nor has it been alleged that there was any inten- tional misrepresentation or purpose to de- ceive on the part of others. The case rests entirely upon the ground of mistake. The question presented for our de- termination is whether that mistake was of such a character, and attended with such cir- cumstances, as entitle the appellees to the relief sought by their biU and decreed to them by the court below. Peyton Grymes, the appellant, owned two tracts of land in Orange county, Va., lying about twenty-five miles from Orange com-t- house. The larger tract was regarded as val- uable, on account of the gold supposed to be upon it. The two tracts were separated by intervening gold-bearing lands, which the appellant had sold to others. Catlett applied to him for authority to sell the two tracts, which the appellant stlU owned. It was given by parol; and the appellant agreed to give, as Catlett's compensation, aU he could get for the property above $20,000. Catlett offered to seU to Lanagan. Lanagan was unable to spare the time to visit the proper- ty, but proposed to send Howel Fisher to examine it This was assented to; and Cat- lett thereupon wrote to Peyton Grymes, Jr., the son of the appellant, to have a convey- ance ready for Fisher and himself at the court-house upon their arrival. The convey- ance was provided accordingly, and Peyton Grymes, Jr., drove them to the lands. They arrived after dark, and stayed all night at a house on the gold-bearing tract. Fisher In- sisted that he must be back at the court- house in time to take a designated train east the ensuing day. This involved the necessity of an early start the next morning. It was arranged that Peyton Grymes, Jr., should have Peyton Hume, who lived near at hand, meet Fisher on the premises In the morning and show them to him, while Grymes got his team ready for their return to the court-house. Hume met Fisher accord- ingly, and showed him a place where there had been washing for surface-gold, and then took him to an abandoned shaft, which he supposed was on the premises. There Fisher examined the quartz and other debris lying about. But a very few minutes had elapsed when Qrymes announced that his team was ready. The party Immediately started back to the cotfft-house. Arriving too late for the train, they drove to the house of the appel- lant: and Fisher remained there until one o'clock that night. WhUe Fisher was there, considerable conversation occurred between him and the appellant in relation to the prop- erty; but It does not appear that any thing was said material to either party in this controversy. Fisher proceeded to Philadel- phia, and reported favorably to Lanagan, and subsequently, at his request, to Repplier, who became a party to the negotiation. He represented to both of them that the aban- doned shaft was upon the premises. Cat- lett went to Philadelphia, and there he sold the property to the appellees for $25,000. Fisher was sent to the court-house to inves- tigate the title. He employed Mr. Williams, a legal gentleman living there, to assist him. A deed was prepared by Mr. Williams, and executed by the appellant on the 21st of March, 1866. On the 7th of April ensuing, the appellees paid over $12,500 of the pur- chase-money, and gave their bond to the ap- pellant for the same amount, payable six months from date, with interest. The deed was placed in the hands of a depositary, to be held as an escrow until the bond should be paid. Catlett, under a power of attorney, received the first Installment, paid over to the appellant $10,000, and retained the residue on account of the compensation to which he was entitled under the contract between them. The vendees requested Hume to hold possession of the property for them until they should make some other arrangement. He occupied the premises until the following July, when, with their consent, he transfer- red the possession to Gordon. In that month, Lanagan and Repplier came to see the property. Hume was there washing for gold. He began to do so with the permission of the appellant before the sale, and had con- tinued the work without intermission. The appellees desired to be shown the boundary- lines. Hume said he did not know where they were, and referred them to Johnson. Johnson came. The appellees desired to be taken to the shaft which had been shown to Fisher. Johnson said it was not on the premises. Hume thought it was. Johnson was positive; and he was right. The appel- lees seemed surprised, but said little on the subject. They proceeded to examine the premises within the lines, and, before taking their departure, employed Gordon to explore the property for gold. Subsequently this ar- rangement was abandoned, and they paid him for the time and money he had expend- ed in getting ready for the work. In Septem- ber, they sent Bowman as their agent to make the exploration. On his way, he stop- ped at the court-house, and told the appel- MISTAKE OF FACT. 211 lant that the shaft shown to Fisher as on the land was not on It The appellant replied instantly, "that there was no shaft on the land he had sold to Repplier and Lanagan, and that he had never represented to any one that there was a shaft on the land, and that he had never authorized any one to make Such a representation, nor did he know or have reason to believe that any such rep- resentation had, in fact, been made by any one." It does not appear that his attention had before been called to the subject, or that he was before advised that any mistake as to the shaft had occurred. Bowman spent some days upon the land, and made a num- ber of cuts, all of which were shallow. The deepest was only fifteen feet in depth. It was made under the direction of Embry and Johnson, two experienced miners living in the neighborhood. It reached a vein of quartz, but penetrated only a little way into it. They thought the prospect very encour- aging, and m-ged that the cut should be made deeper. Bowman declined to do anything more, and left the premises. No further explora- tion was ever made. Johnson says, "I know the land well, and know there has been gold found upon it, and a great deal of gold, too,— that is to say, surface-gold,— but it has never been worked for vein-gold. The gold that I refer to was found by the defendant, Grymes, and those that worked under him." He con- sidered Bowman's examination "imperfect and insufflclent." He had had "twenty-three years' experience in mining for gold." Embry's testimony is to the same effect, both as to the surface-gold and the charac- ter of the examination made by Bowman. The premises lie between the Melville and the Greenwood Mines. Before the war, a bucket of ore, of from three to four gallons, taken from the latter mine, yielded $2,400 of gold. This, however, was exceptional. In the spring of 1869 a vein was struck, from forty to fifty feet below the surface, yielding $500 to the ton. Work was stopped by the influx of water. It was to be resumed as soon as an engine, which was ordered, should arrive. Ore at that depth, yielding from eight to ten dollars a ton, will pay a profit. Embry says he is well acquainted with the courses of the veins in the Melville and the Greenwood Mines, and that "the Greenwood veins do pass through the land in contro- versy, and some of the Melville veins do also." Speaking of Bowman and his last cut, he says: — "At the place I showed him where to cut he struck a vein, but just cut into the top of it; he did not go down through it, or across it. From the appearance of the vein, I was very certain that he would find gold ore. If he would cut across It and go deep into it, and I told him so at the time; but he said that they had sent for him to return home, and be couldn't stay longer to make the examination, and went off, leaving the cut as it was; and the exploration to this day has never been renewed. I am still sat- isfied, that, whenever a proper examination is made, gold, and a great deal of it, will be found in that vein; for it is the same vein which passes through the Greenwood Mine, which was struck last spring, and yielded $500 to the ton. His examination in other respects, as well as this, was Imperfect and insufficient. I don't think he did any thing like making a proper exploration for gold. I don't think he had more than three or four hands, and they were not engaged more than eight or ten days at the utmost." In September, 1866, Repplier instructed Catlett to advise the appellant, that, by rea- son of the mistake as to the shaft, the appel- lees demanded the ret\u;n of the purchase- money which had been paid. In the spring of 1867, Lanagan, upon the same ground, made the same demand in person. The ap- pellant replied, that he had parted with the money. He promised to reflect on the sub- ject, and address Lanagan by letter. He did write accordingly, but the appellees have not produced the letter. This blU was filed on the 21st of March, 1868. A mistake as to a matter of fact, to war- rant relief in equity, must be material, and the fact must be such that it animated and controlled the conduct of the party. It must go to the essence of the object In view, and not be merely incidental. The court must be satisfied, that but for the mistake the complainant would not have assumed the obligation from which he seeks to be re- lieved. Kerr on Mistake and Fraud, 408; Trigg v. Read, 5 Humph. 529; Jennings v. Broughton, 17 Beav. 241; Thompson v. Jack- son, 3 Band. 507; Harrod's Heirs v. Cowan, Hardin, 553; Hill v. Bush, 19 Barb. (Ark.) 522; Juzan v. Toulmln, 9 Ala. 662. Does the case in hand come within this category? When Fisher made his examination at the shaft, it had been abandoned. This was pri- ma facie proof that it was of no account. It does not appear that he thought of having an analysis made of any of the debris about it, nor that the debris Indicated in any wise the presence of gold. He requested Hume to send him specimens from the shafts on the contiguous tracts, and it was done. No such request was made touching the shaft in question, and none were sent. It is nei- ther alleged nor proved that there was a purpose at any time, on the part of the ap- pellees, to work the shaft. The quartz found was certainly not more encouraging than that taken from the last cut made by Bow- man under the advice of Embry and John- son. This cut he refused to deepen, and abandoned. When Lanagan and Repplier were told by Johnson that the shaft was not on the premises, they said nothing about abandoning the contract, and nothing which MISTAKE OF PACT. manifested that they attached any particular consequence to the matter, and certainly nothing which Indicated that they regarded the shaft as vital to the value of the prop- erty. They proceeded with their examina- tion of the premises as If the discovery had not been made. On his way to Philadelphia, after this visit, Lanagan saw and taUsed sev- eral times with Williams, who had prepared the deed. Williams says, "I cannot recollect all that was said in those conversations, hut I do know that nothing was said about the shaft, and that he said nothing to produce the Impression that he was dissatisfied or disappointed In any respect with the proper- ty after the examination that he had made of It" Lanagan's conversation with House- worth was to the same effect. The subsequent conduct of the appellees shows that the mistake had no effect upon their minds for a considerable period after Its discovery, and then it seems to have been rather a pretext than a cause. Mistake, to be available In equity, must not have arisen from negligence, where the means of knowledge were easily accessible. The party complaining must have exercised at least the degree of diligence "which may be fairly expected from a reasonable person." Kerr on Fraud and Mistake, 407. Fisher, the agent of the appellees, who had the deed prepared, was within a few hours' travel of the land when the deed was exe- cuted. He knew the grantor had sold contig- uous lands upon which veins of gold had been found, and that the coiu-se and direction of those veins were important to the premises in question. He could easily have taken measures to see and verify the boundary- lines on the ground. He did nothing of the kind. The appellees paid their money with- out even inquiring of any one professing to know where the lines were. The courses and distances specified In the deed show that a surveyor had been employed. Why was he not called upon? The appellants sat quietly In the dark, until the mistake was developed by the light of subsequent events. PuU knowledge was within their reach all the tltne, from the beginning of the negotiation until the transaction was closed. It was their own fault that they did not avail them- selves of it. In Shirley v. Davis, 6 Ves. 678, the complainant, being desirous to become a freeholder In Essex, bought a house which he supposed to be In that county. It proved to be in Kent. He was compelled In equity to complete the purchase. The mistake there, as here, was the result of the want of proper diligence. See also Seton v. Slade, 7 Ves. 269; 2 Kent's Com. 485; 1 Story's Eq., sects. 146, 147; Attwood v. Small, 6 CL & Fin. 338; Jennings v. Broughton, 17 Beav. 234; Campbell v. Ingilby, 1 De G. & J. 405; Gar- rett V. Burleson, 25 Tex. 44; Warner v. Dan- iels et al., 1 Woodb. & M. 91; Ferson v. San- ger, id. 139; Lamb v. Harris, 8 Ga. 546; Trigg V. Read, 5 Humph. 529; Haywood t. Cope, 25 Beav. 143. Where a party desires to rescind upon the ground of mistake or fraud, he must, upon the discovery of the facts, at once annovmce his purpose, and adhere to it. If he be si- lent, and continue to treat the property as his own, he wlU be held to have waived the objection, and wUl be conclusively bound by the contract, as If the mistake or fraud had not occurred. He is not permitted to play fast and loose. Delay and vacillation are fatal to the right which had before subsist- ed. These remarks are peculiarly applicable to speculative property like that here In question, which Is liable to large and con- stant fluctuations In value. Thomas v. Bar- tow, 48 N. Y. 200; Flint v. Woodin, 9 Hare, 622; Jennings v. Broughton, 5 De G., M. & G. 139; Lloyd v. Brewster, 4 Paige, 537; Saratoga & S. R. R. Co. v. Row, 24 Wend. 74; Minturn v. Main, 3 Seld. 220; 7 Rob. Prac, c. 25, sect. 2, p. 432; Campbell v. Fleming, 1 Ad. & El. 41; Sugd. Vend. (14th ed.) 335; Diman v. Providence, W. & B. R. R. Co., 5 R. I. 130. A coiu-t of equity is always reluctant to re- scind, unless the parties can be put back In statu quo. If this cannot be done, It wIU give such relief only where the clearest and strongest equity imperatively demands it Here the appellant received the money paid on the contract In entire good faith. He parted with It before he was aware of the claim of the appellees, and cannot conven- iently restore It The imperfect and abortive exploration made by Bowman has Injured the credit of the property. Times have since changed. There is less demand for such property, and it has fallen largely In market value, tinder the circumstances, the loss ought not to be borne by the appellant Hunt V. Silk, 5 East, 452; Mlntiffu v. Main, 3 Seld. 227; OklU v. Whlttaker, 2 PhiU. 340; Brisbane v. Dacres, 5 Taunt. 144; Andrew V. Hancock, 1 Brod. & B. 37; Skyrlng v. Greenwood, 4 Bam. & C. 289; Jennings v. Broughton, 5 De G., M. & G. 139. The parties, in dealing with the property In question, stood upon a footing of equality. They judged and acted respectively for them- selves. The contract was deliberately enter- ed into on both sides. The appellant guaran- teed the title, and nothing more. The appel- lees assumed the payment of the purchase- money. They assumed no other ilabillty. There was neither obligation nor liability on either side, beyond what was expressly stip- ulated. If the property had proved unex- pectedly to be of Inestimable value, the ap- pellant could have no further or other claim. If entirely worthless, the appellees assumed the risk, and must take the consequences. Segur V. Tingley, 11 Conn. 142; Haywood v. Cope, 25 Beav. 140; Jennings v. Broughton, 17 Id. 234; Attwood v. SmaU, 6 01. & Fin. 497; Marvin v. Bennett, 8 Falge, 321; Thom- MISTAKE OF FACT. 213 as ▼. Bartow, 48 N. Y. 198; Hunter v. Goudy, 1 Ham. 451; Hall v. Thompson, 1 Sm. & M. 481. The bill, we have shown, cannot be main- tained. In our examination of the case, we have assumed that those who are alleged to have spoken to the agent of the appellees upon the subject of the shaft, before the sale, had' the requisite authority from the appellant Considering this to be as claimed by the appellees, our views are as we have express- ed them. We have not, therefore, found it necessary to consider the question of such authority; and hence have said nothing upon that subject, and nothing as to the aspect the case would present if that question were resolved in the negative. Decree reversed, and case remanded with directions to dismiss the biU. 214 MISTAKE OF FACT. KIEGEL V. AMERICAN LIFE INS. CO. (25 Atl. 1070, 153 Pa. St. 134.) Supreme Court of Pennsylvania. Feb. 13, 1893. Appeal from court of common pleas, Philadelphia county; Thayek, Judge. Bill by E.Theresa Riegel, administratrix of Jacob Eiegel, deceased, against the American Life Insurance Company, asking the reinstatement of a surrendered policy. Decree sustaining a demurrer to the bill, and dismisBiug it, from which plaintiff ap- peals. Reversed. William W. Porter and Frederick J. Gei- ger, for appellant. H. Hazelhurst, for ap- pellee. S'l'ERRETT, J. When this cause was here two years ago, on appeal from decree sus- taining the general demurrer, and dis- missing the bill, an amendment, for the purpose of clearly expressing what at moKt was only implied, was moved, and allowed at bar, by adding to the fifth par- agraph of the bill these words: "Both of the parties acting in respect to the trans- action on the basis that the said Leisen- ring was then alive." That defect in the hill, however, did not appear to be the ground on which the demurrer was sus- tained in the court below. The plaintiff's equity, grounded on averments of fact contained in the bill, and admitted by the pleading, was then fully considered, and emphatically sustained, in a clear and con- vincing opinion by our Brother Williams. reported in 140 Pa. St. 201, and 21 Atl. Ren. 392. The decree was accordingly reversed, and record remitted, with direction that the defendant plead or answer, etc. After full consideration of the facts and circum- stances, the opinion referred to concluded thus: "Upon these facts, if the attention of the learned judge had not been diverted from them, we feel sure he would have reached the same conclusion that we have reached,— that it would be grossly inequi- table to hold the plaintiff to a bargain made under the influence of n mistake of fact like that before us. This mistake the demurrer admits. If there had been any circumstance which the defendant could have set up to show that a correction of this mistake at this time would be in- equitable, it should have been shown to the court by answer. If such circumstan- ces do exist, they may yet be presented, as the case goes back to enable the defend- ant to take defense upon the merits." The defendant company, having been declared Insolvent, was duly dissolved, on appli- cation of the attorney general, more than a year before the answer was filed by Mr. Ritchie, the then president of the Real-Es- tate Title Insurance Company, which, in the interim, appears to have been appoint- ed receiver of the defunct company. No plea or answer was ever filed by any offi- cer of said company, nor by any one, on its behalf, who had any knowledge, other- wise than by information obtained from others, of the facts averred in the bill. Mr. Ritchie and his company were entire (Strangers to the transaction, and neither of them appears to have had any knowl- edge of the facts upon which plaintiff's equity is grounded ; and of course it was Impossible for him, as president of the receiver company, to answer otherwise than upon information and belief. In the jurat to his answer he swears the allega- tions thereof are true "so far as they are therein stated as of his own knowledge," etc. ; but the answer contains not a single allegation that purports to be "as of his own knowledge." The special evidential efficacy of a re- sponsive answer in equity is due to the fact that the plaintiff, by calling on the de- fendant to answer the allegations of the hill, appeals to his conscience, accredits him, and pro bar. makes him his own wit- ness. The plaintiff in this case never called upon Mr. Ritchie, or any other stranger to the transactions alleged in the bill, to make answer thereto. The officers of the insurance company, who werecognizantof those transactions, were the proper persons to deny, if they could of their own knowledge, the averments of the bill, and thus make the answer respon- sive. The answer of Mr. Ritchie in this case is in no sense a responsive answer. It is merely pleading; and, as such, put in issue the facts in dispute, without more. Eaton's Appeal, 6fi Pa. St. 490; Burke's Appeal, 99 Pa. St. ;161; Socher's Appeal, 104 Pa. St. 609; Coleman v. Ross, 46 Pa. St. 1H5; Story, Eq. Jur. §§ 1528,1529; 3 Greenl. Ev.§§ 287-2S9; Daniell.Ch. Pr. 846. In note to the latter it is waid that an answer which alleges as facts what the defend- ant could not personally know, though re- sponsive to the bill, simply puts plaintiff upon proof of his own allegations. So, too, in 3 Greenl. Ev. § 287, it is said that, if the fact asserted by the defendant is such mat it is not and cannot be within his own knowledge, but is in truth only an expres- sion of his strong conviction of its exist- ence, or is what he deems an infallible de- duction from facts which were known to him, his answer is not responsive, in the sense of being evidence In his own favor. The nature of his testimony cannot be changed by the positiveness of his asser- tion. The answer of an infant by his guardian ad 7iteHj, though It be responsive to the bill, and sworn to by the guardian, is not evidence in his favor. But whether the answer he regarded as responsive or not, the proofs were quite sufficient to warrant the learned master in finding, as he did, the truth of every material averment in the bill. His find- ings of fact are in strict accord wth the uncontradicted testimony, and his con- clusions of law are so manifestly correct that his report should have been unhesi- tatingly approved, and decree made in accordance therewith. No testimony, either written or oral, was introduced b.v or on behalf of the defendant. All the material facts on which plaintiff's equity is grounded were as clearly and conclu- sively established as if they had been ad- mitted by answer, or by demurrer to the bill; so that practically we have now be- fore us substantially the same questions that were fully considered and determined when the case was here before. In that appeal the fourth and fifth specifications MISTAKE OF FACT. 215 of errors are quotations from the opinion of the learned president of the court be- low dismissing the bill, wherein, spealiing ol the new contract, he says: " (4) It was not a contract induced by a mistake about facts, but a contract made in view of doubtful facts, and because of the doubtful facts. (5) It was in the nature of a compromise, founded upon the doubts wliich existed, not upon any mis- take of the facts." In this appeal the third specification, quoted from the opin- ion of same learned judge, again dismiss- ing the bill, is that "the new contract was not a contract induced by fhutual mistake about the facts, but a contract made in view of doubtful facts, and be- cause of the doubtful facts." The second specification in this is in effect the same as the fifth in theformer appeal. These prop- ositions go to tlie very heart of the plain- tiff's case. They substantially involve the only cardinal questions that are or ever have been in it, and about which there is the slightest room for doubt. They are the very questions that were considered and decided by this court when the case was here before. That clearly appears iu the opinion, wherein, after re- citing the facts averred in the bill, it is said: "The case presented on these facts was that of a contract entered into under the influence of a mutual mistake, and a claim for relief from such contract. The mistake was in relation to the fact of Ijeisenring's death. Both parties evident- ly supposed and acted on the supposition that he was alive, and that theannual pre- miums upon his life, which had become burdensome to Mrs. Eiegel, must be con- tinued indefinitely until his death should take place. As it had become difficult for her to pay these premiums, the only way in which she could be relieved from them was to surrender her policy, and accept a paid-up policy for such smaller sura as the premiums already paid would purchase. Bather than take the risk of losing the entire amount of the policy, by her inabil- ity to keep up the annual payments, she surrendered her policy for $6,000, and ac- cepted in lieu of it a paid-up policy for $2,500. This was the contract she made while in ignorance of Leisenring's death. At the time she made it she was already relieved from the burdensome premiums, and the entire amount of the policy was honestly due her from the company. What was the effect of the mistake upon her? Simply to take from her the differ- ence between the two policies, and give her absolutely nothing for it. She sur- rendered a policy for $6,000, on which the liability of thecompany was already ti.>;ed. and received one for .f 2,500, to secure relief from a burden already removed. The company parted with nothing. She se- cured nothing. The whole transaction was a mistake, and, if the decree of the court stands, the result will be to take $3,500 from Mrs. Riegel and give it to the insurance company. These facts seem to us to present a clear and a strong case for equitable relief, so strong, indeed, that a mere statement of them is the only ar- gument necessary for its support. The duty of a chancellor to relieve in cases of mutual mistake is so well settled that no citation of authorities can be needed. » * * The learned judge who heard this case in the court below, and who is thor- oughly familiar with the principle to which we have referred, seems to have been misled in regard to the facts set up in the bill. He treats the arrangement made between Mrs. Riegel and the com- pany on the 20th of March as a compro- mise of a claim against the company for the alleged death of Leisenring, which Mrs. Riegel was unable to establish, be- cause unable to show the death. As the fact of the death, and the consequent lia- bility of the company on the policy, were uncertain, it was a case for the applica- tion of the doctrine that the adjustment of a doubtful claim constituted a valid consideration for the surrender of the pol- icy and the acceptance of the new one, and upon this theory the decree was en- tered. But it nowhere appears that Mrs. Riegel made any claim on the company, or supposed that she had any. She was asking relief from future payments of pre- miums on a policy on which she supposed future payments would have to be made, and, to get this relief, she was willing to sacrifice more than one half of the sum Insured. The company was willing, in consideration of the large reduction of its liability, to give her a policy for what her payments would purchase, and relieve her in future. This is an exchange often made, and adjusted by well-settled rules. It was a compromise of nothing. We do not doubt the correctness of the rule applied by the learned judge in cases to which it is fairly applicable, but this is not one of them. The plaintiff distinctly avers that she did not know of the death of Leisen- ring until some 10 days after the exchange of policies was effected, and that' both par- ties to the transaction were acting, in re- spect thereto, on the basis that Leisen- ring was alive.' She distinctly avers that the object of the arrangement was to se- cure relief for herself from the iudefiiiite payment of premiums that had become burdensome to her; that the new policy was accepted for that reason, and the old one surrendered, at a time when, had she known the fact, she was entitled to de- mand the entire sum upon which she had so long and so steadily paid the burden- some premiums." Little, if anything, can be profitably added to what is so clearly and forcibly said in the foregoing quotatiojis in sup- port of our former decree. The error in- to which the learned judge of the common pleas appears to have unintentionally fallen in the outset, and to which he seems to cling so pertinaciously, is not so much in regard to the well-settled princi- ples of equity, upon which relief is granted in cases of mutual ignorance or mistake of material facts, as in the construction which he put upon the undisputed acts and declarations of the parties to this con- tention, and the circumstances connected therewith. Sufficient reference to those principles is made in our former opinion, but it may not be amiss to revert to some of them. The general rule is that an act done or a contract made under a mistake of a material fact is voidable and relieva- ble in equity. The fact must of course be 216 MISTAKE OF FACT. material to the act or contract; for, though there may be an accidental mis- talfe or ignorance of the fact, yet, if the act or contract is not materially affected by it, relief will not be granted. Thus, A. buys from B. an estate to which thelatter is supposed to hare an unquestionable ti- tle. It turns out, upon due investigation of the facts unknown at the time to both parties, that B, has no title; as, if there be a nearer heir than B., who was sup- posed to be dead, but is in fact living. In such a case equity would relieve the pur- chaser and rescind the contract. But sup- pose A. buys from B. an estate the loca- tion of which was well known to each of them, and they mutually believed it con- tained 20 acres, when in fact it contained only 19% acres, and the difference would not have varied the purchase in the view of either party ; in such a case the mis- take would not beground for rescission of the contract. 1 Story, Eq. Jar. §§ 140, 141. It makes no, difference in application of tne principle that the subject-matter of the contract be known to both parties to be liable to a contingency which may de- stroy it immediately; for, if the contin- gency has, unknown to the parties, al- ready happened, the contract will be avoided, as founded on a mutual mistake of a matter constituting the basis of the contract. 1 Story, Eq. Jur. §!j 143a, 1436. The principle is illustrated by familiar examples, employed by text writers, thus: A. agrees to buy a certain horse from B. It turns out that the horse is dead at the time of the bargain, though neither party was then aware of the fact. The agree- ment is void. A. auroes to buy a house belonging to B. The house was previous- ly destroyed by fire, but the parties dealt in ignorance of that fact. The contract, not being for sale of the land on which the house stood, was not enforceable. So, too. A., being entitled to an estate for the life of B., agreed to sell it to C. B. was dead, but both parties were ignorant of the fact. The agreement was avoided. For similar reasons, a life insurance can- not be revived by payment of a premium within the time allowed for that purpose by the original contract, but after the life had dropped, unknown to both insurer and assured, although it was in existence when the premium became due, and al- though the insurer hfis waived proof of the party's health, which, b.v the terras of the renewal, it might have required. The waiver applies to the prcof of health, not to the factof his beingalive. Pritchard v. Society, 3 C. B. (N. S.) 622. Mr. Pollock, in his excellent treatise on the Principles of Contract, (page *441,) states the general principle thus: "An agreement is void if it relates to a subject-matter (whether a material subject of ownership, or a par- ticular title or right) contemplated by the parties as existing, but which in fact did not exist." This Is followed by an inter- esting discussion of the subject, with nu- merous illustrations of the principles in- volved. See Cochrane v. 'Willis, 1 Ch. App. 58; Allen v. Hammond, 11 Pet. 71; Hitch- cock V. Giddings, 4 Price, 135; Hore v. Becher, 12 Sim. 465; Couturier v, Hastie, 5 H. L. Cas. 673. In many of thecases promi- nence is given to failure of consideration. resulting from mutual mistake or Igno- rance oF material facts, but entire failure of consideration is not an essential ingredient in any case. It cannot be doubted that in exchanging the old for the new policy both parties acted on the basis that Leisenring was then alive. Their every act in the trans- action was predicated of that as an as- sumed fact. The new policy, like the old one, was a risk on a life assumed to be then in being. The difference between them was that the one carried with it an obligation on the part of theholdertopay annual premiums during the life of Leis- enring; the other exempted her from that obligation. She purchased that exemption by surrendering seven twelfths of theorig- inal insurance, or ^S.iiOO. If the exchange was not made on the assumption by both parties that Leisenring was then alive, the company stultified itself by issuing a paid- up policy on the life of one who was then in his grave; and the plaintiff was guilty of the supreme folly of paying f 3,500 for exemption from a liability which, by the previous death of I.ieisenring, had ipso facto ceased. In other words, at the time the exchange of policies was made, the plaintiff had a perfectly valid claim upon the defendant for the full amount of the insurance, $6,000, and surrendered $3,500 of that to secure exemption from a lia- bility that had ceased to exist; but she and the company were both at that time ignorant of the fact that the life on which the original risk was taken had pi-eyious- ly dropped. The supposed element of doubt as to whether Leisenring was then dead or not never entered into the con- templation of either part.y; nor did it form any part of tlie consideration for ex- change of policies. The positive and un- contradicted proof by the actuary of the company was that the amount of the paid-up policy was ascertained and fixed, according to the established rules of the company, at the very sum that would have been required if Leisenring had been personally present in the office when the terms of exchange were settled. The cen- tral fact underlying the transaction, and to which every circumstance connected therewith clearly points, was the assump- tion by both parties that Leisenring was then in full life. When last theretofore heard from he was alive, and the pre- sumption was that he continued to live. In the absence of any knowledge to the contrary, it was quite natural and rea- sonable that the parties, in making the exchange, should act upon that presump- tion, and assume, as they evidently did, that he was still alive. Of course they could not know positively that he was then alive, any more than any one can certainly know that a friend from whom he is far separated b.y distance is now liv- ing. In view of the undisputed facts as to the acts of both parties, and everything connected with the transaction, it would be wholly unreasonable and unwarrant- ed to hold that the parties treated upon the basis that the fact which was the sub- ject of their agreement was doubtful, or that the contract was made "in view of doubtful facts, and because of the doubt- ful facts. " In the light of the proofs upon MISTAKE OF FACT. 217 ■which theflndings of the masterare based, and of all the circumstances, the acts of the parties are not susceptible of any such construction as has been put upon them by the learned judge of the common pleas. In shprt, the facts established by the un- contradicted proofs, and found by the master, are essentially the same as those admitted by the demurrer, and upon which our former decree was based. Cer- tainly they are not less favorable to the plaintiff now than then. It therefore ap- pears to UH that a proper consideration of the orderly administration of justice should have resulted in a decree in accord- ance with the views expressed in our for- mer opinion. This proceeding is not grounded upon a previous rescission of the agreement un- der which the exchange of policies was made, but is for the purpose of enforcing a rescission by decree of this court, etc. It is therefore adjudged that the decree of the court of common pleas be reversed and set aside, and exceptions to master's report dismissed; and it is now adjudged and decreed, that the contract under which said exchange of insurance policies was made be rescinded; that the paid-up poli- cy for $2,500 be surrendered and canceled ; and that the original policy of insurance be reinstated, as of date of its surrender; and it is further adjudged and decreed that the defendant company pay to the plaintiff the sum of $6,0()0, with interest from October 4, 1889, and also all thecosts of this proceerling. PAXSON,C.J. I dissent, and would af- firm the decree, upon the clear and able opinion of the learned judge below. MITCHELL, J. I concur with the chief justice in his dissent. 218 mistak;e of pact. NEWTON V. TOLLES. TOLLES V. NEWTON. (19 Atl. 1092, 66 N. H. 136.) Supreme Court of New Hampshire. Hillsbor- ough. March 14, 1890. Bill in equity for the rescission of a con- tract for the purchase of a farm and other property, and for the return of money paid as a part of the purchase money. Facts found by the court: The defendant, Sophia A. ToUes, employed E., a real-estate agent; in Nashua, to sell her farm. In May, 1886, Newton, seeking to buy a farm, applied to R., who informed him of the Tolles farm, told him it contained 200 acres, took him to see it, and there pointed out to him such of the courses and boundaries as he knew; but he did not know, or undertake to point out, all of them. Afterwards, li., as agent of Tolles, and Newton executed an agreement by which Tolles agreed to sell, and Newton to buy, the Tolles farm for .$5,400, to be paid $200 on the execution of the agreement, $],000 on the delivery, on or before June 1, 1886, of a bond for a deed, $1,000 on or be- fore July 10, 1886, and $3,200 on the deliv- ery, on or before October 20, 1886, of a good and sufficient deed, "said Newton to have all the stock, tools, hay, grain," etc. On the margin of the agreement, "farm contains about 200 acres" was written. Newton paid $200 May 15, Tolles executed and delivered to Newton a bond conditioned to convey to him "a certain lot or parcel of land situated in Nashua," and particularly described by metes and bounds, "meaning and intending to convey all the homestead farm, containing about two hundred acres, as by deed of heir's of Horace C. Tolles, to me, and all other land and right in said homestead farm," upon Newton's payment of .'#1,000 on the delivery of the bond, $1,000 on or before July 10, 1886, and $3,200 on the delivery, on or before October 20, 1886, of a good and suffi- cient deed. On the margin of the deed was written: "It is agreed, for the above consid- eration, that said Newton is to have all the stock, tools, hay, grain, &c., and that said Tolles is to remove only household furniture and family stores from said premises. " Prior to 1879 the Tolles farm comprised about 203 acres, of which thedefendantand her husband owned a part in common, and each a part in severalty. Jn that year the heirs of Horace C, then deceased, conveyed a parcel of about 25 acres to Xenophon Tolles, and all their in- terest in the rest of the farm to the defendant. In January, 1886, the defendant sold about 18 acres to C, who sold to lioby. A parcel of about 25 acres, called the "Salmon Brook Meadow," was half a mile distant from, and had no connection with, the rest of the farm, except in its use as a part of it. These par- cels were not shown to Newton by R., and are not covered by the particular description given in the bond. Newton at the time of the bargain did not understand that they were included in his purchase, but he un- derstood that he was buying the Tolles farm, and that it contained 200 acres. The defend- ant did not intend to convey, nor understand that she agreed to convey, the three parcels, or any of them; but she understood and be- lieved that the farm, as described in the bond, contained about 200 acres. It in fact contains about 135 acres. In June, 1886, Newton discovered that Tolles owned the Salmon Brook meadow, and learned of its connection with the farm. He thereupon claimed possession of it, and that it was in- cluded in the bargain, but his claim was de- nied. He refused to pay the installment due July 10th and August 21st. Tolles brought a suit at law to recover it, which is the rec- ord of the above-named actions. About the 1st of August, Newton found by a survey that the farm as described in the bond con- tains only 135 acres. October 20, 1886, Tolles tendered to Newton a warranty deed of the premises of which he is in possession, and demanded payment of the balance of the purchase money. Newton refused to accept the deed, and on the same day filed his bill, in which he offers to restore the real and per- sonal property to the defendant, and give up and cancel the bond, and to account for the rents and profits while he has been in pos- session. He has consumed the hay and grain, but has other hay and grain out of which he can return an equivalent. He sold four cows in August, but replaced them with four others of greater value. The farm has not deteriorated in value. Evidence to show that the property which Tolles by her bond was obliged to convey was of the value of $5,400 or more was excluded, subject to the defendants exception. 6?. B. a. French and H. B. Cutter, for Newton. C. W. Hiolt and M. 8. Cutter, for Tolles. Caepbnteb, J. There was a mutual mis- take in ths quantity of land. The defendant understood she was selling, and the plaintiff that he was buying, a farm of 200 acres. It in fact contains only 135 acres. The defend- ant, believing that the farm contained 200 acres, informed the plaintiff that it did con- tain that number. The plaintiff relied on her statement. Under the influence of the error common to both parties, the transaction was consummated. The mistake was one of fact in a material point affecting the value of the property. Boynton v. Hazelboom, 14 Allen, 107, 108. Its prejudicial consequences to the plaintiff are the same as if the defend- ant's statement had been designedly fraudu- lent. Spurr v. Benedict, 99 Mass. 463, 467. The deficiency is so great that it would "nat- urally raise the presumption of fraud, im- position, or mistake in the very essence of the contract," if the mistake were not affirma- tively found. Stebbins v. Eddy, 4 Mason, 414, 420. A material mistake in the quanti- ty does not, in its effect upon the equitable rights of the parties, differ from a like mis- take in the character, situation, or title of the MISTAKE OF FACT. 219 bargained property. It is equivalent to a mis- take in tlie existence of a material part of tlie subject of tlie contract. The case is as if be- fore the contract was executed, and witliout the knowledge of either party, a parcel con- taining 65 acres of the 200 contracted for had sunk in the sea. Allen v. Hammond, 11 Pet. 63, 71, 72; Hitchcock v. Giddings, 4 Price, 135; Story, Eq. Jur. §§ 141. 142. The error is as injurious to the plaintiff as if 200 acres were comprised in the state boundaries, and the defendant had no title to a parcel of 65 acres, or as if she had title to only 135-200 of the whole in common with a stranger. Hooper V. Smart, L. R. 18 Eq. 683. The defendant could not sustain a bill to compel a specific performance of the contract by the plaintiff, because it would be inequitable. Pickering V. Pickering, 38 N. H. 400, 407, 408; East- man V. Plumer, 46 N. H.464, 479. Theparty against whom a contract, made under a mut- ual mistake of material facts, will not be spe- cifically enforced, is in general entitled to rescind. Pom. Spec. Perf. § 250. If there are exceptions to the rule, this case does not fall within them. It is inequitable, in the highest degree, that the defendant, by rea- son of her negligent and erroneous, tlaough not fraudulent, representation, should make a profit of the sum at which the parties valued 65 acres of land, and that the plaintiff, with- out fault on his part, should lose that sum. Equity will prevent such a result by rescind- ing the contract, or decreeing a specific per- formance with compensation in behalf of the injured party, at his election, or by refusing specific performance on the application of the other party. Hill v. Buckley, 17 Ves. 395; Price V. North, 2 Younge & C. 620; Dalby v. Pullen, 3 Sim. 29; Leslie v. Tompsbn, 9 Hare, 268; Barnes v. Wood, L. R. 8 Eq. 424; Whittemore v. Whittemore, Id. 603; Iron- Works v. Wickens, L. R. 4 Ch. 101; Denny V. Hancock, L. R. 6 Ch. 1; Torrance v. Bol- ton, L. R. 8 Ch. 118; In re Turner, 13 Ch. Div. 130; Belknap v. Sealey, 14 N. Y. 144; Paine v. Upton, 87 N. Y. 327 ; Couse v. Boyles, 4 N". J. Eq. 212; Thomas v. Perry, 1 Pet. C. C. 49; Daniel v. Mitchell, 1 Story, 172; Dog- gett V. Emerson, 3 Story, 700; Smith v. Bab- cock, 2 Woodb. & M. 246; Quesnel v. Wood- lief, 2 Hen. & M. 173; Lawrence v. Staigg, 8 R. I. 256; Noble v. Googins, 99 Mass. 231. Neither of the parties understood that the contract to convey "about" 200 acres was performed by conveying 135 acres. Wilson V. Randall, 67 N. Y, 338, 341, 342, and cases above cited. No laches can be imputed to the plaintiff. He had a right to rely on the defendant's statement of the quantity. He could not dis- cover the mistake by examining the external boundaries. Paine v. Upton, 87 N. Y. 327, 337. When, by the defendant's tender of a deed and demand of payment, he ascertained that she would not voluntarily correct the mistake, he immediately filed h'S bill. The personal property formed no substan- tial part of the consideration. It is not named in the body of the bond, but is men- tioned, apparently as an afterthought, on the margin. Upon the rescission, for any cause, by a vendee in possession of a sale of farm lands, there must in most cases, necessarily, be an accounting, in order to restore the par- ties to the situation they occupied priorto the contract. Upon such an accounting, all the property, the possession of which passed from the defendant to the plaintiff, or its full equivalent, together with the income derived from it, may be fully restored to her It is no objection to a rescission, in a case of this character, that such articles as are neces- sarily consumed in the proper and ordinary management of a farm cannot be restored in specie. It does not appear that the plaintiff, after his discovery of the mistake, took any action by which he intended to afiirm the contract, (Montgomery v. Pickering, 116 Mass. 227,) or that he did anything with the property not reasonably necessary lor its pres- ervation, or which equity would not require to be done. The plaintiff is to be relieved upon such terms as justice to both parties re- quires. Wiswall V. Harriman, 62 N. H. 671, 672;2Story, Eq. Jur. §707. The offered evi- dence of value was immaterial, and was prop- erly excluded. In tlie suit at law, there must be judgment for the defendant. The details of the decree will be settled at the trial term. Decree for the plaintiff. Allen, J., did not sit. The others con- curred. 220 MISTAKE OF FACT. DAMBMANN v. SCHULTING. (75 N. Y. 56.) Court of Appeals of New York. 1878. Action to set aside a release under seal, and to recover a balance for money lent de- fendant by the firm of C. F. Dambmann & Co., of wiilch firm plaintiflE was a partner, and to wliose rights he succeeded. The facts are set forth in the opinion. Judgment for plaintiff. C. Bainbridge Smith, for appellant Wil- liam Watson, for respondent. EARI^ J. Prior to 18i>v,, the defendant had for many years been a merchant extensively engaged in business in the city of New York. In February of that year Jie had become financially embarrassed, and contemplated an assignment for the benefit of his creditors. He was finally dissuaded from making an assignment by the promise of his creditors to loan him the sum of $100,000 to aid him in meeting his obligations. There was evi- dence tending to show that the sums thus to be loaned were to be repaid when he became able; but he testified that it was to be op- tional for him to repay them, in case he paid the debts, which he then owed, in full. The court at special term found that the ar- rangement was that he was to repay these sums when he became able. In pursuance of this arrangement, the firm to which plain- tiff belonged, and to whose rights he had succeeded, loaned defendant $10,000. On the 7th day of March, 1867, defendant had paid in full all the debts he owed when the mon- ey was loaned to him, and then, at his re- quest, all the creditors who made the loans executed and delivered to him an instrument, of which the following is a copy, to- wit: "We the undersigned agree. In consideration of one dollar paid to us, to discharge H. Schulting from the legal payment of the mon- ey loaned to him February 1, 1806, said Schulting giving his moral obligations to re- fund the said money, in part or whole, as his means will allow in future." This was not a sealed instrument, and was executed upon the request of the defendant, upon the claim by him that he had done as he had agreed when the money was advanced to him. It was the clear intention of the parties, by this instrument to discharge the defendant from all legal obligation to pay the money ad- vanced, leaving an obligation simply binding upon his conscience, but not enforceable at law, to pay when he became able, in whole or in part. If this instrument had been un- der seal or based upon a sufiicient consider- ation, no proceedings in law or equity could have been thereafter taken to enforce pay- ment against the defendant. But according to the finding of the special term, before the execution of this Instrument, the defendant was legally liable to pay when he became able, and this liability was not discharged by this instrument, for the simple reason that it was not based upon any con- sideration. It was oot in the nature of a composition of a debtor with his creditors, and cannot be sustained upon the principles applicable to composition agreements. It does not even appear that each creditor sign- ed it upon the consideration that other cred- itors would also sign it. It was a mere agree- ment to discharge debts without payment, and such an agreement cannot be upheld. Down to this period of time there is no claim that there was any fraud or mistake which influenced the conduct of the plaintiff and the other creditors, and the position of the plaintiff and the defendant was as fol- lows: While the plaintiff could legally en- force the payment of the $10,000 (the defend- ant being able to pay), he was under a moral obligation not to do so; and the defendant intending not to be legally bound to pay, was yet under both a legal and moral obliga- tion to pay. The defendant continued in business until August, 1868, when on account of failing health and despondency, he sold out his whole stock of goods to the firm of H. & A. Strousburgh & Co. for the sum of $225,000, they agreeing to pay the most of that sum upon certain of his debts, and also to pay him one-third of what the goods should sell for above the sum of $275,000. The value of the goods was not known to the defend- ant or his vendees, and there is no claim that this sale was not made in good faith. Soon after this sale the plaintiff, having heard thereof, called upon the defendant, and was duly informed of the sale and the terms thereof, and of the amount of his property at that time aside from his interest in the one- third of the surplus. As to that one-third, the defendant informed him that that was not worth much, and that he had offered to sell it for $18,000 or $20,000. There is no evi- dence or claim that In this conversation the defendant made any intentional mis-state- ment. He had offered to several parties to sell his one-third Interest for the sum named, and there is no evidence that he then believ- ed it to be worth more. He actually made an arrangement to sell it for $20,000 to one Von Keller. A few days after however he repudiated this arrangement, but Von Keller claimed it was valid. Defendant's vendees went on and sold the goods, and they brought $576,981; and his one-third interest amounted to about $100,- 000. The defendant knew as early as the 8th day of October, 1868, that goods to the amount of $400,000 had been sold, and that some yet remained to be sold. On the last- named day he went to the plaintiff and said to him that he understood that the previous paper signed by him— the discharge above set out — was not a legal release, because he had not paid any thing on account of the $10,000, and he wanted to know if the plaintiff would sign a legal release upon payment of $5,000. MISTAKE OF FACT. 221 The plaintiff said lie would. Nothing more was said, aind defendant paid him $5,000; and then the plaintiff executed to him, Undar seal, a full and absolute discharge from all liabil- ity. This action was brought to set aside this release, and to recover the balance of the $10,000. The plaintiff seeks to impeach this release on account of fraud, and the court at special term decided In plaintlfC's favor that the re- lease was inoperative, as obtained by misrep- resentation and concealment of material facts. The court did not And that there was any fraudulent misrepresentation, and there was none In fact. So far as I can discover, there was no misrepresentation of any kind. Neither did the court find that there was any fraudulent concealment of any facts; and there was no evidence to justify such a find- ing. The plaintiff had executed a discharge of his Claim, which was illegal, and the de- fendant went to him and informed him of this fact, and stated that he wanted a legal release, and that he would pay him $5,000 if he would give it; and he gave it. He stated to the plaintiff that he was not discharged, that he wanted to be, and the plaintiff dis- charged him.' He made no statement and used no artifice to throw him oft' from his guard or to entrap or mislead him. There was no reluctance on the part of the plaintiff, and the defendant had no reason to suppose there would be, as the plaintiff had already agreed in writing to discharge him. The pri- or instrument shows that it was the under- standing of the parties that the defendant should, so far as concerned any legal liabil- ity, have just such a discharge. The claim, under these circumstances. Is that the defendant was bound to disclose to the plaintiff the change in nis pecuniary cir- cumstances since the prior conversation in August, above alluded to, and that he had no right to leave him under the erroneous im- pression occasioned by that conversation. It must be borne in mind that the declarations made by the defendant in that conversation were made in entire good faith, and that they were not made in any business transaction with the plaintiff, and that they had no ref- erence to or connection with the release. The plaintiff, in executing the release, had no right to rely upon them. The general rule is, that a party engaged in a business transaction with another can commit a legal fraud only by fraudulent mis- representations of facts, or by such conduct or such artifice for a fraudulent purpose as will mislead the other party or throw him off from his guard, and thus cause him to omit inquiry or examination which he would oth- erwise make. A party buying or selling property, or executing instruments, must by inquiry or examination gain all the knowl- edge he desires. He cannot proceed blindly, omitting all inquiry and examination, and then complain that the other party did not volunteer all the information he had. Such is the general rule. But there are exceptions to this rule. Where there is such a rela- tion of trust and confidence between the par- ties that the one is under some legal or equi- table obligation to give full information to the other party— information which the other party has a right, not merely in f oro con- scientiae, but juris et de jure, to have, then the withholding of such Information purpose- ly may be a fraud. Story, Eq. Jur. § 207 et seq.; Hadley v. Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454; Bench v. Sheldon, 14 Barb. 66; Paul v. Hadley, 23 Barb. 521. It is not always easy to define when this relation of trust and confidence exists; and no general mle can be formulated by which its existence can be known. It is sufficient for this case to say that' it did not exist here. The defendant had no reason to make the disclosure which it is claimed he should have made, and the plaintiff had no right to expect it. The defendant had no reason to suppose that the plaintiff would be under the influence of the casual conversation which was had some two months before. And further, if the defendant thought upon the subject, he had no reason to suppose that if he stated all the facts within iis knowledge, it would prevent the plaintiff from giving a discharge which he had agreed to give. While he would have stated that unexpected- ly his share in the proceeds of the goods was much larger than $20,000, yet he would also have stated that he had contracted to sell the share for $20,000, and that the vendee claimed to hold him to the contract. That the claim was a serious one is shown by the fact that in January, 1869, Von Keller sued him, and in April, 1870, after a trial before a referee, sustained the contract and recov- ered a judgment for upward of $100,000, which defendant was able to defeat finally only after a litigation of several years and a decision by this court. Von Keller v. Schult- Ing, 50 N. Y. 108. In October, 1868, the de- fendant could have informed the plaintiff what his interest in the proceeds of the goods was, subject to the chances of a litigation, but what it was actually worth no one cotdd then have told. Without therefore questioning the facts found by the court at special term, we are of opinion that there was error In the legal con- clusion that plaintiff was entitled to any re- lief on account of fraud. It is further claimed that the plaintiff ought to be entitled to relief on account of mistake. He testified that he would not have executed the release if he had known the de- fendant's financial condition. But as already shown, the defendant was in no way respon- sible for his Ignorance, and was under no legal or equitable obligation to disclose the facts as to his pecuniary circumstances. The plain- tiff could have learned the facts by Inquiry of the defendant or his vendees. There was no mistake as to any fact intrinsic to the release. Plaintiff knew that the defendant MISTAKE OF FACT. had not been legally discharged from his lia- bility, and that for the !fo,000 he was to give him an absolute release; and he gave him just such a release as he intended to. There was no mistake of any intrinsic fact essential to the contract or Involved therein. The de- fendant's financial condition was an extrinsic fact, which might have influenced the plain- tiff's action if he had known it But ignor- ance of or mistake as to such a fact is not ground for affirmative equitable relief. The following illustrations of mistakes as to in- trinsic facts essential to contracts, against which courts of equity will relieve, are found in the books. A. buys an estate of B. to which the latter is supposed to have an un- questionable title. It turns out, upon due in- vestigation of the facts, that B. has no title; in such a case equity will relieve the purchas- er and rescind the contract Bingham v. Bingham, 1 Ves. Sr. 120. If a horse should be purchased, which is by both parties be- lieved to be alive, but is, at the time, in fact dead, the purchaser would, upon the same ground, be released by rescinding the con- tract. Allen V. Hammond, 11 Pet. 71. If a person should execute a release to another party upon the supposition, founded on a mis- take, that a certain debt or annuity had been discharged, although both parties were inno- cent the release would be set aside. Hore V. Becher, 12 Sim. 405. If one should execute a release so broad in Its terms as to release his rights in property, of which he was whol- ly ignorant and which was not in contempla- tion of the parties at the time the bargain for the release was made, a court of equity might either cancel the release or restrain its application as Intended. Cholmondeley v. Clinton, 2 Mer. 352; Dungers v. Angove, 2 Ves. Jr. 304. On the other hand, if the ven- dee is in possession of facts which will ma- terially enhance the price of the commodity and of which he knows the vendor to be ig- norant, he Is not bound to communicate those facts to the vendor, and the contract will be held valid. Laidlaw v. Organ, 2 Wheat. 178. In such a case the facts unknown to the vendor are extrinsic to the contract and are not of Its substance; and hence there is no ground for the interference of a court of equity. It is clear from these and other Illustra- tions which might be given, that a court of equity will not give relief In all cases of mistake. There are many extrinsic facts sm'- rounding every business transaction which have an important bearing and influence up- on its results. Some of them are generally unknown to one or both of the parties, and if known, might have prevented the transac- tion. In such cases, if a court of equity could intervene and grant relief, because a party was mistaken as to such a fact which would have prevented him from entering into the transaction if he had known the truth, there would be such uncertainty and instability in contracts as to lead to much embarrass- ment. As to all such facts, a party must rely upon his own circumspection, examination and inquiry; and if not imposed upon or de- frauded, he must be held to his contracts. In such cases, equity will not stretch out its arm to protect those who suffer for the want of vigilance. Judge Story lays It down as a general rule "that mistake or ignorance of facts In parties is a proper subject of relief only when it constitutes a material ingredient in the con- tract of the parties, and disappoints their in- tention by a mutual error; or where it is inconsistent with good faith, and proceeds from a violation of the obligations which are imposed by law upon the conscience of either party. But where each party is equally in- nocent, and there is no concealment of facts which the other party has a right to know, and no surprise or imposition exists, the mis- take or ignorance, whether mutual or unilat- eral, is treated as laying no foundation for equitable Interference." Story, Eq. Jur. § 151. We are therefore of opinion that upon the facts disclosed in the record before us, the plaintiff was not entitled to any relief, and the judgment must be reversed and a new tri- al granted, costs to abide event. All concur except MILLER, J., not voting. Judgment reversed. MISTAKE OF FACT. 223 CONNER V. WELCH et al. (8 N. W. 260, 51 Wis. 431.) Supreme Court of Wisconsin. March 2, 1881. Appeal from circuit court, Dane county. The case established by the pleadings and evidence is correctly stated in the brief of counsel for the plaintiff, as follows: "This action was brought to foreclose four certain mortgages made by Martin Osborne and wife upon 80 acres of land in Dane county, three of which mortgages had been satisfied of record before the commencement of the ac- tion. The facts are that on November 11, 1871, Martin Osborne was seized in fee of the W. % of N. W. % of section 25, tovm 8, range 9, Dane county. November 11, 1871, Osborne and wife gave a mortgage thereon to John W. Allen for $800 and interest. This is still in force as a first mortgage on the property, and is not one of the four mort- gages for the foreclosure of which the ac- tion was brought. It confers a right of property prior to the rights of all parties hereto, and further reference to it in the case is unnecessary. November 23, 1871, Os- borne and wife gave a mortgage thereon to Patrick Duffy for $200 and interest. This mortgage bears date prior to the Allen mort- gage, but was executed later, and in terms made subject thereto. October 1, 1875, Os- borne and wife gave another mortgage there- on to Patrick Duffy for $250 and interest. December 2, 1876, Osborne and wife gave a mortgage thereon to Elizabeth Duffy for $135 and interest. February 21, 1878, Osborne and wife gave a mortgage thereon to Michael G. Conner, the plaintiff, for $229 and interest, which mortgage has never been satisfied of record. March 1, 1878, the defendant Christ- ian R. Stein caused judgment to be entered against Martin Osborne in the circuit court for Dane county upon a judgment note, with warrant of attorney, by his attorneys, Welch & Botkin, a law finn of which the defendant William Welch was a member. March 2, 1878, the defendant Stein assigned said judg- ment to said William Welch. March 4, 1878, the said mortgages, numbers two, three, and four, for $200, $250, and $135, were assigned to the defendant Stein. March 5, 1878, the defendant Stein, by his attorneys, the said Welch & Botkin, brought suit to foreclose the said mortgages, numbers two and three, for $200 and $250, making parties defendant thereto Osborne and wife, the mortgagors, and Conner, the plaintiff herein, holding the subsequent mortgage, number five, above mentioned, but not making a party defend- ant the said Welch, holding by assignment the said judgment number six. March 8, 1878, Osborne and wife, by deed of quit- claim, conveyed said premises to the plain- tiff, Conner, who, at the time, had an actual knowledge of the Stein judgment and its as- signment to Welch. April 9, 1878, at the office of Welch & Botkin, in the presence of Botkin, the plaintiff, Conner, paid to the de- fendant Stein the amount, principal and in- terest, of the mortgages in suit, (Nos. 2 and 3,) together with about $115, costs of suit. At the time of payment he was still without knowledge of the Stein judgment. Neither Stein nor Botkin spoke of it. Botkin, when asked if he had told Conner of the existence of the Stein judgment, testified: 'I do not think I did. He (Conner) paid the money, and then said that he wanted the mortgages satisfied, and asked Mr. Stein to come right up with him and satisfy the mortgages, at the register of deeds' office, and get done with it; and he and Mr. Stein went out of the ofiice for that purpose. It was at Con- ner's request. Not a word was said by me or Stein in regard to satisfying. There was not a syllable or whisper in regard to It.' The two mortgages were then satisfied by Stein. April 29, 1878, the plaintiff, Conner, paid Stein the amount, principal and inter- est, of the mortgage for $135, number four, which, with the accompanying note, was delivered to him. Thereupon, at plaintiff's instance and request. Stein went to the reg- ister's office, accompanied by plaintiff, and satisfied the mortgage; Stein knowing, and the plaintiff not knowing, of the judgment. About December, 1878, the plaintiff first learned of the existence of the judgment from the officer having an execution thereon against this property." The complaint prays that the discharges of the three Duffy mort- gages be cancelled, and for the usual judg- ment of foreclosure and sale in respect to those mortgages, and the mortgage for $229 to the plaintiff, dated February 21, 1878. It is claimed in the complaint that 40 acres of the mortgaged land was the homestead of Osborne, and an injunction was prayed against the sale of such 40 acres, on execu- tion issued upon Stein's judgment. As to the agreement between the plaintiff and Os- borne, pursuant to which the latter conveyed to the plaintiff the land mortgaged, the plain- tiff testified as follows: "I bought the place of Osborne. I was to pay the mortgages. I did not give him any money besides the mortgages. * • * i gave him an account I held against him, more or less. » * * He had no money, and I paid for the making out of these papers. Forget how much that was. That is all I paid for his deed to me, t-icept that I released him from his liability on the note of $229. Think it was agreed that I should let Osborne have his note and mortgage. Have no further claim on him or his land for that." The witness testified la- ter that he understood he took the property In satisfaction of his claims, but that it was no part of the consideration of the deed; and, further, to the question, "Didn't you re- gard the giving to you by Osborne of the quitclaim deed as, between you and Osborne, a settlement of your note and mortgage against him for $229?" the plaintiff answer- ed: "I presume so, but that was omitted in putting the amount in the deed." This is 224 MISTAIvE OF FACT. the substance of all the evideijce on tlie sub- ject. The court found— "Fii-st, that all the facts stated in the complaint are true, except that no part of the mortgaged premises was the homestead of Osborne when Stein recovered his judgment, and that Stein is not the own- er of such judgment; second, that the de- fendant Welch purchased said judgment from the defendant Stein, and took the as- signment thereof absolutely, for full value, and without notice, fraud, or collusion, and that he paid therefor by crediting the said Stein on the account of the firm of Welch & Botkin, of which the defendant Welch was then and still is a member, with the face amount thereof, towards the payment for le- gal services theretofore rendered by the said Welch & Botkin for the said Stein, and that, as between the said Welch and the said Botkin, it was agreed that the amount of said judgment should be received by tlie said Welch on his individual account; third, that Mr. Botkin, the law partner of the said defendant Welch, transacted the business in the foreclosure suits set out in said com- plaint, and that said Welch had no knowl- edge of the details of said foreclosure, and of the satisfaction of the mortgages as set out in said complaint; fourth, that the can- cellation of the mortgages as set out in said complaint was founded upon a mistake upon the part of the plaintiff. That mistake was the supposition that the several mortgages of record, including his own, to the amount in all of the full value of the i^remises, were the only liens prior to his deed from said Os- borne." As conclusions of law, the court found that the mortgage for $229, executed by Os- borne to the plaintiff, is a valid subsisting lien on the land; that the discharge of the three Duffy mortgages should be cancelled, and those mortgages adjudged to be valid and subsisting liens; and that the plaintiff is entitled to a judgment of foreclosure in respect to all four mortgages, and to a sale of the land mortgaged, but not to a personal judgment against either defendant. The de- fendants have appealed from the judgment entered pursuant to such findings. S. W. Botkin, for appellants. Sloan, Ste- vens & Morris, for respondent. LYON, J. As we understand the testi- mony of the plaintiff he accepted the quit- claim deed of the mortgaged premises from Osborne pursuant to an express agreement between them that the note and mortgage of February 21, 1878, for $229, was thereby sat- isfied and discharged. His testimony seems to admit of no other construction. By this agreement the $229 mortgage was dischar- ged, and the satisfactions of the Duffy mort- gages by Stein, in the proper records of the county, at the request of the plaintiff, dis- charged those mortgages. Hence, by the acts and procurement of the plaintiff, the four mortgages in controversy were cancelled and cease to be liens upon the land covered by them. Were these subsisting mortgages, we might not find it very difficult to hold,, under the authorities cited, that the interest represented by the $229 mortgage was not merged in the legal title conveyed to the plaintiff by Osborne, and that the plaintiff should be subrogated to the rights of the mortgagees in the Duffy mortgages, so that all of these mortgages could be made avall- I able to protect the plaintiff against the lien i of the Stein judgment, which is junior there- to. But before the questions of merger and subrogation can be raised at all, the mort- gages now cancelled and discharged must be restored and vitalized. This can only be done by cancelling and holding for naught the satisfactions of the Duffy mortgages, which the plaintiff caused to be entered of record, and his express agreement with Os- j borne to accept the conveyance of the legal ; title in full satisfaction and discharge of the ; $229 mortgage. The precise question is, therefore, wheth. I er, under the circumstances of the case, the I plaintiff is entitled to be relieved of those ' satisfactions and of such agreemient. Has j he shown himself entitled to have them set aside, cancelled, and held for naught? The 1 circuit court found (no doubt correctly) that I there was no fraud or collusion on the part ! of thie defendant Welch, the owner of the Stein judgment, and granted the relief pray- ed on the sole ground that plaintiff acted in ignorance of the existence of that judgment, in the matter of tlie satisfaction and dis- charge of the mortgages. Undoubtedly the plaintiff knew nothing of the judgment, and, presumably, (although he has not so testi- fied,) had he known of its existence he would not have had the mortgages discharged, or I made the contract he did with Osborne for j the conveyance. But that alone is not suffi- I cient to entitle him to have the discharged i mortgages reinstated as valid liens upon the land. He must also have exercised reason- able diligence to ascertain whether subse- quent liens had been put upon the property. A court of equity never relieves a man from the consequences of his own culpable negli- gence. Discussing the rules upon which courts of equity proceed In relieving, or re- fusing to relieve, against contracts made or acts done through mistake, or in ignorance of material facts. Judge Story says that "where an unconscionable advantage has been gained by mere mistake or misappre- hension, and there was no gross negligence on the part of the plaintiff in falling into the error, or in not sooner claiming redress, and no intervening rights have accrued, and the parties may still be placed in statu quo, equi- ty will interfere, in its discretion, in order to prevent intolerable injustice." 1 Story. Eq. Jur. § 1381. In section 146 the learned au- thor says: "It is not, however, sufficient in all cases to give the party relief, that the MISTAKE OF FACT. 22S fact is material; but it must be sucli as lie could not by reasonable diligence get knowl- edge of when he was put upon inquiry. For if, by such reasonable diligence, he could ob- tain knowledge of the fact, equity will not relieve him, since that would be to encourage culpable negligence." In a note to the sec- tion last cited is the following: "If a court of equity is asked to give relief in a case, not fully remediable at law, or not remedia- ble at all at law, then It gi'ants it upon its own terms and according to its own doc- trines. It gives relief only to the vigilant and not to the negligent; to those who have not been put upon their diligence to make inquiry, and not to those who, being put up- on inquiry, have chosen to omit all inquiry, which would have enabled them at once to correct the mistake, or to obviate all 111 ef- fects therefrom. In short, it refuses all Its aid to those who, by their own negligence, and by that alone, have incun-ed the loss, or may suffer the inconvenience." In Mamlock v. Fairbanks, 46 Wis. 415, 1 N. W. 167, this court made an application of the rule above stated. That was an action to rescind a conti'act of sale of a certain note and mortgage by the defendant to the plain- tiff, and to recover the money paid therefor. The ground upon which relief was claimed, was that the defendant misrepresented the identity of the debtors, which misrepresenta- tion affected the value of the securities. It was held that if, by the exercise of reason- able diligence, the plaintiff had the present means of ascertaining the identity of the debtors, and was not prevented from doing so by any artifice of the vendor, there could be no recovery. The opinion contains some of the authorities for the rule, not specially cited herein, and the case is a very strong one against the plaintiff'. Levy V. Martin, 48 Wis. 198, 4 N. W. 35, is not in point. There the mortgage sought to be revived was discharged without the consent of the plaintiff, and against an ex- press agreement between him and the per- sonal representatives of the deceased mort- gagor that it should be assigned to him. Under these circumstances we found no dif- ficulty in cancelling the satisfaction, and subrogating the plaintiff to the rights of the original mortgagor. There was no question of diligence in the case. We have examined the cases cited by the learned counsel for the plaintiff on the sub- ject of the rescission of contracts or instru- ments for ignorance or mistake of material facts, but in none of th'em, so far as we have perceived, is the question of diligence raised or passed upon. We are now to consider the question whether the present plaintiff used proper diligence to ascertain the condition of the ti- tle when he made his agreement with Os- borne, and when he paid and procured the discharge of the Duffy mortgages. The plaintiff' is a man of some wealth, HUTGH.& BUNK.BQ.— 15 and is apparently familiar with the usual modes of ti-ansacting ordinary business. He evidently knew that a judgm'eot against Os- borne would be a lien upon the mortgaged premises, and also the effect upon the title of a discharge of the mortgages. He knew also that Osborne was utterly insolvent and thriftless. The number and amount of mort- gages which the latter had put upon his land during the preceding seven years, ab- sorbing its whole value, was sufficient no- tice to him of Osborne's pecuniary condition. The known insolvency of Osborne would nat- urally make an ordinarily prudent man more cautious when dealing with the title to his land. Then, again, the mortgage of Allen represented nearly or quite one-half of the value of the land, and was paramount to all the others. Stein is a merchant in Madison, and plaintiff knew him well. It does not ap- pear that he is a dealer in real estate to any considerable extent. The very fact that he had purchased the Duffy mortgages, which were junior to the Allen mortgage, would seem to suggest to a reasonable mind that he must have had some special reason for doing so, and that such reason might well be that he became interested in some way in the land. But these circumstances, sug- gestive as they were, failed to open the lips of the plaintiff. He made no inquiry con- cerning the title either of Stein or Botkin or Osborne. Had he done so, and been told that no encumbrance had been placed upon the land subsequent to his mortgage for $229, he might stand in a very different po- sition in this action. But this is not all. A month after he took the conveyance from Osborne, he went vsdth Stein to the office of the register of deeds to have the latter discharge the two oldest Duf- fy mortgages, and some weeks later went again to the same office to have the other Duffy mortgages discharged. Of course, he was in close proximity to the office of the clerk of the circuit court, and could easily have gone there and ascertained whether any judgments had been entered against Os- borne. It seems to us that common pru- dence required him to do so,- or else to inter- rogate Stein or Osborne or Botkin as to the condition of the title. Yet he made the agreement, and took the conveyance from Osborne, and procured Stein to discharge the Duffy mortgages, without doing either. He suffered the matter to rest in statu quo un- til an execution was issued on the judgment, and, so far as it appears, first asserted the rights claimed in this action on the day the land was sold by the sheriff under the exe- cution, which was about 10 months after the last Duffy mortgage was discharged. Our minds are impelled to the conclusiou that, under these circumstances, the plaintiff" was guilty of most culpable negligence in failing to inform himself of the existence of the Stein judgment, and hence that he has no standing in a coui't of equity to obtain the 226 MISTAKE OP FACT. relief he seeks. It there Is any ease in the books which grants such relief, where the act sought to be relieved against was the result of negligence so gross and inexcusable, we have failed to find it Oertainly, no such case is cited by counsel. The application of this rule may work hardship in some cases; perhaps it does in this case. But the rule requires nothing unreasonable and is a most salutary one. It is infinitely better that men should be held to the consequences of their own culpable carelessness, than that courts of equity should undertake to relieve there- from. The rule requires reasonable caution and prudence in the transaction of business, and is deeply imbedded in our jurisprudence. It w within the principle and reason of cave- at emptor. Mamlock v. Fairbanks, supra. The abrogation of the rule would tend to encourage negligence, and to introduce un- certainty and confusion in all business trans- actions. The judgment of the circuit comt must be reversed, and the cause remanded, with di- rections to that court to dismiss the com- olaint MISTAKE OF FACT. 227 PARK BROS. & CO., Limited, r. BLOD- GETT & CLAPP CO. (29 Atl. 133, 64 Conn. 28.) Supreme Court of Errors of Connecticut. Feb. 8. 1894. Appeal from court of common pleas, Hart- ford county; Taintor, Judge. Action by Park Bros. & Co., Limited, against the Blodgett & Clapp Company for damages for breach of contract. Judgment for defendant Plaintiff appeals. Affirmed. Albert H. Walker, for appellant. Edward S. White, for appellee. TORRANCE, J. This Is an action brought to recover damages for the breach of a writ- ten contract, dated December 14, 1888. The contract Is set out in full in the amended complaint. It is in the form of a written proposal, addressed by the plaintiff to the defendant, and Is accepted by the defend- ant in writing upon the face of the con- tract. Such parts of the contract as appear to be material are here given: "We propose to supply you with fifteen net tons of tool steel, of good and suitable quality, to be furnished prior to January 1, 1890, at" prices set forth in the contract for the qualities of steel named therein. "Deliveries to be made f. o. b. Pittsburgh, and New York freight al- lowed to Hartford. To be specified for as your wants may require." The contract was made at Hartford, by the plaintifC through its agent A. H. Church, and by the defendant through its agent J. B. Clapp. After filing a demurrer and an answer, which may now be laid out of the case, the defendant filed an "answer, with demand for reformation of contract," in the first paragraph of which it admitted the execu- tion of said written contract. The second, third, and fourth paragraphs of the answer are as follows: "The defendant avers that on or about December , 1888, it was agreed by and between the plaintiff and de- fendant, the plaintiff acting by its said agent, A. H. Church, that the plaintiff should supply the defendant prior to January 1, 1890, with such an amount of tool steel, not exceeding fifteen tons, as the defendant's wants during that time might require, and of the kinds and upon the terms stated in said contract, and that the defendant would purchase the same of the plaintiff on said terms. (3) That by the mistake of the plaintiff and defendant, or the fraud of the plaintiff, said written contract did not em- body the actual agreement made as afore- said by the parties. (4) That the defendant accepted the proposal made to It by the plaintiff, and contained in said written con- tract, relying upon the representations of the plaintiff's said agent, then made to it, that by accepting the same the defendant would only be bound for the purchase of such an amount of tool steel of the kinds named therein as its wants prior to Janu- ary 1, 1890, might require, and the de- fendant then believed that such proposal embodied the terms of the actual agreement made as aforesaid by and between the plain- tiff and defendant" The fifth and last paragraph of the answer is not now mate- rial. The answer claimed, by way of equi- table relief, a reformation of the written contract In reply the plaintiff denied the three paragraphs above quoted; denied spe- cifically that the written contract did not embody the actual agreement made by the parties; and denied the existence of any joint mistake or fraud. Thereupon the court below, sitting as a coiu't of equity, heard the parties upon the issues thus formed, found them In favor of the defendant, and adjudged that the written contract be re- formed to correspond with the contract as set out in paragraph 2 of the answer. At a subsequent term of the court, final judg- ment in the suit was rendered In favor of the defendant. The present appeal Is based upon what occurred during the trial with reference to the reformation of the con- tract Upon that hearing the agent of the defendant was a witness, on behalf of the defendant, and was t-jked to state "what conversation occurred between him and A. H. Church in making the contract of De- cember 14, 1888, at and before the execution thereof, and relevant thereto." The plain- tiff "objected to the reception of any parol testimony, on the ground that the same was inadmissible to vary or contradict the terms of a written instrument, or to show any oth- er or different contract than that specified In the Instrument, or to show anything rele- vant to the defendant's prayer for Its refor- mation." The court overruled the objection, and admitted the testimony, and upon such testimony found and adjudged as hereinbe- fore stated. The case thus presents a single question, - -whether the evidence objected to was ad- missible under the circumstances; and this depends upon the further question, which will be first considered, whether the mis- take was one which, under the clrcumstan- oes disclosed by the record, a court of equity will correct The finding of the coiu-t be- low Is as foUows: "The actual agreement between the defendant and the plaintiff wa? that the plaintiff should supply the defend- ant, prior to January 1, 1890, with such an amount of tool steel, not exceeding fifteen tons, as the defendant's wants during that time might require, and of the kinds and upon the terms stated In said contract and that the defendant would purchase the same of the plaintiff on said terms. But by the mutual mistake of said Church and said Clapp, acting for the plaintiff and defendant respectively, concerning the legal construc- tion of the written contract of December 14, 1888, that contract failed to express the actual agreement of the parties; and that said Church and said Clapp both intended tc •228 MISTAKE OF FACT. have the said written contract express the actual agreement made by them, and at the time of its execution believed that it did." No fraud is properly charged, and certainly none is fo\m.d, and whatever claim to relief the defendant may have must rest wholly on the ground of mistake. The plaintiff claims that the mistake in question is one of law, and is of such a nature that it cannot be corrected in a oourt of equity. That a court of equity, under certain circumstances, may reform a written Instrument founded on a mistake of fact Is not disputed; but the plaintiff strenuously insists that it cannot, or will not, reform an instrument founded upon a mistake like the one here in question, which is alleged to be a mistake of law. The distinction between mistakes of law and mis- takes of fact is certainly recognized in the text-books and decisions, and to a certain extent is a valid distinction; but It is not practically so important as it is often rep- resented to be. Upon this point Mr. Mark- by, in his "Elements of Law" (sections 208 and 269), weU says: "There is also a pecu- liar class of cases in which courts of equity have endeavored to undo what has been done under the influence of error and to re- store parties to their former position. The courts deal with such cases in a very free manner, and I doubt whether it is possible to bring their action under any fixed rules. But here again, as far as I can judge by what I find in the text-books and in the cases referred to, the distinction between errors of law and errors of fact, though very em- phatically announced, has had very little practical effect upon the decisions of the courts. The distinction is not ignored, and it may have had some influence, but it is always mixed up with other considerations, which not unfrequently outweigh it The distinction between errors of law and errors of fact is therefore probably of much less importance than is commonly supposed. There is some satisfaction In this, because the grounds upon which the distinction is made have never been clearly stated." The distinction in question can therefore afCord little or no aid in determining the question under consideration. Under certain circum- stances a court of equity will, and under others it will not, reform a writing founded on a mistake of fact; under certain circum- stances it will, and under others it will not, reform an instrument founded upon a mis- take of law. It is no longer true, if it ever was, that a mistake of law is no ground for relief in any case, as wUl be seen by the cases hereinafter cited. Whether, then, the mistake now in question be regarded as one of law or one of fact is not of much con- sequence; the more important question is whether it is such a mistake as a court of equity will correct; and this perhaps can only, or at least can best, be determined by seeing whether It falls within any of the well-recognized classes of cases in which such relief is furnished. At the same time the fundamental equitable principle which was specially applied in the case of North- rop V. Graves, 19 Conn. 548, may also, per- haps, afford some aid in coming to a right conclusion. Stated briefly and generally^ and without any attempt at strict accuracy, that principle is that in legal transactions no one shall be allowed to enrich himself unjustly at the expense of another through or by reason of an innocent mistake of law or fact, entertained without negligence by the loser, or by both. If we apply this prin- ciple to the present case, we may see that, by means of a mutual mistake In reducing the oral agreement to writing, tlie plaintiff, with- out either party intending it, gained a de- cided advantage over the defendant, to which it is in no way justly entitled, or at least ought not to be entitled. In a court of equity. The written agreement certainly fails to express the real agi-eement of the parties in a material point; it fails to do so by rea- son of a mutual mistake, made, as we must assume, innocently, and without any such negligence on the part of the defendant as would debar him from the aid of a court of equity. The rights of no third parties have Intervened. The instrument, if corrected, will place both parties just where they In- tended to place themselves in their relations to each other; and, if not corrected, it gives the plaintiff an inequitable advantage over the defendant It is said that if, by mistake, words are inserted in a written contract which the parties did not Intend to Insert, or omitted which they did not intend to omit, this is a mistake of fact which a court of equity will correct in a proper case. Sibert V. McAvoy, 15 111. 106. If, then, the oral agreement in the case at bar had been for the sale and purchase of 5 tons of steel, and, in reducing the contract to writing, the par- ties had, by an unnoticed mistake, inserted "15 tons" instead of "5 tons," this would have been a mistake of fact entitling the de- fendant to the aid of a court of equity. In the case at bar the parties actually agreed upon what may, for brevity, be called a con- ditional purchase and sale, and upon that only. In reducing the contract to writing, they, by an innocent mistake, omitted words which would have expressed the true agree- ment, and used words which express an agreement differing materiilly from the only one they made. There is perhaps a distinc- tion between the supposed case and the actu- al case, but it is quite shadowy. They dif- fer not at all in their unjust consequences. In both, by an innocent mistake mutually entertained, the vendor obtains an uncon scionable advantage over the vendee, a re- sult which was not intended by either. There exists no good, substantial reason, as it seems to us, why relief should be given in the one case and refused in the other, other things being equal. It is hardly nec- essary to say that, in cases like the one at bar, courts of equity ought to move witb- MISTAKE OF FACT. 229 great caution. Before an Instrument is re- formed, under such circumstances, the proof of the mistake, and that it really gives an un- just advantage to one party over the other, ought to be of the most convincing character. "Of course the presumption in favor of the written over the spoken agreement is almost resistless; and the oourt has wearied itself in declaring that such prayers (for relief of this kind) must be supported by overwhelm- ing evidence, or be denied." Palmer v. In- surance Co., 54 Conn. 501, 9 Atl. 248. We are not concerned here, however, with the amount or sufficiency of the proofs upon which the court below acted, nor with the sufficiency of the pleadings; we must, upon this record, assume that the pleadings are sufficient, and that the proofs came fully up to the highest standard requirements in such oases. Upon principle, then, we think a court of equity may correct a mistake of law in a case like the one at bar, and we also think the very great weight of modem authority is in favor of that conclusion. The case clearly falls within that class of cases where there is an antecedent agreement, and, in re- ducing It to writing, the instrument executed, by reason of the common mistake of the par- ties as to the legal effect of the words used, fails, as to one or more material points, to express their actual agreement. It is per- haps not essential in all cases that there should be an antecedent agreement, as ap- pears to be held in Benson v. Markoe, 37 Minn. 30, 33 N. W. 38; but we have no oo casion to consider that question in the case at bar. The authorities in favor of the con- clusion that a coiu-t of equity in such cases wiU correct a mistake, even if it be one of law, are very numerous, and the citation of a few of the more important must suffice. In Hunt V. Rousmanier's Adm'rs, 1 Pet. 1, decided in 1828, It is said: "Where an in- strument is drawn and executed which pro- fesses, or is intended, to carry into execu- tion an agreement, whether in writing or by parol, previously entered into, but which by mistake of the draftsman, either as to fact or law, does not fulfill, or which violates, the manifest intention of the parties to the agreement, equity wiU correct the mistake so as to produce a conformity of the instru- ment to the agreement." It was said in the argument before us that this was a mere obiter dictum, but that is hardly correct. It is true the case was held not to fall within the principle, but the principle was said to be "incontrovertible" (page 13), and was ap- plied to the extent at least of determining that the case then before the com-t did not come within it. In Snell v. Insurance Co.. 98 U. S. 85, the court applied the principle so clearly stated in the case last citeji, and re- formed a policy of insurance, though the mistake was clearly one as to the legal ef- fect of the language of the policy. In nu- merous other decisions of that court the same principle has been cautiously but re- peatedly applied, but it is not necessary to cite them. On the general question, wheth- er a court of equity will relieve against a mistake as to the legal effect of the language of a writing, the case of Griswold v. Hazard, 141 U. S. 260, 11 Sup. Ct. 972, 999, is a strong case, though perhaps hardly an authority upon the precise question in this case. Can- edy V. Marcy, 13 Gray, 373, was a case where the oral contract was for the sale of two-thirds of certain premises, but the deed, by mistake of the scrivener, conveyed the en- tire premises. The words used were ones intended to be used in one sense, the error being that aU concerned supposed those words would cari-y out the oral agreement. This, was clearly a mistake "concerning the legal construction of the written contract," but the court, by Chief Justice Shaw, said: "We are of the opinion that courts of equi- ty in such cases are not limited to affording relief only in cases of mistake of fact, and that a mistake in the legal effect of a de- scription in a deed, or in the use of technical language, may be relieved against upon prop- er proof." In Goode v. Riley, 153 Mass. 585, 28 N. E. 228, decided in 1891, the court says: "The only question argued is raised by the defendant's exception to the refusal of a rul- ing that, if both parties intended that the description should be written as it was writ- ten, the plaintiff was not entitled to a refor- mation. It would be a sufficient answer that the contrary is settled in this common- wealth, "-siting a number of cases. In Ken- nard v. George, 44 N. H. 440, the parties, by mistake as to its legal effect, supposed a mortgage deed to be valid when it was not. The court relieved against the mistake, and said: "It seems to us to be a clear case of mutual mistake, where the instrument given and received was not in fact what all the parties to it supposed it was and intended it should be; and in such a case equity will interfere and reform the deed, and make it what the parties at the time of its execu- tion intended to make it; and in this re- spect it makes no difference whether the defect in the instrument be in a statutory or common-law requisite, or whether the par- ties failed to make the instrument in the form they intended, or misapprehended its legal effect." In Eastman v. Association, 65 N. H. 176, 18 Atl. 745, decided in 1889, the mistake was as to the legal effect of an in- surance certificate, but the court granted re- lief by way of reformation. The court says: "Both parties intended to make the benefi,t payable to Gigar's administrator. That it wa'j not made payable to him was due to theit mutual misapprehension of the legal effect of the language used in the certificate. • * • Equity requires an amendment of the writing that wiU make the contract what the parties supposed it was, and intended it should be, although their mistake is one of law, and not of fact." In Trusdell v. Lehman, 47 N. J. Eq. 218, 20 Atl. 391, the marginal note is as follows: "Where it clearly appears that a deed drawn professedly to carry out the 230 MISTAKE OF FACT. agreement of the parties, previously entered into, is executed under the misapprehension that It really embodies the agreement, where- as, by mistake of the draughtsman either as to fact or law, it fails to fulfill that purpose, equity will correct the mistake by reforming the instrument in accordance with the con- tract." In a general way, the same rule Is recognized and applied with more or less sirictness in the following cases: Clayton v. Freet, 10 Ohio St. 544; Bush v. Hicks, 60 N. Y. 298; Andrews v. Andrews, 81 Me. 337, 17 Atl. 1G6; May v. Adams, 58 Vt 74, 3 Ati. 187; Griffith v. Townley, 69 Mo. 13; Benson V. Markoe, 37 Minn. 30, 33 N. W. 38; Gump's Appeal, 65 Pa. St. 476; Cooper v. Phibbs, L. R. 2 H. L. 170. See, also, 2 Pom. Eq. Jut. § 845, and Bisp. Eq. §§ 184^191. And, whatever the law may be elsewhere, this is certainly the law of oiu* own state. Cham- berlain v. Thompson, 10 Conn. 243; Stedwell V. Anderson, 21 Conn. 144; Woodbury Sav- ings Bank v. Charter Oak Ins. Co., 31 Conn. 518; Palmer v. InsTii-ance Co., 54 Conn. 488, 9 Atl. 248; and Haussman v. Burn- ham, 59 Conn. 117, 22 Ati. 1065. Indeed, sinoo the time of Northrop v. Graves, supra, it is difficult to see how our law could have been otherwise. We conclude then that by our own law, and by the decided weight of authority elsewhere, the defendant was en- titled to the relief sought If this is so, then clearly he was entifled to the parol evidence which the plain tifC objected to; for in no other way, ordinarily, can the mistake be shown. "In such cases parol evidence is admissible to show that the party is entitled to the relief sought" Wheaton v. Wheaton, 9 Conn. 96. "It is settled, at least In equity, that this particular kind of evidence, that is to say, of mutual mistake as to the meaning of words used, is admissible for the negative purpose we have mentioned. And this prin- ciple is entirely consistent with the rule that you cannot set up prior or contemporaneous oral dealings to modify or override what you knew was the effect of your writing." Goode V. Riley, 153 Mass. 585, 28 Ati. 22S; Reyn. Theory Ev. § 69; 1 Greenl. Ev. {15th Ed.) | 269a; Steph. Dig. Ev. § 90. The view we have taken of this case ren- ders it unnecessary to notice at any Ijngth the cases cited by counsel for the plaintiff In his able argument before us. Upon Wa brief, he cites five from Illinois, two froi," Indiana, and one from Arkansas. After an examination of them, we can only say that most of them seem to support the claims of the plaintiff. If so, we think they are op- posed to the very decided weight of authori- ty, and do not state the law as it is held in this state. Before closing, however, we ought to no- tice the case of Wheaton v. Wheaton, supra, upon which the plaintifC's counsel seems to place great reliance. The case is a some- what peculiar one. Even in that case, how- ever, the court seems to recognize the princi- ple governing the class of cases within which we decide the case at bar falls, for it says: "It is not alleged that the writings were not so drawn as to effectuate the intention of the parties, through the mistake of the scriv- ener. On the contrary it is alleged that the scrivener was not even informed what the agreement between the parties was." Prom the statement of the case In the record and In the opinion. It clearly appears that the mistake was not mutual; Indeed, It does not even appear that at the time when the note was executed the other party even knew that there was any mistake at all on he part of anybody. Upon the facts stated, the plaintiff In this case did not bring it within the class of cases we have been considering. The case was correctiy decided, not on the ground that the mistake was one of law, but on the ground that the mistake of law was one which, under the circumstances al- leged, a court of equity would not correct. The court, however, in the opinion, seems to base its decision upon the distinction be- tween mistakes of law and mistakes of fact; holding in general and unqualified terms, as was once quite customary, that the latter could be corrected and the former could not The court probably did not mean to lay the law down In this broad and unqualified way; but If it did, it is sufficient to say that it Is not a correct statement of our law, at least since the decision of Northrop t. Graves, supra. On the whole, this case of Wheaton V. Wheaton can hardly be regardea as sup- porting the plaintiff's contention. There is no error apparent upon the record. In this opinion the other judges concurred. MISTAKE— PAROL EVIDENCE TO COKEECT. 231 WALDEN V. SKINNER. aOl U. S. 577.) Supreme Court of the United States. October, 1879. Appeal from the Circuit Court of the Unit- ed States for the Southern District of Geor- gia. Benjamin H. Hill, for appellant A. R. Lawton, tor appellee. MR. JUSTICE CLIFFORD delivered the opinion of the court. Trusts are either express or implied, the former being such as are raised or created by the act of the parties, and the latter be- ing such as are raised or created by pre- sumption or construction of law. Cook v. Fountain, 3 Swanst 585, 592. Implied trusts may also be divided Into two general classes: First, those that rest upon the presumed intention of the parties. Secondly, those vchich are independent of any such express intentions, and are forced upon the conscience of the party by opera- tion of law. 2 Story, Eq. Jur. § 1195. Sufficient appears to show that Sarah S. Walden, the complainant, on the sixth day of May, 1874, filed her bill of complaint in the court below against the respondents, to wit, Darius S. Skinner and John N. Lewis and Charles S. Hardee, executors of Charles S. Henry, deceased, who in his lifetime was the trustee of Penelope W. Tefft and her three children. Preliminary to the charging part of her complaint she alleges and states that on the 28th of October, 1847, she inter- married with William P. TefCt, who on the 9th of August, five years later, departed this life intestate and without children, leaving the complainant as his sole heir and legal representative; that on the 4th of June, six years subsequent to the death of her first husband, she intermarried with Charles C. Walden, who, on the eighth day of Decem- ber of the next year, departed this life tes- tate, leaving no children by the complainant, and that he by his will bequeathed to her all the property and rights owned and pos- sessed by her at the date of their marriage; aud that the father of her first husband died intestate on the 30th of June, 1862, but that no administration was ever had upon his estate, and that his widow, the mother of her first husband, departed this life testate on the 11th of September eleven years later; that her first husband had two brothers at the date of her marriage neither of whom ever married and both of whom died without children; that at the death of the elder of the two he had a life policy of insurance for $5,000, which his administrator collected and paid to his two living brothers. Allegations then follow in the bill of com- plaint which relate more Immediately to the subject-matter of the controversy, from which it appears that Ellas Fort, June 28, 1831, conveyed a certain tract of land to Charles S. Henry and Stephen C. Greene, as trustees and in trust for Penelope W. TefCt and her three sons, William P. Tefl:t, Henry D. TefCt, and Charles E. Tefft, and it is therein declared that the said property is for the use of the mother during her life- time and the three sons, and that after the death of the mother it shall be for the use of the three sons alone as tenants in com- mon, and that in case of sale "the proceeds to be reinvested upon the same uses and trusts as aforesaid, and if not sold, then the property, after the death of the mother, was to be distributed by said trustees to each of the said sons as shall sm'vlve and attain the age of twenty-one years." Greene, one of the trustees, subsequently died, leaving Charles S. Henry the sole sur- viving trustee under the trust-deed, and she charges that on the 19th of July, 1848, the mayor and aldermen of the city of Savannah conveyed to him as such trustee a certain lot of land numbered five, Monterey Ward, in said city, the lot being then subject to cer- tain annual ground-rents, as specified in the conveyance, and the complainant avers that the conveyance is informal and incomplete, inasmuch as the trustee never signed it, as it was intended, and that it fails to set forth and express the trust interests of the three children as it should do. Wherefore she al- leges that it should be reformed and be made to conform to the purposes of the trust as created and set forth in the original trust- deed. Persuasive and convincing reasons in sup- port of that request are alleged which will hereafter be reproduced when the merits of the controversy are considered. Relief specific and general is prayed, as is more fully set forth in the transcript. Pro- cess was served and the respondents appear- ed, and after certain interlocutory proceed- ings filed separate answers. All of the defenses to the merits are set up in the answer of tlae first-named respond- ent, who admits all of the preliminary mat- ters alleged in the bill of complaint. He also admits that there was in existence at the time of the first marriage of the com- plainant the trust estate held by the surviv- ing trustee arising under the conveyance from Elias Fort to the said two trustees, which, as he alleges, was held for the sole and separate use of the mother during her life, and remainder at her death to her three sons as tenants in common. Prior to that transaction there is no con- troversy between the parties as to the facts, and he also admits that the authorities of the city conveyed the lot called Monterey Ward to the surviving trustee, but he alleges that by the terms of the conveyance the legal title to the lot vested in the trustee in trust for the sole and separate use of the mother, the trust being executory only so long and for such time as the cestui que trust should 232 MISTAKE— PAROL EVIDENCE TO CORRECT, reinaiu a feme covert; and he denies tliat the conveyance is informal and incomplete in any particular, or that it was ever expected or intended by any one that the trustee should sign the same, and he avers that it was acct-pted by the trustee for the pur- poses therein set forth. Attempt is also made to enforce that view by a specific denial of most of the reasons assigned in the bill of complaint in support of the request that the conveyance to the trustee of the lot called Monterey Ward may be reformed so as to conform to the trusts created and expressed in the antecedent trust- deed. Both of the other respondents allege that they are citizens of the state where the suit is brought, and deny that the circuit court had any jurisdiction to make or execute any order, judgment, or decree against them in the premises. Proofs were taken, the parties heard, and the circuit court entered a decree in favor of the respondents, dismissing the bill of complaint. Prompt appeal was taken by the complainant to this court, and since the ap- peal was brought up she has filed the as- signment of errors set forth in the brief of her counsel. They are ten in number, all of which will be sufliciently considered in the cou:se of the opinion, without giving each a separate examination. Before examining the questions presented in respect to the second deed, it becomes nec- essary to ascertain the true consti'uction and meaning of the original trust-deed so far as respects the second trust therein created and defined. Eight hundred dollars consti- tuted the consideration of the conveyance, and it was made upon the trust that if, dur- ing the lifetime of the mother of the three sons, it should be deemed advisable by her to sell and convey the premises, then upon this further trust that the ti-ustees as afore- said, or the survivor of them, upon her ap- plication and with her consent, signified by her being a party to the conveyance, will sell and convey the lot and improvements for the best price which can be obtained for the same, to any person or persons whatsoever, ■without applying to a court of law or equity for that purpose to authorize the same, and the proceeds thereof upon the same trusts as aforesaid to invest in such other property or manner as the mother of the sons shall direct and request for the same use, benefit, and behalf. Explicit and unambiguous as that provi- sion is, it requires no discussion to ascer- tain its meaning; nor is it necessary to en- ter into any examination of the third trust specified in the conveyance, as it is conceded that the titist property was sold by the sur- viving ti'ustee for reinvestment during the lifetime of the mother at her request, she joining in the conveyance as required by the terms of the instrument creating the trust. Twenty-four hundred dollars were receiv- ed for the conveyance of the trust property, and all of that sum, except $600 turned over to the mother, was invested in buildings then being erected upon lot numbered five, called the Monterey Ward. Purchase of that lot had previously been made by the surviving trustee named in the original trust- deed, and it appears that the parties under- stood that it was to be upon the same uses and trusts as were contained in the trust- deed by which the title to the lot sold was acquired. Proof that the new lot numbered five, called Jlonterey Ward, was purchased by the father and the three sons during the life- time of the father seems to be entirely sat- isfactory, and it is equally well established that each contributed one-fourth part of the sum of •'?240 paid for the purchase-money of the lot. Satisfactory proof is also exhibited that Henry D. Telft, one of the three broth- ers, died Aug. 13, 1849, unmarried and intes- tate, and that he had a valid subsisting insurance upon his life in the sum of $5,000, which his administrator collected and paid to his surviving brothel's. Eighteen hundred dollars of the proceeds arising from the sale of the property ac- quired by virtue of the first trust-deed were appropriated towards erecting buildings on the new lot purchased by the father and the three sons while in full life, and when the one whose life was insured deceased, the two survivors appropriated each his proportion of the money received to the same purpose, with the understanding that the property was subject to the same uses and trusts as the property previously acquired and sold. Competent proofs of a convincing charac- ter are also exhibited in the transcript that the first husband of the complainant con- tributed other sums towards completing the buildings, leaving no doubt that he paid his full proportion for the improvements as well as for the lot purchased of the city author- ities. Enough appears to show that the buildings were completed more than two years before the first husband of the complainant died in- testate and without children, when it is obvious that she became the sole heir to all the interest he possessed in the said estate, whatever it might be. Two years elapsed after the buildings were completed before the father of the three sons died, and the proofs show that during that period the complain- ant resided with the parents of her husband, and that her rights as his heir-at-law were uniformly recognized by the family; that she continued to reside there with her moth- er-in-law after the death of thie senior Tefft, until the decease of his widow, and that throughout that period she paid one-half of all repairs, taxes, insurance, and other ex- penses of the property as If she were equally interested in the same with her mother-in- law, and was liable to bear an equal propor- tion of all such expenses. MISTAKE— PAKOL EVIDBNOE TO (TORRBCT. 233 Opposed to that is the proof that the moth- er-in-law, one year before her death, when in a low and depressed frame of mind, be- queathed the whole of the lot in question to the first-named respondent, who is her neph- ew, and on the same day executed a deed to him of the entire property, to false eflfect in possession after her death. Sole title to the premises in fee-simple is claimed by the respondent under those Instruments, and he brought ejectment against the complainant to dispossess her of the premises, and it ap- pears that she was at great disadvantage in attempting to defend the suit, because the trustee had omitted to see that the title was conveyed in trust for the benefit of the ces- tuis que trust as in the prior trust deed, as he should have done, to can-y into effect the understanding of all the parties to the sale of the prior trust premises and the purchase of the lot in question. What she alleges is that the purchase of the new lot was made for the same cestuis que trust as those de- scribed in the deed of the old lot, and that the understanding of all was that the deed of the new lot should contain and declare the same uses and trusts in favor of the same persons, and the proofs to that effect are full and entirely satisfactory. Support to that view is also derived from the fact that the surviving trustee in the old deed is the grantee in the new deed, and that he is therein more than once described as- trustee, and in the introductory part of the instrument is denominated trustee of Mrs. Penelope W. Tefft, wife of Israel K. Tefft, of the city and state previously mentioned in the same instrument. Ten years before the suit was instituted the trustee in the new deed departed this life, an>d the other two respondents were ap- pointed and qualified as his executors. Un- able to obtain complete redress at law, the complainant prays that the deed of convey- ance from the city of the lot and improve- ments in question may be reformed and be made to conform to the true intent and pur- pose for which the lot was purchased, and to that end that it may be made to include the same uses and trusts raised, created, and declared in the prior deed from Elias Fort, according to the understanding and agreement of all the parties. Besides that she also prays that her equi- ties in and to the property, including the improvements, may be set forth, decreed, and allowed by the court. Including such as are In her favor from the payment of taxes, insurance, and repairs upon the property dur- ing the lifetime and since the death of her mother-in-law, and that the first-named re- spondent may be Enjoined from further pro- ceeding in his ejectment suit to recover pos- session of the premises. Courts of equity afford relief in case of mistake of facts, and allow parol evidence to vary and reform written contracts and in- struments, when the defect or error arises from accident or misconception, as properly forming an exception to the general rule which excludes parol testimony offered to vary or contradict vrritten instruments. Where the mistake is admitted by the other party, relief, as all agree, will be granted, and if it be fully proved by other evidence, .Judge Story says, the reasons for granting relief seem to be equally satisfactory. 1 Story, Eq. .Tur. § 156. Decisions of undoubted authority hold that where an instrument is drawn and executed that professes or is intended to carry into execution an agreement, which is in writing or by parol, previously made between the parties, but which by mistake of the drafts- man, either as to fact or law, does not fulfill or which violates the manifest intention of the parties to the agi'eement, equity will cor- rect the mistake so as to produce a conform- ity of the instrument to the agreement, the reason of the rule being that the execution of agreements fairly and legally made is one of the peculiar branches of equity juris- diction, and if the instrument intended to execute the agreement be from any cause insufficient for that purpose, the agreement remains as much unexecuted as if the party had refused altogether to comply with his engagement, and a coiu-t of equity will, in the exercise of its acknowledged jurisdiction, afford relief in the one case as well as in the other, by compelling the delinquent par- ty to perform his undertaking according to the terms of it and the manifest intention of the parties. Hunt v. Rousmaniere's Adm'rs, 1 Pet. 1, 13; Id., 8 Wheat. 174, 211. Even a judgment when confessed, if the agreement was made under a clear mistake, will be set aside if application be made, and the mistake shown while the judgment is within the power of the court. Such an agreement, even when made a rule of court, will not be enforced if made under a mis- take, if seasonable application be made to set it aside, and if the judgment be no long- er in the power of the court, relief, says Mr. Chief Justice Marshall, may be obtained in a court of chancery. The Hiraha, 1 Wheat. 440, 444. Equitable rules of the kind are applicable to sealed instruments, as well as to ordinary written agreements, the rule being that if by mistake a deed be drawn plainly different from the 'agreement of the parties, a court of equity will grant relief by considering the deed as if it had conformed to the antecedent agreement. So if a deed be ambiguously expressed in such a manner that it is diffi- cult to give it a construction, the agreement may be referred to as an aid in expounding such an ambiguity; but if the deed is so expressed that a reasonable construction may be given to it, and when so given it does not plainly appear to be at variance with the agreement, then the latter is not to be re- 234 MISTAKEN- PAROL EVIDENCE TO CORRECT. garded In the construction of the former. Hogan V. Insurance Co., 1 Wash. C. C. 419, 422, Fed. Gas. No. 6,582. Rules of decision in suits for specific per- formance are necessarily affected by consid- erations peculiar to the nature of the right sought to be enforced and the remedy em- ployed to accomplish the object. Where no question of fraud or mistake is involved, the rule with respect to the admission of parol evidence to vary a written contract is the same in courts of equity as in those of com- mon law, the rule in both being that when an agreement is reduced to writing by the act and consent of the parties, the intent and meaning of the same must be sought in the instrument which they have chosen as the repository and evidence of their purpose, and not in extrinsic facts and allegations. Proof of fraud or mistake, however, may be ad- mitted in equity to show that the tenns of the instrument employed in the preparation of the same were varied or made different by addition or subtraction from what they were intended and believed to be when the same was executed. Evidence of fraud or mistake is seldom found in the instrument itself, from which it follows that unless parol evidence may be admitted for that purpose the aggrieved par- ty would have as little hope of redress in a court of equity as in a court of law. Even at law, all that pertains to the execution of a written instrument or to the proof that the instrument was adopted or ratified by the parties as their act or contract, is necessarily left to extrinsic evidence, and witnesses may consequently be called for the purpose of im- peaching the execution of a deed or other writing under seal, and showing that its seal- ing or delivery was procured by fraudulently substituting one instrument for another, or by any other species of fraud by which the com- plaining party was misled and induced to put his name to that which was substantially dif- ferent from the actual agreement. Thorough- good's Case, 4 Coke, 4. When the deed or other written instrument is duly executed and delivered, the courts of law hold that it contains the true agreement of the parties, and that the writing furnishes better evidence of the sense of the parties than any that can be supplied by parol; but courts of equity, says Chancellor Kent, have a broader jurisdiction and will open the writ- ten contract to let in an equity arising from facts perfectly distinct from the sense and construction of the instrument itself. Pursu- ant to that rule, he held it to be established that relief can be had against any deed or contract in writing foimded on mistake or fraud, and that mistake may be shown by parol proof and the relief granted to the in- jured party whether he sets up the mistake affirmatively by bill or as a defense. Gilles- pie V. Moon, 2 Johns. Ch. 585, 596. Parol proof, said the same learned magis- trate, is admissible in equity to correct a mistake in a written contract in favor of the complainant seeking a specific perform- ance, especially where the contract in the first instance is imperfect without referring to extrinsic facts. Keisselbrack v. Living- ston, 4 Johns. Ch. 144; Cathcart v. Robinson, 5 Pet. 204. Many cases support that proposition with- out qualification, and all or nearly all agree that it is correct where It is invoked as de- fence to a suit to enforce specific perform- ance. Little or no disagreement is found In the adjudged eases to that extent, but there are many others where it is held that the rule is unsound when applied in behalf of a com- plainant seeking to enforce a specific perform- ance of a contract ^Yith variations from the written instrument. Difficulty, it must be admitted, would arise in any attempt to reconcile the decided cases in that regard, but it is not necessary to enter that field of contest and conflict in the case before the court for several reasons: 1. Because by comparing the original trust deed with the deed of the lot in question, in view of the attendant circumstances, the Inference is very cogent that the second was designed and intended as a complete substitute for the first. 2. Because the proof shows to a demonstra- tion that the consideration for the purchase of the second lot was paid in equal propor- tions by the father and each of the three sons. 3. Because it appears that the expen- sive improvements made upon the lot in ques- tion were made from the moneys of each of the three sons, advanced at the request of the father. 4. Because it appears that the family and every member of it understood from the first and throughout that the trustee held the property in trust for the mother and the three sons. 5. Because the father, from the date of the deed to the time of his death, recognized the premises as acquired and held for the benefit of his wife and their three sons. 6. Because the mother of the three sons, after the decease of the first husband of complainant, recognized her as intei'ested in the property, and continued to do so at all times throughout her life until about the time she conveyed the lot in question to the re- spondent. Both the deed and her will bear date Sept. 28, 1872, and the proofs show that she was at the time in a low, depressed state of mind, and that she departed this life within one year subsequent to the execution of those in- struments. Prior to that, and throughout the whole period subsequent to the death of her husband, the proofs show that she uniformly recognized the complainant as the owner of a moiety of the lot and the improvements, and always required her to pay one-half of aU repairs, taxes, insurance, and other expenses of the property. By the terms of the original deed the prop- erty was conveyed to the trustees, subject to the payment of taxes, assessments, and ground-rent, to and for the sole and separate MISTAKE— PAROL EVIDENCE TO CORRECT. 235 use, benefit, and behoof of the mother and her three sons during her lifetime, and after her death to the three sons as tenants in com- mon in equal parts, with the provision that if the mother during her lifetime should deem It advisable she might sell and convey the prem- ises, and that In that event the further ti-ust was raised and created that the trustees or the survivor of them, upon her application and with her consent signified by becoming a party to the conveyance, might sell and con- vey the lot and improvements for the best price which could be obtained for the same, without any application to a court of law or equity for that purpose, and to invest the proceeds thereof upon the same trusts in such other property or manner as the mother should direct, and for the same use, benefit, and behalf. Provision was also made that if no such sale and re-investment was made during the lifetime of the mother, then the trustees were to sell the same for the sole use and benefit of the three sons or the survivor or survivors of them, share and share alike, until the youngest should arrive at the age of twenty- one years, when the trustees might sell and convey the same at the request of such sur- vivor or survivors, and divide the proceeds to the survivor or survivors, share and share alike. Taken as a whole the proofs show to the entire satisfaction of the court that the lot in question was purchased and conveyed to the surviving trustee upon the same trusts as those raised and created in the first deed, and that the trustee, through mistake, failed to have those trusts properly declared in the deed of trust to him as he should have done, and that the prayer of the bill of complain- ant, that the deed of the lot and improve- ments In question ought to be reformed and the rights of the complainant be ascertained and adjudged as if the deed in question con- tained the same trusts as those raised and created in the original trust deed is reasonable and proper and should be granted. Courts of equity, beyond all doubt, possess the power to grant such relief, and the proofs, In the judgment of the court, are such as to entitle the complainant to such a decree, un- less the remaining defence set up by the re- spondent must prevail. Cooper v. Phibbs, L. R. 2 Oh. App. 149, 186; Cochrane v. Willis, 34 Beav. 359, 366. Such a decree, of course, cannot now be made against the trustee, as he is not living; but the executors, as con- tended by the complainant, are competent to perform that duty, and she prays that the decree may be adapted to the present state of the parties. Suppose all that Is true, still it Is contended by the principal respondent that the decree below is correct, because the claim is barred. Much discussion of that defence will not be necessary, beyond what is required to ascer- tain the facts. When the father died, the complainant was living on the premises, and she continued to reside there most or all the time during the widowhood of the mother of her first hus- band, except while she lived with her second husband, and when he died she returned to live with her mother-in-law. During all that time the proofs show that she was constantly recognized as the lawful heir to the estate of her deceased husband, until about a year be- fore the decease of the mother, who also re- sided on the premises. Prior to that, the rights of the complainant were unmistakably recognized, and nothing of consequence had occurred to indicate any Intent to call her just right in question. Soon after that, how- ever, the respondent commenced an action of ejectment against her to recover posses- sion of the entire lot and improvements, she still being in possession, and doubtless hoping and expecting that her rights would yet be acknowledged without the necessity of expen- sive litigation. Expectations of the kind not being realized, she filed the present bill of complaint. Laches are imputed to her; but the court, In view of the circumstances and of the embarrassments growing out of the obvious defects in the conveyance intended to secure her rights, is of the opinion that the evidence of laches Is not sufficient to bar her right to recover In the present suit. With- out more, these remarks are sufficient to show that the defence cannot be sustained, and it is accordingly overruled. Two or three remarks will be sufficient to show that the objection that the circuit court has no jurisdiction to enter the required de- cree against the executors of the deceased trustee cannot be sustained. Jurisdiction as between the complainant and respondent Is unquestionable; and, if so, it is clear that the fact that the trustee If living was a citizen of the same state with the complainant would not defeat the jurisdiction in a case where he is a mere nominal party, and Is merely joined to perform the ministerial act of conveying the title if adjudged to the complainant. Where that is so, the executor, in case of the de- cease of the trustee. If authorized by the law of the state to execute such a conveyance, may also be joined In the suit under like cir- cumstances merely to accomplish the like pur- pose. Where the real and only controversy is between citizens of different states, or an alien and a citizen, and the plaintiff is by some positive rule of law compelled to use the name of anBther to perform merely a min- isterial act, who has not nor ever had any Interest in or control over It, the courts of the United States will not consider any others as parties to the suit than the persons between whom the litigation before them exists. Mc- Nutt V. Bland, 2 How. 9, 15; Browne v. Strode, 5 Cranch, 303; Coal Company v. Blatchford, 11 Wall. 172, 177. Cases arise in the federal courts in which nominal or even immaterial parties are joined, on the one side or the other, with those who have the requisite citizenship to give the court 236 MISTAKE— PAROL EVIDENCE TO CORRECT. jurisdiction in tlie case; and where that is so, the rule is settled that the mere fact that one or more of such parties reside in the same state with one of the actual parties to the controversy will not defeat the jurisdic- tion of the court. Decisive authority for that proposition is found in a recent ruling at Mr. Justice Miller, in which he states to the ef- fect that mere formal parties do not oust the jurisdiction of the court, even if they are without the requisite citizenship, where it ap- pears that the real controversy is between citizens of different States. Arapahoe Oo. v. Kansas Pac. Ry. Co., 4 Dill. 277, 283, Fed. Cas. Xo. 502. Xothing is claimed of the executors in this case except that they shall perform the min- isterial act of conveying the title, in case the power to do so is vested In them by the law of the state, and the court shall enter a de- cree against the principal respondent to that effect. From all which it follows that the complainant is entitled as between herself and the principal respondent to the relief prayed in the bill of complaint; but the court, in view of all the circumstances, will not pro- ceed to determine either the proportion of the trust property which belongs to the complain- ant or the amount she is entitled to recover of the said respondent. Instead of that, those matters are left to be ascertained and determined by the circuit court, with au- thority, if need be, to refer the cause to a master to report the facts, with his opinion thereon, subject to the confirmation of the circuit court. Executors of the trustee, in such a case as the complainant alleges, are under the law of the state the successors of the deceased trus- tee, and that as such they may execute what- ever remains executory in the trust at the time of his decease; from which it would fol- low, i£ that be so, that it will be the duty of the executors of the deceased trustee in this case, when the rights of the complainant are fully ascertained, to make the necessary conveyance to perfect her title to the same extent as the trustee might do if in full life. Express authority is reserved to the circuit court to ascertain the rights of the complain- ant as if the trust-deed was reformed, and to make the necessary decree to perfect her title in such mode and form as the law of the state and the practice of the state courts authorize and provide. Crafton v. Beal, 1 Ga. 322; Brown v. Tucker, 47 Ga. 485. Costs in this court will be taxed to the principal respondent in favor of the complain- ant, but no costs win be allowed against the other two respondents. Decree will be reversed and the cause re- manded for further proceedings in conformity with the opinion of the court. So ordered MISTAKE— PAROL EVIDENCE TO CORRECT. 237 METROPOLITAN LUMBER CO. v. LAKE SUPERIOR SHIP-CANAL, RAIL- WAY & IRON CO. et al. (60 N. W. 278, 101 Mich. 577.) Supreme Court of Michigan. Sept. 25, 1894. Appeal from circuit court. Iron county, in chanceiy; John W. Stone, Judge. Bill by the Metropolitan Lumber Company against the Lake Superior Ship-Canal, Rail- way & Iron Company and others. From a decree for complainant, defendants appeal. AflBrmed. Ball & Ball, for appellants. Mead & Jen- nings (B. E. Osborn, of counsel), for appel- lee. HOOKER, J. Complainant's bill is filed to correct a contract for the purchase of tim- ber, by adding to it the description of cer- tain lands which is claimed to have been omitted by mistake. The negotiations took place in Chicago, between the presidents of the corporations, complainant and defend- ant. The contract conveying the timber was subsequently prepared by defendants' coun- sel in Michigan, and was afterwards signed by the respective parties. Upon discover- ing the omission, which discovery was made some time after the contract was signed by complainant's president, defendants were asked to correct the mistake, but declined to do so without suit. Some time afterwards this suit was instituted. The learned cir- cuit judge who heard the cause filed a writ- ten opinion, in which he quotes the testi- mony at length, which, we think, is as fair a review of the case as could be made. We agree with him that the evidence shows that the parties who negotiated the deal, both understood that the "Perch Lake Group" of lands was included in the purchase. It ap- pears to have been omitted because defend- ants' president, Mr. Davis, did not specific- ally mention it in his telegram of instruc- tions, — if it can be called sucji, — which he sent to Mr. Longyear, who was agent for the defendants at Marquette, from whom the attorney received the information upon which he prepared the contract. The tele- gram read as follows, viz.: "Chicago, June 6th, 188—. J. M. Longyear: Have sold to Atkinson all groups under refusal to him; also the Felch group. [Signed] Theo. M. Davis." It appears that complainant had written options on all the land covered by the negotiations, except the Felch group and the Perch lake group. The latter, not being mentioned in the telegram, was omitted. All of the witnesses who were present at the Chicago Interview agree that this group was talked about, and specifically mentioned as one of the tracts to be included. Davis him- self concedes this, but claims that he was figuring upon the basis of the amount of timber upon the groups, for which the com- plainant had written options, and that he supposed the Perch lake group was one of these. He admitted, however, that he con- sented to take $500,000 for the timber, ex- clusive of the Perch lake group, and that he asked $250,000 for that. As these sums ag- gregate $750,000,— the exact amount paid,— there seems little doubt of the justice of complainant's claim. We are satisfied that the complainant is justly entitled to relief. It remains to Inquire whether there is any legal obstacle to granting it. It is opposed upon several grounds, viz.: (1) The mistake was not mutual. (2) The mistalie on part of complainant was committed through gross negligence, and equity will not relieve in such cases. (3) Delay in attempting to en- force complainant's claim, and going on to carry out the contract after refusal by the defendants to correct the contract, until it was impossible to put the parties in statu quo, constitutes a waiver of complainant's claim. (4) The addition of more land to the description, upon evidence of a parol con- tract, is contrary to the statute of frauds. We are satisfied that the omission was the result of the mistake of defendant's presi- dent in sending the telegram, supposing it to be full enough to cover the Perch lake group. There is no reason to believe thai he intentionally caused this omission. We cannot accede to the proposition that com- plainant's president was so negligent in ex- ecuting the contract without discovering the omission as to deprive the complainant of property worth $250,000. He had no reason to anticipate an attempt to cheat his com- pany, and therefore had no occasion to be more than ordinarily careful. He was deal- ing with a concern whose business was me- thodically conducted, and he knew that it was in possession of accurate descriptions. The contract was drawn by a reputable and able lawyer. To hold that he was negligent would be to say that acceptance of a deed or writing without a, comparison and verifica- tion of descriptions is such negligence as to preclude relief against mistake, no matter how serious the consequences. Atkinson died before these proceedings were com- menced, and we have not the light tiiat his testimony might throw upon the question of caution. Prom the testimony of Mr. Bar- rett, one of the defendants' witnesses, it would seem that he took the trouble to bring the contract to defendants' ofiice, to make a comparison of the descriptions, which was . done, and he went away satisfied. During this time he was ill, with a malady from which he died soon after. The claim that a mistake had been made was asserted as soon as it was discovered, and was insisted on at all times afterwards. It is true that suit was not immediately commenced, but com- plainant never gave the defendants reason to suppose that it had abandoned or intend- ed to waive its claim. No injury resulted to the defendants from the delay, and the com- plainant was justified in exhausting persua- 238 MISTAKE— PAROL EVIDENCE TO CORRECT. sion, before resorting to litigation, especial- ly In view of Davis' repeated admission tbat he understood the Perch lake land a part of that contract. It Is strenuously urged that the statutes of frauds preclude the relief sought by complainant, the negotiations having been oral. There is conflict in the books upon the question of the effect of the statute of frauds upon the jurisdiction of courts of equity to reform instruments made in pursuance of oral agreements, where the correction sought is the addition of lands to those described. We are cited to the case of Macomber v. Peckham, 16 R. I. 485, 19 Atl. niO, as a recent adjudication upon the sub- ject, and to Climer v. Hovey, 15 Mich. 18, in support of defendants' contention. In the former case the court was careful to withhold an opinion beyond what was re- »hetner this can be done in Massachu- setts has not yet been decided. Newton v. Pay, 10 AEen, 505. But if it were to be so held, it would not be upon the ground of en- forcing a parol agreement to reconvey; but upon the ground that such an agreement to- gether with proof that the deed was given and accepted only as security for a debt, made out a case of fraud, or trust, which would warrant a decree vacating the title of the grantee, as far as he attempted to hold contrary to the purposes of the conveyance. In such cases the court acts upon the estate or rights acquired under the written instru- ment; and within the power over that in- strument which is derived from the fraud or other ground of jurisdiction. But when it is sought to extend that power to interests in land not included in the instrument and In relation to which there Is no agreement in writing, the case stands differently. Fraud may vitiate the writing which Is tainted by it, but It does not supply that which the statute reqiures. It may destroy a title or right acquired by its means; but It has no creative force. It will not confer title. In the absence of a legal contract by the agreement of the parties, it will not es- tablish one, nor authorize the court to de- clare one, by Its decree. This distinction Is Illustrated by the anal- ogous rule in regard to implied trusts. Gen. St c. 100, § 19. Parol evidence may charge the grantee of lands conveyed with a result- ing or implied trust, which equity will en- 'r>9 MISTAKE— PAROL EVIDENCE TO COTiRECT, force. But such evidence wiU not create a trust in lands already held by an absolute title. A fraudulent misrepresentation, although sufficient to sustain an action for damages, cannot be converted into a contract to be enforced as such. Neither will it furnish the measure by which a written conti'act may be reformed. In this discussion we have as- sumed that there was a clear agreement be- tween the parties, which the deed fails to carry out, and to which it might properly be made to conform, but for the obstacle in the statute of frauds. Ithasbeen of ten asserted thatwhereone by deceit or fraudulent contrivance prevents an agreement intended to be put in writing from being properly written or executed, he shall not avail himself of the omission, and shall not be pennitted to set up the statute of fraud against the proof and enforcement of the parol agreement, or of the pai'ol stipu- lation improperly omitted. But in our opin- ion this doctrine would practically annul the statute. The tendency of the human mind, when fraud and injustice are manifest, is to strain every point to compass its defeat; and to render fuU redress to the party upon whom it has been practiced. Mundy v. Jol- liffe, 5 Mylne & C. 167; Taylor v. Luther, 2 Sumn. 233, Fed. Cas. No. 13,796. This in- fluence has led to decisions in which the facts of the particular case were regarded more than the general considerations, of public pol- icy upon which the statute is founded and entitled to be maintained. Courts have some- times regarded it as a matter of judicial mer- it to wrest from under the statute all cases in which the lineaments of fraud in any form were discernible. But the impulse of moral reprobation of deceit and fraud, how- ever commendable in itself, is liable to mis- lead, if taken as the guide to judicial de- crees. We apprehend that in most instances where fraud occasioning a failure of written evi- dence of an agreement or particular stipula- tion has been held to take the case out of the statute of frauds, there was some fact of prejudice to the party, or change of situa- tion consequent upon the fraud, which was regarded as sufficient to make up the ele- ments of an equitable estoppel. In such case, the argument is transferred to the simple question of the sufficiency of the additional circumstance for that purpose. The cases most frequently referred to are those arising out of agreements for marriage settlements. In such cases the marriage, although not re- garded as a part performance of the agree- ment for a marriage settlement, is such an Irretrievable change of situation, that, if pro- cured by artifice, upon the faith that the set- tlement had been, or the assurance that it would be, executed, the other party is held to make good the agreement, and not permit- ted to defeat it by pleading the statute. Max- well V. Mountacute, Prec. Ch. 526; Browne, St. Frauds, §§ 441-445. Another class of cases are those where a party acquires property by conveyance or de- vise secured to himself under assurances that he will transfer the property to, or hold and appropriate it for the use and benefit of, an- other. A trust for the benefit of such other person is charged upon the property, not by reason merely of the oral promise, but be- cause of the fact that by means of such promise he had induced the transfer of the property to himself. Brown v. Lynch, ] Paige, 147; Thynn v. Thynn, 1 Vern. 296; Oldham v. Litchfield, 2 Vern. 506; Devenish V. Raines, Prec. Ch. 3; 1 Story, Eq. Jur. § 768. When these cases are cited in support of the doctrine that artifice or fraud in evading or preventing the execution of the writing is alone sufficient to induce a court of equity to disregard the statute and enforce lie oral agreement, the subsequent change of situa- tion or transfer of property, without which the deceit would be innocuous, seems to be overlooked, because it is not strictly in part performance of the agreement sought to be enforced. It must be manifest, however, that without such consequent act there would be no standing for the case in a court of equity. That which moves the court to a decree to enforce the agreement Is not the artifice by which the execution of the writing has been evaded, but what the other party has been induced to do upon the faith of the agree- ment for such a writing. It is not that de- ceit, misrepresentation, or fraud, of Itself, en- titles a party to an equitable remedy; but that equity will interfere to prevent the ac- complishment of the fraud which would re- sult from the enforcement of legal rights con- trary to the real agreement of the parties. Indeed, the fraud which alone justifies this exercise of equity powers by relief against the statute of frauds consists in the attempt to take advantage of that which has been done in performance or upon the faith of an agreement, while repudiating its obligations under cover of the statute. When a writing has been executed, the courts allow the fraud or mistake by which an omission or defect in the instrument has been occasioned to defeat the conclusiveness of the writing, and open the door for proof of the real agreement. But the obstacle of the statute of frauds to the enforcement of obligations, or the security of rights not expressed in the instrument re- mains to be removed in the same manner as if there were no writing. Phyfe v. Wardell, 2 Edw. Oh. 47; Moale v. Buchanan, 11 Gill & J. 314. The power to reform the Instrument is not an independent power or branch of eq- uity jurisdiction, but only a means of exercis- ing the power of the court under its general jurisdiction in cases of fraud, accident, and mistake. We are aware that the limitation which we MISTAKE— PAKOL EVIDENCE TO CORRECT. 233 have undertaken to define has not been uni- formly observed or recognized. In Wisvcall v. Hall, 3 Paige, 313, Chancel- lor Walworth granted a perpetual Injunction, and ordered a deed of release of title to land omitted from a deed by fraud and secret con- trivance. There was no discussion of the au- thorities, nor of the principles upon which the case was decided; and no reference to the statute of frauds; and the statute does not appear,, by the report, to have been set up against the prayer for relief. In De Peyster v. Hasbrouck, 11 N. Y. 591, a similar decision was made In the court of appeals in New York. Here again there Is no reference to the statute of frauds, no dis- cussion of the principles involved In the deci- sion, and no authority or precedent cited ex- cept that of Wiswall v. Hall. The mortgagor whose deed was reformed put in no answer whatever. The defence was made by parties claiming under him, and the statute of frauds does not appear to have been pleaded. De- nio, C. J., in giving the opinion, proceeds to say: "It is unnecessary to refer to cases to establish the familiar doctrine that when through mistake or fraud a contract or con- veyance fails to express the actual agreement of the parties, it will be reformed by a court of equity, so as to correspond with such ac- tual agreement. The English cases have been ably digested by Chancellor Kent, and the principle has been stated with his accus- tomed care and accuracy, in Gillespie v. Moon, 2 Johns. Ch. 585." But in Gillespie v. Moon the relief sought and granted was by way of restricting, and not by enlarging, the operation of the deed. Such relief would not, as already shown, con- flict with the statute of frauds; and neither the discussion in that case nor the citation of authorities had reference to the bearing of the statute of frauds upon the question of af- fording relief upon contracts relating to land. Indeed, the English cases furnish but little aid upon that point, for the reason that the courts there have generally, without refer- ence to the statute of frauds, refused to en- force written contracts with a modification or variation set up by parol proof. Woollam V. Heam, 7 Ves. 211, and notes on the same in 2 Lead. Cas. Eq. 404; Nurse v. Seymour, 13 Beav. 254. The principle which was maintained by Chancellor Kent, and upon which the Eng- lish authorities were cited by him in Gilles- pie V. Moon, was that relief in equity against the operation of a written instrument, on the ground that by fraud or mistake it did not express the true contract of the parties, might be afforded to a plaintiff seeking a modification of the contract, as well as to a defendant resisting its enforcement. That proposition must be considered as fully es- tablished. 1 Story, Eq. Jur. § 161. It is quite another proposition, to enlarge the sub- ject-matter of the contract, or to add a new term to the writing, by parol evidence, and enforce It. No such proposition was present- ed by the case of Gillespie v. Moon, and it does not sustain the right to such relief against the statute of frauds. That Chancellor Walworth, in Wiswall v. Hall, did not intend to decide that the stat- ute of frauds could be disregarded if properly set up against such an enlargement of the operation of the written contract is apparent from the remarks of the same learned judge in the subsequent case of Cowles v. Bowne, 10 Paige, 535. He says: "Whether a party can come into this court for the specific per- formance of a mere executory agreement for the sale of lands, which in its terms is ma- terially variant from the written agreement between the parties that has been executed according to the statute, where there has been no part performance or other equitable circumstance sufficient to taJie the case out of the statute of frauds, as a mere parol con- tract between the parties, is a question which it will not be necessary for me to con- sider in this case." In Gouverneur v. Titus, 1 Edw. Ch. 480, there was a deed of land described as being In the northwest comer of a township by mis- take for the northeast corner. The grantor admitted the real contract, and had corrected the mistake by deed. The only question was whether equity would enforce the corrected deed against the lien of a judgment creditor, who had notice of the mistake. In the opinion it is said: "It is a case in which this court would interfere, as between the immediate par- ties, to correct the mistake." The judgment was clearly right. The dictum we are dis- posed to question, unless the deed itself con- tained some other description by means of which the land might be identified and the mistake corrected. In Newson v. Bufferlow, 1 Dev. Eq. 379, a deed was reformed, which was made, by fraud, to include land not sold; and the fraud- ulent grantee was required to execute a recon- veyance of the excess. The opinion contains a remark of the court that this power may be exercised as well by inserting what was omit- ted as by striking out what was wrong- fully included. But this remark is clearly obiter dictum, and is not sustained by the authority cited, namely, Gillespie v. Moon. In Blodgett V. Hobart, 18 Vem. 414, a mortgage was reformed by including other lands omitted by mistake. The statute of frauds was not set up in the answer nor re- ferred to in the opinion of the court, and the answer was considered by the court to be evasive in regard to the alleged agreement for security upon such other lands. In Tilton v. Tilton, 9 N. H. 385, the court controvert the doctrine of such a limitation, as declared in Elder v. Elder, 10 Me. 80; but the decision did not involve the question so discussed. The case arose from an attempted partition between tenants in common of real estate. There was a written agreement for partition according to the award of certain ■254 MISTAKE— PAROL EVIDENCE TO CORRECT. arbitrators named, and the only question was as to the effect of a substitution of other ar- bitrators by parol. Deeds had been executed, and the plaintiff had fully performed his part of the agreement. It was a case of part per- formance sufficient to take the case out of the statute of frauds, and was decided upon that ground. Besides, a partition of lands, though effected by mutual deeds of release, is not a contract for the sale of land. Craig V. Kittridge, 3 Fost. (N. H.) 231, arose upon a partition, and was decided upon the authority of Tilton v. Tilton. Smith v. Greeley, 14 N. H. 378, was a decree upon de- fault, without argument or opinion, against the executors and heirs of a party whose deed, by mutual mistake, failed to include certain land sold. It does not appear whether there was written evidence of the agreement, nor whether there was possession or acts of performance. It was sufficient, perhaps, that the ■statute was not pleaded, and the default admitted the agreement. Caldwell v. Carrlngton, 9 Pet. 86, was an agreement for exchange of lands, and stands entirely upon the ground of part performance. Notwithstanding contrary decisions and dic- ta, we are satisfied that upon principle the conveyance of land cannot be decreed in eq- uity by reason merely of an oral agreement therefor against a party denying the alleged agreement and relying upon the statute of fi-auds, in the absence of evidence of change of situation or part performance creating an estoppel against the plea of the statute. This rule applies as well to the enforcement of such an agreement by way of rectifying a deed as to a direct suit for its specific per- formance. We are satisfied also that this is the rule to be derived from a great prepon- derance of the authorities. Whitchurch v. Bevls, 2 Brown, Ch. 559; WooUam v. Hearn, 7 Ves. 211; 2 Lead. Cas. Eq. (3d Am. Ed.) notes, [*414], Am. Notes, 691; Townshend V. Stangroom, 6 Ves. 328; Beaumont v. Bram- ley, Turn. & R. 41. See, also, Moale v. Bu- chanan, 11 Gill & J. 314; Osborn v. Phelps, 19 Conn. 63; and Elder v. Elder, 10 Me. 80, already cited above; Adams, Eq. 171, 172; Churchill v. Rogers, 3 T. B. Mon. 81; Purcell v. Miner, 4 Wall. 513. The prayer in regard to the fence stands differently. If that stipulation had been fraudulently inserted in the deed, the agree- ment being otherwise, the deed might be re- formed by striking out that provision, or re- quiring a release of it, so as to make the writ- ing correspond with the actual agreement. But upon the allegations of the bill there is no other agreement by which to reform the deed, and to which to make it conform. The plaintiff admits that the stipulation in the deed is precisely in accordance with the ac- tual agreement The fraud which he alleges relates only to the consideration or induce- ment upon which he was led to make that agreement; not to the form of the agreement itself. If that stipulation were to be stricken out, the writing would then not express the agreement actually made by the parties. The court cannot rectify an instrument otherwise than in accordance with the actual agree- ment. It cannot make an agreement for the parties. Hunt v. Rousmaniere, 1 Pet. 1, 14; Brooks v. StoUey, 3 McLean, 523, Fed. Cas. No. 1,962. If the subject-matter of this stipulation were of sufficient materiality, the fraud alleged might have the effect to defeat the whole instrument. But this effect is not sought. The plaintiff's remedy, there- fore, is at law, in damages for the deceit and false representation. The alleged agreement in regard to the pre- mium and accrued interest upon the bonds transferred in payment for the land will not sustain a bill In equity. If such an agreement was made and broken, we see no reason why an action of assumpsit will not lie upon the agreement, or for the overpayment of the agreed price of the purchase. The remedy at law is as effectual as it can be in equity. The entry must therefore be, bUl dismissed. MISTAKE— PAROL EVIDENCE TO CORRECT. 255 DAVIS V. ELY et al. (10 S. E. 138, 104 N. C. 16.) . Supj'eme Court of North Carolina. Oct. 28, 1889. This was a civil action trieii before Boy- kin, J., and a jui-y at spring term o£ the su- perior court of Pasquotank county. The complaint was as follows : (1) That on the 22d day of April, 1884, the plaintiff and defendants entered Into a contract with re- gard to the sale and division of the Great Park estate; that a paper writing, pur- porting to contain the terms of said con- tract, was executed by Timothy Ely and wife, Hannah, by their duly-authorized agent, Harvey Terry, and by the plaintiff, through his agent, William J. GrifiBn, A copy of this writing is hereto attached, marked "Exhibit A," and is made apart of this complaint. (2) That the recitals and agreements set forth in said contract, down to section numbered 40, are all true. (3) That the agreement which was intended to be embodied in the contract, of which the exhibit hereto attached is a copy, was made by Francis Davis, Esq., father of the said John F. Davis, and Harvey Terry, agent of Timothy Ely, and wife, Hannah. (4) That, before the contract could be re- duced to writing, the said Francis Davis left Elizabeth City for his home in Ohio, and di- rected one W. J. Griffln, an attorney at law, to draft said contract, and have the same executed and recorded. (5) That the said draughtsman was compelled to rely upon statements of the said Terry, and, by false and fraudulent representations by said Terry, the said contract, or that portion set forth in the paragraph numbered 40 of the exhibit, hereto attached, does not set forth the true terms agreed on. (6) That the Great Park estate was incumbered by a mortgage which had been purchased by Timothy Ely, and the equity of redemption was held by a firm known as Conrow, Bush &Lippincott; that the said John F. Davis had entered into a contract with the said Conrow, Bush & Lipplncott for the l^urchase of their interest in the Great Park estate, except a portion known as the "Hall Tract," and the said Davis bound himself to pay off and discharge the mort- gage, which was then held by the plaintiff Ely, and thereby leave the Hall tract to Conrow, Bush & Lippincott, unincumbered. This contract of Davis with Conrow, Bush & Lippincott was well known to Harvey Terry, the agent of the defendant Ely. (7) That the said Terry, as agent of the said Timothy Ely, had obtained a judg- ment of foreclosure on his mortgage, and the sale of the Great Park estate was ad- vertised to take place April 22, 1884 ; that, after the advertisement had been posted, the said John F. Davis applied for and ob- tained a restraining order, commanding the commissioners to desist from the sale of the Great Park estate until a certain time mentioned in said restraining order. (8) That the said Francis Davis and Timo- thy Ely and Harvey Terry met in Elizabeth City on the 21st day of April, 1884, and on that day verbally made a contract which was intended to be embodied in the con- tract hereinbefore set out. It was only when the said Davis and Terry had thus come to terms that ttie said Davis con- sented to the sale mentioned in said con- tract. (9) Thesaid FrancisDavis,asagent for his son, John F. Davis, refused to treat with the said Terry upon any basis except that the Hall tract should be given or set apart to his son, John F. Davis, in order that the said John F. Davis might perform bis contract with the said Conrow, Bush & Lippincott. (10) That, after much talking, it was finally agreed that the said Hall tract should be excepted, and the balance of the Great Park estate should be divided into two parts, equal in area, by a line run- ning north and south, and the western half thereof should be given or allotted to John F. Davis and the eastern half to Timothy Ely, and, in addition to the western half, the said Davis should have the portion known as the "Hall Tract." (11) That the said Terry represented unto the said Davis that thesaid Hall tract contained butl,300 acres, which the said Terry well knew to be false. In truth and in fact this com- plainant has been informed that the said Hall tract contains 3,000 acres. (12) That, having confidence in the integrity of said Terry, and having urgent business engage- ments in Ohio, the said Francis Davis left Elizabeth City on the 22d day of April, 1884, and this plaintiff did not learn of the error in the agreement for some time thereafter, and instituted suit as soon as he heard thereof. Wherefore plaintiff prays — First, that the said contract may be reformed so as to speak the true agreement of the par- ties as herein set out ; second, that the de- fendants be decreed to pay all costs of this proceeding ; and third, for such other and further relief as to thecourt mayseemmeet. The answer fully denied all the allegations imputing fraud, and the following issues were submitted without objection to the jury. (1) Does the written contract dated April 22, 1884, contain the true agreement entered into between theparties? (2) Was it the agreement between the parties that John F. Davis should have the Hall tract and one-half of the balance of the Great Parker estate, and the defendants the other half of the Great Parker estate? (3) Was the reservation of the Hall tract to J. F. Davis omitted from the written contract by reason of false and fraudulent represen- tations made to the draughtsman by the defendants, or either of them? The issues show the true contention of the parties. The plaintiff offered evidence tending to show the fraud set out in the complaint, and all the other allegations of the com- plaint, for the purpose of reforming the contract. The defendants objected to the testimony, unless it was introduced for the purpose of rescinding the contract, where- upon the counsel for the plaintiff stated that the purpose of the testimony offered was to reform the contract, and not to re- scind it. Thecourt excluded the testimony, holding that it was not admissible for the purpose of reforming the contract, but that it was admissible for the purpose of rescinding thecontract. Upon this intima- tion the plaintiff submitted to a nonsuit, and appealed. C. W. Grandy, for appellant. Harvey Terry, for appellees. L'.-.e ..ITSTAKE-PAItOL EVIDENCE TO CORRECT. SiinpHEKD, J., {Hfter.stitiuff the fycts as iihove.) There is a hopeless conflict of au- thority upon the question whether a court of equity will correct an executory contract on the ground of fraud or mistake, and en- force it with the variation. In England and several of the American states such relief is denied, although a defendant, for the pur- po.se of resisting specific performance, may show that byfraud or mistake the written contract does not express the real terms of the agreement. In other states this dis- tinction is repudiated, and thecontract will be corrected and enforced in proper cases at the instance of either party. Where such executory contracts, within the statute of frauds, are corrected and enforced, there is a further diversity, some courts holding- that they will only exercise the power where the object is to restrict the sub.iect-matter of the contract, while others hold that the contract will be corrected, although its sub- ject is enlarged. Of this latter opinion is Mr. Pomeroy (2 Pom. Eq. Jur. § ncl' et seq.) and other writers of great respectability. Opposed to this view we have the ICnglish authorities, (A\'oollara v. Hearn, 2 White & T. Lead. Cas. Eq. llL'O,) and Bisp. Eq. § ys3; AVhart. Ev. S 10-'4, and many decisions in the United States, of which the leading case is GhisK v. Hulliert, 102 .Mass. 24. In this ease the court sa.vs that " when the pro- posed reformation of an instrument in- volves the specific enforcement of an oral agreement witliin the statute of frauds, or when the terms sought to be added would so modify the instrument as to make It operate to convey an interest or secure a right which can onlj' be conveyed or se- cured through an instrument in writing, and for which no writing has ever existed, the statute of frauds is a suflicient answer to such a proceeding, unless the plea of the statute can be met by some ground of estop- pel to deprive the party of the right to set up that defense. Jordan v. Sa wkins, 1 Ves. Jr. 402; Osborn v. Phelps, 19 Conn. {i:i; Cli- nan v. Cooke, 1 Schoales & L. 22. The fact that the omission or defect in the writing by reason of which it failed to convey the land or express the obligation which it is sought to make it convey or express was occasioned by mistake, or by deceit and fraud, will not alone constitute such an estoppel. * * » Rectification, by mak- ing the contract include obligations or sub- ject-matter to which its written terms will not apply, is a direct enforcement of the oral agreement, as much in conflict with the statute of frauds as if there were no Mriting at all." This decision, in so far as it holds thatthe subject-matter of thecontract may not be enlarged, is supported by abundant authority. Story's Equity Jurisprudence is often cited to sustain the other view, but the argument there seems to be directed against the distinction between parties seeking and parties resisting specific per- formance. It refers to the decisions of Chan- cellor Kent in (iillespie v. Moon, 2 Johns. Ch. ."iS.j, and Keiselbrack v. Livingston, 4 Johns. Ch. 144. In neither of these cases was the subject-matter enlarged. In Gil- lespie's Case (so often cited) the correction made was tlie striking out of hO acres from a written agreement which included 2.50. Bisp. Eq. 445, says that "in cases which fall within the statute it is obvious that to carry tlie rule in (;illesi)ie's ('ase to the ex- tent of holding that an agreement (for ex- ample) to convey fifty acres may, for the sake of justice and equity be construed! to mean a contract to convey one hundred, would be to repeal the statute of frauds and to give effect to a simple verbal agreement to sell land. Where, however, the conten- tion of the complainant is that something which is actually embraced in the writing was not intended to be included therein, to suffer him to show this is not to enforce a parol contract in relation to land. It is simply to provethat a written contract did not embrace all that, on its face, it ap- peared to include. Such was the actual state of the case in Gillespie v. Moon." It maybe remarked liiat inmost of thestates where such relief is granted the doctrine of "part performance" is recognized, and the proof required is but little short of that which is necessary to enforce a contract upon that ground. In North Carolina, so far from correcting such executory con- tracts within the statute so as to enlarge their terms, the tendency of our decisions is to confine such corrective relief to executed contracts alone. A\'ehave been able to find no decision in point, but the words of H.^r.i,, J., in Newsom v. lUifferlow, 1 Dev. Eq. .'!7'.), strongly show the disinclination of the court to depart from the statute, excei)! upon the most imperative demands of jus- tice and equity. The learned judge says: "It is altogether unnecessary to inquire in this casehowfarcourts of equity have gone in carrying into eflect written executory contracts or varying them by parol evi- dence. Suffice ittosay that thereason why they have declined giving i-elief in many such cases is that the plaintiff had a remedy at law. Thatreason is not applicable to exe- cuted contracts. In thesecascs theplaintiff has no remedy at law, and, unless a court of equity will give relief, he can have no re- dress." This distinction between executed and executory contracts is clearly put by Adams, Eq. 171 : " Where land is thesubject of the erroneous instrument, the reforma- tion of an executed conveyance on parol evidence is not precluded by the statute of frauds, for othervviseitwould be imjjossible to give relief. * * » But it does not ap- pear that, where the defendant has insisted on the benefit of the statute, the court has ever reformed such an executory agreement on parol evidence and specifically enforced it." Land is regarded as such a high species of property that exceptional safeguards have been devised for the preservation and se- curity of its title, and these should not be departed from unless such departure is ab- solutely necessary to subserve the ends of justice. Qnder the former system the equi- table relief we have mentioned was admin- istered by the trained minds of learned judges, sitting as chancellors, who appre- ciated the grave evils which the statute was designed to prevent, and who gave full ef- fect to the rule which required the clearest andmostcogenttestimony. Even then the relief in this state was confined, it seems, to executed contracts, and surely there is nothing in the new method of trying equi- table issues which encourages us to leave the MISTAKE— PAROL EVIDENCE TO CORRECT. 257 old moorings and venture upon a sea of trouble, confusion, and insecurity. On the ground of necessity we correct conveyances by adding clauses of defeasance and words of inheritance. We also restrict or enlarge the subject-matter, but we decline to do this in the case of executory contracts, where there can necessarily be no other object than, as in the case before us, to have it specifically enforced. Itis believed that no great hardship can result from such ruling, as the court will, upon rescission, endeavor to place the parties in-statu quo, and dam- ages maybe given for the fraud and deceit. The court is liberal in the adjustment of equities arising in such cases ; but, even if occasional instances of hardship occur, it is farbetterthattheseshonldbe endured thau that every title in the state should be ex- posed to the assaults of false and fraudu- lent oral testimony. What we have said has no reference to the correction of ordi- nary executory contracts in aid of actions for damages at law, such as the correction of theterms of a bond and the like. Equity will always make the correction, and the party can sue upon the corrected contract at law. The two jurisdictions being now blended, such relief will be granted in a single action. It may be that in cases of personal property, where there is apretium affectionis, the contract may be corrected HUTCH.& BUNK.EQ.— 17 and specifically enforced, but it is unneces- sary to pass upon that question here. The relief sought in this action Is to cor- rect the contract so as to include the "Hall tract." It seems from the complaint that the alleged fraud consisted in certain false representations as to the number of acres made to the plaintiff when the parol agree- ment was made. False representations are also alleged to have been made to Mr. Grif- fin, the draughtsman ; but these are not specified, so we must assume that they were the same as those made to his princi- pal, Davis. However this maybe, we have here a plain case where it is proposed to correct an executory contract for the sale of land by making it include a larger quan- tity than is stated in the writing. The plaintiff does not wish to rescind, and offers the parol testimony solely for the purpose of reformation. We think tnat to admit the testimony in such cases would be, as has been said, virtually repealing the stat- ute of frauds, and opening the door to a flood of evils, the extent of which it would be impossible to estimate. The plaintiff may enforce thecontract in its present form, or he may rescind it, and ask for an adjust- ment of any equities which may have grown out of the transaction. We think tjiat the testimony was properly rejected, and that there is no error. 258 FRAUD— JURISDICTION OF EQUITY. MILLER et al. v. SCAMMON. (52 N. H. 609.) Supreme Judicial Court of New Hampshire. June, 1873. In equity. The bill by Frank W. Miller and George W. Marston against Stephen Scammon alleged that the plaintiffs were the publishers of a dailj* newspaper, that the defendant, fraudulently intending to deceive and injure the plaintiffs, and to expose them to loss and to a prosecution for libel, per- suaded and procured them to insert in their newspaper an advertisement over th« signa- ture of the defendant, and which he said was true, and which he alleged was neces- sary and designed to protect him against being compelled to pay certain notes therein described, which he then and there solemnly declared had been wrongfully obtaiued, and pui-porting to have been for a valuable con- sideration, and to have been signed by the defendant, and which he then and there pre- tended and asserted he never signed, and up- on which he might be sued, or which might be set up in a suit against him. The bill then avers that the allegations of the advertisement were false, and the pres- ent plaintiffs, as well as the defendant, were indicted and convicted for publishing a false and malicious libel in said advertisement, and the present plaintiffs were fined $150, ^^•hich they have paid, with costs taxed at $21.63, together with other costs for counsel fees and other expenses amounting to $50, amounting in the whole to $221.63. The plaintiffs pray that the court will as- certain the amount which they have had to pay and the damages they have suffered by reason of the fraud and deceit of the defend- ant, and that he may be ordered and decreed to pay the same to the plaintiffs, with inter- est, and for such other relief as may be just. To this bill there was a general demurrer, and the questions of law thus raised were reserved. W. H. Y. Haokett, for plaintiffs. Mr. Wig- gin, for defendant FOSTER, J. As a declaration In case, to recover damages for the deceit and fraud of the defendant, the plaintiffs' bill does not seem wanting in the essential and ordinary forms of pleading. The prayer of the biU is that the court may ascertain what the plaintiffs "have had to pay, and the damages they have suffered by reason of the fraud and deceit" of the defendant, and that he may be ordered and decreed to pay the same; but the damages are specifically enumerated in dollai-s and cents In the bill, and no aid In equity is required for their ascertainment. No reason is suggested in the bill why the plaintiffs have chosen to proceed in equity rather than by the usual course of the law, which is ample in its form and power for the redress of such grievances as the plaintiffs complain of, provided they are entitled to re- lief or satisfaction. If the plaintiffs' remedy at law is not as plain, full, complete, and adequate as it is by proceedings in equity, neither the fact nor the reasons why are suggested In this bill, which, if it may be adopted for the disposition of such a case as the present, may just as well serve here- after as a precedent, mutatis mutandis, for a bill to recover damages for deceit, in any case in which such damages are now sought by means of an action of tort. It is quite true that, not only by force of our statutes, but upon general principles, courts of equity exercise a general jurisdic- tion in cases of fraud, sometimes concurrent with, and sometimes exclusive of, the com- mon-law courts. Gen. St. c. 190, § 1; Snell, Eq. 359. And it is said tliat in some cases of fraud, for which the common law affords complete and adequate relief, chancery may have concurrent jurisdiction. Snell, Eq. 859. This general proposition, however, is too broad when applied to our practice, under the rules of evidence which permit or require parties to testify. In the English practice, and perhaps in some American states, equity may entertain this concurrent jurisdiction, because, although the remedy at law may be said to be adequate, the means of obtaining the truth, where discovery by the oath of the party is essential, may be wanting or deficient in the com'ts of common law. "The jurisdiction of the courts of equity for the enforcement of civil rights, as distinguished from the jurisdiction of the courts of com- mon law, derives much of its utility from the power of the great seal to compel the defendant, in a suit, to discover and set forth, upon oath, every fact and circum- stance within his knowledge, information, and belief material to the plaintiff's case." Adam, Eq. 1. But to a very great extent the right to enforce discovery, and to search the conscience of the party, which was formerly only to be had in chancery, is afforded in the practice and by the statutes of our law courts as fully and effectually as by a court of equity. "Perhaps the most general, if not the most precise, description of a court of equity, in the English and American sense," says Judge Story, "is that it has jurisdiction In cases of rights recognized and protected by the municipal jurisprudence, where a plain, ade- quate, and complete remedy cannot be had in the courts of common law. The remedy must be plain, for, if it be doubtful and ob- scure at law, equity will assert a jurisdic- tion. It must be adequate, for, if at law it falls short of what the party is entitled to, that founds a jurisdiction in equity; and it must be complete, that is, it must attain the full end and justice of the case. * ♦ * The jurisdiction of a court of equity is, therefore, sometimes concurrent with the jurisdiction of a court of law. It is some- times exclusive of it, and it is sometimes auxiliary to it." 1 Story, Eq. Jur. § 33. FRAUD— JURISDICTION OF EQUITY. 259 In the matter of actual fraud, Blackstone has said that "courts of equity are estal)- lished to detect latent frauds and conceal- ments which the process of the courts of law is not adapted to reach." 3 Bl. Comm. 431. And although it may still be that courts of liberal equity powers may entertain concur- rent jurisdiction with the courts of law, even in those cases of fraud which are ef- fectually remediable in the latter, such juris- diction is very seldom exercised anywhere, as we believe, and never, to our knowledge, in this state. Its ordinary application is restricted to cases in which a decree is re- quired compelling- the wrongdoer, specifically, to make good his default; "and therefore," says Mr. Adams, "if the wrong require spe- cific redress, and such specific redress is not attainable at law, there is a prerogative jurisdiction in equity to relieve." Adams' Bq., Introduction *xxxv. Sometimes, also, where the remedy at law would seem to be effectual, equity will entertain jurisdiction for the sake of avoiding circuity of action or multiplicity of suits. Smith, Man. Eq. § 1. Indeed, as we regard it, the correct prin- ciple is laid down by Judge Story in his Equity Pleadings (section 473), where he says, "In general, courts of equity will not assume jurisdiction where the powers of the ordinary courts are sufficient for the purposes of justice, and therefore it may be stated as a general rule, subject to few exceptions, that where the plaintiff can have as effectual and complete a remedy in a court of law as in a court of equity, and that remedy is direct, certain, and adequate, a demurrer, which is in truth a demurrer to the jurisdic- tion of the court, will hold; but where there is a clear right, and yet there is no remedy in a court of law, or the remedy is not plain, adequate, and complete, and adapted to the particular exigency, then, and in such cases, com'ts of equity will maintain jurisdiction." And see 1 Daniell, Gh. Prac. 610. Although the plaintiffs have not told us, in their complaint, wherein their remedy is deficient at law, they have suggested it in argument. They say, "It is a recognized rule that equity will give relief against fraud upon less direct proof than would induce a court of law to afford the same relief." But the only difference in the quality of proof seems to be with regard to the matter of presumptions; and altJiough it is said, in support of the plaintiffs' general proposition, that courts of equity will grant relief upon the ground of fraud, established by such presumptive evidence as courts of law would not always deem sufficient proof to justify a verdict (1 Story, Eq. Jur. § 190), it seems quite manifest from the charge of the plain- tiffs' bill that they cannot support or de- rive aid to their claim from any presump- tions other than those which could as well be deduced in a court of law as in equity, from the circumstances which may be dis- closed and developed before a jury. Again, the plaintiffs say, "In equity the plaintiff's are entitled to search the con- science of the defendant, and to have the benefit of his answer under oath, or of his refusal so to make it; and it is not quite certain that the defendant could be com- pelled to state facts as a witness which, while they would make out the plaintiffs' case, would expose him to another indict- ment." But our statute, permitting and com- pelling the testimony of parties in civil ac- tions, seems to afford all the advantages claimed for chancery jurisdiction in this re- spect; and an answer to a question, search- ing the defendant's conscience to its lowest depths, could not, after his conviction for the libel which he uttered and the plain- tiffs published, be now avoided on the ground of its tendency to expose him to a criminal prosecution, that prosecution and its consequences having once been suffered and expiated. And, finally, they submit that "the remedy may be neither plain nor adequate, which depends upon the unwilling testimony of a convicted libeler." But a remedy will not be regarded as inadequate simply because it may be said that the evidence required to enforce it is that of an imwilling, or perhaps an untrutlifui, witness; and, moreover, it is not very apparent that equity is more ef- fectual tlian the law to extract truth from the lips of an unwilling "convicted libeler." In the one tribunal, as in the other, the pro- cess is the same; in the one tribunal, as in the other, both parties may testify, and both be cross-examined. In short, we are unable to discover any sufficient grounds for entertaining equitable jurisdiction of the plaintiffs' case. If the plaintiffs are entitled to relief, their remedy is plain, and not doubtful or obscure. It is by an action on the case for deceit. It is adequate, and does not fall short of what the party is entitled to, that is, it entitles him to a verdict for full and ample damages, and a judgment and execution thereon, with costs, to be levied upon his goods or estate, and, for want thereof, upon his body. And in this particular it is complete, attaining the full end and justice of the case, which requires no other decree than such a judg- ment and execution. In all these particu- lars, the definition of the terms "plain, ade- quate, and complete," as furnished by the books, is fully satisfied. 1 Story, Eq. Jur. § 33. It is unnecessary to entertain the question whether the plaintiffs, upon the statements contained in their bill, might have a remedy at law. It would seem that everything al- leged In the bill might, upon the indictment against them, have been shown in evidence. Whether, if proven by credible testimony, it would constitute a legal defense, we need not now inquire. It is said that, before a person gives general notoriety to oral calum- ny by circulating it in print, he must be 2G0 FRAUD^JURISDICTION OF EQUITY. prepared to prove its truth to the letter. An editor gives publicity to a private slander at his own risk, for he has no more right to take away the character of a man, with- out being able to prove the charge that he has made against him, than he has to take his property, without being able to justify tlie act by which he possessed himself of it. Add. Torts, 775, 776. And even the truth of the thing charged is in many jm'isdictions inadmissible as a justification, and, if ad- mitted at all, can only be received to rebut or refute the proof or inference of malice, which is said to constitute the essence of the offense. Whart. Cr. Law, 850. It \^ould seem that if the plaintiffs might have shown the facts which they now allege in defense of the indictment upon which they have been convicted, or if the prof- fered testimony was inadmissible, because affording no justification, the conviction must be regarded as putting all the parties to this bill in pari delicto, and that the plaintiffs can therefore have no claim, either in law or equity, for relief. Bill dismissed. FRAUD-JURISDICTION OF EQUITY. 261 BUZARD et al. v. HOUSTON. (7 Sup. Ct. 249, 119 U. S. 347.) Supreme Court of the United States. Dec. 13, 1886. Appeal from tlie Circuit Court of the Unit- ed States for the Western District of Texas. This was a bill in equity, filed November 23, 1881, by Buzard and Hillard, citizens of Missouri, against Houston, a citizen of Texas, the material allegations of which were as follows: That the plaintiffs were partners in the business of pasturing and breeding cattle upon a tract of land owned by them in the state of Texas, and on October 14, 1881, ne- gotiated a purchase from the defendants of 1,500 cows and 50 bulls, to be delivered at Lampasas, In that state, in May, 1882, at the price of $15.50 a head, one-half payable upon the signing of the contract, and the other half upon delivery of the cattle; that the terms of their agreement were stated in a memorandum of that date, signed by the parties, and intended as the basis of a more formal contract to be afterwards executed; and that the plaintiffs at once paid to the defendant $500 in part performance. That on October 31, 1881, the parties resumed ne- gotiations, and met to complete the con- tract; that the defendant then proposed that, in lieu of the contract with him for the cat- tle mentioned in the memorandum, the plain- tiffs should talie from him an assignment of a similar contract in writing, dated August 13, 1881, and set forth in the bill, by which one Mosty agreed to deliver to the defendant an equal number of similar cattle, at the same time and place, at the price of $14 a head; that the defendant then stated that he had paid the sum of $15,000 on the con- tract with Mosty; and aslied that, in case of his assigning that contract to the plaintiffs, they should pay him that sum, and also the difference of $1.50 a head in the prices men- tioned in the two contracts, but finally pro- posed to deduct from this 25 cents a head; that, as an inducement to the plaintiffs to make the exchange of contracts, the defend- ant represented to them that Mosty was good and solvent, and able to perform his con- tract; that he was better than the defend- ant, and then had on his ranch 1,200 head of the cattle; and that there was no doubt of the performance of this contract, because one McAnulty was a partner with Mosty in its performance; of all which the plaintiffs knew nothing, except that they knew that McAnulty was a man of wealth, and fully able as well as willing to perform his con- tracts. That on November 1, 1881, the plaintiffs, believing and relying on the defendant's rep- resentations aforesaid, accepted his proposi- tion, and paid the sum of $14,500, making, with the sum of $500 already paid, the amount of $15,000, which he alleged he had paid to Mosty on his contract, and executed and delivered to the defendant their obliga- tion to pay him, on the performance by Mosty of that contract, an additional sum of $1,837.50, being the profit on the contract with Mosty in the sale to the plaintiffs, less the deduction of 25 cents a head; and re- turned to him his original contract with them, and in lieu thereof received from him his contract with Mosty, and his assignment thereof to the plaintiffs indorsed thereon, and set out in the bill, containing a provision that he should not be responsible in case of any failure of performance by Mosty; that the aforesaid representations of the defendant were absolutely untme, deceitful, and fraud- ulent, and were known by the defendant to be false, and the plaintiffs did not know and had no means of knowing that they were untrue; that those representations were in- tended by the defendant to deceive the plain- tiffs, and did deceive them, to their great injury, to-wit, to the extent of the amount of $15,000 paid by them to him, and to the fur- ther extent of $10,000 for the expenses neces- sary to obtain other cattle, and for the loss of the increase of such cattle for the next year by reason of the impossibility of ob- taining them in the exhausted condition of the market; and that Mosty, at the time of the assignment, was absolutely insolvent, and had no property subject to be taken by his creditors, and his contract was utterly worth- less, as the defendant then knew. The bill then stated that the plaintiflfs brought into court the contract between the defendant and Mosty, that it might be deliv- ered up to the defendant; and also the as- signment thereof by the defendant to the plaintiffs, that It might be canceled. The bill prayed for a discovery; for a rescission and cancellation of the assignment of the contract with Mosty, and also of the plain- tiffs' obligation to pay to the defendant the sum of $1,837.50; for the repayment to the plaintiffs of the excess of money received by the defendant from them beyond the amount which they were to pay him under the origi- nal conti'act; for a reinstatement and con- firmation of that contract, and its enforce- ment upon such tenns as the court might deem just and proper; or, if that could not be done, that the defendant be compelled to restore to the plaintiffs the sums of $500 and $14,500 received from them, and also to pay them the sum of $10,000 for damages which they had sustained by reason of the defend- ant's fraudulently obtaining the surrender of the original contract, and by reason of the other injuries resulting to them therefrom; and for further relief. The defendant demurred to the bill, assign- ing as a cause of demurrer that the bill showed that the plaintiff's' only cause of ac- tion, if any, was for the sums of money paid by them on the contract, and for damages for breach of the contract, for which they had an adequate and complete remedy at 262 FRAUD— JURISDICTIOX OF EQUITY. law. The circuit court overruled the demur- rer. The defendant then answered fully un- der oath, denying that he made any of the representations alleged, and repeating the de- fense taken by demurrer; the plaintiffs filed a general replication; conflicting testimony was taken; at a hearing upon pleadings and proofs the bill was dismissed, with costs; and the plaintiffs appealed to this court. H. E. Barnard, for appellants Buzard and another. Jas. F. Miller, for appellee Hous- ton. Jlr. Justice GRAY, after stating the case as above reported, delivered the opinion of the court. In the judiciary act of 1789, by which the first congress established the judicial courts of the United States, and defined their juris- diction, it is enacted that "suits in equity shall not be sustained in either of the courts of the United States, in any case where plain, adequate, and complete remedy may be had at law." Act of September 24, 1789, c. 20. § 16 (1 Stat. 82; Rev. St. § 723.) Five days later, on September 29, 1789, the same con- gress proposed to the legislatures of the sev- eral states the article afterwards ratified as the seventh amendment of the constitution, which declares that "in suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." 1 Stat. 21, 98. The effect of the provision of the judiciary act, as often stated by this court, is that "whenever a court of law is competent to take cognizance of a right, and has power to proceed to a judgment which affords a plain, adequate, and complete remedy, without the aid of a court of equity, the plaintiff must proceed at law, because the defendant has a constitutional right to a trial by jury." Hipp V. Babin, 19 How. 271, 278; Insurance Co. v. Bailey, 13 Wall. 616, 621; Grand Chute v. Winegar, 15 Wall. 373, 375; Lewis v. Cocks, 23 Wall. 466, 470; Root v. Railway Co., 105 U. S. 189, 212; Kjllian v. Ebbinghaus, 110 U. S. 568, 573, 4 Sup. Ct 232. In a very re- cent case the court said: "This enactment certainly means something; and, if only de- claratory of what was always the law, it must, at least, have been Intended to empha- size the rule, and to impress it upon the at- tention of the courts." New York Guaranty Co. V. Memphis Water Co., 107 U. S. 205, 214, 2 Sup. Ct. 279. Accordingly a suit in equity to enforce a legal right can be brought only when the court can give more complete and effectual relief, in kind or in degree, on the equity side, than on the common-law side; as for in- stance, by compelling a specific performance, or the removal of a cloud on the title to real estate; or preventing an Injury for which damages are not recoverable at law, as in Watson V. Sutherland, 5 Wall. 74; or where an agreement procured by fraud is of a con- tinuing nature, and its rescission will prevent a multiplicity of suits, as in Boyce v. Grundy, 3 Pet 210, 215, and in Jones v. Holies, 9 Wall. 364, 369. In cases of fraud or mistake, as under any other head of chancery juris- diction, a court of the United States will not sustain a bill in equity to obtain only a de- cree for the payment of money by way of damages, when the like amount can be re- covered at law in an action sounding in tort or for money had and received. Parkersburg V. Brown, 106 U. S. 487, 500, 1 Sup. a. 442; Ambler v. Ohoteau, 107 U. S. 586, 1 Sup. Ot. 556; Litchfield v. Ballon, 114 U. S. 190, 5 Sup. Ct. 820. In England, indeed, the court of chancery, in cases of fraud, has sometimes maintained bills in equity to recover the same damages which might be recovered in an action for money had and received. But the reason for this, as clearly brought out by Lords Justices Knight Bruce and Turner, in Slim v. Crouch- er, 1 De Gex, F. & J. 518, 527, 528, was that such cases were within the ancient and orig- inal jurisdiction in chancery before any court of law had acquired jurisdiction of them, and that the assumption of jurisdiction by the courts of law, by gradually extending their powers, did not displace the earlier juris- diction of the court of chancery. Upon any other ground, such bills could not be main- tained. Clifford V. Brooke, 13 Ves. 131; Thompson v. Barclay, 9 Law J. Ch. 215, 218. And we have not been referred to any in- stance in which an English court of equity has maintained a bill in such a case as that now before us. In Newham v. May, 13 Price, 749, Chief Baron Alexander said: "It is not in every case of fraud that relief is to be administered by a court of equity. In the case, for instance, of a fraudulent warranty on the sale of a horse, or any fraud upon the sale of a chattel, no one, I apprehend, ever thought of filing a bill in equity." The present bill states a case for which an action of deceit could be maintained at law, and would afford full, adequate, and com- plete remedy. The original agi-eement for the sale of a number of cattle, and not of any cattle in particular, does not belong to the class of contracts of which equity would de- cree specific performance. If the plaintiffs should be ordered to be reinstated in all their rights under that agreement, and permit- ted now to tender performance thereof on their part, the only relief which they could have in this suit would be a decree for dam- ages, to be assessed by the same rules as in an action at law. The similar contract with Mcsty, and the assignment thereof to the plaintiffs, are in the plaintiffs' own posses- sion, and no judicial rescission of the assign- ment is needed. If the exchange of the con- tract was procured by the fraud alleged, it would be no more binding upon the plaintiffs at law than in equity; and in an action of deceit the plaintiffs might treat the assign- ment of the contract with Mosty as void. FRAUD— JURISDICTION OF EQUITY. 263 and, upon delivering up that contract to the defendant, recover full damages for the non- performance of the original agreement. No relief la sought against Mosty, and he is not made a party to the bill. The obligation ex- ecuted by the plaintiffs to the defendant is not negotiable, so that there is no need of an injunction. A judgment for pecuniary dam- ages would adjust and determine all the rights of the parties, and is the only redress to vyhich the plaintiffs, if they prove their alle- gations, are entitled. There is therefore no ground upon which the bill can be maintain- ed. Insurance Co. v. Bailey, 13 Wall. 61S, and other cases above cited. The comparative weight due to conflicting testimony such as was introduced in this case can be much better determined by see- ing and hearing the witnesses than upon written depositions or a printed record. This case does not require us to enter upon a consideration of the question under what circumstances a bill showing no ground for equitable relief, and praying for discovery as incidental only to the relief sought, is open to a demurrer to the whole bill, or may. If discovery is obtained, be retained for the pur- poses of granting full relief, within the rule often stated in the books, but as to the proper limits of which the authorities are conflict- ing. It is enough to say that the case clearly falls within the statement of Chief Justice Marshall: "But this rule cannot be abused by being employed as a mere pretext for bringing causes, proper for a court of law, in- to a court of equity. If the answer of the defendant discloses nothing, and the plain- tiff supports his claim by evidence in his own possession, unaided by the confessions of the defendant, the established rules, limiting the jurisdiction of courts, require that he should be dismissed from the court of chan- cery, and permitted to assert his rights in a court of law." Russell v. Clark, 7 Cranch, 69, 89. See, also, Horsburg v. Baker, 1 Pet. 232, 236; Brown v. Swann, 10 Pet. 497, 503. The decree of the circuit court, dismissing the bill generally, might be considered a bar to an action at law, and It is therefore, in accordance with the precedents in Rogers v. Durant, 106 U. S. 644, 1 Sup. Ct. 623, and the cases there cited, ordered that the decree be reversed, and the cause remanded, with di- rections to enter a decree dismissing the bill for want of jurisdiction, and Without preju- dice to an action at law. BRADLEY, J. (dissenting.) I dissent from the judgment in this case so far as it directs the bill to be dismissed by the court below for want of equitable jurisdiction. The com- plainant had been induced to give up a con- tract for cattle made to him by the defend- ant, and to accept in lieu of it an assignment from the defendant of a contract which he had from a third person who was insolvent, and whose Insolvency was not known by the complainant, but was known by the defend- ant, though he asserted that the third person was entirely responsible. The bill seeks to abrogate and set aside the assignment, and to restore to complainant his original con- tract, on account of the fraud and misrep- resentation practiced upon him. Having been induced to pay $15,000 in the transac- tion, and suffered a large amount of dam- ages, he adds to the relief sought a prayer to have his damages assessed and decreed. This is the case made by the bill. I think it is clearly within the scope of equity jurisdic- tion, both on account of the fraud, and from the nature of the relief asked by the com- plainant; namely, the cancellation of an agreement, and the reinstatement of a con- tract which he had been fraudulently indu- ced to cancel. If the bill had prayed nothing else, it seems to me clear that it would have presented a case for equity. A court of law could not give adequate relief. The exist- ence of the assignment, and the cancella- tion of the first agreement, would embarrass the plaintiff in an action at law. It is differ- ent from the case of a lost note or bond. Fraud is charged, and documents exist which in equity ought not to exist. I think the complainant is entitled to have the fraudu- lent transaction wiped out, and to be restored to his original status. 264 FRAUD— JURISDICTION OP EQUITY. TEFT V. STEWART et aL (31 Mich. 367.) Supreme Court of Michigan. Jan. Term, 1875. Appeal from circuit court, Berrien county; In chancery. Edward Bacon, for complainant. George S. Clapp and D. Darwin Hughes, for defend- ants. GRAVES, C. J. The real grievance alleged by complainant is, that defendants combin- ed to defraud him, and the substance of the transaction, and its incidents, which he re- lates at much length, may be stated from the bill as follows: The defendant Stewart resided In St. Jo- seph, Berrien county, and owned a stock of goods, including a quantity of boots and shoes. This property was at Bangor, Van Buren county, and was valued by Stewart at some fourteen thousand dollars, and he wish- ed to sell it. One Sherwin, residing in Illi- nois, owned a tract of about two hundred acres of land in Berrien county, which he de- sired to dispose of. Complainant was an acquaintance of Sherwin, and after some ne- gotiations, it was agreed between the differ- ent parties, that Stewart should transfer to complainant the boots and shoes and one- half of the remainder of the stock, and that complainant. In consideration thereof, should procure Sherwin, upon certain terms agreed on between Sherwin and complainant, to convey the land to Stewart, but subject to an existing mortgage on it of one thousand dollars; that Carroll should buy the remain- ing half of the stock of Stewart, at two thou- sand five hundred dollars; that complainant in a few days received from Sherwin the deed going to Stewart, and called on the lat- ter to deliver it, and get possession of the boots and shoes and his share of the other goods; whereupon Stewart stated that com- plainant would have no trouble about the goods, as Carroll was at Bangor, in charge of them and making an inventory; that com- plainant expressed himself as unwilling to deliver the deed unless Stewart would give him some writing which would assure to him his portion, as he had nothing to do with Carroll; that Stewart then stated his readi- ness to give such a paper, and one Devoe, a brother-in-law of complainant, being present, it was arranged that the writing should run to Devoe instead of complainant; although, as was understood, complainant was solely interested; that Stewart then made a bill of sale to Devoe of the boots and shoes, and half of the rest of the stock, and added an order to Carroll to make delivery; that com- plainant then gave up the deed to Stewart, who subsequently put it on record, and De- voe received the bUl of sale and order, and proceeded to Bangor for the property; that complainant and Devoe then called on Carroll tor it, when he refused to deliver any of it, or to allow any of it to be taken, and claimed the whole In virtue of a purchase by hlmaelf of Stewart; that complainant succeeded in getting a part of the boots and shoes, but was precluded by Carroll from getting any- thing more; that complainant discovered, aft- er this claim by Carroll, that subsequent to the conclusion of the terms of the bargain as before mentioned, but before the delivery of Sherwin's deed to Stewart, and the mak- ing of the bill of sale and order by Stewart to Devoe, Carroll and Stewart had fraudu- lently, and without complainant's knowledge, and with intent to cheat him, made an ar- rangement by which Stewart had given a bill of sale of the whole property to Carroll, ard had taken back a mortgage on it for two thousand five hundred dollars; that com- plainant had neither knowledge nor notice of this transaction when the deed was delivered to Stewart, and the bill of sale and order re- ceived from him, and first became aware of it when Carroll refused to allow anything to be taken; that Stewart and Carroll refused to recognize any right of complainant in or to the property, and refused to allow him to have any of it; that Stewart and Carroll, or one of them, have converted a portion of it and appropriated the proceeds, and mixed with the rest of the old stock other goods since procured; that Devoe has assigned to complainant, but that Stewart and Carroll wholly deny his right. The bill waived answer on oath, and asked no preliminary or final relief by injunction. Neither did it seek to get rid of the deed made to Stewart, or to obtain the land con- veyed by Stewart to complainant. The defendants answered separately, and denied the fraud charged, and most of the ma- terial matter tending to show the grievance alleged in the bill. Their account of the transaction was in substance, that complain- ant was not known to Stewart in the trans- action as vendee, or as a party in any way to the trade concerning the goods, and that Car- roll was sole vendee. They further explicitly claimed that the biU did not make a case of equitable cogni- zance, and insisted that his remedy, if any, was at law. Proofs having been taken, the court on final hearing decreed that the defendants, within forty days after the 11th of August, 1874, should pay to complainant, or his solicitor, two thousand nine hundred and fifty dollars, with interest from that date at seven per cent., together with complainant's costs, and that he should have execution therefor. The defendant Stewart thereupon appealed, whilst the defendant CarroU acquiesced in the de- cree It appears to me quite impossible, in the face of the objection taken and insisted on, to sustain this decree without sanctioning the right to come into equity in all cases to recover damages where the grievance assert- ed is a fraud committed by one upon an- other in a dealing in personal property. FRAUD— JURISDICTION OF EQUITY. 265 If the right contended for and carried out by the decree can be maintained, no reason is perceived why, upon the same principle, a party claiming to have been cheated in a horse trade, or In a purchase of any chattels where the amount is sufficient, may not at his election proceed to sue in chancery for damages, and preclude an Investigation be- fore a jury. The principles and course of practice of the court are, however, not in harmony with any such procedure. It is admitted that the books commonly say that equity has jurisdiction in all cases of fraud, but every one knows that the propo- sition Is not to be accepted literally. It must always be understood in connection with the general and specific remedial powers of the court. These, confine it absolutely to civil suits. They also confine It, when the point is seasonably and properly made and Insisted on, to transactions where, in consequence of the indicated state of facts, there appears to be ground for employing some mode of ac- tion, or some kind of aid or relief not prac- ticable in a court of law, but allowable in equity. In the present case no injunction was call- ed for, and there was no ground for discov- ery, and no discovery was sought, as the bill waived an answer on oath. No claim was set up to have the deed from Sherwin to Stewart set aside, or to have the land conveyed to complainant, and no case is made to warrant such a claim, since the bill contains nothing to show that third persons may not have acquired Interests on the faith of Stewart's title. Indeed, no circumstances are set forth to call specially for equitable intervention or for any assistance or mode of redress peculiar to chancery procedure. The facts as given, and the case as shaped, point to just the action and relief peculiar to a court of law. They look to a single judg- ment for damages, and nothing else. The case, then, was really of legal, and not In strict propriety of equitable cognizance. The objection was timely made and urged. and complainant was bound to regdrd it; and unless it is to be maintained that in all cases standing on the same principle, a complain- ing party is to be allowed by his election to try in chancery, and prevent an investigation by jury, the point made by appellant must be sustained, and in my judgment it should be. Story, Eq. Jur. §§ 72-74; 1 Spence, Eq. Jur. 691-700; Adams, Eq. Introduction, pp. 57, 58; Shepard v. Sanford, 3 Barb. Oh. 127; Bradley v. Bosley, 1 Barb. Oh. 125; Monk v. Harper, 3 Edw. Oh. 109; Pierpont v. Fowle, 2 Woodb. & M. 23, Fed. Gas. No. 11,152; Vose V. Philbrook, 3 Story, 335, Fed. Gas. No. 17,- 010; Insurance Co. v. Bailey, 13 Wall. 616; Hipp V. Babin, 19 How. 271; Parker v. Man- ufacturing Co., 2 Black, 545; Jones v. New- hall. 115 Mass. 244; Suter v. Matthews, Id. 253; Foley v. Hill, 2 H. L. Cas. 28; Cramp- ton V. Varna E. Co., 7 Ch. App. 562, 3 Bng. R. 509; Hoare v. Bremridge, L. R. 14 Eq. 522, 3 Eng. R. 824, cited by Lord Hatherly with approbation in Dchsenbein v. Papelier, 8 Ch. App. 695, 6 Eng. R. 576; Kemp v. Tucker, 8 Ch. App. 369, 5 Eng. R. 596; Warne V. Banking Co., 5 N. J. Eq. 410; Haythom v. Margerem, 7 N. J. Eq. 324. There would be more reason than there is for wishing to escape from the objection no- ticed, if complainant's version of the affair was placed by the proofs beyond fair contro- versy; but It is not. The evidence is ex- tremely conflicting in regard to the true na- ture of the transaction, and there is room for arguing in favor of the theory advanced on each side. The case is, then, specifically suited for investigation by jury, where the witnesses can be seen and their trustworthi- ness be better understood. I think that, so far as the defendant Stew- art is concerned, who alone has appealed, the decree should be reversed, and the bill dismissed, with his costs of both courts, but that the dismissal should be without preju- dice to any proceedings at law against him the complainant may think proper to take. OAMPBEIili and COOLEY, JJ., concurred. OHRISTTANOY, J., did not sit in this case. 266 ACTUAL FRAUD. HICKS V. STEVENS. (11 N. E. 241, 121 111. 186.) Supreme Court of Illinois. March 22, 1887. Error to appellate court, First district. Stevens, the plaintiff, was introduced to Hicks, the defendant, by Jones, who had the option for purchasing the rights in tube-closer, an invention of Hicks, for the state of New York. Stevens talked with Hicks about in- vesting in it. Hicks asked $50,000 for each of several states, including Pennsylvania and Ohio, and that the rights for each of these states were worth that sum, as were also the rights for the state of New York. After sev- eral interviews, Stevens told Jones he should have to give it up, as Hicks' prices were too high. Jones then asked him to take half of New York with him, and that they go in as partners on an option he had to pur- chase that state for $20,000. Negotiations were had, and a number of interviews took place, at which representations were made by Hicks as to the capabilities and merits of his invention, and Hicks gave Stevens a circular containing a description of such capabilities. May 30, 1883, an agreement of purchase was executed by the parties, wherein Hicks sold to Jones and Stevens the territorial rights for the state of New York to make and sell the Hicks Tube-closer. Stevens executed his three notes for $2,500 each, and delivered them to Hicks, and shortly thereafter paid him $2,500 in cash. Jones did the same. Stevens paid Jones $250, half of the amount he paid Hicks for the option. This sum Hicks gave Stevens credit for on one of bis notes. Being unable to sell the tube-closer, October 16, 1883, Stevens and Jones gave Hicks a reassignment of their rights, and de- manded their money and notes, which Hicks refused to give up. October 23d, Stevens notified Hicks in writing that he rescinded the contract, and demanded a return of the consideration. November 5th he filed his bill to rescind the contract, and recover the money and notes. The judge found that the patent was worthless; that Hicks' representa- tions were material and false; and decreed that the contract be rescinded, and that the $2,500 paid and the notes be returned, but did not decree the repayment of the $250 paid by Stevens to Jones, and indorsed by Hicks on one of Stevens' notes. On appeal the appellate court affirmed the decree, except that it added the $250 paid by Stevens to Jones to the money decree. H. W. Wolseley, for plaintiff in error. Utl- man Strong and Edward A. Dicker, for de- fendant in error. SHOPB, J. There is no disputing as to the making of the contract of sale in this ease, or as to its terms; the principal controversy being whether Hicks, before the sale, made material representations as to the utility and value of the Invention sold, which were re- lied on by Stevens, and which were false. The evidence satisfies us that, prior to the consummation of the sale, the parties had fre- quent interviews, in which Hicks represented to Stevens and Jones that the Hicks Tube- closer was a new and valuable invention, and would save both steam and fuel; that it was a good and profitable thing to sell, and would bring great profits. Hicks also gave Stevens a printed circular setting forth therein its capabilities and merits, which, among other things, stated that "the use of the tube-closer demonstrates to a positive certainty its abil- ity to show by the steam-guage. In the morn- ing, before firing up, the same steam pressure that is felt at night after the day's work. It will even hold steam in the boiler from Sat- urday night until Monday morning. It is guarantied to save fully 15 per cent, of fuel, or whatever fuel is usually required to raise steam in the morning. The Hicks tube-closei' will do it. It will save its cost every month." Hicks also assured Stevens, in some of the interviews, that the right to make and sell the tube-closer in either of the states of Ohio or Pennsylvania was worth $50,00p; that the right to the state of New York was worth the same sum; and that the appliances could be manufactured for five dollars apiece, and would sell for $30 each, and that there was not less than 2,000 boilers in each of the states named. Most of these representations, especially those in the circulars, are not de- nied. Hicks, by his answer and testimony, claims that all the representations he in fact made were true, but, whether true or false, they were not relied on by Stevens in making the purchase. It is claimed there was an error in admit- ting in evidence the verbal statements made by Hicks, in regard to the tube-closer, prior to the written agreement for its sale. Such statements were not admitted for the purpose of changing the terms of the written contract, but to show that its execution was procured through fraudulent misrepresentations on the part of the vendor, and for that purpose it was certainly proper. But it is said there is no charge of fraud in the bill, and hence there was no foundation in the pleadings to justify the admission of the evidence. This is a misapprehension. Good pleading requires fraud to be charged specifically, and not in general terms. The facts relied on as con- stituting fraud should be set. forth so as to apprise the opposite party what he is called on to meet. Elston v. Blanchard, 2 Scam. 420; Davis v. Pickett, 72 111. 483. The bill sets forth the specific representations made by Hicks which induced the complainant to make the purchase, and then charges "that the rep- resentations in the circular given by Hicks to the complainant and Jones, and the represen- tation that by Hicks' experience, by the use of said invention, great saving of steam and fuel could "be made, and other representa- tions of like effect, whereby complainant and Jones were induced to purchase said rights, are and were utterly false, and said inven- ACTUAL FEAUD. 207 tion Is -worthless, and by i'ts use no saving of any practical value can be made," and vcere known by Hicks to be wortbless and of no value. The facts alleged in the bill, if true, constitute a fraud. If it v^ere otherwise, Hicks s"hould have interposed a demuirer or motion to dismiss for want of equity. It is urged that Stevens did not rely on any of the representations made by Hicks, but acted upon his own judgment; and that, if he did rely upon them, he was guilty of such negligence, in failing to properly investigate, as to deprive him of any equitable relief. To entitle a party to relief, either legal or equitable, on the ground of a fraudulent mis- representation, he must have relied upon the representation as true; for unless the rep- resentations are believed to be true, and acted upon, it can cause no legal injury. It is necessary that he should trust the representa- tion, but It is not essential that the false representations should be the sole inducement to his entering into the contract. 2 Pom. Eq. Jur. § 890; 2 Pars. Cont. (5th Ed.) 773. The party acting upon a representation must, un- der the circumstances of the case, have been justified in relying upon it, in order to en- title him to relief. As stated in Pom. Eq. Jur. § 891: "It may be laid down as a gen- eral proposition that where the statements are of the first kind, [relating to substantial matters of fact, and not mere opinion,] and especially when they are concerning matters which, from their nature or situation, may be assumed to be within the knowledge or un- der the power of the party making the repre- sentation, the party to whom it is made has a right to rely on them; and, in the absence of any knowledge of his own, or of any facts which should arouse suspicion and cast doubt upon the truth of the statements, he is not bound to make inquiries and examination for himself. It does not, under such circum- stances, lie in the mouth of the person as- serting the fact to object or complain be- cause the other took him at his word. If he claims that the other party was not misled, he is bound to show clearly that such party did know the real facts; the burden is on him of removing the presumption that such party relied and acted upon his statements." And in section 895 the same author says: "When a representation is made of facts which are, or may be assumed to be, within the knowledge of the party making it, the knowledge of the receiving party concerning the real facts, which shall prevent his relying on and being misled by it, must be clearly and conclusively established by the evidence." When a party, ignorant of the real facts, and having no ready means of information, makes a purchase, or enters into a transac- tion as to the subject-matter of which rep- resentations have been made which are ma- terial, the law will presume, as a matter of fact, that he relied on them. Kedgrave v. Hurd, 20 Ch. Div. 1; Nicols' Case, 3 De Gex & J. 387; Fishback t. MUler, 15 Nev. 428; Benj. Sales (4th Am. Ed.) 465, note b. If false representations are made as to matters of fact, and the means of knowledge are at hand, and equally available to both parties, and the purchaser, instead of resort- ing to them, trusts the vendor, the law, as a general rule, will not relieve him from his own want of ordinary prudence. Oooley, Torts, 487. This is the case where the prop- erty is tangible and is at hand, and subject to inspection, but a different rule obtains when the property is at a remote distance, or where the property right is Intangible, and the falsity of the representations cannot be detected by inspection. In Smith v. Rich- ards, 13 Pet. 26, it is held that when a sale is made of property, but at a remote dis- tance, which the purchaser knows that the seller has never seen, but which he buys upon the representation of the seller, relying on its truth, such representation in effect must be deemed to amount to a warranty, or at least that the seller is bound to make it good. Cooley, Torts, 488; Maggart v. Free- man, 27 Ind. 531; Lester v. Hahan, 25 Ala. 445. In the case at bar the purchaser was wholly unacquainted with the use, opera- tion, and management of steam-boilers, and of the utility and value of the invention, and it is doubtful whether its capabilities, use- fulness, and practical value could then have been determined, even by experts, without very considerable use and long experiment. At the date of this contract, the patent, though allowed, had not been issued, and but few of the tube-closers had been used or tested by others than the inventor. Stevens testifies that he had not seen the tube-closer in use or operation before he signed the con- tract; that he inquired, of several to whom he was refeiTed by Hicks, but could learn noth- ing as to their merits, except from one party, who said they had tried It, but had thrown it away. When Hicks was informed of this, he said he had met a similar case, and had fixed it up so that it worked all right, and that he would do the same with this one. Hicks was the inventor, and claimed to have made thorough tests of his invention, and presumably had a greater knowledge of its use, capabilities, utility, and value than any other person. From these facts, and his profession of friendship to Jones, and of his desire to put him Into a good paying busi- ness, we think Stevens and Jones not only relied upon the representations, but had a right to rely on them in making their pur- chase. AUin V. Millison, 72 111. 201. It is true that Hicks told Stevens and Jones not to take his word, but to satisfy themselves as to the merit of his invention before buying, but this cannot relieve him from liability for his misrepresentation made for the purpose of inducing the purchase. He must have known that but little, if any, information could be obtained by Inquiry, from the fact the tube-closer had not been 268 ACTUAL FRAUD. brought into general use. The inqiilries made proved fruitless, as he must have known they would. In 2 Pom. Eq. Jur. § 806, it is said: "If, therefore, the party accompanies or fol- lows his misrepresentations by words of gen- eral caution, or by advice to the other that he consult his friends or professional ad- visers before concluding the agreement, he does not thereby counteract any effect upon the transaction which his untrue statement would otherwise produce;" citing Keynel v. Sprye, 1 De Gex, M & G. 709; Smith v. Richards, 13 Pet. 1'6. In Eaton v. ^^'iunie, 20 Mich. 156, the court say: "When one as- sumes to have linowledge upon a subject of \\ liicU another may well be ignorant, and knowingly makes false statements regarding it, upon which the other relies, to his injury, we do not think it lies with him to say that the party who took his word, and relied upon it, was guilty of negligence in so doing, so as to be precluded from recovering compensation for the injiu:y which was inflicted upon him under cover of the falsehood;" citing Rail- road Co. V. Ogier, .">."> Pa. 72; Gordon v. Railroad Co., 40 Barb. .">.">0; Ernst v. Rail- road Co., 3.5 N. Y. 28. See, also, Walsh v. Hall, 66 N. C. 238; Oswald v. JIcGehee, 28 •Miss. 340; JlcClellan v. Scott, 24 Wis. 81; Starkweather v. Benjamin, 32 Mich. 305; Kendall v. Wilson, 41 Vt. 567; Pierce v. Wil- son, 34 Ala. 603. Tti maintain an action at law for fraud and deceit arising from false representations of a material matter connected with a trans- action, it is necessary to show that the party making it knew it to be false, or occupied such a position as that the law would im- pute to him a knowledge of the fact. -V per- son cannot, it is believed, be free from fraud in a court of equity when he makes a positive representation of a material fact which he does not know to be true, or has good reason to believe is true, and which in point of fact Is false. In Allen v. Hart. 72 111. 104, it is held that it Is not indispensable to a right to rescind a contract that the party making the representation knew it to be false, provided it is material, and the other party had a right to rely upon it and did so, and was deceived; and this is believed to be sustained by the weight of authority. In this case, Hicks' facilities were superior to those of any one else for knowing whether the representations made by him were true. If he did not in fact know them to be true, he should not have so asserted to Stevens, whom he knew had no means at hand by which to detect their falsity. There was no error in admitting in evi- dence the printed circular of Hicks, showing the valuable qualities of his invention. The proof shows that he gave Stevens one of them during their negotiations, containing material and important representations of what his invention would accomplish as a means of saving steam and fuel; that it would save its cost in a month; while the proof showed that practically It was of no value in the respect mentioned in the circu- lar. These circulars were printed and dis- ti'ibuted for the purpose of inducing others to purchase rights of him, and the state- ments therein may be regarded as of a more deliberate character than if made in a con- versation. They were properly admitted. See 2 Pom. Eq. Jur. § 881, and also Cooley, Torts, 477. As a general rule, representations as to the value of property sold, though exaggerated, do not constitute fraud, but It has some ex- ceptions. As said in Cooley, Torts (page 484:) "There are some cases, however, in which even a false assertion of an opinion will amount to a fraud; the rctison being that under the circumstances the other party has a right to rely upon it without bringing his own judgment to bear. Such is the case when one is purchasing goods, the value of which can only be known to experts, and is relying upon the vendor, who is a dealer in such goods, to give him accurate information concerning them. The same rule has been applied when a dealer in patent-rights sold certain territory to one who was ignorant of its value, representing it to be very valua- ble, when he knew it was not." See Allen V. Hart, 72 111. 104. Tlie value of a patent- right for the purpose of sales depends large- ly upon the usefulness of the invention, and the demand for the article patented. Objection is made to the admissibility of some other evidence. In chancery it will be presumed that the court considered and act- ed only upon such as may be proper. As the other evidence in the ease is sufficient to sus- tain the decree of the superior court. It will not be necessary to consider the objection. It is also claimed that the appellate court erred in directing that the i|!250 paid by Stevens be added to the money decree. Be- fore Stevens was introduced to Hicks, the latter made sale to Jones of an option to pur- chase the right to the state of New York at $20,000, and Jones had paid him .$500 there- for. Jones wag not bound to take the right for the state of New York, but, if he did not, he could not recover back the money he had paid for the option. Stevens bought of Jones a half interest in the option, for which he paid Jones $2.50. To this trans- action Hicks was not a party. If Jones and Stevens together failed to purchase the state right, Stevens could not have called on Hicks to refund to him the money he had paid to Jones; and, when the contract for the pur- chase of the right for the state of New York was rescinded, it was the same, in substance, as if it had never been made. Hicks was again placed where he was before his sale, and Jones and Stevens having failed to exer- cise their option, could not compel Hicks to return the price paid for it. The bill did not seek to set aside and rescind Jones' con- tract for the purchase of the option; nor did Hicks refuse to let either Jones, or Jones ACTUAL FRAUD. 269 and Stevens, purchase the right for the state of New York, but, on the contrary, was anx- ious to have them take it. This ruling of the appellate court is, we think, clearly er- roneous. The judgment of the appellate court will be reversed as to so much of its judgment as adds to the decree the said sum of $250, and the decree of the superior court is affirmed. Reversed in part, and affirmed in part. 1270 ACTUAL FRAUD. STIMSON T. HELPS et al. (10 Pflo. Rep. 290, 9 Colo. 33.) Suprru^e Court of Colorado. Feb. 26, 1886. Appeal from county court, Boiilder county. The complaint sets out that on the sixth day of October, 1881, William Stimson leased to the defendants in error the S. W. %, of sec- tion 21, in township 1, range 70 west, in said county, for the period of four years and six months, for the pm-pose of mining for coal, under the conditions of said lease; that they had no knowledge of the location of the boundary lines of said tract at the time of the leasing, and that they so informed Stim- son, the defendant in the case; that they re- quested Stimson to go with them and show them the boundary lines; that the defendant, pretending to know the lines bounding said land, and their exact locality, went then and there with plaintiffs, and showed and pointed out to them what he said was the leased land, and the boundary lines thereof, es- pecially the north- and south lines thereof; that plaintiffs not then knowing the lines bounding said land, nor the exact location thereof, and relying upon what the defendant then and there pointed out to them as the leased land, and the lines thereof, then and there proceeded to work on the land pointed out, and sank shafts for mining coal thereon, and made sundry improvements thereon, — made buildings, laid ti-acks, etc.; that all the said work was done and labor performcj and improvements made on the land pointed out by defendant to plaintiffs as the leased land, and that plaintiffs, relying upon the statements of defendant as aforesaid, and not knowing otherwise, believed they were performing the work, and making all the im- provements on the land they had so leased, which they did by direction of the defend- ant; that while they were working on the said land Stimson was frequently present, and told the plaintiffs they were on his land, and received royalty from ore taken there- from; that about April 10, 1882, they were notified to quit mining on said ground by the Marshall Coal Mining Company; that the land belonged to said company; that none of the said improvements were put on said leased land; and that they were compelled to quit work and mining thereon; that the improvements made by them were worth $2,- 000; that Stimson falsely represented to them other and different lines than the true boundaries of said premises, and showed and pointed out to them other and different lands than the lands leased them, and thereby de- ceived them, and damaged them, in the sum of $2,000. Issue joined, and trial to the court Motion by defendant's counsel for judgment on the pleadings, and evidence overruled. .Judgment for the plaintiffs in the sum of $2,000, and costs. Wright & Grifan, for appellant. G. Berk- ley, lor appellees. ELBERT, J. The law holds a contracting party liable as for fraud on his express rep- resentations concerning facts material to the treaty, the truth of which he assumes to know, and the truth of which is not known to the other contracting party, where the representations were false, and the other party, relying upon them, has been misled to his injury. Upon such representations so made the contracting party to whom they are made has a right to rely, nor is there any duty of investigation cast upon him. In such a case the law holds a party bound to know the truth of his representations. Big- elow, Fi-aud, 57, 60, 63, 67, 68, 87; Kerr, Fraud & M. 54 et seq.; 3 Wait, Act. & Dcf. 436. This is the law of this case, and, on the evidence, warranted the judgment of the court below. The objection was made below, and is re- newed here, that the complaint does not state sufficient facts to constitute a cause of ac- tion. Two points are made: (1) That the complaint does not allege that the defendant Icnew the representations to be false; (2) that it does not allege intent to defraud. It is not necessary, in order to constitute a fraud, that the party who makes a false representation should know it to be false. He who makes a representation as of his own knowledge, not knowing whether it be true or false, and it is in fact untrue, is guilty of fraud as much as if he knew it to be untrue. In such a case he acts to his own knowledge falsely, and the law imputes a fraudulent intent. Kerr, Fraud & M. 54 et seq., and cases cited; Bigelow, Fraud, 63, 84, 453; 3 Wait, Act. & Def. 438 et seq.; 2 Estee, Pr. 394 et seq. "Fraud" Is a term which the law applies to certain facts, and where, upon the facts, the law adjudges fraud, it is not essential that the complaint should, in terms, allege it It is sufficient if the facts stated amount to a case of fraud. Kerr, Fraud & M. 366 et seq., and cases cited; 2 Estee, PI. 423. The complaint In this case states a substantial cause of ac- tion, and is fully supported by the evidence. The action of the county court in refusing to allow the appellant to appeal to the dis- trict court after he had given notice of an ap- peal to this court, and time had been given in which to perfect it, cannot be assigned as error on this record. If it was an error, it was error not before, but after, the final judgment from which this appeal is taken. The judgment of the court below is af- firmed. [Note from 10 Pac. Rep. 292.] A contract secured by false and fraudulent representations cannot be enforced. Mills v. Collins, 67 Iowa, 164, 25 N. W. Rep. 109. A court of equity will decree a rescission of a contract obtained by the fraudulent repr^en- tations or conduct of one of the parties thereto, on the complaint of the other, when it satis- factorily appears that the party seeking the rescission has been misled in regard to a ma- ACTUAL FRAUD, 271 terial matter by such representation or conduct, to his injury or prejudice. But when the facts are known to both parties, and each acts on his own judgment, the court will not rescind the contract because it may or does turn out that they, or either of them, were mistaken as to the legal effect of the facts, or the rights or ob- ligations of the parties thereunder, and particu- larly when such mistake can in no way injuri- ously affect the right of the party complaining under the contract, or prevent him from obtain- ing and receiving all the benefit contemplated by it, and to which he is entitled under it. See- ley V. Reed, 25 Fed. Rep. 361. When, by false representations or misrep- resentations, a fraud has been committed, and by it the complainant has been injured, the gen- eral princuiles of equity jurisprudence afford a remedy. Singer Manufg Co. v. Yarger, 12 Fed. Rep. 487. See Chandler v. Childs, 42 Mich. 128, 3 N. W. Rep. 297; Cavender v. Roberson, 33 Kan. 626, 7 Pac. Rep. 152. When no damage, present or prospective, can result from a fraud practiced, or false repre- sentations or misrepresentation made, a court of equity will not entertain a petition for relief. Dunn V. Remington, 9 Neb. 82, 2 N. W. Rep. 230. A person is not at liberty to make positive assertions about facts material to a transaction unless he knows them to be true; and if a statement so made is in fact false, the as- sertor cannot relieve himself from the imputa- tion of fraud by pleading ignorance, but must respond in damages to any one who has sus- tained loss by acting in reasonable reliance upon such assertion. Lynch v. Mercantile Trust Co., 18 Fed. Rep. 486. Equity will not relieve a,gainst a misrepre- sentation, unless it be of some material matter constituting some motive to the contract, some- thing in regard to which reliance is placed by one party on the other, and by which he was actually misled, and not merely a matter of opinion, open to the inquiry and examination of both parties. Buekner v. Street, 15 Fed. Rep. 365. False representations may be a ground for relief, though the person making them believes them true, if the person to whom they were made relied upon them, and was induced there- by to enter into the contract. Seeberger v. Ho- bert, 55 Iowa, 756, 8 N. W. Rep. 482. Fraudulent representations or misrepresenta- tions are not ground for relief, where they are immaterial, even though they be relied upon. Hall V. Johnson, 41 Mich. 286, 2 N. W. Rep. 55. See, to same effect. Lynch v. Mercantile Trust Co., 18 Fed. Rep. 486; Seeberger v. Ho- bert, 55 Iowa, 756, 8 N. W. Rep. 482. In fraudulent representation or misrepresenta- tion the injured parties may obtain relief, even though they did not suppose every statement made to them literally true. Heineman v. Stei- ger, 54 Mich. 232, 19 N. W. Rep. 965. Where the vendor honestly expresses an in- correct opinion as to the amount, quality, and value of the goods he disposes of in a sale of his business and good-will thereof, and the purchaser sees or knows the property, or has an opportunity to know it, no action for false rep- resentations will lie. Collins v. Jackson, 54 Mich. 186, 19 N. W. Rep. 947. Mere "dealing talk" m the sale of goods, un- less accompanied by some artifice to deceive the purchaser or throw him off his guard, or some concealment of intrinsic defects not easily detected by ordinary care and diligence, does not amount to misrepresentation. Reynolds v. Palmer, 21 Fed. Rep. 433. False statements made at the time of the sale by the vendor of chattels, with the fraud- ulent intent to induce the purchaser to accept an inferior article as a superior one, or to giv6 an exorbitant and unjust price therefor, will render such purchase voidable; but such false statement must be of some matter affecting the character, quantity, quahty, value, or title of such chattel. Bank v. Yocum, 11 Neb. 328, 9 N. W. Rep. 84. A statement recklessly made, without knowl- edge of its truth, is a false statement knowing- ly made, within the settled rule. Cooper v. Schlesinger, 111 U. S. 148, 4 Sup. Ct. Rep. 360. Whether or not omission to communicate known facts will amount to fraudulent repre- sentation depends upon the circumstances of the particular case, and the relations of the parties. Britton v. Brewster, 2 Fed. Rep. 160. Where a vendor conceals a material fact, which is substantially the consideration of the contract, and which is peculiarly within his knowledge, it is fraudulent misrepresentation. Dowling V. Lawrence, 58 Wis. 282, 16 N. W. Rep. 552. Evidence of fraudulent representations must be clear and convincing. Wickham v. More- house, 16 Fed. Rep. 324. Where a man sells a business, and the con- tract of sale contained a clause including all right to business done by certain agents, evi- dence that the seller was willing to engage in the same business with such agents is not proof of fraud in making the contract. Taylor v. Saurman, 110 Pa. St. 3, 1 Atl. Rep. 40. It was recently held by the supreme court of Indiana, in the case of Cook v. Churchman, 104 Ind. 141, 3 N. E. Rep. 759, that where money is obtained under a contract, any fraudulent representations employed by a party thereto as a means of inducing the loan to be made, if otherwise proper, are not to be excluded be- cause of the statute of frauds; also that where parol representations are made regarding the credit and ability of a third person, with the in- tent that such third person shall obtain money or credit thereon, the statute of fraud applies, and no action thereon can be maintained, al- though the party making the representations may have entered into a conspiracy with such person with the expectation of obtaining some incidental benefit for himself. ACTUAL FRAUD. MITCHELL et al. t. McDOUGALL. (62 111. 498.) Supreme Court of lUinois. Jan. Term, 1872. Appeal from circuit court, McLean county; Thomas F. Tipton, Judge. Bill in equity to rescind a conveyance of lands on the ground of misrepresentation and fraud. R. B. Williams, for appellants. Benjamin & Weldon, for appellee. BREESE, J. In Lockridge v. Foster, 4 Scam. 569, which was a biU in chancery pray- ing, in the alternative, for the rescission of an executed contract for the sale of land, on the ground of fraudulent representations by the vendor, this court said, on the principles of equity and justice, a contract, to be ob- ligatory, must be justly and fairly made. The contracting parties are bound to deal honestly, and act in good faith with each oth- er. There should be a reciprocity of candor and fairness. Both should have equal knowl- edge concerning the subject-matter of the contract; especially ought all the facts and circumstances which are likely to influence their action to be made known. If they have not mutually this knowledge, nor the same means of obtaining It, it is then a duty in- cumbent on the one having the superior in- formation to disclose it to the other. In mak- ing the disclosure, he is bound to act in good faith and with a strict regard to truth. If Le makes false representations respecting material facts, or intentionally conceals or suppresses them, he acts fraudulently, and renders himself responsible for the conse- quences which may result. Fraud may con- sist as well in a suppressio veri as in a sug- gestio falsi, for. In either case, it may operate to the injury of the innocent party. A false representation by the vendor, which in- fluences the conduct of the other party, and Induces him to make the purchase, will vitiate and avoid the contract. And in making the representation, it is immaterial whether he knows it to be false or not, for the conse- quences are the same to the vendee. If he re- li^ on the truth of the declaration, he Is equally Imposed on and injured, and ought to have redress from the one who has been the cause of the injury. So a suppression or concealment by the vendor of facts, which, if known to the vendee, would have the ef- fect to prevent him from making the pur- chase, win, in equity, equally vitiate the con- tract. A court of equity will not enforce and carry Into effect contracts thus unfairly and fraudulently made; and when the injured party Invokes its aid in proper time, and the circumstances of the case will permit it to be done, the contract will be rescinded and the parties restored to their original rights. The court refers to 1 Story, Eq. Jur. §§ 191- 197, 204-207, and 2 Kent, Comm. 482, 490. Sections 191-197, inclusive, treat of false suggpstions, and fully support the doctrine of the case cited, on that point. Sections 204 to 207, inclusive, treat of the doctrine of suppressio veri, a doctrine which, though true in morals, is not the doctrine recognized by courts of equity, except under certain cir- cumstances. The extreme doctrine of some courts is, that undue concealment of a fact resting in the knowledge of one contracting party, which, if known to the other, would have prevented the contract, will vitiate the contract. The true definition is found in section 207, supra, where it is said undue concealment which amounts to a fraud in the sense of a court of equity, and for which it will grant relief, is the non-disclosure of those facts and circumstances which one party is under some legal or equitable obligation to communicate to the other, and which the latter has a right, not merely in foro conscientlse, but juris et de jure, to know. Under such circumstances, the concealment o( an important fact would be improper and unjust; it would be an undue concealment on account of the fiduciary relation existing; but where two parties, in the absence of any such relation, are treating for an estate, and the purchaser knows, from surface indica- tions, or otherwise, by actual boring, there is a valuable mine upon the land, the pur- chaser is not bound to disclose that fact to the owner, for the means of information on the subject were as accessible to the owner of the land as to the purchaser. The rule stated by Chancellor Kent, at page 482, refen-ed to in the opinion in 4 Scam., su- pra, is that each party is bound to communi- cate to the other his knowledge of the ma- terial facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation. This, we admit, is a rule of moral obligation, but not enforced in the courts. It is by them qualified, as we have stated above, that the / party in possession of the facts must be un- j der some special obligation, by confidence re- } posed, or otherwise, to communicate them truly and fairly, and this is the doctrine of this court in the cases of Fish v. Cleland, 33 111. 243, and aeland v. Pish, 43 111. 282, re- ferred to by appellee's counsel. It is qualified by Beach v. Sheldon, 14 Barb. 72; Laidlaw v. Organ, 2 Whart 178; Knitzing V. McElrath, 5 Pa. St. 467. In Fox V. Mackeath, 2 Brown, Ch. 400, Thurlow, Lord Chancellor, in delivering the opinion in the case where undue concealment of an important fact was charged, said: "The doubt I have is, whether this case af- fords facts from which principles arise to set aside this transaction, which will not, by nec- essary application, draw other cases into haz- ard. And, without Insisting upon technical morality, I don't agree with those who say, that where an advantage has been taken In a contract, which a man of delicacy would not have taken, it must be set aside. Sup- ACTUAL FRAUD. 27^ pose, for instance, that A, knowing there to be a mine in the estate of B, of which he Isnew B was ignorant, shoTild enter Into a contract to purchase the estate of B for the price of the estate without considering the mine, could the court set it aside? Why not, since B was not apprized of the mine and A was? Because B, as the buyer, was not obliged, from the na- ture of the contract, to make the discovery. It is, therefore, essentially necessary, in order to set aside the transaction, not only that a great advantage should be taken, but it must arise from some obligation in the party to make the discovery." Not, as Justice Story says (1 Story, Eq. Jur. § 148), from an obli- gation- in point of morals only, but of legal duty. In such a case he says, a court of equity wiU not correct the contract merely because a man of nice morals and honor would not have entered Into it. Lord Eldon, in Turner v. Har- vey, Jac. 178, approved the doctrine of Lord Thurlow and the illustration of the mine, and BO does Justice Story in 1 Eq. Jur. § 207. But we are dealing in this case with the doctrine of suggestio falsi and not of suppres- sio verl, as the charge in the bill is, false rep- resentations made by appellee of the value of the land and lots in Missouri. There is much testimony in the record, from which we derive the knowledge that appellee represented to appellant, who had never been in Missouri (appellee having resided there be- fore coming to Bloomington), that the land was good land, and was the land occupied by one Judge Smith, before the Rebellion, and im- proved by him. This land was the south part of section eighteen and the north part of sec- tion twenty -four, in all one hundred and sixty acres, and was worth, probably, fifteen dollars per acre. The land conveyed was in section fifteen, stony, poorly timbered, and compara- tively worthless. The house in Montevallo, Instead of being a desirable residence, and worth one thousand dollars, as represented by appellee, proved to be a mere sheU, one story high, occupied by hogs and goats, bring- ing not eight dollars a month rent "right along," as represented, but unfit for human abode, and worth, with the "lot and a half," not over two hundred and fifty dollars, and, as we should judge, not at all saleable. So soon as appellant, by personal inspection on a visit to the locality, discovered the facts, he came to the conclusion appellee had imposed upon him, and at once, on his return to Bloomington, demanded a rescission of the contract and a reconveyance of the Blooming- ton property, and tendering deeds for the Mis- souri property, together with appellee's note for three hundred dollars, part of the pur- chase money. This being refused by appellee, this bill was filed by appellants, and pending the biU the house was consumed by fire, on which, however, appellee had effected an In- surance of three thousand dollars. The court dismissed the bill and complain- ants appealed. There Is no question of law made except HUTCH.& BUNIi.EQ.— 18 the one we have discussed, and there is some conflict in the testimony, but a careful exami- nation of it, as we find it In the record, satis- fies us appellant has not received from appel- lee what he contracted for, and which con- tract he made wholly on the representations of appellee, which have proved to be untrue. It is said by appellee, there was a mistake in conveying the land as in section fifteen— that he supposed the "Smith farm" was on that section, but is willing and offers to con- vey the land in fact occupied by Smith in sec- tions eighteen and twenty-four, and he in- sists, that a mistake being made is no ground for the rescission of the contract, as the court can and will correct the mistake. But this consideration should not prevail in this case, because appellee represented the land he was selling to be worth twenty dollars per acre, which he had purchased but a short time pre- viously for four dollars per acre, and he as- serted to appellant that such land was selling for twenty dollars an acre in that neighbor- hood. This he based upon a letter said to have been received by him from one Selsor, a land agent in that county. Selsor in his depo- sition says, the lands he referred to in that letter were among the best improved farms in that portion of Cedar and Vernon counties; he says he had no idea of fixing the price of raw lands by these figures, and did not sup- pose any one would be so foolish as to at- tempt it. That letter, which appellee says was burnt up in the building when it was destroyed, was to this effect: "We have sold within the last two weeks ten thousand dollars worth of land, from fifteen to twenty-five dollars an acre." This was so construed by appellee to appellant as to induce the latter to believe they were lands in the neighborhood of those he was about to purchase. The town property was of small value. Now, under such circumstances, it would not be just to allow appellee to correct the mis- take in the land and claim the contract as made, but it would be just, as a mistake was made by appellee in the deed, to permit the injured party to avail of it, and, through that, repudiate the entire contract. In a case where false representations have been made, it is the province of a court of equity, if applied to for that purpose, to rescind the contract, put- ting the parties in statu quo. It is claimed by appellee that the Blooming- ton property was taken at a very high valua- tion, and that he ought to be permitted to show that appellant has received from him its full value. This we do not consider as the question be- fore us. The question is, did appellant get what he bargained for? That he did not we think the evidence satisfactorily shows. Appellant's right to the insurance money will hardly be questioned, as the building up- on the lot when sold, is now represented by that money, and after deducting the premium paid by appellee and the cost of the addition ACTUAL FRAUD. to the building ■which he erected, and was covered by the Insurance, we are of opinion the company should pay the balance to appel- lant. On the point that Mrs. Mitchell, appellant's wife, was improperly rejected as a witness, we think the court ruled correctly; the case was in no correct legal sense her own case. The views here expressed reverse the de- cree of the circuit court dismissing the bill. The cause is remanded for further proceedings consistent with this opinion. Decree reversed. SCOTT, J., did not hear the argument In this case, and ga^e no opinion. ACTUAL FRAUD. 273 SOUTHERN DEVELOPMENT CO. OF NEVADA V. SILVA. (8 Sup. Ct. 881, 125 U. S. 247.) Supreme Court of the Unitefl States. March 19, 1886. Appeal from the circuit court of the Unit- ed States for the Northern Distiict of Cali- fornia. Wm. M. Stewart, A. T. Britton, and A. B. Browne, for appellant. J. P. Langhorne and John H. Miller, for appellee. LAMAR, J. This is a bill in equity to rescind a contract of purchase of a silver mine on the ground of fraudulent representa- tions, and to recover the consideration paid. The suit was commenced originally in the supei-ior court of Inyo county, Cal., on the Sth of May, 1884; but on account of the di- verse citizenship of the parties, the plaintiff being a corporation organized under the laws of Nevada, and the defendant a citizen of California, it was removed Into the United States circuit court. Demurrers to the origi- nal bill and to an amended bill having been sustained, the present "second amended" bill of complaint was flled. Answer was filed by defendant, replication by complainant, and issue was joined. Testimony was talien, and the case was heard, resulting In a decree dismissing the bill on the 14th of March, 1887. It appears from the record that on the 15th of March, 1884, the appellant (who was the complainant below) purchased from the defendant a mining claim, known as the "Sterling Mine," together with other mining property, all situated in Inyo coun- ty, Cal., paying him therefor the sum of ^10,000. On the 8th of May, 1884, the origi- nal bill of complaint was filed,, charging, in substance, that complainant was induced to purchase said mine and mining property solely upon the representations made by Sil- va as to its condition, extent, and value; that such representations were made to H. M. Terington, the president of said complain- ant company, and to one Forman, a mining expert in his employ, in January, 1884, when an examination of said mine was made by them; that said representations were false -and fraudulent, and were well known to the defendant at the time to be such; and that said representations were, in substance and in a somewhat different order, as follows: (1) That there were 2,000 tons of ore in the mine; (2) that the bottom of what is called the "Ore Chamber" was solid ore, as good as the ore exposed on the sides of the cham- ber; (3) that there were not less than 500 tons of ore in and about the said ore cham- ber; (4) that the mine was worth $15,000; and (5) that, after going through the mine, the defendant represented to said Yerington and Forman that he had shown them all the work which had been done in or about the mine that would throw any light upon tlie quantity of ore therein. The answer of the defendant is direct, pos- itive, and unequivocal m its denials of the allegations of the bill; and, as an answer on oath is not waived, unless these denials are disproved by evidence of greater weight than the testimony of one witness, or by that of one witness with corroborating cir- cumstances, the complainant will not be en- titled to a decree; and this effect of the de- fendant's answer is not weakened by the fact that the equity of the complainant's bill is the allegation of fraud. Vigel v. Hopp, 104 U. S. 441; 2 Story, Eq. Jur. § 1528; 1 Daniell, Ch. Prac. 844. The burden of proof is on the complainant; and unless he brings evidence sufficient to overcome the natural presumption of fair dealing and honesty, a court of equity will not be justified in setting aside a contract on the ground of fraudulent representations. In order to establish a charge of this character the complainant must show, by clear and decisive proof— First, that the defendant has made a repre- sentation in regard to a material fact; sec- ondly, that such representation is false; thirdly, that such representation was not ac- tually believed by the defendant, on reason- able grounds, to be true; fourthly, that it was made witlj intent that it should be acted on; fifthly, that it was acted on by com- plainant to his damage; and, sixthly, that in so acting on it the complainant was ignorant of its falsity, and reasonably believed it to be true. The first of the foregoing requi- sites excludes such statements as consist merely in an expression of opinion or judg- ment, honestly entertained; and, again, (ex- cepting in peculiar cases,) it excludes state- ments by the owner and vendor of property in respect to its value. The evidence in the case shows that in the development of this mine a tunnel, called the "Sterling Tunnel," had first been dug. At a distance of about 140 feet along the line of this tunnel, from its mouth, there are branches running easterly and westerly. About 60 feet from the main tunnel, in the eastern branch, winze No. 1 starts down. About 38 feet below the level of the tunnel, a level, known as thie "3S-feet level," starts off from this winze, and at the bottom of the winze, a distance of about 82 feet vertical below the main tunnel, there is another level, known as "82-feet level." In the easterly branch of the tunnel, about 30 feet from winze No. 1, there is another winze starting downward, inclining to the southeast as it goes down. This winze is numbered 2, and is connected with the 38-feet and the 82-feet levels. Intermediate between these levels is another level, known as the "55-feet level," which opens out to the eastward of winze No. 2 into a chamber about 15 feet long and about 8 feet wide. In the south-east corner of this chamber was a little hole or shaft. r(> ACTUAL FRAUD. extending downward a few feet only. In sinking winze No. 2, Silva struck an ore body at a point opposite the 38-feet level. It was irregular in shape, dipping at an angle of about 45 degrees. Ctommencing at a point, comparatively speaking, it increased gradually as it descended, and was in form somewhat like a pyramid. At its base it measured 4 or 5 feet across, and it was about nine feet long. The surface of this Inclined pyramid formed the floor or bottom of the chamber. There was, however, a small space between the base and opposite foot- wall, which is called the "bottom" of the chamber by complainant's witnesses, and it is the "bottom" spoken of in the bill. The ore comprising this pyramid was carbonate, and, being friable, had slacked down over the face of the pyramid to the bottom, partially covering it and partially filling up the lit- tle hole or shaft in the south-east corner. As to the first alleged representation, as classified above,— viz., that there were 2,000 tons of ore in sight in the mine, and that Yerington relied upon such statement when he made the purchase,— the proof utterly fails to establish either that Silva made the statement, as a statement of fact, or that Yerington relied upon such statement, even had It been made. Silva, both in his answer and in his testimony, denies ever having made the statement, and the testimony of Yerington himself is to the effect that Sil- va' s statem«»nt was qualified by the phrase "in his judgment." This, then, is shown to have been nothing more than an expression of opinion on the part of Silva as to the quantity of ore in sight in the mine. But, even if Silva had made the statement imput- ed to him in the bill, there is abundant evi- dence to show that Yerington did not rely upon it in the purchase of the mine. Yer- ington's own evidence, on this point, is against him. He testifies that he did not believe that there were more than 1,000 tons of ore in the mine, and that B'orman agreed with him on that point. And he further tes- tifies that, valuing this ore at 32 ounces of ore and 45 per cent, of lead per ton, (which it appears was its approximate value, as deter- mined by several assays,) and calculating that there would be 1,000 tons of ore there, the mine would be worth $10,000,— the sum he actually gave for it This lacks much of coming up to the rule that the complainant must have been deceived, and deceived by the pereon of whom he complains. Atwood V. Small, 6 aark & F. 232; Pasley v. Free- man, 3 Term R. 57. Besides, the quantity of ore "in sight" in a mine, as that twm is un- derstood among the miners, is at best a mere matter of opinion. It cannot be calculated with mathematical, or even with approxi- mate, certainty. The opinions of expert min- ers, on a question of this kind, might reason- ably differ quite materially. In the case of Tuck V. Downing, 76 111. 71, 94, the court say: "No man, however scientific he may be, could certainly state how a mine, with the most flattering outcrop or blow-out, will finally turn out. It is to be fully tested and worked by men of skill and Judgment Mines are not pui'chased and sold on a war- ranty, but on the prospect. 'The sight' de- termines the purchase. If very fiattering, a party is willing to pay largely for the chance. There is no other sensible or known mode of selling this kind of property. It is, in the nature of the thing, utbei-ly speculative, and every one knows the business is of the most fluctuating and hazardous character. How many mines have not sustained the hopes created by their outcrop!" We approve the position of the court below, that "Yea-lngton and his expert, Forman, were as competent to judge how much ore there was 'in sight' as Silva was. They were novices in matters of that kind. This misrepresentation, if such it be, does not contain either the first, fourth, or fifth element stated by Pomeroy as essential elements in a fraudulent misrep- resentation." As stated above, the substance of the al- legation of the bill is that Silva represented that the bottom of this ore chamber, which was covered with loose ore slacked down from the pyramid, was composed of ore as good as that exposed on the sides of the chamber. Silva, in his answer, expressly denies ever having made such statement. Forman testifies that with a little prospect- ing pick he had with laim he raked through the dirt and loose ore that had slacked dovra, to see if it would reach the bottom of the ore chamber, but that it would not. He further says: "I asked Silva how the bot- tom was; if he had sunk below there. He said, 'No.' I said, 'How is the bottom. You, as a miner, know it is a suspicious thing to see a bottom covered up, or anything of that kind.' He said the bottom Avas as good or better than any ore which we saw in the chamber." Yerington at first testifies that Silva, in reply to a question by Forman, stated that this floor was solid ore; but he says that he does not think any comparison was made between that ore and the ore in the sides of the chamber, as narrated by Forman. On the next day, however, Yer- ington having, as he says, refreshed his mem- ory, — "and I [he] had the means of doing it," —was positive that the conversation between Silva and Forman at that time was as For- man afterwards stated It. Silva, in addition to his positive denial in his answer, testifies that "there never was a word said about that. They asked me this: 'What I thought of the ore body?' and I said 'I thought it would be extensive.' I thou.fht so at the time, and I think so yet" The witness Ed- dy, who was present all the time in the ore chamber, except when he went to the 88-feet level to get a pick, does not know anything about a conversation such as Yerington and Forman narrate. On this point then, the I testimony of Silva is directly to tlxe contrary ACTUAL FRAUD. 277 of that of Yerlngton and Forman. Oertain otliei' material facts in the case seem to indi- cate that there is just as strong probability that Sllva's statements in this matter are true as that those of Yerington and Forman are true. In the bill Yerington alleged, un- der oath, that Sllva had discovered the fact that the bottom of the ore chamber was not composed of ore, and had afterwards cov- ered the bottom with ore, vein-rock, and mat- ter, — in other words, had "salted" the mine. There is no evidence in the record to prove this, or tending to prove it; on the contrary, the evidence of Yerington himself, and of the other witnesses who were examined on that point, is all to the effect that the ore cover- ing the floor of the chamber had slacked down from natural causes in fine particles like wheat. Nor is there such evidence to show that Silva knew the character of this floor, or of the extent of the ore vein, or de- posit, (as it afterwards turned out to be,) as would justify the interposition of a court of equity to set aside the contract on the ground of fraudulent representations. He had come onto the -ore in excavating from the top. The sides of the ore chamber contained some ore of a good quality, and he had never dem- onstrated the extent and amount of ore in the pyramidal wedge in the side of the cham- ber. It is shown by the evidence of Yer- ington himself that, in the side of a drift running westerly from the ore chamber, there was ore which appeared to be continu- ous with the body of ore in the chamber; so that the statement Silva said he made, — viz., that he thought the ore body would be extensive,— at least, appears reasonable. Up- on all the facts and circumstances apparent of record, he might have made the state- ment he says he made, and believed he was telling the truth. For there is also some evidence to the effect that Silva had com- menced to run a drift from the bottom of winze No. 1, for the purpose of striking and cutting the supposed downward extension of the ore body in the chamber; and this, be- fore the examination of the mine by Yering-' ton and Forman. After the sale of the mine, Coffin, the superintendent for the complain- ant company, when he commenced work in the mine, started in where Silva had left off in this drift, and carried it immediately be- neath the ore chamber, entering the chamber by an up-raise. Then it was that the dis- covery was made that the ore body, instead of being a continuous ledge or lead, was merely a deposit. Furthermore, the testi- mony of Yerington and Forman, as regards the little hole or shaft in the south-east cor- ner of the chamber, is directly opposed by the testimony of Silva and Eddy. Both Yering- ton and Forman testify that this little shaft was completely fllled up with dirt and loose ore; while Sllva and Eddy both testify that it was not so filled up, but that both Yer- ington and Forman stood in that shaft, and took samples of ore from it. It is thus seen that the evidence on this material point does not clearly establish the fraudulent represen- tations of Silva as claimed by the complain- ant; but that, on the contrary, the material facts and circumstances as disclosed by the record are entirely compatible with the the- ory that Silva did not make the representii- tions charged against him, or, at most, that he merely gave expression to an opinion as to the extent of the ore body, erroneous though it proved to be. This would not con- stitute fraud. In the language of the court below: "This testimony was taken in June, 1866, about two and a half years after the conversations took place. They were pres- ent at the time, examining the mine, and en- gaged in conversation for an hour or more. These discrepancies in matters of detail dur- ing a long conversation, related by different parties, viewing the subject from different t stand-points after the lapse of so long a pe- j rlod of time, are no more than might rea- sonably be expected, even in honest wit- nesses. There is no occasion to impute any intention to testify falsely to either. * * * Parties are extremely liable to misunder- stand each other, and, in looking back upon the transaction in the light of subsequent developments, are prone to take the view most advantageous to themselves." As to the third alleged representation, — to- wit, that there were not less than 500 tons of ore in and about that ore chamber,— Silva, both in his answer and in his testimony, de- nies that he ever told Yerington and For- man, or anybody else, that there were 500 tons of ore there, or that there was any amount fixed or agreed upon by them as to the quantity of ore there; while the testi- mony of both Yerington and Forman is to the effect that Silva said, in his opinion, or in his judgment, there were 500 tons of ore in the chamber. So that, taking the strongest testimony produced on the part of complain- ant upon this point, it simply amounts to an expression of opinion on the part of Silva as to the amount of the ore in the Chamber, and not a statement of fact. It therefore does not constitute fraud. It is equally true that any statements that may have been made by Silva with reference to the value of the mine, cannot, under the circumstances of this case, be considered an act of fraud on his part sufficient to warrant a court of equity in setting aside the contract herein. Yerington testifies that Silva said he had been asking $15,000 for the mine, but that he would take $12,500; while Forman says he does not recollect that Silva made any statement as to the value of the mine, but that he heard Silva say he thought it was worth $15,000. Such statements are not fraudulent in law, but are considered merely as trade talk, and mere matters of opinion, which is allowable. Gordon v. Butler, 105 U. S. 553; Mooney v. Miller, 102 Mass. 217. Moreover, it is clear, beyond question, that Yerington did not purchase the mine upon 278 ACTUAL FRAUD. Silva's representations as to Its value, as we shall hereafter see. This disposes of all the alleged fraudulent representations, as arranged above, except the last, adversely to the complainant; and it is to this one that attention will now be direct- ed. This charge is, substantially, that Silva represented to Yerington and Forman, when they visited the mine In January, 1884, and had gone through it, that he had shown them all the work which had been done in and about the mine that would throw any light on the quantity of ore therein. This repre- sentation Is alleged to have been false and fraudulent, and well known by Silva to be such, because at a cut a short distance from the mouth of the main tunnel, at a point known as the "point of location," a little hole or shaft had been sunk which had been filled up, and was not observable at the time of the examination of the mine in January, 1884, and also because there had been a number of drill-holes made in the sides of the ore cham- ber, and afterwards filled up before the ex- amination in January, 1884, so that they were not observable at that time; which holes clearly developed the fact that the ore about the chamber was nothing more than a shell, instead of a continuous body, as it appeared to the observer. The existence of the plug- ged-up drill-holes in the sides of the ore cham- ber is the worst feature of the case against Silva. They could not have been made by a former proprietor of the mine, as is slightly claimed in his behalf; for, as has been al- ready shown in this opinion, Silva himself, or at least persons in his employ, had excavated that chamber after he had purchased it from one Edwards, in 1876. And certain it is that the drill-holes were found plugged up within a short time after he had sold the mine to the complainant company, March 15, 1884. The question Is, did Silva know of their existence at the time he sold the mine, and, having such knowledge, did he falsely represent to the complainant that he knew nothing of them, thereby inducing complainant to act upon such representations? Upon this ques- tion the evidence is somewhat conflicting. Yerington testifies that after going through the mine, he asked Silva If he had shown him the whole of the mine, and he replied that he had. And Forman testifies that Silva, in re- ply to a question from him, said that he had shown him all the work that had been done in and about the mine that would throw any light upon the quantity of ore in the mine, or the extent of the ledge or deposit. Silva ad- mits that. In reply to a question by Yerington, he told him that he had shown him all the work that had been done in and about the mine, either by himself or under his direc- tion. So that the question Is narrowed down to simply this: Were said drill-holes in ex- istence at the time Silva made such state- ment? If so, had they been made by him, or under his direction, or did he know of their existence? In his sworn answer Silva ex- pressly "denies that he drilled any such hole or holes through the ore into the country rock or otherwise, or thereby or at all discovered the extent of said ore, or that he filled up said drill-holes, or concealed them from view, or kept them secret from complainant," etc.; and in his testimony he also denies having any knowledge of their existence. He says that he drilled no holes in the mine except what he had to do as a miner, and that he concealed nothing from Yerington when he showed him the mine. And again he says: "I showed Mr. Yerington all the work that was done in the mine that I knew anything of." There is no direct evidence going to show who drilled the holes; and there is noth- ing In the entire record to connect Silva with them, except the fact that he was the owner of the mine, and was in possession of it at a time when it is most likely they were drilled. But this circumstance alone should not out- weigh the positive denial of Silva in his an- swer, and also in his equally positive denial in his testimony, of his knowledge of the ex- istence of said drilled holes. The law raises no presumption of knowledge of falsity from the single fact per se that the representation was false. There must be something fur- ther to establish the defendant's knowledge. Barnett v. Stanton, 2 Ala. 181; McDonald v. Trafton, 15 Me. 225. This rule is fortified by the consideration that, had he known of the limited quantity of ore in and about the "ore chamber," Silva would hardly have gone to the expense and labor of starting a drift from the bottom of winze No. 1, and constructing it for a certain distance, before the sale of the mine, for the purpose of reaching the sup- posed downward extension of the ore in and about that chamber. Knowing that the ore body terminated within a few inches of the surface of the chamber, and then, in the face of that knowledge, actually constructing a drift on the 82-feet level, at enormous ex- pense, for the purpose of getting under that limited quantity of ore, would not appear a reasonable thing to do by any one, especially by such an experienced and practical miner as Silva is admitted to have been. The testi- mony, therefore, and all the other facts and circumstances of record, do not substantiate complainant's theory of the case on this point; in other words, there is not a satisfac- tory case of fraudulent representations on this point made out,— not such a case as would justify the interposition of a court of equity to set aside the contract under con- sideration on the ground of fraudulent repre- sentations. As regards the little hole or shaft that had been sunk at the "point of location," and afterwards filled up, so that it was not observable at the time of Yerington's visit in January, 1884, there Is absolutely no testi- mony at all to show that Silva knew any- thing about its existence. He had done no work at that place, or very little at most, and was using the cut there as a sort of kitchen. The sides of the cut indicated that there was ACTUAIi FRAUD. 279 a ledge of ore there. It Is admitted that For- man asked SUva why he did not "go down" on that ore, and that he replied that he con- sidered the tunnel the best place to mine. Silva denies, both in his answer and in his testimony that he ever knew that a shaft had been sunk at the point of location, and no one is found who can testify that he did know anything about it; on the contrary, the for- mer owner of the mine, one Edwards, testi- fies that he himself dug that shaft, and filled it up, prior to the time Silva purchased it, and that to his knowledge Silva did not know anything about that shaft. It is essential that the defendant's repre- sentations should have been acted on by com- plainant, to his injury. Where the purchaser imdertakes to make investigations of his own, and the vendor does nothing to prevent his investigation from being as full as he chooses to make it, the purchaser cannot afterwards allege that the vendor made misrepresenta- tions. Atwood V. Small, supra; Jennings v. Broughton, 5 De Gex, M. & G. 126; Tuck v. Downing, supra. The evidence abundantly shows that Yerington had been willing to give $10,000 for the mine prior to the time he visited it, and made his examination, in January, 1884. He had made inquiries of various persons for months previous to that visit. Several experts in his employ had vis- ited the mine, had taken samples of ore from it; and it must have been from reports thus received that Yerington had made up his mind as to what the mine was worth. From the letters of an agent (Woods) to Eddy, the testimony of the witness Boland, the testi- mony of the witness Anthony, Eddy's testi- mony, and from the testimony of Silva him- self, there can be no doubt that Yermgton had offered $10,000 for the mine several months before he had ever seen it; thus showing that his examination of the mine in January, 1884, merely went to corroborate the reports that he had received of it from his experts, Forman, Bliss, et al., and that it was upon such reports, and his own judgment aft- er an examination of the mine, that he made the purchase of it. From all which it is clear to this court that the complainant has not proven his case, and the decree below Is affirmed. 280 ACTUAL, FRAUD. PREWBTT T. TRIMBLE. (17 S. W. 356, 92 Ky. 176.) Court of Appeals of Kentucky. Oct. 24. 1891. Appeal from circuit court, Montgomery county. "To be officially reported." Action by John T. Prewett, trustee, etc., against James G. Trimble for rescission of a contract for the purchase of bank stock. Judgment for defendant. Plaintiff appeals. Reversed. Ed. 0. O'Rear and Z, T. Young, for appel- lant. Wood & Day, for appellee. LEWIS, J. January 19, 1888, appellee, then president of the Exchange Bank of Kentucky at Mt. Sterling, sold and transfer- red to appellant 20 shares of stock in that bank at the price of $120 per share, and 21 shares in the Mt. Sterling National Bank at $120 per share for 20 shares, and $118 for the remaining one, payment for which was then made partly in notes assigned to and received by appellee at their face value, and partly in money. May 14, 1888, appellant brought this action for rescission of the con- tract and restoration of the notes, or, if col- lected, payment of amount thereof, and the money received by appellee, and interest on the whole; it being alleged and not de- nied that a tender and offer to retransfer the stock and demand of repayment of the purchase price had been made by appellant and refused by appellee. It appears that December 31, 1887, a statement of resources and liabilities of the Exchange Bank of Ken- tucky, signed by the cashier, was published in newspapers of Mt. Sterling, and by print- ed cards, which were generally distributed; there being at foot of the statement an an- nouncement that the bank had declared its usual semi-annual 4 per cent, dividend. There was printed on the same card a state- ment, signed by the president and directors, in which the cashier's statement was refer- red to as evidence of the prosperous condition and increasing business of the bank. Ac- cording to that statement, the resources of the bank, having a capital of $100,000, amounted to $329,380.42, of which $245,790 were loans and discounts and $13,338.68 over- drafts, while the undivided profits were $15,- 851.41. But no mention was made of any in- solvent debts being part of the aggregate of either loans or overdrafts. In respect to the statement it is alleged and appears that of the total amount of loans and discounts more than $30,000 consisted of stale and worthless demands, and of overdrafts at least $7,000 were likewise worthless, the drawers being insolvent; and that, after charging off such worthless demands, there would be left in the bank no undivided profits at all. It is further alleged and proved that the books of the bank showed at date of the statement about $7,600 more due to depositors, and, consequently, that much more liabilities than disclosed by it The evidence places beyond question that when the statement was published and cir- culated the real value of stock in the Ex- change Bank of Kentucky, calculated and determined by the actual condition of its re- sources and liabilities, was not over $70 per share. It is also satisfactorily shown that when he made the purchase appellant did not know, nor have any other means of knowing, the true condition of that bank's affairs than such information as was afforded by the cashier's statement, and that given directly to him by appellee, and that he believed and acted on that information. There is discrep- ancy in the testimony of the parties as to wliat occurred between them when the eon- tract was made; but that of another person, present at the time, is substantially that ap- pellee said, if not directly to, in hearing of, appellant, that the notes held by the Ex- change Bank of Kentucky were worth dollar for dollar, and, being asked about value of the stock, took in his hands the card upon which was printed the cashier's statement, one of which he had on a previous occasion, in person given to appellant, and, referring to it, explained that, the capital being $100- OOO, the surplus of $15,000 made the stock worth $115 per share and more as an In- vestment, and that It was going at $120. But, independent of what occurred between the parties at the time of the contract, it is manifest the cashier's statement was pub- lished and circulated by authority of the president and directors for the purpose and in e.\:pectatIon of it being accepted, and treat- ed by the public as in all respects true and reliable; thereby not only increasing busi- ness of the bank, but keeping up or enhan- cing market value of the stock, in which each of them had a personal interest; and, as their own accompanying statement was obvious- ly intended to be, it should be regarded a deliberate affirmation of the truth of that of the cashier, and as equivalent to a report of the affairs of the bank, made directly by them; and, if so, upon both prmclple and authority no other relation or privity be- tween the parties to this action need be shown than the act of appellee as president indorsing and authorizing publication and circulation of the cashier's statement, and the resulting Injury to appellant, who was within the class designed to be influenced by the statement. Cook, Stocks, §§ 353, 354, and cases cited. Whether they published and gave currency to the statement, knowing it to be materially untrue, and for the fraudulent purpose of deceiving the public as charged In the petition, we need not Inquire; for it Is not, in order to maintain this action, Indis- pensable that appellee be shown to have known the statement was false, for It Is ele- mentary doctrine that a false representation may, in contemplation of law, be made with ACTUAL FRAUD. 281 knowledge of Its falsity,— that is, made scien- ter,— so as to afford a right of action in dam- ages, and, a fortiori, ground for equitable proceedings, (1) without actual knowledge of either its truth or falsity, as when the party has affirmed his knowledge by a positive statement which implies knowledge; (2) when made under circumstances in which the par- ty ought to have known, if he did not know, of its falsity, as when, having "special means of knowledge," it is his duty to know. Bige- low, Fi-auds, pp. 509, 516. In Story, Eq. Jur. § 193, it is laid down that affirmation of a material fact that "one does not know or believe to be true is equally, in morals and law, as unjustifiable as the afiirmation of what is known to be positively false; and even if the party innocently misrepresents a material fact by mistake, it is equally con- clusive, for it operates as surprise and impo- sition on the other." Representations by a party having means of knowledge in regard to a matter, not possessed generally, are apt to be believed and acted on, especially if he is in a situation where he owes a duty to the public to deal honestly and intelligently. Therefore something more than use of ordi- nary diligence to know the condition of a bank should be required of the president in order to exempt him from liability to a per- son who has suffered loss by a false state- ment or report of its affairs, officially made or affirmed by him, especially when he has been thereby personally benefited. In Cook, Stock & S. § 145, it is said on authority of nu- merous cases cited that any statement by the authorized agents of a corporation in re- gard to the status of the corporation, or ma- terial matters connected therewith, whereby subscriptions of stock are obtained, is a fraudulent representation, for which a person sustaining loss thereby may hold such agents personally liable, or have the contract re- scinded. This is upon the principle and for the reason that such agents have exceptional means of knowledge, and owe a duty to speak the truth or not at all about the mat- ter. But, as observed by the author, "in all these cases the distinction between state- ments relative to the prospects and capabil- ities of the enterprises, and statements spe- cially specifying what does or does not exist, must be carefully borne in mind." In this case, not the bank, but appellee personally, profited by the bargain appellant was indu- ced by the false report or statement of its con- dition to make with him; and therefore it would be contrary to reason and justice for Uim to be permitted to enjoy the benefit of it, at the expense of appellant, upon the flimsy ground of ignorance about the material mat- ters in reference to which he made the delib- erate and positive representation, for, leaving out of view the question whether he did in fact know the statement was untrue, being in a situation to know, and where it was his duty to know, he, in contemplation of law, did know it, and consequently such statement is to be held fraudulent; and ap- pellee has a remedy for the loss sustained either by action in damages or for rescission, for it is a settled rule that, even where one who brings about a contract by misrepresen- tation commits no fraud, because his rep- resentation was, when made, innocent In the ordinary sense, still if, when the fact of its falsity becomes known, he refuses to relin- quish the advantage, upon offer of reciprocal relinquishment received by the injured par- ty, it would make him guilty of constructive fraud, and the contract subject to rescission by a com-t of equity. In our opinion, appel- lant, as the record stands, was entitled to a rescission of the contract as prayed for in his petition, and the court had jurisdiction to grant it; wherefore the judgment is re- versed, and cause remanded for judgment in favor of appellant. HOLT, C. J., not sitting. 282 ACTUAL FRAUD. HADCOCK V. OSMER. (47 N. E. 923, 153 N. T. 604.) C!ourt of Appeals of New York. Oct. 5, 1897. Appeal from supreme court, appellate divi- sion. Fourth department. ^Act ion by C harles E. Hadcock, as executor, against Luman Osmer, for deceit. From a T38 N. judgment of the appelIatS"af?lsKnri38 N. Y. Supp. 618) affirming a judgment entered on a verdict for plaintiff, defendant appeals. Af- firmed. Watson M. Rogers, for appellant. Hemy I'urcell, for respondent. VANN, J. Prior to the 15th of Septem- ber, 1888, Deloss Brown, as principal, and Jo- seph Brown, as surety, were indebted to the defendant on a past-due note for over $300, and payment thereof had repeatedly been de- manded. After trying in vain to borrow money to pay the note, Deloss told the defend- ant that he did not know where they could get It, and asked if he must have it. The de- fendant said "yes," and, upon being further asked by Deloss where the money could be had, recommended him to call on one Benja- min Hadcock. He did so, and was told by Benjamin that he could not lend the money, but that his brother, Emmanuel, who was stopping with him, could let him have it. De- loss reported to the defendant that he thought he could get the money of "the Hadcocks," and that they w^ould let him have it "some time In October." When the time came around, the Messrs. Brown started to see if they could get the money of Emmanuel Had- coc-k, but first went to the defendant, and asked him to go along. He said that he could not, when Deloss declared there was no use of their going alone, and thereupon the de- fendant wrote and delivered to the Browns a paper, of which the following is a copy: "Mr. Hadcock: The Browns are good for what money you let them have. [Signed] L. Os- mer." The Hadcocks did not know the Browns, but, as they knew the defendant, on the strength of this paper Emmanuel Hadcock lent them $400, taking their note therefor, and on the same day they used the most of the money to pay their debt to the defendant. Both of the Browns were insolvent at this time, and, while the defendant may have be- lieved they were good, he did not know wheth- er they were good or not, and did not try to find out. Upon the trial of this action, which was brought to recover damages for false rep- resentations by means of said paper, there was but slight dispute as to the representa- tions, their falsity, or the injury resulting therefrom; but the defendant insisted that, as he did not know that his representations were false, there could be no recovery against him. Through his counsel, he asked the trial court to charge the jury "that there can be no recovery in an action of deceit unless It ap- pears that the defendant made the represen- tations knowing them to be false, with Intent to deceive, and that the plaintiff suffered damages in consequence thereof." The court refused to so charge, except with the modifi- cation: "That, if he made the statement that they were good as a fact, not as an opinion, without knowing whether It was true or not, then it was false in the sense that he made a statement of fact as though he knew it to be true, which he did not know to be true. That, together with what I have already said in my charge in regard to it, will enable tlie jury to understand what I mean." Excep- tion was taken to the refusal to charge as re- quested and to the charge as made. In the body of the charge, the court, after instruct- ing the jui7 as to the difference between the assertion of a fact and the expression of an opinion, told them, in substance, that if the defendant made the representation, either knowing it to be untrue, or, without knowing whether it was untrue or not, stating it as an existing fact, intending that it should be taken and acted upon as such, they might in- fer an intent to defraud; "because," as the court continued, "a man has no right tt) stati' a thing as a fact, which misleads the other party to his damage, unless he knows wheth- er it is true or untrue; and if he states it, knowing and understanding that he does not know whether it is true or not, he just as much misleads the other man as though he stated It with the knowledge that it was un- true." An action to recover damages for deceit cannot be maintained without proof of fraud as weU as injury. Actionable deceit cannot be practiced without an actual intention to deceive, resulting in actual deception, and consequent loss. But, while there must be a furtive intent, it may exist when one asserts a thing to be true which he does not know to be true, as It is a fraud to affirm positive knowledge of that which one does not posi- tively know. Where a party represents a matei'ial fact to be true to his personal knowledge, as distinguished from belief or opinion, when he does not know whether it is true or not, and It is actually untrue, he Is guilty of falsehood, even if he believes it to be true; and if the statement is thus made with the intentiofl that it shall be acted upon by another, who does so act upon it, to his injury, the result is actionable fraud. Kountze V. Kennedy, 147 N. Y. 124, 130, 41 N. E. 414; Rothschild v. Mack, 115 N. Y. 1, 7, 21 N. B. 726; Marsh v. Falker, 40 N. Y. 562, 573; Bennett v. Judson, 21 N. Y. 238; Add. Torts, 1007; 1 Bigelow, Fraud, 514. Such seems to be the case now before us, as the facts are presumed to have been found by the jury. The plaintiff's testator did not ask for infor- mation In regard to the solvency of those who wished to borrow money of him, but the defendant volunteered to give it. He was in- terested In the result of the loan, for the bulk of the proceeds was for his benefit. On be- ing told that the loan would not be made ACTUAL FRAUD. 283 without his presence, he armed the proposed borrowers with a written statement over his own signatiire, containing a positive asser- tion of a material fact, with the intention that it should be acted upon, and should in- duce the loan of the money. Yet he did not know the assertion thus positively made for such an important purpose to be true, and he did not investigate or seek to discover wheth- er it was true or not, although he had dealt some with the Browns, and had some infor- mation as to their circumstances. He intend- ed, as the jury has found upon sufficient ev- idence, that the lender should understand him as communicating his actual knowledge, and not as expressing his opinion, judgment, or belief. Knowing that he did not know what he said he did, and what he intended to cause another to believe he did, he toolc the responsibility of its truth; and honesty of belief in the supposed fact, under such cir- cumstances, cannot relieve him from the im- putation of falsehood and fraud. As was said by Judge Peckham in Eothschild v. Mack, supra: "He either knew or he did not know of the financial condition of the mak- ers of the note. If he did know it, then ha knew that the note, as to both makers and indorsers, was without value. If he did not know its condition, he yet assumed to have actual knowledge of the truth of his state- ment. * * * He certainly meant to con- vey the impression of actual knowledge of the truth of the representations he made as to the value of the note, and he either knew .such representations were false, or else he was conscious that he had no actual knowl- edge while assuming to have it, and intending to convey such impression. If damage en- sue, this makes an actionable fraudulent rep- resentation." The language of Chief Judge Andrews, in Kountze v. Kennedy, supra, is equally applicable: "One who falsely asserts a material fact, susceptible of accurate knowledge, to be true of his own knowledge, and thereby induces another to act upon the fact represented to his prejudice, commits a fraud which will sustain an action for de- ceit. This is not an exception to, but an ap- plication of, the principle that actual fraud must be shown to sustain such an action. The purpose of the party asserting his per- sonal knowledge is to induce belief in the fact represented; and if he has no knowl- edge, and the fact is one upon which special knowledge can be predicated, the inference of fraudulent intent, in the absence of ex- planation, naturally results." The rule is tha same in other states and in England. Thus, in Furnace Co. y. MofCatt, 147 Mass. 403, 18 N. E. 168, the court said: "The charge of fraudulent intent, in an action for deceit, may be maintained by proof of a statement made as of the party's own knowledge, which is false, proviaed the thing stated is not merely matter of opinion, estimate, or judgment, but is susceptible of actual knowledge; and in such case it is not necessary to make any fur- ther proof of an actual intent to deceive. The fraud consists in stating that the party knows the thing to exist, when he does not know it to exist; and if he does not know it to exist he must ordinarily be deemed to know that he does not. Forgetfulness of its existence after a former knowledge, or a mere belief of its existence, will not warrant or excuse a statement of actual knowledge." See, also, Bullitt v. Farrar, 42 ilinn. 8, 43 N. W. 566; Hexter v. Bast, 125 Pa. St. 52, 17 Atl. 252; Wells v. McGeoch, 71 Wis. 196, 35 N. W. 769; Swayze v. Waldo, 73 Iowa, 749, 33 N. W. 78; Craig v. Ward, 1 Abb. Dec. 454; Evans v. Edmonds, 13 C. B. 777. The charge of the learned trial judge was within these rules, and the exceptions under consid- eration furnish no ground for a reversal of the judgment. The court was further asked to charge that "there can be no recovery in this case, in any event, unless it be proven or be found that there was an actual purpose or intent on the part of the defendant, on the 15th day of September, 1868, to defraud Emmanuel Hadcock of his property." The court so charged, but added: "Of course, that is in connection with what I have already char- ged, that it was not necessary it should have been determined, when he made the paper, before they got the money, as to which of the Hadcocks it was to go, but there must have been an intention to cheat and defraud the person to whom this paper should be de- livered, the one or the other." The defend- ant excepted to the modification, and now ar- gues that it was reversible error. In the course of his charge the trial judge had said: "If it was understood by the defendant that there was a proposition to borrow of one or more Hadcocks, and he sent out a general paper addressed to Mr. Hadcock, why, then you can say whether it was not fairly intend- ed to be delivered to such person of the fam- ily as would loan the money; and, if that is true, it is not essential that it should appear to you that It had been determined, at the- time the paper was drawn, that the loan should be from one or the other. If 3*du find that fairly the meaning, intention, and design of the parties was that whoever loaned the money should have this paper presented to him, then it may be fairly said that the rep- resentation was made to whoever did loan the money to those persons." While the de- fendant had at first suggested that the mon- ey might be bon-owed of Benjamin Hadcock, he was finally told that "the Hadcocks" would probably make the loan. Since the brothers Hadcock lived together as members of the same family, and the paper was ad- dressed generally to "Mr. Hadcock," it was properly left to the jury to find whether it was not the intention of the defendant that the paper should be delivered to such mem- ber of the Hadcock family as would make the loan, which was the primary object of giving the writing. As a general recommen- 284 ACTTTAL FRAUD. datlon of credit, knowingly given to an in- solvent person, will support an action for de- ceit in favor of any one acting thereon to his injury, so, as we think, a letter addressed simply to "Mr. Hadcock" would justify any man of that name in acting upon It, at least when it was delivered to him with the ap- parent authority of the writer, and tliere was no direction from the latter as to which one of the Hadcocks it should be given. More- over, the evidence warranted the Inference that the Browns had implied authority from the defendant to deliver the letter to either one of the Hadcocks, and hence to the plain- tiff's testator. We agree 'vith the conclusion reached by the learned apppUate division, and think that their judgment should be affirmed, with costs. All concur, except O'BRIEN, J., who takes no part, and GRAY, J., absent. Judgment affirmed. ACTUAL FRAUD. 285 BORDERS V. KATTLBMAN. (31 N. B. 19, 142 111. 96.) Supreme Court of Illinois. May 9, 1892. Appeal from appellate court, Fourth dis- trict. Bill by H. A. Kattleman against Wil- liam R. Borders to set aside a sale for fraud. Complainant obtained a decree, whicli was affirmed by the appellate court. Defendant appeals. Affirmed. Koerner & Koerner, for appellant. H. Clay Horner, for appellee. SHOI'E, J. This was a bill in chancery by appellee against appellant. Borders, to set aside and rescind a sale of property on the ground of fraud practiced by appellant upon appellee, whereby the latter was in- duced to part with his property in exchange for a comparatively worthless note and mort- gage of a third party. About the 1st of July, 1884, appellee deposited in the banking house of Borders & Boyle $2,000, taking a certifi- cate of deposit therefor, payable in six months after date, at 5 per cent, interest per annum. A few months thereafter the firm became embarrassed, and was dissolved by the re- tirement of Boyle. A new firm was formed, composed of James J. Borders and appel- lant, who, for a valuable consideration, agreed to indemnify Boyle against all debts and liabilities of the late banking firm. Shortly after the maturity of the certificate of deposit appellee applied to appellant at the bank for payment of said certificate, who then, as the weight of proof tends to show, stated to him that he tappellant) had a tract of land in Randolph county worth §2,800, which he had just sold and conveyed to Crozier at that price; that Crozier had paid $700 in cash, and given his promissory note to him (appellant) for $2,142, secured by mortgage on the land. It is also shown that he represented to appellee that the laud was well worth $2,800; was ample security for the note, which would be promptly paid at its maturity. He advised appellee, as appellee testified, to go and see Crozier, who he represented was well posted in respect of the land. The proofs leave but little, if any, doubt that the sale of the land to Cro- zier was not a sale in good faith. It appears, also, from the testimony that appellee did call on Crozier for information, and was as- sured by him' that he (Crozier) had in fact bought the land for $2,800, and given a mort- gage on the same to appellant to secure a note of $2,142. Appellant also, it seems, represented their tract of land had 40 acres cleared and under cultivation. Proof shows there were only 8 or 9 acres cleared on the tract. Appellant also represented to appel- lee, as the chancellor found from the evi- dence, that the firm of Borders & Boyle was so embarrassed financially as to endanger the loss of his money deposited with that firm; that he told appellee that he did not want to see him lose anything, and advised him to take the Crozier note and mortgage in exchange for his certificate of deposit, as the only sure means of protecting himself from loss. It is only just to say that appel- lant denies most of these alleged representa- tions, or that he was guilty of deceiving ap- pellee in respect of the value or nalnire of the land. Appellant knew that James J. Borders, one of the partners in the firm of Borders & Boyle, was perfectly solvent, and that the new firm of which appellant was a member had obligated themselves to Boyle, the outgoing partner of the firm of Borders & Boyle, to protect him from all the liabili- ties of the late firm, which, of course, in- cluded appellee's certificate. Appellee not closing with the terms offered at once, ap- pellant wrote him, urging speedy and prompt action in the matter. He wrote: "We are settling very fast with out depositors. In this way, delay is dangerous. * * » j could have used the note offered you, [Cro- zier note,] and can do so yet. If you want it on the terms offered, to wit, trade my note, for you to give me an order on Crozier for difference, which order, if not paid, shall not bind you, and you to become owner of full face of note and interest, which terms, if sat- isfactory, put your name on it, without re- course, and send same to me, and I will send you note and mortgage indorsed in same way; mortgages duly recorded. Answer by return mail. * * * i -^m take pleasure in showing you the land at any convenient time. I am too busy now. Besides, the ground is covered with snow, and you could not judge of the quality of the soil. I can- not put this matter off. Time is very precious with me now." It is shown by the witness Stout that ap- pellant told him he was about to sell this land to a man named Kattleman, and that if he cornered witness, and asked anything about the value of the land, for the witness to put the price up. After Borders had sold the notes to appellee, this same witness ask- ed him (appellant) how he came to sell the land for the price he did, and appellant replied, as Is testified, that he "had got hold of a man that had more money than brains;" and also said, in reply to a remark by the witness, that Crozier would never pay the notes,— "Of course, that Is the calculation." Most of the material representations shown by the evidence to have been made by appel- lant to appellee, to induce the purchase of the Crozier note and mortgage, are shown to have been untrue. Some of them, at least, if the evidence is to be credited, appear to have been made under circumstances strong- ly tending to charge appellant with knowl- edge of their untruthfulness, or, at least, he occupied such a position as to lead to the presumption of his knowledge of their falsi- ty. He admits that he knew that J. J. Bor- ders, one of the firm of Borders & Boyle, 286 ACTUAL FRAUD. was perfectly solvent at the time it is shown he was endeavoring to induce appellee to be- lieve that the firm was insolvent, and that he was in danger of losing his money. He had owned the land in question some time before the pretended sale to Crozier, profess- ed to be familiar with it, and must be held to have had notice of its value. The point is made that, if the means were at hand by which appellee might have satis- fied himself as to the truth or falsity of the representations, he was bound to do so, and, failing to avail himself of such means, he is not entitled to the relief sought. If appel- lant could make a defense based upon ap- pellee's credulity and faith in appellant's rep- resentations, it could not prevail here. It appears that appellee did try to see the land before concluding his purchase from appel- lant. But, it being covered with snow, It could not, as stated by appellant in his let- ter, be properly examined; and, moreover, appellee was assiu'ed by appellant and Cro- zier, to whom the land had been conveyed, that the land was of the value of $2,800, and that practically one third of it was clear- ed and improved. Appellant says in his let- ter, as has been seen, that he will take pleasure in showing appellee the land at any convenient time; that he was too busy then; and that no proper judgment could be formed by his personal inspection of it at that time. While willing to show the land at some convenient time in the future, he was unwilling to delay concluding tlie transaction with appellee. He wrote: "I cannot put this matter off. If you do not want tlie note, say so, and I will place it elsewhere." He wanted an answer by re- turn mail. Time was exceedingly precious to appellant then. Under such circumstan- ces, it would be in the highest degree un- conscionable to permit appellant to take ad- vantage of the fact that appellee gave cre- dence to his word, and relied upon his state- ments as true. In such case, the party will not be relieved from the consequence of his false representations, because the party thereby injured trusted him, and parted with his property upon false representation of fact, which he assumed to know to be true. Where the sale is of property at a distance, so that the purchaser has not the means at hand of ascertaining the truthfulness of the vendor's representations, the vendee may re- ly upon their truth, and have redress if they are shown to have been materially false. Smith V. Richards, 13 Pet. 26; Maggart v. Freeman, 27 Ind. 531; Harris v. McMurray, 23 Ind. 9; Ladd v. Pigott, 114 111. 647, 2 N. E. 503; Savage v. Stearns, 126 Mass. 207. Here, as it appears, appellee did not have the ability to make any proper examination of the land without further time. Appel- lant, it would seem, was imperious in his demand that the transaction be closed at once, having first Induced appellee to be- lieve, as before stated is shown by the evi- dence, that he was in danger of losing his money unless he took the Crozier notes and mortgage. Nor is it important that it should be aJfirmatively found that the untrue rep- resentation should have in fact been known I to appellant to be false. It is well settled that it is immaterial whether a party mis- representing a material fact knows it to be false, or makes the assertion of the fact without knowing it to be true; for the af- firmation of what one does not know to be true is unjustifiable, and, if another act up- on the faith of it, he who induced the action must suffer, and not the other. Story, Eq. Jul-. § 193; 2 Pom. Eq. Jur. § 877; Bigelow, Frauds, p. 410 et seq.; Cooley, Torts (2d Ed.) 582; Thompson v. Lee, 31 Ala. 292; Railroad Co. v. Tyng, 63 N. Y. 653; Allen V. Hart, 72 111. 104; Fauntleroy v. Wilcox, 80 111. 477; Hicks v. Stevens, 121 111. 186- 197, 11 N. E. 241. So it has been held that, where the representations relate to facts which must be supposed to be within the defendant's knowledge, proof of their falsity is a sutficient showing of his knowledge that they were false. Cooley, Torts, 583; Morse V. Dearborn, 109 Mass. 593; Morgan v. Skid- dy, 02 N. Y. 319. And so a party selling property Is presumed to know whether the representations he affirmatively makes in re- spect of it are true or false. It he know them to be false, it is a positive fraud; and if he make them without knowing them to be true, for the purpose of inducing another to act upon them, it in equity amounts to fraud. Miner v. Medbury, 6 Wis. 295; Smith V. Richards, supra; McFerran v. Taylor, 3 Cranch, 270; Glasscock v. Minor, 11 Mo. 655. Taking the evidence on the part of appellee, supported by the letters of appel- lant and proof of extrinsic facts, we are un- able to say that the chancellor was not justi- fied in finding that appellee was induced to part with his certificate of deposit by the statements and representations of appellant of matters materially affecting the transac- tion, and which are shown to be untrue. All fraud and untrue statement, and that he made any untrue representations. Is denied by appellant, and his version of the trans- action is consistent with his honesty and good faith; but in the conflict we think the preponderance of the evidence is with ap- pellee, and sustains the material allegations of the bill. The decree of the circuit court will accordingly be affirmed. ACTUAL FRAUD. 287 NEILL V. SHAMBURG et al. (27 Atl. 992, 158 Pa. 268.) Supreme Court of Pennsylvania. Nov. 6, 1803. Appeal from court of common pleas, For- est county; Charles P. Noyes, Judge. Bill by Elizabeth P. Nelll against B. F. Shamburg and H. W. Shamburg, admin- istrators of G. Shamburg, deceased, to re- scind a contract of sale by plaintiff to defendants' intestate of an undivided half interest in a leasehold of a 200-acre tract of oil land. The price consideration of the con- tract of sale was $550 paid in cash, and $100 to be paid in case a vyell producing six or more barrels of oil per day should be found on the land. The bill was dismissed, and complainant appeals. AflBrmed. T. F. Richey and Samuel T. Neill, for ap- pellant Julius Byles, Samuel D. Irwin, and Eugene Mackey, for appellees. MITCHELL, J. There are two main ques- tions of fact upon which the plaintiff's claim to relief must ultimately rest — First, serious inadequacy of price; and, secondly, fraud, actual or constructive. If either of these grounds fails, the case must faU. The mas- ter finds that there was no inadequacy of price, and, as the learned court concm-s in this finding, it would be sufficient for us to say that we have not been shown that it was clear error. But an examination of the whole evidence, in deference to the earnest- ness of counsel, who regard this as a turn- ing point in the case, leads us to the same conclusion. At the time of the sale,— July, 1879,— the 200-acre tract was undeveloped, except for one well, No. 8, which had been in operation about three months. The most favorable evidence as to this well was given by James, who said, "My recollection is that it started off between five and seven barrels, somewhere," while the Mclntyres, Tucker, and other witnesses, put its produc- tion at from one to three barrels. The same witnesses describe the neighboring territory as "spotted," good wells and dry holes being found close together. The 50-acre tract ad- joining on the northwest had at that date three wells, two of which, Nos. 5 and 6, were small, and one. No. 7, was a valuable well, having produced as high as 75 barrels, sad ranging down, according to the different wit- nesses, from that to 7 or 8 barrels, which James Mclntyre says was its production in July, 1879. Business was duU, and there was no active market for leases in that neighbtwhood, (Jenkins and Fogle.) Under these circumstances, it is plain that the value of the lease was almost entirely speculative. Indeed, James testifies that the value of oil territory is always speculative, until it is actually developed. It is a business with elements of great uncertainty, and that ap- pears to have been peculiarly so in the pres- ent case. Everything depended on whether No. 7, or the little wells near it, should be taken as the best index of the nature of the territory. The three witnesses for plaintiff put the value of the lease at from twenty thousand to eight or ten thousand dollars; the highest estimate being gives by Egoff, whose testimony is badly handicapped by the fact that he was a discharged employe, who admitted that he had come forward in the case partly "to get even with" his former employer. On the other hand, we have the testimony of eight or nine witnesses, most of them with superior local knowledge, and several owners of land in the immediate vicinity, with certainly no bias to depreciate the neighborhood, aU concurring that the lease was worth nothing beyond the royal- ty. The decided weight of the evidence is in favor of the adequacy of the consideration paid. As this finding takes away the foundation of the plaintiff's claim to relief, the other matters may be dismissed briefly. There was no proof of actual fraud. No express misrepresentations were shown, all that there was on the subject being the clause in the assignment of the lease stipu- lating a "further consideration of one hun- dred dollars when a well is found on said lease producing six barrels per day," etc. The master construed this as "a practical representation that no such well had then been found." In view of the fact that this is writing into a paper in which the plaintiff is the grantor, and which the grantee has not signed, a representation by the latter which is not to be found in the words used, this construction might be difficult to main- tain; but, as it is in favor of the appellant, we need not consider it further. Even con- ceding that the representation was thus made, the master finds that it has not been shown to be untrue. It is further claimed that Shamburg, In- tentionally and in bad faith, concealed from the plaintiff facts relating to the production of oil on the 50-acre lease, which she was entitled to know. It was certainly shown that Shamburg had directed his employes not to give information on this subject, but to refer parties to him. The plaintiff had no interest in the 50-acre lease, but we may concede that, when she was about to sell her part of the other lease to her cotenant, she became entitled to know such facts with re- gard to its production as would bear upon the value of the other. But, unless there is some exceptional circumstance to put on him the duty to speak, it is the right of every man to keep his business to himself. Possibly, Shamburg was unduly suspicious on this point, but the nature and position of his business suggested caution. Fogle testi- fies that Shamburg was the only person operating in that neighborhood, and James says that Shamburg told him he had spent near $150,000 in developing that territory, "and now aU these fellows are anxious to 288 AOTIJAL, FRAUD. pry into my business." We do not find in tbe acts of Shamburg, under the circum- stances, anything more than a positive in- tention and effort to reap the benefit of his enterprise, by Iseeping the knowledge of its results to himself, and we agree with the master that this "falls far short of establish- ing fraud." The claim of constructiye fraud is based on the relations of the parties as partners, and as mortgagor and mortgagee. The mas- ter has rightly found that there was no part- nership. The parties were tenants in com- mon. No presumption of partnership arose from that relation. Walker v. Tupper, 152 Pa. St 1, 25 Atl. Rep. 172; Dunham v. Love- rock, 27 Atl. Rep. 990, (not yet officially re- ported.) And there was no evidence from which to infer a partnership by Intention and agreement of the parties. The relation- ship of mortgagor and mortgagee, like that of tenants in common, is in some respects, and to a limited degree, one of confidence. There are certain things, approximating to, if not actually involving, a breach of good faith, which neither will be permitted to do, to the prejudice of the other. But we do not find in the present case anything which requii-es the application of this principle. The mortgage was merely for indemnity against a contingent loss by having to pay a guaranty to third persons. Until such loss occurred, Shamburg had no claim on the mortgaged premises wh'ch changed the rela- tion of the parties as tenants in common. Decree affirmed. AOTUAI, FRAUD. 289 PORTER V. WOODRUFF. (36 N. J. Eq. 174.) Court of Chancery of New Jersey. October Term, 1882. On bill, answer and proofs taken In open court. Oscar Keen, S. H. Pennington, and Thomas X. McOarter, for complainant. John R. Emery and Henry C. Pitu6y, for defend- ant. VAN FLEET, V. 0. This is a bill by a principal against her agent. The complainant charges the defendant with many acts of mis- conduct in the course of his agency, some of which constitute gross frauds. The relation of principal and agent was formed between the parties in January, 1873. The complain- ant's husband died November 29, 1872. She was then about 68 years of age, childless, and without experience in business. She lacked both a knowledge of business and an in- clination to acquire it. Her husband, by Jais will, gave his whole estate to her. His per- sonal estate amounted to about $60,000. He had, by a writing, which has not been put in evidence, but the existence of which has been fully proved, recommended the defend- ant as a fit person to assist the complainant In the management of her estate. The de- fendant had been associated with the com- plainant's husband for many years as a ruling elder in the superintendence of the spiritual affairs of one of the most influential Presby- terian churches of the city of Newark. His reputation as a capable and trustworthy busi- ness man stood high. He was president of one of the most prominent fire insurance com- panies of the city of Newark. His high re- ligious character, and the position of trust he occupied in the business community, were al- most sure to give him the confidence of the most cautious person. Very shortly after tlie death of her husband, the complainant sur- rendered into the possession of the defendant all her papers and securities, and requested him to have the safe in which her husband had kept his securities removed to his office. In order that he might manage her affairs with less inconvenience to himself. This he did. From this time forth until the latter part of December, 1879, the defendant exer- cised over the securities and moneys of the complainant a dominion almost as absolute as he did over his own. The complainant, in describing her relations to the defendant, says: "I looked to the defendant for every- thing without anxiety. I just threw myself on his fidelity, as a child would on a parent, without questioning." And the defendant, speaking on the same subject, says that the complainant and he were on terms of close friendship and in- timacy; that she looked upon him as her ad- viser, comforter and friend, and that what he did for her was done as a friend, and HUTCH.& BUNK.EQ.— 19 were such services as a son or brother might render for a mother or a sister, without ex- pectation of compensation, except by way of gift. This narrative shows that the relation be- tween the parties was one of great trust and almost blind confidence on one side, and com- plete control on the other. The defendant, therefore, occupied a position towards the complainant where he was bound not only to deal with her honestly and justly, but to scrupulously avoid engaging in any transac- tion, in respect to her estate, in which his interests might be put in antagonism to hers. He was required, in all things relating to her estate, to subordinate his interests to hers, and carefully abstain from using his power and influence over her for his own advantage and to her harm. The law by which he was bound to regulate his conduct is a law of jealousy, and under its wise pro- visions he can keep nothing that he has ob- tained from her, under the guise of a con- tract, to which he cannot show a title en- trenched in the utmost good faith. His title must have been acquired openly, on a full and frank disclosure of every fact likely to influence her conduct, and his contract must j be shown to have been just and honest in every particular. The first of the several claims to relief pre- sented by the bill, which I shall consider, is I that in which the complainant charges that I the defendant is liable for the profit made on the purchase and sale of certain railroad I stock. Among the property which the com- plainant acquired, under the will of her hus- band, were 67 shares of the capital stock of the Central Railroad Company of New Jer- sey. After this corporation became insolvent and passed into the possession of the chancel- lor, the complainant became very much troubled about what was best to do with her stock, whether to sell it or to keep it. She sought information in many directions, con- sulted the defendant almost daily, and after undergoing much perturbation of mind upon the subject, at last, under a strong fear that if she continued to hold it, the whole would be lost, she gave the defendant peremptory direction to sell it at $16 a share. This direc- tion was given about the 1st of May, 1878. The defendant did not sell the stock, but caused it to be transferred to his wife, and paid the complainant for it at the price it was then selling for on the market. The amount he paid was $1,072. He did not tell the complainant that he intended to purchase the stock himself or of his purpose to have it transferred to his wife, but, on the con- trary, by his answer, he says that after he made up his mind to buy, he went to the complainant and told her that a sale had been effected, or could be effected, at $16 a share. In his evidence, he says that the idea of pur- chasing the stock for himself, as a specula- tion, first entered his mind after he had re- ceived direction to sell it, and after he had 290 ACTUAL FRAUD. had an interview with Vermilyea & Co., stockbrokers of ttie City of New York, in which they told him that they thought the market price of the stock would advance. At the time he told the complainant that a sale had been effected, or could be eflfected, at $16 a share, he did not tell her that he had con- sulted these gentlemen, nor what opinion they had expressed. After the stock was trans- ferred, the defendant paid to the receiver in charge of the affairs of the corporation under the re-organization scheme, the sum of $500, and in return received an adjustment bond, and also surrendered five shares of stock, and in return received an income bond. On January 30, 1880, he sold the 62 shares still standing ui the name of his wife, for $5,- 091.75. The defendant's wife had no benefi- cial interest in the transaction, she paid no part of the purchase money, and received no part of the proceeds of sale. The defendant's reticence under the circum- stances was not only unnatural, but unduti- ful. It amounted to a concealment of infor- mation which, I think, he was bound to give. He knew that the complainant had long been in a state of painful anxiety about her stock, that she had been reaching out in almost every direction for help, and that she seized upon every scrap of information that came in her way with the greatest avidity; he knew, also, that her mind had been in a very unstable condition as to what it was best for her to do, and that she had great confidence in his shrewdness, as well as his integrity, and that she would be likely to be sti-ongly influenced by his conduct. I am thoroughly persuaded that he concealed from her the fact that he intended to buy for the purpose of inducing her to sell, believing that if he told her he intended to become the pur- chaser himself, she would at once refuse to sell. This conviction is greatly strengthened by his subsequent conduct Shortly after the stock was transferred, its market price be- gan to advance, and the complainant ex- pressed regret that she had sold, and applied to the defendant to know whether she could not get the stock back again. He told her she had spoken too late. He did not ac- knowledge that he was its purchaser, and frankly state, as I think he should have done, that he was unwilling to return it. Subse- quently, v^hen applied to for information as to whom the complainant's stock had been sold, he answered that he did not know, but said it had been sold through Vermilyea & Co. This statement, it will be perceived, involved something more than concealment. The evidence renders it entirely clear, I think, that from the time the defendant made up his mind to buy the stock, up until the evidence of his purchase was discover- ed, he made a constant effort to conceal from the complainant the fact of his purchase. His motive for adopting this course orig- inally was to prevent the complainant from retreating from the purpose to sell, and he afterwards found it necessary to adhere to it to escape her reproaches for not dealing with her openly and fairly. The legal principle to be applied in decid- ing whether the defendant can successfully resist the complainant's claim is too firmly established to warrant even the most astute and courageous counsel in attempting to over- throw it or to narrow its scope. The gen- eral interests of justice and the safety of those who are compelled to repose confidence in others alike demand that the courts shall always inflexibly maintain that great and salutary rule which declares that an agent employed to sell cannot make himself the purchaser, nor, if employed to purchase, can he be himself the seller. The moment he ceases to be the representative of his employ- er and places himself in a position towards his principal where his interests may come in conflict with those of his principal, no mat- ter how fair his conduct may be in the par- ticular transaction, that moment he ceases to be that which his service requires and his duty to his principal demands. He Is no longer an agent but an umpire; he ceases to be the champion of one of the contestants in the game of bargain, and sets himself up as a judge to decide, between his prin- cipal and himself, what is just and fair. The reason of the rule is apparent; owing to the selffishness and greed of our nature, there must, in the great mass of the trans- actions of mankind, be a strong and almost ineradicable antagonism between the inter- ests of the seller and the buyer, and universal experience has shown that the average man will not, where his Interests are brought in conflict with those of his employer, look up- on his employer's interests as more important and entitled to more protection than his own. In such cases the courts do not stop to in- quire whether an agent has obtained an ad- vantage or not, or whether his conduct has been fraudulent or not, when the fact is es- tablished that he has attempted to assume two distinct and opposite characters in the same transaction, in one of which he acted for himself and in the other pretended to act for another person, and to have secured for each the same measure of advantage that would have been obtained if each had been represented by a disinterested and loyal rep- resentative; they do not pause to speculate concerning the merits of the transaction, whether the agent has been able so far to curb his natural greed as to take no advan- tage, but they at once pronounce the transac- tion void because it is against public pol- icy. The salutary object of the principle is not to compel restitution in case fraud has been committed or an imjust advantage has been gained, but to elevate the agent to a position where he cannot be tempted to be- tray his principal. Under a less stringent rule, fraud might be committed or imfair ACTUAIi FRAUD. 291 advantage taken, and yet, owing to the im- perfections of the best of human institutions, the injured party be unable either to discover it or prove it in such manner as to entitle him to redress. To guard against this uncer- tainty, all possible temptation is removed, and the prohibition against an agent acting in a dual character is made broad enough to cover all his transactions. The rights of the principal ■will not be changed, nor the capacity of the agent enlarged, by the fact that the agent is not Invested with a discre- tion, but simply acts under an authority to purchase a particular article at a specified price, or to sell a particular article at the market price. No such distinction is recog- nized by the adjudications, nor can it be established without removing an important safeguard against fraud. Benson v. Heat- horn, 1 Tounge & 0. Ch. 326; Conkey v. Bond, 34 Barb. 276, 36 N. Y. 427. In pronouncing the judgment of the court of errors and appeals in Staats v. Bergen, 17 N. J. Eq. 554, 558, the present chief jus- tice has discussed this whole subject with his usual vigor and perspicuity. "The rule," just stated, he says, "is one of public pol- icy. The trustee,"— and here, I think, it should be said that the persons referred to are not simply those who are strictly entitled to be called trustees, but the term is used in its most comprehensive sense, and intend- ed to embrace all persons who act in a rep- resentative capacity, whether, according to exact nomenclature, they are styled agents, factors, executors, adrninistrators or trustees, —"the trustee is not prevented from bidding for property which he himself sells, on the ground simply of a supposition of actual fraud, bat because the law has established, as an inflexible rule, applicable to every emergency, that he shall not place himself in a situation in which he will be tempted to take advantage of his cestui que trust. This is a wise public regulation, intended to pro- tect a species of property which otherwise would be constantly exposed to peculiar haz- ard. The trustee, therefore, must submit to this regulation, and if he does an act in vio- lation of it, no matter how pure his inten- tion may be, such act is voidable at the in- stance of the person whom he represents. * * * At these sales, then, the trustee is forbidden to purchase, because his interest, as such pm^chaser, is opposed to the interest of his cestui que trust, and he acts, there- fore, under a bias in his own favor. Nor does this rule rest, to any considerablp ex- tent, in the fact that, in a particular line of cases, the trustee has peculiar opportunities for the practice of fraudulent acts with re- gard to the property in his charge. The rule, to be efficacious, must be general, and the law Implies, therefore, that in all cases of trusts such opportunities may exist, and consequently the prohibition is universal. * * * So jealous is the law on this point, ihat a trustee may not put himself in a posi- tion in which, to be honest, must be a strain on him." The cases are numerous in which these principles have been enforced against persons acting in the capacity of agents. I shall cite only those most pertinent. Ex parte Lacey, 6 Ves. 625; Brookman v. Roths- child, 3 Sim. 153; Rothschild v. Brookman, 2 Dow & C. 188; Gillett v. Peppercorne, 3 Beav. 78; Moore v. Moore, 5 N. Y. 256; New York Cent. Ins. Co. v. National Protec- tion Ins. Co., 14 N. Y. 85. It is possible for an agent, dealing directly with his principal, to make a contract which the courts will uphold; but such transac- tions, to be maintained, must be character- ized by the utmost good faith. There must be no misrepresentation, and an entire ab- sence of concealment or suppression of any fact within the knowledge of the agent, which might influence the principal; and the burden of establishing the perfect fairness of the contract, in such cases, rests upon the agent. Condit v. Blackwell, 22 N. J. Eq. 481. Such transactions are never upheld, unless it is clearly shown that there has been, on the part of the person trusted, that most marked integrity, that uberrima fldes, which removes all doubt respecting the fairness of the contract. Rothschild v. Brookman, ubi supra. My conclusion is that the defendant is lia- ble to the complainant for the profit made on the purchase and sale of the complainant's railroad stock. The second claim to relief which I shall consider is that in which the complainant in- sists that she is entitled to have the sum which shall be found to be due her in the transaction just discussed, charged as a lien for unpaid purchase money on certain real estate which she conveyed, at the defend- ant's instance, to the defendant's wife. This claim rests upon the following facts: In March, 1874, the defendant purchased a house and lot on High street, in the city of Newark, for a residence for himself, for the sum of $15,000. On the 1st of April, 1874, he pro- cured them to be conveyed to the complain- ant, and paid the purchase money as follows: The complainant and defendant executed two bonds of $4,500 each, which were secured by two mortgages, made by the complainant alone, on the property conveyed, and the complainant also assigned to the vendor a mortgage held by her against Leopold and Herman Graf for $4,000, and the balance of the purchase money, viz., $2,000, was paid in cash. The defendant admits that at the time he made this payment he might have had $2,000 of the complainant's money in his hands. During the year immediately succeeding the conveyance, the defendant says he made improvements on the property which cost $7,000. The complainant continued to hold the title to the property until she severed her relations with the defendant. On the sev- erance of their relations, the complainant 292 ACTUAL FRAUD. demanded that the defendant should take the title to the High street property, dis- charge her from liability on the bonds which she had executed in his behalf, and return to her such part of the purchase money as her money and securities had paid. This was done. The house and lot were conveyed to the defendant's wife January 7, 1880, and the defendant then paid to the complainant, in cash, in satisfaction of the money and securities belonging to her, which he had used in paying for the house and lot, the sum of $4,391.90. The funds he used in mak- ing this payment were the proceeds of the sale of the railroad stock, which the defend- ant had induced the complainant to transfer to his wife. Under the force of these facts, the complainant insists that inasmuch as the moneys which the defendant paid to her were the proceeds of her property, and were, therefore, in equity hers, and not his, that it should be adjudged that the consideration which the defendant agreed to pay for the conveyance to his wife has not been paid, and consequently that she is entitled to a lien as for unpaid purchase money. Two things are undisputed. First, that part of the consideration which the defend- ant was to pay for the conveyance to his wife, was to make restitution to the com- plainant, in money, of so much of her prop- erty as he had used, at the time of the pur- chase, in paying for the house and lot; and second, that in going through the form of making such restitution, he simply gave to the complainant what in equity was hers al- ready. If the defendant, in going through the form of paying the complainant, had used money in his possession belonging to her, the legal nature of the transaction would have been so conspicuously clear that it would have been impossible to misunder- stand it. So too, if he had secretly convert- ed one of her securities into money and hand- ed that over to her as payment, though he might have deceived her for the moment, his act would have not constituted a payment, but a fraud. This is exactly what he did do. He converted property which in equity was hers, into money, and attempted to pay her with her own money. He attempted to use that which was hers as his, and to dis- charge his obligation to her by giving her that which he had attempted, wrongfully, to take from her and 'to vest in himself. Ex- cept we travesty reason and ridicule truth, it is impossible to call such a transaction a payment. This conclusion makes it the duty of the court to declare that the whole of the con- sideration which the defendant agreed to give for the conveyance to his wife has not been given, and this places the complainant In a position before the court where she is enti- tled to the aid of the court in enforcing her equitable rights against the land conveyed. The right of a vendor of lands to a lien In equity for unpaid purchase money, has been fully and repeatedly recognized by this court and is now a part of its established juris- prudence. This lien will be enforced, not against the purchaser, but against all who claim under him as volunteers or donees. Graves v. Coutant, 31 N. J. Eq. 763. Jly judgment is that the complainant Is entitled to a lien as for unpaid purchase money, against the house and lot conveyed by her to the defendant's wife, to the ex- tent that the defendant used the money of the complainant in paying the consideration he agreed to give the complainant therefor. The third claim made by the complainant presents the question whether or not the defendant is liable for $1,000 of the purchase money of a lot of land conveyed by the com- plainant to one David Brackin, in July, 1874. The lot was sold for $1,200, $200 of which was paid in cash, and the balance, as the complainant alleges, was to be secured by a first mortgage on the property sold. The defendant, she says, had charge of the whole matter, and, instead of secui-ing the balance of the purchase money by a first mortgage on the lot sold, accepted a second mortgage on another lot, and that since then the first mortgage has been foreclosed, the mortgaged premises sold and the whole of her money lost I shall not restate or discuss the evi- dence pertinent to this branch of the case. It is enough to say that, according to my view, the evidence entirely fails to estab- lish a case against the defendant. It should be said that it clearly appears that the com- plainant is entirely wrong in the facts on which she rests her right to relief. It was not the first mortgage that was foreclosed, but the one held by the complainant. At the sale of the mortgaged premises they were bid in by the solicitor employed by the de- fendant, for the complainant, to foreclose her mortgage, for $700. The complainant re- fused to take title to the mortgaged prem- ises, and they were afterwards conveyed to the defendant's daughter by his direction, and he subsequently assumed control over them. The defendant paid the taxed costs of the suit and the expenses of the sale, but nothing more, though he procured the mortgaged premises to be conveyed to his daughter. In stating the account between the parties the defendant must be charged with the sum for which the premises were sold, and credited with whatever he has paid on account thereof. The complainant also seeks to hold the de- fendant liable for making an improper or Insecure investment of her moneys. In March, 1875, the complainant received from the sale of some land located in Pennsyl- vania the sum of $6,000, and handed It over to the defendant to invest for her. The de- fendant, March 17, 1875, deposited the money to an account he kept in one of the Newark banks, as trustee. He is unable to tell how many different trusts this account repre- sented, or when this particular $6,000 was ACTUAL FRAUD. 293 disbursed, or to whom. On March 6, 1875, WiUiam A. Pruden and Amos W. Austin executed a second mortgage on a lot In Com- merce street, in the city of Newarl£, to the defendant as executor of Robert 0. Stouten- burgh, deceased, for $6,000. The defendant says he Invested the complainant's money in this mortgage. The prior mortgage on this lot secured the sum of $10,000. The defend- ant says, before Investing the complainant's money in the mortgage just described, he told her it was a second lien, that he was satisfied the security was sufficient and that the mortgagors were good and prompt pay- ers, and that she thereupon directed lilm to malie the investment. The mortgage was not assigned to the complainant at the time the investment was made, but the defendant says he took It from the pacliage contain- ing the papers of the Stoutenburgh estate, and placed it among the papers he held for the complainant The mortgage was not formally assigned until after the complain- ant had revolsed the defendant's authority as her agent, and called upon him to surrender her property. The defendant made seven in- dorsements of interest on the bond after he says he placed the mortgage among the pa- pers of the complainant; four of them are made by him as attorney, two as executor and one vpithout any designation. It is evident at a glance that the defend- ant's conduct in this transaction is open to the very gravest suspicion. The security, in the first place, was one that a trustee could not accept without rendering himself person- ally liable in case it proved to be worthless or inadequate. Gilmore v. Tuttle, 32 N. J. Eq. 611. The defendant, therefore, occupied a position in respect to this security which entirely disqualified him, as the trusted ad- viser of the complainant, from giving her such counsel respecting it as she was en- titled to have. Simply placing the mortgage among the complainant's papers, without other evidence of her ownership, not only put her title to it in a condition of extreme jeopardy, but left the defendant free to use it, as occasion might seem to require, as a security belonging to both funds, and thus malse it answer a double purpose. The de- fendant kept no account of his transactions on behalf of the complainant, and she was, therefore, deprived of the protection which the performance of that duty would have af- forded her. The defendant's conduct in this matter deserves, as I think, the severest con- demnation. But while it appears to be very clear that the defendant's conduct in this transaction has been highly improper, still I think it equally clear on the proofs as they now stand that no case is established against the de- fendant which can be made the basis of re- lief to the complainant. It has not been shown that the mortgage in question is either a worthless or an inadequate security. No loss has as yet been sustained, nor has any attempt been made to show that the com- plainant must inevitably or will probably suffer loss. All that has been shown is that the defendant has invested the complainant's money in a second mortgage. I know of no authority which goes to the length of declar- ing that a trustee shall he liable, whether loss is sustained or not, simply because he has in- vested the fimds in his hands in a second mortgage. He is bound to make safe invest- ments, such as will yield a reasonable income and a return of the principal when required. If he does that, though the security he takes may not be the most desirable, he incurs no personal liability. He should not, as a gen- eral rule, invest in second mortgages; if he does, he takes the risk of being personally an- swerable in case loss ensues, but he is not liable, as I understand the rule, simply be- cause he has made such an investment, if no loss has been sustained, and In the absence of evidence that any will be sustained. The next claim made by the complainant is uncontested. Among the property which the complainant received under the will of her husband were ten shares of the stock of a corporation known by the name of the Pe- ters Manufacturing Company. Dividends, in both cash and stock or bonds, were declared on this stock in 1873, 1874, and 1875. Those of 1873 were 30 per cent, in cash, and 40 per cent, in stock; in 1874, 40 per cent, in cash, 25 per cent, in stock, and 35 per cent, in bonds; and in 1875, 30 per cent, m cash, and 20 per cent, in bonds. The defendant collect- ed all these dividends. He paid the cash dividends to the complainant, but had the stock and bond dividends issued to himself as trustee. His explanation or justification of his conduct in this matter is this: he says when the first stock dividend was declared, he inquired of the complainant what he should do with it, and that she replied he might do with it what he liked, or what he had a mind to, and that he understood her by this form of expression to say to him that she meant that he should take it as a gift. When the subsequent dividends were declared, he says he supposed that she entertained the same intention with respect to them, and he procured them also to be issued to himself, though he made no further inquiry of her re- specting her purpose, and she made no fur- ther declaration of her intention. The de- fendant sold the stock and bonds thus obtain- ed, in January, 1877, for $1,300. But before making the sale, he had received on the stock so obtained by him dividends in cash to the amount of $561. The defendant, by his an- swer, admits that he is liable for the value of the stock and the amount that he has re- ceived thereon in dividends, and says that he is willing to account to the complainant for the same, if she Insists that he shall do so. She does so insist. This claim is one of the foundations of her bill. The defendant, in the accounting, must be charged with what he received on the sale of the stock and 294 ACTUAL FRAUD. bonds, and also with whatever he has receiv- ed thereon as dividends. I shall dispose of the other questions at is- sue between the parties by simply stating my conclusions, without attempting to review the evidence or stating the argument upon which they rest. 1. The complainant is not entitled to a de- cree setting aside tlie deed made by her to the defendant's daughter as compensation for the defendant's services. 2. The defendant, in the accounting, is en- titled to a credit of $50 for money paid to the complainant in December, 1879. 3. The defendant, in the accounting, must be charged vritli the dividends received by him for the complainant on her stock In the Amei-ican Insurance Company, for the years 1876, 1877 and 1878; also with three sums, of $17.50 each, for unpaid interest on the Graf bonds and mortgages, due February 1, 1873, August 1, 1873, and February 1, 1874; and also with $6.20 which, in his account, he has erroneously charged against the com- plainant. The account between the parties will be stated and settled by the vice chancellor. Ei- ther party may bring on the hearJng on the accounting on ten days' notice to the other. The complainant is entitled to costs. ACTUAL FRAUD. 295 VIRGINIA LAND 00. v. HAUPT. (19 S. E. 168, 90 Va. 533.) Supreme Court of Appeals of Virginia. March a 1894. Error to circuit court of city of Roanolie. Action by the Virginia Land Company against one Haupt. Judgment for defendant, and plaintiff brings error. Affirmed. Watts, Robertson & Robertson, for plain- tiff in error. Griffin & Glasgow, for defend- ant in error. LEWIS, P. The defendant in error was sued by the Virginia Land Company to recover cer- tain unpaid assessments on the stock of the company aggregating $2,800. The principal grounds of defense were (1) fraud in pro- curing the contract of subscription; and (2) a material variance between the prospec- tus and the charter of the company. The jury found for the defendant, and the court refused to disturb the verdict. The defend- ant subscribed for the stock at the Instance of one O'Leary, who was a real estate agent at Roanoke, and one of the promoters of the company. It was proposed In the prospectus "to organize a company for the purchase of a certain tract of land, lying near the said city, containing about 550 acres, and to lay It out in residence lots, and to develop its natural attractions." By the charter sub- sequently obtained the company was author- ized to buy land, not exceeding 5,000 acres, also personal property, and to issue mort- gage bonds; to loan money to develop lands; to construct street railways, and to use cars impelled by any kind of motive power; to erect and operate motor, gas, and electric works, etc. O'Leary was known to the de- fendant as a successful business man, and his name headed the subscription list. When he solicited the defendant to subscribe he informed him, in answer to a specific Inquiry, that the land proposed to be purchased be- longed to Gates, Moorman & Moorman. In point of fact, O'Leary and one Christian, another subscriber to the stock and a pro- moter of the company, held options on the land, which fact was not mentioned to the defendant. O'Leary recommended the stock to the defendant as a desirable Investment, and upon his advice the defendant agreed to take 100 shares. After the organization of the company the land was transfei-red to the company, and in consequence O'Leary ind Christian realized a very large profit. The company was chartered early In March, 1890, and on the 19th of the same month the first stockholders' meeting was held, at which meeting O'Leary represented the defendant as his proxy. At the same meeting an as- sessment of 10 per cent, of the capital stock was ordered, notice of which was afterwards sent to the defendant; and on the 23d of the ensuing August another assessment of 5 per cent, was ordered. Upon receipt of notice of this last assessment the defendant wrote the secretary of the company as fol- lows: "Dear Sir: I have your notice of September 1st, calling for an assessment of $500.00,— five per cent, on one hundred shares of your stock. If you wUl please refer to my letter of April the 28th, addressed to your treasurer, you will notice that I am not a stockholder in your company. Although I have never received a reply to this letter, I take it. In the absence of such acknowledg- ment, my stock was, as a matter of course, canceled. So that there may be no further misunderstanding in the matter, however, I beg to advise that I am not a stockholder in the Virginia Land Company, having paid no assessment whatever on the subscription." In the notice of the 10 per cent, assessment of March 19, 1890, It was said: "This amount must be paid promptly, or the stock will be declared forfeited;" and in response to this the defendant's letter of the 28th of April, above referred to, was written, which is as follows: "Dear Sir: I have your favor of the 24th Inst, calling attention to ten per cent, assessment of the Virginia Land Com- pany's stock, and in reply beg to say that recent financial arrangements in another di- rection, that I am suddenly called upon to provide for, will make It Impossible for me to pay this assessment now; and to prevent delays, as well as to avoid bemg a hindrance in any way to the success of the company, I will be glad If you will consider my stock forfeited, as provided for in notice of assess- ment. * * * I win be glad, therefore. If you will dispose of my stock to other parties. I have been informed that the stock Is selling at a premium, so I presume there vrill be no difficulty in doing this. Having paid nothing on the stock, I am, of course, not entitled to anything from it." At the trial the defend- ant testified that when he made the contract of subscription he had no other information respecting the proposed enterprise than such as he obtained from the prospectus and what was told him by O'Leary; that he was In- duced to subscribe by the urgent solicitation of O'Leary, In whose judgment and integrity he had confidence, and who earnestly recom- mended the scheme as a good Investment. He also testified that he had no idea that O'Leary was Interested In the land which It was proposed to buy otherwise than as a stockholder, and that, so far from the fact being disclosed to him, O'Leary, when ques- tioned on the subject, represented that it be- longed to Gates, Moorman & Moorman. He testified further that he would not have con- sented to subscribe had he known of the promoter's interest in the land, and that he had no Intimation of any such thing as a "promoter's fund" until several weeks after he had subscribed. The court, among other things, instructed the jm-y that if they believed from the evi- dence that O'Leary and Christian held op- tions on the land, and that O'Leary induced the defendant to subscribe in ignorance of 296 ACTUAL FRAUD. that fact, relying on his (O'Leary's) supposed disinterested and superior judgment, and that he, the defendant, was thereby misled, to his injury, into making a contract that he other- wise would not have made, then the sub- scription was voidable, at his option. This construction propounds the law correctly. The authorities are abundant in support of the general rule that one who is fraudulently induced by an agent of a corporation— and a promoter is an agent of the proposed cor- poration—to subscribe to its capital stock may, at his option, repudiate the contract; and that a fraud may consist as well in the suppression of what is true as in the rep- resentation of what IS false. Indeed, the law is that, where the person solicited to subscribe has no other isiformation on the subject than that the agent chooses to convey, the statement of the agent ought to be char- acterized by the utmost candor and honesty. Cook, Stock, Stockh. & Corp. Law (3d Ed.) § 147; Crump v. Mining Co., 7 Grat. 352; Bosher v. Land Co., 89 Va. 455, 16 S. E. 360; Directors, etc., v. Kisch, L. R. 2 H. L. 99. It is contended, however, that the defendant has by his conduct waived the right to annul the contract in question. But there can be no waiver in a case of this sort without full knowledge of the facts, and such knowl- pdge of the facts and such knowledge on the part of the defendant has not been shown. He says he had an intimation a few weeks after the organization of the com- pany that there was a large promoters' fund, but as to who were the parties interested in the fund he was not informed. He made Inquiry on the subject, he says, but could ascertain nothing definite; and that he relied on his letter of the 2Sth of April, in reply to the notice of the first assessment, to which he received no reply. And afterwards, when notified of the 5 per cent, assessment, he promptly replied, calling attention to his said letter, and saying he was not a stockholder. He also called the attention of one of the directors of the company to the intimation he had had in regard to the promoters' fund. and informed him that he repudiated the contract. It Is true, he gave a proxy to O'Leary to represent him at the first stock- holders' meeting, at which meeting the facta in regard to the promoters' options on the land were disclosed; but, as was well said in the argument, it would be absurd to hold that he was affected by notice to O'Leary of what the latter knew from the beginning, and failed to disclose to him. And if he was not affected by notice to O'Leary, then there is no proof that he received any certain in- formation of the facts constituting the fraud complained of before the institution of the present action. In treating of laches as a bar to the subscriber's remedies, Cook says: "The date from which laches begins to run Is the time when the subscriber is first chargeable with notice that a fraud has been perpetrated upon him. Mere suspicions or random statements, heard in public or In stockholders' meetings, do not necessarily constitute notice. But, after a subscriber's suspicions are reasonably aroused, it is his duty to investigate at once. The corporation has the burden of proof in asserting that the subscriber had notice and was guilty of laches." Cook, Stock, Stockh. & Corp. Law (3d Ed.) § 162. Applying these principles to the present case, we are of opinion upon the ground of fraud the case is with the defend- ant, and that there has been no waiver of the fraud on his part; and, as this view Is decisive of the case, it Is needless to consider whether the case is within the ruling in Manufacturing Co. v. Hockaday, 89 Va. 557, 16 S. B. 877, on the ground of a variance between the prospectus and the charter of the company. There were a number of exceptions taken to the rulings of the court during the prog- ress of the trial, to review which seriatim would extend this opinion to a great length. It is enough to say in this connection that the case was submitted to the jury In sub- stantial conformity v?lth the views expressed in this opinion, and that the judgment must be affirmed. ACTUAL FRAUD. 297 ZAHN et al. v. McMILLIN et al. (36 Atl. 188, 179 Pa. 146.) Supreme Court of Pennsylvania. Jan. 4, 1897. Appeal from court of common pleas, Law- rence county; William D. Wallace and S. H. Miller, Judges. Action by William A. Zahn and others against E. A. McMillin and others. From a judgment for defendants, plaintiffs appeal. Reversed. S. W. Dana, S. D. Long, A. Leo. Weil, and O. M. Thorp, for appellants. J. Norman Mar- tin, D. B. Kurtz, and L. T. Kurtz, for appel- lees. DEAN, J. On April 22, 1891, through ne- gotiations conducted by E. A. McMillin, he and William Smith took by assignment from Thomas A. Book 19 oil and gas leases In Lawre. one dollar was held to be a sufficient consideration for a covenant not to run a stagecoach between given points, in opposition to the plaintiff. The consideration upon which the defendant entered into the contract under review as expressed was the advantages and benefits that would flow to him by reason of the "for- mation of said firm and partnership busi- ness." This, under the authorities cited, is a sufficient legal consideration, in so far as such contracts are dependent on a considera- tion to be sustained. The exact value of the consideration, the court ought not, and, in the nature of things, cannot, undertake to measure. There is nothing in the record of the case which shows such gross Inadequacy of consideration as to shock the conscience, and amount in itself to evidence of fraud. See Mete. Cont. p. 271. The remaining objections urged against the validity of the contract may all be passed upon in considering the other question upon which the validity of the contract depends, namely, Is the restraint which it imposes rea- sonable? While public policy forbids any agreement which unreasonably restrains a person from exercising his trade or business, it is equally true that public policy also re- quires that the freedom of persons to enter into contracts shall not be lightly interfered with. Clark, Cont. p. 447. The contract un- der consideration imposed a restraint un- limited as to time, but limited as to space. We are aware that it has been repeatedly held that, where the restraint is otherwise reasonable, the circumstances that it is In- definite as to time will not affect its validity (1 Whart. Cont. § 432; Mete. Cont. p. 232; Benj. Sales, § 525; Hitchcock v. Coker, 6 Adol. & E. 438; Pemberton v. Vaughan, 10 Q. B. 87; Catt v. Tourle, 4 Ch. App. 654; Cook V. Johnson, 47 Conn. 175; Bowser v. Bliss, 7 Blackf. 344); and that our court, in more than one case, which will be presently refer- red to, held the same doctrine. Nevertheless, if the test of the validity of the contract Is, as we have shown It to be, that it must be founded on a valuable consideration, and that the restraint imposed must be reasonable, and such as is reasonably necessary to protect the Interest of the party In whose favor it Is imposed, and at the same time not unduly prejudice the interest of the public, It seems to us that the question of time in the re- striction imposed cannot be arbitrarily said to have no effect on the validity of a contract which, being reasonable in all other respects except in point of time, is, from the circum- stances, unreasonable and oppressive as to the latter. See Mandeville v. Harman (N.J. Ch.) 7 Atl. 37; Keeler v. Taylor, 53 Pa. St. 469. In the case of Hitchcock v. Coker, supra. Lord Denman, construing a contract which imposed a restraint on one who, hav- ing entered the service of the plaintiff (who was a druggist), agreed that he would not at any time after leaving such service engage in the business of a druggist in that town, said: "It Is not limited to such time as the plaintiff should carry on business in Taunton, nor to any given number of years, nor even to the life of the plaintiff; but it attaches to the defendant as long as he lives, although the plaintiff may have left Taunton, or parted with his business, or be dead;" and he ac- cordingly held the restraint to be unreason- able and oppressive. That case was re- versed on writ of error, but the point of reversal was that a restriction so extensive in point of time was necessary for the pro- tection of the promisee in the enjoyment of the good will of his trade; and, as we under- stand the principle ruled in that case, a restric- tion so extensive Is reasonable, and not op- pressive, when It prevents the destruction of a property right or interest or the good will of a trade or business. See review of the case in Clark, Cont. pp. 455, 456. The con- trary of this doctrine, however, is directly held In French v. Parker, 16 R. I. 219, 14 Atl. 870. With conflicting authorities as to the ap- plication of the rules for testing the validity of contracts In partial restraint of trade, up- on which all agree, we think a clear distinc- tion must be taken between the class of cases binding one who has sold out a mer- cantile or other kind of business, and the good will therewith connected, not to again engage in that business within a given ter- ritory, and that class of cases binding one to desist from the practice of a learned pro- fession. I can readily perceive that a suc- cessor of a merchant, broker, or shopkeeper might reasonably expect to retain the former patronage of the place of business, but fully concur with the views expressed by the court in the case of Mandeville v. Harman, supra, that professional skill, experience, and reputation are things which cannot be bought or sold. They constitute part of the Individuality of the particular person, and die with him. In that case the court said: "There can be no doubt, I think, that if the complainant was the most distinguished phy- CONSTRUCTIVE FRAUD. 307 slcian of the city of Newark, and had by far the most lucrative practice In that city, and he should be so unfortunate as to die next month or next year, it would be impossible for his personal representative to sell his good will or practice, as a thing of property distinct from the office which he had occu- pied prior to his death, for any price; and I think it is equally obvious that, if it were sold in connection with his office, the only possible value which coiild be ascribed to it would be the slight possibility that some of the persons who had been his patients might, when they needed the services of a physi- cian, go or send there for the next occupant of the office. The practice of a physician is a thing so purely personal, depending so absolutely on the confidence reposed in his personal skill and ability, that, when he ceases to exist, it necessarily ceases also, and after his death can have neither an in- trinsic nor a market value. And, if the com- plainant should make sale of his practice in his lifetime, it is manifest all the purchaser could possibly get would be immunity from competition with him, and, perhaps, his im- plied approval that the purchaser was fit to be his successor; but it would be impossible for him to transfer his professional skill and ability to his successor, or to induce anybody to believe that he had." So far as we have been able to examine, the cases which have ruled that, if the re- straint is reasonably limited as to space, the fact that It is unlimited as to time will not render the agreement void, were cases in which some business or property, or prop- erty right, either of goods or good will, had been sold, and the restriction as to unlimited time was not considered unreasonable, be- cause it affected property rights. Our own court has considered a number of cases in- volving contracts in restraint of trade, and in some of them held that restraints unlim- ited in point of time did not render the con- tracts void; but in every one of such cases, as far as we have examined, a property in- terest was involved. The first is that of Holmes V. Martin, 10 Ga. 503. In that case Holmes conveyed to Martin a house and lot in the town of Lawrenceville, with this re- striction in the deed: "That said house and lot shall not be occupied by the said Martin or his assignees as a public tavern or hotel, which right is reserved in said property by Holmes." In that case the court held this contract to be good, and that contracts in partial restraint of trade only may be sup- ported, provided the restraint be reasonable, and the contract founded on a consideration. In the case of Mell v. Mooney, 30 Ga. 413, no question arose which called for a ruling of the validity of contracts in restraint of trade, the points in the case relating alone to pleading. In the case of Jenkins v. Tem- ples, 39 Ga. 655, it appeared that Jenkins had bought of Temples an entire stock of groceries and confectioneries at very high I prices, and Temples had agreed that he would use all of his influence for Jenkins with his former customers, and bound him- self not to deal in any of said articles at Spring Place until January, 1869. Temples violated the agreement. The court below held the contract to be void, and this court ruled, reversing the judge below, that a party might legally bind himself for a valu- able consideration not to conduct a partic- ular trade or business in a particular place for a reasonable and definite period of time. In the case of Spier v. Lambdin, 45 Ga. 319, Lambdin sold to Spier an unexpired lease of the Barnesville Academy, with the con- sent of the trustees, for the consideration of $475, representing that he wished to aban- don school teaching, and wovild use his in- fluence for Spier's benefit. The contract v/as held to be good and enforceable. In the case of Ellis v. Jones, 56 Ga. 504, Ellis & Palmer had purchased a stock of merchan- dise, consisting of dry goods, groceries, etc., from Jones & Co., and the store house con- taining the same, together with their cus- tom and good will. Jones & Co. having re- commenced business in the same place, Ellis & Palmer filed a bill to enjoin such action. The injunction was refused. It does not satisfactorily appear in the case that Jones & Co. covenanted not to engage in the same business. In the case of Goodman v. Hen- derson, 58 Ga. 567, the suit was upon a writ- ten agreement, whereby Goodman, in con- sideration of $100 a month for two years, and a further money consideration, agreed to retire from the business of purchasing green hides, sheep skins, etc., in the Savan- nah market forever, and that he would use his influence in favor of the purchaser, and sold to him the good will of the business. This court held in that case that the limit as to time made no difference if the eon- tract was limited as to space. In the case of Brewer v. Lamar, 69 Ga. 656, there was an agreement to sell a certain proprietary medicine, and the seller agreed never to use or permit his name to be used on any prep- aration for the same class of complaints for which this medicine was made, and agreed also to surrender his trade-mark, and give to the purchasers the exclusive right to sell and manufacture the same under the old name. The consideration of the pur- chase was $275. The court held that the contract was in partial restraint of trade, and could be enforced. In the case of New- man V. Wolfson, 69 Ga. 764, Newman sold to Wolfson a stock of goods, etc., together with the good will of the business, for $1,466, and covenanted not to engage in a like busi- ness in that city for a period of five years. The court in this ease held that the contract was not unreasonable. In the case of Swan- son V. Kirby, 98 Ga. 586, 26 S. E. 71, this court held that where one has sold out a given business, and contracted not to again carry on the same in a particular locality, R08 CONSTRUCTIVE FRAUD. though unlimited as to time, such a contract, being reasonable and proper when limited as to place, and in other respects, was valid. In this case the consideration paid was $1,500, and the property purchased was a membership in the American Ticket Brok- ers' Association, a burglar-proof safe, desk, typewriter, and other office fixtures. The covenant was not to open a ticket office in the city of Atlanta without the consent of Kirby. In that case the court held that while contracts in total restraint of trade were void, where the restraint was partial, reasonable, and founded upon a good con- sideration, the contract would be enforced. It has never been decided in this state that a covenant between professional men (where no property rights were involved in the con- tract which imposed the restriction) so ex- tensive in duration as that under consider- ation in the present case is valid. As was said by the court in the case of Mandeville V. Harman, supra: "It is one of the natural ! rights of every citizen of this state to use i his skill and labor In any useful employ- ■ ment, not only to get food, raiment, and | slielter, but to acquire property; and I \ think it may be regarded as very certain i that the courts will never deprive any one ; of this right, or even abridge it, except in obedience to the sternest demands of jus- | tice." We test this contract by the rules before referred to, and find it supported by a legal consideration. Being limited as to space, although unlimited as to time, we find that it may properly be classed among contracts in partial restraint of trade. When we seek its terms to a.><(^ertain whether it is reason- able, made to protect the promisee, and not oppressive on the promisor, we find that no money was paid by the promisee, and no property sold by the promisor. We find that the promisor, by the nature of the con- tract, must have rendered service for all the benefits he received. We find that, un- der the terms of this contract, if the prom- isee, the defendant in ei'ror, should remove from the town of Oliver, from the state of Georgia; If he should become permanently incapacitated, by disease, from continuing the practice of medicine; if he should die,— the promisor, in any event, would not be at liberty to practice his profession in Oliver, nor within 15 miles radius of that town. No matter what the changed conditions might be, it was so nominated In the bond that he should not exercise his calling within the territory prescribed. It must be clear, there- tore, that the restrictions imposed upon the promisor in this contract were larger than were necessary for the protection of the promisee. Full protection would have been afforded to the latter if the time in which the restraint should apply had been limited to the life of the defendant In error, or to the time in which he was engaged In the practice of his profession In the county of Screven. Had this contract been so limited, It is obvious from the view which we take of the law that it should be upheld and would be enforced. But, when the terms of the contract prohibit one party from at any time in the future practicing his pro- fession at a given place, without regard to the fact that the other party should not be engaged in the competitive business, without regard to the fact that he may have removed from the county and state in which such territory was located, without regard to the fact of the inability of the party, from age or physical infirmity, to continue his prac- tice, it would seem to be unreasonable,— not necessary for the protection of the party in whose favor the restraint was imposed, oppressive to the party restrained, and op- posed to the interests of the public; and, such being the case, the contract cannot be enfoi'ced. If It be said that it would be the right of the plaintiff in error, under any of the circumstances we have mention- ed, to pray for a modification or rescission of such contract, the reply is that we are not dealing with such question. We are to con- strue It as it is written, and, so construing It, we hold it to be void and of no binding force and effect. The judgment of the court below must be reversed. All the justices concurring, except COBB, J., absent for providential cause. CX)XSTRUCTIVB FKAUD. 309 COWEE 7. CORNELL. (75 N. T. 91.) Court of Appeals of New York. Nov. 12, 1878. Appeal from order of the general term of the supreme court in the Third judicial de- partment, reversing a judgment entered upon the report of a referee. Plaintiff made a claim against the estate of I^atham Cornell, of whose vyill defendants were the executors, for interest upon a prom- issoi-y note executed by the deceased. This claim was rejected, and was referred by stip- ulation. The facts, as stated by the referee, are in substance as follovys: Latham Cornell, the deceased, was the grandfather of Latham C. Strong. He was possessed of large property, consisting of real estate and of personal property invested in stocks, bonds and other securities. He died in 1876 at the age of ninety-five. For four years prior to his death he was partially blind. Prom July, 1871, until the time of his death, his grandson at his request at- tended to his affairs, writing his letters, look- ing after his banking business and his rents, making out his bills, cutting off his coupons, reading to him, and on occasions going away from home to transact other business. In July, 1871, Cornell gave to Strong a deed of two adjoining houses in the city of Troy, valued at about $32,000, in one of which houses the grandfather lived until the time of his death. The grandson moved into the adjoining house in the spring of 1872, and resided there until after his grandfather's death. During the time that the two thus lived in adjoining residences, they were in daily conference upon business matters of the old gentleman, in the house occupied by the grandson. The grandson with his family consisting of five persons, during all this time lived at the sole expense of the grandfather, and claims to have received, in addition to the note in suit, as gifts from his grand- father, $30,000 in government 'bonds and the assignment of a mortgage for about $1,700. At what particular time it is claimed these gifts were made is not in evidence. Mr. Cor- nell made his will in 1871, providing a legacy of $15,000 for air. Strong. In the fall of 1872, Mr. Strong expressed a desire to go in- to business for himself and to be independent of his grandfather, and actually was in ne- gotiation with different persons in Troy and New York with a view of forming business associations. Mr. Cornell became uneasy at the prospect of losing the services of his grandson and caused him to be written for to come home. Mr. Strong came back to Troy, and his grandfather said to him then, as he had previously said, that he wanted him to give up his ideas of leaving and to devote his whole time to the business of his grandfather. Mr. Cornell further said that he had no one else to look after his business, and frequently said that there was money enough for all of them. Mr. Strong imme- diately abandoned his business projects and devoted his whole time and attention to his grandfather's business, until the death of the latter. After this Mr. Cornell sent for his legal advisers and proposed to alter his will so as to make provision to compensate his grandson for having devoted himself to his business. What provision was intended is not disclosed by the evidence. The lawyers advised that his will be left unaltered, and that he take some other way of compen- sating his grandson. Mr. Cornell gave to Mr. Strong the note in question. It is as follows: "$20,000. Troy, April 1, 1873. Five years after date I promise to pay Latham L. C. Strong, or order, $20,000, for value received, with interest yearly. L. Cornell." The note was on a printed form, the name of the payee being printed "Latham Cornell." The note was filled up in the handwriting of the maker, but in striking out with his pen the name of the payee he left the word "Latham" and afterwards interlined the full name, "L. C. Strong." Annexed to the note was a stub with some printed forms, on which Mr. Cornell wrote: "Troy, April 1st, 1873, L. C. Strong, $20,000 at five years, to make the amount the same as Chas. W. Cornell." The stub was on the note when it was delivered to the payee, but was torn off by him before it was transferred to the plain- tiff; and there is no evidence that the plain- tiff ever knew of the existence of the stub. The stub and note were taken from a blank book which belonged to decedent. No pay- ment of interest was made upon the note during the Ufetime of the maker. The ref- eree found that the note was given for a valuable consideration. Mr. Strong sold the note to the plaintiff for $19,000, taking his note, payable in one year after date. "What that date was has not been disclosed. Mr. Strong testified at the trial that he still held the note. Mr. Strong was one of the execu- tors. Further facts are stated in the opinion. Irving Browne, for appellant John Thomp- son, for respondents. HAND, J. The counsel for respondents suggested at the close of his argument be- fore us that there was no evidence of a de- livery of the note to Strong, the payee, and the finding of delivery by the referee was entirely unsupported. He does not however make this a point in his printed brief, and did not present it strenuously or with any emphasis in his oral remarks. It is true that the evidence in this respect was not very satisfactory. Ordinarily the possession and production of the note by the payee will raise a presumption of delivery to him. But this presumption must be very much weakened when the possession is shown not to precede, the possession of all the maker's papers and effects by the payee :U0 CXDXSTRUCTIVB FRAUD. as executor, when the note appears to have been all in the handwriting of the maker and to have been taken with a stub attached, also in his handwriting, from a bank book belonging to him, and when installments of interest falling due in the maker's life-time were not paid and although years elapsed after they so became due before his death there is no proof of any demand of them by the payee or recognition of liability by the deceased. I am not prepared to say however that these circumstances absolutely destroy the presumption from possession and produc- tion of the instrument. While some evidence on the part of the plaintiff, showing that the note had been delivered to Strong in his grandfather's life-time, or at least negativ- ing the idea that Strong found it in the bank- book or among the papers of the deceased when he took possession of them as executor, could probably have been easily produced if consistent with the fact, yet we cannot hold its absence conclusive against the plaintiff upon this point, upon the record as it stands. No motion for judgment or to dismiss was made on this ground by the respondents al- though the trial was in other respects treated by the counsel on both sides as one before a referee appointed in the ordinary way to hear and determine and direct judgment as In an action, and we cannot say but that if the plaintiff had been notified of such an ob- jection, the evidence would have been sup- plied. The finding of the delivery by the referee was not even excepted to, although there were exceptions to the finding of con- sideration. Under these circumstances we must, I think, assume an acquiescence in the truth of the finding by the respondents for reasons known to them, and which if dis- closed would probably be entirely satisfac- tory. The majority of the general term put their reversal of the judgment upon the ground that it conclusively appeared from the stub attached that the note was intended as a gift and was without consideration. In this I am unable to concur. The referee's finding that the note was de- livered not as a gift but for a valuable con- sideration has some evidence to support it, in the proof of the services rendered by Strong to the deceased, and his abandonment of a profession at the request of the deceased, in the intention expressed by the latter to make some compensation for those services, and the conversation had with his counsel not very long before the date of this note, In which he was dissuaded from making this compensation by will and advised to do it while alive, to which he assented. What ap- pears upon the stub is not in my opinion conclusive against this result. There is perhaps difficulty in giving any entirely satisfactory construction to this memorandum made by the deceased; but the interpretation of the general term seems to my mind inconsistent with the known facts of the case. Strong certainly had had and the deceased knew that he had had property of the value of $32,000 given him before the date of this note, and perhaps $30,000 more in bonds. The $20,000 note could not have been therefore as the general term supposes, a gift to make him equal in gifts with his cousin Charles, to whom only $20,000 had been given in all. But not only do the circumstances show that the memorandum could not mean that this gift of the $20,000 to Strong would make him equal in gifts to Charles, but the memorandum itself does not say so. Its language is "to make the amount the same as Chas. W. Cornell." While, as has al- ready been said, there is probably insuper- able difficulty in discovering precisely all that the deceased meant by this expression, its intrinsic sense is merely that the amount of this note, $20,000, Is so fixed to make it the same as an amount possessed in some way by Charles, and this is consistent with both amounts being gifts, or the one being fixed upon in the testator's mind as a fair com- pensation for Strong's services and at the same time equal to an amount he had given or intended to give to Charles. On the whole I think this memorandum was a piece of evidence to be submitted with the other evi- dence to be considered by the referee on the question of fact. His decision upon all this evidence cannot be disturbed by this court. The same may be said of the proof of large gifts to Strong either all before, or some before and some after the date of the note. The reversal by the general term is not stated to be upon the facts, and on the argu- ment it was conceded by the counsel for the respondents to be upon the law merely. It may be that a finding upon all the evidence that the note was without consideration and a gift would not be disturbed, and would be held by us as not unauthorized by the evi- dence. On the other hand, we cannot accede to the proposition that a finding to the con- trary, such as has been made by the referee here, must by reason of the contents of this stub or other testimony be reversed as er- roneous in law. It follows that except as bearing upon un- due Influence, and the relations of parties hereafter considered, the inadequacy of the services or the extravagance of the compen- sation are not material. That was a matter purely of agreement between Strong and the deceased, and with which the court will not interfere under ordinary circumstances. Earl V. Peck, 64 N. Y. 597; Worth v. Case, 42 N. Y. 362; Johnson v. Titus, 2 Hill, 606. Although the consideration of a promissory note is always open to Investigation between the original parties (and we agree with the court below that the plaintiff here has no better position than Strong himself), yet as pointed out by the chief judge in Earl v. Peek, supra, mere inadequacy in value of the CXDXSTKUCTIVB FRAUD. 311 thing bought or paid for is never Intended by the legal expression, "want or failure of consideration." This only covers either total worthlessness to all parties, or subsequent destruction, partial or complete. Assuming then, as I think we must, that there was no error as matter of law in the finding of the referee that this note was given for a valuable consideration, and that the adequacy of that consideration is some- thing with which we have no concern if the parties dealt on equal terms, the only point remaining to consider is the relations exist- ing between the deceased and Strong at the date of the note. It is insisted strenuously by the learned counsel for the respendents that these were such as to call for the application of the doc- trine of constructive fraud, and threw upon the plaintiff the burden of proving not only that the deceased fully understood the act, but that he was not induced to it by any un- due influence of Strong, and that the latter took no unfair advantage of his superior in- fluence or knowledge. The court below were hardly correct in the suggestion that the plaintiff conceded this burden to be upon himself, and for that rea- son, instead of resting upon the statement of consideration In the note, gave evidence in opening his case of an actual consideration; for this may have been done to show in the first instance that the note was not a gift and hence void under the law applicable to gifts. Indeed it appears from the findings and refusals to find, and the opinion of the referee, that such was not the theory upon which the action was tried or decided. We return then to the question whether this case was one of constructive fraud. It may be stated as universally true that fraud vitiates all contracts, but as a general thing it is not presumed but must be proved by the party seeking to relieve himself from an obligation on that ground. Whenever, how- ever, the relations between the contracting parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from overmastering infiuence, or on the other from weakness, dependence or trust justifiably re- posed, unfair advantage in a transaction is rendered probable, there the burden is shift- ed, the transaction is presumed void, and it is Incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue infiuence was used, and that all was fair, open, voluntary and well under- stood. This doctrine is well settled. Hunt, J., Nesbit V. Lockman, 34 N. Y. 167; Story, Bq. Jur. § 311; Sears v. Shafer, 6 N. Y. 268; Huguenln v. Basely, 13 Ves. 105, 14 Ves. 273, and 15 Ves. 180; Wright v. Proud, 13 Ves. 138; Harris v. Tremenheere, 15 Ves. 40; Edwards v. Myrick, 2 Hare, 60; Hunter v. Atkins, 3 Mylne & K. 113. And this is I think the extent to which the well-consider- ed cases go, and is the scope of "constructive fraud." The principle referred to, it must be re- membered, is distinct from that absolutely forbidding a purchase by a trustee or agent for his own benefit of the subject of a trust, and charging it when so purchased with the trust. That amounts to an incapacity in the fiduciary to purchase of himself. He cannot act for himself at all, however fairly or inno- cently, in any dealing as to which he has duties as trustee or agent. The reason of this rule is subjective. It removes from the trustee, with the power, all temptation to commit any breach of trust for his own bene- fit But the principle with which we are now concerned does not absolutely forbid the dealing, but it presumes it unfair and fraud- ulent unless the contrary is afllrmatively shown. This doctrine, as has been said, is well settled, but there is often great difficulty in applying it to particular cases. The law presumes in the'fcase of guardian and ward, trustee and cestui que trust, at- torney and client, and perhaps physician and patient, from the relation of the parties itself, that their situation is unequal and of the character I have defined; and that rela- tion appearing itself throws the burden upon the trustee, guardian or .attorney of showing the fairness of his dealings. But while the doctrine is without doubt to be extended to many other relations of trust, confidence or inequality, the trust and con- fidence, or the superiority on one side and weakness on the other, must be proved in each of these cases; the law does not pre- sume them from the fact for instance that one party is a grandfather and old, and the other a grandson and young, or that one is an employer and the other an employ^. The question as to parties so situated is a question of fact dependent upon the circum- stances in each case. There is no presump- tion of inequality either way from these rela- tions merely. In the present case it cannot be said that the fact that the deceased employed Strong as his clerk to read and answer his letters and cut off his coupons, and make out his bills, or as his bailiff to collect his rents, or that at this time he was old and of defective vision, or that Strong lived near him and was his grandson, taken separately or to- gether raise a conclusive presumption of law that their situation was unequal, and that dealings between them as to compensation for these services were between a stronger and a weaker party, a fiduciary in hac re and the party reposing confidence. These relations as a matter of fact may have led to or been consistent with controlling influ- ence on the part of the grandson, or childish weakness and confidence on the part of the grandfather, but this was to be shovyn, and is not necessarily derivable or presumable 312 TO.VSTRUCTIVE FRAUD. from the relations themselves, as In the case of trustee, attorney or guardian. From these relations and the large gifts shown from the deceased to Strong, and from the extravagant amount of the com- pensation in the note, it is very possible the referee might have found as a fact the ex- istence of weakness on the one side, or un- due strength on the other, which rendered applicable the doctrine of constructive fraud, and threw upon the plaintiff the burden of disproving such fraud. These circumstances may have well been of a character, if not sufficient to shift the presumption, at least to authorize a setting aside of a contract without any decisive proof of fraud, but up- on the slightest proof that advantage was taken of the relation, or of the use of "any arts or stratagems or any undue means or the least speck of imposition." Whelan v. Whelan, 3 Cow. 538, Lord Eldon, L. C; Har- ris V. Tremenheere, 15 Ves. 40, Lord Brough- am; Hunter v. Atkins, 3 Mylne & K. 135. But the referee not only has not found as fact any inequality in the situation of the deceased and Strong, but refused to find as a matter of law its existence, and there is really no evidence whatever of any arts or stratagems or "speck of imposition" on the part of Strong as to this note. We are not permitted to supply these find- ings even if we thought them proper for the referee to make, nor can we sustain a re- versal of the original judgment upon facts not found and not necessarily inferable from uncontradicted evidence in the case, the gen- eral term not having in any way interfered with the findings of the referee. On the whole therefore we reach the con- clusion that there was no good reason for disturbing the judgment of the referee. This large claim upon the estate of the de- ceased is not so clearly justified and explain- ed in the evidence as we could have wished, and the circumstances are such as to compgl this court to look upon the case, if not with suspicion, certainly with anxiety, yet after careful examination we can find no material error in the original decision. The order granting a new trial must be reversed and judgment for plaintiff affirmed with costs. All concur, except MILLER and EARL, JJ., absent. Judgment accordingly. OONSTRUCTIVK FRAUD. 313 ALLORE V. JEWELL. (94 U. S. 506.) Supreme Court of the United States. Oct., 1876. Appeal from the circuit court of the United States for the Eastern district of Michigan. The facts are stated in the opinion of the court Alfied Russell, for appellant. A. B. May- nard, contra. Mr. Justice FIELD delivered the opinion of the court. This is a suit brought by the heir at law of Marie Genevieve Thlbault, late of Detroit, Mich., to cancel a conveyance of land alleged to have been obtained from her a few weeks before her death, when, from her condition, she was Incapable of understanding thf na- ture and effect of the transaction. The deceased died at Detroit on the 4th of February, 1S64, intestate, leaving the com- plainant her sole surviving heir at law. For many years previous to her death, and until the execution of the conveyance to the de- fendant, she was seised in fee of the land in controversy, situated in tbat city, which she occupied as a homestead. In November, 1863, the defendant obtained from her a con- veyance of this property. A copy of the con- veyance is set forth in the bill. It contains covenants of seisin aiid warranty by the gran- tor, and immediately following them an agreement by the defendant to pay her $250 upon the delivery of the instrument; an an- nuity of $500; all her physician's bills during her life; the taxes on the property for that year, and all subsequent taxes during her life; also, that she should have the use and occupation of the house until the spring of 1864, or that he would pay the rent of such other house as she might occupy until then. The property was .then worth, according to the testimony in the case, between $6,000 and $8,000. The deceased was at that time between sixty and seventy years of age, and was confined to her house by sicliness, from which she never recovered. She lived alone, in a state of great degradation, and was with- out regular attendance in her sickness. There were no persons present with her at the exe- cution of the conveyance, except the defend- ant, his agent, and his attorney. The $250 stipulated were paid, but no other payment was ever made to her; she died a few weeks afterwards. As grounds for cancelling this conveyance, the complainant alleges that the deceased, during the last few years of her life, was afflicted with lunacy or chronic insanity, and was so infirm as to be incapable of transact- ing any business of importance; that her last sickness aggravated her insanity, greatly weakened her mental faculties, and still more disqualified her for business; that the de- fendant and his agent knew of her infirmity, and that there was no reasonable prospect of her recovery from her sickness, or of her long surviving, when the conveyance was taken; that she did not understand the nature of the instrument; and that it was obtained for an insignificant consideration, and in a clandes- tine manner, without her having any inde- pendent advice. These allegations the defendant controverts, and avers that the conveyance was taken upon a proposition of the deceased; that at the date of its execution she was in the full possession of her mental faculties, appreci- ated the value of the property, and was capa- ble of contracting with reference to it, and of selling or otherwise dealing with it; that since her death he has occupied the premises, and made permanent improvements to the value of $7,000; and that the complainant never gave him notice of any claim to the property until the commencement of this suit. The court below dismissed the bill, where- upon the complainant appealed here. The question presented for determination is, whether the deceased, at the time she execut- ed the conveyance in question, possessed suf- ficient intelligence to understand fully the na- ture and effect of the transaction; and, if so, whether the conveyance was executed under such circumstances as that it ought to be up- held, or as would justify the interference of equity for its cancellation. Numerous witnesses were examined in the case, and a large amount of testimony was taken. This testimony has been carefully an- alyzed by the defendant's counsel; and it njust be admitted that the facts detailed by any one witness with reference to the condi- tion of the deceased previous to her last ill- ness, considered separately and apart from the statements of the others, do not show in- capacity to transact business on her part, nor establish insanity, either continued oi tempo- rary. And yet, when all the facts stated by the different witnesses are taken together, one is led irresistibly by their combined effect to the conclusion, that, if the deceased was not afflicted with insanity for some years be- fore her death, her mind wandered so near the line which divides sanity from insanity as to render any important business transac- tion with her of doubtful propriety, and to justify a careful scrutiny into its fairness. Thus, some of the witnesses speak of the deceased as having low and filthy habits; of her being so imperfectly clad as at times to expose immodestly portions of her person; of her eatmg with her fingers, and having vermin on her body. Some of them testify to her believing in dreams, and her imagining she could see ghosts and spirits around her room, and her claiming to talk with them; to her being incoherent in her conversation, passing suddenly and without cause from one subject to another; to her using vulgar and profane language; to her making immodest gestures; to her talking strangely, and mak- ing singular motions and gestures in her neighbors' houses and in the streets. Other 314 OOXSTRUCTIVE FRAUD. witnesses testify to further peculiarities of life, manner, and conduct; but none of the peculiarities mentioned, considered singly, show a want of capacity to transact business. Instances will readily occur to every one where some of them have been exhibited by persons possessing good judgment in the management and disposition of property. But when all the peculiarities mentioned, of life, conduct, and language, are found in the same person, they create a strong impression that his mind is not entirely sound; and all transactions relating to his property will be narrowly scanned by a court of equity, when- ever brought under its cognizance. The condition of the deceased was not im- proved during her last siclniess. The testi- mony of her attending physician leads to the conclusion that her mental infirmities were aggravated by it. He states that he had stud- ied her disease, and for many years had con- sidered her partially insane, and that in his opinion she was not competent in November, 1863, during her last sickness, to understand a document like the instrument executed. The physician also testifies that during this month he informed one Dolsen, who had in- quired of the condition and health of the de- ceased, and had stated that efforts had been made to purchase her property, that in his opinion she could not survive her sickness, and that she was not in a condition to make any sale of the property "in a right way." This Dolsen had at one time owned and managed a tannery adjoining the home of tlie deceased, which he sold to the defendant. After the sale, he carried on the business as the defendant's agent Through him the trans- action for the purchase of the property was conducted. The deceased understood English Imperfectly, and Dolsen undertook to explain to her, in French, the contents of the paper she executed. Some attempt is made to show that he acted as her agent; but this is evi- dently an afterthought. He was in the em- ployment of the defendant, had charge of his business, and had often talked with him about securing the property; and in his in- terest he acted throughout. If the deceased was not In a condition to dispose of the prop- erty, she was not in a condition to appoint an agent for that purpose. The defendant himself states that he had seen the deceased for years, and knew that she was eccentric, queer, and penurious. It Is hardly credible that, during those years, carrying on business within a few yards of her house, he had not heard that her mind was unsettled; or, at least, had not inferred that such was the fact, from what he saw of her conduct. Be that as It may, Dolsen's knowledge was his knowledge; and, when he covenanted to pay the annuity, some inquiry must have been had as to the probable dura- tion of the payments. Such covenants are not often made without inquiries of that na- ture; and to Dolsen he must have looked for Information, for he states that he conversed with no one else about the purchase. With him and with his attorney he went to the house of the deceased, and there witnessed the miserable condition in which she lived, and he states that he wondered how anybody could live in such a place, and that he told Dolsen to get her a bed and some clothing. Dolsen had previously informed him that she would not sell the property; yet he took a conveyance from her at a consideration which, under the circumstances, with a cer- tainty almost of her speedy decease, was an insignificant one compared with the value of the property. In view of the circumstances stated, we are not satisfied that the deceased was, at the time she executed the conveyance, capable of comprehending fully the nature and effect of the transaction. She was in a state of phys- ical prostration; and from that cause, and her previous infirmities, aggravated by her sickness, her intellect was greatly enfeebled; and, if not disqualified, she was unfitted to attend to business of such importance as the disposition of her entire property, and the securing of an annuity for life. Certain it is, that, in negotiating for the disposition of the property, she stood, in her sickness and in- firmities, on no terms of equality with the de- fendant, who, with his attorney and agent, met her alone In her hovel to obtain the con- veyance. It is not necessary. In order to secure the aid of equity, to prove that the deceased was at the time Insane, or in such a state of mental imbecility as to render her entirely in- capable of executing a valid deed. It is suf- ficient to show that, from her sickness and in- firmities, she was at the time in a condition of great mental weakness, and that there was gross inadequacy of consideration for the con- veyance. From these circumstances, imposi- tion or imdue infiuence will be inferred. In the case of Harding v. Wheaton, 2 Mason, 378, Fed. Cas. No. 6,051, a conveyance executed by one to his son-in-law, for a nominal consid- eration, and upon a verbal arrangement that it should be considered as a trust for the main- tenance of the grantor, and after his death for the benefit of his heirs, was, after his death, set aside, except as security for actual advances and charges, upon application of his heirs, on the ground that it was obtained from him when his mind was enfeebled by age and other causes. "Extreme weakness," said Mr. Justice Story, in deciding the case, "will raise an almost necessary presumption of imposi- tion, even when it stops short of legal inca- pacity; and though a contract, in the ordinary course of things, reasonably made with such a person, might be admitted to stand, yet If It should appear to be of such a nature as that such a person could not be capable of measur- ing 'its extent or importance, its reasonable- ness or its value, fully and fairly, it cannot be that the law Is so much at variance with com- mon sense as to uphold it" The case subse- quently came before this court; and, in de- OOXSTEUCTIVB FRAUD. 315 dding it, Mr. Chief Justice Marstiall, speak- ing of this, and, it would seem, of other deeds executed by the deceased, said: "If these deeds were obtained by the exercise of undue influence over a maij whose mind had ceased to be the safe guide of his actions, it is against conscience for him who has obtained them to derive any advantage from them. It is the peculiar province of a court of conscience to set them aside. That a court of equity will interpose in such a case Is among its best- settled principles." Harding v. Handy, 11 Wheat. 125. The same doctrine is announced in adjudged cases, almost without number; and it may be stated as settled law, that whenever there is great weakness of mind in a person executing a conveyance of land, arising from age, sick- ness, or any other cause, thougn not amount- ing to absolute disqualification, and the con- sideration given for the property is grossly in- adequate, a court of equity will, upon proper and seasonable application of the injured par- ty, or his representatives or heirs, interfere and set the conveyance aside. And the pres- ent case comes directly within this principle. In the recent case of Kempson v. Ashbee, 10 Ch. Cas. 15, decided in the court of appeal in chancery in England, two bonds executed by a young woman, living at the time with her mother and step-father,— one, at the age of twenty-one, as surety for her step-father's debt, and the other, at the age of twenty-nine, to secure the amount of a judgment recovered on the first bond,— were set aside as against her, on the ground that she had acted in the transaction without independent advice; one of the justices observing that the court had endeavored to prevent persons subject to in- fluence from being Induced to enter into trans- actions without advice of that kind. The prin- ciple upon which the court acts in suh cases, of protecting the weak and dependent, may al- ways be invoked on behalf of persons In the situation of the deceased spinster in this case, of doubtful sanity, living entirely by herself, without friends to take care of her, and con- fined to her house by sickness. As well on this ground as on the ground of weakness of mind and gross inadequacy of consideration, we think the case a proper one for the inter- ference of equity, and that a cancellation of the deed should be decreed. The objection of the lapse of time — six years —before bringing the suit cannot avail the de- fendant. If during this time, from the death of witnesses or other causes, a full presenta- tion of the facts of the case had become im- possible, there might be force in the objection. But as there has been no change In this re- spect to the injury of the defendant, it does not lie in his mouth, after having, in the man- ner stated, obtained the property of the de- ceased, to complain that her heir did not soon- er bring suit against him to compel its sur- render. There is no statutory bar in the case. The improvements made have not cost more than the amount which a reasonable rent of the property would have produced, and the complainant, as we understand, does not ob- ject to allow the defendant credit for them. And as to the small amount paid on the ex- ecution of the conveyance, it Is sufficient to observe, that the complainant received from the administrator of the deceased's estate only $113.42; and there is no evidence that he ever knew that this sum constituted any portion of the money obtained from the defendant. A decree must, therefore, be entered for a can- cellation of the deed of the deceased and a surrender of the property to the complainant, but without any accounting for back rents, the improvements being taken as an equiva- lent for them. Decree reversed, and cause remanded with directions to enter a decree as thus stated. Mr. Chief Justice WAITE and Mr. Justice STRONG, concur. Mr. Justice BRADLEY (dissenting). I can- not concur in the judgment given in this case. Were there no other reason for my dissent, it would be enough that the complainant has been guilty of inexcusable laches. He knew every thing of which he now complains, in February, 1864, when the grantor of the de- fendant died, and when his rights as her heir vested; and yet he waited until six years and nine months thereafter before he brought this suit, and before he made any complaint of the sale she had made. Meanwhile, he accepted the money the defendant had paid on account of the purchase, and he stood silently by, as- serting no claim, while the defendant was making valuable improvements upon the lot, at a cost of $6,000 or $7,000, a sum about equal to the value of the property at the time of the purchase. To permit him now to as- sert that the sale was invalid, because the vendor was of weak mind, is to allow him to reap a profit from his own unconscionable si- lence and delay. I cannot think a court of equity should lend itself to such a wrong. 316 CONSTRUCTIVE FRAUD. GREENE et al. v. ROWORTH et al. (21 X. E. 165, 113 N. Y. 4(j2.) Court of Appeals of New York. April 23, 1889. Appeal from common pleas of New York city and county, general term. Action originally brought by William Eoworth, to vacate transfers of certain prop- erty made by him to his sons, Joseph G. and John W. Roworth. Pending the decision, AVilliam Roworth died, and the action was revived in favor of the present plaintiffs, Emma T. Greene and others. A judgment for plaintiffs was reversed in part and affirmed in part on appeal to the general term of the supreme court, and defendants now appeal to this court. Thomas Darlington, (Samuel Jones, of counsel,) for appellants. /. M. & A. U. Van Cott, for respondents. RuGER, C. J. The reversal by the general term of so much of the judgment of the spe- cial term as awarded relief to the plaintiffs in respect to the conveyance of personal property, eliminated from the case all ques- tions predicated upon rulings in relation thereto. This determination left the issues in respect to the validity of the conveyances of two parcels of real estate as the only sub- jects of controversy on the appeal to this court. The evidence of the exercise of fraud and undue influence by the defendants Joseph and John Roworth, in obtaining from their fath- er, William Roworth, deeds of such property, was quite sufficient to sustain the findings of the trial court respecting the same. The ev- idence tended to show that for many years prior to January, 1877, William Roworth and his son Samuel carried on the business of manufacturing confectionery at 354 Pearl street in the city of New York, under the firm name of Samuel W. Roworth &Co., and had established a prosperous busmess Will- iam Roworth was then the owner of a one- half interest in tlie assets of said firm; of a three-quarters interest in the lot and build- ing in which the business was carried on ; of a house and iot in Devoe street, Brooklyn, and another in Fifth street in the same city; a mortgage on property in Detroitfor $2,000;' and deposits in bank of about $500. In Jan- uary, Samuel W. Roworth died, devising his interest in the assets of said firm equally to the defendants, his two brothers, John and Joseph, and to his two sisters. Between the lime of Samuel's death, in January, 1877, and March, 1880, the defendants John and Joseph had obtained from William Roworth, without consideration except a promise to pay him a small sum weekly from the part- nership business, all of the property possessed by him. This was effected by transfers and conveyances of such property, or its proceeds, made successively at different times by Will- iam Eoworth to one or both of said defend- ants, between the dates aforesaid. At the time of the death of Samuel the two defend- ants were each upwards of 45 years of age, and had been unsuccessful in ttie business operations tlieretofore carried on by them re- spectively, and were not then possessed of any property. They were supporting them- selves as workmen, upon a small salary, in the employ of Samuel W. Roworth & Co. In 1877, William Roworth was 76 years of age, and had become quite infirm in health. His memory had greatly failed, and he was prac- tically incapable of taking an active and re- sponsible part in the management of his bus- iness, although he continued for some time thereafter to attend at the store and factory, and make entries in the books, draw up bills, and render other small services which he had been theretofore accustomed to perform. He had become very nervous and susceptible, being frequently overcome by emotion, and easily affected to tears, and subject to the in- fluence of those surrounding him. He had an aged wife, who survived him, and was dependent upon him for support. The find- ings of fact made by the trial court as the basis of its judgment with respect to the two deeds which remain as the subject of con- troversy on this appeal are substantially the same, and that one relating to the transfer of No. 354 Pearl street. New York, reads as follows: That "the said William Roworth, at the time of the execution and acknowledg- ment of said instrument, did not know or comprehend the legal effect of the said in- strument, " and that its "execution, acknowl- edgment, and delivery * * * were procured by fraud and undue influence, exercised upon said William Roworth by the said defendants, Joseph G. Roworth and John W. Roworth, and by their taking advantage of his age and infirmities, and his confidence and trust in them, and his dependence and reliance upon them; and the signing and delivery of the same by William Roworth was reckless and improvident, was done without proper advice of counsel, ana upon a grossly inadequate consideration, and while he was acting un- der the influence of said defendants, unduly exercised upon him." The evidence, as we have said, fully supports this finding, and, indeed, we are of the opinion that the proof would not have justified the contrary conclu- sion. In the consideration of this case the court cannot shut its eyes to the significant fact that William Roworth has been substan- tially stripped of all of his property by some one; and however or to whomever it passed originally, either the property or its proceeds found their way to a common end, viz., to the benefit and possession of the defendants. Whatever the defendants advanced, if any- thing, towards the acquisition of any part of the property, has been for their own advan- tage, and substantially from funds which they had received from their father. The only material question in this case arises over an alleged inconsistency between the findings made by the trial court as the basis of its judgment, and a single one also found by the court out of 105 spscial requests CONSTRUCTIVE FRAUD. 317 to find on questions of fact submitted by tiie defendants at the close of the trial. It is un- doubtedly an established rule of tliis court, where findings of fact, made by the court or referee, which are material to the deter- ilQination of the case, are irreconcilably con- flicting, that we will be governed by that finding which is most favorable to the party appealing; but this rule presupposes such a difference in the findings. So, far, therefore, as these findings are conflicting, it is the duty of the court to endeavor to reconcile them, and give to each some office to perform. It is only when this cannot, by a reasonable construction, be accomplished, that the court are bound to accept that finding most favor- able to the appellant. Bennett v. Bates, 94 N. Y. 354; Redtteld v. Redfleld, 110 N. Y. 671, 18 N. E. Rep. 373. It was said in the latter case that " we have held that, where the special findings of a judge or referee differ from the findings formally made as the basis of the judgment, the appellant has the right to rely upon such findings as are most favor- able to him. Those decisions were made at a time when the practice authorized the sub- mission of proposed findings * * * after the decision of the case was rendered; and under that practice such findings were passed upon, generally weeks, and frequently months, after the formal findings had been made. And we held tliat where such find- ings differed from the prior findings, and con- tradicted them, that the appellant had the right to rely upon them if most favorable to him. Tompkins v. Lee, 59 N. Y. 662; Sch winger v. Raymond, 83 N. Y. 192; Bon- nell V. Griswold, 89 N. Y. 122. Since those decisions, the practice has been changed, and now the proposed findings must be presented at the submission of the case, and the pre- sumption is that those findings are passed upon when the case is decided and the formal findings made. Hence, for the purpose of construing the findings, we must look at all of them, both the general and special find- ings, and if they are in conflict we must at- tempt to reconcile them." In accord with the rule thus stated, we must look at the find- ings in question, to see how far they are in- consistent. The formal finding will be found much broader than the one alleged to be in- consistent llierewith, as it especially finds that the deed was fraudulently procured, in igno- rance of its effect by the grantor, and these facts are not negatived by any subsequent finding. There is undoubtedly an apparent inconsistency between the additional and some parts of the formal findings, but upon examination we think it does not necessarily nullify the effect of the formal finding. The additional finding is as follows: "That the said Joseph G. and John W. Roworth did not, about said month of April, or at any time, persuade or influence said William Roworth to sign said alleged paper, or makeany repre- sentations in respect thereto." We infer that this finding relates to the deed in ques- tion. In the same connection the court re- fused to find that the said William Roworth was not "by reason of bodily infirmities un- able and incapacitated from participating in or taking part in the management and con- trol of his business, property, and affairs," or that "Joseph G. and John W. Roworth were not intrusted by William Roworth * * * with the exclusive and entire management and control of his property and business, " or that "he was not dependent upon the said Joseph G. and John W. Roworth for the proper management and control of his prop- erty and business, and was not solely reliant upon their advice in regard thereto, " or that he was cognizant of "the real purpose and effect of his deed to Joseph G. and John W. Roworth. " It seems quite evident, by these refusals to find, that the court did not intend, by its informal finding, to nullify the general force and effect of the formal findings. The court had, in its original findings, on seven distinct and separate occasions applying to as many different transfers of property, reiter- ated in substance the findings of fraud and undue influence on the part of these defend- ants in obtaining such transfers. The several findings were presumptively passed upon at the same time, and it is quite improbable that the court intentionally determined to leave two findings in the case radically inconsistent with each other, or to nullify and contradict its repeated findings, often expressed and con- firmed in its previous statement of facts. We are of the opinion that the court, by the additional finding, intended only to say that there was no direct or positive evidence of any special influence or persuasion with reference to the procurement of the deed in question, but left the judgment to stand upon the legal presumption of fraud aris- ing upon the facts and circumstances of the case. The informal finding was substan- tially a finding as to the inferences to be drawn from the evidence, and not upon an existing and independent fact itself, and in that respect was rather a finding upon a question of law than one of fact. In that view it may be said to be erroneous, and as not affecting the judgments rendered. The leading facts of the case have been found, and are not impaired Ijy any contradictory finding. They were, substantially, that the deed was secured by parties who had already obtained the larger portion of the grantor's property, without any adequate consideration therefor; that this conveyance left him com- paratively destitute of property, and was made without consideration, in the absence of any legal adviser, by an aged man, whose mental and physical condition was much en- feebled, and in ign'^rance of its legal effect, to persons occupying a confidential relation towards him, and who had the management and control of his property and business af- fairs, and upon whose advice and counsel he was accustomed to rely. That these facts afford sufficient ground to support a finding of fraud and undue influence, even without positive or direct proof of persuasion or in- 318 CONSTRUCTIVE FRAUD. fluence, cannot be questioned. Tliey pre- sent a situation from which fraud is legally imputable to those benefited, and requiring an explanation from them, which was not furnished by the defendants. As was said by Judge Hand in Gowee v. Cornell, 75 N. Y. 99: "We return, then, to the question whether this case was one of constructive fraud. It may be stated as uni- versally true that fraud vitiates all contracts, but as a general thing it is not presumed, but must be proved by the party seeking to relieve himself from an obligation on that ground. Whenever, however, the relations between the contracting parties appear to be of sucii a character as to render it certain that they do not deal on terms of equality, but that, either on the one side from superior knowledge of the matter derived from a fidu- ciary relation, or from overmastering influ- ence, or, on the other, from weakness, de- pendence, or trust justifiably reposed, unfair advantage in a transaction is rendered prob- able, there the burden is shifted, the trans- action is presumed void, and it is incumbent upon the stronger party to show affirmative- ly that no deception was practiced, no undue influence was used, and that all was fair, open, voluntary, and well understood." The remarks of Judge Andbevits in Re Will of Smitli, 95 N. Y. 516, are so pertinent to the question that we repeat them here: "Undue influence, which is a species of fraud, when relied upon to annul a transaction inter par- tes, or a testamentary disposition, must be proved, and cannot be presumed. But the relation in which the parties to a transaction stand to each other is often a material cir- cumstance, and may of itself, in some cases, be sufficient to raise a presumption of its existence, * * * and, when the situa- tion is shown, then there is cast upon the party claiming the benefit or advantage the burden of relieving himself from the suspi- cion thus engendered, and of showing, either by direct proof or by circumstances, that the transaction was free from fraud or undue in- fluence, and that the other party acted with- out restraint and under no coercion, or any pressure, direct or indirect, o* the party ben- efited. This rule does not proceed upon a presumption of the invalidity of the particu- lar transaction, without proof. The proof is made in the first instance when the relation and the personal intervention of the party claiming the benefit is shown," The gen- eral rule is stated in 1 Story, Eq. Jur. § 238: "The doctrine, therefore, maybe laid down as generally true that the acts and contracts of persons who are of weak understandings, and who are therefore liable to imposition, will be held void in courts of equity if the nature of the act or contract justify the con- clusion that the party has not exercised a de- liberate judgment, but that he has been im- posed upon, circumvented, or overcome by cunning or artifice or undue influence." If, therefore, we should give full effect to the special finding, and come to the conclusion that the giving of the deed in question was the voluntary, unrestricted act of the gran- tor, it would not, under the circumstances of this case, justify the retention by the gran- tee of the property conveyed, or furnish a reason for refusing relief to the improvident grantor. We are therefore of the opinion tliat the judgment should be affirmed. All concur. CONSTRUCTIVE FRAUD. 319 ' A BROWN V. PIERCE. (7 Wall. 205.) .'feupreme Court of the United States. Dec, 1868. Error to the supreme court, Nebraska ter- ritory. Brown filed his bill in September, 1860, in the court below against three persons, Pierce, Morton, and Weston, alleging that in the spring of 1857, he settled upon and improved a tract of land near Omaha; that he erected a house on the tract and continued to occupy it until August 10th, 1857, when he entered the tract under the pre-emption laws of the United States; that Pierce claimed the land by virtue of the laws of an organization known as the Omaha Claim Club; that this organization, consisting of very numerous armed men, sought to, and did to a great ex- tent, control the disposition of the public lands in the vicinity of Omaha in 1857, in de- fiance of the laws of the United States; that it frequently resorted to personal violence in enforcing its decrees; that the fact was no- torious in Omaha, and that he. Brown, was fully advised in the premises; that as soon as he had acquired title to the land. Pierce, together with several other members of the club, came to his house and demanded of him a dee'd of the land, threatening to take his life by hanging him, or putting him in the Missouri river, if he did not comply with the demand; that the club had posted hand- bills calling the members together to take action against him; and that knowing all this, and In great fear of his life, he did, on the 10th of August, 1857, convey the land by deed to Pierce; that he. Brown, received no consideration whatever for the conveyance; that from the date of his settlement upon said laud, until the time of filing the bill, he liad continued to keep possession either ac- tually or constructively; that Morton claimed an interest in the premises by virtue of a judgment lien, and that Weston also made some claim. The prayer was, that the deed might be declared void, and Pierce be decreed to re- convey, and for general relief. The bill was taken pro confesso as to all the defendants, except Morton, who an- swered. Tills answer, stating that he, Morton, was not a resident of the territory, and had no knowledge or information about the facts al- leged in the bill, but on the contrary was an utter stranger to them, and therefore could not answer as to any belief concerning them, —set forth that on the 28th August, 1857, Pierce was "the owner and in possession of, and otherwise well seized and entitled to, as of a good and indefeasible estate of inher- itance in fee simple," the tract in contro- versy; that being so, and representing him- self to be so, and having need of money in business, he applied to him, Morton, to bor- row the same, and that he, Morton, being in- duced by reason of the representation, and also by the possession, and believing that he. Pierce, was the owner, he was thereby in- duced to lend, and did lend to him $6,000, on the personal security of him. Pierce; that before the filing of this bill by Brown, he, Morton, had obtained judgment against Pierce for $3,400, part of the loan yet un- paid; that this judgment was a lien on the lands; and that as he, Morton, was informed and believed, if he could not obtain his money from this land, he would be wholly defrauded out of it. The answer further stated that the defend- ant was informed and believed that Brown, the complainant, entered upon the lands as the tenant of Pierce, and that the suit by the complainant was being prosecuted in viola- tion of the just rights of Pierce, as well as of him, Morton. There was no replication. Proofs were taken by the complainant, and they showed to the entire satisfaction of the court that all the matters alleged in the bill and not denied by the answers, were true. See 7 Wall. 213. There thus seemed no doubt as to the truth of all the facts set out in the bill. The court below declared Brown's deed void, and decreed a reconveyance from Pierce to him, and that neither Morton nor Weston had any lien on the premises. Morton now brought the case here for review. Carlisle & Woolworth, for appellant. Red- ick & Briggs, contra. Mr. Justice CLIFFORD delivered the opin- ion of the court. Representations of the complainant were, that on the tenth of August, 1857, he ac- quired a complete title to the premises de- scribed in the bill of complaint, under the pre-emption laws of the United States, and that thereafter, on the same day, he was compelled, through threats of personal vio- lence and fear of his life, to convey the same, without any consideration, to the principal respondent. Framed on that theory, the bill of complaint alleged that the first-named re- spondent was at that time a member of an unlawful association in that territory, called the Omaha Claim Club, and that he, accom- panied by three or four other persons be- longing to that association, came to his house a few days before he perfected his right of pre-emption to the land In question, and told the complainant that if he entered the land under his pre-emption claim, he must agree to deed the same to him, and added, that un- less he did so, he, the said respondent and his associates, would take his life; and the complainant further alleged, that the same respondent, accompanied, as before, by cer- tain other members of that association, came again to his house on the day he perfected his pre-emption claim, and repeated those threats of personal violence, and did other acts to intimidate him, and induce him to be- lieve that they would carry out their threats 3120 CONSTRUCTIVE FRAUD. if he refused to execute the deed as required. Based upon those allegations, the charge is that the complainant was put in dui'ess by those threats and acts of intimidation, and that he signed and executed the deed, and conveyed the land by means of those threats and certain acts of intimidation, and through fear of his life, and without any consider- ation; and he prayed the court that the con- veyance might be decreed to be inoperative and void, and that the grantee might be re- quired to reconvey the same to the com- plainant. Two other persons were made respondents, as claiming some interest in the land in con- troversy. Pierce, the principal respondent, and ^^■eston, one of the other respondents, were non-residents, and were served by pub- lication pursuant to the rules of the court and the law of the jurisdiction. They never appeared, and failing to plead, answer, or demur, and due proof of publication in the manner prescribed by law having been filed in court, a decree was rendered as to them, that tlie bill of complaint be taken as con- fessed. Nations v. Johnson, 2-1 How. 201. Morton, the other respondent, appeai'ed and filed an answer, in which he alleged tliat the principal respondent, on the twenty-eighth of August, 1857, and for a long time before, was the owner in fee of the premises; that he was informed, and believed, that the com- plainant entered upon the land as the tenant of the principal respondent, and that he was prosecuting this suit in violation of the just rights of all the respondents; that the prin- cipal respondent wanting to boiTow money, he, the respondent before the court, loaned him a large sum, and accepted bills of ex- change for the payment of the same, drawn to the order of the bon'ower of the money, and which were indorsed by the drawer; that the bills of exchange not having been paid when they became due. he brought suit against the drawer and indorser, and recov- ered judgment against him for three thou- sand one hundred dollars; that the judg- ment so recovered is in full force and unsat- isfied, aud that the same is a lien on the premises described in the bill of complaint. Xo answer, from any knowledge possessed by the respondent, is made to the allegation that the complainant acquired a complete title to the land under the pre-emption laws of the United States, nor to the charge con- tained in the bill of complaint, that the deed was procured by threats of personal violence amounting to actual duress. On the contrary, the answer alleged that the respondent before the court was an utter stranger to all those matters and things, and that he could not answer concerning the same, because he had no information or belief upon the subject. Authorities are not wanting to the efifect, that all matters well alleged in the bill of complaint, which the answer neither denies nor avoids, are admitted; but the better opin- ion is the other way, as the sixty-first rule adopted by this court provides that if no ex- ception thereto shall be filed within the period therein prescribed, the answer shall be deem- ed and taken to be suflicient Young v. Grundy, 6 Cranch, 51; Brooks v. Byam, 1 Story, 297, Fed. Cas. No. 1,947. Material allegations in the bi-ll of com- plaint ought to be answered and admitted, or denied, if the facts are within tlie knowl- edge of the respondent; and if not, he ought to state what his belief is upon the subject, if he has any, and if he has none, and cannot form any, he ought to say so, and call on the complainant for proof of the alleged facts, or waive that branch of the controversy; but the clear weight of authority is, that a mere statement by the respondent in his answer, as in this case, that he has no knowledge that the fact is as stated, without any an- swer as to his belief concerning it, is not such an admission as is to be received as full evidence of the fact. Warfleld v. Gambrill. 1 Gill & .T. 503. Such an answer does not make it neces- sary for the complainant to introduce more than one witness to overcome the defence, and the well-known omissions and defects of such an answer may liave some tendency to prove the allegations of the bill of com- plaint but they are not such an admission of the same as will constitute a suflicient foundation for a decree upon the merits. Young V. Gnmdy, 6 Cranch, 51; Parkman v. fl'elch, 19 Pick. 234. Proper remedy for a complainant, in such a case, is to e.xcept to the answer for insuffi- ciency within the period prescribed by the sixty-tirst rule; but if he does not avail him- self of that right, the answer is deemed sufli- cient to prevent the bill from being taken pro confesso. as it may be if no answer is filed. Hardeman v. Harris, 7 How. 726; Stockton V. Ford, 11 How. 232; 1 Daniell, Ch. Prac. 736; Langdon v. Goddard, 3 Story, 13, Fed. Cas. No. 8,061. Attention is called to the fact that no rep- lication was filed to the answer; but the sug- gestion comes too late, as the respondent pro- ceeded to final hearing in the court below without interposing any such objection. Mere formal defects in the proceedings, not objected to in the court of original jurisdic- tion, cannot be assigned in an appellate tri- bunal as error to reverse either a judgment at law or decree in equity. Legal efifect of a replication is, that it puts in issue all the matters well alleged in the answer, and the rule is, that if none be filed, the answer will be taken as true, and no evi- dence can be given by the complainant to contradict anything which is therein well al- leged, 1 Barb. Ch. Prac. 249; Mills v. Pit- man, 1 Paige, Ch. 490; Peirce v. West, 1 Pet. C. C. 351, Fed. Cas. No. 10,909; Story, Bq. PI. 878; Cooper, Eq. PI. 329. Undenied as the answer is by any replica- tion, it must have its fair scope as an ad- mission; but the court is not authorized to CONSTRUCTIVE FRAUD. 321 supply anj'tliing not expressed in it, beyond what is reasonably implied from the lan- guage employed. Proofs were taken by the complainant, and they show, to the entire satisfaction of the court, that all the matters alleged in the bill of complaint, and not de- nied in the answer, are true, and the conclu- sion of the court below was, that the com- plainant acquired a complete title to the land under his pre-emption claim, and that the deed from him to the principal respondent was procured in the manner and by the means alleged in the bill of complaint. Nothing is exhibited in the record to sup- port any different conclusion, or to warrant any different decree, unless it be found in one or the other of the first two defences set up in the answer. First defence is, that the principal respond- ent, on the twenty-eighth of August, 1857, and long before that time, was the owner in fee of the premises; but neither that part of the answer, nor any other, denied that the complainant acquired a complete title to the land, as alleged in the bill of complaint, nor set up any defence in avoidance of those alle- gations, nor made any attempt to present any defence against the direct charge, that the deed under which the respondent claimed title was procured from the complainant through threats of personal violence and by means of duress. Indefinite as the allegation of title is, the answer must be construed as referring to the title under the deed in controversy, as it is not pretended that the respondent ever had any other, and, if viewed in that light, it is in no respect inconsistent with the con- clusion adopted by the supreme court of the territory. Such an indefinite allegation cannot be con- sidered as presenting any sufficient answer, either to the alleged title of the complainant or to the charge made in the bill of com- plaint. Briefly stated, the second defence set up in the answer is, that the respondent was in- formed and believed that the complainant en- tered upon the land as a tenant, but the time when the supposed entry was made is not alleged, nor are the circumstances attending the entry set forth, nor is any reason assign- ed why the allegations were not made more definite, nor is there any fact or circum- stance alleged which shows or tends to show that there was any prior owner to the land, except the United States, nor that the re- spondent ever pretended to have any other title to the same than that derived from the complainant. Viewed in any light, those allegations must be regarded as evasive and insufBcient; and they are not helped by the omission of the complainant to file the general replication. Those parts of the answer 'being laid out of the case as Insufficient to constitute a de- fence, the conclusion is inevitable that the title to the land was in the complainant as alleged, and that he parted with It through HUTCH.& BUNK.BQ.— 21 threats of personal violence and by duress, and without any consideration. Argument to show that a deed or other written obligation or contract, procured by means of duress, is inoperative and void, is hardly required, as the proposition is not de- nied by the respondent. Actual violence is not necessary to constitute duress, even at common law, as understood m the parent country, because consent is the very essence of a contract, and, if there be compulsion, there is no actual consent, and moral compul- sion, such as that produced by threats to take life or to infiict great bodily harm, as well as that produced by imprisonment, is every- where regarded as sufficient, in law, to de- stroy free agency, without which there can be no contract, because, in that state of the case, there is no consent. Duress, in its more extended sense, means that degree of constraint or danger, either actually infiicted or threatened and impend- ing, which is sufficient, in severity or in ap- prehension, to overcome the mind and will of a person of ordinary firmness. Chit. Cont. 217; 2 Greenl. Ev. 283. Text-writers usually divide the subject in- to two classes, namely, duress per minas and duress of imprisonment, and that classifica- tion was uniformly adopted in the early his- tory of the common law, and is generally preserved in the decisions of the English courts to the present time. 2 Inst. 482; 2 RoUe, Abr. 124. Where there is an arrest for an improper purpose, without just cause, or where there is an arrest for a just cause, but without lawful authority, or for a just cause, but for an unlawful purpose, even though under proper process, it may be construed as duress of imprisonment; and if the person arrested execute a contract or pay money for his release, he may avoid the contract as one procured by duress, or may recover back the money in an action for money had and receiv- ed. Kichardson v. Duncan, 3 X. H. 508; Watkins v. Baird, 6 Mass. 511; Strong v. Grannis, 26 Barb. 124. Second class, duress per minas, as defined at common law, is where the party enters into a contract (1) for fear of loss of life; (2) for fear of loss of limb; (3) for fear of maj'hem; (4) for fear of imprisonment; and many modem decisions of the courts of that country still restrict the operations of the rule within those limits. 3 Bac. Abr. tit. "Duress," 252. ... .-^. 'They deny that contracts procured by men- ace of a mere battery to the person, or of trespass to lands, or loss of goods, can be avoided on that account, and the reason as- signed for this qualification of the rule is, that such threats are held not to be of a na- ture to overcome the mind and will of a firm and prudent man, because it is said that if such an injui-y is inflicted, sufficient and adequate redress may be obtained in a suit at law. 322 CONSTRUCTIVE FKAUD. Cases to the same effect may be found also in the reports of decisions in this coun- try, and some of our text-writers have adopt- ed the rule, that it is only where the threats uttered excite fear of death, or of great bod- ily harm, or unlawful imprisonment, that a contract, so procured, can be avoided, be- cause, as such courts and autliors say. the person threatened with slight injury to the person, or with loss of property, ought to have sufficient resolution to resist such a threat, and to rely upon the law for his rem- edy. Slieate v. Beale, 11 Adol. & E. 983; Atlee v. Backhouse, 3 Mees. & W. 642; Smith V. Monteith, 13 Mees. & A^'. 438; Shep. Touch. U; 1 Pars. Cont. 393. On tlie other hand, there are many Ameri- can decisions, of high authority, which adopt a more liberal rule, and hold that contracts procured by threats of battery to the person, or the destruction of property, may be avoid- ed on the ground of duress, because in such a case there is nothing but the form of a con- tract, without the substance. Foshay v. Ferguson, 5 Hill, 158; Bank v. Copeland, 18 -Md. 317; Eadie v. Shmmon, 2(; X. Y. 12; 1 Story, Eq. Jur. (9th Ed.) 2:J1); Harmony v. Bingham, 12 N. Y. 99; Id., 1 Duer, 220; Fleetwood v. New York, 2 Sandf. 475; Tutt V. Ide, 3 Blatchf. 250; Astley v. Reynolds, 2 Strange, 915; Brown v. Peck, 2 Wis. 277; Oates V. Hudson, 5 Eng. Law & Eq. 469. But the case under consideration presents no question for decision which requires the court to determine which class of those cases is correct, as they all agree in the rule that a contract procured through fear of loss of life, produced by the threats of the other party to the contract, wants the essential ele- ment of consent, and that it may be avoided for duress, which is sufficient to dispose of the present conti'oversy. 2 Greenl. Ev. 283; 1 Bl. Comm. 131. Next question which arises in the case is, whether the judgment set up by the appel- lant creates a superior equity in his favor over that alleged and proved by the appellee. Before proceeding to examine this question, it will be useful to advert briefly to the ma- terial facts exhibited in the record. Title was acquired by the complainant un>- der the pre-emption laws of the United States, and on the same day the principal respond- ent, through threats to take his 'life, if he refused, compelled him to convey the same to that respondent, and the record shows that the respondent before the court, within the same month, loaned the money to the gran- tee in that deed, for which he recovered judgment, although the grantor was then in possession of the land, and has remained in possession of the same to the present time. The judgment is founded upon the bills of exchange received for that loan. Judgments were not liens at common law, but several of the states had passed laws to that effect before the judicial system of the United States was organized, and the decisions of this court have established the doctrine that congress, in adopting the processes of the states, also adopted the modes of process pre- vailing at that date in the courts of the sev- eral states, in respect to the lien of judg- ments within the limits of their respective jurisdictions. Williams v. Benedict, 8 How. Ill; Ward v. Chamberlain, 2 Black, 438; Bayard v. Lombard, 9 How. 530; Riggs v. Johnson Co., 6 Wall. 166. Different regulations, however, prevailed In different states, and in some neither a judg- ment nor a decree for the payment of money, except in cases of attachment or mesne pro- cess, created any preference in favor of the creditor until the execution was issued, and had been levied on the land. Where the lien is recognized, it confers a right to levy on the land to the exclusion of other adverse in- terests acquired subsequently to the judg- ment; but the lien constitutes no property or right in the land itself. Conard v. Insur- ance Co., 1 Pet. 443; Masslngill v. Downs, 7 How. 767. Such judgments and decrees were made liens by the process acts in the federal dis- tricts where they have that effect under the state laws, and congress has since provided that they shall cease to have that operation in the same manner, and at the same periods, in the respective federal districts, as like processes do when issued from the state courts. Federal judgments and decrees are liens, therefore, in all cases, and to the same extent, as similar judgments and decrees are, when rendered in the courts of the state. Express decision of this court is, that the lien of a judgment constitutes no property in the land, that it is merely a general lien se- curing a preference over subsequently acquir- ed interests in the property, but the settled rule in chancery is, that a general lien is con- trolled in such courts so as to protect the rights of those who were previously entitled to an equitable interest In the lands, or in the proceeds thereof. Specific liens stand upon a different footing, but it is well settled that a judgment creates only a general lien, and that the judgment creditor acquires thereby no higher or better right to the property or assets of the debtor, than the debtor himself had when the judg- ment was rendered, unless he can show some fraud or collusion to impair his rights. Drake, Attach. § 223. Correct statement of the rule is, that the lien of a judgment creates a preference over subsequently acquired rights, but in equity It does not attach to the mere legal title to the land, as existing in the defendant at its rendition, to the exclusion of a prior equita- ble title in a third person. In re Howe, 1 Paige, Ch. 128; Ells v. Tousley, Id. 283; White V. Carpenter, 2 Paige, 219; Buchan v. Sumner, 2 Barb. Ch. 18l; Lounsbury v. Purdy, 11 Barb. 494; Keirsted v. Avery, 4 Paige, Ch. 15. Guided by these considerations, the court CONSTRUCTIVE FRAUD. 323 of chancery will protect the equitable rights of third persons against the legal lien, and will limit that lien to the actual interest which the judgment debtor had in the estate at the time the judgment was rendered. Averill v. Loucks, 6 Barb. 27. Objection is also made, that the affidavit showing that the defendants were non-resi- dents, was hot in due form, and that the or- der of notice, and the publication of the same, were insufficient to give the court ju- risdiction; but the proposition is not support- ed by the record, and must be overruled. Decree affirmed. 324 CONSTRUCTIVE FRAUD. .'FKAXCIS et al. ▼. WILKINSON et al. (35 N. E. 150, 147 111. 370.) Supreme Court of Illinois. Oct. 26, 1893. Appeal from circuit court, Stark county; T. M. Sliaw, Judge. Bill by Charity Francis and others against Sylvester Wilkinson and others. From a de- cree dismissing the bill, complainants appeal. Affirmed. The other facts fuUy appear In the fol- lowing statement by MAGRXIDBR, J.: This Is a bill filed on the 2d day of Septem- ber, A. D. 1886, by Charity Prands, of Kan- sas, Rachel Gurfman, of Kansas, and Nancy Cox, of Stark county, lU., daughters of Solomon WlUdinson, deceased, formerly of Stark county, HI., against Sylvester Wilkin- son, Alonzo Wilkinsoin, and Newton Wilkin- son, of said county of Stark, sons of said Solomon Wilkinson, deceased, and Frances Leffler, of said coimty, also a daughter of said Solomon, and John Leffler, of said coun- ty, a son of said Frances Leffler, and grand- son of said Solomon, to set aside certain deeds executed to the defendants by the said Solomon in his lifetime, and for partition of the lands described in said deeds among the said children of the said Solomon. An- swers were filed by said defendants denying the material allegations of the bill. Since the beginning of the suit Rachel Ourfman, Frances Leffler, and John Leffler have died, and their representatives have been made parties. After hearing had upon testimony oral and documentary, and upon evidence submitted in the fonn of depositions, the cir- cuit court dismissed the bill for want of equity, and the present appeal is prosecuted from said decree of dismissal. Solomon Wilkinson came from Ohio to Stark county, HI., in 1849, being at that time about 50 years old. He brought some money with him, and at onoe purchased a farm of 200 acres, on which he lived until his death. He died on April 2, 1885, leaving seven chil- dren, the four daughters and three sons above named, to wit, Rachel, Charity, Nancy, Frances, Sylvester, Alonzo, and Newton. TTia wife died in the spring of 1871. The oldest daughter, Frances, married in 1850, but her husband died in about six weeks, leaving one child, Jetm Leffler. She never left her father, but kept house for him, and man- aged the household affairs after her moth- er's death; and she and her son John, who became of age in 1872, lived with the old man on the home place until his death. Charity married in 1853, Rachel in 1856, and Nancy in 1857 or 1858, each leaving home at the date of her marriage. It is in ev- idence that the lasit three daughters assisted In the work of the farm up to the dates of their respective marriages. Sylvester be- came of age in 1863, Alonzo in 1865, and Newton In 1868. The three sons remained CO the home farm, Alonzo until his mar- riage in 1875, Sylvester until his marriage In 1876, and Newton imtil his marriage In 1881. Up to the latter date and longer they and John Leffler "worked" the home farm and adjoining farms purchased by their father. The deeds sought to be set aside are the following: A deed of 100 acres, ex- ecuted on January 5, 1869, by Robert B. Mc- Ohance to Sylvester Wilkinson; a deed of 80 acres, executed on February 16, 1870, by James A. McChance and his wife to Alonzo Wilkinson; four deeds executed by Solomon Wilkinson, all dated May 27, 1873,— one of 133 acres to Sylvester Wilkinson, one of 187 acres to Newton WUkinson, one of 111 acres to John Leffler, and one of 169 acres to Frances Leffler; a deed dated May 27, 1873, executed by said Sylvester to said Alonzo, conveying one-half of the 160 acres conveyed to Sylvester by Robert B. McChance; a deed of 160 acres, dated October 21, 1874, ex- ecuted by Davis Lowman and wife and Daniel Bnrge and wife to said Sylvester, Alonzo, Newton, and John. The first two deeds were recorded on the respective dates of their execution. The five deeds executed on May 27, 1873, were recorded on July 28, 1876. By the above deeds there were con- veyed to Sylvester 253 acres, to Alonzo 200 acres, to Newton 227 acres, to John Leffler 151 acres, to Frances Leffler 169 acres, mak- ing 1,000 acres in all. The evidence showed that the sons participated in the profits and produce realized from the business of the farms, and received their respective shares of such business up to 1873, or perhaps 1881. Miles A. FuUer and Frank A. Kerns, for appellants. O. O. Wilson and Frank Thomas, for appellees. MAGRUDER, J., (after stating the facts.) The grounds upon which the bill seeks to set aside the deeds are: First, want of mental capacity; second, the exercise of undue In- fluence. The three daughters of Solomon Wilkinson who filed the bill do not claim that he showed any want of mental capacity until after the death of his wife, in the spring of 1871. He was not able to read or write, but there is no testimony on either side that he was not a vigorous man, both mentally and physically, prior to 1871. Hence the deed of 160 acres, executed In January, 1869, to his son Sylvester Wilkinson, by Robert B. McChance, and the deed executed in Feb- ruary, 1870, to his son Alonzo Wilkinson, by James A. McChance, cannot be invalidated because of any want of mental capacity. Nor are we able to discover that the execu- tion of those deeds was procured by any kind of fi-aud, deceit, or undue influence. The two tracts were purchased by Solomon Wilkinson, but the proof shows that he knew of and consented to the conveyances of them to his sons Sylvester and Alonzo, who had remained with him after reaching the age of majority, and had assisted him, the one for six and the other for five years, in his busl- construcjtive fraud. 325 ness of farming and stock raising. Ordi- Qarily, where a purchase of real property is made by a father in the name of his legiti- mate child, no trust results in favor of the father, but the transaction is presumed to be a gift for the benefit of the child. 2 Pom. Eq. Jur. § 1039. Undue influence -wiU not be inferred from the relation of parent and child where the gift is from the parent to the child, imless the former at the time of the gift is under the control and dominion of the latter. Oliphant v. Leversidge, 30 N. B. Bep. 334, 142 HI. 160; Burt v. Quisenberry, 132 m. 399, 24 N. B. Bep. 622. J. H. Cox, the husband of one of the complainaiits, says that the deceased directed the deed of the 160 acres to be made in 1869 to Sylvester, because he had then concluded to give each of his children 160 acres of land. If such was his intention at the time, he did not subsequently carry it out as to the complain- ants. The fact that a grantor, many years before making a final distribution of his property by the execution of deeds, expressed an intention to divide it equally among his children, affords no evidence of undue in- fluence, or mental incapacity, where a differ- ent disposition of his property is made. Butherford v. Morris, 77 HI. 397. The labor of the sons for their father during a number of years constituted some consideration foi the conveyances which were made to them by his vendors at his direction. Where a father disposes of property by way of ad- vancement or distribution to his children dur- ing his life, instead of disposing of it by wiU, courts will not be as rigid in consider- ing the adequacy of the consideration paid as if the transaction was with strangers. Clearwater v. Kimler, 43 111. 272. The de- ceased had the legal right to dispose of the two tracts in question as he pleased, and, if he saw proper to make his two sons the re- cipients of his bounty, the other children havt no cause of complaint. Id. But the main contention between the par- ties is as to the deeds executed by the de- ceased on May 27, 1873, thereby dividing 600 acres among his sons, his grandson, and his daughter Mrs. LeflBer. It is flrst insisted that these deeds were invalid for an alleged want of mental capacity in Solomon Wilkin- son to make them. We have frequently de- cided that a man has sufficient mental ca- pacity to dispose of his property by wiU or deed if he is capable of transacting ordinary business, and of acting rationally in the or- dinary affairs of life. Buying and selling property, settling accounts, collecting and paying out money, or borrowing or loaning money, have been mentioned as instances of what is meant by the transaction of the ordi- nary affairs of business. Meeker y. Meeker, 75 m. 260; Brown v. Biggin, 94 Bl. 560; Schneider v. Manning, 121 HI. 376, 12 N. B. Rep. 267; Freeman v. Basly, 117 III. 317, 7 N. E. Bep. 656; Perry v. Pearson, 135 BL 218, 25 N. B. Bep. 636. The burden is upon the complainant who seeks to set aside ad executed deed for want of mental capacity or for the exercise of undue influence to prove the allegations of his bill by a preponderance of the evidence. English t. Porter, 109 Bl. 285. We do not think that there is in this case a preponderance of the evidence in favor of a want of mental capacity. In 1873, Solo- mon Wilkinson was about 72 or 73 years old. Witnesses for complainants swear that, after the death of his wife in the spring of 1871, he showed signs of feebleness, was much affected by the loss of his wife, was not as clear and active in his mind as he had been, was complaining and despondent, would some- times shed tears in talking of his wife, showed the infirmities of age, complained of not being able to attend to his business as ho had done, etc. Some of these witnesses give It as their opinion, based upon their conversations with him, that he was not competent to do biisiness in 1873. On the contrary, an equal number of witnesses testi- fj'ing for the defendants say that they saw no particular change In him after 1871, ex- cept such as was incident to advancing age; that they saw no difference in his business capacity; that he seemed to know as much as he ever did; that, although he fretted about his wife, "his mind was all right;" that "he was a very smart old man." One of the physicians who attended upon him for eight or ten years before his death and in his last sickness says that he would sit by his fireside and talk with him about the com- mon topics of the day, and that he noticed no failing except what old age would account for. Another doctor, who was called in as consulting physician during his last illness, and had known him and his wife for 30 years, says that he was low-spirited after her death, but with that exception he noticed no difference in his mind. All the witnesses on both sides agree that he was a strong man physically, and before 1871 was an unusually competent man as a farmer and stock dealer. Particular Instances are mentioned where he transacted business after 1873. In 1876 or 1877 he went to Peoria, 25 miles from his home, and paid a Judgment of about $1,800 which had been obtained against himself and his son-in-law. Cox, upon a note signed by him as security for Cox; and the owner of the judgment states that at that time his mental condition was good, "his mind was as strong and reasonable as anybody's," aad "he was capable of attending to any other business." In 1884, the year before his death, at the age of 83 or 84, he went to the office of a lumber merchant in Wyoming, distant about two miles and a half from his house, and directed an answer to be written to a let- ter about a pension daim, which he had re- ceived from the commissioner of pensions, dictating the replies to be made to the ques- tions in the letter, listening to each answer when it was read to him, and approving of 326 CONSTRUCTIVE FRAUD. It as being what he wanted. In 1878 he sold a horse, making the trade himself, and the party buying the horse from him say* that "his mind was aU right," and that he was giving directions about the worli on the •farm. A merchant in Wyoming swears that he sold him hardware in 1876 and 1878, tto be used on the farm, and that his mind was sound, and he was able to transaxst ordinary business. Another merchant swears that the old man did business with him at his store from 1873 to 1881, and paid the accounts from 1873 to 1876, and imderstood the nature of the business he was transacting, and that there was no impairment of his mind. The grantor at the time of mailing the deed must know and comprehend the transaction in which he is engaged; or, in other words, the mental capacity to be considered is that which exists at the time of the execution of the deed. 1 Redf. Wills, p. 124; Campbell V. Campbell, 130 111. 466, 22 N. B. Rep. 620. The notary who wrote the deeds made on May 27, 1878, and before whom they were acknowledged, swears that Solomon Wilkin- son came to his office in Wyoming on that day, in pm^uanoe of a previous appointment; that he had his title papers with him, ar- ranged and classified, so as to enable him to know what piece of land he wanted to con- vey to each grantee; that there was no one present while he was writing the deeds, al- though his son Sylvester may have come into the office with him; that the old man seemed to underetand just what he wanted; that he said he was going to divide a por- tion of his property; that he would hand over one package of title deeds and then another, and direct how the property de- scribed in each should be conveyed; that the conveyances written on that day were read over to him after they were drawn up, and were signed by him by his mark; that he was not especially feeble, except so far as there was feebleness incident to de- clining years; that his hands were trembling, and tears came into his eyes, and he said he had reached tljat age when he did not feel able or competent to attend to his business; that he said he intended to provide for his other children in some other manner. While the evidence shows that on May 27, 1873, the deceased was somewhat infirm by reason of old age, and that he was conscious of not possessing as much vigor as would enable him to manage his large farms, and attend to the raising of stock thereon, with the effi- ciency of former years, yet we think that he was mentally capable of executing the deeds signed by him, and of making the division of property consummated by him on that day. Old age and loss of memory do not necessa- rily and of themselves indicate a want of ca- pacity to make a conveyance. Bmi; v. Qui- senberry, 132 lU. 399, 24 N. E. Rep. 622; Pooler V. Cristman, (111. Sup.) 34 N. B. Rep. 57. There was here no such mental weak- ness as wiU justify a court of equity in set- ting aside the deeds, inasmuch as the grantor was not thereby rendered Incapable of un- derstanding and protecting his own interests. A deed wiU be permitted to stand notwith- standing the fact that the intellectual powers have been somewhat impaired by age, if it appears that the grantor retained a full com- prehension of the meaning, design, and effect of his acts. Perry v. Pearson, supra. It is next insisted that these deeds were obtained by the undue influence of the gran- tees therein over Solomon Wilkinson, and that for that reason they ought to be set aside. Undue influence which will justify the setting aside of an executed deed must have been of such a nature as to deprive the gran- tor of his free agency, and thus to render his act more the offspring of the will of an- other than of his own will. Rutherford v. Mon-is, 77 111. 397; Burt v. QuisenbeiTy, supra. Some of the witnesses for the com- plainants testify taiat after the death of his wife in 1871, Solomon Wilkinson left the management of his business more to his sons than he had formerly done, while witnesses for the defendants say that he seemed to ex- ercise no less control after that date than be- fore. The sons themselves swear that each of them was given an interest in the pro- ceeds and earnings of the farm after (he be- came of age, on condition of his remaining at home and assisting hi« father. But, even if it be true that the father gave his sons gi-eater control over his business affairs after 1871 than they had previously had, that fact alone does not establish such a dependence upon them that he could not freely exercise his own will in reference to the disposition of his property. There was money in the bank, which he had a right to draw when he pleased. He came and went as he saw fit. Burt V. Quisenberry, supra. Where the natu- ral position of parent and child is so chan- ged that the former becomes subject to the dominion of the latter, and where their situa- tion is such that the child has a controlling influence over the will and conduct and in- terests of the parent, equity will interpose its jurisdiction to set aside instruments exe- cuted between them, and, under such circum- stances, gifts from parents to children will be set aside, unless most satisfactory evi- dence is produced that they were not ob- tained by undue influence. Burt v. Quisen- berry, supra; Harvey v. Sullens, 46 Mo. 147; Brice V. Brice, 5 Barb. 533. But the fraud or undue influence which will render a will or deed invalid must be connected with the execution of the instrument, and operating when it is made; Pooler v. Cristman, (111. Sup.) 34 N. E. Rep. 57; Guild v. Hull, 127 m. 523, 20 N. E. Rep. 665;) and although a father may act imder the advice of his son in his ordinary affairs, and may be influenced by that advice, yet such relation and influ- eince do not tend to prove the exercise of undue influence in the execution of a con- veyance by the former to the latter, (Brown- field V. Brownfield, 43 lU. 148; Rutherford V. Morris, supra,) We discover nothing in CONSTRUCTIVE FRAUD. 327 the testimony In this case to indicate tliat the deceased was under any such control as that he was not able at all times to act freely and according to his own judgment. The circumstances already detailed in regard to the transaction of May 27, 1873, show that the execution of the deeds made by the de- ceased on that day was his own act, and not the offspring of another's will. He made no conveyance to Alonzo, but, in addition to the 80 acres conveyed to the latter in 1870, his brother Sylvester deeded to him 80 of the 160 acres which he obtained the title to in 1869. The notary testifies that Sylvester thus conveyed the 80 acres to his brother Alonzo at the request of their father, and that such conveyance was referred to by the father as a part of his arrangement for the division of his property. Tlie same considerations al- ready presented apply to the deed made by Lowman and Bnrge to the sons and grand- son in 1874. Bm-ge swears that he made the deed to the sons and grandson while they and Solomon were present; that Solomon gave his notes for a part of the purchase money, and that his mind was perfectly sound. This conveyance was 'a consumma- tion of the division made in 1873, and, while it does not appear when the notes were paid, yet the evidence shows that the land was paid for out of the proceeds of the farm, as earned by the labors of the gi'antees in the deeds. The father may have been influenced by affection for the three sons and grand- son who remained with him and aided him in managing his farms, and for the widow- ed daughter, who stayed at his home, and kept house for him, and managed his house- hold a,ffalrs. "But influence secured through affection is not wrongful, and therefore, al- though a deed be made to a child at his so- licitation, and because of partiality induced by affection for him, it wiU not be undue in- fluence" if it is not such as to deprive the grantor of his free agency. Burt v. Quisen- beny, supra. The testimony shows that the complainants and their husbands received from their fa- ther from time to time about $2,000 apiece, . paid in land and money and in the discharge of security debts. They had married many years before their father's death, and had left home, and reared families, and acquired property of their own. The husband of one of the complainants was a witness to the execution of the deeds made on May 27, 1873. They knew of those deeds soon after their execution, and two of them received money from their father a short time there- after. The fact that they did not receive as much as the defendants is no gi'ound for in- validating the deeds to the latter. Inequali- ty in the distribution of the property is not of itself conclusive evidence of undue in- fluence, although it may be considered as a circumstance tending to establish undue in- fluence. The grantor or testator may give one child more than anotlier without invali- dating the conveyance or will. Sallsbuiy v. Aldrich, 118 111. 199, 8 X. E. Rep. 777; Schneider v. Manning, 121 111. 376, 12 N. E. Rep. 267; Burt v. Quisenberry, supra; Pool- er V. Cristman, supra. Nearly all the testimony introduced by the complainants in this case for the purpose of showing the exercise of undue influence con- sists of proof of declarations made by Solo- mon Wilkinson after his execution of the deeds herein attacked. Those declarations were to the effect— First, that he had been persuaded by his sons; second, that he put the title out of himself in order to keep the property from being lost through suits brought against him on account of his sign- ing notes for his son-in-law. Cox. But it is well settled that the declaration of a grantor when the grantee is not present cannot be admitted for the purpose of invali- dating the deed. Parties making deeds or wills cannot invalidate them by their own parol declarations, made previously or subse- quently. Dickie v. Carter, 42 lU. 376; ' Ben- nett V. Stout, 98 111. 47; Bentley v. O'Bryan, 111 111. 53; Guild v. Hull, 127 111. 523, 20 N. E. Rep. 665; Burt v. Quisenberry, supra. There was also some evidence of declarations made by one or more of the sons of Solomon Wilkinson, to the effect that he made the conveyances to them in order to keep the property from being swept away by the debts incurred as security for Cox. If such declarations made by the father and sons were properly admissible, the fraud upon creditors which they tended to show could in no way operate to the beneflt of these complainants, who sue as heirs of the fraud- ulent grantor. The general rule is that vol- untary conveyances, although void as to cred- itors, are valid as to the parties, and can- not be set aside by the gi-antor or his heirs. 1 Story, Eq. .Tur. § 371; Miller v. Marckle, 21 lU. 152; Harmon v. Harmon, 63 lU. 512; Rawson v. Fox, 65 111. 200; Campbell v. Whitson, 68 111. 240; McElroy v. Hiner, 133 m. 156, 24 N. E. Rep. 435. The decree ot the circuit court is affirmed. ;!23 COXSTRUCTIVE P^RAUD. ROSS V. CONWAY et al. (No. 13,341.) (28 Pac. 785, 92 Cal. 632.) Supreme Court of California. Jan. 6, 1892. Department 2. Appeal from superior court, Sonoma county; S. K. Douuhsiuty, Judge. Suit by Jaines E. Bosa against John M. Conway et al. to annul, on the ground of undue influence, a trust-deed made by his mother, Elizabeth G. Ross, Jor the benefit of defendants. Plaintiff had judg- ment, and defendants appeal. Affirmed. George D. Collins and George A. John- Bon, (/). M. Delnias, of counsel,) for ap- pellants. John A. Wright, for respondent. HARRISON, J. The plaintiff, as thesole heir of his mother, Elizabeth G. Eoss, brought this action to cancel and annul two certain deeds of trust conveying cer- tain real estate in Santa Rosa, executed by his mother, August 11, 1888, and Au- gust 18, 1888, respectively, alleging that at the time of their execution his mother was weak in body, and that her mind was impaired, and that the defendant (Jon- way, who was the pastor of the Roman Catholic church of Santa Rosa, of which she had been for many years a member, and who was also her spiritual adviser, had thereby acquired great influence over her, and, taking advantage of such in- fluence and of her mental weakness, had caused her to execute the said deeds of trust for the benefit of himself and of the church of which he was the pastor. The defendants denied these allegations, and the cause was tried by the court, a jury having been called in as advisory to the court upon certain issues. The verdict of the jury and the findings of the court were in support of the allegations of the complaint, and judgment was rendered in favor of the plaintiff. A motion for a new trial having been made and denied, an appeal has been taken from both the judg- ment and the order denying a new trial. The two deeds of trust are substantially the same, the last one having been executed merely for the purpose of correcting an erroneous description in the first. Under the trust created by the deeds the trus- tees are directed to sell one of the parcels of land "as soon as practicable," and out of the proceeds thereof apply $8,000 in the improvement of the other parcel, and pay the remainder of the proceeds to the de- fendant Conway. Out of the income to be derived from the parcel to beimproved, $75 per month was to be paid to the plain- tiff, and the remainder monthly "to the pastor of the Roman Catholic church in Santa Rosa, to be disbursed by him in such manner as he may deem charitable. " Other provisions contingent upon the death or change in circumstances of the plaintiff are unnecessary to be repeated here. The issues before the court were, in substance, whether Mrs. Ross was, at the respective dates on which the deeds of trust were executed, of weak mind, or able to comprehend the provisions of the instruments; and whether the defendant Conway used the Influence whicn he had acquired over her, by virtue of being her spiritual adviser, lor the purpose of pro- curing her to make such disposition of her property. Upon these Issues there was much conflicting evidence before the court, both in the testimony of the witnesses who were examined, as well as in the cir- cumstances under which the instruments were executed, and the purposes held by Mrs. Ross with reference to her son and to the church. Upon the evidence before it the court found in favor of the plain- tiff. This finding was in accordance with the verdict of the jury, and upon a mo- tion for a new trial, in which the evidence was again brought before the court for consideration, it adhered to Its former conclusion. Under these circumstances we cannot disregard its finding. Inas- much, however, as counsel have elabo- rately argued the facts, we have examined the record, and are of the opinion that the evidence fully justifies the findings of the court. The court finds that at the dates of the execution of the deeds of trust Mrs. Ross was of weak mind, and in a dying condi- tion, and that she died on the 20th of Au- gust; tliat the defendant Conway was, and had for a long time previously been, the pastor of the Roman Catholic church at Santa Rosa, and the spiritual adviser of Mrs. Ross; that a confidence was re- posed in him by her, and that there ex- isted on his part an influence and appar- ent authority over her arising out of his relation to her as her spiritual adviser, and that he took an unfair advantage of this influence, and used this confidence and authority for the purpose of procur- ing her to execute the two deeds of trust. The court also finds that Mrs. Ross had in December, 1887, executed a will of all her estate, with the exception of some minor legacies, in favor of the plaintiff herein, and that the provision in the deeds of trust for the defendants, other than the defendant Conway, were without any consideration from them, but were made solely through the influence of Conwa.y. The rule is inflexible that no one who holds a confidential relation towards another shall cake advantage of that re- lation in favor of himself, or deal with the other upon terms of his own making; that in every such Iransaction between persons standing in that relation the law will presume that he who held an influence . over the other exercised it unduly to his own advantage; or, in the words of Lord Langdalb in Casborne v. Barsham, 2 Beav. 78, the inequality between the trans- acting parties is so great "that, without proof of the exercise of power beyond that which may be inferred from the nat- ure of the transaction Itself, this court will impute an exercise of undue influ- ence;" that the transaction will not he upheld unless it shall be shown that such other had Independent advice, and that his act was not only the result of his own volition, but that he both understood the act he was doing and comprehended its result and effect. This rule finds Its application with peculiar force in a case where the effect of the transaction is to divert an estate from those who, by the ties of nature, would belts natural recip- ients, to the person through whose influ- CX)XSTRUOTIVB FRAUD. 329 ence the diversion is made, whether such divL-i'Bion be for bis'own personal advan- tage, or for the advantage of some inter- est of which he is the representative. It has been more frequently applied to trans- actions between attorney and client or guardian and ward than to any other relation between the parties, but the rule itself has its source in principles which underlie and govern all confidential rela- tions, and is to be applied to all transac- tions arising out oE any relation In which the principle is applicable. It is termed by Lord Ei.don " that great rule of the court that he who bargains in any matter of advantage with a person placing con- fidence in him is bound to show that a reasonable use has been made of that con- fidence." Gibson v. Jeyes, 6 Ves. 278. It was said by Sir Samuel Romilly in his argiimeiit in Huguenin v. Baseley, 14 Ves. 300, that " the relief stands upon a general principle applying to all the variety of relations in which dominion may be exer- cised by one person over another, " — a principle which was afterwards affirmed by Lord Cottknham in Dent v. Bennett, 4 Mylne & C. 277, saying that he had re- ceived so much pleasure from Iiearing it uttered in that arauracnt that the recol- lection of it had not been diminished by the lapse of more than 30 years. That the influence which the spiritual adviser of one who is about to die has over such person is one of the most pow- erful that can be exercised upon the hu- man mind, especially if such mind is im paired by physical weakness, is so conso- nant with human experience as to need no more than its statement; and in any transaction between them, wherein the adviser receives any advantage, a court of •jquity will not enter into an investiga- tion of the extent to which such influence has been exercised. Any dealing between them, under such circumstances, will be set a«5ide as contrary to all principles of equity, whether the benefit accrue to the adviser, or to some other recipient who, through such influence, may have been made the beneficiary of the transaction. These principles have been so invariably announced whenever the question has arisen that a mere reference to the author- ities will suffice. Norton v. Relly, 2 Eden, 286; Huguenin v. Baseley, 14 Ves. 273; Thompson v. Heffernau, 4 Dru. & War. 291; Dent v. Bennett, 4 Mylne & C. 269; In re Welsh, 1 Redf. Sur. 246; Richmond's Appeal, 59 Conn. 226, 22 Atl. Rep. 82; Ford V. Hennessy,70Mo.580; Pironiv. Corrigan, 47 N. J. Eq. 135, 20 Atl. Rep. 218; Connor V. Stanley, 72 Cal. 556, 14 Pac. Rep. 306 ; 1 BigPlow, Fraud, 352; Story, Eq. Jur. § 311. The finding of the court that Mrs. Ross did not have any independent advice upon the subject of making the deeds of trust is fully sustained by the evidence. It ap- pears from the record that the attorney who prepared the instruments was intro- duced to her by Conway, and that the on- ly persons with whom she had any inter- view, or from whom she could receive any advice respecting the same, were this at- torney and the defendant Conway. On the 9th of August she had expressed to Conway a desire to make a testamentary disposition or her property, ^nd, upon his suggestion that Mr. Collins was a suita- ble person, she requested that he would send him to her at the hospital where she was lying. He thereupon sought Collins, and, telling him the wish of Mrs. Ross, accompanied him to the hospital. On their way he told Collins of the mode in which she proposed to dispose of her property, and, after their arrival, re- mained in the room with them while she was giving directions about the will, go- ing out, however, occasionally, for short intervals to visit other people in the hos- pital, and leaving the building before the will was formally executed. Two days later he visited Collins at his office, and, after hearing the will read, he made to Collins a suggestion of some changes, and whether a deed of trust would not be preferable to a will. An appointment was then made between him and Collins to meet that afternoon in theroomof Mrs. Ross at the hospital. After their arrival at the hospital, Conway made a sugges- tion to her that she execute a deed of trust instead of a will, and also other sug- gestions in reference to her disposition of the property. Only him.self and Collins were in the room during this consultation, he, however, leaving it temporarily a few times during the period over which the interview extended, but remaining un- til Collins had received all the directions that she gave. Assuming that, by virtue of his relation to her, he had acquired an influence over her, it must be held that in the transaction under investigation there was an undue exercise of such influence; that by not insisting that she should have independent advice, and by continu- ing to remain in her presence during the interview with the only other person whom he permitted to see her, he exer- cised an influence over her actions which, though unseen and inaudible, was none the less effective in its results. "The ques- tion is," said Lord Eldon in Huguenin v. Baseley, 14 Ves. 300, "not whether she knew what she was doing, had done, or proposed to do, but how the intention was produced; whether all that care and providence was placed round her, as against tbose who advised her, which from their situation and relation with re- spect to her they were bound to exert on her behalf." While the contract of purchase made between the defendant Conway and the trustees under the in- struments sought to be annulled was ir- relevant to an.y material issue before the court, and would have been properly ex- cluded from evidence, we are unable to see that its admission could in any way have been prejudicial to the rights of the appellants. The judgment and order de- nying a new trial are affirmed. We concur: DE HAVEN, J.; McFAR- LAND, J. Hearing in bank denied. 330 (X)XSXRUCTIVE FUAUD. TATE T. WILLIAMSON. (2 (Jh. App. 55.) Court of Appeals in Chancery. Dec. f7, 1866. This was an appeal by the defendant, Robert Williamson, from a decree of Vice Chancellor Wood, setting aside a sale, on the ground that the purchaser stood In a fiduciary relation to the vendor, and did not make a full disclosure to him of all material facts within his knowledge relating to the value of the property. The facts of the case fully appear in the report of the case before the vice chancellor (L. R. 1 Eq. 528) and the judgment of the lord chancellor. Mr. W. M. James, Q. C, and Mr. Little, in support of the decree. Attorney General (Sir J. Rolt), and Mr. Brlstowe, for the ap- pellant. Solicitors for the plaintiff: Messrs. N. O. & C. Milne. Solicitors for the appellant: Messrs. Clowes & Hickley. LORD CHELMSFORD, L. C. In this case the vice chancellor has made a decree that an agreement for the sale by the Intestate, William Clowes Tate, to the defendant, Rob- ert Williamson, of the undivided moiety of an estate called the "Whitfield Estate," in the county of Stafford, consisting of mes- suages, lands, and coal mines, ought to be set aside, upon the ground of the defendant not having communicated to the intestate all the Information which he had acquired with reference to the value of the property, and, in particular, of his not having communicat- ed an estimate of the value of the mines which was obtained by the defendant pend- ing the agreement. The question raised by the appeal is whether any such relation existed between the defendant and the intestate as to render It the duty of the defendant to make the communication. The jurisdiction exercised by courts of equity over the dealings of persons standing in certain fiduciary relations has always been regarded as one of a most salutary descrip- tion. The principles applicable to the more familiar relations of this character have been long settled by many well-known decisions, but the courts have always been careful not to fetter this useful jurisdiction by defining the exact limits of its exercise. Wherever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one, and the influence which nat- urally grows out of that confidence Is pos- sessed by the other, and this confidence is abused, or the influence Is exerted to obtain an advantage at the expense of the confid- ing party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no such confidential relation had existed. Did, then, the defendant, R. Williamson, when he put himself in communication with the intestate, clothe himself with a char- acter which brought him within the range of the principle? In considering this question, it will be nec- essary to bear in mind the situation of both the parties at the time when the agreement for the sale of the property was entered into. The Intestate, when he was quite an infant, had become possessed of the property in question independently of his father. He contracted habits of extravagance at the uni- versity, and in consequence of some dis- pleasure which he had occasioned to his father on the subject of his debts, the fa- ther's doors were closed against him. He was thus thrown upon the world at an early age without any one to control him, and with scarcely a friend to counsel him, and towards the close of his life he became addicted to drinking and died prematurely at the age of twenty-four. The defendant is the nephew of Mr. Hugh Henshaw Williamson, the great uncle by marriage of the intestate, who had been the trustee and manager of the property, and the receiver of the rents, which latter duty the defendant had for some short time been deputed to perform for him. It does not appear that the defendant by his employment acquired any particular in- formation respecting the property, but as he states in his answer that he had "pre- viously" (to his first interview with the in- testate) "some idea of endeavoring to be the purchaser of the estate, in case the same should come into the market," it is reason- able to suppose that he was not altogether ignorant of its character, and must have formed some Idea of Its value. I think no stress can be laid upon the cir- cumstance of Mr. H. H. Williamson having been the trustee of the property. The trus- teeship, as to the intestate's moiety, had come to an end upon his attaining his ma- jority, in July, 1857. The accounts had been settled, and Mr. Williamson, in surrendering his trust, had behaved generously to the in- testate. Though he continued after this pe- riod to receive the rents and manage the property, yet there appears to have been nothing in the office which he undertook after his trusteeship expired which would have prevented his dealing with the Intes- tate upon the same terms as a mere stran- ger. Much less could the mere receipt of the rents for his uncle have placed Robert Williamson in a different position from that of any ordinary purchaser. But a new and peculiar relation arose out of the circum- stances which afterwards occurred. In the year 1859 the debts which the intestate owed at the university were causing him consid- erable embarrassment He had been pressed by Mr. HoUoway, acting for his Oxford cred- itors, for payment of an amount of fl,(X)0. He was unable, in consequence of the unfor- COXSTRUOTIVB FRAUD. 331 tunate quarrel with his father, to apply to him for advice, and, having before expe- rienced the kindness of "Mr. H. H. William- son, he turned to him again in his difficul- ties. The letter by which the intestate made his situation known to Mr. Williamson is not forthcoming. The defendant, in his an- swer, says that he was Informed by Mr. H. H. Williamson that It stated he was again Involved, and either asked for assistance, or for advice as to the mode of procuring assistance. I should have been glad if we could have seen the terms of this letter, as It might have explained the exact nature of the office which Mr. Williamson was asked to undertake. In the answer to this letter, dated the 30th of July, 1859, which is set out in the bill, in paragraph 52, Mr. Wil- liamson invited the intestate to his house, and desired him to bring with him "a cor- rect account of his debts, omitting nothing, and he would see what could be done." The intestate did not accept the invitation, and nothing more was heard of the matter until about the 26th of August following, when Mr. H. H. Williamson received a list of the intestate's debts due to Oxford cred- itors, amounting, as already mentioned, to £1,000. The defendant, In his answer, says "that the list was given to him by Mr. H. H. Williamson, and that he, after perusing tile same, remarked that the charges were excessive, and that the bills might probably be settled for half the amount; that Mr. H. H. Williamson thereupon requested him to see the intestate, and ascertain upon what terms he could be relieved from his debts, and, if this could bo done for £500 or a little more, he authorized the defendant to advance the intestate that amount on fur- ther security of the property." The defend- ant accordingly wrote to the lntesta.te on the 26th of August, 1859, the letter, which Is set out In paragraph 58 of the bill, in 1;^'hlch he states that his uncle is not suffi- ciently well to attend to business; that the list of debts owing forms a very heavy amount, which Mr. Holloway expects to have paid immediately; and adds, "I will meet you in the course of a few days in London, upon having a couple of days' notice, and, after hearing your views on the subject, will talk over the matter, and see in what way it can be arranged." The counsel for the defendant say that his office was merely to see whether a compromise of the debts could be effected, and that, at the time of the purchase, his mission was at an end. One can hardly believe that his advice and assistance could have been understood to be of this limited character. He knew that Mr. Holloway was pressing for Immediate payment to the Oxford creditors, and that if he refused to reduce the amount the whole must be paid. It does not appear that, if Mr. Holloway had Insisted on a payment In full, Mr. H. H. Williamson would not have been disposed to advance a larger sum than that which he had mentioned, as the prop- erty would have been an ample security for any amount required to cover the whole of the debts. And the defendant must have been perfectly aware that the intestate's property in Staffordshire was the only fund out of which the debts could be discharged. The account of the defendant's Interview with the Intestate -^e have from the answer alone. He states that he offered to negotiate with the intestate's creditors for an abate- ment of their claims, telling him "that he was authorized by his uncle to advance £500 or more If required" (I suppose he must have added "upon the security of the property"), "but that the Intestate positively refused to allow him to ask for any deduction from his debts, saying that any such application would injure his character." The answer then pro- ceeds: "But he at the same time stated that he was desirous to sell his share of the Whit- field estate." Mr. Brlstowe, for the defend- ant, said the instant the intestate refused to allow any attempt to compromise his debts, the defendant's office of adviser came to an end, and from that moment the parties, to use the familiar expression, were dealing "at arms' length." I cannot accept this view of the defendant's position. I think that his visit to London was not solely for the compromise, but generally for the arrangement of the In- testate's debts; that he came with authority which involved a dealing with the property of the intestate, as he was to advance his uncle's money on the security of this property. And It may be observed that he had his attention particularly directed to the mode of satisfying the debts by a mortgage. He knew, too, that if the payment of the debts In full was In- sisted upon, and his uncle refused to advance a larger sum than "£500 or a little more," a sufficient amount to discharge all the debts could easily be raised upon the security of the property, which was subject only to a mort- gage for £1,000. It seems to me that the de- fendant had placed himself in a position which rendered it incumbent upon him to give the best advice to the intestate how to relieve himself from his debts, and no one can doubt that if his judgment had been unbiased that he would have recommended a mortgage, and not a sale. But It appears, from the defend- ant's own statement, that he had a reason for not giving his advice. As already stated, he had previously thought of purchasing the estate In case it should come Into the market for sale, "an event," he says, "he thought was not unlikely to happen." I asked the defend- ant's counsel what he understood by these words, and was answered that the defendant's expectation was founded upon the inconven- ient nature of property consisting of an undi- vided moiety. This may have first led the defendant to expect that he might have an opportunity of purchasing the property at no distant period, but his belief in the proba- bility of a sale must have been considerably strengthened at the time of his interview with nr!2 CONSTRUCTIVE FRAUD. the intestate, from the knowledge he had of his embarrassments. Whether the conversa- tion between the defendant and the Intestate turned so abruptly from the intestate's refusal to compromise his debts, to the expression of his desire to sell his sliare of the Whitfield estate, as represented by the defendant or not, it is quite clear to my mind that the confi- dential relation between the parties had not terminated when the negotiation for the pur- chase of the property by the defendant com- menced, and that he did not then, or at any time afterwards, stand in the situation of an ordinary purchaser. This being so, the defendant, pending the agrtcmeut, was bound to communicate all the information he acquired which it was material for the intestate to know in order to enable him to judge of the value of his property. It was admitted that the valuation of Mr. Cope was In the hands of the defendant at the time he wrote his letter of the 10th September, 1859. The defendant is charged with making un- true representations in that letter. If he had done so, it would of course strengthen the case against him, but I find nothing In the letter which amounts to a misrepresentation, nor anything more than a disparagement of the property, not uncommon with a purchaser when he desires to stimulate the owner of the property to close with his offer. Having stated my opinion with regard to the duty cast upon the defendant to communi- cate Cope's valuation to the 'ntestate, it seems unnecessary to pursue the case further. The fair dealing, in other respects, of the defend- ant during the negotiation, and before the agreement was signed, becomes almost Irrel- evant. The refusal of the solicitors to pro- ceed with the agreement unless the young man had some legal assistance, the recommen- dation of the defendant tliat the intestate should apply to his father for advice, the op- portunity afforded him pending the negotia- tion of consulting any friends who were capable of advising him, the reference to Mr. Payne whether merely for the purpose of completing the agreement, or to afford the in- testate an opportunity of obtaining his opinion as to the value, all these considerations are of no consequence, when once It is established that there was a concealment of a material fact, which the defendant was bound to dis- close. Nor, after this, Is It of any Importance to ascertain the real value of the property. Even if the defendant could have shewn that the price which he gave was a fair one, this would not alter the case against him. The plaintiff, who seeks to set aside the sale, would have a right to say, "You had the means of forming a judgment of the value of the property in your possession, you were bound, by your duty to the person with whom you were dealing, to afford him the same op- portunity which you had obtained of determin- ing the sufficiency of the price which you offered; you have failed In that duty, and the sale cannot stand." But, in truth, there are strong grotmds for thinking that the price agreed to be paid by the defendant is quite inadequate to the value of the property, There Is no occasion to weigh the opposite opinion of the engineers and survejors, and to form a conclusion from them. It is sufficient to take the valuation of the mines by Cope, amounting to £20,000, and the valuation of the surface by the defendant's own witnesses, ranging from £10,000 to £11,290, and makhig every allowance for a reduction of the value of the intestate's share, in consequence of Its being an undivided moiety. It will appear that the value, by the defendant's own shew- ing, must have been at the least £14,000. For this property the defendant agreed to pay £7,000 apparently about half the value, and that not at once, but £1,500 was to be ad- vanced to the Intestate, which was to beai' Interest till the day for the completion of the purchase, which advance must have been in- tended to enable the intestate to pay off his debts immediately; £2,000 was to be paid on the 25th March, 1860, and the residue by year- ly mstalments in the four following years. It appears to me, upon a careful review of the whole case, that it would be contrary to the principles upon which equity proceeds, in judging of the dealings of persons in a fiduci- ary relation, to allow the purchase by the de- fendant, Robert Williamson, to stand. I am satisfied that the defendant had placed himself in such a relation of confidence, by his undertaking the office of arranging the in- testate's debts by means of a mortgage of his property, as prevented him from becoming a purchaser of that property without the fullest communication of all material Information which he had obtained as to Its value; that this openness and fair dealing were the more necessary when he was negotiating with an extravagant and necessitous young man, de- prived at the time of all other advice, eager to raise money, and apparently careless in what manner it was obtained; and the de- fendant having, by concealment of a valua- tion which he had privately obtained, pro- cured a considerable advantage In the price which the seller was induced to take, and which even the defendant's witnesses prove to be grossly Inadequate, he cannot be per- mitted so to turn the confidence reposed in him to his own profit, and the sale ought to be set aside. Decree affirmed. Petition of appeal dismissed, with costs. OOXSTRUCTIVB FRAUD. 333 PEIOB V. THOMPSON et al. (1 S. W. 408, 84 Ky. 219.) Court of Appeals of Kentucky. Sept. 14, 1886. Appeal from circuit court. Barren county. Tills is an action by appellant for a new trial in the case of Buford W. Thompson, etc., against George R. Price, Administrator of Joseph Price, Deceased. The court below refused to grant a new trial. From that judgment George E. Price prosecuted this appeal. Buford W. Thompson, etc., against George R. Price, Administrator of Joseph Price, was an action to settle the accounts of said administrator, and sell lands of his decedent to pay debts. By the commission- er's report in said action the administrator was found to be indebted to the estate in the sum of $295.50. This report was con- firmed, and an order entered directing the administrator to pay said sum to commis- sioner, in default of which execution issued, and land belonging to administrator was levied on and sold. The equity of reaemp- tion was afterwards levied on, but, before the sale, this action was brought. W. P. D. Bush, Finlay Bush, and Bales, Nuckols & Gorln, for appellant, George R. Price, Adm'r, etc. W. L. Porter, for ap- pellees, B. W. Thompson and others. BENNETT, J. The appellee filed his peti- tion in the Barren circuit court against the appellees, Buford W. Thompson, and T. M. Dicliey, the master commissioner of the Bar- ren circuit court, and others. In his petition he alleges that appellee Thompson filed his petition in the Barren circuit court against him, as the administrator of Joseph Price, deceased, for the purpose of having the de- cedent's estate settled, and the sale of land to pay debts, etc.; that appellee T. M. Dick- ey, to whom the ease was referred as the master commissioner of the court, reported that appellant was Indebted to said estate, as administrator, in the sum of $295.59; that said report was confirmed without objection, and appellant was ordered to pay said sum to the commissioner, and in default of which execution was ordered to issue; no payment having been made, execution issued in the name of the commissioner, and by his direc- tion, against appellant, which was levied on a tract of land containing 99 acres, belong- ing to appellant; that said land was sold at execution sale for the sum of $250, which was less than two-thirds of its appraised value. The appellee Dickey purchased it. Afterwards a second execution was issued, and levied on the equity of redemption in said land. He alleged that he had paid off and discharged various just claims and de- mands against the estate of his decedent, exceeding in amount the sum of $295.56; that he gave the receipts and vouchers evi- dencing these payments to his attorney, to file with the commissioner; that said receipts and vouchers had been lost, either by his at- torney or by the commissioner, after they had been so given him; that he was not present when the commissioner's report was made, or when it was confirmed, or when the order was made directing him to pay said sum to the commissioner, nor did he know that such orders were made, or that his re- ceipts and vouchers were lost, until after execution had issued against him. He pray- ed the court to set aside the report of the commissioner, the order and judgment di- recting him to pay said sum to the commis- sioner, the sale of his land, and grant him a new trial, etc. The court granted him an injunction until further orders, but, on final trial, dissolved the injunction, and dismissed his petition. From that judgment he appeals to this court. The appellee Dickey made a joint answer with the other defendants. They do not deny that appellant did not know that the corjmissioner had reported an indebtedness against him of $295.56, and that the court had confirmed the report, and ordered him to pay the money to the commissioner, etc., or that his receipts and vouchers had been lost, until after execution had been issued against him. Besides, he swears in his dep- osition to the same thing. The evidence, therefore, as to that matter is conclusive. The allegation of the petition Is that the receipts and vouchers were placed in the hands of the attorney "to file with the com- missioner in making said settlement, and they were either lost by said Bales (the at- torney) or by said commissioner after they were given to him." The answer in refer- ence to that allegation is: "They have no knowledge or information sufficient to form a belief as to whether they were placed in the hands of said Bales to be filed with the commissioner." So the answer does not deny that said receipts and vouchers were filed with the commissioner, or that "they had been lost by the commissioner after they had been given to him." The commissioner ceitainly knew whether such was the fact or not, and his silence is conclusive against him. Besides, the attorney. Bales, swears; "I placed them, as I now believe, and after the judgment in the cause was rendered then believed, in the hands of T. M. Dickey, master commissioner of the Barren circuit court. If I did not so place them, I lost them; but they were all put together in a paper, and handed to Dickey, and I find a part of them allowed, and the others not, and, as they were not disallowed or rejected, I took it Mr. Dickey mislaid them." Appel- lant swears that he did pay said claims against the estate, which were properly prov- ed, etc. Mr. Bales also swears that said claims were properly proved, etc. No wit- ness contradicts them, nor did appellees offer any evidence at all. So It may be regarded as conclusively proven (1) that appellant had paid and discharged said debt; (2) that he 334 CONSTRUCTIVE FRAUD. bad placed tbe receipts and vouchers evi- dencing the payment in the hands of his at- torney, to be filed with the commissioner; (3) that they were placed in the hands of the commissioner, and were lost or mislaid, so that they were not allowed by him in his settlement, and, by reason thereof, judgment was obtained against appellant on a demand which he had already paid. We understand the general rules of law governing applications for new trials to be: (1) When for newly-discovered evidence, "the names of the witnesses who have been discovered;" (2) that the applicant has been vigilant in preparing his case for ti-ial; (3) that the new facts were discovered after the trial, and would be inrportant; (4) that the evidence discovered will tend to prove facts which were not directly in issue on the trial, or were not then liuown, nor investigated by the proof; (."i) that the new evidence is not merely cumulative, etc. Here the evidence was not newly discov- ered, but was known to appellant before the trial, and had been prepared by him to be used on the trial; and, judging from the rec- ord, had it been used on the trial, the issue would certainly have been decided for the ap- pellant. So the question now is. was the appellant vigilant in preparing his case for trial? Ordinarily, we would say not. Had the trial of the case been before a jury, or before the court by depositions, it would have been his duty to see that his witnesses were duly subpcenaed to attend court to testify, or that their depositions were duly taken. Nor would it be reckoned proper vigilnnce to leave these matters in the hands of his attorney to attend to; for the attorney is but his agent, and his want of proper vigilance is also that of the principal. But a different case is pre- sented here. The commissioner is the officer of the court, — "the hand of the court," — whose duty it is in such cases to receive all vouchers presented to him, and preserve them, and, if properly proven, to allow and report them to court. This being his official duty, and the presumption being that he will discharge his duty, it cannot be said that after a person has filed his vouchers with him, properly proven, that it is his duty to keep a watch over him, as in the case of a private person, to see that he discharges that duty by report- ing the claim to be allowed by the court. Had appellant's attorney, with whom he in- trusted these vouchers to be delivered to the commissioner, failed to deliver them, then it could be truly said that he was wanting in proper vigilance; for in that case his attor- ney's negligence would be his negligence. But his attorney having delivered the vouch- ers to the officer of the court, — the hand of the court, in such matters, — properly proven as vouchers, that was all that was necessary, under the circumstances. That officer having lost them, and appellant not being apprised of it until after judgment and execution had been obtained against him, he should have had a new trial, and the injunction sustained, and the report of the commissioner charging him with $295.56 set aside, and the order di- recting the payment of it to the commissioner set aside. Appellant also asks that the sale of his land under said execution be set aside. It is contended that this should not be done, for the reason that the reversal of an erroneous, not void, judgment does not and cannot set aside the sale of property made thereunder. That is, no doubt, the general rule. But in this case the return of the officer who made the sale shows that the appellee T. M. Dick- ey, the master commissioner, to whom the case was referred, was the purchaser of the property at the execution sale. It is also alleged in the petition that he was the pur- chaser at that sale. The answer says that the return of the officer in that regard was a mistake; that he was not the purchaser, but he offers no proof as to tliat matter, and, the return of the officer being presumptively correct, the commissioner must be regarded as the purchaser. So the question arises, was his purchase valid? Had he been free from a fiducial character, there can be no doubt that his purchase would have been valid; but, standing in a fiducial relation to dece- dent's estate, equity devolved upon him the duty to protect the interest of that estate. In such cases the fiduciary cannot avail him- self of the influence which his position gives, for the purposes of his own gain or benefit, to the prejudice or injury of those interests which it is his duty to protect. It is a rule of equity that no man can acquire an interest where he has a duty to perform inconsistent with that interest. The rule which prevents a person, standing in a fiducial relation, from acquiring an interest which is inconsistent with those fiducial duties, stands mainly upon motives of general public policy; nor can a man, standing in such relation with respect to property, be allowed to purchase the prop- erty at a judicial or execution sale, unless the entire responsibility of obtaining the high- est price has been removed or taken out of his hands. If he continues under the duty of seeing the property bring its highest price, he is incapacitated from purchasing. These principles apply, not only to trustees proper, but to all persons invested with fidu- cial power; such as executors, administra- tors, assignees of a bankrupt, commissioners of bankrupts, sheriffs, and judicial officers in general. See Kerr, Frauds, 150, 160. See, also, Stapp V. Toler, 3 Bibb, 450. While the same general principle governs all persons occupying a fiducial character, yet there are two classes controlled by "different special rules." The first class includes all those Instances in which the fiduciary and those with whom he stands in that relation consciously and intentionally deal with each other, each knowingly taking a part in the transaction from which results a contract or conveyance. Here the contract is not neces- OOXSTRUOTIVB FRAUD. 335 sarlly voidable,— it may be valid; but a pre- sumption of its invalidity arises, and that so strong that nothing short of clear evidence of good faith, of full Imowledge, of adequate consideration, and of independent thought, consent, and action, can overcome it. The second class is where the iiduciary, acting with reference to his trust, deals with him- self in his private or individual character; as where an agent to sell, sells the property to himself, or a sheriff buys the property at his own sale. Such transactions are always voidable at the suit of the party concerned. They are not merely presumptively invalid, as in the first class, where good faith, full knowledge, adequate consideration, independ- ent thought, consent, and action, may be prov- ed; because the sale or purchase, if made privately, is not Ijnown, or, if made publicly, by coercive authority, cannot be controlled. Therefore the good faith, full knowledge, etc., do not control. For these reasons the pre- sumption of invalidity in the first class is re- buttable, and the presumption of invalidity in the second clasb is conclusive. 3 Pom. Eq. .Tur. §§ 956, 957. These rules being sound, and so well sustained by authority, this court does not hesitate to adopt them for the gov- ernment of all persons occupying a fiduciary character, whether of a private or a public nature. Ofiicers whose powers are not merely per- suasive, but coercive, ex parte, and arbitrary, should be held to strict impartiality, fidelity, and integrity in the discharge of their trusts. AH temptation to make private gain, to take unfair advantage, directly or indirectly, should be removed. The most effective way to do so is to declare all such transactions conclusively invalid. The master commission- er, Dickey, was still acting as commissioner in the case at the time he purchased the land at execution sale. It was to the interest of the estate that the land should bring its full value. It was his duty to encourage its bring- ing its full value. Therefore, for him to be- come a bidder for it at the sale antagonized his private interest with his fiducial duty. This he had no right to do. For these rea- sons the injunction should have been sustain- ed, a new trial granted, the report of the commissioner allowing the $295.56, and the order of court directing its payment, set aside, and the sale of said land set aside, and ap- pellant allowed credit for any sums proved to have been paid by him for said estate, not otherwise allowed. Wherefore the judgment of the lower court is reversed, and cause re- manded for further proceedings consistent with this opinion. LEWIS, J., not sitting. 336 CX3XSXKUCT1VB FRAUD. A, ELMORE V. JOHXSOX et ux. (32 N. E. 413, 143 111. 518.) Supreme Court of Illinois. Oct. 31, 1892. Appeal from superior court, Cook countj-; Kirk Hawes, Judge. Bill by Susie K. Elmore against Frank A. Johnson and Annie O. Johnson to set aside a deed. The bill was dismissed for want of equity, and complainant appeals. Affirm- ed. The other facts fully appear in the fol- lowing statement by Magruder, J.: This is a bill filed in the superior court of Cook county on December 11, 1890, by the appellant against the appellee and his wife for the purpose of setting aside a deed made by the appellant to the appellee on January IT, 1884, conveying to him the W. % of lots 6, 0, 20, and 23, in the subdivision of S. % of S. W. Vi of N. W. % of section 22, town- ship 39 N., range 13 E., etc., in Cook coun- ty; said west half consisting of 16 of the 32 sublots into which said lots 6, 9, 20, and 23 were subdivided. Also for the purpose of requiring Annie 0. Johnson, the wife of appellee, to convey to appellant the title held by her to said west half; and also for the purpose of taking an account of moneys paid out by appellee for appellant, and of moneys received by him for her, and of services by her to him and by him to her, aud of losses alleged to have been caused by want of diligence and skill and by al- leged misconduct, etc. The defendants an- swered the bill. Replications were filed to the answers. Proofs were taken, and, the cause coming on to be heard in May, 1891, the bill was dismissed for want of equity, etc. The present appeal is prosecuted from such decree of dismissal. The deed was executed by appellant to appellee in payment for his services to her as her solicitor and attorney in the matter hereinafter mentioned. The bill charges that the defendant Johnson was negligent and unskillful in the conduct of the complain- ant's business; that his services were worth less than the value of the 16 sublots con- veyed to him; that the complainant was without means, and when defendant began to insist upon pay for his services she agreed to pay him $400 if he would obtain title for her to the 4 lots or 32 sublots; that, after a decision had been rendered in her favor, and before the execution of the mas- ter's deed to her, the defendant induced her, by fraudulent representations and false promises, to convey to him the west half of said lots; that she supposed the deed made by her to be a deed of an undivided one-half part of the lots when she signed It; that between the summer of 1883 and November, 1888, she did certain typevrriting work for the defendant in his oflBce, for which he had not paid her; that an execu- tion issued In the attachment suit herein- after mentioned was returned no part satis- fied; that the executions issued upon the decree for alimony hereinafter mentioned could have been collected or secured; that a mortgage suit against the property was allowed to go by default; that the lots had been sold for taxes; that complainant did not know any of the facts in regard to said executions, or the abandonment of the mort- gage suit, or the value of defendant's serv- ices in the chancery case until the day be- fore filing her bill; that she first retained the defendant to collect her alimony, and obtain title to the lots "for a reasonable fee and reward;" that she did not learn of the tax sales until "somewhat over a year" be- fore filing her bill; that she first discovered the facts as to defendant's negligence and misconduct, etc., within a few days before filing the bill. The answer of the defendant denies all the allegations of the bill as to fraud, neg- lect, or misconduct, and as to the agreement to take $400 for services, and sets forth a history of his professional relations with the complainant, and gives his explanation of the various matters referred to in the bill, and charges laches, etc. On September 24, 1879, the complainant, who was then about 33 years old, and had been divorced from' a former husband named Elmore, delivered to one Collins Pratt, an attorney in Chicago, government bonds, own- ed by her, to the amount of $600, to be by him converted into money, and loaned out upon real-estate security. Pratt used this money to purchase said lots 6, 9, 20, and 23, and obtained a deed of the same to himself on September 24, 1879. He then executed his own note, dated October 4, 1879, for $600, payable in two years, to the order of com- plainant, with interest at 8 per cent., and also a trust deed to secure the same, upon said lots, to one Paul Mackenhaupt, as trus- tee, and delivered said note and trust deed to the complainant. On March 8, 1880, Pratt, who was at that time engaged to be married to the complainant, obtained the note and trust deed from her upon some representation that it would be necessary to change the securities in view of their ap- proaching marriage, and applied to Macken- haupt for a release of the trust deed, which was executed and delivered to Pratt on said 8th day of March, 1880. On March 24, 1880, the complainant and Pratt were married, and lived together until about May 1, 1880, when he abandoned her. During said mar- riage, and on April 13, 1880, Pratt borrowed $500 of one Elmers, and executed his note of that date for that amount, payable in two years, to the order of Elmers, and to secure said note he and appellant conveyed said lots 6, 9, 20, and 23 to Charles Thornton, trustee, by trust deed of same date. On the same day, April 13, 1880, there was filed for record a warranty deed, executed by Pratt, and purporting to have been also executed CXDNSTRUOTIVB FRAUB. 337 by complainant as his wife, conveying said lots G, 9, 20, and 23 to one Addle Pratt, a reputed sister of Collins Pratt, in whose name subdivision was made of the 4 lots into the 32 sublots above referred to. On April 80, 1880, the defendant executed his unsecured note to the complainant for $600, payable two years after date, with 8 per cent, interest. This latter note complainant claims to have known nothing about until long afterwards, when she was trying to collect the $600 from Pratt, and he stated that he h^d given his note therefor. She says that she then examined her trunk and papers, and found the note for the first time. On November 1, 1881, complainant ob- tained a decree of divorce from Collins Pratt upon the ground of adultery, which decree required him to pay her $40 every month as alimony, and changed her name to Susie Iv. Elmore. Mr. John W. Waughop was her solicitor iu the divorce suit. Soon after the separation between complainant and Pratt, she employed Mr. Leonard Swett to collect the $600 from Pratt, and Jlr. Swett suc- ceeded in obtaining $250 of that amount for her. About the time of the decree of di- vorce, or soon thereafter, Mr. Waughop had made an agreement for her with Pratt, by the terms of which Pratt was to pay $500 in full discharge of alimony and of the bal- ance due upon the claim for $G00, said sum of $500 to be paid at the rate of $5 per week. She was paid $5 per week up to and until February 18, 1882. It would ap- pear that Mr. Swett received $50 for his services, and Mr. Waughop nothing. By deed dated .January 7, 1870, one Arnold and his wife sold and conveyed to Collins Pratt and Edgar il. Wilson lots 2, 13, 16, and 27 in said subdivision for an expressed con- sideration of $000; and to secure their note for $500, payable in three years, to order of William Fitzgerald, with 10 per cent, inter- est, Pratt and Wilson executed a trust deed, dated January 21, 1879, conveying said last- named lots to O. T. Hartigan, trustee. Such being the condition of affairs, the complainant, about the middle of February, 1882, applied to the defendant Johnson to act as her attorney and solicitor in recover- ing what might be due to her in money or property from her former husband, Collins Pratt. Accordingly, on February 23, 1882, the defendant filed a bill for the complain- ant, as her solicitor, in the circuit court of Cook county, against the said ColUns Pratt, Addle Pratt, Elmers, and Thornton. This bill was sworn to by Mrs. Elmore. It sets up the facts hereinbefore stated. It charges that the note of April 30th was never de- livered to her or accepted by her; that Pratt obtained the $600 to use for himself, and deceived her in respect thereto, and attempt- ed to defraud her out of the money; that either her signature to the deed to Addle Pratt was forged, or obtained from her by fraud and misrepresentation, and without HUTOH.& BUNK.EQ.— 22 consideration; that lots 2, 13, 16, and 27 are of the value of $1,000, and are the only property owned by Pratt; that said $600 was not loaned to Pratt, but Intrusted to him for conversion into real-estate securities drawing 8 per cent.; that the note and Mackenhaupt ti'ust deed were obtained from her in order to cheat and (Jefraud her, and get a release of the trust deed; that the Elmers note and Thornton trust deed wevf without consideration, or accepted with no- tice of her rights, and with the intent to cheat and defraud her. The bill offers to return and cancel the note of April 30th. It contains the following averment: "Your oratrlx believes, ancl on belief avers the fact to be, that said defendant purchased said real estate (lots 0, 9, 20, and 23) with the money so intrusted to him as aforesaid, to be invested by him in good real-estate se- curities." The bill prays that the release deed made by Mackenhaupt may be set aside and canceled, and that the trust deed to him may be declared to be in full force, and a valid lien upon said lots for the bal- ance of the $600 due from said Collins; and for such other relief as the nature of the case may require and may seem' meet. On March 18, 1882, the bill was amended by averring that Pratt was then the owner of said lots 6, 9, 20, and 23, and held an un- recorded deed, dated February 9, 1882, from Addie Pratt to himself. On March 10, 1883, the prayer of the bill was amended as fol- lows: "Or that Pratt may be declared to hold the title * * * jn trust, * * * and may be required to convey the same to your oratrlx, and that the said deed * * * to said Addie Pratt may be de- ' Glared null and void, and may be set aside," etc. At the April term, 1882, Collins Pratt answered the bill, alleging that complain- ant loaned her money upon his note secured by the trust deed to Mackenhaupt, after in- vestigation and advising with others; that said trust deed was released in order to bor- row $500 to buy household fm-niture in view of the approaching marriage; that complain- ant has some of the goods bought with the money borrowed of Elmers; that she ac- cepted the note of April 30th; that he has paid $290, instead of $250; that she fully understood the contents of the deed to Addie Pratt. The answer admits the purchase of lots 6, 9, 20, and 23, and the ownership of an undivided half of lots 2, 13, 16, and 27, and denies all charges of deception and fraud or forgery or misrepresentation, and also de- nies that he now owns lots 6, 9, 20, and 23, or holds an unrecorded deed of the same from Addie Pratt. Addle Pratt also filed an answer to the hill, denying that the deed to her was without consideration, or obtain- ed by fraud, or that complainant's signature thereto was forged, or that defendant had made a deed to Collins Pratt; and averring that said deed to defendant was executed for a good consideration, and was under- 338 OOXSTRUCTIVB FRAUD. stood by complainant when she signed it. April 13, 1882, replications were filed to the answers. March 17, 1883, the bill was dis- missed as to Elmers and Thornton, and the cause placed upon the trial calendar. The hearing took place on November 23 and 27, 1883, the defendants being represented by counsel. The decision was in favor of the complainant, and a decree in accordance with the decision was entered on December 8, 1883. The decree found that Pratt pur- chased lots 6, 9, 20, and 23 with complain- ant's money; that the note to Elmers and trust deed to Thornton were valid, but that the $500 borrowed of Elmers was used by Pratt, and exceeded the amount which had been paid by him to complainant; that a resulting trust had therefore arisen in favor of complainant, and she was entitled to have, the title acquired by Pratt in said lots con- veyed to her; that the deed to Addle Pratt had been procured by fraud; that the lots had been sold under decree in favor of El- mers; that the unsecured note of April 30th had been surrendered on the hearing; the decree set aside the deed made by Collins Pratt to Addie Pratt, and ordered said Col- lins to execute a deed of the lots to com- plainant, subject to the right of the pur- chasee under the foreclosure decree of El- mers, within 30 days, and upon his failing to do so that the master execute said deed. On January 16, 1884, the master executed to the complainant a deed of lots 6, 9, 20, and -3, and on the next day, .January 17, 1884, Lomplainant executed and delivered to the ■defendant the deed of the west half of said lots above referred to. The deed from the master to her was not recorded until January 17, 1884. Some time in June, 1882, Bimers filed a bill to foreclose the trust deed secur- ing his note upon lots 6, 9, 20, and 23. Ap- pellee entered the appearance of appellant in said foreclosure suit, but a decree of sale was entered therein, and said lots were sold under said decree on September 3, 1883, to Elmers, for $670.23. The certificate of sale was purchased by appellee and appellant from Elmers on August 23, 1884, for $731; one half— $365.50— having been paid by ap- peUee, and the other $365.50 by appellant. The certificate was assigned to Mrs. John- son. As soon as the time for redemption expired, which was on December 3, 1884, the master took up the certificate, and made a deed conveying the whole of the four lots to Mrs. Johnson. Thereupon, on December 8. 1884, Mrs. Johnson and appellee, her hus- band, united in a deed conveying all their interest in the east half of the lots to the appellant. In addition to the chancery suit, appellee took otlier proceedings. On March 1, 1882, he began an attachment suit to recover .$388.38 sworn by the complainant to be the balance of the .$600 then due to her, charging that the debt had been fraudulently con- tracted. The attachment writ was levied upuii lots 6. 9, 20, and 23, and also upon lots 2, lo, 16, and 27. Judgment was rendered therein on April 5, 1882, and general and special execution issued on November 15, 1882. No levy, however, was made mider the execution, but it was returned unsatis- fied. Proceedings were also commenced to enforce the decree for alimony, and to set aside the agi'eement to settle for $500, pay- able at the rate of $5 per week. On March 6, 1882, appellee filed in the divorce suit an affidavit sworn to by complainant on March 2, 1882, setting up the decree for alimony, the receipt of $5 per week up to February 18, 1882, the delivery to Pratt of the $600, the release of the trust deed, etc., and al- leging that there was due to her $388.38; that the settlement for $500 had been made upon representations as to Pratt's poverty, and had never been fully approved of by her; that she had given notice of her inten- tion not to accept the $500; that Pratt had purchased lots 6, 9, 20, and 23 on September 29, 1879, for $600, "and affiant is informed that they are now worth about $3,000, and are incumbered to the extent of $540 only;" that Pratt owns lots 2, 13, 16, and 27, in- cumbered for $600; that he refuses to pay $75 due to her for alimony. A rule was en- tered by the court after a contest and after reading other affidavits, requiring Pratt to pay the $75 within a certain time. Upon his failm'e to do so, an attachment was issued, and he was arrested for contempt of court, and entered into a recognizance to appear in May. 1882, to answer the charge of con- tempt. He did not appear, however, but fled from the state, and went to Dakota, where he has remained ever since. During the pe- riod from April 8, 1882, to August 21, 1883, appellee caused six executions to be issued upon the decree for alimony for the amounts thereof accruing from time to time, but real- ized nothing. On May 6, 1882, Hartigan sold lots 2, 13, 16, and 27 under the trust deed to him for default in the payment of the principal of the note secured thereby, and interest thereon, and executed a trustee's deed to the purchasers, Edgar M. Wilson and Edward B. Holmes. All the lots were so sold for $682.43. Alex. S. Bradley, for appellant. James B. Munroe and F. A. Johnson, for appellees. MAGRUDER, J., (after stating the facts.) Appellee testifies that the deed made to him by appellant, conveying to him the west half of the lots in controversy, was executed by her in pursuance of a previous contract which she had made with him in reference to payment for his legal services. He swears that by the terms of this contract she was to pay all tne costs, and he was to have a contingent fee of one-half of what should be recovered both in the suit for alimony, and in the chancery suit in regard to the lots. The evidence shows that this contract was OOXSTRUCTIVB FRAUD. 339 made during the pendency of the legal pro- ceedings which the appellee was conducting for the appellant. It was not entered into before or at the time of his original employ- ment, which took place on February 15, 1882, nor did it exist when he filed the bill on February 23, 1882. His answer states that "early in the spring or summer of 1882 * * * it was * * * mutually agreed that this defendant should have and receive as a contingent fee for his services one- half." He testifies that he cannot fix the date of the agreement, but that, to the best of his recollection, "it was in March or April, possibly in May, after I discovered I had a pretty good-sized job on hand, and a good deal of work to do, and had done a good deal of work. * * * She claimed to have no money early in the proceedings, and could not pay my fees in money, and that was why I subsequently made a different aiTangement with her." Appellant swears that she never made an agreement with the appellee to give him one-half of the money or of the land to be recovered. The deed to appellee was also executed while the relation of attorney and client existed between himself and the appellant. That deed was made on January 17, 1884, and he concedes that he did not cease to be appellant's solicitor until some time thereafter. In England "it is a settled doctrine of equity that an attorney cannot, while the business is unfinished in which he had been employed, receive any gift from his client, or bind his client in any mode to make him greater compensation for his services than he would have a right to demand if no contract should be made during the relation." Weeks, Attys. at Law (2d Ed.) § 364. More than 50 years ago the English doctrine was adopted by the supreme court of Alabama in an able opinion in the case of Leeatt v. Sallee, 3 Port. 115, where it was held that "an agreement made by a client with his counsel, after the latter has been employed in a particular business, by which the orig- inal contract is varied, and greater compen- sation is secured to the counsel than' may have been agreed upon when he was first re- tained, is invalid, and cannot be enforced." The reason for the doctrine is to be found in the nature of the relation which exists be- tween attorney and client. That relation is one of confidence, and gives the attorney great influence over the actions and interests of the client. In view of this confidential relation, transactions between attorney and client are often declared to be voidable which would be held to be unobjectionable between other parties. The law is thus strict, "not so much on account of hardship in the par- ticular case as for the sake of preventing what might otherwise become a public mis- chief." Lewis V. J. A., 4 Edw. Oh. marg. p. 599, top p. C22. "No single circumstance has done more to debase the practice of the law in the popular estimation, and even to lower the lofty standard of professional eth-, ies and self-respect among members of the legal profession itself in large portions of om- country, than the nature of the transactions, often in the highest degree champertous, be- tween attorney and client, which are per- mitted, and which have received judicial sanction. It sometimes would seem that the fiduciary relation and the opportunity for un- due influence, instead of being the grounds for invalidating such agreements, are prac- tically regarded rather as their excuse and justification." 3 Pom. Eq. Jur. § 960, note 1. Before the attorney undertakes the busi- ness of the client, he may contract with ref- erence to his services, because no confiden- tial relation then exists, and the parties deal with each other at arm's length. The same is true in regard to dealings which take place after the relation has been dissolved. 1 Story, Eq. Jur. (13th Ed.) §§ 810-313. But the law watches with unusual jealousy over all transactions between the parties which occur while the relation exists. In the case at bar it does not appear that any definite contract in regard to fees existed between appellant and appellee prior to the spring of 1882; but, inasmuch as he undertook to man- age her legal interest before that time, there was an implied contract, created by opera- tion of law, which entitled him to receive such reasonable coinpensation as his services might be worth. "If the amount of com- pensation be not fixed by the terms of the contract by which an attorney or solicitor was employed, he would be entitled to be paid such reasonable fees as have been usu- ally paid to others for similar services." Leeatt V. Sallee, supra. The question, then, arises, what was a reasonable compensation for the services ren- dered by the appellee to the appellant? He has introduced no independent evidence upon this subject. His only witness is an oflice companion, who says that, in his opinion, appellee's legal services were worth $30 per day, but does not claim to have full knowl- edge of the services rendered in the matter herein involved. Appellee is unable to state, except approximately, the time spent by him in attending to appellant's matter, but he says: "I believe that in the whole matter * * • I spent at least forty days." Forty days' services at ?30 per day would be ?1,- 200. We do not think, however, that the proof establishes $1,200 as the value of the services. Mr. W. J. Culver swears that the customary and usual charge for all the work done by appellee in the divorce attachment and "resulting trust" case would be $250 in money. Mr. B. F. Richolson, the attorney for Pratt, swore that appellee's services in the chancery or "trust" suit in regard to the land were reasonably worth from $300 to $350, and he made the following statement: "If the fee was contingent upon services, I think he would be justified in charging somewhat more. I hardly think double that, because I think the success was so reason- 340 CXDXSTRUCTIVE FRAUD. ably assured there was not very much doubt." What was the value of the lots of which appellee was to have one-half? In the iiflldavit filed by appellant in the divorce proceeding on March 6, 1882, she swore that she had been informed that the lots were then worth $3,000, and were incumbered for .'?.j40, only. This affidavit was drawn by ap- pellee, and was presented to the court upon an application to set aside the agreement of settlement for $500. We cannot suppose that the value of the lots was exaggerated in order to induce the court to believe that Pratt was not too poor to pay more than $500. Taking $3,000 as the estimated value of the lots on JIarch 6, 1S82, then, by ap- pellee's agreement for fees, he was to get property worth $1,500, less $270 of incum- brance, amounting to $1,230. This amount exceeded the reasonable compensation to which appellee would have been entitled un- der the implied contract under which he began his services for appellee. We have recently held in Jlorrison v. Smith, 130 111. .•Jl)4, 23 N. E. 241, tliat a sale by a client to an attorney will be sustained if it is fair and honest, and in no manner tainted with fraud, undue influence, or cornjption, and that the law does not go so far as to hold such a sale voidable at the election of tlie client. In that case the subject-matter of the pur- chase by the attorney from the client was a judgment obtained by the former for the lat- ter. The judgment debtor was insolvent, except as to his ownership of an undivided interest in land which was subject to a life estate. The docti-ine of that case is the law of this court as applied to such a purchase by an attorney from a client as is there de- scribed. The litigation had reached the point where judgment had been obtained. The judgment was a lien upon a reversionary interest in land. Its value could, therefore, be easily ascertained by ascertaining the value of the interest in the land subject to the life estate. But there is a manifest dis- tinction between a purchase by an attorney from a client and a contract made during the pendency of a litigation for the convey- ance or transfer by tlie client to the attorney of a part of the property involved in the liti- gation as a compensation for his legal serv- ices therein. Where a purchase ig proposed, the seller is always, to a certain extent, put on his guard. He knows that it is for the interest of the buyer to get the property as cheaply as possible. He has every motive to inquire into and learn the value of the thing to be sold. But, in case of the con- tract above indicated, the client is at a great disadvantage. The value of the property in litigation depends upon the result of the liti- gation, and, being unable to understand the legal aspects of the case, he is unable to foresee what such result will be. He must rely, not upon his own judgment, but upon the judgment and statements of his attorney. Moreover, he is unable to judge as to the value of his attorney's services, because he cannot know what legal steps are necessary to be taken in the conduct of the case. The advantage is overwhelmingly on the side of the attorney where such a contract is made. Whatever may be the rule as to a purchase by an attorney from a client, we think that, where the title to property is so involved in litigation that the value of the property de- pends upon the decision as to such title, a contract made during tlie pendency of the litigation to compensate the attorney for his legal services with a part of the property involved therein should be held to be void- able at the election of the client, irrespec- tive of the fairness or unfairness of the con- tract, provided such election is exercised within a reasonable time. Such a rule as this Is demanded by public policy, and in the interests of a wholesome administration of justice. The distinction here noted is pointed out In Berrien v. McLane, 1 Hoff. Ch. 420, where it is said : "A voluntary gift, made while the connection of attorney and client subsists, Is absolutely void, and the property transferred by it can only be held as security for those charges which the at- torney can legally make. Next, * * * a transfer of property, made upon an osten- sibly valuaole consideration, such as a lease or sale, is presumptively void. The client has the advantage of driving the attorney to produce evidence to prove its fairness, and to show that the price or terms were as beneficial as could have been obtained from a stranger. And, lastly, * * * a trans- fer of a part of the property actually in liti- gation, or a contract to transfer a part, * * * is void, — illegal, — because of the ex- isting relation of the parties. * * * gueh a contract will not be enforced on the appli- cation of the attorney; and, if the client applies, will be canceled on equitable terms." The above passage from the Berrien Case is quoted for the purpose of showing that a distinction is recognized between a sale and a transfer of a part of the property in liti- gatioh in payment of fees or a contract to transfer the same; but we do not go so far as to hold with the learned vice chancellor in that case that such a contract or transfer is absolutely void, but that it is voidable at the option of the client. The view here ex- pressed is supported by the following au- thorities: Rogers v. Marshall, 3 McOrary, 76, 9 Fed. 721, and note to the first opinion, and cases cited in note; 4 Kent, Comm. (12th Ed.) p. 449, note b; WaUis v. Loubat, 2 Denio, 607; Lecatt v. Sallee, supra; Pear- son V. Benson, 28 Beav. 598; Newman v. Payne, 2 Yes. Jr. 199; Wood v. Downes, 18 Ves. 119; Lewis v. J. A., supra; Starr v. Vanderheyden, 9 Johns. 253; West v. Ray- mond. 21 Ind. 305; Simpson v. Lamb, 40 Eng. Law & Eq. 59; Hall v. Hallet, 1 Cox, 134; Hawley v. Cramer, 4 Cow. 717; Weeks, Attys. at Law, (2d Ed.) § 273; Armstrong V. Huston's Heirs, 8 Ohio, 552; Gray t. Em- OOXSTRUCTIVB FRAUD. 341 mons, 7 Mich. 533; Merritt v. Lambert, 10 Paige, 352; Bolton v. Daily, 48 Iowa, 348; 1 Perry, a?rusts (3d Kd.) § 202. But even if the rule which applies to a pur- chase by an attorney from his client should be held to be applicable in the present case, the contract and the deed made in pursuance thereof must be subject to a rigid test. In case of such a purchase, the transaction is presumptively fraudulent, and the burden is on the attorney to show "fairness, adequacy, and equity." Lewis v. J. A., supra. He must remove the presumption against the validity of the transaction "by showing affirmatively the most perfect good faith, the absence of undue influence, a fair price, linowledge, in- tention and freedom of action by the client, and also that he gave his client full informa- tion and disinterested advice." 2 Pom. Eq. Jnr. § 960. In order to sustain the deed made to appellee on January 17, 1884, it must appear that the consideration received by ap- pellant was "adequate," and that the appellee paid "a fair price." This involves the deter- mination of the question whether the services rendered to appellant were worth what the property was worth on the day of the deliv- ery of the deed. Counsel on both sides have presented this as one of the material issues in the case, and have introduced testimony to show the value of the lots in January, 1884. Of appellant's witnesses three swore that the lots were then worth .$3,200, two that they were worth $4,000, and two that they were worth $4,800. Of appellee's witnesses two placed the value of the lots at that time at about $900, one at from $1,000 to $1,400, one at $1,200, and one at from $1,950 to $2,400. It is claimed by counsel for appellee that the valuations of his witnesses are based upon actual sales, while the valuations proved by appellant are matters of opinion, formed from a general knowledge of values. It has been well said that "there is no more important factor in determining the value of particular property than the sale of similar property in the same neighborhood at about the time in question." Lewis, Em. Dom. § 443. We have held that "actual sales of property in the vicinity and near the time are competent evidence, as far as they go." Culbertson & Blair Packing & Provision Co. v. City of Chi- cago, 111 III. 651. But, while such sales may be the most satisfactory evidence of value, yet they are only one of the modes of proving value, and not the only mode. Railroad Co. V. Haller, 82 111. 208. It is true that the wit- nesses of appellant do not testify to actual knowledge of sales made in the neighbor- hood where these lots are located in the year 1884, or about that time, and that some of the witnesses of appellee do refer to sales. Pur- chases made in 1879 are not an exact criterion of values in 1884. Nor are forced sales un- der trust deeds and foreclosure decrees al- ways a correct indication of value. After making allowance for the difference thus in- dicated between the testimony produced by appellee and that produced by appellant, we are unable to reach the conclusion that the value of the services rendered to the appel- lant was equal to the value of the lots convey- ed to appellee in January, 1884. We cannot say, however, after a careful re- view of the evidence, that the contract for compensation, and the deed made in pursu- ance thereof, are liable to any other objec- tions than these two: First, they were exe- cuted during the existence of the relation of attorney and client; second, they secured a larger compensation for legal services than those services were really worth. We see no evidence of any undue influence exercised by the appellee over the appellant, except, per- haps, in the matter of obtaining from her a renewal of the contract. In the fall of 1882 appellee seemed to fear that appellant would make a settlement with Pratt without con- sulting him, or upon a basis not approved by hini; and on November 24, 1882, he wrote her a letter, in which, after referring to her previously expressed desire that he should conduct her business "upon a contingent fee of 50 per cent, of the amount recovered," he said, "A definite understanding is therefore necessary before any further action is taken." He says that after this date she renewed the contract for one-half of what should be re- covered; and thereafter, in March, 1883, as the record shows, he amended the bill by praying that Pratt be declared a trustee, etc. It was said in Bolton v. Daily, supra: "We think that where an attorney sets up an ex- press agreement to pay more than an ordi- nary fee, exacted of a client where the work was two-thirds done, under a tlireat of with- drawing from the case if the agreement was not made, nothing but the best of reasons would be suflicient to uphold the agreement." Here, however, the implied threat to take no further action without a definite understand- ing had reference to reaffirming a contract already made, rather tlian to the making of a contract for the first time. Appellee had perhaps good reasons for asking for a defi- nite understanding. The appellant had thrown out intimations of a settlement for her litigation. She had shown herself to be changeable in her humor, and had already employed two attorneys besides appellee in her lawsuit. She had repudiated the agree- ment of settlement entered into with her sec- ond husband. She had made some incorrect statements to her counsel; for example, she had charged that the note to Elmers and the trust deed to Thornton had been obtained by fraud, when the evidence overwhelmingly es- tablished the fact that those securities repre- sented a bona fide loan, and that she herself had voluntarily united in the execution of the trust deed. Aside from the haste with which appellee secured his deed on January 17. 1884, we are satisfied that the action of ap- pellant in the execution of that deed was free and voluntary. She admits that she was pleased with the result reached in getting a 342 OOXSTRUCTIVB FRAUD. decree for tlie lots. The proof does not sus- tain her in the claim which she now makes, —that she thought she was conveying to ap- pellee an undivided one-half of the lots, so that as cotenant she would have the benefit of his services in the further management of the property. On the contrary, the proof shows that the deed was fully explained to her, and that she well understood it to he a conveyance of the west half of the lots, and that she chose the east half in preference to the west half upon being given her choice. A^'e think the proof also shows that appellant was fully advised of all the steps taken in the suit. She was acquainted with the value of the lots, and received information in relation thereto from the beginning of her troubles, having accepted a trust deed thereon in 1879, and having executed a trust deed thereon in 1880. In 1882 she had made an affidavit as to the value of the lots. Afterwards she is shown to have talked with a number of per- sons in regard to the future outcome of the property. She was a shrewd, capable, busi- ness woman; had been engaged in business before she married Pratt; and, though with- out much ready money, owned a house and two lots in a suburb called ilelrose. If appellant had filed her bill within a rea- sonable time, we are of the opinion that she would have been entitled to have the deed to appellee set aside, either upon the ground that both the deed and the contract which preceded it were obtained from her while the relation of client and attorney existed be- tween herself and appellee, or upon the ground that the property agreed to be given and subsequently conveyed to appellee as compensation for his legal services was worth more than the reasonable and custom- ary value of those services. But, inasmuch as the contract, which appellee could not have enforced, was fully completed and ex- ecuted by the conveyance to him of one-half the property, the question arises whether or not appellant has not been guilty of laches in not sooner filing her bill to have the deed set aside. From January, 18S4, when the deed was made, to December, 1890, when the present hill was filed, a period of almost seven years elapsed. In connection with the ques- tion of laches it is a fair subject of inquiry, under the facts of this case, whether the con- duct of the appellant does not show acqui- escence, if not confirmation, on her part. Where bills are filed to set aside contracts or deeds between parties standing in a confi- dential relation to each other, the defense of laches is not usually regarded with favor. It has been said that "length of time weighs less in such a case than in any other," and that it is "extremely difficult for a confiden- tial agent to set up an available defense grounded on the laches of his employer." Wood V. Downes, 18 Ves. 120, note 1. But even in cases where it has been held that such contracts and sales, without reference to their fairness or honesty, will be set aside upon the application of the party in interest, it has at the same time been held that such application must be made within a reason- able time, to be judged of by the court un- der all the circumstances of the case. Haw- ley V. Cramer, 4 Cow. 717; Smith v. Thomp- son's Heirs, 7 B. Mon. 310; Fox v. Mack- reth, 1 White & T. Lead. Gas. Eq. pt. 1 (4th Am. Ed.) p. 188, § 11.3; Id., p. 257; JlcCor- mick V. JIalin, 5 Blackf. 509; Williams v. Reed, 3 Mason, 405, Fed. Cas. No. 17,733. What is a "reasonable time" cannot well be defined, but must be left, in large measure, to the determination of the court in view of the facts presented. Equity does not always follow the period of limitation fixed by stat- ute and enforced in courts of law. Parties will be required to assert their rights with- in a shorter time in states where the val- ues of real estate increase rapidly, and greater temptations are thereby afforded for speculative litigation. Burr v. Borden, 61 111. 389. But the party who is entitled to set the transaction aside cannot be charged with de- lay, or with acquiescence or confirmation, unless there has been knowledge of all the facts, and perfect freedom of action. Acts which might appear to be acts of acquies- cence will not be held to be such if the client or cestui que trust is ignorant of the circum- stances, or under the control of the original influence, or otherwise so situated as not to be free to enforce his rights. Rogers v. Mar- shall, supra; Hawley v. Cramer, supra. Confirmation may be evidenced by long ac- quiescence, "as by standing by and allowing the purchaser to lay out money in the firm belief that her title would not be contested." Pearson v. Benson, 28 Beav. 598. Let us see how the appellant stood related to the two objections theretofore pointed out on January 17, 1884, and for nearly seven years thereafter. She must be held to have known that the property which she conveyed to appellee was worth more than his serv- ices. She alleges in her bill in this case that she agreed to pay him $400, and, while that allegation is not sustained by the proof, she must be held to be bound by it. In her tes- timony, after stating that appellee intro- duced the subject of his fees after Pratt's arrest, she says: "I asked him * * * what would be his fees for attending to all my business, and making everything per- fectly clear and straight for me. * * * He said there was a great deal of work about the case, and would probably be a great deal more, and he would have to have $400." She swears that she thus knew the value of his services as fixed by himself. On January 17, 1884, with knowledge, ac- cording to her own evidence, that his serv- ices were estimated by himself to be worth only $400, she conveyed to him one-half of property which she had sworn to be worth $3,000 in March, 1882, and which was of greater value in 1884. With admitted knowl- edge as to the disparity between the value OOXSTRUOTIVB FRAUD. 343 of the land and the value of the services, she permitted the appellee to deal with the west half of the land as his own, and recog- nized him as the owner thereof, for 6 years and 11 months, without giving any intima- tion that she intended to disturb his title. In December, 1S84, he paid off one half of the incumbrance held by Elmers, and she not only permitted him thus to spend his own money on the property, but furnished him with the money to pay off the other half of the Incumbrance for herself. From June 30, 1884, down to the time of filing the present bill, she paid taxes on the east half of the property, and suffered him to pay taxes on the west half; sometimes taking the money over to the treasurer's office for him, and paying his taxes for him on the west half. A little more than a month before filing the bill she paid $83.35 for an outstanding tax title against the east half, and he at the same time, with her consent, paid the same amount for a tax deed to himself of the same outstanding title against the west half. In 1888 and 1889 she made efforts not only to sell her own lots in the east half, but also to sell for him the lots in the west half which she had conveyed to him. She went out to the property in 1885, and employed a man to plant trees for her on the east half, telling him that appellee owned the west half. In 1886 she had some negotiation with one Whittemore about selling one of her lots In the east half to him, and spoke of Johnson as the owner of the west half by deed from herself for services. At another time she was present when appellee offered to sell his lots in the west half for $75 a lot, and talked to the same party about buying her own lots In the east half. In 1887 she occupied a part of the otfice of a real-estate agent named Hopson, and proposed to him that he should seU her lots, referring to appellee as the own- er of the adjoining lots, and as being willing to sell them. The evidence shows that be- tween January, 1884, and December, 1890, a belt line railroad was built to the west of these lots, and the Wisconsin Railroad Com- pany laid its tracks in the neighborhood, and certain locomotive works were located in that vicinity. On account of these improvements, the lots, which had been bought for $600 in 1879, had become worth $16,000 in 1890. It appears from the evidence that the de- fendant went into the office of the appellee as a typewriter in 1883, and did the business of a typewriter for several years. The ap- pellee and two other attorneys had each a private room, and a large reception or wait- ing room. The appellant was permitted to use a typewriter belonging to appellee, oc- cupying the reception room for that purpose. She was allowed the use of the room and of the typewriter without charge, and, in con- sideration thereof, she did for appellee such typewriting as he required. We cannot see that the appellee owed her anything for work done under this arrangement. While she was in his office she seems to have done a profit- able business as a typewriter for outside par- ties. When she procured a typewriter of her own, and took another office in the same building, he paid her for the services which she rendered. Upon the ground of laches and acquiescence we think that the court be- low properly dismissed the bill. The decree of the superior court of Cook county is af- firmed. :!44 CJONSTKUGTIVB FRAUD. SOLINGER V. EARLB. (82 N. Y. 393.) Ccurt of Appeals of New York. Nov. 9, 1880. Appeal from judgment entered upon an or- der reversing a judgment for plaintiff upon an order overruling a demurrer to the com- plaint. The judgment of the general term sustained the demun-er and dismissed the complaint. The facts appear in the opinion. Abram Kling, for appellant William M. Ivens, for respondents. ANDREWS, J. The complaint alleges in substance that the plaintiff, to induce the de- fendants to unite with the other creditors of Newman & Bernhard in a composition of the debts of that firm, made a secret bargain with them to give them his negotiable note for a portion of their debt beyond the amount to be paid by the composition agree- ment. He gave his note pursuant to the bar- gain, and thereupon the defendants signed the composition. The defendants transferred the note before due to a bona fide holder, and the plaintiff having been compelled to pay it, brings this action to recover the mon- ey paid. The complaint also alleges that the plaintiff was the brother-in-law of Newman, and entertained for him a natural love and afCection, and was solicitous to aid him In effecting the compromise, and that the de- fendants knowing the facts, and taking an unfair advantage of their position, extorted the giving of the note as a condition of their becoming parties to the composition. We think this action cannot be maintained. The agreement between the plaintiff and the defendants to secure to the latter payment of a part of their debt in excess of the ratable proportion payable under the composition was a fraud upon the other creditors. The fact that the agreement to pay such excess was not made by the debtor, but by a third person, does not divest the transaction of its fi-audulent character. A composition agreement is an agreement as well between the creditors themselves as between the creditors and their debtor. Bach creditor agrees to receive the sum fixed by the agreement In full of his debt. The sign- ing of the agreement by one creditor is often an inducement to the others to unite in it. If the composition provides for a pro rata payment to all the creditors, a secret agree- ment, by which a friend of the debtor under- takes to pay to one of the creditors more than his pro rata share, to induce him to unite in the composition, is as much a fraud upon the other creditors as if the agreement was directly between the debtor and such creditor. It violates the principle of equity, and the mutual confidence as between cred- itors, upon which the agreement is based, and diminishes the motive of the creditor who is a party to the secret agreement, to ac? in view of the common interest in makinj; the composition. Fair dealing and common honesty condemn such a transaction. If th« defendants here were plaintiffs seeking to en- force the note, it is clear that they could nol recover. Cockshott v. Bennett, 2 Term R. 763; Leicester v. Rose, 4 East, 372. The ille- gality of the consideration upon well-settled principles would be a good defense. The plaintiff, although he was cognizant of the fraud, and an active participator in it, would nevertheless be allowed to allege the fraud to defeat the action, not, it is true, out of any tenderness for him, but because courts do not sit to give relief by way of enforcing illegal contracts, on the application of a party to the illegality. But if he had voluntarily paid the note, he could not, according to the gen- eral principle applicable to executed contracts void for illegality, have maintained an action to recover back the money paid. The samo rule which would protect him in an action to enforce the note, protects the defendants in resisting an action to recover back the money paid upon it. Nellis v. Clark, 4 Hill, 429. It is claimed that the general rule that a party to an illegal conti'act cannot recover back money paid upon it does not apply to the case of money paid by a debtor, or in his behalf, in pursuance of a secret agreement, exacted by a creditor in fraud of the compo- sition, and the cases of Smith v. Bromley, 2 Doug. 696, note; Smith v. Cuff, 6 Maule & S. IGO; and Atkinson v. Denby, 7 Hurl. & N. 934,— are relied upon to sustain this claim. In Smith v. Bromley the defendant, being the chief creditor of a bankrupt, took out a com- mission against him, but afterward finding no dividend Ukely to be made, refused to sign the certificate unless he was paid part of his debt, and the plaintiff, who was the bank- rupt's sister, having paid the sum exacted, brought her action to recover back the money paid, and the action was sustained. Lord Mansfield in his judgment referred to the statute 5 Geo. II. c. 30, § 11, which avoids all contracts, made to induce a creditor to sign the certificate of the bankrupt, and said: "The present is a case of a transgression of a law made to prevent oppression, either on the bankrupt or his family, and the plaintiff is in the case of a person oppressed, from whom money has been extorted and advan- tage taken of her situation and concern for her brother." And again: "If any near rela- tion is induced to pay the money for the bankrupt, it is taking an unfair advantage and torturing the compassion of his family." In Howson v. Hancock, 8 Term R. 575, Lord Kenyon said that Smith v. Bromley was de- cided on the ground that the money had been paid by a species of duress and oppression, and the parties were not in pari delicto, and this remark is fully sustained by reference to Lord Mansfield's judgment. Smith v. Cuff was an action brought to recover money paid by the plaintiff to take up his note given to CONSTRUCTIVE FRAUD. 345 the defendant, for the balance of a debt owing by the plaintiff, which was exacted by the latter as a condition of his signing with the other creditors a composition. The de- fendant negotiated the note and the plaintiff was compelled to pay it. The plaintiff recov- ered. Lord EUenborough said: "This is not a case of par delictum; it is oppression on the one side and submission on the other; it never can be predicated as par delictum where one holds the rod and the other bows to it." Atkinson v. Denby was the case of money paid directly by the debtor to the creditor. The action was sustained on the authority of Smith v. Bromley and Smith v. Cuff. It is somewhat difficult to understand how a debtor who simply pays his debt In full can be considered the victim of oppression or extortion because such payment is exacted by the creditor as a condition of his signing a compromise, or to see how both the debtor and creditor are not in pari delicto. See re- mark of Parke, B., in Higgins v. Pitt, 4 Exch. 312. But the cases referred to go no further than to hold that the debtor himself, or a near relative who out of compassion for him pays money upon the exaction of the creditor, as a condition of his signing a composition, may be regarded as having paid under duress and as not equally criminal with the creditor. These decisions cannot be upheld on the ground simply that such payment is against public policy. Doubtless the rule declared in these cases tends to discourage fraudulent transactions of this kind, but this is no legal ground for allowing one wrongdoer to recov- er back money paid to another in pursuance of an agreement, illegal as against public policy. It was conceded by Lord Mansfield in Smith v. Bromley, that when both parties are equally criminal against the general laws of public policy, the rule is "potior est con- ditio defendentis," and Lord Kenyon In How- son V. Hancock, said that there is no case where money has been actually paid by one of two parties to the other upon an illegal contract, both being particeps criminis, an ac- tion has been maintained to recover It back. It Is laid down In Cro. Jac. 187, that "a man shall not avoid his deed by duress of a stran- ger, for it hath been held that none shall avoid his own bond for the Imprisonment or danger of any one than himself only." And in Robinson v. Gould, 11 Cush. 57, the rule was applied where a surety sought to plead his own coercion as growing out of the fact that his principal was suffering illegal im- prisonment as a defense to an action brought upon the obligation of the surety given to se- cure his principal's release. But the rule in Cro. Jac. has been modified so as to allow a father to plead the duress of a child, or a husband the duress of his wife, or a child the duress of the parent. Wayne v. Sands, 1 Freem. 351; Baylie v. Clare, 2 Brownl. & G. 276; 1 Rolle, Abr. 687; Jacob, Law Diet. "Duress." We see no ground upon which It can be held that the plaintiff in this case was not in par delictum in the transaction with the de- fendants. So far as the complaint shows he was a volunteer in entering into the fraudu- lent agreement. It is not even alleged that he acted at the request of the debtor. And In respect to the claim of duress, upon which Smith V. Bromley was decided, we are of opinion that the doctrine of that and the sub- sequent cases referred to can only be asserted in behalf of the debtor himself, or of a wife or husband, or near relative of the blood of the debtor, who intervenes in his behalf, and that a person in the situation of the plaintiff, remotely related by marriage, with a debtor who pays money to a creditor to Induce him to sign a composition, cannot be deemed to have paid under duress by reason simply of that relationship, or of the interest which he might naturally take in his relative's affairs. The plaintiff cannot complain because the defendants negotiated the note, so as to shut out the defense, which he would have had to It in the hands of the defendants. The nego- tiation of the note was contemplated when it was given, as the words of negotiability show. It Is possible that the plaintiff while the note was held by the defendants, might have maintained an action to restrain the transfer, and to compel Its cancellation. Jackman v. Mitchell, 13 Ves. 581. But it Is unnecessary to determine that question In this case. The plaintiff having paid the note, although under the coercion resulting from the transfer, the law leaves him where the transaction has left him. The judgment should be affirmed. All concur. Judgment affirmed. ;)46 OOXSTRUCTIVK FRAUD. HANOVER NAT, BANK OF CITX OF NEW YORK V. BLAKE. (37 N. E. 519, 142 N. T. 404.) Court of Appeals of New York. June 5. 1894. Appeal from supreme com't, general term, first department Action by the Hanover National Bank of the City of New York against Sarah F. Blake. From a judgment of the general term (20 N. Y. Supp. 780) affirming a judg- ment for defendant rendered at special term plaintifC appeals. Reversed. The action is brought by the payee of a promissoi7 note against the indorser. The facts v?ere not in dispute, and vyere stated by the general term as foUows: Frederick D. Blake and Charles Waterman v^ere part- ners engaged In the dry-goods business un- der the firm name of P. D. Blake & Co. They vyere indebted to various creditors, Including the plaintiff, and, becoming in- solvent, •axecuted a general assignment of all their property to James H. Thorp on the 24th day of April, 1888. On the 4th of .Tune, 1888, the creditors of P. D. Blake & Co. signed a composition agreement by vfhich they agreed to take 40 per cent, ol their respective claims, to be paid by four notes, made by the members of the firm, each for 10 per cent of the claim; two payable in 6 and 12 months, and two in 18 and 24 months,— the latter two indorsed by Sarah F. Blake. The Hanover Bank, desiring to have the security of Mrs. Blake upon all the notes, asked that she indoree the first two as well as the last two, which she did. This was not known to the other creditors, and was a security additional to that provided by the terms of the composition agreement. The note in suit is the third of the series, payable in 18 months, and properly indorsed by Mrs. Blake, in accordance with the com- position agreement. At the trial both par- ties moved for judgment, which the court directed for the defendant. At the general term that judgment was affirmed, and the plaintiff has again appealed to this court. Thos. S. Jloore, for appellant. C. Bain- bridge Smith, for respondent. GRAY, J. (after stating the facts). In the general term opinion the question of law was stated thus: "Did the secret agree- ment, by which Mrs. Blake indorsed the first two notes, invalidate the whole com- position agreement, so that notes given In pursuance of its terms are not enforceable by the plaintiff?" The learned justices, finding no controlling authority in this state, determined the question adversely to the plaintiff, and upon the ground, in substance, that, as the agreement was fraudulent, the fraud permeated and vitiated the whole composition agreement, and disabled the creditor from recovering anything under It. In this view we are not able to agree with tnem. It may be true that there was no decision, in the courts of this state, In Its features so precisely in point as to compel adherence to its authority, and it is true that the view of the general term has support in decisions of English couits. I think, however, that in our state there are expres- sions of opinion by eminent judges of this court, and by a former very distinguished judge of the superior court of the city of New York, which rather commit us to a contrary view, and which should commend themselves to us, as furnishing a wise and more politic nilo in these cases of composi- tion by an insolvent debtor with his cred- itors. The general principle has been long settled in England and here that a secret agreement which induces a creditor to agree to a composition by the promise of a pref- erence, or of some undue advantage, over the other creditors, is utterly repugnant to the composition agreement, and, from its fi-audulont natm-e, is avoided by the law. The very essence of a composition agree- ment is that all creditors come In upon terms of equality, and that equality would be destroyed if the secret agreement were given effect. In Leicester v. Rose, 4 East, 372, at page 381, Lord EUenborough ob- served that the principle of all the cases was "that where the creditors, in general, have bargained for an equality of benefit and mutuality of security, it shall not be competent for one of them to secm'e any partial benefit or security to himself." In Russell V. Rogers, 10 Wend. 474-479, Jus- tice (afterwards chief justice) Nelson said: "So scrupulous are courts in compelling creditors to the observance of good faith towards one another in cases of this kind, that any security taken for an amount be- yond the composition agreed upon, or even for that sum, better than that which is common to all, if unknown to the other cred- itors, is void and inoperative." It is in the extent of the operation of the principle, which was thus early asserted, that we will find the divergence of judicial opinions be- tween English judges and those of this state. It is curious to observe that, though Leicester V. Rose was relied upon as the basis of au- thority for their conclusions, the applica- tion of the doctrine of that case has been different in each country. Leicester v. xtose was decided in 1803. Its facts were that several creditors of the Insolvent refused to sign unless collateral security, which was to be given for the first two installments of the composition payment, should also be given for the last two. The defendant agreed to proctire this additional security, and, not having done so, the action was brought to enforce his agreement. Lord EUenborough stated the question to he whether any legal effect could be given to such an agreement, which gave to some creditors a better security than to others; and he held that it could not, as it was a COXSTRUCTIVB FRAUD. 347 fraud upon the rest of the creditors. The case of Howden v. Haigh, 11 Adol. & E. 1033, was decided in 1840, and was a suit upon composition notes. By a secret agree- ment between the plaintiff and defendant that the latter should indorse to him a bill accepted by a third party, in order to give him a preference beyond the other credit- ors, the former had been induced to sign the composition deed. It was held that he could not recover. Lord Denman, relying upon Leicester v. Rose and Knight v. Hunt, 5 Bing. 432, held that every part of the transaction was avoided by reason of the deceit upon the other creditors. Littledale. J., while agreeing with him that the fraud ext07; 1 Spence, Eq. Jur. 43'J, 499 ; 2 Spence, Eq. Jur. 04-70. lu the case at bar, the testator devises aud bequeaths the residue of his estate to his son, "to have and to hold the same to bim, his heirs and assigns forever, to his and their own use, but subject however to the follow- ing charges:" These charges are first, the pay- ment of specified sums yearly to the testator's wife and sister for their respective lives, un- less discharged by the purchase of annuities In their favor by the executors (of whom the son is one) under the authority given them by the will; second, the further payment, which the testator expressly "directs" the ex- ecutors to make, of all the wife's expenses in case of sickness, in lieu of her right to dower or thirds in his estate. Subject to these charges during the lives of the testator's wife and sister, the son is given, by the fullest, clearest and most formal words, an absolute estate In fee. By the further clause of the will, the tes- tator merely signifies to his son his "desire and hope that he will so provide, by will or otherwise, that in case he shall die leaving no lawful issue living, the property which he will take under this will shall go in equal shares" to certain nephews, nieces, and cous- ins of the testator. This clause, if construed as creating a trust, leaves nothing to the discretion of the son, tiut amounts to an ex- ecutory devise over. In case of his death leaving no issue, to the persons named, in definite amounts. To give it that construc- tion would be inconsistent with the principal Intention of the testator, as previously mani- fested, to give the son an absolute title, as well as with the desciiption of the estate in this very clause as "the property which he will take under this will." It follows that the son had full power to dispose of the estate by will, unfettered by the supposed trust, and that there must be a decree for the son's devisees. EXPRESS TRUSTS— PEEiCATORY WORDS. 375 0L,AT et al. v. WOOD et al. (47 N. E. 274, 153 N. Y. 134.) Court of Appeals of New York. June 8, 1897. Appeal from supreme court, general term, First department. Action by George S. Clay and otliers against Lucretla M. Wood and otliers for partition, and Incidentally to construe the will of Wil- liam W. Clay, deceased. A judgment dis- missing the complaint on the merits was af- firmed by the general term (36 N. Y. Supp. 317), and plaintiffs appeal. Afiirmed. This action was brought for the partition of real property, and it involves the construc- tion of the will of William W. Clay, deceased. By that will the testator, after directing the payment of his debts and funeral expenses, and particularly an indebtedness secured by mortgage upon his house and lot, in the second clause gave to his wife, Lucretia, "and to her heirs and assigns, forever," the house and lot mentioned, and also his household goods and personal effects in said house, "to have and to hold the said house and lot to her, my said wife, Lucretia M. Clay, and to her heirs and assigns, forever, and to have and to hold the said household goods, etc., unto her, my said wife, Lucretia M. Clay, and to her heirs, exec- utors, administrators, and assigns, forever." He also gave to her the sum of $20,000. In the third and fourth clauses he gave legacies to his brothers, to a sister, to nephews, and to an adopted daughter; providing at the same time that none of those legacies should be a charge upon the house and lot and household goods, etc., which he had given to his wife. By the fifth clause he gave all the residue of his estate to his wife, and "to her heirs, exec- utors, administrators, and assigns, forever," and then stated as follows: "And It is my de- sire and request that my said wife do sustain, provide for, and educate Lucretia M. Wood, the daughter of my said adopted daughter, Josephine M. Wood. And it Is my further de- sire and request that my wife do make the said Lucretia M. Wood, Josephine M. Wood, and my nephews and nieces, the children of my brothers, Caleb S. Clay and George Clay, joint heirs after her death in the said estate which by this will I have bequeathed to my said wife." The question in this case arises upon the effect to be given to that concluding sentence of the fifth paragraph. The plain- tiffs, who are the nephews and nieces referred to therein, claim in their" complaint that a trust was thereby created in favor of the persons named, anu that Lucretia M. Clay, the widow of the testator, having died, those persons had become tenants in common of the property, or entitled thereto under the trust alleged. It appears that Mrs. Clay died, leavmg a will whereby she gave the property equally to Jose- phine M. Wood and Lucretia M. Wood. John F. Dillon, lor appellants. James Jj. 6ishop, for respondents. GRAY, J. (after stating the facts). Upon reading this will, we can infer some conflict in the mind of the testator vrith respect to the ultimate disposition which he should malie of his property. It was as to how he might bene- fit the persons named in the fifth clause, aftei his widow's death. He could have created, in terms, a life estate in his wife, with a re- mainder over in their favor, in which case there would be a certainty with respect to their interest; or he could have created a pow- er of appointment in their favor, with a like certainty; or he could take the course which he did, namely, of desiring that his wife should make them "her heirs." The mental confiict was not serious respecting the superior claims of his wife, as we seem clearly to see from the careful and elaborate provisions of his will; but it appears when we read liis expres- sions of desire and of request, addressed to his wife, respecting a disposition of the estate which he had given to her, and which she might well have heeded. What was the dom- inant intention of Mr. Clay in making his will as he did? To discover that, we must take into consideration the whole scheme of the will, and weigh the expressions which he has made use of when defining the interest of his wife. Whether the will in question was drawn with the aid of a lawyer, or by a lay hand, we are not informed. The language is somewhat inartificial, and yet it is so plain and emphatic as to leave little room for doubt in the mind as to what was the principal pur- pose of the testator. His general scheme was to give everything to his wife upon his death, except the legacies which he gave by the third and fourth clauses. That was the simple plan which he evidently had in mind, and the question is whether the disposition which he made resulted in vesting in her the full bene- ficial interest In, and in absolute right of dis- posal of, the property, or whether, as the ap- pellants claim, a trust was created with re- spect to that property, or a power of trust im- perative in its nature. It is very earnestly and ably argued in behalf of the appellants that by force of the last clause in the fifth para- graph of the will, while the widow took a legal estate in fee. It was subject, as to the real and personal property, to a trust, or to a power in trust, in favor of the persons and the classes of persons named therein; and they base the argument upon the proposition, sub- stantially, that the provision is couched In such precatory words as to fulfill all the conditions named by the authorities as requisite to cre- ate a trust, in that the words used exclude any option or discretion in the wife, and the subject of the request and the objects of the bounty are definitely pointed out. Thty argue, too, that the relations sustained by the per- sons named to the testator are such, and are shown by other parts of the will to be such, as to indicate a strong interest on his part to make the gift. If, however, the conclusion must be reached that the testator Intended an absolute gift to his wife of his real and per- 376 EXPRESS TRUSTS— PRECATORY WORDS. sonal property, carrying with It an absolute right of disposal, then it will become unneces- sary (or us to consider questions of trust or of power in trust; for the existence of an abso- lute and beneficial estate In fee in the widow would be equally destructive of the claim of a trust, or of the claim of an imperative trust power. Tlio testator, it must be admitted, was very emphatic in the use of language when defin- ing the nature of the holding by his wife of the estate devised and bequeathed. When he gave to her the house and lot where he resid- ed, he added the words, "and to her heirs and assigns, forever." In the same paragraph where he had so given her the house and lot, and also all of his household goods and ef- fects, he repeats that she was "to have and to hold the said house and lot to her, * • • and to her heirs and assigns, forever"; and he states with reference to the personal ef- fects that she was to have and to hold them "unto her, * * * and to her heirs, exec- utors, administrators, and assigns, forever." This repetition of language, indicating com- pleteness and perpetuity of ownership, ai'rests the attention. It will be obsei'ved, too, that there was discrimination in the employment of language defining her holding, in tlie use of words which would be appropriate in speak- ing of the succession to either class of pi'op- crty. He had been particular, in the first clause, to direct that In the payment of his debts the mortgage upon the house and lot should be discharged, and he was equally par- ticular, in the promotion of the interests of his wife, in directing, in the fourth clause, that the legacies given should not be a charge up- on either the house and lot, or the personal effects mentioned. When he disposes of his residuary estate, in the fifth clause, he Is again emphatic in defining the estate which his wife shall talje therein, by givmg it to her, "and to her heirs, executors, administrators, and assigns, forever." Again, in expressing his desire and request as to the disposition to be made by his wife in that clause, he refers to "the said estate which by this will I have bequeathed to my said wife." It is hardly conceivable that the intention of a testator that his wife should have the absolute title to, and the completest right of disposal of, the estate given could be stated in more forcible language. The words which have been some- times used, and which the counsel for the ap- pellants think would be more appropriate to express the intention to make an absolute gift to the wife, such as "with full power of disposal," or "for her sole use and benefit," would not be any stronger, and, indeed, would seem to be more appropriately used when pro- viding for the case of a married woman, and to protect her against her husband's acts. Where there is an absolute gift of real or per- sonal property, in order to qualify it, or to cut it down, the latter part of the will should show an equally clear intention to do so, by the use of words definite ia their meaning, and byexpressions which must be regarded as imperative. That is a general rule, and can it be said of the concluding clause of this fifth paragraph that it stands the test? We cannot think so. It undoubtedly contains the desire and request of the testator that his wife should make the persons named her "joint heirs" after death; but, in view of the very emphatic and precise language which he had seen fit to employ in defining the estate which his wife should take in his property, it would be going too far in the effort to give ef- fect to the testator's desire to hold that It dominated his previous expressions of inten- tion, and affected their legal force and sig- nificance. In Phillips V. Phillips, 112 N. Y. 197, 19 N. E. 411,— a case upon which much reliance is placed by the appellants, — Judge Finch observed of the testator's will. In the course of his opinion, "that in the gift to his wife he does not add words that could seem inconsistent with a subsequent charge upon it, as for her own use and benefit, or to her and her heirs, forever, but leaves the path to a trust or a charge unobstructed so far as possible." That case differed from the pres- ent one in that the testator "wished" his wife, who was his executrix, "if she finds it always convenient," to pay to his sister and brother during their lives the interest on $10,000. In that case tliere was no cutting down of his wife's fee to a life estate; but. It being seen that a gift was made, dependent only upon the fact of ability to do so, a precatory trust was deemed to have been created with re- spect to the annuities. The very words of distinction pointed out by Judge Finch are present here. In Re Gardner, 140 N. Y. 122, 35 N. E. 439, the testator gave the residue of his estate to his wife, to have and to hold the same, to her and her assigns, forever, provid- ing that what should remain unexpended or undisposed of at her death he gave to his son and his heirs. The testator added this clause: "And I expect and desire that my said wife will not dispose of my said estate by will in such a way that the whole that might remain at her death shall go out of my own family and blood relation." It was held that "the estate of the wife was not qualified by the precatory words mentioned," and that they were "merely the expression of an expectation or desire." The construction of a trust was refused by us upon the ground that the words of the will in the first instance clearly indi- cated a disposition in the testator to give the entire interest, use, and benefit to the donee. In Re Hamilton [1895] 2 Ch. 370, which is re- lied upon in the prevailing opinion at the gen- eral term, the following language is used: "I give, bequeath, and appoint to my dear nieces * * * the sum of £2,000 apiece, for their sole and separate use, and to be independent of their husbands, and I wish them to be- queath the same equally between the families of my nephew Silver Oliver and my dear niece Mrs. Packenham in such mode as they shall consider right" It was held that the EXPRESS TRUSTS— PRECATORY WORDS, 377 nieces took absolutely, and a construction of the words was refused which should imply- that the ladies took for life only, instead of absolutely. We are referred to many cases on the one side and on the other, but precedents in will cases are not very satisfactory aids in reach- ing a conclusion in the work of interpretation; for each will will differ in its scheme, as in its forms of expression. At most, they fur- nish illustrations of the application of those general rules of construction which have been laid down in the decisions of the courts. Whether the precatory words in a will shall be accorded such force as to deprive the donee of the absolute right of disposal, and thereby qualify the benellcial interest in the gift, must be determined in connection with what may be gathered from the rest of the will as an intention which would be reconcilable with the idea of a trust imposed upon the legal estate. Where to impose such a trust would be to nullify previous expressions in the will, and to create a repugnancy between its dif- ferent parts, then the rules of construction forbid the attempt, and this is not disputed by the appellants' counsel. Their contention in that respect is that that principle of con- struction has no application to the present case, because of the absence of words show- ing that the wife was to have the whole bene- ficial interest. Thus we see that the pivotal point of construction is as to the significance of the expressions used by the testator when giving hjfi estate to his wife, and the infer- ences to be drawn therefrom. In our view, they are unmistakable, and create an atmos- phere about the instrument of an entire sub- jection of the claims of others upon his bounty to the paramount claim of his wife, and to her ultimate testamentary disposition. In the present case we can only read the lan- guage, In which the testator expresses his de- sire and request, in the light of the emphatic language previously used in the will, and, as so read, award to it the force of a suggestion and of an expectation, which, however strong- ly phrased, were only morally binding upon the widow. Within the case of Oolton v. Ool- ton, 127 U. S. 300, 8 Sup. Ot. 1164, where the testator gave to his wife all of the real and personal estate of which he should die seised, possessed, or entitled to, with a recommenda- tion to her as to the care and protection of his mother and sister, and with a request to her to make such gift and provision for them as in her judgment would be best, the present case might be said to be within the exception there recognized. It was there held that the I language of the bequest was sufficient to con- vey to the testator's wife the whole estate absolutely, if it stood alone, but that neverthe- less, as it did not stand alone, and did not "contain any expressions which necessarily anticipate or limit any subsequent provisions affecting it," the bequest was affected by the request. Precisely that did occur in the will under consideration, as we view it, and the I language of the devise and bequest to the wife i did contain such expressions as to anticipate and limit the possible effect of the subsequent provision. The cases of Dominick v. Sayre, 3 Sandf. 555, and Smith v. Floyd, 140 N. X. 337, 35 N. E. 606, related to devises for life, with a power, in the one ease, and with a "right and privilege," in the other case, of disposal by will in favor of certain persons, and we do not perceive how they affect the conclusions we have reached. We have suffi- ciently expressed our views upon the ques- tions presented by this appeal, and they lead to an affirmance of the judgment. The judg- ment should be affirmed, with costs. All con- cur. Judgment affirmed. 378 EXPRESS TRUSTS— VOLUNTARY TRUSTS. RICHARDS V. DELBRIDGE. (L. R. 18 Bq. 11.) Chancery Division. April 16, 1874. Demurrer. The bill filed by Edward Ben- Qetto Richards, an infant, by his next friend, stated: That John Delbridge, deceased, was possessed of a mill, with the plant, machin- ery, and stock-in-trade thereto belonging, in which he carried on the business of a bone manure merchant, and which was held un- der a lease dated the 24th of June, 1863. That on the 7th of March, 1873, John Del- bridge indorsed upon the lease and signed the following memorandum: "7th March, 1873. This deed and all thereto belonging I give to Edward Bennetto Richards from this time forth with all the stock-in-trade. John Delbridge." That the plaintifC was the person named In the memorandum, and the grandson of John Delbridge, and had then for some time assisted him in the business. That John Delbridge, shortly after signing the memorandumv delivered the lease on his behalf to Elizabeth Ann Richards, the plain- tifC's mother, who was still in possession thereof. That John Delbridge died in April, 1873, having executed several testamentary instruments which did not refer specifically to the said mill and premises, but he gave his furniture and effects, after his wife's death, to be divided among his family. That the testator's widow, Elizabeth Richards, took out administration to his estate, with the testamentary papers annexed. The bill, which was filed against the defendants Elizabeth Delbridge, Elizabeth Ann Richards, and the testator's two sons, who claimed under the said testamentary instruments, prayed a dec- laration that the indorsement upon the lease by John Delbridge and the delivery of the lease to Elizabeth Ann Richards created a valid trust in favor of the plaintifC of the lease and of the estate and interest of John Delbridge in the property therein comprised, and in the good will of the business carried on there, and in the implements and stock- in-trade belonging to the business. The de- fendants demurred to the bill for want of equity. Fry, Q. C, and Mr. Phear, in support of the demurrer. W. R. Fisher (Mr. Southgate, Q. C, with him), and T. D. Bolton, for plain- tiff. Gregory, Rowcliffes & Rawle, for de- fendants. JESSEL, M. R. This bill is waiTanted by the decisions in Richardson v. Richardson, L. R. 3 Eq. 686, and Morgan v. Malleson, L. R. 10 Eq. 475, but, on the other hand, we have the case of MUroy v. Lord, 4 De Gex, F. & J. 264, before the court of appeals, and the more recent case of Warriner v. Rogers, L. R. 16 Eq. 340, 348, in which Vice Chancellor Bacon said: "The rule of law upon this subject I take to be very clears and, with the exception of two cases which have been referred to (Richardson v. Rich- ardson and Morgan v. Malleson), the deci- sions are all perfectly consistent with that rule. The one thing necessary to give valid- ity to a declaration of trust— the indispen- sable thing— I take to be, that the donor, or grantor, or whatever he may be called, should have absolutely parted with that In- terest which had been his up to the time of the declaration, should have effectually changed his right In that respect, and put the property out of his power, at least in the way of interest." The two first mentioned cases are wholly opposed to the two last That being soi, I am not at liberty to decide the case other- wise than in accordance with the decision of the court of appeal. It is true the judges appear to have taken different views of the construction of certain expressions, but I am not bound by another judge's view of the construction of particular words; and there is no case in which a different prin- ciple is stated from that laid down by the court of appeal. Moreover, if it were my duty to decide the matter for the first time, I should lay down the law In the same way. The principle is a very simple one. A man may transfer his property, without valuable consideration, in one of two ways: he may either do such acts as amount in law to a conveyance or assignment of the property, and thus coihpletely divest himself of the legal ownership, in which case the person who by those acts acquires the property takes it beneficially, or on trust, as the case may be; or the legal owner of the property may, by one or other of the modes recog- nized as amounting to a valid declaration of trust, constitute himself a trustee, and, without an actual transfer of the legal title, may so deal with the property as to deprive himself of its beneficial ownership, and de- clare that he will hold it from that time forward on trust for the other person. It is true he need not use the words, "I declare myself a trustee," but he must do some- thing which is equivalent to it, and use ex- pressions which have that meaning; for, however anxious the court may be to carry out a man's intention, it is not at liberty to construe words otherwise than according to their proper meaning. The cases in which the question has arisen are nearly all cases in which a man, by doc- uments insufficient to pass a legal interest, has said: "I give or grant certain property to A. B." Thus, In Morgan v. MaUeson, L. R. 10 Eq. 475, the words were: "I hereby give and make over to Dr. Morris an India bond"; and in Richardson v. Richardson, L. R. 3 Eq. 686, the words were, "grant convey, and assign." In both cases the judges held that the words were effectual EXPRESS TRUSTS— VOLUNTARY TRUSTS. 379 declarations of trust. In the former case, Lord Romilly considered that the words were the same as these: "I undertake to hold the bond for you," which would undoubtedly have amounted to a declaration of trust. The true distinction appears to me to be plain, and beyond dispute; for man to make himself a trustee there must be an expres- sion of intention to become a trustee, where- as words of present gift shew an intention to give over property to another, and not re- tain it in the donor's own hands for any purpose, fiduciary or otherwise. In MUroy v. Lord, 4 De Gex, P. & J. 264, 274, Lord Justice Turner, after referring to the two modes of making a voluntary settle- ment valid and effectual, adds these words: "The cases, I think, go further, to this ex- tent: That if the settlement is intended to be effectuated by one of the modes to which I have referred, the court will not give effect to It by applying another of those modes. If it is intended to take effect by transfer, the court will not hold the intended trans- fer to operate as a declaration of trust, for then every Imperfect instrument would be made effectual by being converted Into a perfect trust." It appears to me that that sentence con- tains the whole law on the subject. If the decisions of Lord Romilly and of Vice-Chan- cellor Wood were right, there never could be a case where an expression of a present gift would not amount to an effectual dec- laration of trust, which would be carrying the doctrine on that subject too far. It ap- pears to me that these cases of voluntary gifts should not be confounded with another class of cases in which words of present transfer for valuable consideration are held to be evidence of a contract which the court will enforce. Applying that reasoning to cases of this kind, you only make the imper- fect Instrument evidence of a contract of a voluntary nature which this court will not enforce; so that, following out the principle even of those cases, you come to the same conclusion. I must, therefore, allow the demurrer; and, though I feel some hesitation, owing to the conflict of the authorities, I think the costs must follow the result 380 EXPRESS TRUSTS— VOLUNTARY TRUSTS. YOUNG T. YOUNG. (80 N. Y. 422.) Court of Appeals of New York. 1880. Appeal from judgment of the general term of the supreme court, in the Third judicial department, reversing a decree of ttie surro- gate of the county of Sullivan upon the ac- counting of plaintiff, as administrator of the estate of Joseph Young, deceased. Upon such accounting the administrator claimed that certain United States and town coupon bonds belonged to himself and to his brother, John N. Young. The surrogate dis- allowed the claim, and charged him with said bonds. These bonds, upon the death of the intes- tate, were found in two paclsages inclosed in envelopes, upon which were indorsed memo- randa signed by him, one dated March 14, the other March 14, 1874, each of which de- scribed the bonds Inclosed by numbers, and stated that certain of them belonged to Wil- liam H. Young, that the others belonged to John N. Young. Then followed a statement of the indorsements, of which the following is a copy: "But the inst. to become due thereon is owned and reserved by me for so long as I shall live; at my death they be- long absolutely and entirely to them and their heirs." The other was similar. The circumstances under which the memo- randa were made, and the further material facts, are set forth in the opinion. Hezeliiah Watson, for appellant. Homer A. Nelson, for "-espondent. RAPALLO, J. The intention of Joseph Young, deceased, to give the bonds in con- troversy on this appeal to his son, WUliam H. Young, reserving to himself only the in- terest during his life-time, was so clearly manifested, that we have examined the case with a strong disposition to effectuate that intention and sustain the gift, if possible. The transaction is sought to be sustained In two aspects: First, as an actual executed gift, and secondly, as a declaration of trust. These positions are antagonistic to each oth- er, for it a trust was created, the posses- sion of the bonds, and the legal title thereto, remained in the trustee. In that case there was no delivery to the donee, and conse- quently no valid executed gift; while If there was a valid gift, the possession and le- gal title must have been transferred to the donee, and no trust was created. As each of these theories thus necessarily excludes the other, they must be separately consid- ered. To establish a valid gift, a delivery of the subject of the gift to the donee or to some person for him, so as to divest the posses- sion and title of the donor, must be shown, and the first question which arises under the peculiar circumstances of this case is, whether it is practicable to make a valid gift In prsesenti of an Instrument securing the payment of money, reserving to the donor the accruing interest, and If so, by what means this can be done. The puipose of such a gift may undoubtedly be accom- plished by a proper transfer to a trustee and perhaps by a written transfer delivered to the donee, but the question now Is, can it be done in the form of a gift, without any written transfer delivered to the donee, and without creating any trust? T can conceive of but one way in which this is possible, and that is by an absolute delivery of the secu- rity which is the subject of the gift, to the donee, vesting the entire legal title and pos- session in him, on his undertaking to account to the donor for the interest which he may collect thereon. But If the donor retains the instrument under his own control, though he do so merely for the purpose of collect- ing the interest, there is an absence of the complete delivery which is absolutely essen- tial to the validity of a gift. A gift cannot be made by creating a joint possession of donor and donee, even though the intention be that each shall have an Interest in the chattel, especially where, as in this case, the line of division between these interests is not ascertainable. The reservation of the interest on the bonds to the donor was for an uncertain period; that Is, during his life- time, and until his death it was impossible to determine the precise proportion of the money secured by the bonds, to which the donee was entitled. If therefore the donor retained the cus- tody of the bonds for the purpose of collect- ing the accruing interest, or even If they were placed in the joint custody or posses- sion of himself and the donee, there was no sufficient delivery to constitute a gift. But if an absolute delivery of the bonds to the donee, with intent to pass the title, was made out, the donor reserving only the right to look to the donee for the interest, the transaction may be sustained as an executed gift. Doty V. WiUson, 47 N. Y. 580. This brings us to an examination of the evidence. The written memoranda attached by the donor to the envelopes containing the bonds, evinced his intention to make a pres- ent gift to the respondent of an interest in the bonds, and shows that the disposition was not intended to be of a testamentary character. He declares that the bonds are owned by William H. Young, but the inter- est to become due on the same is owned and reserved by the donor for so long as he shall live, and that at his death the bonds are owned by the donee "absolutely and entire- ly" in one case, and "wholly and entire- ly" in the other. There are some verbal dif- ferences in the two memoranda, but the pur- port of both is the same. They both ex- press in the same words that the Interest to become due on the bonds is "owned and reserved" by the donor for so long as he shall live, and that the bonds are not to be- EXPRESS TRUSTS— VOLUNTARY TRUSTS. 381 long "wholly" or "absolutely" to the donees till after his death. The exhibition of these memoranda to the wife of the donee, and the declarations of the donor, show that what he had thus done was in pursuance of a settled purpose, and that he believed that he had made a valid disposition of the bonds according to the memoranda, but they do not satisfy the re- quirement of an actual delivery. The evidence touching the point of deliv- ery is that the deceased for several years before his death resided at the house of his son, William H. Young, where there was a safe which had formerly belonged to the de- ceased, but which he is said to have present- ed to his grandson, James C. Young, a son of William H., reserving to himself the right to use the safe, and in fact using it as a place of deposit for his valuable papers. That William H. Young also kept papers In the same safe, but rarely went to it himself, the deceased being in the habit of depositing therein for him such things as he desired, and removing them for him at his request. The upper part of this safe was divided into pigeon-holes, where the deceased usu- ally kept his papers and was in the habit, up to the time of the transaction now in ques- tion, of keeping the bonds in controversy. The lower part of the safe was divided into larger open compartments, one of which had been appropriated as the receptacle of the papers of William H. Young. After affixing to the two envelopes In which the bonds were contained, the memo- randa showing the dispositions in favor of his sons William H. Young and John N. Young, and after exhibiting these memo- randa to the respective wives of the donees, the deceased replaced the two packages of bonds in this safe, and after his death they were found, not in the pigeon-hole where they had formerly been kept, but in the compartment where William H. Young's pa- pers were kept. After the memoranda had been made, the bonds were generally kept in that compartment, but the deceased had been seen by William H. to put them in the pigeon-holes and take them out with the in- dorsements on. On the occasion of exhibiting the packages of bonds and the indorsements to Mrs. Wil- liam H. Young, the deceased asked her to take them in her hands and see what he had written on them. But this was not In- tended as a delivery to her, for she asked him whether he wanted her to take them and put them up, and he said, "No." After having thus exhibited them he took them back and placed them in the safe. The mem- oranda were made on the 14th March, 1874. The testator died November 12, 1875. In the meantime installments of Interest on the bonds became due. The deceased cut off the coupons, and on some occasions William H. Young assisted him in so doing, but Wil- liam H. testified that he never asserted any ownership over the bonds as against his father. And the testimony shows that they were at all times under the control of the deceased, although William H. Young and his son, James C. Young, also had access to the safe. Those three however were the only persons having access to the safe, and it does not appear that John N. Young, the other donee named in the memoranda, ever had any control over the bonds or access thereto. It was also shown that after the alleged gift, when solicited for a loan, the deceased said that he supposed he might with the boys' consent take some of their bonds. Also that he called the attention of his grandson, James C. Young, to the memo- randa and said, "you see what I have done with them." That he declared to a witness, Benjamin Grant, that what he had left he had given to William and Newton. That in September, 1875, he took from one of the envelopes a bond of $1,000, being one of those stated in the memorandum indorsed to belong to John N. Young, and gave it to a third party, but it also appeared that he had, before making the memorandum, presented John N. Young with $1,000. This is the substance of aU the testimony by which a delivery to the donee is sought to be established. It shows that the de- ceased at no time parted with the posses- sion or control of the bonds, but merely confirms the intention expressed in the mem- oranda. The change of the position of the bonds in the safe where they were kept, from the pigeon-hole to the compartment, might have been significant had William H. been the only donee, and had the intended gift been unaccompanied by any reserva- tion. But under the existing circumstances it cannot be construed into a delivery of the bonds. In the first place, part of the bonds were stated In the memoranda to be given to William H., and part to John N. Young. The intention of the donor toward each of his sons was the same. Yet no attempt ap- pears to have been made to efCect any soi-t of delivery to John N. Moreover, the form of the intended gift shows that no immedi- ate delivery could have been contemplated by the deceased. The memorandum on each envelope says that the interest to become due on the bonds is "owned and reserved" by the donor. This interest, up to the dates of the maturity of the bonds respectively, was represented by coupons attached to the bonds. It clearly could not have been in- tended to deliver them, for so many of them as might become due during the life of the donor were reserved from the gift, as the interest was expressly declared to be "owned" by the donor, and not parted with. The possession of these coupons was neces- sary to enable him to collect the interest, and he availed himself of it for that pur- pose from time to time. No intention was manifested to deliver up these vouchers and look to the donees for the interest No divi- 382 EXPRESS TRUSTS— VOLUNTARY TRUSTS, elon of the coupons could be made, for the period of the donor's life was uncertain; and further, If all the coupons were retained by the donor, they might not represent the entire interest reserved by him. The bonds matured In 1887 and 1888, and some were redeemable earlier; and if he had lived un- tU the maturity of the bonds, or until the United States bonds were called In by the government, as they were liable to be, the donees would not then have been entitled to the possession of the bonds or their pro- ceeds. The reservation accompanying the gift would entitle the donor to possession of the fund. The intention of the donor, as deducible from the memoranda and the evi- dence, was, not to part with his title to the accruing interest, but to keep the bonds and collect the interest for his own use till he should die; and that then, and not before, his sons should have possession of them and own them absolutely. That although he meant that their right to this interest in remainder should be vested and irrevocable from the time of the supposed gift, yet that at no time during his life did the donees have exclusive possession of the bonds or the le- gal right to such possession. The declarations of the donor that he had given the bonds to his sons must be under- stood as referring to the qualified gift which he intended to make. There is nothing to indicate that he ever relinquished his right to the Interest, and all the circumstances of the case show that he could not have In- tended to admit that he had made an ab- solute gift, free from the qualification ex- pressed in the memoranda. The cases of Grangiac v. Arden, 10 Johns. 295; Davis v. Davis, 8 Nott & McC. 226, and kindred cases, consequently have no application. The prin- ciple of those cases was applied in the late case of Trow v. Shannon, 78 N. Y. 446, but in that case the gift was intended to be ab- solute. No qualification was attached to it, and the bonds were placed where they were accessible to the donee, and he had himself collected the interest for his own use. There was nothing inconsistent with a f uU delivery, but there was no direct evidence of such de- livery, and the admissions of the donor that she had given the bonds and they belonged to the donee, were received, and weight given to them, as some evidence from which the jury might infer that the gift had been com- pleted by an absolute delivery. It is impossible to sustain this as an exe- cuted gift, without abrogating the rule that deUvery is essential to gifts of chattels inter vivos. It is an elementary rule that such a gift cannot be made to take effect in posses- sion in futuro. Such a transaction amounts only to a promise to make a gift, which Is nudum pactum. Pitts v. Mangum, 2 Bailey, 588. There must be a delivery of possession with a view to pass a present right of prop- erty. "Any gift of chattels which expressly reserves the use of the property to the donor for a certain period, or (as commonly appears in the cases which the courts have had oc- casion to pass upon) as long as the donor shall live, is ineffectual." 2 Schouler, Pers. Prop. p. 118, and cases cited; Vass v. Hicks, 3 Murph. (N. C.) 494. This rule has been ap- plied even where the gift was made by a written instrument or deed purporting to transfer the title, but containing the reserva- tion. Sutton's Ex'r v. HalloweU, 2 Dev. 186; Lance v. Lance, 5 Jones Law, 413. The only question remaining therefore Is whether a valid declaration of trust is made out. The trust contended for. If put Into word^, would be that the donor should hold the bonds and their proceeds for his own bene- fit during Ms life and to the use of the donees from the time of his own death. Of course no trust was created of the inter- est for the donor's own life, for he was the legal owner of the Income of the bonds, and never parted with this right— nor could he be at the same time trustee and cestui que trust The trust then would be to hold to the use of the donees an estate in remainder in the bonds, which should vest in possession in the donees, at the time of his death. The difficulty In establishing such a trust is that the donor did not undertake or at- tempt to create it, but to vest the remainder directly in the donees. Assuming, for the purposes of the argument, that he might have created such a trust in himself, for the bene- fit of his sons, and, further, that he might have done so by simply signing a paper to that effect and retaining it in his own posses- sion, without ever having delivered it to the donees, or any one for them, yet he did not do so. He simply signed a paper certifying that the bonds belonged to his sons. He did not declare that he held them in trust for the donees, but that they owned them subject to the reservation, and were at his death to have them absolutely. If this instrument had been founded upon a valuable consideration, equity might have interfered and effectuated Its intent by compelling the execution of a declaration of trust, or by charging the bonds, while In his hands, with a trust in favor of the equitable owner. Day v. Roth, 18 N. Y. 448. But it is well settled that eq- uity will not interpose to perfect a defective gift or voluntary settlement made without consideration. If legally made, it will be up- held, but it must stand as made or not at all. When therefore it is found that the gift which the deceased attempted to make fail- ed to take effect for want of delivery, or a sufficient transfer, and it Is sought to supply this defect and carry out the intent of the donor by declaring a trust which he did not himself declare, we are encountered by the rule above referred to. Story, Eq. Jur. 706, 787, 793b-793d; Antrobus v. Smith, 12 Ves. 39, 43; Edwards v. Jones, 1 Mylne & C. 226; 7 Sim. 325; Price v. Price, 8 Eng. Law & Bq. 281; Hughes v. Stubbs, 1 Hare, 476. It EXPKESS TRUSTS- VOLUNTARY TRUSTS. 883 Is established as unquestionable law that a court of equity cannot by its authority render that gift perfect which the donor has left imperfect, and cannot convert an Imper- fect gift into a declaration of trust, merely ■on account of that imperfection. Heartley v. Nicholson, 44 L. J. Ch. 279. It has in some cases been attempted to establish an excep- tion in favor of a wife and children on the ground that the moral obligation of the donor to provide, for them constituted what was called a meritorious consideration for the gift, but Judge Story (2 Eq. Jur. § 987, and 1 Eq. Jur. § 433) says that that doctrine seems now to be overthrown, and that the general principle is established that in no case what- ever will courts of equity interfere In favor of mere volunteers, whether It be upon a voluntary contract, or a covenant, or a set- tlement, however meritorious may be the con- sideration, and although the beneficiaries stand In the relation of a wife or child. Hol- loway T. Headington, 8 Sim. 325; Jeffreys v. Jeffreys, 1 Oraig & P. 138, 141. These positions are sustained by many au- thorities. To create a trust, the acts or words relied upon must be unequivocal. Implying that the person holds the property as trustee for another. Martin v. Funk, 75 N. Y. 134, per Church, C. J. Though it is not necessary that the declaration of trust be in terms ex- plicit, the donor must have evinced Ijy acts which admit of no other interpretation, that such legal right as he retains is held by him as trustee for the donee. Heartley v. Nich- olson, 44 L. J. Ch. 277, per Bacon, V. C. The settler must transfer the property to a trustee, or declare that he holds it himself in trust Mib-oy v. Lord, 4 De Gex, P. & J. 264, per Lord Knight Bruce. In cases of volun- tary settlements or gifts, the court will not impute a trust where a trust was not in fact the thing contemplated. The distinction be- tween words importing a gift and words cre- ating a trust is pointed out by Sir Geo. Jessel in Richards v. Delbridge, L. R. 18 Eq. Cas. 11, as follows: "The making a man trustee involves an intention to become a trustee, whereas words of gift show an intention to give over property to another, and not to re- tain it in the donor's hands for any purpose, fiduciary or otherwise." The words of the donor In the present case are that the bonds are owned by the donees, but that the interest to accrue thereon Is owned and reserved by the donor for so long as he shall live, and at his death they belong absolutely to the donees. No intention is here expressed to hold any legal title to the bonds In trust for the donees. Whatever interest was intended to be vested in them was trans- ferred to them directly, subject to the reser- vation In favor of the donor during his life, and free from that reservation at his death. Nothing was reserved to the donor, to be held In trust or otherwise, except his right to the accruing Interest which should become pay- able during his life. It could only be by re- forming or supplementing the language used, that a trust could be created, and this, as has been shown, will not be done in case of a voluntary settlement without consideration. There are two English cases where indeed the circumstances were much stronger In favor of the donees than in the present case, which tend to sustain the position that a set- tlement of this description may be enforced In equity by constituting the donor trustee for the donee. They are Morgan v. Malleson, L. R. 10 Eq. Cas. 475, and Richardson v. Richardson, L. R. 3 Eq. Cas. 686. In the first of these cases, Morgan v. Malleson, L. R. 10 Eq. Cas. 475, the intestate signed and deliv- ered to Dr. Morris a memorandum In writing: "I hereby give and make over to Dr. Morris one India bond," but did not deliver the bond. Sir John Romilly sustained this gift as a declaration of trust. The case is refer- red to by Church, C. J., In Martin v. Funk as an extreme case. In Richardson v. Richard- son, an instrument purporting to be an as- signment, unsupported by a valuable consid- eration, was upheld as a declaration of trust In speaking of these cases in Richards v. Delbridge, L. R. 18 Eq. Cas. 11, Sir Geo. Jes- sel, M. R., says: "If the decisions of Lord Romilly (in Morgan v. Malleson), and of Wood, V. C. (in Richardson v. Richardson) were right, there never could be a case where the expression of a present gift would not amount to an effectual declaration of trust." And it may be added that there never could be a case where an intended gift, defective for want of delivery, could not, if expressed in writing, be sustained as a declaration of trust. Both of the cases cited are now placed among overruled cases. Fisher, Ann. Dig. (1873 and 1874) 24, 25. In Moore v. Moore, 43 L. J. Ch. 623, Hall, V. C, says: "I think it very important indeed to keep a clear and definite distinction between these cases of imperfect gifts and cases of declarations of trust; and that we should not extend beyond what the authorities have already establish- ed, the doctrine of declarations of trust, so as to supplement what would otherwise be mere imperfect gifts." If the settlement is intend- ed to be effectuated by gift, the court will not give effect to it by construing it as a trust If It Is Intended to take effect by transfer the court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect Instrument would be made effectual by being converted into a perfect trust. MUroy v. Lord, 4 De Gex, F. &I J. 264. The case of Martin v. Funk and kindred cases cannot aid the respondent. In all those cases there was an express declaration of trust. In the one named the donor delivered the money to the bank, taking back its obli- gation to herself in the character of trustee for the donee; thus parting with all bene- ficial interest In the fund, and having the le- gal title vested in her in the character of trus- tee only. No interposition on the part of the 3S4 EXPRESS TRUSTS— VOLUNTARY TRUSTS. court was necessary to confer that character upon her; nor was it necessary, by construc- tion or otherwise, to change or supplement the actual transaction. None of the difficul- ties encountered in the present case stood in the way of carrying out her intention. It was capable of being executed in the form in which it was expressed. The question whether a remainder in a chattel may be created and given by a donor by carving out a life estate for himself and transferring the remainder, without the inter- vention of a trustee, is learnedly discussed in the appellant's brief; but the views we have expressed render It unnecessary to pursue that inquiry. We are satisfied that it is im- possible to hold that the facts as they appear establish a valid transfer of any interest in the bonds in question to the donee, and that the attempted gift cannot be sustained as a declaration of trust. It follows that the judg- ment of the general term must be reversed and the decree of the surrogate affirmed. Costs of all the parties in this court and in the supreme court to be paid out of the es- tate. All concur. Judgment reversed. EXPRESS TRUSTS— VOLUNTARY TRUSTS, 385 In re WEBB'S ESTATE. (49 OaJ. 541.) Supreme Court of California. Jan., IS^TS. Appeal from probate court, city and coun- ty of San Francisco. Lloyd Baldwin, for appellant. George W. Tyler, for respondent. CROCKETT, J. The claim of the father and sisters of the deceased to the fund in con- troversy can be sustained, if at all, on no other ground than that, by the two letters of the deceased to his sisters, he created and declared a present trust, to the effect that he held the policy of insurance in trust for his father and sisters. The transaction cannot be upheld merely as a donation inter vivos. There was no assignment or delivery of the policy to the father and sisters, and treated simply as a donation, it would fail for that reason. But a person intending to make a donation to another, and who clearly declares his purpose and transfers the title, need not necessarily part with the possession, pro- vided he declares himself, in proper form, to be a trustee, holding possession for the donee. In such a case, he would thenceforth hold the property as a trustee and not in his own right. That such a trust, when properly de- clared, even in favor of a volunteer, is valid, and will be enforced, is established by nu- merous authorities. "Where there is no val- uable consideration, yet, if the settler, by a clear and explicit declaration, duly executed, and intended to be final and binding upon iiim, makes himself a trustee, courts of equity will enforce the trust." Perry, Trusts, § 96. "If the trust is perfectly created, so that the donor or settler has nothing more to do, and the person seeking to enforce it has need of no further conveyances from the settler, and nothing is required of the court but to give effect to the trust as an executed trust, it will be carried into efCect, although it was withoxTt consideration, and the possession of the prop- erty was not changed. Whether the trust is perfectly created or not is a question of fact in each case, and the court, in determining the fact, will give effect to the situation and HUTCH.& BUNK.EQ.— 25 relation of the parties, the nature and situa- tion of the property, and the purposes or ob- jects which the settler had in view making the disposition." Id. §§ 98, 99. In such cases the point to be determined is, whether the trust has been "perfectly created;" that is to say, whether the title has passed and the trust been declared, and the trust being executed nothing remains for the court but to enforce it. In discussing this question the court say, in Stone v. Hackett, 12 Gray, 227: "It is certainly true that a court of equity will lend no assistance toward perfecting a volimtary contract or agreement for the creation of a trust, nor regard it as binding so long as it remains executory. But it is equally true that if such an agreement or contract be executed by a conveyance of property in trust, so that nothing remains to be done by the grantor or donor to complete the transfer of title, the relation of trustee and cestui que trust is deemed to be establish- ed, and the equitable rights and interests arising out of the conveyance, though made without consideration, will be enforced in chancery." The same proposition is an- nounced, and the authorities fully collated and examined, in Kederick v. Manning, 1 De Gex, M. & G. 176. To the same effect are Jones V. Lock, L. R. 1 Ch. 25, and Wason v. Colburn, 99 Mass. 342. We think these cases announce the correct rule, and are decisive of the present conti'O- versy. The letters from the deceased to his sisters did not purport and were not intended to be an assignment of the policy, the title to which remained in the deceased. It was not an executed trust, but at most nothing more than a voluntary executory agreement to create a trust in futuro, and such agree- ments cannot be enforced in equity. This view of the case renders it unnecessary for us to decide whether the probate court had ju- risdiction to enforce the trust, if it had been established. Judgment reversed and cause remanded for a new trial. McKINSTRY, J., did not express an opin- ion. 386 EXPRESS TRUSTS— VOLUNTARY TRUSTS. MARTIN T. FUNK. (75 N. y. 134.) Court of Appeals of New York. Not. 12, 1878. Nehemlah Millard, for appellants. M. W. Divine, for respondent CHURCH, C. J. The facts in this case are substantially undisputed, as found by the judge before whom the case was tried. The intestate Mrs. Boone, in 1866, deposited in the Citizens' Savings Bank $500, declar- ing at the time that she wanted the account to be in trust for Lillie Willard, who is the plaintiff. The account was so entered, and a pass-book delivered to the intestate, which contained these entries: "The Citizens' Sav- ings Bank in account with Susan Boone, in trust for Lillie Willard. 1866, March 23, $500." A deposit of the same amount and in the same manner was made in trust for Kate Willard, now Mrs. Brown. This money be- longed to the Intestate at the time of the de- posits. The plaintiff and Mrs. Brown are sisters, and were at the time of the age re- spectively of eighteen and twenty, and were distant relatives of the intestate, their moth- er being a second cousin. The intestate re- tained possession of the pass-books until her death in 1875, and the plaintiff and her sister were ignorant of the deposits until after that event. The money remained in the bank with its accumulated interest until the death of the intestate, except that she drew out one year's interest. Mrs. Brown assigned to the plaintiff her interest in the deposit purporting to have been made for her benefit, and the action is brought against the administrator of the Intestate and the bank for the delivery of the pass-books and the recovery of the money. The question involved has been very much litigated, and many refinements may be found in the books in respect to it. Many cases have been found difficult of solution, not so much on account of the general principles which should govern, as in applying those prin- ciples to a particular state of facts. It is clear that a person sui juris, acting freely and with full knowledge, has the power to make a voluntary gift of the whole or any part of his property, while it is well settled that a mere intention, whether expressed or not, is not sufficient, and a voluntary prom- ise to make a gift is nudum pactum, and of no binding force. Kekewich v. Manning, 50 Eng. Ch. 175, and cases cited. The act con- stituting the transfer must be consummated, and not remain incomplete, or rest in mere Intention, and this is the rule whether the gift is by delivery only, or by the creation of a trust in a third person, or in creating the donor himself a trustee. Enough must be done to pass the title, although when a trust Is declared, whether in a third person or the donor, it Is not essential that the prop- erty should be actually possessed by the ces- tui que trust, nor is it even essential that the latter should be informed of the trust. In Milroy v. Lord, 4 De Gex, F. & J. 264, Lord Chief Justice Turner, who adopted the most rigid construction of trusts, in delivering an opinion against the validity of the trust in that case, laid down the general principles as accurately perhaps as is practicable. He said: "I take the law of this court to be well settled, that in order to render a volun- tary settlement valid and effectual the set- tler must have done every thing which ac- cording to the nature of the property com- prised in the settlement was necessary to be done in order to transfer the property, and render the settlement binding upon him. He may of course do this by actually trans- ferring the property to the persons for whom he intended to provide, and the provision will then be effectual, and it will be equally ef- fectual if he transfer the property to a trus- tee for the purpose of the settlement, or de- clare that he himself holds it in trust for those purposes, and If the property be per- sonal, the trust may I apprehend be declared either in writing or by parol." The contention of the defendant Is that the transaction did not transfer the prop- erty, and that there was no sufficient dec- laration of trust and that by retaining the pass-books the intestate never parted with the control of the property. If what she did was sufficient to constitute herself a trustee, it must follow that whatever con- trol she retained would be exercised as trus- tee, and the right to exercise it would not be necessarily inconsistent with the com- pleteness of the trust. The question involv- ing substantially the same facts has been several times before different courts of the state, and in every instance the transaction has been sustained as a good gift. The Case of Wetzel before Surrogate Brad- ford, and Millspaugh v. Putnam, 16 Abb. Prac. 380, were deposits in the same form, and in the former the cestui que trust had no notice of the deposit, and in both cases the gift was held effectual. In Smith V. Lee, 2 Thomp. & C. 591, money was de- posited with the defendant, and a note taken payable to the depositor for another person, and it was held that the depositor consti- tuted himself a trustee. The case of Kelly V. Manhattan Inst, for Savings (not report- ed) was a special term decision of the New York common pleas before Robinson, J., where precisely such a deposit was made as in this, and it was upheld as an absolute gift. These decisions although not control- ling upon this court are entitled to respect, and they show the tendency of the judicial mind to give these transactions the effect which on their face they import So in Minor v. Rogers, 40 Conn. 512, a similar de- posit was upheld as a declaration of trust. Park, J., noticed the point urged there as here of the retention of the pass-book, and said: "She retained possession therefore be- EXPRESS TRUSTS- VOLUNTARY TRUSTS. 387 cause the deposit was made in her name as trustee, and not because she had not given the beneficial interest of the deposit to the plaintifE," and in that case the depositor had drawn out the deposit, and the action was sustained against her administrator. So In Ray V. Simmons, 11 R. I. 266; the facts were precisely like the case at bar, except that the cestui que trust was informed of the gift, and the court held the trust valid. But the supreme court of Massachusetts in two cases (Brabrook v. Boston Five Cent Sav. Bank, 104 Mass. 228, and Clark v. Clark, 108 Mass. 522) seem to hold a difCer- ent doctrine. In the first case the circum- stances were deemed controlling, adverse to an intent to create a trust, and in the last, which was similar in its facts to this, the court express the opinion that the trust was not complete, but without giving any rea- sons for the opinion. The last decision, al- though entitled to great respect, is excep- tional to the general current of authority in this country. In the English courts I do not find any case where these precise facts appeared, but the cases are numerous where the general principles have been elaborately discussed and applied to particular facts. It is only deemed necessary to refer to a few of them. In Richardson v. Richardson, L. R. 3 Eq. Cas. 684, it was held that an instrument executed as a present and complete assign- ment (not being a mere contract to assign at a future day) is equivalent to a declara- tion of trust. Morgan v. Malleson, L. R. 10 Eq. Cas. 475, was decided upon this prin- ciple, and is an extreme case in support of a declaration trust. It appeared that the testator gave to his medical attendant the following memftrandum: "I hereby give and make over to Dr. Morris, an Indian bond No. D 506, value £1,000, as some token for all his very kind attention to me during my illness." This was held to constitute the testator a trustee for Dr. Morris of the bond which was retained by him. These cases are commented upon, and the latter some- what criticised in Warriner v. Rogers, L. R. 16 Eq. 340, but Sir James Bacon, in deliver- ing the opinion, substantially adheres to the general rule before stated. He requires on- ly "that the donor or grantor, or whatever he may be called, should have absolutely parted with that interest which had been his up to the time of the declaration— should have effectually changed his right in that respect, and put the property out of his pow- er, at least in the way of interest." This case was decided against the validity of the trust, mainly upon the ground that the memoranda produced were upon their face testamentary in character. In Pye's Case, 18 Ves. 140, money was transmitted to an agent in France to purchase an annuity for a lady. Owing to circumstances which the agent supposed prevented its purchase in uer name, he purchased it in the name of the principal. When the latter learned this fact, he executed and transmitted to the agent a power of attorney to transfer the annuity, but before its arrival the principal died. Lord Eldon held that a declaration of trust was established. Wheatley v. Purr, 1 Keen, 551, is quite analogous to the case at bar. A testatrix directed her brokers to place £2,000, in the joint name of the plaintiffs, and herself as a trustee for the plaintiffs. The sum was placed to the account of the testatrix alone, as trustee of the plaintiffs, and a promis- sory note was given by them to her as such trustee. The note remained in her posses- sion until her death, when her executor re- ceived the money. It was held that the transaction amounted to a complete declara- tion of trust. Mr. Hill, in his work on Trustees, after saying "that it is extremely difficult, in the present state of authorities, to define with accuracy the law affecting this very intri- cate subject," lays down the following as the result: "When the author of the vol- untary trust is possessed of the legal inter- est in the property, a clear declaration of trust contained in or accompanying a deed or act which passes the legal estate will cre- ate a perfect executed trust, and so a dec- laration or direction by a party that the property shall be held in trust for the object of his bounty, though unaccompanied by a deed or other act divesting himself of the legal estate, is an executed trust." Hill, Trustees, 130. If there is a valid declaration of trust, that is sufficient of itself, I apprehend, to transfer the title, but the difficulty is in de- termining what constitutes such a declara- tion, and whether a mere formal transfer of the property, as In the case of the medical attendant, Is sufficient, is a question upon which there is some difference of opinion. No particular form of words is necessary to constitute a trust, while the act or words relied upon must be unequivocal. Implying that the person holds the property as trustee for another. Let us now consider the case in hand. In form at least the title to the money was changed from the intestate individually to her as trustee. She stated to the bank that she desired the money to be thus deposited. It was so done by her direction, and she took a voucher to herself in trust for the plain- tiff. Upon these facts what other intent can be imputed to the intestate than such as her acts and declarations imported, and did they not import a trust? There was no con- tingency or uncertainty in the circumstan- ces, and I am unable to see wherein it was incomplete. The money was deposited un- qualifiedly and absolutely in trust, and the intestate was the trustee. It would scarce- ly have been stronger if she had written in the pass-book: "I hereby declare that I have deposited this money for the benefit of the :!S8 EXPRESS TRUSTS- VOLUNTARY TRUSTS. plaintiff and I hold the same as trustee for her." This would have been a plain declaration of trust, and accompanied as it was with a formal transfer to herself in the capacity of trustee, would have been deemed sufficient under the most rigid rules to be found in any of the authorities. It seems to me that this was the necessary legal intendment of the transaction, and that it was. sufficient to pass the title. The retention of the pass- book was not necessarily inconsistent with this construction. She must be deemed to have retained it as trustee. The book was not the property, but only the voucher for the property, which after the deposit con- sisted of the debt against the bank. There are many cases where the instru- ment creating the trust has been retained by the author of it until his death, especially when he made himself the trustee, and yet the trust sustained. Exton v. Scott, 6 Sim. 31; Fletcher v. Fletcher, 4 Hare, 67; Souver- bye V. Arden, 1 Johns. Ch. 240; Bunn v. Winthrop, Id., 329. This circumstance, among others, has been considered upon the question of intent, but is never deemed de- cisive against the validity of the trust Id. See, Hill, Trustees, supra. Some confusion has been created by judicial expression, that the author of such a trust must do all in his power to carry out his intention, that the nature of the property will admit of. This general proposition requires some qualifica- tion. In this case the intestate might have notified the objects of her bounty, but this is not regarded as indispensable by any of the authorities, and she might have made the deposits in their name, and delivered to them the books, or delivered to them the money. The rule does not require that the gift shall be made in any particular way, it only requires that enough shall be done to transfer the title to the property, and one of the modes of doing this is by an unequivocal declaration of trust. In Richardson v. Rich- ardson, supra, the court, in noticing this point, said: "Reliance is often placed on the circumstance that the assignor has done all he can, and that there is nothing remaining for him to do, and It is contended that he must in that case only be taken to have made a complete and effectual assignment. But that is not the sound doctrine on which the case rests; for if there be an actual declara- tion of trust, although the assignor has not done all that he could do, for example, al- though he has not given notice to the as- signee, yet the interest is held to have ef- fectually passed as between the donor and donee. The difference must be rested sim- ply on this: aye or no, has he constituted himself a trustee." As notice to the cestui que trust was not necessary, and as the retention of the pass- books was not inconsistent with the com- pleteness of the act, the case is peculiarly one to be determined by this test: did the intestate constitute herself a ti-ustee? After a careful consideration of the case in con- nection with the established rules applicable to the subject, and the authorities, I think this question must be answered in the af- firmative. It was not done in express for- mal terms, but such is the fair legal import of the transaction. I have considered the case thus far upon what appears from the face of the transaction, without evidence ali- unde, bearing upon the intent It is not necessary to decide that surrounding cir- cumstances may not be shown to vary or ex- plain the apparent character of the acts, and the intent with which they were done. The facts developed may not be so unequivocal as to be regarded as conclusive. It is suf- ficient to say that there is no finding of an intent contrary to the creation of a trust, and the facts found do not establish such an adverse intent. But looking at the evidence it Is fairly inferable that the intestate de- signed that the plaintiff and her sister should have the benefit of these deposits, and there are some circumstances from which an in- ference may be drawn that she regarded the gifts as fixed and complete. The circum- stance that she did not intend that the ob- jects of her bounty should know of her gift until after her death is not inconsistent with it, and the most that can be said is that she may have believed that the deposits might be withdrawn during her life, and the mon- ey converted to her own use. It is not clear that she entertained such a belief, but if she did, it would not change the legal effect of her acts. The judgment must be affirmed. All concur except MILLER and EARL, JJ., absent at argument Judgment affirmed. EXPRESS TRUSTS- VOLUNTARY TRUSTS. 389 BEAVER V. BEAVER et al.i (22 N. B. 940, 117 X. Y. 421.) Court of Appeals of New York. Nov. 26, 1889. Appeal from supreme court, general term, third department. The action was commenced by the plaintiff , as executrix of Asiel G. Beaver, against the Ulster County Savings Institution, to recover certain deposits amounting to the sum of $2,800 or thereabouts, standing to his credit on the books of the bank. The administra- tors of John 0. Beaver claiming the money as part of his estate, they were substituted as defendants in place of the bank, the money having been brouglit into court. The ques- tion litigated was whether the money repre- sented by the deposits and the accumulations had been vested in Asiel G. Beaver, as a gift f lom John O. Beaver. The account with the bank consisted of twodeposits, — one July 5, 1866, of $854.04, and one of October 5, 1866, of $145.96,— making in the aggregate $1,000, and the accumulations thereon. It is undis- puted that the deposit of $854.04 was made in person by John O. Beaver, and that the money deposited belonged to him. The only evidence to sustain the claim that it was given by him to Asiel Q. Beaver is found in the re- lations between them and the circumstances attending the deposit. Asiel G. Beaver was the son of John O. Beaver, and in 1866 was 17 years of age, and resided with his father, as one of a family of 13 children. John O. Beaver made the deposit of July 5, 1866, in the name of Asiel. The rules of the bank re- quired that on making the first deposit the depositor should subscribe a declaration of his assent to the by-laws of the institution, and his promise to abide by them. John O. Beaver, at the date of the first deposit, signed in his own name a declaration presented to him by the treasurer of the bank, commenc- ing with the words: "I, Asiel G. Beaver, of Esopus, Ulster county, hereby request the officers of the Ulster County Savings Institu- tion to receive from me $854, and open an account with me," etc. At the same time the savings bank entered on its books an ac- count beginning, "Dr., Ulster County Sav- ings Bank, in account with Asiel Beaver," and crediting said Asiel with the deposit of $854. Under the name of Asiel Beaver were originally written the words, "Payable to John 0. Beaver." The bajik also at the same time issued and delivered to John 0. Beaver a pass-book, with a similar entry as in the account on the books of the bank, containing also, as originally written, the words, "Paya- ble to John O. Beaver. " These words in the account and in the pass-book were in the handwriting of the treasurer of the bank, and were written at the same time and by the same hand as the other part of the entries. But before the delivery of the pass-book the words "Payable to John O. Beaver" were erased therefrom, and the same erasure was 'Reversing 6 N. Y. Supp. 586. made in the account on the bank-books. How the interlineation came to be made in the first instance does not appear, nor does it appear at whose suggestion or under what circum- stances theerasures were made. Subsequent- ly, on October 5, 1866, another depo.sit of $145.96 was made to the account, and cred- ited on the pass-book. There are no facts, except as above stated, tending to show a gift of the money deposited to Asiel. On the other hand, many circum- stances were shown which are claimed to be inconsistent with a gift by the father to the son of the money deposited. The son mar- ried a few years after the deposit was made, and died in 1886, 20 years after the date of the deposits, being then of the age of 37 years, leaving a wife, but no children, surviving. John O. Beaver, the father, died in 1888. The father retained possession of the pass- book at all times until his death. In April, 1867, he drew $27.29 from the account, and signed a receipt therefor in the pass-book in his own name. No other sum was ever drawn from the account. Prom time to time John O. Beaver presented the pass-book to the bank to have the iiiterest credited, and the bank officers had no dealings with any other person in respect to the account. There is no evidence that Asiel G. Beaver ever had the pass-book in his possession, or knew of the deposits. In May, 1870, Asiel opened an individual account at the bank in his own name, which continued until March, 1886, when he drew out $1,818.56, in full of the ac- count. It appears that John O. Beaver had eight or nine pass-books in the bank, repre- senting deposits made in the names of other persons. He left at his death real estate of the value of $12,000 to $15,000, and more than $20,000 in personal property. One of the rules of the bank provides that "drafts may be made personally, or by the order in writ- ing of the depositor, (if the institution have the signature of the party,) or by letters of attorney, duly authenticated, but no person shall have the right to demand any part of his principal or interest without producing the original book, that such payment may be entered thereon, " and another declares that, "although the institution will endeavor to prevent fraud or impositions, yet all payments to persons presenting the pass-books issued by it shall be valid payments to discharge the institution. " The rules were printed on the pass-books of the bank. A. T. Clearwater, for appellants. F. L. Westbrook, for respondent. Andrews, J., (after stating the facts as above.) It is found that the money with which John O. Beaver made the deposit of $854.04, July 5, 1866, belonged to him. The inference that the deposit of $145.96, made October 5, 1866, was also made by him, from his own means, does not admit of reasonable question. The pass-book was at all times in his possession. Concurrently with the last deposit the amount was entered therein. It 390 EXPRESS TRUSTS— VOLUNTARY TRUSTS. is affirmatively shown that Asiel, who was then a minor, lived with his father, and had no money of his own, and the circumstances are quite satisfactory to show that he never at any time during his life knew of the bank account. The question in the case turns upon the legal effect of the deposit, made in connection with the attendant and subse- quent circumstances. If they established either a trust in favor of Asiel as to the .$854.04, deposited July 5, 1866, or a gift of the fund deposited, then, clearly, the subse- quent deposit would, in the absence of ex- planation, be impressed with the same char- acter, and be governed by tlie same rules. On the other hand, if the first deposit was not affected with any trust, and was not a gift, neither is the last one. Both were the property of John O. Beaver, or both the prop- erty of the son, either by a beneficial or legal title. The trial court seem to have sustained the transaction as a gift, but at the same time refused to find that there was no trust. There is no warrant, under the decisions of this court, to uphold the deposit of July 5, 1866, asatrust. The caseof Martin v. Funk, 75 N. Y. 134, established a trust in favor of the claimant in that case, in respect to a fund deposited by another iti a savings bank to his own credit, in trust for the former; the lat- ter taking from the bank at the time a pass- book in which the account was entered in the same way. The court applied the doctrine that the owner of a fund may, by an un- equivocal declaration of trust, impress it with a trust character, and thereby convert his absolute legal title into a title as trustee for the person in whose favor the trust is de- clared. There was no declaration of trust in this case, in terms, when the deposit of July 5, 1866, was made, nor at any time after- wards, and none can be implied from a mere deposit by one person in the name of an- other. To constitute a trust tliere must be either an explicit declaration of trust, or cir- cumstances which show beyond reasonable doubt that a trust was intended to be cre- ated. It would introduce a dangerous insta- bility of titles if anything less was required, or if a voluntary trust inter vivos could be established in the absence of express words, by circumstances capable of another construc- tion, or consistent with a different intention. See Young v. Young, 80 N. Y. 438, and cases cited. The plaintiff's title to the fund must de- pend, therefore, upon the question of gift. The elements necessary to constitute a valid gift are well understood, and are not the sub- ject of dispute. There must be on the part of tlie donor an intent to give, and a delivery of the thing given, to or for the donee, in pursuance of such intent, and on the part of the donee acceptance. The subject of the gift may be chattels, choses in action, or any form of personal property, and what consti- tutes a delivery may depend on the nature and situation of the thing given. The de- livery may be symbolical or actual, by act- ually transferring the manual custody of the chattel to the donee, or giving to him the symbol which represents possession. In case of bonds, notes, or choses in action, the de- livery of the instrument which represents the debt is a gift of the debt, if that is the intention; and so, also, where the debt is that of the donee, it may be given, as has been held, by the delivery of a receipt ac- knowledging payment. Westerlo v. De Witt, 36 X. Y. 340; Gray v. Barton, 55 N. Y. 72; 2 Schouler, Pers. Prop. § 66 et seq. The ac- ceptance also may be implied where the gift, otherwise complete, is beneficial to the donee. But delivery by the donor, either actual or constructive, operating to divest the donor of possession of and dominion over the thing, is a constant and essential factor in every transaction which takes effect as a complete gift. Anything short of this strips it of the quality of completeness which distinguishes an intention to give, which alone amounts to nothing, from the consummated act, which changes the title. The intention to give is often established by most satisfactory evi- dence, although the gift fails. Instruments may be even so formally executed by the donor, purporting to transfer title to the donee, or there may be the most explicit dec- laration of an intention to give, or of an act- ual present gift, yet, unless there is delivery, the intention is defeated. Several cases of this kind have been recently considered by this court. Young v. Young, supra; Jack- son V. Railway Co., 88 N. Y. 520; In re Crawford, 113 N. Y. 560, 21 N. E. Eep. 692. We are of opinion that there is lacking in this case two of the essential elements to constitute a gift by John O. Beaver to his son of the money deposited July 5, 1866, viz., an intent to give, and a delivery of the sub- ject of the alleged gift. The only evidence relied upon to establish an intent on the part of the father to make a gift to his son is the transaction at the bank on the day the de- posit was made, in connection with the rela- tion between the parties. There is no proof of any oral statement made by the father on that occasion disclosing an intention to make a gift, and not a scintilla of evidence that afterwards, during the 20 years which elapsed before the son's death, the father made any declaration or in any way recognized that the money belonged to the son, or had been given to him. Evidence offered on the part of the defendant of declarations of John O. Beaver, made on the day of the deposit and after- wards, inconsistent with the theory of an in- tent to give the money to Asiel, were ex- cluded, on the objection of the plaintiff. The acts of John 0. Beaver after the account was opened tend strongly to negative the claim that the money was deposited with intent to give it to the son. The drawing out of the interest by John O. Beaver on one occasion; his retention of the pass-book for 22 years, and procuring it to be written up from time to time; the fact that the son, so far as ap- pears, never was informed of the existence EXPRESS TRUSTS— VOLUNTARY TRUSTS. 391 of the account,— are strong indications that John O. Beaver did not make the deposit in the son's name, with intent to make a pres- ent gift of the mgney. The father dealt with the account as his own, and, if the con- trol he exercised over it during the minority of Asiel could be reasonably explained on the theory that he acted as the natural guardian of the son, no such explanation is possible as to the 16 years of the life of the son after he reached his majority. The trial court having found that there was a consummated gift, which, of course, includes a finding of an intent to give, this court is concluded from reviewing the find- ing, if there was any competent and suffi- cient evidence to support it. The form of the account is the essential fact upon which the plaintiff relies. It may be justly said that a deposit in a savings bank by one per- son, of his own money to the credit of an- other, is consistent with an intent on the part of the depositor to give the money to the other. But it does not, we think, of it- self, without more, authorize an affirmative finding that the deposit was made with that intent, when the deposit was to a new ac- count, unaccompanied by any declaration of intention, and the depositor received at the time a pass-book, the possession and presen- tation of which, by the rules of the bank, known to the depositor, is made the evidence of the right to draw the deposit. We cannot close our eyes to the well-known practice of persons depositing in savings banks money to the credit of real or fictitious persons, with no intention of divesting themselves of own- ership. It is attributable to various reasons, — reasons connected with taxation, rules of the bank limiting the amount which any one individual may keep on deposit, the desire to obtain high rates of interest where there is a discrimination based on the amount of de- posits, and the desire on the part of many persons to veil or conceal from others knowl- edge of their pecuniary condition. In most cases where a deposit of this character is made as a gift, there are contemporaneous facts or subsequent declarations by which the intention can be established, independently of the form of the deposit. We are inclined to think that to infer a gift from the form of the deposit alone would, in the great majority of cases, and especially where the deposit was of any considerable amount, impute an intention which never existed, and defeat the real purpose of the depositor. The relation of father and son does not in this case, we think, strengthen the plaintiff's case. It may be true that, as between parent and child, a presumption of a gift may be raised from circumstances where it would not be implied between strangers. Kidgway v. En- glish, 22 J^. J. Law, 409. But where a de- posit is made in the name of another, with- out any intention on the part of the depositor to part with his title, he would be quite like- ly to select a member of his own family to represent the account, and in this case thi3 is the natural explanation of the transaction. The circumstances of the erasure in the declaration signed by John 0. Beaver, and also in the account on the books of the bank, of the words, "Payable to John O. Beaver," throw no light upon the actual intention. If they were originally inserted at the sug- gestion of John 0. Beaver, it would seem to imply that when he came to make the de- posit he did not intend to part with the con- trol of the money, and it is scarcely presum- able that he changed his intention at the very time of making the deposit. If the words were inserted by the treasurer without au- thority, he may have erased them so as to leave no evidence of an intent to evade the law or the rules of the bank in respect to de- posits, or he may have done it for some other unexplained reason. Again, it is possible that John O. Beaver desired that the fund should be placed so that it could be drawn on presentation of the pass-book, without the necessity of a written order, and the erasure was made for this reason. In short, the rea- son for the insertion of the words, and the subsequent erasure, is matter of speculation merely, and does not aid in the interpreta- tion of the main transaction. There was not only a failure to prove an intent on the part of John O. Beaver to make a gift, but the case is, we think, equally defective on the proof of delivery. The declaration and re- quest drawn by the treasurer ran in the name of Asiel, as did the promise recited to abide by the rules of the bank. But it was signed by John O. Beaver in his own name, and not as agent for Asiel, and in law was his request and his promise. John O. Beaver took and retained possession of the pass- book on which the rules were printed. The rules prescribed the undertaking of the bank, and the conditions to be observed by depos- itors in requiring payment. Under these rules, John O. Beaver had the exclusive do- minion over the account, and the exclusive right to draw upon it so long as he retained the pass-book. It wms his signature that the bank had, and not that of Asiel, and the rule authorizing drafts by the depositor only ap- plies when the bank has his signature. But the rule also prescribed that "no person shall have the right to demand any part of his principal or interest without producing the original book, that such payments may be entered thereon," and also that "all pay- ments to persons producing the pass-books shall be valid payments to discharge the in- stitution." Under these rules, Asiel was never in a situation to control the account, while John O. Beaver had complete author- ity over the fund at all times. If John O. Beaver had delivered the pass-book to Asiel with intent to give him the deposit, there would have been a constructive delivery of the subject of the gift. In re Crawford, supra. But he never did this, or any equiva- lent act. We think, for the reasons stated, that the plaintiff failed to establish a gift, or to justify 392 EXPRESS TRUSTS— VOLUNTARY TRUSTS. a finding of a gift. The question of gifts, in connection with deposits in savings banlis, has of late years been frequently considered by the courts in various states. The pre- ponderance of authority seems to be in favor of the views we have expressed. See Robin- son V. Ring, 72 Me. 140; Burton v. Bank, 52 Conn. 398; Marcy v. Amazeen, 61 N. H. 131; Scliick V. Grote, 42 N. J. Eq. 352, 7 Atl. Rep. 852; Scott v. Bank, 140 Mass. 157, 2 N. E. Rep. 925; 8 Amer. &Eng. Cyclop. Law, tit. "Gifts," and notes. The cases of Howard v. Bank. 40 Vt. 597; Blasdel v. Locke, 52 N. H. 238; Gardner v. Merritt, 32 Md. 78,— go the furthest towards sustaining transac- tions, similar to the one in question, as gifts, of any we have noticed, but they are distinguishable in material respects from this. Our conclusion is that the cause of ac- tion in this case was not made out, and the judgment should therefore be reversed, and a new trial ordered. All concur, except DANFOETHi J., dissenting, and Finoh, J., not voting. EXPRESS TRUSTS— VOLUNTARY TRUSTS. 393 BATH SAV. INST. v. HATIIORN et al. (33 A. 836, 88 Me. 122.) Supreme Judicial Court of Maine. June 7, 1895. Report from supreme judicial court, Saga- dalioc county. This was a bill of interpleader brought by the Bath Savings Institution against the de- fendant Hathoru, as administrator of the estate of Henry Wallier, deceased, and against Alice B. Files, to determine the title to a certain deposit in that institution. The course of procedure adopted by agree- ment between all parties was this: Each defendant filed an answer, and then, by agreement, a decree of inteiiileader was filed, and by further agreement it was stipulated that the answers should be taken as the pleadings in the case, and the cause set down for hearing on bill, answers, and proof, and that Miss Files be regarded as plaintiff in the continuance of the suit. It thus be- came, practically, a suit in equity by Alice B. Files against the administrator of Henry Walker's estate. The facts in the case were practically undisputed. It appeals that Henry Walker died October 2, 1891, leaving neither wife nor children, his wife having died nearly six years before. Their home was in Woolwich, opposite Bath, and Miss Files, who was a second cousin of Mrs. Walker, frequently visited there, and Mr. and Mrs. Walker often visited the Files family in Winslow, the two families being in close and Intimate relations. On July 1, 1882, Mr. Walker deposited the sum of $700 In the Bath Savings Institution in his own name, but "in trust for Alice B. Files," and took out a depositor's book in that form. At the time of making the deposit he had a conversation with the treasurer of the bank as to its form, and the treasurer told him that if he put the book in any one's name, in trust for any one, it would go to that per- son at his decease; and Mr. Walker said he wished it to, that he wished it to go to Miss Files. In accordance with his direction, the signature book, which all depositors are re- quired to sign, was signed by Mrs. Potter, then a clerk in the bank, in the same form, "Henry Walker, in trust for Alice B. Files, of Woolwich." Mr. Walker retained the bank book in his possession ever after, but never drew any part of the principal or in- terest therefrom, but took the book to the bank occasionally to have the accrued divi- dends added. On one occasion, very soon after the deposit was made. Miss Piles' sis- ter, now Mrs. White, was visiting at his house, and saw the book, among some other papers that he happened to be examining. She took it up, and looked at it, saw the form of entry, and he told her then, "Yes, that is for Alice at my decease, and the next will be for you," and Mrs. White communi- cated this information to Alice, her sister, immediately on her return home from the visit, who expressed her satisfaction thereat. Mrs. Trott, who was in the family as house- keeper for about six years, going there be- fore Mrs. Walker's death, saw the book on three different occasions, and Mr. Walker explained to her, also, when she spoke of its being in trust, that the book was for Alice; and again, just a few months before his death, after he had the July dividend added, he was examining the book, spoke of it as Alice's bank book, and asked Mrs. Trott to guess how much it had gained. She told him she supposed it was between ten hun- dred and eleven hundred dollars, and his re- ply was: "You are pretty good f(jr guessing. You guessed pretty nearly right; and that will be a great help to Alice, won't it, Mrs. Trott?" Decree against estate. Orville D. Baker and I/eslie C. Cornish, for Alice B. Files. Charles W. Larrabee, for de- fendant Hathorn. HASKELL, J. Henry Walker, of Wool- wich, died, solvent and intestate, October 2, 1S91, leaving brothers and sisters and neph- ews and nieces, but neither wife nor children. His wife died January 1, 1886. She was a cousin to the father of plaintiff, Alice B. Files, of Winslow, who knew the old people as uncle and aunt, and seems to have been always welcome at their house and a favorite with them. On July 1, 1882, Mr. Walker deposited in the Bath Savings Institution $700 "in trust for Alice B. Files," saying, in substance, that he wished it to go to her at his decease. That deposit remained intact during Mr. Walker's life, and at his death amounted to something over $1,000. He always retained the book, and it was found among his pa- pers by his administrator, the defendant, who now claims the deposit as a part of his estate. The evidence shows that Mr. Walker intended the deposit for Alice at his decease, but never communicated his intention to her. The authorities all say that a gift inter vivos must be complete. The donor must divest himself of all dominion over the thing given, and the title to it must pass absolutely and irrevocably to the donee. Northrop v. Hale, 73 Me. 66; Dale v. Lincoln, 31 Me. 420; Robinson v. Ring, 72 Me. 140; Bank v. Fogg, 82 Me. 538. 20 Atl. 92. A voluntary trust is an equitable gift, and, like a legal gift inter vivos, must be com- plete. A declaration of trust as effectually passes the equitable title of the fund to the cestui as a gift inter vivos passes the legal title to the donee. The distinction between them is of a technical nature. In a trust, the real title vests in the donee, but the legal title, perhaps, carrying control of the prop- erty, may be placed elsewhere; while in a gift both the real and legal title instantly fall to the donee. It is not necessary, there- fore, that he who declares a trust should di- vest himself of the legal title, if, perchance, 394 EXPRESS TRUSTS— VOLUNTARY TRUSTS. he so does it as to transfer the real or equi- table title to the cestui; for then he creates an estate really no longer his own. He may retain the legal title, giving him the control, but for the benefit of the cestui, according to the terms of the trust. His control be- comes subject to the direction of courts of equity, that always supervise the adminis- tration of trusts. They are the children of equity. They spring from it, and cannot sur- vive without its aid and control. The trus- tee is merely an agent to administer them, and nothing more. An express trust of lands can only be cre- ated by some writing signed by the party or his attorney (Rev. St. c. 73, § 11), but a trust of personal property may be created or de- clared by parol. It is necessary, however, to clearly establish the terms of it, and show an executed gift, so that the equitable title shall have passed to the donee as effectually as a sift inter vivos. Gerrish v. Institution, 128 JIass. 159; Dresser v. Dresser, 46 Me. 48. Says Lord Cranworth: "If a man chooses to give away anything which passes by de- livery, he may do so, and there is no doubt that, in the absence of fraud, a parol decla- ration of trust may be perfectly good, even though it be voluntary. If I give any chat- tel, that of course passes by delivery ; and if I expressly or impliedly say I constitute my- self trustee of such and such personal prop- erty for a person,' that is a trust executed, and this court will enforce it, in the absence of fraud, even in favor of a volunteer. ♦ * * The authorities all turn upon the question whether what took place was a dec- laration of trust, or merely an imperfect at- tempt to make a legal transfer of the prop- erty. In the latter case, the court will af- ford no assistance to volunteers; but when the court considers that there has been a declaration of trust, it is a trust executed, and the court will enforce it, whether with or without consideration." Jones v. Lock, 1 Ch. App. 25. In this case, the deposit is in the name of the donor, "in trust for the donee." Standing alone, this entry does not work an absolute, indisputable gift in the form of a dry trust, — that is, a trust without limitation or con- dition, that may be terminated at the will of the cestui; but extrinsic evidence is com- petent to control its effect. Brabrook v. Bank, 104 Mass. 228; Clark v. Clark, 108 Mass. 522; Powers v. Institution, 124 Mass. 377; Stone v. Bishop, 4 Cliff. 593, Fed. Cas. No. 13,482; Northrop v. Hale, 72 Me. 275. The evidence discloses that, at the time the donor made the deposit, he expressed a desire that the donee should have the money at his death. That certainly shows no Intent to part with the legal title at an earlier day. He is said to have subsequently made talk of the same purport; but he neither informed the donee of the deposit, nor made any effort or did any act to apprise her of it, or of his inten- tion concerning it. The deposit on his part was both voluntary and secret. Information of It may have been communicated to her by others, but never at his request or witli his knowledge. What evidence, then, oper- ates to pass the equitable title in the deposit to her? He had consummated no contract with her. His intentions were kept in his own breast. He could have withdrawn the money at any time, and have made a new disposition of it, and she may not have been the wiser, so far as he knew. It is just as essential, to establish the trust sought to be set up here, to prove some act on tlie part of the donor that shall operate to pass the equitable title to the donee, as it is to ijrove delivery in a gift inter vivos. Both require the same essentials. In both, some title must pass from the donor, differing only in degree. A gift must be executed by deliv- ery; a trust, by declaration. In Bank v. Fogg, 82 Me. 538, 20 Atl. 92, the donor deposited a sum of money in the name of the donee, subject to his own order, with intent that, at his death, it should go to the donee. No trust was claimed or shown. It was an unexecuted purpose, an Ineffectual attempt at testamentary disposi- tion. In Parcher v. Institution, 78 Me. 470, 7 Atl. 266, a depositor caused to be entered upon the bank ledger words, in substance, "Payable also to Mrs. Leavitt in case of my death," and it was held no gift. In Curtis v. Bank, 77 Me. 151, the entry of "Subject also to" the donee was held to constitute no gift, but that a subsequent de- livery of the bank book completed the gift. In Barker v. Fi-ye, 75 Me. 29, a deposit in the name of the donee, subject to the order of the donor during life, afterwards changed by erasing words giving the donor any control of the fund, and after notice to the donee of the change and that the bank book would be delivered to him the first time they met, and after his reply requesting that the book be sent to him, which the court says "was an acceptance of the gift," it was held that the gift was complete. The same doctrine is held in Northrop v. Hale, 73 Me. 66; Robinson v. Ring, 72 Me. 140; Drew v. Hagerty, 81 Me. 231, 17 Atl. 63; Parkman v. Bank, 151 Mass. 218, 24 N. E. 43. All of our cases require something more than a mere intention to give, a promise to give, or an expectation to give. Benevolence alone will not do. There must be beneficence also. The mystery sometimes supposed to exist about a trust cannot change the nature of a transaction. A voluntary trust is a gift, and requires all the essentials of a plain gift to sustain it. In Dresser v. Dresser, supra, a writing spec- ifying the terms of a voluntary trust, and a delivery of the trust property so that the dominion of the donor over it was there- after lost. Is a good example of a trust of this sort. In Alger v. Bank, 146 Mass. 418, 15 N. B. 916, the donor made a deposit similar to the EXPRESS TRUSTS— VOLUNTARY TRUSTS. 395 one under consideration. It was in his own name, as trustee for the donee, his house-, keeper, who claimed the deposit as a pay- ment for her services. It was shown that, shortly before his death, he told her, "I put it iu for you;" "that money is yours;" and the court held that the judge, who tried the case, was authorized to find a perfected gift, if he chose to do so. Some of the cases are in conflict concerning the question now under consideration, more in the application of the law to the ever- varying facts in the numerous cases than otherwise; but our own cases are all con- sistent, and squarely hold to the doctrine that a trust in personal property may be created by parol, and that a deposit in bank in the name of another may be explained or controlled by evidence outside the written terms of the deposit. In this case, the terms of the deposit clearly show an intended trust in favor of the donee, but may be controlled or limited by extrinsic evidence. This evi- dence confirms the trust, showing that it should cease at the death of the donor, and that the legal title should then pass to the cestui. When the deposit was made, the treasurer of the bank told the donor that, at his decease, the money would go to the donee, and the donor replied that was his wish. All the subsequent acts and declara- tions of the donor show the same intent. The gift cannot be upheld as an absolute gift inter vivos, nor as a gift causa mortis, for these gifts require a delivery of the res, a complete transfer of title. They diflfer from a gift in trust in that they purport to, and must, pass the whole title, so that the donor can have no dominion or control over them. But a gift in trust withholds the legal title from the donee. It may be transmitted to a third person, or It may be retained by the donor, but in either case the equitable title has gone from him, and unless the declara- tion of trust contains the power of revoca- tion, or the wide discretion of chancery at- taches (Coutts V. Acworth, L. R. 8 Eq. 558; Wollaston v. Tribe, L. R. 9 Eq. 44; Everitt V. Everitt, L. R. 10 Eq. 405; 7 Ch. App. 244; 15 Ch. Div. 570; Lister v. Hodgson, L. R. 4 Eq. 30; Sharp v. Leach, 31 Beav. 491; An- derson V. Blsworth, 3 Giff. 154; Toker v. Toker, 31 Beav. 629; Phillips v. Mullings, 7 Ch. App. 247; Smith v. IlifCe, L. R. 20 Eq. 666; Welman v. Welman, 15 Ch. Div. 570, 578, 579; Prideaux v. Lonsdale, 1 De Gex, J. & S. 433), it leaves him powerless to ex- tinguish the trust. Of course, the trust must be established by proof, and the fact that no evidence of a voluntary trust once created remains, or can be shown, does not alter the principle. Many rights fall of enjoyment from the lack of evidence that might once be adduced. So, a secret trust may be valid when it can be proved; but if the donor con- ceals the evidence of it, and later appropri- ates the fund to his own use, it is simply a wrong on his part, that prevails becavise of his perfidy, and goes unpunished and un- noticed because unknown. The cestui's rights are the same, although his remedy may have been destroyed. In the case of In re Smith's Estate, 144 Pa. St. 428, 22 Atl. 916, a lad of 3 years went to live with his uncle. When the lad was 12 the uncle placed $13,000 in bonds in an en- velope, on which he had written and signed a declaration that he held them for his nephew. The bonds remained in the uncle's possession until his death, and the court held a completed gift in trust for the nephew. In Bank v. Albee, 64 Vt. 571, 25 Atl. 487, the court says: "A completed trust, although voluntary, may be enforced in equity. It is not essential that the beneficiary should have bad notice of its creation or have assented to it. The owner or donor of personal property may create a perfect or complete trust by his unequivocal declaration in writing, or by parol, that he himself holds such property in trust for the purposes named. The trust is equally valid whether he constitutes himself or another person the trustee." In that case a father deposited money in a savings bank in the name of his son, naming himself trustee. It appeared that one mo- tive of the father was to avoid taxation; but, said the court, "that fact does not negative the idea that he also intended to create a trust for the benefit of his son. It is perfect- ly consistent with it, and the retention of the pass book is not inconsistent with such a pur- pose. He must have retained it a« trustee." Ray V. Simmons, 11 R. I. 266, is in point. One Bosworth deposited money in a savings bank in his own name as trustee for a step- daughter. He did not tell her what he had done, nor show her the pass book. He kept that himself. After his death, the court held that the stepdaughter was entitled to the money,— that the transaction constituted a trust in her favor. So is Martin v. Funk, 75 N. Y. 134. Susan Boone deposited $500 in a savings bank "in trust for Lillie Willard." Susan kept the pass book, and Lillie had no knowledge of it until after Susan's death. Want of notice to Lillie, and the retention of the pass book by Susan, were urged in defense; but the court held a gift in trust complete. This is an ex- haustive case, and contains a review of au- thorities by Chief Justice Church prior to 1878. So is Minor v. Rogers, 40 Conn. 512. A widow deposited $250 in her own name, "as trustee of William A. Minor," the child of a neighbor. The child knew nothing of the deposit until after the depositor's death, and meantime did not have possession of the pass book; and the court held the trust complete, and allowed a recovery of the money from the depositor's executor. So is Re GafiCney's Estate, 146 Pa. St. 49, 23 Atl. 163. It appeared that Hugh GafCney de- posited $560 in his own name, as trustee for Polly Kim, and the court held the entiy itself prima facie evidence of the trust, and, unex- plained, sufficient to uphold it 396 EXPRESS TRUSTS— VOLUNTARY TRUSTS. In Gerrish v. Institution, supra, the court says: "No particular form of words is re- quired to create a trust in another, or to make the party himself a trustee for the ben- efit of another; that it is enough for the lat- ter purpose if it be unequivocally declared in writing,— or orally, if the property be per- sonal; that it is held in trust for the person named; that when the trust is thus created, it is effectual to transfer the beneficial in- terest, and operates as a gift perfected by de- livery." The same case holds that notice to the ben- eficiary is unnecessary where the transaction is clear; but when ambiguous, or susceptible of different interpretations, it removes the doubt, and is decisive of the purpose of the donor. Some of the earlier Massachusetts cases seem to hold notice to the beneficiary essential to the validity of a trust, but, when considered in the light of this case, rather consider the notice a controlling than an es- sential element in the creation of a voluntary trust. The prevailing doctrine now is that notice is unnecessary, but, when shown, has controlling effect. In this case, the entry "in trust for" is of clear and unmistakable Import, and suflicient to create a prima facie trust. It might have been controlled by evidence that would have shown a contrary intention, but such evi- dence is wholly wanting. Moreover, all the declarations, acts, and conduct of the donor are consistent with the presumption arising from the entry itself, and show that it ex- presses the true import rf the transaction, and creates a completed trust in favor of the donee. Decree accordingly, with costs against the estate. TRUSTS— ACTIVE AND PASSIVE. 397 KIRKIiAND V. COX et al. (94 111. 400.) Supreme Court of Illinois. Jan. Term, 1880. Appeal from circuit court, Montgomery couuty; Charles S. Zane, Judge. Alex. J. P. Garesche and E. Lane, for ap- pellant. James M. Truitt qnd Rice & Miller, for appellees. SOHOLFIBLD, J. In this form of action, since the naked legal title must control, we think it sufficient to show that title is not in appellees, and the judgment below cannot, therefore, be sustained. The rule is, undoubtedly, as claimed by appellees' counsel, that trustees must be pre- sumed to take an estate only commensurate with the charges or duties imposed on them; but this, however, is subject to the qualifi- cation that such presumption shall be con- sistent with the intention of the party cre- ating the trust, as manifested by the words employed in the instrument by which it is created. SheUey v. Edlin, 4 Adol. & El. 582- ^89, 31 B. C. L. 143; Cadogan v. Ewart, 7 Adol. & El. 630, 666; Davies v. Davies, 1 Adol. & El. (N. S.) 430, 41 E. C. L. 611. Under the statute of uses, which is in force here, where an estate is conveyed to one person for the use of or upon a ti'ust for another, and nothing more is said, the stat- ute immediately transfers the legal estate to the use, and no trust Is created, although express words of trust are used. Perry, Trusts, § 298. And so we have expressly held. Witham v. Brooner, 63 lU. 344; Lynch V. Swayne, 83 111. 336. But this, it will be observed, has reference only to passive trusts, or what are some- times termed simple or dry trusts; and in such cases the legal estate never vests in the feoffee for a moment, but is instantaneously transferred to the cestui que use as soon as the use Is declared. 2 Bl. Oomm. (Shars- wood's Ed.) 331, 332; and Witham v. Broon- er, supra. It is said in Perry on Trusts (section 300) : "Although it is probable that it was the in- tent of the statute (i. e., of uses) to convert all uses or trusts into legal estates, yet the convenience to the subject of being able to keep the legal title to an estate in one per- son, while the beneficial interest should be in another, was too great to be given up alto- gether, and courts of equity were astute in finding reasons to withdraw a conveyance from the operation of the statute. Three principal reasons or rules of construction were laid down whereby conveyances were excepted from such operation: First, where a use was limited upon a use; second, where a copyhold or leasehold estate, or personal property was limited to uses; third, where such powers or duties were imposed with the estate upon a donee to uses that it was nec- essary that he should continue to hold the legal title in order to perform his duty or execute the power. In all of these three in- stances courts, both of law and equity, held that the statute did not execute the use, but that such use remained as it was before the statute, a mere equitable interest to be ad- ministered in a court of equity." And again, in section 305, it is said: "The third rule of construction is less technical, and relates to special or active trusts, which were never within the purview of the statute. There- fore, if any agency, duty or power be im- posed on the trustee, as, by a limitation to a trustee and his heirs to pay the rents, or to convey the estate, or if any control is to be exercised or duty performed by the trus- tee in applying the rents to a person's main- tenance, or in making repairs, or to preserve contingent remainders, or to raise a sum of money, or to dispose of the estate by sale, in all these and in other and like cases, the operation of the statute is excluded, and the trusts or uses remain mere equitable estates. So, if the trustee is to exercise any discre- tion in the management of the estate, in the investment of the proceeds or the principal, or in the application of the income, or if the purpose of the trust is to protect the estate for a given time, or until the death of some one, or until division. * * *" And again, in regard to enlarging and extending estates given to trustees, the same author, in sec- tion 315, says: "So, if land is devised to trustees without the word heirs, and a trust is declared which can not be fully executed but by the trustees taking an inheritance, the court will enlarge or extend their estate into a fee simple to enable them to can'y out the intention of the donors. Thus, if land is conveyed to trustees without the word heirs, in trust to sell, they must have the fee, other- wise they could not sell. The construction would be the same if the trust was to sell the whole or a part, for no purchasers would be safe unless they could have the fee, and a trust to convey or to lease at discretion would be subject to the same rule. A for- tiori, if an estate is limited to trustees and their heirs, in trust to sell or mortgage or to lease at discretion, or if they are to convey the property in fee, or to divide it equally among certain persons, for to do any or all of these acts requires a legal fee." See, also, to the same effect. Hill, Trustees (4th Am. Ed.) 376; Rees v. Williams, 2 Mees. & W. 749. In those cases where the legal fee is not vested in the trustee, it will, of course, in the absence of a devise prevailing to the con- trary, vest in the heir at law. And there are also cases in which, it having been the duty of the trustee to convey to the heir at law, it will be presumed, after the lapse of con- siderable time, that such conveyance has been made. Hill, Ti-ustees (4th Am. Ed.) 401; Perry. Trusts, § 350; Gibson v. Rees, 50 111. 383; Pollock v. Alaison, 41 111. 516. But it Is not claimed, nor could it be, that there is 398 TRUSTS— ACTIVE AND PASSIVE. auy foundation for such presumption in tlie facts found in this record. In Harris v. Cornell, 80 111. 67, it was said, referring to Hardin v. Osborn, Sept. Term, 1875, that it had been held the purposes of a trust having been accomplished, the owner of the trust became, by operation of law, re- invested with the legal title and could sue in ejectment. This was unadvisedly said. A rehearing was granted in Hardin v. Os- born, and the opinion therein referred to was withdrawn. In McNab v. Young, 81 111. 11, language of like Import as that used in Har- ris V. Cornell, supra, was used upon the au- thority of the same case, although it is there- in erroneously referred to as being reported in 60 111., at page 93. The case there reported, of that name, does not discuss that or any kindred question. The true doctrine in regard to active trusts, and that adhered to by this court. Is ex- pressed in Vallette v. Bennett, 69 111., at page 636, that where the legal title is vested in the trustee, nothing short of a reconveyance can place the legal title back in the grantor or his heirs, subject, of course, to the qualifica- tion that, under certain circumstances, such reconveyance will be presumed without direct proof of the fact. The language of Walsh's will is: "As to uiy worldly estate, all the real, personal and mixed, of which I shall die seized and pos- sessed, * * * I hereby grant, devise, con- vey and confirm unto" (naming the trustees), "in trust," etc. He then directs his said trustees to assume and take entire control of his estate; to collect all outstanding dues, rents, profits and interests of whatever char- acter, derived therefrom, and to govern and control all such interests as may accrue and arise to said estate from time to time; to make such disposal of said estate as shall in their judgment benefit and increase the value of said estate; that said trustees "shall pay, or cause to be paid, out of said estate," to his daughter, Mary Lucy, "such install- ments of money as in the judgment of said trustees shall be deemed proper and sufficient to meet her current expenses, and provide her an ample and comfortable support;" that said trustees should transfer his estate to his said daughter upon her reaching the age of 35 years, she being then unmarried, but if then married, they are directed to transfer the estate to her only upon the contingency that they should deem her husband a person in whom confidence might be placed; but if the trustees should deem the husband an in- competent and unfit person to have the care and control of the estate, they are directed to continue to make payments to his daughter, "in such amounts and at such times as in their judgment they may think proper," and that the circumstances and station of his daughter may demand; that in the event of the death of his daughter without issue, cer- tain specific legacies, amounting to some $2,- 600 in the aggi-egate, are given, and the bal- ance of his estate is to be divided equally be- tween the House of the Good Shepherd, Saint Joseph's Male Orphan Asylum, and Saint Ann's Infant Asylum; and he then exempts his trustees from liability for all losses occur- ring without their fault. This very clearly gave the entire control and management of the estate to the trustees until Mary Lucy should arrive at the age of 35 years— being unmarried; and she having died before she reached that age, the control and management of the estate continued to devolve upon them. The language employed so plainly conveys this idea that it can ad- mit of no controversy. The power "to make such disposal of the estate as shall," in the judgment of the trus- tees, "benefit and increase the value of said estate,"— as also the duty of paying Mary Lucy "such installments of money as in the judgment of said trustees shall be proper and sufficient to meet her current expenses and provide an ample and comfortable support," —necessarily imply the power to sell the lands and convert them into money or inter- est bearing securities; for this might well, in the judgment of the trustees, benefit and in- crease the estate, and be essential to make payment of the sums directed to be paid to Mary Lucy. The power Implied to sell, is to sell the whole title,— and to this is essential the power to convey that title, requiring, as a condition precedent, a fee-simple estate in the trustees. The property Is devised to the trustees to sell and convey, if they deem it advisable, or to hold and control until it is to be transfer- red as directed; and in the contingency that has arisen, it was intended that it should be the duty of the trustees to make the equal division of the property between the corpora- tions designated and convey it accordingly; for the grant to these corporations is in sev- eralty, and not as tenants in common, and their title must necessarily rest on the con- veyance of the trustees. Whether the corporations can hold or not is not now material. The words of the de- vise show the intention of the testator that the trustees should take a fee, whether he was mistaken in the law as respects the ob- jects of his intended bounty or not. The only difference would be, if the corporations can- not take, the trustees, instead of holding the legal title in trust for them, hold it in trust for the heirs at law. Hill, Trustees (4th Am. Ed.) 208, 209. The legal title, then, being in the trustees, the heirs at law could not maintain eject- ment. Perry, Trusts, §§ 17, 328, 520; Hill, Trustees (4th Am. Ed.) 422, 423, *274; Id. 482, *317; Id. 672, *428; Id. 784, *503; Bull. & T. Trusts & Trustees, p. 811. The judgment of the circuit court is re- versed. Judgment reversed. POWERS IN TRUST. 399 DELANET V. McCORMAOK et al. (88 N. Y. 174.) Court of Appeals of New York. Feb. 28, 1882. Appeal from judgment of the general term of the supreme, court, in the Second judicial department, entered upon an order made the second Monday of December, 1881, which afQrmed a judgment in favor of plaintiff, en- tered upon a decision of the court on trial at special term. Reported below, 25 Hun, 574. This action was brought to obtain a con- struction of the will of John Walsh, late of the city of New York, deceased. The clauses of the will as to which there was any contro- versy are as follows: "Thirdly. I give, devise, and bequeath unto my said son James, during his natural life, all the rents, issues, and profits of my real estate, and in case he married and has lawful issue, then and in the last-mentioned event and thereupon I give, devise, and bequeath to my said son James all and singular my real estate, whatsoever and wheresoever, to have and to hold, the same to my said son, his heirs and assigns forever. "Fourthly. I desire my executors to keep the buildings on my real estate insured against loss or damage by fire, and in repair, and to pay all taxes, assessments, and other charges thereon, and also the Interest on in- cumbrances by mortgage thereon; and, if necessary, they are authorized to receive suf- ficient of the rents to enable them so to do; and in case of damage or loss by fire they are to receive the avails of the insurance, and to repair or rebuild; but this clause of my will is only to have efEect until my said son James shall have lawful issue; and I also authorize my said executors, until that event, to raise, by mortgage of my real es- tate, or any part thereof, whenever and as often as shall be necessary, a similar amount as is now on mortgage of my said estate, wherewith to discharge the present mortgage if necessary. "Fifthly. In case of the death of my son James without ever having had any lawful issue, I desire my executors who shall then be surviving, or the last survivor, to sell all my real estate, and to distribute the proceeds thereof amongst my next of kin as personal estate, according to the laws of the state of New York for the distribution of intestate personal estate; and for that purpose I au- thorize my said surviving executors or the last survivor to execute good, valid, and suf- ficient conveyances in the law to transfer said estate, and vest the same in the pur- chaser and purchasers in fee simple. "Liastly. I appoint my beloved wife, and my beloved son James, and my friend Tighe Davey to be the executors of this my last will and testament." The testator died in 1836, leaving, surviv- ing him, his son James, one nephew, the plaintiff herein, and four nieces. James died in 1880, unmarried, and having had no lawful Issue. The two other executors died before him, as did also the four nieces of the testator. The defendants are the chil- dren of said nieces. John W. GofC, for appellant McCormack. Luke F. Cozans and J. Woolsey Shephard, for appellants Walker et al. John R. Kuhn, for respondent. FINCH, J. The testator gave to his son James the whole of his real estate for life, and absolutely and in fee, in case the son married and had issue; but if he died with- out having had lawful issue, the testator di- rected his executors who should then be sur- viving, or the last survivor of them, to sell his real estate and distribute the proceeds among the testator's "next of kin, as per- sonal estate, according to the laws of the state of New York, for the distribution of intestate personal estate." The executors named were the testator's wife, his son James, and his friend Tighe Davey; all of whom are dead. James died without hav- ing had lawful issue. At testator's death his next of kin were his son James, four nieces, and a nephew, who is the present plalntifi:. The four nieces died during the lifetime of James, but leaving children who are defend- ants here, and claim an interest in the pro- ceeds of the real estate, or In the real estate itself. At the date of the death of James the plaintiff was the sole next of kin of the testator, and claiming the entire proceeds of the real estate, brought an action for a con- struction of the will and the appointment of a trustee to carry out its unexecuted pro- visions. The trial court determined that it had jurisdiction to appoint a trustee, and made such appointment, and that the plain- tiff was entitled to the entire proceeds of the real estate after payment of the liens there- on. That judgment was affirmed, and the children of two of the nieces bring this ap- peal. It is contended in their behalf that the de- vise to James, before marriage and the birth of issue, was but a life estate; that the re- mainder in fee vested at the death of testa- tor in his heirs at law; that the four nieces and plaintiff took such remainder in fee as tenants in common, subject to be divested by the marriage of James and birth of law- ful issue; that this contingency not having occurred the fee was not divested; and that it cannot be divested by a sale of the real estate and disposition of the proceeds as per- sonalty because the power of sale given to the executors was a mere naked power, not coupled with any interest; died with the do- nees to whom it was given; and cannot be executed by a court of equity. It might prove to be the better opinion that James took a base, or determinable fee, subject to be divested upon his death with- out having had lawful issue, so that during his life there was no fragment of the estate •too POWERS IX TRUST. to descend upon his heirs at law, but the character of his Interest need not be particu- larly discussed if the power of sale survived the death of the executors, and the real es- tate is to be distributed as personalty. That is the vital point in the case, and the appel- lant's view of it is sought to be sustained by a reference to the rule at common law, which, it is said, the Revised Statutes have not seriously changed, but have omitted any provision, express or implied, which gives the court authority to appoint a trustee to execute a naked power. The argument turns in the end upon the single inquiry whether the authority given to the executors to sell is a mere naked power, or a power in trust and its execution imperative. The statutory provisions must control and determine the result, and render unnecessary any discus- sion or examination of the cases previously decided, which were not always harmonious and in some instances not easily reconciled. They were very ably and patiently examined in Dominick v. Sayre, 3 Sandf. 555, resulting in a general conclusion that the statutory re- vision substantially followed and adopted the rules of the common law, departing from them only to remove doubts and secure great- er accuracy and precision. But in any event the statutes must furnish the rule by which we are to be guided to a conclusion, for they begin with a comprehensive provision abol- ishing all powers as then existing by law, and making their creation, construction and execution to be governed by the succeeding enactments. 1 Rev. St. pt. 2, c. 1, tit. 2, art. 3, § 73. A power is there defined to be "an authority to do some act in relation to lands, or the creation of estates therein, or of char- ges thereon, which the owner granting or re- serving such power might himself lawfully perform." Section 74. The authority here given to the executors of John Walsh to sell the lands and distribute the proceeds in the event of the death of James without having had issue was clearly a power within the statutory definition. It was also a general and not a special power, for the former ex- ists where the authority permits the aliena- tion in fee by means of a conveyance, will or charge of the lands embraced in the power to any alienee whatever (section 77), and the latter when the alienation must be to desig- nated persons, or of a less estate or Interest than a fee. Section 78. A distinction Is then drawn between cases In which no per- son other than the grantee of the power has any Interest in Its execution, in which case the power, whether general or special, is de- nominated beneficial (section 79), and cases in which the grantee has no interest In its execution, but holds It for the benefit of oth- ers. A general power is In trust "when any person or class of persons, other luan the grantee of such power, is designated as en- titled to the proceeds, or any portion of the proceeds, or other benefits to result from the alienation of the lands according to the pow- er." Within this definition the general pow- er conferred upon the executors to sell the lands and distribute the proceeds to testa- tor's next of kin was a power In trust. In the execution of which the grantees had no inter- est, for, although James was one of them, the power, by its terms, was to be exercised upon his death, and in an event which left him without any interest In Its execution. These statutory definitions seem to us entire- ly accurate and clear and scarcely need, at least for present purposes, the "authoritative exposition" invoked. A power to be exer- cised by the grantee, not at all for his own benefit but wholly and entirely for the bene- fit of some other person or class of persons, is necessarily exercised by such grantee in a trust capacity. The element of trust inheres in its substance and is its essential and vital characteristic. The statutes then provide that every trust power shall be imperative, and impose a duty upon the grantee, the performance of which may be compelled in equity, unless In a case where its execution or non-execution is made expressly to depend upon the will of the grantee, and does not cease to be such even though he may have the right to select some and exclude others from among the objects of the trust. Sec- tions 96, 97. So far, It is determined for us, that the authority granted to the executors of John Walsh Is a general power in trust, and imperative. Being such, a further pro- vision, reaching the emergency of the death of the grantees, becomes applicable. It is enacted (section 102) that the provisions of sections 66 to 71 of article 2, relating to ex- press trusts, shall apply to powers In trust, and section 68 of that article confers upon the court, upon the death of the surviving trustee, his powers and duties, and permits them to be exercised by some person ap- pointed for that purpose under the direction of the court. The statutes therefore answer the whole argument of the appellants. The power in trust conferred upon the executors did not die with them, but survived and vested In the courts of equity having full power to compel the execution of the trust. If In Catton v. Taylor, 42 Barb. 578, there Is any thing to the contrary, which seems to be the fact, it was decided without reference to the statutes and does not alter or modify our conclusion. The power in this case was general, In trust and Imperative. It was not of a character personal to the trustees as in- volving the exercise of their individual choice and discretion, and might as well be executed by persons other than themselves. Probably It would have survived before the Revised Statutes, but certainly remains and Is en- forceable since. Assuming then the validity of the trust power and the jurisdiction of equity to pro- vide for its exercise, the appellants still con- tend that the "next of kin," to whom the proceeds of the real estate were to be dis- tributed, are the persons or their representa- POWERS IN TRUST. 401 tlves who were such at the date of the death of the testator, and not those who were such at the date of the death of James. There is no question here of the suspension of the power of alienation, for the sale and distribution awaited only the termination of a single life; but nevertheless the argument of the appellants proceeds, and must neces- sarily proceed, upon the idea that the next of kin of the testator at his death took vest- ed interests in a legacy, payable in the future, since otherwise the right of each would lapse and nothing would pass to their representa- tives. But there is no gift to the next of kin, and no language importing such gift, ex- cept in the direction to convert the real es- tate into money and then make distribution; and in such case the rule is settled that time is annexed to the substance of the gift and the vesting is postponed. Much more is that true where the gift is only to vest upon the happening of a future contingency, until the occurrence of which it is uncertain whether a gift will be made at all. Warner v. Durant, 76 N. Y. 136; Leake v. Robinson, 2 Mer. 387; Smith v. Edwards, 88 N. Y. 92. Here a future condition or contingency attached to the substance of the gift. It was condi- tioned upon the death of James without hav- HUTCH.& BUNK.EQ.— 26 ing had lawful issue, so that the vesting was plainly postponed and the gift was future. There is the further and important fact that at the death of James the land was to be con- verted into personalty and be distributed as such, and the very subject of the gift was not to come into existence until the pre- scribed contingency. Vincent v. Newhouse, 83 N. Y. 511; Hoghton v. Whitgreave, 1 Jac. & W. 145. The case therefore falls within the rule that where the gift is money, and the direction for the conversion absolute, the leg- acy given to a class of persons vests in those who answer the description and are capable of taking at the time of distribution. Teed V. Morton, 60 N. Y. 506. Adding to these considerations the incongruity of a construc- tion which would include James himself among the next of kin in the testator's mind and intention, we are entirely clear that the courts below correctly decided that the next of kin entitled were those who answered that description at the date of the distribu- tion. We discover therefore no error in the disposition of the case. The judgment should be affirmed, with costs. All concur. Judgment affirmed. 4ua TRUST— PUBLIC OR CHARITABLE. JACKSON y. PHILLIPS et ai (14 Allen, 539.) Supreme Judicial Court of Massachusetts. Suffolk. Jan. Term, 1867. Bill In equity by the executor of the will of Francis Jackson, of Boston, for instrac- tions as to the validity and efCect of the fol- lowing bequests and devises: "Article 4th. I give and bequeath to Wil- liam Lloyd Garrison, Wendell Phillips, Ed- mund Quincy, Maria W. Chapman, L. Maria Child, Edmund Jackson, William I. Bow- ditch, Samuel May, Jr., and Charles K. Whip- ple, their successors and assigns, ten thou- sand dollars; not for their own use, but in trust, nevertheless, for them to use and ex- pend at their discretion, without any respon- sibility to any one, in such sums, at such times and such places, as they deem best, for the preparation and circulation of books, news- papers, the delivery of speeches, lectures, and such other means, as, in their judgment, will create a public sentiment that will put an end to negro slavery in this country; and I hereby constitute them a board of trustees for that purpose, with power to fill all va- cancies that may occur from time to time by death or resignation of any member or of any ofllcer of said board. And I hereby ap- point Wendell Phillips president, Edmund Jackson treasurer, and Charles K. Whipple secretary, of said board of trustees. Other bequests, hereinafter made, will sooner or later revert to this board of trustees. My desire is that they may become a permanent organization; and I hope and trust that they will receive the services and sympathy, the donations and bequests, of the friends of the slave. "Ai-tlcle 5th. I give and bequeath to the board of trustees named in the fourth article of this will, their successors and assigns, two thousand dollars, not for their own use, but in trust, nevertheless, to be expended by them at their discretion, without any responsibility to any one, for the benefit of fugitive slaves who may escape from the slaveholding states of this infamous Union from time to time. "Disregarding the self-evident declaration of 1776, repeated in her own constitution of 1780, that 'all men are bom free and equal,' Massachusetts has since, in the face of those solemn declarations, deliberately entered into a conspiracy with other states to aid them in enslaving millions of innocent persons. I have long labored to help my native state out of her deep iniquity and her barefaced hy- pocrisy in this matter. I now enter my last protest against her inconsistency, her injus- tice, and her cruelty, towards an unoffend- ing people. God save the fugitive slaves that escape to her borders, whatever may become of the commonwealth of Massachusetts! "Article 6th. I give and bequeath to Wen- dell Phillips of said Boston, Lucy Stone, formerly of Brookfield, Mass., now the wife of Henry Blackwell of New York, and Susan B. Anthony of Rochester, N. Y., their suc- cessors and assignjs, five thousand dollars, not for their own use, but in trust, neverthe- less, to be expended by them, without any responsibility to any one, at their discretion, in such sums, at such times, and in such places, as they may deem fit, to secure the passage of laws granting women, whether married or unmarried, the right to vote; to hold oflice; to hold, manage, and devise prop- erty; and all other civil rights enjoyed by men; and for the preparation and circula- tion of books, the delivery of lectures, and such other means as they may judge best; and I hereby constitute them a board of trus- tees for that Intent and purpose, with power to add two other persons to said board if they deem it expedient. And I hereby appoint Wendell Phillips president and treasurer, and Susan B. Anthony secretary, of said board. I direct the treasurer of said board not to loan any part of said bequest, but to invest, and, if need be, sell and re-invest, the same in bank or railroad shares, at his discretion. I further authorize and request said boai-d of trustees, the survivors and survivor of them, to fill any and all vacancies that may occur from time to time by death or resigna- tion of any member or of any oflicer of said board. One other bequest, hereinafter made, will, sooner or later, revert to this board of trustees. My desire is that they may become a permanent organization, until the rights of women shall be established equal with those of men; and I hope and trust that said board will receive the services and sympathy, the donations and bequests, of the friends of human rights. And being desirous that said board should have the immediate benefit of said bequest, without waiting for my exit, I have already paid it in advance and in full to said Phillips, the treasurer of said board, whose receipt therefor is on my files. "Article 8th. I now give to my three chil- dren equally the net income of the residue of my estate, during the term of their natural lives, in the following manner, namely: After the payment of my debts and the foregoing gifts and bequests, I give, bequeath and de- vise one undivided third part of the residue of my estate, real, personal and mixed, to my brother Edmund Jackson of said Boston, his successors and assigns, not for his or their own use, but in trust, nevertheless, with full power to manage, sell and convey, invest and re-invest, the same at his discre- tion, with a view to safety and profit;" and "the whole net Income thereof shall be paid semi-annually to my daughter Eliza P. Eddy, during her natural life;" and at her decease, one-half of such income to be paid seml-an- nuaUy "to the board of trustees constituted in the sixth article of this will, to be expend- ed by them to promote the intent and pur- pose therein directed," and the other half to Lizzie F. Bacon, her daughter, during her TRUST— PUBLIC OR CHARITABLE. 403 natural life; and at the decease of both mother and daughter, "to pay and convey the whole of said trust fund to said board of trustees constituted in the sixth article of this will, to be expended by them in the manner, and for the Intent and purpose, therein di- rected." By article 9th, the testator gave another un- divided third part of the said residue to his brother Edmund, his successors and assigns, in trust, with like powers of management and Investment, "and the whole net income there- of shall be paid semi-annually to my son James Jackson, during the term of his natur- al life; at his decease, I direct said trustee, or whoever may then be duly qualified to ex- ecute this trust, to pay semi-annually one- half part of the net income thereof to the board of trustees constituted in the fourth article of this will, and the other half-part of said net income shall be paid semi-an- nually to his children equally, during their natural lives; at the decease of all his chil- dren, if they survive him, I direct said trus- tee, or whoever shall then be duly authorized to execute this trust, to pay and convey the whole of said trust fund to said board of trustees constituted in said fourth article in this will, to be expended by them for the in- tent and purpose directed in said fourth ar- ticle; but, in case my said son James should leave no child living at the time of his de- cease, then, at his decease, I direct said trus- tee, or whoever shall then be duly author- ized to execute this trust, to pay and convey the whole of said trust fund to said board of trustees constituted in the fourth article of this will, to be expended by them for the intent and purpose therein directed." By article 10th, the testator made a similar bequest and devise of the remaining undi- vided third part of said residue to his brother George Jackson, his successors and assigns, and in trust to pay the whole net income thereof semi-annually to the testator's daugh- ter Harriette M. Palmer, during her natural life, and at her decease, one half of such in- come "to the board of trustees constituted in the fourth article of this will, to be expended by them in the manner and for the Intent and purpose therein directed;" and the other half, in equal proportions, to all her children that may survive her, during the term of their natural lives; and, at their decease, to pay and convey the whole of said trust fund to said board of trustees; "but, in case my said daughter Harriette M. Palmer should outlive all her children, then, at her decease, I direct said trustee, or whoever shall then be duly authorized to execute this trust, to pay and convey the whole of said trust fund to the board of trustees constituted in said fourth article In this will, to be expended by them as aforesaid." S. E. Sewall, for one of the trustees. G. W. Phillips, for others of the trustees. S. Bartlett and J. G. King, for certain heirs at law. GRAY, J. This case presents for decision many important and interesting questions, which have been the subject of repeated dis- cussion at the bar and of much deliberation and reflection by the court. The able and elaborate arguments of counsel have neces- sarily involved the consideration of the fun- damental principles of the law of charities, and of a great number of the precedents from which they are to be derived; and have dis- closed such diversity of opinion upon the ex- tent and application of those principles, and the just interpretation and effect of the ad- judged cases, as to require the principles in question to be fully stated, and supported by a careful examination of authorities, in de- livering judgment. I. By the law of this commonwealth, as by the law of England, gifts to charitable uses are highly favored, and will be most liber- ally construed in order to accomplish the in- tent and purpose of the donor; and trusts which cannot be upheld in ordinary cases, for various reasons, will be established and car- ried into effect when created to support a gift to a charitable use. The most important dis- tinction between charities and other trusts is in the time of duration allowed and the de- gree of definiteness required. The law does not allow property to be made inalienable, by means of a private trust, beyond the period prescribed by the rule against perpetuities, being a life or lives in being and twenty-one years afterwards; and if the persons to be benefited are uncertain and cannot be ascer- tained within that period, the gift will be ad- judged void, and a resulting trust declared for the heirs at law or distributees. But a public or charitable trust may be perpetual in its du- ration, and may leave the mode of application and the selection of particular objects to the discretion of the trustees. Sanderson v. White, 18 Pick. 333; Odell v. Odell, 10 Allen, 5, 6, and authorities cited; Saltonstall v. San- ders, 11 Allen, 446; Lewin, Trusts, c. 2. Each of the bequests in the will of Francis Jackson, which the court Is asked in this case to sustain as charitable, is to a permanent board of trustees, for a purpose stated In gen- eral terms only. The question of the valid- ity of these trusts is not to be determined by the opinions of individual judges or of the whole court as to their wisdom or policy, but by the established principles of law; and does not depend merely upon their being permitted by law, but upon their being of that peculiar nature which the law deems entitled to extra- ordinary favor because It regards them as charitable. It has been strenuously contended for the heirs at law that neither of the purposes de- clared by the testator Is charitable within the intent and purview of St. 48 Eliz. c. 4, which all admit to be the principal test and evidence of what are in law charitable uses. It be- comes necessary therefore to consider the spirit in which that statute has been con- strued and applied by the courts. 404 TRUST— PUBLIC OR CHARITABLE. The preamble of the statute mentions three classes of charitable gifts, namely, First: For the relief and assistance of the poor and needy, specifying only "sick and maimed sol- diers and mariners," "education and prefer- ment of orphans," "marriages of poor maids," "supportation, aid and help of young trades- men, handicraftsmen and persons decayed," "relief or redemption of prisoners and cap- tives," and assistance of poor inhabitants in paying taxes, either for civil or military ob- jects. Second: For the promoting of educa- tion, of which the only kinds specified in the statute (beyond the "education and prefer- ment of orphans," which seems more appro- priately to fall within the first class) are those "for maintenance of schools of learning, free schools, and scholars of universities." Third: For the repair and maintenance of public buildings and works, under which are enu- merated "repair of ports, havens," and "sea- banks," for promoting commerce and navlgar tion and protecting the land against the en- croachments of the sea; of "bridges," "cause- ways" and "highways," by which the people may pass from one part of the country to an- other; of "churches," in which religion may be publicly taught; and of "houses of correc- tion." It is well settled that any purpose is char- itable in the legal sense of the word, which is within the principle and reason of this stat- ute, although not expressly named in it; and many objects have been upheld as charities, which the statute neither mentions nor dis- tinctly refers to. Thus a gift "to the poor" generally, or to the poor of a particular town, parish, age, sex, race, or condition, or to poor emigrants, though not falling within any of the descriptions of poor in the statute, is a good charitable gift. Saltonstall v. Sanders, 11 Allen, 455-461, and cases cited; Magill v. Brown, Brightly, N. P. 405, 406; Barclay v. Maskelyne, 4 Jur. (N. S.) 1294; Chambers v. St. Louis, 29 Mo. 543. So gifts for the promo- tion of science, learning and useful knowl- edge, though by different means and in differ- ent ways from those enumerated under the second class; and gifts for bringing water in- to a town, for building a town-house, or other- wise improving a town or city, though not al- luded to in the third class; have been held to be charitable. American Academy v. Har- vard College, 12 Gray, 594; Drury v. Natick, 10 Allen, 177-182, and authorities cited. By modem decisions in England, gifts towards payment of the national, debt, or "to the queen's chancellor of the exchequer for the time being, to be applied for the benefit and advantage of Great Britain," are legal chari- ties. Tudor, Char. Trusts (2d Ed.) 14, 15, and cases cited. Sergeant Maynard, long before, gave an opinion that a bequest "to the public use of the country of New England" was a good disposition to a charitable use. 1 Hutch. Hist. Mass. (2d Bd.) 101, note. And it may be mentioned as evidence of the use of the word "charitable" by the founders of Massa- chusetts, that it was applied by the Massa- chusetts Company in 1628, before they crossed the ocean, to "the common stock" to be "raised from such as bear good affection to the plantation and the propagation thereof, and the same to be employed only in defray- ment of public charges, as maintenance of ministers, transportation of poor families, building of churches and fortifications, and all other public and necessary occasions of the plantation." 1 Mass. Col. Rec. 68. No kind of charitable tnists finds less sup- port in the words of St. 43 Eliz. than the large class of pious and religious uses, to which the statute contains no more distinct reference than in the words "repair of churches." Such uses had indeed been previously recognized as charitable, and entitled to peculiar favor, by many acts of parliament, as well as in the courts of justice. St. 13 Edw. I. e. 41; 17 Edw. II. c. 2; 23 Hen. VIII. c. 10; 1 Edw. VI. c. 14; Anon., And. 43, pi. 108; Pitts v. James, Hob. 123; Cheney's Case, Co. Litt. 342; Gibbons v. Maityard, Poph. 6, Moore, 594; Coke's note to Porter's Case, 1 Coke, 26a; Bruerton's Case, 6 Coke, lb, 2a; Barry v. Ley, Dwight, Char. Cas. 92. In the latest of those acts, the "erecting of grammar schools for the education of youth in virtue and godliness, the further augmenting of the universities, and better provision for the poor and needy," were classed with charities for the mainte- nance of preachers, and called "good and god- ly uses;" and grammar schools were consid- ered in those times an effectual means of for- warding the progress of the Reformation. St. 1 Edw. VI. c. 14, §§ 1, 8, 9; Attorney General V. Downing, Wilm. 15; Boyle, Char. 7, 8> Sir Francis Moore, who drew St. 43 Eliz., in- deed says that a gift to maintain a chaplain or minister to celebrate divine service could not be the subject of a commission under the statute; but "was of purpose omitted in the penning of the act," lest, In the changes of opinion in matters of religion, such gifts might be confiscated in a succeeding reign as superstitious. Yet he also says that such a gift might be enforced by "the chancellor by his chancery authority;" and cites a case in which it was so decreed. Duke, Char. Uses (Bridgman's Ed.) 125, 154. And from very soon after the passage of the statute, gifts for the support of a minister, the preaching of an annual sermon, or other uses connected with public worship and the advancement of religion, have been constantly upheld and car- ried out as charities in the English courts of chancery. Anon., Gary, 39; Nash, Char.; Dwight, Char. Cas. 114; Pember v. Inhabit- ants of Knighton, Heme, Char. Uses, 101, Toth. (2d Ed.) 34; Duke, Char. Uses, 354, 356, 381, 570, 614; Boyle, Char. 39-41; Tu- dor, Char. Trasts, 10, 11. So in this common- wealth, trusts for the support of public wor- ship and religious Instruction, or the spread- ing of religion at home or abroad, have al- ways been deemed charitable uses. 4 Dane, Abr. 237; Bartlet V. King, 12 Mass. 536; Go- TRUST— PUBLIC OR CHARITABLE. 405 Ing V. Emery, 16 Pick. 107; Sohler v. St. Paul's Church, 12 Mete. (Mass.) 250; Brown V. Kelsey, 2 Cush. 243; Earle v. Wood, 8 Cush. 445. It Is not necessary in this connec- tion to speculate whether the admission of pious uses Into the ranlc of legal charities in modern times is to be attributed to the influ- ence of the civil law; to their having been mentioned in the earlier English statutes; to a more liberal interpretation, after religion had t)ecome settled in England, of the words "repair of churches," or, possibly, of the clauses relating to gifts for the benefit of ed- ucation, in St. 43 Bliz. ; or to the support giv- en by the court of chancery to public charita- ble trusts, independently of any statute. It is sufficient for our present purpose to observe that pious and religious uses are clearly not within the strict words of the statute, and can only be brought within its purview by the largest extension of its spirit. The civil law, from which the English law of charities was manifestly derived, consid- ered wills made for good and pious uses as privileged testaments, which were not, like other wills, void for uncertainty in the ob- jects, and which must be carried into effect even if their conditions could not be exactly observed; and included among such uses (which it declared to be in their nature per- petual) bequests for the poor, orphans, wid- ows, strangers, prisoners, the redemption of captives, the maintenance of clergymen, the benefit of churches, hospitals, schools and col- leges, the repairing of city walls and bridges, the erection of public buildings, or other or- nament or improvement of a city. Poth. Pand. lib. 30-32, Nos. 57-62; Code, lib. 1, tit. 2, cc. 15, 19; Id., tit. 3, cc. 24, 28, 42, 46, 49, 57; Godol. Leg. pt. 1, c. 5, § 4; 2 Kent, Comm. (6th Ed.) 257; 2 Story, Eq. Jur. §§ 1137-1141; McDonough v. Murdoch, 15 How. 405, 410, 414. Charities are not confined at the present day to those which were permitted by law in Eng- land in the reign of Elizabeth. A gift for the advancement of religion or other charitable purpose in a manner permitted by existing laws is not the less valid by reason of having such an object as would not have been legal at the time of the passage of the statute of charitable uses. For example, charitable trusts for dissenters from the established church have been uniformly upheld in Eng- land since the toleration act of 1 Wm. & M. c. 18, removed the legal disabilities under which such sects previously labored. Attor- ney General v. Hickman, 2 Eq. Cas. Abr. 193, W. Kel. 34; Loyd v. Spillet, 3 P. Wms. 344, 2 Atk. 148; Attorney General v. Cock, 2 Ves. Sr. 273. And in this country since the Revo- lution no distinction has been made between charitable gifts for the benefit of different re- ligious sects. Gifts for purposes prohibited by or opposed to the existing laws cannot be upheld as char- itable, even if for objects which would othei-- wlse be deemed such. The bounty must, in the words of Sir Francis Moore, be "accord- ing to the laws, not against the law," and "not given to do some act against the law." Duke, Char. Uses, 126, 169. So Mr. Dane defines, as undoubted charities, "such as are calculated to relieve the poor, and to promote such education and employment as the laws of the land recognize as useful." 4 Dane, Abr. 237. Upon this principle, the English courts have refused to sustain gifts for print- ing and publishing a book inculcating the absolute and inalienable supremacy of the pope in ecclesiastical matters; or for the sup- port of the Roman Catholic or the Jewish religion, before such gifts were countenanced by act of parliament. De Themmines v. De Bonneval, 5 Russ. 288; Tudor, Char. Trusts, 21-25, and cases cited. And a bequest "to- wards the political restoration of the Jews to Jerusalem and to their own land," has been held void, as tending to create a politi- cal revolution in a friendly country. Haber- shon v. Vardon, 4 De Gex & S. 467. In a free republic, it is the right of every citizen to strive in a peaceable manner by vote, speech or writing, to cause the laws, or even the constitution, under which he lives, to be re- formed or altered by the legislature or the people. But it is the duty of the judicial de- partment to expound and administer the laws as they exist. And trusts whose expressed purpose is to bring about changes in the laws or the political institutions of the country are not charitable in such a sense as to be entitled to peculiar favor, protection and per- petuation from the ministers of those laws which they are designed to modify or sub- vert. A precise and complete definition of a legal charity , is hardly to be found in the books. The one most commonly used in modern cases, originating in the judgment of Sir William Grant, confirmed by that of Lord Eldon, in Morice v. Bishop of Durham, 9 Ves. 405, 10 Ves. 541— that those purposes are considered charitable which are enumer- ated in St. 43-Eliz. or which by analogies are deemed within its spirit and intendment —leaves something to be desired in point of certainty, and suggests no principle. Mr. Bin- ney, in his great argument in the Girard Will Case, 41, defined a charitable or pious gift to be "whatever is given for the love of God, or for the love of your neighbor, in the cath- olic and universal sense — given from these motives, and to these ends— free from the stain or taint of every consideration that is personal, private or selfish." And this defi- nition has been approved by the supreme court of Pennsylvania. Price v. Maxwell, 28 Pa. St. 35. A more concise and practical rule is that of Lord Camden, adopted by Chancellor Kent, by Lord Lyndhurst, and by the supreme court of the United States— "A gift to a general public use, which extends to the poor as weU as the rich." Jones v. Williams, Amb. 652; Coggeshall v. Pelton, 7 Johns. Ch. 294; Mitford v. Reynolds, 1 Phil. 106 TRUST— PUBLIC OR CHARITABLE. 191, 192; Perln v. Carey, 24 How. 506. A charity, In the legal sense, may be more fully defined as a gift, to be applied consistently with existing laws, for the benefit of an in- definite number of persons, either by bring- ing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government. It is immaterial whether the purpose is called charitable in the gift itself, if it is so described as to show that it is charitable in its nature. If the words of a charitable bequest are ambiguous or contradictory, they are to be so construed as to support the charity. If possible. It is an established maxim of in- terpretation, that the court is bound to carry the will into effect, if it can see a general intention consistent with the rules of law, even if the particular mode or manner pointed out by the testator is illegal. Bartlet v. King, 12 Mass. 543; Inglis v. Sailor's Snug Harbor, 3 Pet. 117, 118. If the testator uses a word which has two meanings, one of which will effect and the other defeat his object, the first is to be adopted. Saltonstall v. San- ders, 11 Allen, 455. When a charitable intent appears on the face of the will, but the terms used are broad enough to aUow of the fund being applied either in a lawful or an unlaw- ful manner, the gift will be supported, and its application restrained within the bounds of the law. The most frequent illustrations of this In the English courts have arisen under St. 9 Geo. II. c. 36 (commonly called the "Statute of Mortmain"), prohibiting de- vises of land, or bequests of money to be laid out in land, to charitable uses. In the leading case. Lord Hardwicke held that a direction to executors to "settle and secure, by purchase of lands of inheritance, or other- wise, as they shall be advised, out of my per- sonal estate," two annuities to be paid yearly forever for charitable objects, was valid, be- cause it left the option to the executor to make the investment in personal property, which was not prohibited by the statute; and said, "This bequest is not void, and there is no authority to construe it to be void. If by law it can possibly be made good," or (according to another and perhaps more ac- curate report) "no authority to construe It to be void by law, if It can possibly be made good." Sorresby v. Hollins, 9 Mod. 221, 1 Coll. Jurid. 439. The doctrine of that case has ever since been recognized as sound law. Attorney General v. Whitchurch, 3 Ves. 144; Curtis V. Hutton, 14 Ves. 539; Dent v. All- croft, 30 Beav. 340; Mayor, etc., of Faver- sham V. Ryder, 5 De Gex, M. & G. 353; Ed- wards V. Hall, 11 Hare. 12, 6 De Gex, M. & G. 89. In a like spirit the house of lords recently decided that a bequest to erect build- ings for charitable purposes If other lands should be given was valid, and could not be held to be Impliedly prohibited by St. » Geo. II. Philpott V. St. George's Hospital 6 H. L. Cas. 338. The rule stated in Attorney Gen- eral V. Williams, 2 Cox, Oh. 388, and Tatham V. Drummond, 11 L. T. (N. S.) 325, upon which the heirs at law rely, that "the court will not alter its conception of the purposes of a testator, merely because those intentions happen to fall within the prohibition of the statute of mortmain," shows that no forced construction of the testator's language Is to be adopted to avoid illegality, but does not affect the principle that a bequest which ac- cording to the fair meaning of the words may Include a legal as well as an illegal applica- tion is to be held valid. In the light of these general principles, we come to the consideration of the language of the different bequests In this will. II. The first bequest which Is drawn In ques- tion Is that contained in the fourth article of the will, by which the sum of ten thousand dollars Is given in trust to be used and ex- pended at the discretion of the trustees, "in such sums, at such times and such places as they deem best, for the preparation and cir- culation of books, newspapers, the delivery of speeches, lectures and such other means as In their judgment will create a public sen- timent that will put an end to the negro slavery in this country;" and the testator expresses a desire that they may become a permanent organization, and a hope "that they will receive the services and sympathy, the donations and bequests, of the friends of the slave." Among the charitable objects specially des- ignated in St. 43 Eliz. Is the "relief or re- demption of prisoners and captives." And this was not a peculiarity of the law of England or of that age. The civil law re- garded the redemption of captives as the high- est of all pious uses— in the words of Jus- tinian, causa pilssima — ^and not only declared that no heir, trustee or legatee should in- fringe or unjustly defeat the pious Inten- tions of the testator by asserting that a leg- acy or trust for the redemption of captives was uncertain, and provided for the appoint- ment of a trustee when none was named in the will, and for Informing him of the be- quest, but even authorized churches to alien- ate their sacred vessel and vestments for this one purpose, upon the ground that It was reasonable that the souls or lives of men should be preferred to any vessels or vest- ments whatsoever — "Quoniam non absurdum est animas hominum quibuscunque vasis vel vestimentis preferrl." Code, lib. 1, tit. 2, c. 22; Id., tit. 3, cc. 28, 49; Id., lib. 8, tit. 54, c. 36; Nov. 7, c. 8; Id., p. 115, c. 3; Id., p. 120, c. 10; Id., p. 131, c. 11; Godol. Leg. pt. 1, c. 5, § 4. The captives principally contemplated in St. 43 Eliz. were doubtless Englishmen taken and held as slaves in Turkey and Barbary. And the relief of our own citizens from such captivity was always deemed charitable in TRUST— PUBLIC OR CHARITABLE. 407 Massachusetts, an Illustration of which is found in the records of the governor and council in 1693, by whom a petition of the relations of two inhabitants of the province, "some time since taken by a Salley man of war, and now under '^rkish captivity and slavery," for permission "to ask and receive the charity and public contribution of well disposed persons for redeeming them out of their miserable suffering and slavery," was granted; "the money so collected to be em- ployed for the end aforesaid, unless the said persons happen to die before, make their es- cape, or be in any other way redeemed; then the money so gathered to be improved for the redemption of some others of this prov- ince, that are or may be in like circumstances, as the governor and council shall direct." Council Rec. 1693, fol. 323. But there is no more reason for confining the words of the statute of Elizabeth to such captives, than for excluding from the class of religious char- ities gifts for preaching the gospel to the heathen, which have uniformly been sustained as charitable, here and in England. Boyle, Char. 41; Bartlet v. King, 12 Mass. 536. Indeed It appears by Sir Francis Moore's reading upon the statute, that even in his time the word "captives" might include cap- tive enemies. Duke, Char. Uses, 158. It was argued that the slave trade was fos- tered and rewarded by the English govern- ment in the reign of Elizabeth, and there- fore gifts for the relief of negro slaves could not be deemed within the purview of the statute of charitable uses. The fact Is un- doubted; but the conclusion does not follow. The permission of slavery by law does not prevent emancipation from being charitable. A commission of manumission, granted by Queen Elizabeth, twenty-seven years before the statute, recites that In the beginning God created all men free by nature, and after- wards the law of nations placed some under the yoke of slavery, and that the iqueen be- lieved it would be pious and acceptable to God and according to Christian charity — "pium fore credimus et Deo acceptabile Christianseque charitati consentaneum"— to wholly enfranchise the villeins of the crown on certain royal manors. 20 Howell, St. Tr. 1872. See, also. Bar. Ob. (5th Ed.) 305, 308. The spirit of the Roman law upon this point is manifested by an edict of Constantine, which speaks of those who with a religious sentiment In the bosom of the church grant their slaves that liberty which is their due —Qui religiosa mente in ecclesise gremio ser- vls suis meritam concesserint libertatem." Code, lib. 1, tit. 13, c. 2. That the words of the statute of charitable uses may be ex- tended to negro slaves of English masters is clearly shown by the decision of Lord Cotten- ham, when master of the rolls, applying for the benefit of negroes in the British colonies In the West Indies the accumulations of a bequest made In 1670 "to redeem poor slaves." Attorney General v. Gibson, 2 Beav. 317, note; Id., cited Craig & P. 226. In deal- ing with such a question, great regard is to be had to the favor which the law gives to liberty, so eloquently expressed by Chief Jus- tice Portescue: "Crudelis enim necessario judlcabitur lex, quae servitutem augmentat et minult libertatem. Nam pro ea natura sem- per Implorat humana. Quia ab homine et pro vltio Introducta est servitus. Sed liber- tas a Deo hominis est indita naturae. Quare ipsa ab homine sublata semper redire gllscit, ut facit omne quod libertati natural! pri- vatur. Quo ipse et crudelis judicandus est, qui libertati non favet. Hsec considerantia Anglise jui^a in omni casu libertati dant fa- vorem." Fortes. De Laud. c. 42. But the question of the lawfulness of this gift, if falling within the class of charitable usee, depends not upon the laws and the pub- lic policy of England at the time of the pas- sage of the statute, but upon our own at the time of the death of the testator. It was se- riously argued that, before the recent amend- ment of the constitution of the United States, "a trust to create a sentiment to put an end to negro slavery, would, having regard to the constitution and laws under which we live, be against public policy and thus be void;" but the court is unable to see any foundation for this position in the constitution and laws, either of the United States or of this com- monwealth. The law of Massachusetts has always been peculiarly favorable to freedom, as may be shown by a brief outline of its history. The "rights, liberties and privileges," established by the general court of the colony in 1641, to be "impartially and inviolably enjoyed and observed throughout our jurisdiction forev- er," declared: "There shall never be any bond slavery, villenage or captivity amongst us, unless it be lawful captives taken in just wars, and such strangers as willingly sell themselves or are sold to us. And these shall have all the liberties and Christian usages which the law of God established in Israel concerning such persons doth morally require. This exempts none from servitude who shall be judged thereto by authority." The last proviso evidently referred to pun- ishment for crime. Body of Liberties, art. 91. This article, leaving out the word "strangers" in the clause as to slaves acquired by sale, was included in each revision of the laws of the colony. Mass. Col. Laws (Ed. 1660) 5; Id. (Ed. 1672) 10; 4. Mass. Col. Rec. pt. 2, p. 467. It Is worthy of observation, that the tenure upon which the Massachusetts Company held their charter, as declared in the charter itself, was as of the manor of East Greenwich in the county of Kent; that no one was ever born a villein in Kent (Y. B. 30 Edw. I, p. 168 ; Pitzh. Abr. "Villenage," 46; 3 Seld. Works, 1876); and that the Body of Liberties contained ar- ticles upon each of the principal points dis- tinctive of the Kentish tenure of gavelkind — freedom from escheats on attainder and ex- ecution for felony, the power to devise, the 408 TKUST— rUBLIC OR CHARITABLE. age of alienation, and descent to all the sons | together— adopting some and modifying oth- ers. Body of Libei-tles, arts. 10, 11, 53, 81; 2 Bl. Comm. 84. In the laws of Europe, at the time of the foundation of the colony, descent was nam- ed first among the sources of slavery. The common law, following the civil law, repeat- ed "Servi aut nascuntur aut fiunt," and dif- fered only in tracing it through the father, instead of the mother; and each system rec- ognized that a man might become a slave by capture in war, or by his own consent or con- fession in some form. Just. Inst. lib. 1, tit. 3; Bract 4b; Fleta, lib. 1, c. 3; Eedes v. Hol- badge. Act. Can. 393; Swinb. Wills, pt. 2, § 7; Co. Litt 117b. And such was then the es- tablished law of nations. Gro. De Jure B. lib. 2, e. 5, §§ 27, 29; Id. lib. 3, c 7. In parts af Enghind, hereditary villenage would seem to have still existed in fact; and it was allowed by law until since the American Revolution. Pigg V. Daley, Noy, 27; Co. Litt. 116-140; 2 Inst. 28, 45; 2 Rolle, Abr. 732; Smith v. Brown, 2 Salk. 666, Holt, 495; Smith v. Gould, 2 Salk. 667, 2 Ld. Raym. 1275; Treble- cock's Case, 1 Atk. 633; The King v. Ditton, 4 Doug. 302. Lord Bacon, in explaining the maxim, "Jura sanguinis nulla jure clvlli dl- rimi possunt," with a coolness which shows that in his day and country the Illustration was neither unfamiliar nor shocking, says, "If a villein be attainted, yet the lord shall have the issue of his villein born before or after his attainder; for the lord hath them jure naturte but as the increase of a flock." Bac. Max. reg. 11. The Massachusetts Body of Liberties, as Governor Winthrop tells us, was composed by Nathaniel Ward, who had been "formerly a student and practiser in the course of the common law." 2 Winthrop's Hist. New Eng- land, 55. In view of the other laws of the time, the omission, in enumerating the legal sources of slavery, of birth, the first men- tioned in those laws, is significant. No in- stance is known In which the lawfulness of hereditary slavery In Massachusetts under the charter of the colony or the province was affirmed by legislative or judicial authority; and it has been denied in a series of judg- ments of this court, beginning in the last century. In each of which It was essential to the determination of the rights of the parties. Littleton v. Tuttle, 4 Mass. 128, note; Lanes- borough V. Westfield, 16 Mass. 74; Edgax- town V. Tisbury, 10 Cush. 408. The case of Perkins v. Emerson, 2 Dane, Abr. 412, did not touch this question; but simply deter- mined that a person received into a house as a slave of the owner was not received "as an inmate, boarder or tenant," so that notice of the place whence such person last came must be given to the selectmen under Prov. St. 10 Geo. II.; Anc. Chart. 508. No doubt many children of slaves were in fact held as slaves here, especially after the Province Charter, during the period of which all acts of the general court were required to he transmitted to England for approval. Earlier ordinances which had not been so approved were hardly recognized by the English gov- ernment as of any force. The policy of Eng- land restrained the colonists from abolishing the African slave trade, and the number of slaves (which had been very small under the comparatively Independent government of the colony) was much increased. The prac- tice of a whole people does not always con- form to its laws. Thousands of negroes were held as slaves in England and commonly sold In public at the very time when Lord Mans- field and other judges decided such holding to be unlawful. Sommersett's Case, 20 How- ell, St. Tr. 72, 79, Loftt, 17; Quincy, 97, note; The Slave Grace, 2 Hagg. Adm. 105, 106. While negro slavery existed In Massachu- setts, It was In a comparatively mild form. The marriages of slaves were protected by the legislature and the courts; according to the opinion of Hutchinson and of Dane, slaves might hold property; they were ad- mitted as witnesses, even on capital trials of white persons, and on suits of other slaves for freedom; they might sue their masters for wounding or immoderately beating them; and indeed hardly differed from apprentices or other servants except in being bound for life. See authorities and records cited in Quincy, 30, 31. note; 2 Dane, Abr. 313. The annual tax acts show that before the Decla- ration of Independence they were usually taxed as property, always afterwards as per- sons. The general court In September 1776 forbade the sale of two negroes taken as prize of war on the high seas and brought into this state, and resolved that any negroes so taken and brought in should not be allow- ed to be sold, but should be treated like oth- er prisoners. Res. Sept. 1776, c. 83. It was In Massachusetts, by the first article of the declaration of rights prefixed to the constitution adopted In 1780, as immediately afterwards interpreted by this court, that the fundamental axioms of the Declaration of Independence— "that all men are created equal; that they are endowed by their Crea- tor with certain Inalienable rights; that among these are life, liberty, and the pur- suit of happiness" — first took at once the form and the force of express law; slavery was thus wholly abolished in Massachusetts; and it has never existed here since, except so far as the constitution and laws of the state were held to be prevented by the constitution and laws of the United States from operating up- on fugitive slaves. Caldwell v. Jennison, Rec. 1781, fol. 79, 80; Jennlson's Petition, Jour. H. R. June 18, 1782, fol. 89; Com. v. Jennison, Rec. 1783, fol. 85; Parsons, C. J., In Winchendon v. Hatfield, 4 Mass. 128; 4 Mass. Hist. Coll. 203, 204; Com. v. Aves, 18 Pick. 208, 210, 215, 217; 2 Kent, Comm. (6th Ed.) 252; Betty v. Horton, 5 Leigh, 623. TRUST— PUBLIC OR CHARITABLE. 409 The doctrine of our law, upon this subject, as stated by Chief Justice Shaw in deliver- ing the judgment of the court in Com. v. Aves, just cited, is that slavery is a relation founded in force, contrary to natural right and the principles of justice, humanity and sound policy; and could exist only by the effect of positive law, as manifested either by direct legislation or settled usage. The same principle has been . recognized by Chief Justice Marshal and Mr. Justice Story, speaking for the supreme court of the United States. The Antelope, 10 Wheat. 120, 121; Prigg V. Pennsylvania, 16 Pet. 611. The constitution of the United States uni- formly speaks of those held in slavery, not as property, but as persons; and never con- tained anything inconsistent with their peace- able and voluntary emancipation. As be- tween master and slave, it would require the most explicit prohibition by law to restrain the right of manumission. M'Cutchen v. Marshall, 8 Pet. 238. We cannot take judi- cial notice of the local laws of other states of the Union except so far as they are in proof. Knapp V. Abell, 10 Allen, 488. But it appears by cases cited at the bar that bequests of manumission were formerly favored in Vir- ginia; and that it was more recently decided in Mississippi that a trust created by will for paying the expenses of transporting the tes- tator's slaves to Africa and maintaining them in freedom there was lawful. Charles v. Hunnicutt, 5 Call, 311; Wade v. American Colonization Soc, 7 Smedes & M. 663. A state of slavery, in which manumission was wholly prohibited, has never been known among civilized nations. Even when slavery prevailed throughout the world, the same common law of nations, jus gentium, which justified its existence, recognized the right of manumission as a necessary consequence. Just. Inst. lib. 1, tit. 5. We fully concur with the learned counsel for the hell's at law that if this trust could not be executed according to the intention of the testator without tending to excite serv- ile insurrections in other states of the Union, it would have been unlawful; and that a trust which looked solely to political agitation and to attempts to alter existing laws could not be recognized by this court as charitable. But such does not appear to us to be the necessary or the reasonable in- terpretation of this bequest. The manner stated of putting an end to slavery is not by legislation or political action, but by cre- ating a public sentiment, which rather points to moral influence and voluntary manumis- sion. The means specified are the usual means of public instruction, by books and newspapers, speeches and lectures. Other means are left to the discretion of the trus- tees, but there is nothing to indicate that they are not designed to be of a kindred nature. Giving to the bequest that favorable construction to which all charitable gifts are entitled, the just inference Is that lawful means only are to be selected, and that they are to be used in a lawful manner. It was further objected that "to create a public sentiment" was too vague and indefi- nite an object to be sustained as a charita- ble use. But "a public sentiment" on a moral question is but another name for pub- lic opinion, or a harmony of thought — idem sentire. The only case cited for the heirs at law in support of this objection was Browne V. Yeall, 7 Ves. 50, note, in which Lord Thur- low held void a perpetual trust for the pur- chase and distribution in Great Britain and its dominions of such books as might have a tendency to promote the interests of virtue and religion and the happiness of mankind. But the correctness of that decision was doubted by Sir William Grant and Lord Eldon in Morice v. Bishop of Durham, 9 Ves. 406, 10 Ves. 534, 539; and it is incon- sistent with the more recent authorities, here and in England. The bequest now be- fore us is quite as definite as one "for the increase and improvement of Christian knowledge and promoting religion," and the purchase from time to time of such bibles and other religious books, pamphlets and tracts as the trustees should think fit for that purpose, which was upheld by Lord Eldon in Attorney General v. Stepney, 10 Ves. 22; or "to the cause of Christ, for the benefit and promotion of true evangelical piety and religion." through the agency of trustees, to be by them "appropriated to the cause of religion as above stated, to be dis- tributed in such divisions and to such so- cieties and religious charitable purposes as they may think fit and proper," which was sustained by this court in Going v. Emery, 16 Pick. 107; or "for the promotion of such religious and charitable enterprises as shall be designated by a majority of the pastors composing the Middlesex Union Association," as in Brown v. Kelsey, 2 Cush. 243; or to be distributed, at the discretion of trustees, "in aid of objects and purposes of benevolence or charity, public or private," as in Salton- stall V. Sanders, 11 Allen, 446; or "for the cause of peace," to be expended by an unin- corporated society, whose object, as defined in its constitution, was "to illustrate the in- consistency of war with Christianity, to show its baleful Infiuence on all the great interests of mankind, and to devise means for insuring universal and permanent peace," as in Tappan v. Deblois, 45 Me. 122; or to found "an establishment for the increase and diffusion of knowledge among men;" or "for the benefit and advancement and propaga- tion of education and learning in every part of the world, as far as circumstances will permit;" as in Whicker v. Hume, 7 H. L. Cas. 124, 155, and President of U. S. v. Drummond, there cited. See, also, McDon- ough V. Murdoch, 15 How. 405, 414. The bequest itself manifests its immediate 410 TRUST— PUBLIC OR CHARITABLE, purpose to be to educate the whole people upon the sin of a man's holding his fellow- man in bondage; and its ultimate object, to put an end to negro slavery in the United States; in either aspect, a lawful charity. It is universally admitted that trusts for the promotion of religion and education are charities. Gifts for the instruction of the public in the cure of the diseases of quad- rupeds or birds useful to man, or for the pre- vention of cruelty to animals (either by pub- lishing newspapers on the subject, or by providing establishments where killing them for the market might be attended with as little suffering as possible), have been held charitable in England. London University v. Yarrow, 23 Beav. 159, 1 De Gex & J. 72; Marsh v. Means, 3 Jur. (N. S.) 790; Tatham v. Drummond, 11 L. T. (N. S.) 325. To deliver men from a bondage which the law regards as contrary to natural right, humanity, justice and sound policy, is surely not less charitable than to lessen the suffer- ings of animals. The constitution of Mas- sachusetts, which declares that all men are born free and equal, and have the natural, essential and unalienable rights of enjoying and defending their lives and liberties, of ac- quiring, possessing and protecting property, of seeking and obtaining their safety and happiness; ilso declares that a frequent re- currence to the fundamental principles of the constitution, and a constant adherence to those of piety and justice, are absolutely necessary to preserve the advantages of lib- erty and to maintain a free government; that '"the encouragement of arts and sciences, and all good literature, tends to the honor of God, the advantage of the Christian religion, and the great benefit of this and the other United States of America:" and that "wis- dom and knowledge, as well as virtue, dif- fused generally among the body of the peo- ple, being necessary for the preservation of their rights and liberties, and as these de- pend on spreading the opportunities and ad- vantages of education in the various parts of the country, and among the different or- ders of the people, it shall be the duty of leg- islatures and magistrates, in all future pe- riods of this commonwealth," besides cher- ishing the interests of literature and the sciences, "to countenance and inculcate the principles of humanity and general benevo- lence, public and private charity," "and all social affections and generous sentiments among the people." Declaration of Rights, arts. 1, 18; Const. Mass. c. 5. This bequest directly tends to carry out the principles thus declared in the fundamental law of the commonwealth. And certainly no kind of education could better accord with the re- ligion of Him who came to preach deliver- ance to the captives, and taught that you should love your neighbor as yourself and do unto others as you would that they should do unto you. The authorities already cited show that the peaceable redemption or manumission of slaves in any manner not prohibited by law is a charitable object. It falls Indeed within the spirit, and almost within the letter, of many clauses in the statute of Elizabeth. It would be an anomaly in a system of law, which recognized as charitable uses the re- lief of the poor, the education and prefer- ment of orphans, marriages of poor maids, the assistance of young tradesmen, handi- craftsmen and persons decayed, the relief of prisoners and the redemption of captives, to exclude the deliverance of an indefinite num- ber of human beings from a condition in which they were so poor as not even to own themselves, in which their children could not be educated, in which marriages had no sanc- tion of law or security of duration, in which all their earnings belonged to another, and they were subject, against the law of nature, and without any crime of their own, to such an arbitrary dominion as the modern usages of nations will not countenance over cap- tives taken from the most barbarous enemy. III. The next question arises upon the be- quest in trust for the benefit of fugitive slaves who might from time to time escape from the slaveholding states of the Union. The validity of this bequest must be de- termined according to the law as it stood at the time when the testator died and fi-om which his will took effect. It is no part of the duty of this court to maintain the con- stitutionality, the justice, or the policy of the fugitive slave acts, now happily repeal- ed. But the constitution of the United States, at the time of the testator's death, de- clared that no person held to service or labor in one state should be discharged therefrom by escaping into another. It may safely be assumed that, under such a constitution, a bequest to assist fugitive slaves to escape from those to whom their service was thus recognized to be due could not have been upheld and enforced as a lawful charity. The epithets with which the testator accom- panied this bequest show that he set his own ideas of moral duty above his allegiance to his state or his country; and warrant the conjecture that he would have been well pleased to have the fund applied in a man- ner inconsistent with the constitution and laws of the United States. But he has used no words to limit its use to illegal methods, and has left his trustees untrammelled as to the mode of its application. Whether this bequest is or is not valid, Is to be ascertained from a fair construction of its language, in the light of the maxims of interpretation stated in the earlier part of this opinion, by wliich the court is bound to carry into effect any charitable bequest in which can be seen a general intention consistent with the law, even if the particular mode pointed out is illegal; and there is no author- ity to construe it to be void if It can be ap- plied in a lawful manner consistently with the intention of the testator as manifested ic TRUST— PUBLIC OR CHARITABLE. 411 the words by which It is expressed. One il- lustration of these maxims may be added in this connection. In Isaac v. Gompertz, Amb. (2d Ed.) 228, note, the will contained one bequest for the support and maintenance of a Jews' syna- gogue; and another bequest of an annuity "to the gabas of the- said synagogue," who were found, upon inquiry by a master, to be treasurers of the synagogue, whose office It was to collect and receive the annual sub- scriptions for the support of poor Jews be- longing to the synagogue, and to apply the same to the expenses of supporting the syna- gogue and to the maintenance of such poor Jews. This last bequest was upheld, and re- ferred to a master to report a scheme, al- though the support of the synagogue was ad- judged to be an unlawful use; and thus a bequest manifestly intended for the benefit of persons professing a religion not tolerated by law, and which might, according to its terms, be applied either in an unlawful or a lawful manner, was sustained as charita- ble, and its application confined to the lawful mode. A bequest for the benefit of fugitive slaves Is not necessarily unlawful. The words "re- lief or redemption of prisoners and captives" have always been held in England to include those in prison under condemnation for crime, as well as persons confined for debt; and to support gifts for distributing bread and meat among them annually, or for enabling poor imprisoned debtors to compound with their creditors. Duke, Char. Uses, 131, 156; Attorney General v. Ironmongers' Co., Coop. Prac. Cas. 285, 290; Attorney General v. Painterstainers' Co., 2 Cox, Oh. 51; Attorney General v. Drapers' Co., Tudor, Char. Trusts, 591, 592, 4 Beav. 67; 36th Report of Charity Commissioners to Parliament, pt. 6, pp. 856- 868. It would be hardly consistent with char- ity or justice to favor the relief of those un- dergoing punishment for crimes of their own committing, or imprisonment for not paying debts of their own contracting; and yet pro- hibit a like relief to those who were In equal need, because they had withdrawn them- selves from a service Imposed upon them by local laws without their fault or consent. It was indeed held In Thrupp v. Collett, 26 Beav. 125, that a bequest to be applied to pur- chasing and procuring the discharge of per- sons committed to prison for non-payment of fines under the game laws was not a law- ful charity. But such persons were convict- ed offenders against the law of England, who would by such discharge be wholly released from punishment. A fugitive slave was not a criminal by the laws of this commonwealth or of the United States. To supply sick or destitute fugitive slaves with food and clothing, medicine or shelter, or to extinguish by purchase the claims of those asserting a right to their service and labor, would in no wise have tended to Im- pair the claim of the latter or the operation of the constitution and laws of the United States; and would clearly have been within the terms of this bequest. If, for example, the trustees named in the will had received this fund from the executor without question, and had seen fit to apply it for the benefit of fugitive slaves in such a manner, they could not have been held liable as for a breach of trust. This bequest therefore, as well as the pre- vious one, being capable of being applied ac- cording to its terms in a lawful manner at the time of the testator's death, must, upon the settled principles of construction, be held a valid charity. It is hardly necessary to remark that the direction of the testator that his trustees shall not be accountable to any one is simply void. No testator can obtain for his bequests that support and permanence which the law gives to public charities only, and at the same time deprive the beneficiaries and the public of the safeguards which the law provides for their due and lawful administration. As the trustees named In the will are not a corporation established by law, and these two bequests are unlimited In duration, and by their terms might cover an Illegal as well as a legal appropriation. It is the duty of the court, before ordering the funds to be paid to the trustees, to refer the case to a master to settle a scheme for their application in a lawful manner. Isaac v. Gompertz, Amb. 228, note; Attorney General v. Stepney, 10 Ves. 22; Boyle, Char. lOO, 217. IV. It Is quite clear that the bequest In trust to be expended "to secure the passage of laws granting women, whether married or unmarried, the right to vote, to hold office, to hold, manage and devise property, and all other civil rights enjoyed by men," cannot be sustained as a charity. No precedent has been cited in Its support. This bequest differs from the others In aim- ing directly and exclusively to change the laws; and its object cannot be accomplished without changing the constitution also. Whether such an alteration of the existing laws and frame of government would be wise and desirable is a question upon which we cannot, sitting in a judicial capacity, proper- ly express any opinion. Our duty is limited to expounding the laws as they stand. And those laws do not recognize the purpose of overthrowing or changing them, In whole or in part, as a charitable use. This bequest therefore, not being for a charitable purpose, nor for the benefit of any particular persons, and being unrestricted in point of time, is inoperative and void. For the same reason, the gift to the same object, of one third of the residue of the tes- tator's estate after the death of his daughter Mrs. Eddy and her daughter Mrs. Bacon, Is also invalid, and will go to his heirs at law as a resulting trust. It Is proper to add that the conclusion of the court upon this point, as well as upon tJie 112 TRUST— rUBLIC OR CHARITABLE. gift to create a public sentiment which would put an end to negro slavery in the United States, had the concurrence of the late Mr. Justice Dewey, whose judicial experience and large acquaintance with the law of charitable uses give great weight to his opinion, and whose lamented death, while this case has been under advisement, has deprived us of his assistance in determining the other ques- tions in controversy. V. The validity of the other residuary be- quests and devises depends upon the law of perpetuities as applied to private trusts. The principles of this branch of the law have been so fully considered by the court in recent cases as to require no extended statement. The general rule is that If any estate, legal or equitable, is given by deed or will to any person in the first instance, and then over to another person, or even to a public charity, upon the happening of a contingency which may by possibility not take place within a life or lives in being (treating a child in its mother's womb as in being) and twenty-one years afterwards, the gift over is void, as tending to create a perpetuity by making the estate inalienable; for the title of those tak- ing the previous interests would not be per- fect, and until the happening of the con- tingency it could not be ascertained who were entitled. Brattle Square Church v. Grant, 3 Gray, 142; Odell v. Odell, 10 Allen, 5, 7. If therefore the gift over is limited upon a single event which may or may not happen within the prescribed period, it is void, and cannot be made good by the actual happening of the event within that period. But if the testator distinctly makes his gift over to depend upon what is sometimes call- ed an alternative contingency, or upon either of two contingencies, one of which may be too remote and the other cannot be, its valid- ity depends upon the event; or, in other words, if he gives the estate over on one contingency which must happen, if at all, within the limit of the rule, and that con- tingency does happen, the validity of the dis- tinct gift over in that event will not be af- fected by the consideration that upon a dif- ferent contingency, which might or might not happen within the lawful limit, he makes a disposition of his estate, which would be void for remoteness. The authorities upon this point are conclusive. Longhead v. Phelps, 2 W. Bl. 704; Sugden and Preston, arguendo, in Beard v. Westcott, 5 Barn. & Aid. 809, 813, 814; Minter v. Wraith, 13 Sim. 52; Evers v. Challis, 7 H. L. Cas. 531; Arm- strong V. Armstrong, 14 B. Mon. 338; 1 Jarm. Wills, 244; Lewis, Pei-p. c. 21; 2 Spence, Eq. Jur. 125, 126. By the ninth and tenth articles of the will, the income of one third of the residue of the testator's estate, real and personal, is to be paid to his son James and to his daughter Mrs. Palmer, respectively, during life. Each of these articles contains a distinct direction that, in case such son or daughter shall die leaving no child surviving, the principal of his or her share shall be paid and conveyed to the board of trustees named in the fourth article, to be expended for the intent and pur- pose therein directed. As the first tenant for life in each bequest is living at the death of the testator, the event of such tenant's dying, leaving no child then living, must happen within the period of a life in being, if at all ; and, if it does happen, the gift over to the charity will be valid. Neither James Jack- son nor Mrs. Palmer therefore is entitled to a present equitable estate In fee. But as James, though now unmarried, may marry and have children who survive him, and as Mrs. Palmer's children niny survive her, in either of which cases hall' of the income of the share would by the will go to such chil- dren during their lives and the bequest over to the charity be too remote, the validity and effect of that bequest over cannot be now de- termined. If the contingency upon which it Is valid should hereafter occur, namely, the death of the testator's son or daughter, re- spectively, leaving no children surviving, the whole remainder of the share will then go to the charity established by the fourth ar- ticle, and be paid, after the settlement of a scheme for its lawful application, to the trus- tees therein named. VI. By the thirteenth amendment of the constitution of the United States, adopted since the earlier arguments of this case, it is declared that "neither slavery nor involun- tary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States or any place subject to their jurisdic- tion." The effect of this amendment upon the charitable bequests of Francis Jackson is the remaining question to be determined; and this requires a consideration of the na- ture and proper limits of the doctrine of cy pres. It is contended for the heirs at law, that the power of the English chancellor, when a charitable trust cannot be administered ac- cording to its terms, to execute it so as to carry out the donor's intention as nearly as possible — ey pres— is derived from the royal prerogative or St. 43 Eliz. and is not an ex- ercise of judicial authority; that, whether this power is prerogative or judicial, it can- not, or, if it can, should not, be exercised by this court; and that the doctrine of cy pres, even as administered in the English chan- cery, would not sustain these charitable be- quests since slavery has been abolished. Much confusion of ideas has arisen from the use of the term "cy pres" in the books to describe two distinct powers exercised by the English chancellor in charity cases, the one under the sign manual of the crown, the other under the general jurisdiction in equity; as well as to designate the rule of construc- tion which has sometimes been applied to executory devises or powers of appointment to individuals, in order to avoid the objec- TRUST— PUBLIC OR CHARITABI-B. 1413 tlon of remoteness. It was of this last, and not of any doctrine peculiar to cliarities, that Lord Kenyon said, "The doctrine of cy pres goes to the utmost verge of the law, and we must take care that it does not run wild;" and Lord Eldon, "It is not proper to go one step farther." Brudenell v. Elwes, 1 East, 451, 7 Ves. 390; 1 jarm. Wills, 261-263; Sugd. Powers, c. 9, § 9; Coster v. Lorillard, 14 Wend. 309, 348. The principal, if not the only, cases in which the disposition of a charity is held to be in the crown by sign manual, are of two classes; the first, of bequests to particular uses charitable in their nature, but illegal, as for a form of religion not tolerated by law; and the second, of gifts of property to char- ity generally, without any trust interposed, and In which either no appointment is pro- vided for, or the power of appointment is delegated to persons who die without exer- cising it. It is by the sign manual and in cases of the first class, that the arbitrary dispositions have been made, which were so justly con- demned by Lord Thurlow in Moggridge v. Thackwell, 1 Ves. Jr. 469, and Sir William Grant in Gary v. Abbot, 7 Ves. 494, 495; and which, through want of due discrimination, have brought so much discredit upon the whole doctrine of cy pres. Such was the case of Attorney General v. Baxter, in which a bequest to Mr. Baxter to be distributed by him among sixty pious ejected ministers, (not, as the testator declared, for the sake of their nonconformity, but because he knew many of them to be pious and good men and in great want,) was held to be void, and given under the sign manual to Chelsea College; but the decree was afterwards reversed, upon the ground that this was really a legacy to sixty individuals to be named. 1 Vern. 248; 2 Vern. 105; 1 Bq. Cas. Abr. 96; 7 Ves. 76. Such «Iso was the case of Da Costa v. I>e Pas, in which a gift for establishing a jesuba or assembly for reading the Jewish law was applied to the support of a Christian chapel at a foundling hospital. Amb. 228; 2 Swanst. 489, note; 1 Dickens, 258; 7 Ves. 76, 81. This power of disposal by the sign manual of the crown in direct opposition to the de- clared intention of the testator, whether it is to be deemed to have belonged to the king as head of the church as well as of the state, "intrusted and empowered to see that noth- ing be done to the disherison of the crown or the propagation of a false religion" (Rex v. Portington, 1 Salk. 162, 1 Eq. Cas. Abr. 96); or to have been derived from the power exer- cised by the Roman emperor, who was sov- ereign legislator as well as supreme interpre- ter of the laws (Dig. 33, 2, 17; 50, 8, 4; Code, lib. 1, tit. 2, c. 19; Id., tit. 14, c. 12); is clear- ly a prerogative and not a judicial power, and could not be exercised by this court; and it is difficult to see how It could be held to ex- ist at all in a republic, in which charitable bequests have never been forfeited to the use or submitted to the disposition of the gov- ernment, because superstitious or illegal. 4 Dane, Abr. 239; Gass v. Wilhite, 2 Dana, 176; Methodist Church v. Remington, 1 Watts, 226. The second class of bequests which are dis- posed of by the king's sign manual is of gifts to charity generally, with no uses specified, no trust interposed, and either no provision made for an appointment, or the power of appointment delegated to particular persons who die without exercising it. Boyle, Char. 238, 239; Attorney General v. Syderfen, 1 Vern. 224, 1 Eq. Cas. Abr. 96; Attorney Gen- eral V. Fletcher, 5 Law J. Ch. (N. S.) 75. This too is not a judicial power of expound- ing and carrying out the testator's Intention, but a prerogative power of ordaining what the testator has failed to express. No In- stance Is reported, or has been discovered in the thorough investigations of the subject, of an exercise of this power in England be- fore the reign of Charles n. Moggridge v. Thackwell, 7 Ves. 69-81; Dwight's Argument in the Rose Will Case, 272. It has never, so far as we know, been introduced into the practice of any court In this country; and, If It exists anywhere here. It is in the legisla- ture of the commonwealth as succeeding to the powers of the king as parens patriae. 4 Kent, Comm. 508, note; Fontain v. Ravenel, 17 How. 369, 384; Moore v. Moore, 4 Dana, 365, 366; Witman v. Lex, 17 Serg. & R. 93; Attorney General v. Jolly, 1 Rich. Eq. 108; Dickson v. Montgomery, 1 Swan, 348; Le. page V. Macnamara, 5 Iowa, 146; Bartlet v. King, 12 Mass. 545; Sohier v. Massachusetts General Hospital, 3 Cush. 496, 497. It cer- tainly cannot be exercised by the judiciary of a state whose constitution declares that "the judicial department shall never exercise the legislative and executive powers, or either of them: to the end it may be a government of laws and not of men." Declaration of Rights, art. 30. The jurisdiction of the court of chancery to superintend the administration and decree the performance of gifts to trustees for ehaii- table uses of a kind stated in the gift stands upon different grounds; and is part of its equity jurisdiction over trusts, which is shown by abundant evidence to have existed before the passage of the statute of charita- ble uses. Sir Francis Moore records a case in which a man sold land to another upon confidence to perform a charitable use, which the grantor declared by his last will that the grantee should perform; "the bargain was never enrolled, and yet the lord chancellor decreed that the heir should sell the land to be disposed according to the limitation of the use; and this decree was made the 24th of Queen Elizabeth, before the statute of chari- table uses, and this decree was made upon ordinary and judicial equity In chancery." Symon's Case, Duke, Char. Uses, 163. About the same time the court of chancery enter- tained a suit between two parties, each claim- iU TRUST— PUBLIC OR CHAUITABLB. ing to be trustee, to determine how bequests lor the weekly relief of the poor of certain towns, for the yearly preferment of poor chil- dren to be apprentices, and for the curing of divers diseased people lying by the high- way's side, should be "employed and bestow- ed according to the said will." Reade v. Silles (27 Eliz.) Act. Can. 559. A decree in 16 Ellz., confirming a report of the master of the rolls and others to whom a suit for en- forcing a charitable trust founded by will had been referred, is cited in 1 Spence, Eq. Jur. 588, note. For years before St. 43 Eliz., or the similar act of 39 Eliz., suits in equity by some In behalf of all of the inhabitants of a parish were maintained to establish and enforce bequests for schools, alms or other charitable purposes for the benefit of the par- ish, which would have been too indefinite to be enforced as private trusts. Parker v. Browne (12 Eliz.) 1 Cal. Pro. Ch. 81, 1 Mylne & K. 389, 390; D wight, Char. Cas. 33, 34; in which the devise was in trust to a corpora- tion Incapable at law of taking. Parrot v. I'awlet (21 Eliz.) Gary, 47; Elmer v. Scot (24 Eliz.) Cho. Cas. Ch. 155; Matthew v. Marow (32-34 Eliz.); and Hensman v. Hackney (38 Eliz.) D wight. Char. Cas. 65, 77; in which the decrees approved schemes settled by masters in chancery. Many other examples are col- lected in the able and learned arguments, as separately printed in full, of Mr. Binney in the Case of Girard's Will, and of Mr. Dwight in the Rose Will Case. And the existence of such a jurisdiction anterior to and independ- ent of the statute Is now generally admitted. Vidal V. Girard, 2 How. 194-196, and cases cited; Perin v. Carey, 24 How. 501; MaglU V. Brown, Brightly, N. P. 346; 2 Kent, Comm. 286-288, and note; Burbank v. Whitney, 24 Pick. 152, 153; Preachers' Aid Soc. v. Rich, 45 Me. 559; Derby v. Derby, 4 R. I. 436; Urmey v. Wooden, 1 Ohio St. 160; Chambers V. St. Louis, 29 Mo. 543; 1 Spence, Bq. Jur. 588; Tudor, Char. Trusts, 102, 103. The theory that St. 43 Eliz. enlarged the discretion of the chancellor to depart from the expressed intention of the founder of a charity is refuted by the words of the stat- ute itself. After reciting that many gifts and appointments for the charitable purposes therein named "have not been employed ac- cording to the charitable Intent of the givers and founders thereof, by reason of frauds, breaches of trust, and negligence in those that should pay, deliver and employ the same;" It then, for redress and remedy there- of, authorizes the lord chancellor or lord keeper to make such decrees that the prop- erty "may be duly and faithfully employed to and for such of the charitable uses and In- tents before rehearsed respectively for which they were given, limited, assigned or appoint- ed by the donors and founders thereof;" which decrees, "not being contrary or repug- nant to the orders, statutes or decrees of the donors or founders," shall "stand firm and good, according to the tenor and purpose thereof, and shall be executed accordingly," until altered by the lord chancellor or lord keeper upon complaint by any party aggriev- ed; and upon such complaint the chancellor or keeper may "by such course as to their wisdoms shall seem meetest, the circumstan- ces of the case considered, proceed to the ex- amination, hearing and determining thereof; and upon hearing thereof shall and may an- nul, diminish, alter or enlarge" the decrees of the commissioners as "shall be thought to stand with equity and good conscience, ac- cording to the true intent and meaning of the donors and founders thereof." These last qualifications are specially marked by Lord Coke, who was attorney general at the passage of the statute and for some time be- fore and after, and who adds, by way of note to the final clause, "This is the lapis duetitlus, whereby the commissioners and chancellors must institute their course." 2 Inst. 712. See, also, Duke, Char. Uses, 11, 156, 169, 372, 619. In cases of bequests to trustees for char- itable uses, the nature of which is described in the will, the chancellor acts in his equity jurisdiction over trusts; and the prerogative of the king finds its appropriate exercise through his attorney general in bringing the case before the court of chancery for a judi- cial determination. This has been well ex- plained by Lord Eldon. "It is the duty of a court of equity, a main part, originally almost the whole, of its jurisdiction, to ad- minister trusts; to protect not the visible owner, who alone can proceed at law, but the individual equitably, though not legally, en- titled. From this principle has arisen the practice of administering the trust of a pub- lic charity: persons possessed of funds ap- propriated to such purposes are within the general rule; but, no one being entitled to an immediate and peculiar Interest to prefer a complaint, who is to compel the perform- ance of these obligations, and to enforce their responsibility? It is the duty of the king, as parens patriae, to protect property devoted to charitable uses; an4 that duty is executed by the officer who represents the crown for all forensic purposes. On this foundation rests the right of the attorney general In such cases to obtain by informa- tion the interposition of a court of equity." Attorney General v. Brown, 1 Swanst. 291, 1 Wils. 354. To the like effect are the opin- ions of Lord Redesdale in Attorney General V. Mayor, etc., of Dublin, 1 Bligh (N. S.) 347, 348, and Corporation of Ludlow v. Green- house, Id. 48, 62; of Lord Keeper Bridgman in Attorney General v. Newman, 1 Ch. Cas. 158; of Su: Joseph Jekyll In Eyre v. Shafts- bury, 2 P. Wms. 119; and of Lord Hard- wlcke in Attorney General v. Middleton, 2 Ves. Sr. 328; which also state that the juris- diction of the court of chancery over chari- ties was exercised on such Informations be- fore St. 43 Eliz. See, also. Attorney Gen- eral T. Carroll, Act Can. 729; D wight's Ar- TRUST— PUBLIC OR CHARITABLE. 415 gument In the Rose Will Case, 259-268. This duty of maintaining the rights of the public, and of a number of persons too indefinite to vindicate their own, has vested in the commonvrealth, and is exercised here, as in England, through the attorney general. Go- ing V. Emery, 16 Pick. 119; County Attor- ney V. May, 5 Cush. 338-340; Gen. St. c. 14, § 20. It is upon this ground that, in a suit instituted by the trustees of a charity to ob- tain the instructions of the court, the attor- ney general should be made a party defend- ant, as he has been by order of the court in this case. Harvard College v. Society for Promoting Theological Education, 3 Gray, 280; Tudor, Char. Trusts, 161, 162. The power of the king or commonwealth, thus exercised, is simply to present the question to a court of justice, not to control or direct its judicial action. A charity, being a trust in the support and execution of which the whole public is con- cerned, and which is therefore allowed by the law to be perpetual, deserves and often requires the exercise of a larger discretion by the court of chancery than a mere pri- vate trust; for without a large discretionary power, in carrying out the general intent of the donor, to vary the details of administra- tion, and even the mode of application, many charities would fail by change of circumstan- ces and the happening of contingencies which no human foresight could provide against; and the probabilities of such fail- ure would Increase with the lapse of time and the remoteness of the heirs from the original donor who had in a clear and lawful manner manifested his will to divert his es- tate from his heirs for the benefit of public charities. It is accordingly well settled by decisions of the highest authority, that when a gift is made to trustees for a charitable purpose, the general nature of which is pointed out, and which is lawful and valid at the time of the death of the testator, and no intention is expressed to limit it to a particular insti- tution or mode of application, and after- wards, either by change of circumstances the scheme of the testator becomes imprac- ticable, or by change of law becomes illegal, the fund, having once vested in the charity, does not go to the heirs at law as a resulting trust, but is to be applied by the court of chancery, in the exercise of its jurisdiction in equity, as near the testator's particular directions as possible, to carry out his gen- eral charitable intent. In all the cases of charities which have been administered in the English courts of chancery without the aid of the sign manual, the prerogative of the king acting through the chancellor has not been alluded to, except for the purpose of distinguishing it from the power exer- cised by the court in its inherent equitable jurisdiction with the assistance of its mas- ters in chancery. At the time of the settlement of the Mass- achusetts Colony, this power was most free- ly exercised by the court of chancery, either on information by the attorney general, or on proceedings by commission under the statute of charitable uses. Attorney Gen- eral V. Warwick (1615, 1638) Dwight, Char. Cas. 140, 141, West, Ch. 60, 62; Bloomfield V. Stowemarket (1619) Duke, Char. Uses, 644. In the last case, lands had been given before the Reformation to be sold, and the proceeds applied, one half to the making of a highway from the town in which the lands were, one fourth to the repair of a church in that town, and the other fourth to the priest of the church to say prayers for the souls of the donor and others; and Lord Bacon decreed the establishment of the uses for making the highway and repairing the church, and directed the remaining fourth (which could not, by reason of the change in religion, be applied as directed by the donor) to be divided between the poor of the same town, and the poor of the town where the donor inhabited. In the Case of Baliol College, this doctrine was enforced by successive decrees of the greatest English chancellors between the English Revolution and our own, which have been recently confirmed by the unanimous decision of the house of lords. Attorney Gen- eral V. Guise, 2 Vern. 166; Attorney Gen- eral V. Baliol College, 9 Mod. 407; Attorney General v. Glasgow College, 2 Colly. 665, 1 H. L. Cas. 800. The case is of such im- portance and reported at different stages in so many books and at such length, that it may be well to state it. John Snell, an Episcopalian, who made his last will and died in 1679, while the form of religion es- tablished by law in Scotland as well as in England was Episcopal, gave lands in trust to apply the income for the maintenance and education at the university of Oxford of Scotchmen to be designated by the vice chan- cellor of that university and the heads of certain colleges therein, and who should, up- on their admission, give security to enter into holy orders and to be sent into Scotland and there remain. After the Revolution of 1688, Presbyterianism was reestablished in Scotland by act of parliament; and in 1690 an information was filed by the attorney gen- eral, at the relation of the vice chancellor and heads of colleges named In the will, against the testator's heiress at law, suggest- ing a pretence by her that as Episcopacy and Prelacy had been abolished In Scotland, and the Presbyterian form of worship established instead, the testator's Intentions could not be carried into effect, the devise became void, and the property reverted to her. But the lords commissioners of the great seal, by a decree passed in 1692, established the devise against her, ordered an account, and reserv- ed all directions for the establishment of the charity. 2 Vern. 267, note; 2 Colly. 665-670, 1 H. L. Cas. 802-804, 820, 822. In 1693 the cause came on for further directions before 416 TRUST— rUBLIC OR CHARITABLE. '>ord Keeijer Somers, who, acting upon the doctrine that it was within the province of a court of equity to administer the trust up- on the principle of cy pres, ordered the es- tate to be conveyed to the six senior fellows of Baliol College, one of the colleges named in the will, to maintain a certain number of Scotch scholars at that college, and, in con- sideration of the privileges enjoyed by such scholars, to apply the surplus income to its library; and this decree was made subject to such alteration and disposition as the court should from time to time make, upon the ap- plication of any person concerned, for the better and more effectual execution of the trust, as near as could be to the testator's will and Intentions. 2 Vem. 267, note; 2 Colly. 670, 671, 1 H. L. Cas. 804, 805, 824. In 1744 Lord Hardwiclje, in the execution of the directions in the decree of Lord Somers, referred the cause to a master to approve of a scheme "for the better establishment and regulation of the charity, and carrying the same into effect for the future as near to the will and Intention of the testator as the al- teration of circumstances since the making of the will would admit;" and upon his re- port, and against the exceptions of the heads of colleges in Oxford, confirmed a scheme which did not impose any condition of the scholars taking holy orders— thus cari-ying out the general intention of the trust so far as to educate Scotch scholars at Oxford, al- though the testator's ultimate object that they should be educated in the Episcopal form of church government to take part in the established religion in Scotland could not, by reason of the change of law since his death, oe eflfected. 9 Mod. 407; 1 H. L. Cas. 805, 806, 825-827. In 1759 Lord Keeper Henley (afterward Lord Northington) varied the scheme in other particulars, but declined to vary It In this; and further orders were aft- ei-wards made in chancery as the revenues increased. 2 Colly. 672-674, 1 H. L. Cas. 806, 807, 825, 826; 3 Ves. 650, note. Upon a new information filed at the relation of some Scotch Episcopalians, the house of lords In 1848, reversing an order of Vice Chancellor Knight Bruce, held that the charity must continue to be administered according to the earlier decrees. 1 H. L. Cas. 800. In another case. Queen Elizabeth, by let- ters patent, established a hospital for forty lepers, and made the inmates a corporation. After leprosy had become almost extinct in England, and the members of the corporation reduced to three, an information was filed, alleging that the corporation was dissolved, and praying for a new application of the revenues agreeably to the letters patent and the donor's intention, or as near thereto as circumstances would permit and the court should direct. Lord Eldon held that neither the donor's heirs at law nor the crown took the land discharged of the charity; referred the case to a master to report a scheme; and confirmed the report of the master, approv- ing a scheme for the application of the rev- enues to a general infirmary, reserving a preference to all lepers who might offer themselves. Attorney General v. Hicks, Highm. Mortm. 336-354, 3 Brown, Ch. 166, note. Sir John Romilly, M. R., afterwards made a like decision, holding that a gift made in 1687 of land (for which in 1774 other land had been substituted by leave of parliament) in trust out of the income to keep it ready for a hospital and burial place for patients sick of the plague, was a present gift for charitable purposes, and valid, although the plague had not reappeared in England for more than one hundred and eighty years; and, after alluding to a class of cases, cited for the heirs at law in that case, as they have been in this, in which the charitable be- quest could never have taken effect, added, "But who can say, when this deed was exe- cuted or the act passed, that this was not a charitable trust, capable of being perform- ed;" "and if it were ever wholly devoted to charity, those cases do not apply." Attorney (General v. Craven, 21 Beav. 392, 408. The principle that a bequest to trustees for charitable purposes indicated in the will, which are lawful and capable of being car- ried out at the time of the testator's death, will not be allowed to fail and result to the heirs at law upon a change of circumstancas., but will be applied by the court according t« a scheme approved by a master to carry cut the intent of the testator as nearly as pos- sible, has been affirmed and acted on in many other English cases. Attorney Gen- eral V. Pyle, 1 Atk. 435; Attorney General v. Green, 2 Brown, Ch. 492; Attorney General v. Bishop of London, 3 Brown, Ch. 171; Mogg- ridge v. Thackwell, Id. 517, 1 Ves. Jr. 464; Attorney General v. Glyn, 12 Sim. 84; At- torney General v. Lawes, 8 Hare, 32; At- torney General v. Vint, 3 De Gex & S. 705. The dicta of Lord Alvanley, upon which the heirs at law much rely, do not, in the con- nection in which they were uttered, substan- tially differ from the general current of au- thority. Attorney General v. Boultbee, 2 Ves. Jr. 387, 388; Attorney General v. Whit- church, 3 Ves. 143, 144; Attorney General v. MinshuU, 4 Ves. 14. By the opinion of Lord Eldon, formed after great doubt and hesitation, the principle has been held to extend to the case of a bequest of property to a person named. In trust for such charitable purposes, not otherwise de- scribed, as he should appoint. Moggridge v. Thackwell, 7 Ves. 96, 13 Ves. 416; Paice v. Archbishop of Canterbury, 14 Ves. 364; Mills V. Farmer, 19 Ves. 483, 1 Mer. 55. Such a trust has been held valid in this common- wealth, so far as to vest a title in the trustee as against the next of kin. Wells v. Doane, 3 Gray, 201. Whether, in case of his death, it could properly be administered by a court of chancery, without the aid of the preroga- tive power, need not be considered In this TRUST— PUBLIC OR CHARITABLE. 417 case. See Fontain v. Ravenel, 17 How. 387, 388; Moore v. Moore, 4 Dana, 366. i In most of the cases cited at the argument, in which the heirs at law were held to be en- titled to the property, the charitable gift nev- er took effect at all; either because it could not be carried out as directed, without vio- lating the mortmain act of 9 Geo. II., as in Jones V. WUliams, Amb. 651; Attorney Gen- eral V. Whitchurch, 3 Ves. 141, and Smith v. Oliver, 11 Beav. 481; or because the testator had in terms limited it to a special object which could not be accomplished at the time of his death; as in the case of a bequest to build a church in Wheatley, which could not be done without the consent of the bishop, and he refused (Attorney General v. Bishop of Oxford, 1 Brown, Ch. 444, note; Id., cited 2 Cox, Ch. 365; 2 Ves. Jr. 388; and 4 Ves. 431, 432); or of a direction to contract with the governors of a hospital for the purchase of a presentation of a boy to that charity, if the residuary assets should prove sufficient for that purpose, and they proved to be in- sufficient (Cherry v. Mott, 1 Mylne & C. 123). In Marsh v. Means, 3 Jur. (N. S.) 790, the testator gave a legacy, after the death of his wife, "for continuing the periodical publish- ed under the title of 'The Voice of Human- ity,' according to the objects and principles which are set forth in the prospectus con- tained in the third number of that publica- tion." "The Voice of Humanity" had been published quarterly by an association for the protection of animals, but no number had appeared for nearly a year before the date of the will. Upon the death of the widow twenty years later. Vice Chancellor Wood held that the gift was not to support the principles of the publication, but only the publication itself, and, the publication hav- ing ceased and the association perished, that the legacy lapsed. But he added, "It would, I thinli, have fallen within the description of charity, if this periodical had been subsisting at the date of the will, and afterwards ceas- ed. That would be simply a case where, the particular intention having failed, the general intention must be carried out." Two striking cases upon this subject have arisen in England under charities for the re- demption of captives. In the Case of Betton's Charity, Thomas Betton in 1723 bequeathed the residue of his estate to the Ironmongers' Company, in trust, "positively forbidr'ing them to diminish the capital sum by giving away any part, or that the interest and profit arising be applied to any other use or uses than hereinafter mentioned and directed," namely, one half of trie income yearly unto the redemption of British slaves in Turkey or Barbary, one fourth unto charity schools in the city and suburbs of London where the education is according to the church of England, and one 1 See, also, Lorings v. Marsh, 6 Wall. 337. HUTCH.& BUNK.EQ.-27 fourth "unto necessitated decayed freemen of the company, their widows and children." The first half of the income of the fund greatly accumulated, few such slaves having been found for a century. Lord Brougham, reversing the decree of Sir John Leach, M. R., held that the court had jurisdiction to apply the surplus income of this moiety and its accumulations as near ns might be to the Intentions of the testator; living regard to the bequest touching British captives, and also to the other charitable bequests in the will; and that the case should be refen-ed back to the master to approve a proper scheme for such application. Attorney Gen- eral V. Ironmongers' Co., 2 Mylne & K. 576. Sir Christopher Pepys, M. R. (afterwards Lord Cottenham,) accordingly ordered it to be so referred. On the return of the master's report. Lord Langdale, M. E., approved a scheme to apply the whole fund to the sec- ond and third purposes declared in the will. 2 Beav. 313. Lord Chancellor Cottenham on appeal reversed this decree; and upon the ground that the testator had not limited the first charity, like the others, to persons in London, ordered the first moiety to be ap- plied to supporting and assisting charity schools in England and Wales, and referred it back to the master to settle a scheme for that purpose. Craig & P. 208. And this de- cree was affirmed in the house of lords with the concurrence of Lord Chancellor Lynd- hurst, and Lords Brougham, Cottenham and Campbell. 10 Clark & F. 908. In that case, though there were differences of opinion as to the details of the scheme, the jurisdiction of the court of chancery to frame one in such a case was thus affirmed by the deliberate judgments of five law lords; and all agreed that, for the purpose of ascertaining what was cy pres to the particular object which had failed, the court might look at all the charitable bequests in the will; applying in this respect the principle upon which Lord Bacon had acted more than two centuries before in the case of Bloomfleld v. Stowe- market, above cited. But the case most like that now before us is that of Lady Mico's Charity, Lady Mico, by her will made in 1670, gave a thousand pounds "to redeem poor slaves in what man- ner the executors should think most con- venient." This charity was established by decree in chancery in 1686. Upon an in- formation filed in 1827, after the fund had accumulated a hundred fold, it was referred to a master to approve of a scheme for the application of the income according to the will of the testatrix, or, if he should find that it could not be executed according to her will, then as near the intent of the will as could be, regard being had to the existing circum- stances and to the amount of the fund. The master, by his general report in 1835, stated that the relators had laid before him a scheme for applying the fund to the enfran- chisement of slaves in the British Colonies 418 TRUST— PUBLIC OR CHARITABLE. who were too poor to purchase their own freedom; which application, in consequence of St. 3 & 4 Wm. IV. c. 73, abolishing slavery (which took effect in 1834), had become im- practicable; that he was of opinion that the testatrix by her will contemplated the re- demption of poor slaves in the Barbary States, but that intention could not be car- ried into effect; and he approved a scheme to apply the capital and income in purchasing and building schcol-houses for the education of the emancipated apprentices and their is- sue, qualifying teachers, paying the salaries of masters and other expenses, and to apply the surplus rents to the support of any other schools, and generally in promoting educa- tion in the British Colonies. Sir Christopher Pepys, M. R., confirmed this scheme by a de- cree; and, after he had become lord chan- cellor, stated the reasons to have been that "in this there was no restriction as to the description of slaves, or the countries in which the slaves were to be looked for;" that upon the reference to the master "it appeared that there were not within any part of the British dominions any poor slaves to be re- deemed, but that there were in the colonies many thousands of human beings from whom the odious appellation of slaves had been removed, but whose state was very far short of that of freemen, from whose bodies the chains of slavery had been struck, but whose minds and morals were still in that state of degradation which is inseparable from the unfortunate situation from wliich they had recently been in part rescued; it was proposed to the master to apply, and he approved of a scheme for the completion of that holy work, by assisting in the education of those poor beings. If, before the slavery abolition act, these funds could properly have been applied to procuring the redemption of slaves in the colonies, the proposed applica- tion for the benefit of the apprentices was doubtless cy pres to the intention of the donor." And his reason for not applying Betton's Charity in the same manner was that It was in terms limited to slaves in Tur- key or Barbary. Attorney General v. Gibson, 2 Beav. 317, note; Attorney General v. Iron- mongers' Co., Craig & P. 226, 227. There is no adjudication of this question by the supreme court of the United States. The dicta of Chief Justice Marshall in Bap- tist Ass'n V. Hart's Ex'rs, 4 Wheat 1, were based upon an Imperfect survey of the au- thorities, were not required by the decision, and are hardly reconcilable with the more recent judgments of the same court; and that case, as well as Wheeler v. Smith, 9 How. 79, arose under the law of Virginia. VIdal v. Glrard's Ex'rs, 2 How. 192; Perln v. Carey, 24 How. 501; Bartlett v. Nye, 4 Mete. (Mass.) 380; American Academy of Arts & Sciences V. President, etc., of Harvard College, 12 Gray, 593; 2 Kent, Comm. 287. In Fontain V. Ravenel, 17 How. 369, the testator author- ized his executors or the survivor of them to dispose of the residue of his estate "for the use of such charitable institutions in Pennsylvania and South Carolina, as they or he may deem most beneficial to mankind," and they died without appointing; and it was held that the title did not vest In the execu- tors as trustees, and that according to the English law the disposition would have been in the crown by sign manual. As Mr. Jus- tice McLean, delivering the opinion of the court, said: "Nothing short of the preroga- tive power, it would seem, can reach this case. There is not only uncertainty in the beneficiaries of this charity, but behind that is a more formidable objection. There is no expressed will of the testator. He intended to speak through his executors or the sur- vivor of them, but by the acts of Providence this has become impossible. It is then as though he had not spoken. Can any power now speak for him, except the parens pat- riae?" The further remarks about the power of cy pres, if intended to cover a case in which the charitable purposes were described or indicated in the will, were upon a question not before the court. The separate opinion of Chief Justice Taney in Fontain v. Ravenel was but his own, based mainly upon that of Chief Justice Marshall in Baptist Ass'n v. Hart's Ex'rs. And it is impossible to avoid the Inference that the impressions of both of those eminent magistrates were derived from the laws of Maryland and Virginia in which they had been educated, and by which St. 43 Ellz. has been expressly repealed, and chari- ties are not recognized as entitled to any favor, either in duration or construction, be- yond other trusts. DashleU v. Attorney Gen- eral, 5 Har. & J. 392; Gallego v. Attorney General, 3 Leigh, 450. In North Carolina, the supreme court once declared that It had all the powers exercised by the English chan- cellor, either In the equity jurisdiction or un- der the sign manual; and since, rebounding from that extreme opinion, seems to have adopted the view of Maryland and Virginia. Griffin v. Graham, 1 Hawks, 96; McAuley v. Wilson, 1 Dev. Eq. 276; Holland v. Peck, 2 Ired. Eq. 255. There is a dictum to a like effect In Carter v. Balfour, 19 Ala. 830. So in New York, the court of appeals, after some division and vacillation of opinion in the course of the frequent changes in the composition of the court, has recently ad- judged that In that state the English law of charitable uses has been wholly abrogated by statute, and that charities are within the rule against perpetuities, and have no privi- leges about private trusts. Bascom v. Al- bertson, 34 N. Y. 584. On the other hand, the court of appeals of Kentucky, In an able judgment delivered by Chief Justice Robertson, marked the distinc- tion between the power exercised under the sign manual, and that Inherent in the equity jurisdiction; and, after speaking of the for- mer as not judicial, added: "The cy pres doc- trine of England is not, or should not be, a TRUST— PUBLIC OR CHAKITABLB. 419 judicial doctrine, except in one kind of case; and that is, where there is an available char- ity to an identified or ascertainable object, and a particular mode, inadequate, illegal or inappropriate, or which happens to fail, has been prescribed. In such case, a court of eq- uity may substitute or sanction any other mode that may be lawful and suitable and will effectuate the declared intention of the donor, and not arbitrarily and in the dark, presuming on his weakness or wishes, de- clare an object for him. A court may act ju- dicially as long as it effectuates the lawful intention of the donor." Moore v. Moore, 4 Dana, 366. See, also, Gass v. Wilhite, 2 Dana, 177; Curling v. Curling, 8 Dana, 38. The power of cy pres, which was declared by the supreme court of Pennsylvania in Metho- dist Church v. Remington, 1 Watts, 226, and Witman v. Lex, 17 Serg. & R. 98, not to ex- ist in that state, was the power exercised un- der the sign manual in case of a gift to super- stitious uses, or of an expression of general intention to devote a sum to charitable pur- poses not designated. In a very recent case, the same court said: "The rule of equity on this subject seems to be clear, that when a definite charity is created, the failure of the particular mode in which it is to be effectu- ated does not destroy the charity; for equity will substitute another mode, so that the sub- stantial intention shall not depend r_ion the formal intention." "And this is the doctrine of cy pres, so far as it has been expressly adopted by us"— "a reasonable doctrine, by which a well defined charity, or one where the means of definition are given, may be enforced in favor of the general intent, even where the mode or means provided for by the dlanor fail by reason of their inadequacy or unlawfulness." Philadelphia v. Girard, 45 Pa. St. 27, 28. Like principles have been maintained in South Carolina and Illinois. Attorney General v. Jolly, 1 Rich. Eq. 99, 2 Strob. Eq. 395; Gilman v. Hamilton, 16 111. 231. The existence of a judicial power to ad- minister a charity cy pres where the ex- pressed intention of the founder cannot be exactly carried out has been either counte- nanced or left an open question in all the New England states except Connecticut Burr V. Smith, 7 Vt. 287, 288; Second Con- gregational Soc. V. First Congregational Soc, 14 N. H. 330; Brown v. Concord, 33 N. H. 296; Derby v. Derby, 4 R. I. 439; Tappan v. Deblois, 45 Me. 131; Howard v. American Peace Soc, 49 Me. 302, 303; Treat's Appeal, 30 Conn. 113. See, also, 2 Redf. Wills, 815, note: McCord v. Ochiltree, 8 Blackf. 15; Beall V. Fox, 4 Ga. 427; Chambers v. St. Louis, 29 Mo. 590, 592; Lepage v. Macnamara, 5 Iowa, 146; Mclntyre v. Zanesville, 17 Ohio St 352. The narrow doctrines which have prevailed in some states upon this subject are incon- sistent with the established law of this com- monwealth. Our ancestors brought with them from England the elements of the law of charitable uses, and, although the form of proceeding by commission under St. 43 Eliz. has never prevailed in Massachusetts, that statute, in substance and principle, has al- ways been considered as part of our common law. 4 Dane, Abr. 6, 239; Earle v. Wood, 8 Cush. 445. Under the Colony charter, chari- ties wej-e regulated and administered, accord- ing to the intent of the donors, under the di- rection of the general court, the court of as- sistants, and the county courts; and under the Province charter, although no court was vested with equity jurisdiction, charitable bequests were not the less valid. Anc. Chart. 52; Drury v. Natick, 10 Allen, 180, 181, and authorities cited; Winslow v. Trowbridge, stated in 11 Allen, 459, 460. The English mortmain act of 9 Geo. II. c. 36, did not ex- tend to Massachusetts; and the similar pro- vision in Prov. St. 28 Geo. II. c. 9, was re- pealed immediately after our Revolution by St 1785, c. 51. Odell v. Odell, 10 Allen, 6. Charities are held not to be within the com- mon rule limiting perpetuities and accumula- tions. Defxter v. Gardner, 7 Allen, 243; Odell V. Odell, 10 Allen, 1. Charitable bequests to an unincorporated society here, to a foreigL corporation or society, or to a particular re- ligious denomination in a certain county, have been carried into effect, even where no trustees have been named in the will. Bui- bank v. Whitney, 24 Pick. 146; Bartlett \. Nye, 4 Mete. (Mass.) 378; Washburn v. Se wall, 9 Mete. (Mass.) 280; Universalist Sec. v.. Fitch, 8 Gray, 421. See, also. Wells v. Doane, 3 Gray, 201; Saltonstall v. Sanders, 11 Allen, 446. The intention of the testator is the guide, or, in the phrase of Lord Coke, the lodestone, of the court; and therefore, whenever a char itable gift can be administered according to his express directions, this court, like the court of chancery in England, is not at lib- erty to modify it upon considerations of pol- icy or convenience. Harvard College v. So ciety for Promoting Theological Education, 3 Gray, 280; Baker v. Smith, 13 Mete. (Mass.) 34; Trustees of Smith Charities v. Inhabitants of Northampton, 10 Allen, 498. But there are several cases, where the charitable trust could not be executed as directed in the will, in which the testator's scheme has been var- ied by this court in such a way and to such an extent as could not be done in the case of a private trust Thus bequests to a par- ticular bible society by name, whether a cor- poration established by law or a voluntary association, which had ceased to exist before the death of the testator, have been sustain- ed, and applied to the distribution of bibles through a trustee appointed by the court for the purpose. Winslow v. Oummings, 3 Cush. 358; Bliss V. American Bible Soc, 2 Allen, 334. At a time when the general chancery jurisdiction of this court over trusts was limited to those arising under deeds and wills, the legislature by a special statute authoriz- ed it to hear and determine in equity any 420 TRTTST— PTTBLIC OR CHARITABLE. and all matters relating to a certain gift to a Bcientific corporation, to be invested in a cer- tain manner, and paid in premiums for dis- coveries or improvements on heat or light published in America within two years be- fore each award. Upon a bill being filed, and it appearing that it had become impracticablo to carry out the intent of the donor in the mode prescribed. Chief Justice Shaw author- ized a different investment of the fund ; and, in accordance with a scheme reported by a master, authorized the corporation to apply the surplus income, after paying such pre- miums, to purchasing books, papers and phil- osophical apparatus, and making such pub- lications or 1 ocuring such lectures, experi- ments or investigations as should facilitate and encourage the making of such discoveries and improvements; and said: "Whenever it appears that a general object of charity is intended, and the purpose is not unlawful and void, the right of the heir at law is di- vested." "It is now a settled rule in equity that a liberal construction is to be given to charitable donations, with a view to promote and accomplish the general charitable intent of the donor, and that such intent ought to be observed, and when this cannot be strictly and literally done, this court will cause it to be fulfilled as nearly in conformity with the intent of the donor as practicabla Where the property thus given is given to trustees capable of taking, but the property cannot be applied precisely in the mode directed, the court of chancery interferes, and regu- lates the disposition of such property under its general jurisdiction on the subject of trusts, and not as administering a branch of the prerogative of the king as pai-ens pa- triae." "What is the nearest method of car- rying Into effect the general intent of the donor must of course depend upon the sub- ject matter, the expressed intent, and the other circumstances of each particular case, upon all of which the court is to exercise its discretion." American Academy v. ECarvard College, 12 Gray, 582. The same principle was also recognized or assumed in 4 Dane, Abr. 242, 243, in Sanderson v. White, 18 Pick. 333, and other cases already cited. Baker v. Smith, 13 Mete. (Mass.) 41; Harvard College V. Society for Promoting Theological Educa- tion, 3 Gray, 282, 298; Trustees of Smith Charities v. Inhabitants of Northampton, 10 Allen, 501, 502. By Gen. St. c. 113, § 2, this court may hear and determine in equity all suits and proceedings for enforcing and regulating the execution of trusts, whether the trusts relate to real or personal estate, "and shall have full equity jurisdiction, according to the us- age and practice of courts of equity, in all other cases, where there is not a plain, ad- equate and complete remedy at law." The powers usually exercised by the court of chan- cery in the course of its jurisdiction In equity have thus been expressly conferred upon this court by the legislature. The authority of ad- ministering a charitable trust according to the expressed intention of the donor, and, when that cannot be exactly followed, then as nearly as possible, is a part of this juris- diction, which the court is not at liberty to decline. The only question is, whether the facts of the case show a proper occasion for its exercise according to the settled practice in chancery. In all the cases cited at the argument, in which a charitable bequest, which might have been lawfully carried out under the circum- stances existing at the death of the testator, has been held, upon a change of circumstan- ces, to result to the heirs at law or residuary legatees, the gift was distinctly limited to particular persons or establishments. Such was Russell v. Kellett, 3 Smale & G. 264, in which the gift was of five pounds out- right to each poor person of a particular de- scription in certain parishes, and Vice Chan- cellor Stuart held that the shares of those who died before receiving them went to the residuary legatees. Such, also, was Clark v. Taylor, 1 Drew. 642, in which it was held that a legacy to a certain orphan school by name, which ceased to exist after the death of the testator, failed and fell into the resi- due of the estate; and which can hardly be reconciled with the decisions in Incorporated Soc. V. Price, 1 Jones & L. 498, 7 Ir. Eq. 260; In re Clergy Society, 2 Kay & J. 615; Marsh v. Attorney General, 2 Johns. & H. 61; Winslow v. Cummings, 3 Cush. 358, and Bliss V. American Bible Soc, 2 Allen, 334. So in Easterbrooks v. Tilllnghast, 5 Gray, 17, the trust was expressly limited, not only in object, but in duration, to the maintenance of the pastor of a certain church of a speci- fied faith and practice in a particular town, "so long as they or their successors shall maintain the visibility of a church in said faith and order;" and could not have been held to have terminated, had it not been so limited. , Attorney General v. Columbine, Boyle, Char. 204, 205; Potter v. Thurston, 7 R. I. 25; Dexter v. Gardner, 7 Allen, 243. The charitable bequests of Francis Jackson cannot, in the oi.inion of the court, be re- garded as so restricted in their objects, or so limited in point of time, as to have been terminated and destroyed by the abolition of slavery in the United States. They are to a board of trustees for whose continuance care- ful provision is made in the will, and which the testator expresses a wish may become a permanent organization and may receive the services and sympathy, the donations and be- quests, of the friends of the slave. Their duration is not in terms limited, like that of the trust sought to be established in the sixth article of the will, by the accomplish- ment of the end specified. They take effect from the time of the testator's death, and might then have been lawfully applied in exact conformity with his expressed Inten- tions. The retaining of the funds in the cus- tody of the court while this case has been TRUST— PUBLIC OR CHARITABLE. 421 under advisement cannot affect the question. The gifts being lawful and charitable, and having once vested, the subsequent change of circumstances before the funds have been actually paid over is of no more weight than if they had been paid to the trustees and been administered by them for a century be- fore slavery was extinguished. Neither the immediate purpose of the tes- tator—the moral education of the people; nor his ultimate object— to better the condition of the African race in this country; has been fully accomplished by the abolition of slav- ery. Negro slavery was recognized by our law as an infraction of the rights inseparable from human nature; and tended to promote idle- ness, selfishness and tyranny in one part of the community, a destruction of the domestic relations and utter debasement In the other part. The sentiment which would put an end to it is the sentiment of justice, humanity and charity, based upon moral duty, inspired by the most familiar precepts of the Chris- tian religion, and approved by the constitu- tion of the commonwealth. The teaching and diffusion of such a sentiment are not of tem- porary benefit or necessity, but of perpetual obligation. Slavery may be abolished; but to strengthen and confirm the sentiment which opposed it will continue to be useful and desirable so long as selfishness, cruelty, the lust of dominion, and indifference to the rights of the weak, the poor and the ignorant, have a place in the hearts of men. Looking at the trust established by the fourth article of this will as one for the moral education of the people only, the case is within the principle of those, already cited, in which charities for the relief of leprosy and the plague were held not to end with the disap- pearance of those diseases; and is not es- sentially different from that of Attorney Gen- eral V. Baliol College, In which a trust for the education at Oxford of Scotch youths, to be sent into Scotland to preach Bpiscopalianism in the established church there, was applied by Lords Somers and Hardwicke and their successors to educate such youths, although, by the change of faith and practice of the Church of Scotland, the donor's ultimate ob- ject could no longer be accomplished. The intention of Francis Jackson to benefit the negro race appears not only in the lead- ing clause of the fourth article, and in his expression of a hope that his trustees might receive the aid and the gifts of the friends of the slave, but in the trust for the benefit of fugitive slaves In the fifth article of the will, to which, according to the principle es- tablished by the house of lords in the Case of Betton's Charity, resort may be had to ascer- tain his intent and tiie fittest mode of carry- ing it out. The negroes, although emancipat- ed, still stand in great need of assistance and education. Charities for the relief of the poor have been often held to be well applieil to educate them and their children. Bishop of Hereford v. Adams, 7 Ves. 324; Wilkinson V. Malin, 2 Cromp. & J. 636, 2 Tyrw. 544; Anderson v. Wrights of Glasgow, 12 Li T. (N. S.) 807. The Case of Mico Charity is directly to the point that a gift for the re- demption of poor slaves may be appropriated, after they have been emancipated by law, to educate them; and the reasons given by Lord Cottenham for that decision apply with no less force to those set free by the recent amendment of the constitution in the United States, than to those who were emancipated by act of parliament in the West Indies. The mode in which the funds bequeathed by the fourth and fifth articles of the will may be best applied to carry out in a lawful manner the charitable intents and purposes of the testator as nearly as possible must be settled by a scheme to be framed by a master and confirmed by the court before the funds are paid over to the trustees. In doing this, the court does not take the charity out of the hands of the trustees, but only declares the law which must be their guide in its administration. Shelf. Mortm. 651-654; Boyle, Char. 214-218. The case is therefore to be referred to a master, with liberty to the attorney general and the trustees to sub- mit schemes for his approval; and all further directions are reserved until the coming Id of his report. Case referred to a master. The case was then referred to John Cod- man, Esquire, a master in chancery for this county, who, after notice to the trustees and the attorney general, and hearing the parties, made his report, the results of which were approved by the attorney general; and upon exceptions to which the case was argued by W. Phillips for himself and other excepting trustees, and by J. A. Andrew in support of the master's report, before Gray, J., with the agreement that he should consult the whole court before entering a final decree. No account was asked by any party of sums already expended by the trustees. As to the bequest in the fifth article, the master reported that the unexpended balance (amounting to $1049.90) was so small that it was reasonable that It should be confined to a limited territory; and that it should there- fore be applied by the trustees, in accordance with their unanimous recommendation, to the use of necessitous persons of African descent in the city of Boston and its vicinity. This scheme was approved and confirmed by the court, with this addition: "Preference being given to such as have escaped from slavery." As to the sum bequeathed in the fourth arti- cle of the will, the master reported that a portion had been expended by the trustees before any question arose as to its validity; and that but two schemes had been suggest- ed to him for the appropriation of the residue, namely, first, (which was approved by four of the seven trustees who had accepted the trust,) in part to the support of the AntI- 422 TRUST— PUBLIC OR CHARITABLE. Slavery Standard, and in part to the New England Branch of the American Freedmen's Union Commission; or, second, (which was approved by the remaining trustees,) that the whole should be applied to the last named ob- ject. The master disapproved of the first of these schemes; and reported that the Anti-Slavery Standard was a weekly newspaper published in the city of New York with a circulation of not more than three thousand copies, which was established nearly thirty years ago for the purpose of acting upon public opinion in favor of the abolition of slavery; that in his opinion, since the abolition of slavery, and the passage of the reconstruction acts of con- gress, "the support of a paper of such limit- ed circulation as hardly to be self-sustaining would do very little for the benefit of the col- ored people in their present status, and its direct influence would be almost impercepti- ble on the welfare of that class most nearly corresponding to those whom the testator had In view in making this bequest;" and that the argument, that it was evidently the intention of the testator to accomplish the object Indi- cated in the fourth article of his will by means of which a newspaper like this might be considered an example, was answered by the fact that the object for which these means were to be used had been already accom- plished without them. The master returned with his report a few numbers of the Anti- Slavery Standard, (taken without selection as ■they were given to him by the chairman of the trustees,) by which it appeared that it was in large part devoted to urging the passage of laws securing to the freedmen equal political rights with the whites, the keeping of the southern states under military government, the impeachment of the president, and other political measures. The master reported that he was unable to devise any better plan than the second scheme suggested; that this mode of appro- priation was in his opinion most in accord- ^vre with the Intention of the testator as ex- pressed In the fourth article of the will, be- cause the Intention nearest to that of eman- cipating the slaves was by educating the emancipated slaves to render them capable of self-government; and this could best be done by an organized society, expressly intended and exactly fitted for this function, and which, if the whole or any part of this fund was to be applied to the direct education and sup- port of the freedmen, was admitted at the hearing before him to be the fittest channel for the appropriation. The master returned with his report printed documents by which it appeared that the object of the American Freedmen's Union Commission, as stated in Its constitution, was "the relief, education and elevation of the freedmen of the United States, and to aid and cooperate with the peo- ple of the South, without distinction of race or color. In the improvement of their condi- tion, upon the basis of industry, education, freedom and Christian morality;" and that the New England and other branches of the commission were now maintaining large num- bers of teachers and schools for this purpose throughout the southern states. The master accordingly reported that what remained of the fund bequeathed by the fourth article of the will should be "ordered to be paid over to the New England Branch of the Freedmen's Union Commission, to be employed and expended by them In promoting the education, support and Interests generally of the freedmen (late siaves) In the states of this Union recently in rebellion." And this scheme was by the opinion of the whole court accepted and confirmed, modified only by di- recting the executor to pay the fund to the trustees, to be by them paid over at such times and in such sums as they in their dis- cretion might think fit to the treasurer of the branch commission; and by substituting for the words "recently in rebellion" the words "in which slavery has been abolished, either by the proclamation of the late President Lin- coln or the amendment of the constitution." Final decree accordingly. TRUSTS— PUBLIC OE CHARITABLE. 423 ALLEN et al. v. STEVENS et al. (55 N. E. 568, 161 N. Y. 122.) Court of Appeals of New York. Dec. 5, 1899. Appeal from supreme court, appellate di- vision, Fourth department. Action by Benjamin G. Allen and others against Charles E. Stevens and others, as executors and trustees under the will of Nathan F. Graves, deceased, to obtain a con- struction of the will. From an order of the appellate division (54 N. Y. Supp. 8) revers- ing a judgment in favor of defendants (49 N. Y. Supp. 431), they appeal. Reversed. This action was brought for the purpose of obtaining a construction of the will of Nathan F. Graves, deceased, and particular- ly the tenth clause thereof, devising and bequeathing the residuary real and personal estate in trust for the purpose of founding, erecting, and maintaining Graves Home for the Aged, to the effect that the said provi- sions of the tenth clause be adjudged void and invalid, and also that it be adjudged and determined tliat the said will is void and in- valid so far as it devised and bequeathed more than one-Half of the real and personal property of the testator to benevolent, chari- table, literary, scientific, religious, and mis- sionary societies, associations, or corpora- tions, in trust or otherwise, and that the sur- plus of such one-half part be distributed and conveyed to the plaintiffs, who are next of kin of the testator. The special term decid- ed that the will was In all respects valid, and rendered judgment accordingly. Tlie appel- late division, by a divided court, held that the tenth clause was invalid, and reversed the judgment. From the order and judg- ment entered thereon, appeals have been taken to this court. The will read as follows: "I Nathan F. Graves, of the city of Syra- cuse, in the state of New York, being of sound mind and memory, do make, ordain, publish, and declare this to be my last will and testament; that is to say: "First. After all my lawful debts are paid and discharged, I give, devise, and be- queath unto Catharine H. Graves, my wife, all of the furniture, beds, and bedding of every kind, including paintings, pictures, vases, and statuary of every kind, with all kitchen utensils, in the dwelling house where we now live, the horses, harnesses, carriages, wagons, sleighs, sleds, cows, chickens, and everything appertaining thereto and con- nected therewith, including feed of every kind, to have and to hold the same to her heirs and assigns, forever. I also give and bequeath to the said Catharine H. Graves the rents, issues, and profits of all of my houses, tenements, and stores south of James street, in Syracuse, to be paid to her month- ly, subject only to the necessary repairs and taxes for and during her natural life. I also give and bequeath to the said Cathar- ine H. Graves all dividends that may be de- clared by the New York State Banking Com- pany on all the stock standing in my name, to be paid to her when declared and due, payable to her immediately, for and during her natural life. "Second. I give and bequeath to the Onei- da Cemetery Association, called 'Glenwood Cemetery,' situate in the town of Lenox, near the village of Oneida, In iladlson coun- ty, in the state of New York, the sum of five hundred dollars, to be received and held in trust by the trustees thereof, or other representatives of said Cemetery Associa- tion, to be invested on first bond and mort- gage or mortgages, the interest, or so much thereof or so much of the same as may be necessary, be expended in keeping the fami- ly burial lot in good order, grading, mow- ing, enriching, and all other things that may be needed. The lot is known as lot num- ber one in section S In said cemetery, the title of which Is in Nathan P. Graves and Catharine H. Graves, his wife. The said money may be deposited in any savings bank in Madison or Onondaga county when not invested in bond and mortgage. Any part of the interest or principal may be used to repair any injury to the monument or headstones caused by any casualty or by lapse of time. "Third. I give and bequeath to the Gen- eral Synod of the Reformed Church In Amer- ica, also known as the General Synod of Church In America, the sum of ten thousand dollars, for the speclflc purpose of founding and maintaining an annual course of lec- tures on missions (the choice of the lecturer and the details of the lectureship to be un- der the direction of the professors in the seminary at New Brunswick, New Jersey, and the corresponding secretary of the board of foreign missions of the Reformed Church of America, or his successor), payable after the death of my wife, Catharine H. Graves; but the sum of five hundred dollars a year is to be paid by my executors, at such times as the same may be needed to sustain the lecture course, during the life of my wife. "Fourth. I give and bequeath to the Syra- cuse University, situated in the city of Syra- cuse, in the state of New York, ten thousand dollars, for the specific purpose of founding and maintaining an annual course of lectures on missions (the choice of the lecturer and the details of the lectureship to be under the direction of the chancellor of the Universi- ty), payable after the death of my wife, Catharine H. Graves; but the sum of five hundred dollars a year is to be paid by my executors, at such times as the same may* be needed to sustain the lecture course, during the life of my wife. "Fifth. I give and bequeath to Hope Col- lege, situated at Holland, in the state of Michigan, ten thousand dollars for the spe- cific purpose of erecting a fireproof building, to be used as a library. The sums that I 424 TRUSTS— PUBLIC OR CHARITABLE. have advanced or may hereafter advance during my life will be deducted from the above amount. I also give and bequeath to said Hope College my miscellaneous li- brary in the dwelling house in Syracuse where I now reside. The library will not be delivered to said Hope College during the life of Catharine H. Graves, my wife, unless she consents to the removal in writing. "Sixth. I give and bequeath to the Syra- cuse Home Association, situate .at the corner of Townsend and Hawley streets, in Syra- cuse, to the Onondaga County Orphan Asy- lum, in Syracuse, and the St. Joseph's Hospi- tal, situate on Prospect avenue, corner Un- ion street, in Syracuse, each one thousand dollars, payable after the death of Cath- arine H. (iraves, my wife. "Seventh. I give and bequeath unto the con- sistory of the Reformed Church, situated on .lames street, in Syracuse, in the state of Xew York, the sum of two thousand dollars in trust for the specific purpose hereinafter named, which sum may be invested in first mortgage or mortgages; the interest to be used in the payment of the rent of a pew in said church, and the balance of interest, if any, to be given to the board of foreign mis- sions of said church. The iiew desiguated by the consistory may be used by the pastor of the church and his family when needed for that purpose, and, when not so needed, to be used as the consistory shall from time to ti.^\e determine. "Eighth. I give and bequuath to my execu- tors the sum of fifteen hundred dollars, but in trust to be used for the purpose of placing in the Reformed Church in Syracuse a memo- rial window for wife, Catharine H. Graves, and myself. The sum may be used for that purpose, or so much thereof as may be nec- essary. The memorial window may be omit- ted, and a memorial tablet be placed on the wall inside of the church. In either case the consent and approval of the consistory must first be obtained. "Xiuth. I give and bequeath to Francis H. Loomis, the son of my sister Achsah H. Loomis, one thousand dollars. I give and bequeath to Helen A. Graves, the daughter of my brother Benjamin S. Graves, one thou- sand dollars. I give and bequeath to Benja- min G. Allen, the son of my sister Mary A. Allen, one thousand dollars. I give and be- queath to Helen 11. Hiclis, Charles Sterling Graves. William Shaw Graves. Nathan Fran- cis Graves and Mary Elizabeth Graves, the children of my brother Sterling P. Graves, each one thousand dollars. I give and be- queath to Abial S. Graves, my brother, one thousand dollars; to Mary B. Strong, Eliza- beth and Benjamin S. Graves, his children, one thousand dollars each. 1 give and be- queath to Helen Breese Graves, daughter of Maurice A. Graves, one thousand dollars. I give and bequeath to Nathan B. Graves ten thousand dollars. I give and bequeath to Augustus C. Stevens, son of Charles E. Ste- vens, my law Ubrary and my mahogany book and paper case. I give and bequeath to Maurice A. Graves my three black-walnut book cases, now in my library room where I now reside; also, my library table. I give and bequeath to my brother the portrait of myself, painted by Elliatt; unto Sterling P. Graves. I give and bequeath unto Nathan Francis Graves my watch and chains. "Tenth. I give, bequeath, and devise all the rest and residue of my property of every kind, personal and real, wherever situate, to mj' trustees hereinafter named, for the pur- pose of founding, erecting, and maintaining Graves Home for the Aged, to be located in the city of Syracuse, in the state of New York. It is intended as a home for those who by misfortune have become incapable of providing for themselves, and those who have slender means of support. The institution to be known as the Graves Home for the Aged. I hereby appoint Charles E. Stevens, Rasselas A. Bonta, and Maurice A. Graves for the trustees to execute the above trust. I hereby authorize and empower my executors, or the survivor of them, to rent or sell any part or all of my real estate that I may own at the time of my death. They are author- ized to employ a pei'son or- persons to have charge of the real estate, to collect rents and make repairs, and to pay such sums for compensation as they may deem reasonable and proper. After my executors have exe- cuted their trust, and paid all the legatees provided for in this will, they are authorized and directed to convey to the said trustees above named the balance and remainder of my property of every kind, to be applied for the purposes above provided; and the said trustees, or the survivor, are authorized to rent or sell all or any part of my real or per- sonal property, and to employ such agents as they may deem proper to take charge of the same, and pay them such compensation as they deem best. "Eleventh. My executors or my trustees are authorized to retain my stock and shares in the New York State Banking Company, and continue the business of banking for a term of years, at their discretion, but may sell the same or any part thereof at any time; but the same is not to be continued, nor any portion of my property held, longer than the lives of Catharine Graves Roby, daughter of Sidney B. Roby, of Rochester, and Helen Breese Graves, daughter of Maurice A. Graves, of Syracuse. Likewise, I make, con- stitute, and appoint Charles E. Stevens, Ras- selas A. Bonta, and Maurice A. Graves to be executors of this, my last will and testament, hereby revoking all former wills by me made. "In witness whereof, I have hereunto sub- scribed my name and affixed my seal the fif- teenth day of September, in the year of our Lord one thousand eight hundred and ninety- three. Nathan F. Graves. [Seal.]" Augustus C. Stevens, for appellant execu- tor. Charles 0. Cook, for appellant Syracuse Home Ass'n. Frank Hiscock, for appellant TRUSTS— PUBLIC OR CHARITABLE. 425 attorney general. 0. B. Stevens, for appellant First Reformed Church. Joseph W. Sutphen, for appellant General Synod. William G. Tra- cy, for respondents Allen and others. C. Oars- kadden, for respondent Breese. PARKER, C. J. (after stating the facts). Under the law of this state, prior to the en- actment of chapter 701 of the Laws of 18J>3, the tenth clause of the will in question would have been void upon two grounds: First, be- cause of the indeflniteness of the beneficiaries (Bascom v. Albertson. 34 N. Y. ."iSO; Tilden v. Green, 130 N. Y. 29, 28 N. E. 880, 14 L. R. A. 33); and, siecond, because, although intending to found a permanent charity, the testator did not direct the formation of a corporation witliin two lives In being to talie over the trust property. Burrill v. Boardman, 43 N. Y. 254; CruilvShanls v. Home for the Friend- less. 113 N. Y. 337, 21 N. E. 64, 4 L. R. A. 140; People v. Simonson, 126 N. Y. 299. 27 N. E. 380. The question now presented is whether the act of 1893 has so far amended the law relating to the subject of charitable bequests as to malvO it possible for the charitable in- tentions of this testator to be executed. Be- fore examining the statute, which was cou- cededly intended to affect in some wise the law upon tlie general subject, it will not be out of place to have in mind the situation of such law. No one disputes that it was the intention of the legislature to change in sub- stantial respects the law as it had been set- tled by the courts of this state. The contro- versy is as to the extent of the changes in- tended by the legislature, and upon the ques- tion of intent some light will be thrown by a very brief reference to the early state of the law in this state upon the subject of char- itable uses, and the changes from time to time which finally resulted in its overthrow. This subject was exhaustively considei'ed in an opinion written by .Judge Deuio in the case of Williams v. Williams, 8 N. Y. 52,5. In that case the opinion declared that according to the law of England as It existed at the time of the American Revolution, and as it still exists, devises and bequests in sui)port of charity and religion, although defective for want of such grantee or donee as the rules of law require in other cases, would nevertheless be supported in the courts of chancery; that such pints of the common law had become incorporated into our system of jurisprudence prior to the adoption of the constitution, by force of the provisions, of which it became a part, of the common law of this state. In answer to the claim that the law of charitable uses was created by the statute 43 Eliz. c. 4, and hence was abrogated by the repeal in tMs state of the statute of Elizabeth (Laws 1788, c. 46, § 37), the court asserted that the doc- trine of charitable uses was a creation of chancery, and had been regarded as an im- portant part of its jurisdiction long prior to the enactment of the statute of Elizabeth, and such system having become ingrafted upon the common law, and the practice thereof having Deen undertaken and carried on by the court of chancery in this state, that it was not affected by the repeal of the statute of Elizabeth; that the provisions of the Re- vised Statutes did not affect property given in perpetuity for religious or charitable pur- poses; and hence that the bequest of $6,000 to Zophar V. Oakley and other individual trustees, with power to perpetuate their suc- cessors, as a perpetual fund for the education of children of the poor who should be educat- ed in the academy in the village of Hunting- ton, with directions to accumulate the fund up to a certain point, and apply the income to the education of children whose parents' names were not upon the tax list, was valid. If that case had continued to be the law of this state, there would have been no oppor- tunity for questioning the validity of the tenth clause of this testator's will. That de- cision, it would seem, should have settled the question in this state, but the struggle be- tween the advocates of a liberal policy to- wards charities and the opponents of such a policy did not stop with that decision. In Levy V. Levy, 33 N. Y. 97, Judge Wright chal- lenged the position taken by the court in the "R'illiams Case, and discussed anew the ques- tion whether the English doctrine of trusts for charitable uses was the law of this state. The discussion was continued in Bascom v. Albertson and Burrill v. Boardman, supi-a; and in Holmes v. Mead, 52 N. Y. 332, it was finally decided that the system of charitable uses, as recognized in England prior to the Revolution, has no existence in this state, and that such uses are not exempt from the pro- visions of the statute abolishing all uses and trusts except such as are authorized thereby. Efforts in the interest of upholding important charitable bequests have from time to time been made to persuade the courts to reopen the subject to a limited extent, without other result than an approval of the case of Holmes V. Jlead, as in HoUaud v. Alcock, 108 N. Y. 312, 16 N. E. 305, where the court felt called upon to point out that "charity, as a great interest of civilization and Christianity, has suffered no loss or diminution in the change which has been made. The law has been simplified, and that is all." So the fact seem- ed to be at the time of such writing, and so it may have been, except as to that class of charities which, for convenience, we may call original charities, as where a person desires to found an institution to carry on a charity that will bear his name and be a monument to his memory, or wishes to benefit a class of unfortimate persons in his own community, in whom he may be interested. Many a testa- tor has attempted to provide by his last will and testament for such a charity, but, so far as the decisions show, nearly every such at- tempt has come to naught, because the courts, in applying the rules resulting from the flual overthrow of the Williams Case, have been obliged to hold that the language employed by the testator was either indefinite as to bene- ficiaries, or in violation of the law against 426 TRUSTS— PUBLIC OR CHARITABLE. perpetuities. Holmes v. Mead, 52 N. Y. 332; Prlchard v. Thompson, 95 N. Y. 76; Cottman V. Grace, 112 N. Y. 299, 19 N. E. 839, 3 L. B. A. 145; Read v. Williams, 125 N. Y. 560, 26 N. E. 730; Fosdlck v. Town of Hempstead, 125 N. Y. 581, 26 N. B. 801, 11 L. R. A. 715; Tilden v. Green, 180 N. Y. 29, 28 N. E. 880, 14 L. R. A. 33; Booth t. Church, 126 N. Y. 215, 28 N. E. 238. Our attention has not been called to, nor have we discovered, any case in the books, since the decision of Holmes V. Mead, where an attempt to create an original charity has survived the test of an application by the courts of the rules of law to the language employed by the testator. Among the last, if not the very last, of the successful attempts in that direction, was in respect to the will of James H. Roosevelt, de- ceased, which was before the court In Burrill V. Boardman, 43 N. Y. 254. In that case the court declined to decide the question whether the peculiar system of charitable uses as it existed in England has ever had foothold in this state. The decision of this court, hold- ing that will to be valid, made Roosevelt Hospital a possibility. As these statements seem to make their own comment, we pass to the position of the legislature in 1893, which had its attention sharply drawn to the suL- jeet by a comparatively recent decision of this court, the effect of which was to deprive the public of a great charity, in which Samuel J. Tilden sought to employ the bulk of his fortune, aggregating millions. Looking back over the 20 years that had elapsed since the decision of the court in Holmes v. Mead, the legislature could discover nothing but wrecks of original charities, — charities that were dear to the hearts of their would-be founders, and the execution of which would have been of mestlmaoie value to the public. Further back of that period, however, it found that in Wil- liams V. Williams, supra, the court had de- clared it to be the law of this state that char- itable devises and bequests were not subject to the statute against perpetuities, nor subject to strangulation by the rule against indefinite beneficiaries; for the court, having equitable jurisdiction, claimed the right to administer the law of charitable uses. Our legislature not only saw that a great wrong had been and was being done to the public by the loss of many devises and bequests for the purpose of founding original charities, but it further saw that the remedy could alone be furnished by it. It perceived that its repeal of the statute of Elizabeth furnished the foundation for the decisions of the courts, and did away with the law of England upon that subject, as well as with the practice In this country in that regard which had been founded upon such law, so it set about making a change in the law; and the statute which it enacted, to- gether with the title, reads as follows: "An act to regulate gyfts for charitable pur- poses. "Section 1. No gift, grant, bequest or de- vise to religious, educational, charitable, or benevolent uses, which shall, in other respects be valid under the laws of this state, shall or be deemed invalid by reason of the indefinite- ness or uncertainty of the persons designated as the beneficiaries thereunder in the instru- ment creating the same. If in the instrument creating such a gift, grant, bequest or devise there is a trustee named to execute the same, the legal title to the lands or property given, granted, devised or bequeathed for such pur- poses shall vest in such trustee. If no per- son be named as trustee then the title to such lands or property shall vest In the supreme court. "Sec. 2. The supreme court shall have con- trol over gifts, grants, bequests and devises in all cases provided for by section one of this act. The attorney-general shall represent the beneficiaries in all such cases and it shall be his duty to enforce such trusts by proper pro- ceedings in the court." Laws 1893, c. 701. Reading the statute in the light of the events to which reference has been made, it seems to me very clear that the legislature In- tended to restore the law of charitable trusts as declared in the Williams Case; that hav- ing discovered that legislative enactment had operated to take away the power of the courts of equity to administer trusts that were in- definite as to beneficiaries, and had declared a permanent charity void unless the devise in trust was to a corporation already formed, or to one to be created, it sought to restore thiit which had been taken away through an- other enactment. This is markedly indicated, not only by the absence of details in the stat- ute, which is broadly entitled "An act to reg- ulate gifts for charitable purposes," but also in the brevity of the statute, which confers all power over such trusts and trustees on the supreme court, and directs the attorney general to represent the beneficiaries in cases within the purview of the statute, as was the practice in England. Practical effect can be given to the provision that no devise or be- quest shall be deemed invalid by reason of the indeflniteness or uncertainty of the persons designated as beneficiaries only by treating it as a part of a general scheme to restore to the courts of equity the power formerly exer- cised by chancery in the regulation of gifts for charitable purposes; for, in order to as- certain the class of persons who were en- tUled to the benefits of the trust, the rule for- merly in force must necessarily be invoked, by which the court ascertained as nearly as pos- sible the intention of the testator, , by decree adjudged who were intended to be the bene- ficiaries of the trust, and directed its admin- istration accordingly. Fowler, in his work on Charitable Uses, in speaking of the act of 1893, says: "It must be very obvious that the act of 1893 has se- riously affected those decisions of the courts of New Y'ork which require great certainty or a vested interest in the beneficiaries of a charitable trust. The act, in this respect only, is designed to restore the ancient law touching charitable uses for uncertain per- sons, and to this extent to relieve charitable TRUSTS— PUBLIC OE CHARITABLE. 427 trusts from the narrow boundaries prescribed by the Revised Statutes for private uses in lands." While that learned author expresses the opinion that the act does not relieve char- itable or public uses from the application of the rules relating to perpetuities, which, be says, "have no reference to public trusts," he asserts that, bad that been done, the ancient law would have been almost revived by the legislature. That he is right in saying that the legisla- ture "designed to restore the ancient law touching charitable uses for uncertain per- sons" seems unquestionable, and it appears to be reasonably clear, from a reading of the entire act, that the legislature designed to re- store the law governing the administration of such trusts as well. And, if such was the design of the legislature, then effect must be given to it, though such a construction seems contrary to the letter of the statute. Smith V. People, 47 N. Y. 330. As this statute is remedial in its character, it should be lib- erally construed with a view to the beneficial end proposed. Hudler v. Golden, 36 N. Y. 446. The statute provides that, if there is a trustee named to execute the trust, the legal title to the property shall vest in such trustee, and, further, that, if no person be named as trustee, the title shall vest in the supreme court. That there might be no opportunity for questioning the authority of the supreme court In such matters, the second section pro- vides that the supreme court shall have con- trol over all gifts, grants, bequests, and de- vises in all cases provided by section 1 of this act. Under the provisions of the act a testator may name a corporation as trustee, or provide that a corporation to be founded shall act as trustee, or the trustee named may be an individual; but, if he name none of these, the statute provides, in effect, that the trust shall not fail, but the title to the property devised or bequeathed In trust shall vest in the supreme court, which shall have control over gifts, grants, bequests, and devises pro- vided for by the act. If the contention be well founded that It was not the intention of the legislature to revive the ancient law as to the administration of such trusts by the supreme court, and to do away with the rule requiring the formation of a corporation for such purpose, then no permanent charity can be administered by the supreme court, not- withstanding the title to the trust property is by the command of the statute vested in the supreme court when no trustee is named by the testator. It is insisted that It cannot be, because the trust term is not measured by lives. Neither is a corporation, which may, as a trustee, execute a permanent trust for charity. But, it is answered, the law has created an exception to the general rule in fa- vor of corporations. True, and the lawmak- ing power had the right to create other ex- ceptions, or change the law altogether; and it has changed the law as to all cases within the scope of the act, "to regulate gifts for charitable purposes," so that now the su- preme court must execute such a trust, if the title to the trust property vests In It under the statute, and shall have control over the administration, if a trustee be named by the testator. A construction of this statute al- lowing the supreme court to execute a per- manent charity when the title to the real estate is vested in it, and at the same time declar- ing that, where such property is devised to a trustee named, the devise Is void, would be absurd. The learned counsel for the respondent points out that it is not all gifts and devises to religious, educational, charitable, or benev- olent uses that shall not be deemed invalid by reason of indeflniteness as to beneficiaries, but only such as "shall in other respects be valid under the laws of this state," and, with signal ability, seeks to persuade us that, in order to give these words effect, it must be held that a trust is not within the protection of the statute if it contravenes the law against perpetuities, and, as a necessary se- quence, that if the devise in trust be not to a corporation, or provision be not made for the formation of a corporation, within a pe- riod measured by two lives in being, to take over the trust estate, then the devise or be- quest is invalid, and this statute is without effect in such case. It will be observed that, if this contention be well grounded, the au- thority attempted to he conferred upon the supreme court to take title and execute a trust of 'a permanent character when no trus- tee is nnmed is practically of no effect, and the statute itself is limited in its application to a case of the type of Prichard v. Thomp- son, 95 N. Y. 76, which Is the single case brought to our attention where the only ob jection to the validity of the trust was that the beneficiaries were indefinite. In the light of the destruction of so many original chari- ties, as shown by the decisions, the thought cannot for a moment be indulged in that the legislature had in view this case only, and sought to furnish a remedy for just such cas- es in the future, and for none other. We are thus led to inquire whether this clause in the statute may not have been In- tended to serve some other purpose than to require the continuance of the practice of the formation of corporations for the adminis- tration of permanent, charitable trusts, — a re- sult apparently in conflict with the other pro- visions of the statute providing for the exe- cution of trusts by trustees or by the supreme court. In the attempt to ascertain the in- tention of the legislature, it Is a just rule, always to be observed, that the court shall assume that every provision of the statute was intended to serve some useful pm^pose; and, in obedience to that rule, we now in- quire whether this clause of the statute does not have a useful place therein, and yet is not In conflict with the letter and spirit of the rest of the statute. It is so obvious that it has, that we need cite but one instance for the need of such a provision, and that Is suggested by one of the contentions made In this case. A., having a substantial estate, ■i-2S TRUSTS— rUBLlC OR UHARITABLH. and desiring to provide suitably for the sup- port of his wife and two brothers during their lifetime, for which he deemed the income amply sufficient, devised his estate In trust to a trustee during the lifetime of his wife and brothers, directing that the income be apportioned between the cestuis que trustent during their lives, and that after the death of the last survivor of them the property be vested in the supreme court as a permanent trust, the income to be used towards the sup- port and maintenance of the Syracuse Hos- pital. Such a trust would, of comse, be in direct violation of the statute of perpetuities and void: for by it the testator would de- sign to do what the statute aims to prevent- from being done, namely, to tie up the estate for the benefit of his family for a period long- er than two lives in being (i. e. three lives in being), before the trust for charitable pur- poses could go into operation. This clause therefore seems to constitute a very useful feature, indeed, of the statute; and, because tliis is so, all excuse is talcen away for an ar- gument that it was intended to serve as such an obstruction to a practical operation of the statute as would render it of no substantial value to the pui)lic. and it eliminates all op- Iiortunity for questioning that it was the In- tention of the legislature to restore the an- cient law as to gifts for charitable purposes, because exiDerience has shown that, as to orig- inal charities, far better results were obtain- ed under it, from the public point of view, and with a more decent regard for the wishes of testators, who do not always love their distant relatives, — occasionally, perhaps, with justification. We are thus conducted to an examination of the tenth clause of the will. It reads as follows: "Tenth. I give, bequeath, and de- vise all the rest and residue of my property, of every kind, personal and real, wlierever situate, to my trustees hereinafter named, for the purpose of founding, erecting, and maintaining Graves Home for the Aged, to be located in the city of Syracuse, in the state of New York. It is intended for a home for those wlio by misfortune have become inca- pable of providing for themselves, and those who have slender means of support. The in- stitution to be known as the Graves Home for the Aged. I hereby appoint Charles 0. Stevens, Rasselas A. Bonta, and Mam'ice A. Graves for the trustees to execute the above trust. I hereby authorize and empower my executors, or the survivor of them, to rent or sell any part or all of my real estate that I may own at the time of my death. They are authorized to enlploy a person or persons to have charge of the real estate, to collect rents and to make repairs, and to pay such sum for compensation as they may deem reason- able and proper. After my executors have executed their trust, and paid all the legatees provided for in this will, they are authorized and directed to convey to the said trustees above named the balance and remainder of my property, of every kind, to be applied for the purposes above provided; and the ssiiil trustees, or the survivor, are authorized to rent or sell all or any part of my real or per- sonal property, and to employ such agents as they may deem proper to take charge of the same, and pay them such compensation as they deem best." While tlie place where "Graves Home for the Aged" is to be located is stated, and the general object of the charity is clearly given, namely, to provide a home for the aged who by misfortune have become in- capable of providing for themselves, it is still indefinite as to the territory from which such aged people may be accepted at the home. But for the statuti^ tliat we have been considering, this trust would fail be- cause of the indefiniteness of the benefi- ciaries; but the practice that it revives makes it necessary for the supreme court, when properly moved by the attorney gen- eral, representing the beneficiaries, to ascer- tain, as nearly as may be, the intention of the testator as to the method of selecting those aged persons who are to be the bene- ficiaries of the home, and to make such in- tention efficacious by decree. It seems to have been the opinion of the appellate divi- sion that tlie power of alienation of the bank shares and the real estate south of James street was, under the terms of the will, suspended during three lives in being after the death of the testator, but to us it seems that this is not so. It Is true that by the first clause of the will the trustees «'ere directed to pay to testator's wife, dur- ing life, the dividends on the bank stocks, when declared, and the net income from the real estate, after making payments for nec- essary repairs and taxes, while by the elev- enth provision of the will the testator au- thorized ];is executors and trustees to re- tain his shares in the New York State Bank- ing Company for a term of years, at their discretion, "but may sell the same, or any part thereof, at any time; but the same is not to be continued, nor any portion of my property held, longer than the lives of Cath- arine Graves Roby, daughter of Sidney B. Roby, of Rochester, and Helen Breese Graves, daughter of Maurice A. Graves, of Syracuse." It will be observed, therefore, that the will operated to vest the title of the estate in the trustees, in trust for the purposes outlined by the testator, as of the date of the latter's death; and they were directed to pay to the widow certain rents and dividends for life, unless she survived two persons upon whose lives the trust es- tate was expressly limited. The next question is whether this trust is to be executed by the trustees named in the will, or by the supreme court. It is the next question because we have already reached the conclusion that a corporation is not necessary for the execution of such a trust, since the adoption of the statute, but that the supreme court, in a proper case, must take upon itself such execution, over TRUSTS— PUBLIC OR OHARITABI/E. 429 which It shall have control where a trustee Is not named for the purpose. In this case trustees were named, and, as the eleventh clause of the will expressly prohibits the trustees from holding any portion of the testator's property longer than the lives of the two persons in being therein named, it must be held that the trustees are charged with the management and conduct of the trust until the expiration of a period meas- ured by the two lives in being, at which time the title to the trust property will vest in the supreme court under the statute. The plaintiffs claim that the tenth provi- sion of the will is void as to one-lialf of the remainder of the testator's estate under sec- tion 1, c. 360, of the Laws of 18(50, which reads as follows: "Section 1. Xo person having a husband,- wife, child or parent, shall, by his or her last will and testament, devise or bequeath to any benevolent, chari- table, literary, scientific, religious or mis- sionary society, association or corporation, in trust or otherwise, more than one-half part of his or her estate, after the payment of liis or her debts (and such devises or bequests shall be valid to the extent of one- half and no more)." The testator gives about .$2.5,0(X) or less than one-seventh of his estate, to organizations that are within the description of the statute, and in addi- tion to that the residuary devises and be- quests are charitable, and therefore with- in the general description of the statute; but as such devises and bequests are not to a "society, association or corporation in trust or otherwise," but, instead, to trustees, they are not within its prohibition. The maxim, "Expressio unius est exclusio alteri- us," is applicable; for it is a man's general right, in this state, to do as he wislies with his own. He may now, as in the past, dis- inherit his relatives for the benefit of stran- gers; and this statute was not designed to af- fect that right, except indirectly. It was rec- ognized, perhaps, that, in the fear of death, men who have never exhibited a charitable impulse suddenly awaken to the fact that behind them are lost opportunities for use- fulness that in some way ought to be made good; and in order to balance the account they look about for an opportunity to do good with their money, and find at once a man interested in promoting the fortunes of some religious or charitable institution, who, without hesitation, begins to play, and with a skill acquired by long experience, upon their fears and hopes. Given such a man and such a situation, it was reidily conceived that, in his thought of self, the just de- mands of wife or child or parent might be temporarily lost sight of, and his all de- voted to religious or charitable purposes, through some of the many societies, asso- ciations, and corporations which are to be found on every hand. Hence the design of the framers of the statute was to place a limitation upon the power of a person thus moved, to dispose of more than one-half of his property by will to such organizations, to the end that he should have an opportuni- ty to measui'e the claims of his kindred upon him as to the remaining half, unembarrassed by the importunities of those whose business it is to get money for the societies, asso- ciations, or corporations they represent; and this it was thought would be substantially accomplished by an act prohibiting him from giving more than one-half of his property to the societies, associations, and corporations most likely to be considered. But, except as thus restrained by the statute, he may still disinherit his kindred by disposing of his property in such manner and for such pur- pose as he may desire; and so this testator, in devising his property to trustees in trust for the uses and purposes described in the will, was not within the prohibition of the statute. The result thus reached in this case in no way thwarts the general pur- pose of the legislature, for the only person who stood in such relation to the testator as to benefit by the statute in any case was the testator's wife, who was over 80 years of age at the time of his de.ath, was amply provided for by the will, and has since died. The amount of costs awarded seems to be out of all proportion to the work done, and so large that it is not at all surprising that sev- eral lawyers have appealed from nearly all allowances except their own; but the su- preme court had the power in this suit, lirought as it was on the equity side of the court, to award costs to each of the parties; and the question of amount, also, was in the discretion of that court, and not subject to review here, so long as the allowances did not exceed the limitations provided by statute, and this they did not do. The judgment of the appellate division should be reversed, and that of the special term affirmed, with costs to the appellant trustees and to the attorney general. GRAY, J., dissents. 430 TRUSTS-PUBLIC OR CHARITABLE. HtINT, Atty. Gen., et aJ. v. FOWLER et al. (12 N. E. 331, 17 N. E. 491, 121 111. 269.) Supreme Court of Illinois. June 17, 1887. Appeal from circuit court, La Salle coun- ty. Geo. Hunt, Atty. Gen., and Mayo & Wid- mer, for appellants. Duncan, O'Connor & Gilbert, for appellees Vineria Fowler and others. SHELDON, J. This was a hill in chan- cery filed by the heirs at law of Esther S. Chapman, deceased, against the attorney general of the state and the executors of the will of the decedent, to have a certain por- tion of the estate left by her declared to be intestate, and to belong to the complainants, as heirs at law of the decedent. The will, executed March 15, 1883, after making sun- dry bequests to rurious persons other than the complainants, concluded with this re- siduary clause: "All the residue of my es- tate I devise and bequeath unto the legatees hereinbefore named, in equal proportions, excepting said Oakwood seminary and said Sylvester M. Chapman." Subsequently, on April 5, 1885, the testatrix executed a codicil which contained this residuary clause: "All the rest and residue of my estate, including that which may lapse for any cause, I direct to be invested or loaned upon the best terms possible, so as to produce the largest in- come, and said income to be distributed among the worthy poor of the city of La Salle, in such manner as a court of chancery may direct." Executors of the will were appointed. The decedent left both real and personal estate. The bill alleges that the city of La Salle is situated in the town of La Salle, and in- cludes but a small portion of the territory of the town; and that there is not now, nor has there ever been, in said city, any organ- ization or association, voluntary or othervrise, for the distribution of charity to the poor of the city; and that the municipal authorities have no duties imposed upon them to pro- vide for the poor; and claims that the re- siduary clause of the codicil is incapable of execution by reason of the uncertainty of the beneficiaries intended by the testator, and void, and that, in consequence, all the rest and residue of the estate, both real and personal, after the payment of the general and specific legacies, was intestate estate. A demurrer to the bill was interposed by the attorney general and the executors, which was overruled by the court, whereupon the executors answered, denying the invalidity of the residuary clause of the codicil, or that it was incapable of execution, and setting up that, even if such were the case, the rest and residue of the estate must be distributed in accordance with the residuary clause of the will. Thereupon the bill was amended by making the residuary legatees specified in the will additional parties defendant. Sub- sequently a hearing was had upon pleadings and proofs, and a decree was entered find- ing that the residuary clause of the codicil was InefEectual to dispose of the property, but that it nevertheless revoked the residu- ary clause of the will, and declaring that the real estate of which the testatrix died seised belonged to the complainants as her heirs at law, and directing that the rest and residue of the personal estate should be dis- tributed to the complainants as intestate es- tate. From this decree the attorney gen- eral, the executors, and a portion of the lega- tees specified in the residuary clause of the will have prosecuted this appeal. There is in American courts much diversi- ty of decision upon the subject of charitable trusts. In express private trusts there is not only a certain trustee who holds the le- gal estate, but there is a certain specified cestui que trust clearly identified, or made capable of identification, by the terms of the instrument erecting the trust. It is an es- sential feature of public or charitable trusts that the beneficiaries are uncertain,— a class of persons described in some general lan- guage, often fiuctuating, changing in their individual numbers, and partaking of a quasi public character. 2 Pom. Eq. Jur. § 1018. In some of the states the equitable system of distinctively charitable trusts is not rec- ognized, and the courts apply only the rules applicable to express private trusts. In oth- er states the "statute of charitable uses" of 43 Eliz. c. 14, has been adopted or repealed, and thereby decisions have been influenced. And in other cases local legislation, or sup- posed local policy, to more or less extent, enters into adjudications. In another, and, as believed, the larger, portion of the states, the system of charitable trusts as adminis- tered in the English court of chancery, in the exercise of its ordinary judicial power, prevails, with variation in regard to the element of certainty in the trustee and the object of the charity. A classification of the decisions in the several states will be found in 2 Perry, Trusts, § 748, in note, and 2 Pom. Bq. Jur. § 1029, and note. The prerogative power of the crown, exercised through the lord chancellor as the representative of the king, as where there is a gift to charity generally, without appointment of a trustee, and the bounty is devoted to some particular charity, or where there is a gift to a par- ticular charitable piu-pose which cannot be effectuated, and it is applied to some other charitable use, cy-pres the original purpose, is regarded not as a judicial, but a minis- terial, prerogative function. This preroga- tive power courts in this counti-y do not as- simie to exercise. Were this subject of charitable trusts a new question with us, there would be opened up a wide and Interesting field of discussion, in order for the establishment of the proper rule in this regard. But we are saved labor TRUSTS— PUBLIC OR CHARITABLE. 431 In this respect, from the ground having here- tofore been gone over by this court, and the rule applicable to charitable trusts having been established to be that vsrhich is admin- istered In the court of chancery in England, in the exercise of its ordinary jurisdiction as a court of equity. This was done in the case of Heuser v. Harris, 42 111. 425, and where it was recognized that the statute of 43 Eliz. c. 4, had been adopted in this state. The entire contention in this case arises upon the construction, validity, and efEect of this residuary clause of the codicil. It is insisted this clause is void for uncertainty as to the beneficiaries. This is not a bequest to charity generally, or to the poor generally, but to the worthy poor of the city of La Salle. The class here is definite, — the worthy poor of the city of La Salle, — but the individuals of the class to whom the bounty is to be distributed are uncertain. There is always this uncertainty as to individuals, in the case of public char- ities, and it is this feature of uncertainty which distinguishes public charities from private charities; charitable trusts from private trusts; and to hold charitable gifts to be void because of such uncertainty is to reject this whole distinctive doctrine of char- itable trusts. 2 Redf. Wills, 544, (66.) In the case of a charitable bequest it is immaterial how vague, indefinite, and uncer- tain the objects of the testator's bounty may be, provided there is a discretionary power vested in some one over its application to those objects. Domestic & F. M. Soc.'s Ap- peal, 30 Pa. 425; Perry, Trusts, § 732. It is denied that there is any such discretion- ary power here given, and White v. Fisk, 22 Conn. 31, is cited in support of such denial. The bequest in that case was: "Any surplus income that may remain, to the extent of $1,000 per annum, I direct to be expended by my said trustees for the support of indi- gent, pious young men preparing for the ministry in New Haven." The decision was that the gift was void, as the objects of the benefaction were indefinite, and that no pow- er was conferred on the trustees to make them definite by selection. This case, though meeting with seeming approval In Grimes' Ex'rs V. Harmon, 35 Ind. 198, has been dis- approved by other high authorities. See Perry, Trusts, §§ 713, 720, 748, note 1; 2 Redf. Wills (2d Ed.) p. .541, note; Hesketh v. Murphy, 36 N. J. Eq. 304. The latter case especially speaks of White v. Fisk as a case not likely to be followed. In Hesketh v. Murphy the testator's will empowered and directed the trustees to em- ploy the annual income of the fund "for the relief of the most deserving poor of the city of Paterson aforesaid, forever, without re- gard to color or sex; but no person who is known to be intemperate, lazy. Immoral, or undeserving, to receive any benefit from the said fund." It was objected that the gift could not be applied to its objects and was void, because the will did not confer upon any one the power of ascertainment of the individuals who should receive the benefit of the bequest. But the court held that the power given the trustees by the will to dis- tribute the fund carried with it, by neces- sary implication, the power to select the beneficiaries from the designated class, and upheld the bequest. We entirely agree with the criticism there made by Chief Justice Beasley upon the case of White v. Fisk, that there was a mistaken assumption on the part of the court in that case that there was no povjer to select the objects of the charity lodged by the testator in the trustee; that when a power is conferred on the trustees to distribute the fund to members of a class, such members having certain qualifications which can be ascertained only by the exer- cise of judgment and discretion, as the act of distribution cannot be performed except after such ascertainment of the particular beneficiaries, the principal power to distrib- ute the moiieys carries with it the incidental and necessary power of selection; and this, upon the ordinary doctrine that, when one act Is authorized to be done by a trustee or other agent, every authority requisite to the doing of such act is, by intendment of law, comprised in such grant of power. See Pickering v. Shotwell, 10 Pa. St. 23, that the power in the trustee to act at its discretion need not be expressly given, if it can be im- plied from the nature of the trust. In the later case of Erskine v. Whitehead, 84 Ind. 357, the decision in Grimes v. Harmon does not seem to be approved in its full extent. In Heuser v. Harris, supra, the bequest of money was "to the poor of Madison coun- ty," the interest only to be used, with no appointment of a trustee. As the county court of Madison county was charged by law with the support of the paupers in the county, it was held in that particular case that the poor of the county were its paupers, and that the fund should be held by the county court to be applied for the latter" s support. It is not to be the inference from that case that a charitable bequest to the poor necessarily means to paupers, and that the trust is only to be executed by some- body charged by law with the support of paupers. "A bequest in trust for the poor inhabitants of a particular place, parish, or town is a charitable trust for the poor not receiving parochial or municipal aid and re- lief as paupers, on the ground that the char- ity Is for the poor, and not for the rich, and, if it was applied to the maintenance of those supported by the parish, town, or county, it would relieve wealthy tax-payers from their taxes, and not materially aid the poor." Perry, Trusts, § 698. It is said in Redf. Wills (2d Ed.) 805, that some of the American cases have gone great lengths in carrying into effect the intention of the testator when there was great in- definiteness In the objects of the trust; "that 432 TRUSTS— PUBLIC OK CHARITABLE. the want of a tnistoe in such cases is never any obstacle in tbe way of a court of equity laiT.viug into effect any trust, and more es- pecially oue of a charitable cbaracter." Mr. Pomeroy, in speakinii of the distinguishing features between charitable and private trusts, says that, in case of the former, "not only may the beneficiaries be uncertain, but that even when the gift is made to no cer- tain trustee, so that the trust, if private, would wholly fail, a court of eiiuity will carry the trust into effect either by appoint- ing a trustee, or by acting itself in place of a trustee. 2 I>om. Eq. .Jur. §§ 102.j, 102ij. And see Brown v. Kelsey, 2 Cusb. 2i3; W ashburn v. Sewall, 9 Mete. 280. There can be no question of the general rule. But it is said it does not apply in a case A^'here there is such indefiniteness as to beneficiaries as here. Numerous are the in- stances which might be cited where there was the want of a trustee, and the court ex- ecuted the trust in cases of equal indefinite- ness as here as to the objects of the trust, —as in JlcCord v. Ochiltree, S Blackf. 15, where the legacy was for the education of the pious indigent youths; in Bull v. Bull, 8 Conn. 47, where the executors were to dis- pose of the residue of the estate "among our brothers and sisters and their children as they shall judge shall be most in need of the same. — this to be done according to their best discretion,— and the executors died never having exercised the power, nor executed the trust; in Williams v. Pearson, 38 Ala. 2!J!J, where the beneficiaries named were "all the paupers and poor children of two designated 'lieats,' whose parents were not able to sup- port them;" in Howard v. American Peace .Soc, 49 Me. 288, where the gift was to the suffering poor of the town of Auburn. Where a legacy is given to tri;stees to dis- tribute In charity, and they all die in the life-time of the testator, yet the legacy will be enforced in equity. 2 Story, Eq. .Jur. § 1166. An extended collection of eases on the general subject may be found in note to Hesketh v. Murphy, 35 N. .1. Eq. 23, and in 1 Jarm. Wills, 403, in note. ilr. Perry sums up, as the result of the principles and authorities, that "a bequest for charity generally, * * * or to the poor generally, or to charity generally, with no trustees appointed, will not be carried into effect by the courts in this cotmtry." PenT, Trusts, § 729. That "if a testator makes a general and indefinite bequest to charity, or to the poor, or to religion, and appoints no trustee, but plainly refers such appointment to the court, there would seem to be no impropriety in the court appointing a trustee according to the plain intent of the donor, leaving such trustee to find his power in the will of the donor. But if a testator makes a vague and indefinite gift to charity, and names no trustee, and gives no power to the court to appoint one, there is no pow- er in the American courts to administer such an inchoate and imperfect gift." Id. § 731. Tliat "it is immaterial how uncertain the beneficiaries or objects are, if the court, by a true construction of the instrument, has power to appoint trustees to exercise the dis- cretion or power of making the beneficiaries as certain as the nature of the trust requires them to be." Id. § 732. See, also, 2 Story, Eq. Jur. § 1169. In the present case the testatrix appoints no trustee to distribute the fund, but ex- pressly refers its distribution to a court (, chancery. The power of distribution, in our opinion, carries with it the power to select the individuals to whom distribution shall be made. The trustee appointed by the court to make the distribution will have the inci- dental power to select the beneficiaries, so that the case stands the same as if the tes- tatrix herself had appointed a trustee to dis- tribute the fund. The trustee to be appoint- ed by the court will, in effect, be a trustee of her appointment made through the coiu't of chancery. Courts incline strongly in favor of charita- ble gifts, and take special care to enforce thom. As obsei-ved by ilr. Perry (section 087), charitable bequests are said to come v\ithin that department of human affairs where the maxim ut res magis valeat quam pereat has been, and should be, applied; and, further (section (190), that until the statute of distributions (22 Car. II. c. 13) was enacted, the ordinary was obliged to apply a portion of every intestate estate to charity, on the ground tliat there was a general principle of piety and charity in every man. This shows the favor in which charity is held in the law. There is to be the most liberal con- struction of the donor's intention in support of a charitable donation. Charities have al- ways received a more liberal construction than the laAv will allow in gifts to individu- als. 2 Story, Eq. Jur. § llf;5. The charity here is not A'ague and indef- inite, but quite specific,— to the worthy poor of the city of La Salle. Individuals of the class named will ever be readily found to whom the fund may be distributed. The trust is not difficult of execution according to the intention of the testatrix. Instead of herself naming a trustee to make the dis- tribution of her bequest, the testatrix pre- ferred that the distribution should be made by a court of chancery, whose peculiar prov- ince it is to effect the administration of trusts, and especially charitable trusts. There can be no doubt that the execution of the trust by such court would be to effectu- ate the donor's Intention, the aim which Is always sought to be accomplished. Under the principles and the strong cur- rent of authorities which are properly appli- cable, we are fully satirried that the bequest in question is a valid charitable gift, and that it should be carried into effect by a court of chancery, as the testatrix expressly willed that it should be. The residuary TRUSTS— PUBLIC OR CHARITABLE. 433 clause of the codicil being held valid, it fol- lows that the complainants take nothing as heirs at law, and are not entitled to main- tain their bill. The decree of the circuit court will be reversed, and the cause re- manded to that court with directions to dis- miss the bill. Decree reversed. SCHOLFIELD, J. (dissenting). I do not concur in this opinion. I hold that courts of equity in this state exercise no prerogative powers, but, as contradistinguished there- from, only judicial powers; that, not exer- HUTCH.& BUNK.BQ.— 28 cising prerogative powers, the court could not, by the act of the individual, be, and here is not, invested with a power not ju- dicial, namely, that of selecting or designat- ing the "worthy poor" to be the recipients of the testatrix's bounty; and that, since it has not been and could not be invested with such power, it cannot appoint and invest a trus- tee with such power. I concede the testatrix might have invested a trustee with such power, leaving and directing the court to ap- point the trustee; but that is a very differ- ent case. 434 RESULTING TRUSTS. SKBLLENGER'S EX'RS v. SKELLEN- GBR'S EX'R. (32 N. J. Eq. 659.) Court of Chancery of New Jersey. May Term, 1880. Alfred Mills, for complainants. George T. Wert and George W. Forsyth, for next of kin. Edward C. Lyon, for executor of Han- nah Skellenger, deceased. THE VICE CHANCELLOR. This is a bill for direction. The complainants, as the ex- ecutors of Daniel Skellenger, deceased, ask direction as to what they shall do with cer- tain moneys belonging to their testator, not disposed of by his will. His estate consisted entirely Of personalty. By his will, he first gave all his estate to his wife, except his moneys and securities for the payment of money, and then gave all the residue of his estate to his executors, "to have and to hold upon and subject to the following trusts, to wit: upon trust to invest the same at in- terest, on good security, and the interest and income thereof, after payment of taxes and expenses attending investments, annually to pay to his (my) wife during her natural life," and, witliin six months after her death, to pay from and out of the residue so directed to be invested upon trust, several pecuniary legacies of fixed amounts. Xo other or fur- ther disposition of the residue is made. The testator's widow survived him. They never had a child. The widow is now dead. She left a will. The complainants, after paying all the legacies directed to be paid, have still in hand over $1,700. The will makes no dis- position of the beneficial interest in this sum. The legal title to it was given to the com- plainants to enable them to perform certain trusts, but, the trusts having been fully per- formed without it, the question arises, what shall be done with it, or who Is entitled to it? There are three different claimants: first, the executors, who claim the whole to the exclusion of all others; second, the next of kin of the testator, who also claim the whole in exclusion of the executors, and likewise to the exclusion of the representative of the widow, and, third, the representative of the widow, who claims a moiety of the fund. At common law, an executor, by virtue of his appointment, is entitled to the whole of the personal estate, and if, after the payment of debts and legacies, any surplus remains, it vests in him beneficially. 2 Wms. Ex'rs, 1475, marg. note. But this rule has never prevailed in the United States. On the con- trary, it has uniformly been held in this coun- try that, if any part of the personal estate happens to be undisposed of by the will, the executor takes it, as trustee for ' those who are entitled under the statute of distribution. 1 Terry, Trusts, § 155; Story, Eq. Jur. § 1208. No doctrine of equity jurisprudence is more firmly established than that where personal estate is given by will to a trustee, upon certain trusts, and the purposes of the trust do not exhaust the whole estate, or tlie ti-usts fail, either in whole or in part, by lapse or otherwise, the trustee shall not take the sur- plus for his own benefit, unless such appears to have been the intention of the testator, but a trust results in favor of those who are entitli^d under the statute of distribution as the nait of kin of the testator. Hill, Trus- tees, 113, mai'g. note; 1 Perry, Trusts, § 152; 2 Wms. Ex'rs, 1475, marg. note. Where the gift is made to the donee as trustee, or in trust, without any words indicating an inten- tion to confer a beneficial interest upon him, the form of the gift will be considered con- clusive against his right to take for his own benefit. Hill, Trustees, 114, marg. note; 1 Perry, Trusts, § 158. These authorities dis- pose of the claim of the complainants. Technically, the testator did not die intes- tate as to any part of his estate. He gave the legal title of the whole to his executors. They would have taken it anyhow, in virtue of their office, if the will had contained no express gift to them. But he did die intestate as to the beneficial interest in this fund. No disposition was made of that. This interest is an equitable estate, and, as such, is enti- tled, in equity, to be considered, to all in- tents and purposes, as a legal estate. Such estates, in equity, are subject to the same incidents, properties and consequences that similar legal estates are at law, and are trans- missible in the same manner. Gushing v. Blake, 30 N. J. Eq. 695. The income of this fund passed by the will, but no beneficial in- terest in the corpus itself. As to that the will is silent and inoperative, and it therefore stood, on the testator's death, in exactly the same condition that it would if he had left uo will. As to that it must be declared, as a matter of law, that he had no will. This being so, it would seem to follow, as a necessary sequence, that the widow was entitled to participate in its distribution. As a general rule, the right of the distributees vests immediately on the death of the intes- tate. But it is contended that our statute was intended to regulate distribution only in cases of total intestacy, and has no appli- cation to a case of partial intestacy. This argument, however, proves too much, for, if sound, it will exclude the next of kin quite as effectually as the widow. The right of distribution is not a common-law right, but depends upon statute. Originally the ordi- nary took the whole surplus for pious uses. To cure this wrong, parliament took away the right of the ordinary, and gave it, by statute, to the widow and next of kin. They hold under the same grant, and one cannot take unless the other does also. In the words of Chief Justice Shaw, uttered in a case identical in all material points with the one under consideration, "the same provision in the statute of distribution which gives prop- erty not disposed of by will, where there is RESULTING TRUSTS. 435 a win, to the next of kin, gives a distributive share to the wldov?." Nlekerson v. Bowly, 8 Mete. (Mass.) 430. It Is also Insisted that the widow should not be permitted to take any part of this fund, because It is apparent, upon the face of the will, that the testator Intended she should not. This Intention, it is said, must be Inferred from the fact that he gave her the use of the whole during her life, and he could not, therefore, have intended that she should take a part absolutely. In other words, having given her a part by express words, it must necessarily be Inferred that he did not intend she should have any more. This argument, it will be observed, proceeds upon the assumption that the right of dis- tribution Is to be regulated by the intention of the testator. But this, I think, is a mis- talkie. The Intention of the testator is to govern only so far as he has declared it by his will. With regard to that part of his property which his will did not pass, it must be declared he had no will, and therefore the court cannot know his intention concern- ing It. The next of kin cannot take until intestacy is found, and then they take, not in pursuance of the testator's intention, but by force of law, regardless of what Ms In- tentions were. Upon this point. Chief Jus- tice Shaw, in the case already cited, says: "If It were thought Important to Inquire into the intent of the deceased, when he has made a will, but left property undisposed of, either in terms or by implication, as every man Is presumed to know the law. It may reason- ably be inferred as his intention that the residue should be disposed of according to law." The rule upon this subject Is settled. It has recently been adjudged by this court that where a testator dies intestate as to part of his estate, in consequence of the lapsing of a legacy, his vyidow is entitled to a dis- tributive share of It, though she had ac- cepted the provision made for her in lieu of dower, by the will. Handy v. Marcy, 28 N. J. Eq. 59. The other pertinent authorities are Davers v. Dewes, 3 P. Wms. 40; Dicks V. Lambert, 4 Ves. 725; Oldham v. Carleton, 2 Cox, 399; Ex parte Kempton, 23 Pick. 163; Dale V. Johnson, 3 Allen, 364. The decree will direct the complainants to pay one moiety of the fund to the representa- tive of the widow, and the other to the next of kin of the testator. 436 RESULTING TRUSTS. BOND et al. v. MOORE et al. (90 N. C. 239.) Supreme Court of North Carolina. Feb. Term, 1884. Civil action tried at fall term, 1883, of superior court, Chowan county; Avery, Judge. John M. Jones, owning the lot of land in the town of Edenton described in the com- plaint, and the recovery of possession of which is the object of this action, on February 9, 1866, conveyed the same by deed executed by himself of the first part, Thomas W. Hudglns of the second, and Martha A. Jones, his wife, of the third part, to the said Thom- as W. Hudgins in fee upon the following de- clared trusts: 1. That the said trustee shall at any time convey the said lot and Improvements to such person as the said party of the third part shall direct in writing attested by one wit- ness. 2. That he will convey said lot and im- provements to such person as the said party of the third part shall give or devise the same to, by last will and testament, or by an appointment in the nature of one, which iwwer to make a will or appointment in the nature of one is expressly conferred upon the said party of the third part, notwithstanding her coverture. 3. Upon the death of the party of the first part, he will convey the said lot and im- provements to the said party of the third part. 4. Upon the death of the party of the third part without having made a last will and testament or appointment in the nature of one, he will convey the said lot and improve- ments to the party or parties entitled by the laws of North Carolina. 0. The party of the first part shall occupy or rent out the lot and improvements for his own use during the joint lives of himself and the party of the third part, unless the same shall be sooner sold by her order. These declarations of the trusts upon which the trustee was to hold are preceded by recitals in the deed, which in substance state that the said Martha A. had thereto- fore united with her said husband in the sale and conveyance of certain lots owned by her previous to her marriage, the pur- chase money whereof he had received, un- der an arrangement by which he agreed to convey the lot herein described "to a trus- tee for the use of the party of the third part and upon the trusts hereinafter declared." The said Martha died before her husband, without heirs, having made no disposition of the estate under the forms conferred in the deed, by deed, will or other writing. John M. Jones, her survivor, died In 1879, leaving a will, wherein the plaintiff Bond is named executor and the other plaintiffs are the devisees. The trustee died In 1872, Intestate, and the defendants, other than the defendant Jloore, who is in possession of the lot, are his heirs at law. The defendant Moore claims the lot by vir- tue of a judgment against the university, an execution Issued thereon, a sale and a sher- iff's deed to him. The relief demanded is a recovery of the possession and damages for detention against Moore, and a judgment against the other de- fendants requiring a conveyance of the legal title. The defendants demur to the complaint, and the demurrer being overruled and judg- ment rendered for the plaintiffs they appeal. Pruden & Bunch, for plaintiffs. W. A. Moore, for defendants. SMITH, O. J. (after stating the case). The question to be decided arises from the con- struction of the deed, and is whether au equitable estate in remainder vests In the plaintiffs, entitling them to demand a con- veyance of the legal estate from the heirs at law of the trustee and possession from the defendant Moore. It is not important to consider the force and effect of the terms used in the declara- tion of the trust in favor of the wife, and the necessity of words of inheritance to enlarge an estate for life into a fee. This trust is, as are the otliers, executory, and not an ex- ecuted trust,— created by a direction to the trustee to convey,— not itself a conveyance; and the same technical rules of construction do not prevail in interpreting both. When the trustee is required to act in execution of the trust, in order to effectuate the expressed purpose of the instrument, that purpose is ascertained by employing the ordinary rules of inteiT3retation; and a direction to convey the lot in the absence of restriction or quali- fying words, when applied to instructions given to the trustee, is a direction to convey the full estate vested in him, and the trust consists in the right to have it performed. In the latter case the intent is ascertained by giving a fair and reasonable meaning to the language in which it is expressed, and in this sense the trust is enforced. This is the distinction taken in Levy v. Griffls, 65 N. 0. 236, and is warranted in Holmes v. Holmes, 86 N. C. 206. But it is a settled rule in the interpreta- tion of written Instruments to look to other provisions for light to guide in arriving at the meaning of any doubtful clause. In ap- plying the rule, we think It plainly appears that a life estate only was intended to be secured to the wife, associated with a power of disposition of the whole estate, by a written instrument in the form prescribed. The re- citals in the deed show that it is drawn in pursuance of the agreement between Jones and his wife, and in precise fulfillment of its RE&ULTING TRUSTS, 437 terms; for it declares the promise to liave been to convey tlie lot to a trustee for her use "upon the trusts hereinafter declared." Among the trusts enumerated, the third un- dertakes to provide for the contingency of the death of the wife without having exercised the power conferred, clearly contemplating a remainder and limiting her estate under a preceding clause for the term of her life. Nor is it material whether this final limita- tion of the trust estate is effectual or inop- erative by reason of an insufficient descrip- tion of the party to take under it. In either case the clause subserves the same purpose in showing the character and extent of the estate secured to the wife. Her death, then, without her having exer- cised, the dispositive power, her husband still being alive, and his estate also becoming ex- tinct, which endured only during their joint lives, presents the very contingency upon whose happening the trustee is required to convey "to the party or parties entitled by the laws of North Carolina." Who is the party meant? The plaintiffs appropriate this designation to the grantor, the defendants to the heirs of the wife, and there being none, to the university substituted in their place un- der the law of escheat. In our opinion, the words do not and were not intended to point out any particular per- sons to take the inheritance remaining, but to leave it to pass under the law as undis- posed of property. They show such estate, depending on a contingency, to have been in the mind of the grantor as capable of sub- sisting beyond the life of the wife and of his own, and to place it under the control of the law. This being the proper construction of the clause upon well established principles, the undisposed of remainder was freed from the intervening life estate in the wife, became united with the then expiring life estate of the .husband, and he became the equitable owner of the entire inheritance. "Another form in which a resulting trust may appear," says Mr. Justice Story, "is where there are certain trusts, created either by deed or will, which fail in whole or part, or which are of such an indefinite nature that courts of equity will not carry them into effect, or which are illegal in their nature or character, or which are fully executed and yet leave an unexhausted residuum. In all such cases there will arise a resulting trust to the party creating the trust, or to his heirs or legal representatives, as the case may re- quire." 2 Story, Eq. Jur. § 1106a; Lewiu, Trusts, 175; Mosely v. Mosely, 87 N. 0. 69; Robinson v. McDiarmid, Id. 455. But the defendants contend that inasmuch as the husband was permitted to receive the purchase money of the wife's land, under his agreement to convey his lot in trust for her, this money constitutes the consideration of his deed and the trust arises to her. The rule which raises a trust in favor of one whose money was used in payment for land bought, has no application to the facts of the present case. The deed to which she con- sents in becoming a party contains all the trusts, and, in the very form he agreed to make and secure to her, the full fruits of his contract. He stipulates to make precisely such a conveyance, and with such declaration of trusts as are found in the present deed. This exhausts her equity in the premises. Her money is the consideration of, and given for, the interests and benefits secured to her in its provisions, and for no other portion of the trust estate. The land was her hus- band's, not her's; and whatever estate re- mains after all the trusts in her behalf have been executed, must be vested in him. This does not belong to the class of cases in which the purchase money of one party has been used and the title to the land conveyed to auQther. "The doctrine," remarks the same author, "is strictly limited to cases in which the pur- chase has been made in the name of one person and the purchase money has been paid by another." 2 Story, Eq. Jur. § 1201a. The authorities cited in the argument sus- tain this view of the law. Unless the con- structive trust was raised in such case, a successful fraud would be perpetrated by the grantee. King v. Weeks, 70 N. C. 372; Cun- ningham V. Bell, 83 N. 0. 328; Kisler v. Kis- ler, 27 Am. Dec. 308. We therefore affirm the judgment overrul- ing the demurrer, and remand the cause to be proceeded with in the court below. No error. Affirmed. 438 RESULTING TRUSTS. GOULD V. LTXDE et ai. (114 Mass. 366.) Supreme Court of Massachusetts. Jan. Term, 1874. W. P. Harding, for defendants. T. H. Sweetser & W. B. Stevens, for plaintiff. ENDICOTT, J. It is conceded by the plain- tiff that there was no express trust upon which the conveyances were made, the al- leged agreement between the parties being oral; but it is claimed, that a resulting trust to the plaintiff arises out of the transaction. The rule that on a voluntary conveyance without consideration a trust results to the grantor was confined to common law convey- ances, and does not apply to modern convey- ances in common form, with recitals of con- sideration, to the use of the grantee and his heirs. Such deeds to a stranger, and a for- tiori when the purpose of the grant is to con- vey to a wife, exclude any resulting trust to the grantor. The distinction between such a conveyance and a conveyance to a third party where an- other furnishes the money to whom a trust results, he not being estopped by the recitals and covenants of the deed, is too well estab- lished by our authorities to require illustra- tion. Walker v. Locke, 5 Gush. 90; Whitten V. Whitten, 3 Gush. 191; Bartlett v. BarUett, 14 Gray, 277; Titcomb v. Morrill, 10 Allen, 15; Blodgett V. Hildreth, 103 Mass. 484; Cairns V. Colburn, 104 Mass. 274; Peirce v. Colcord, 113 Mass. 372; Perry, Trusts, §§ 161, 162, and cases cited. The subsequent agreement, or attempt by the wife to convey, does not affect the ques- tion, as a trust must result, if at all, the in- stant the deed passes. Barnard v. Jewett, 97 Mass. 87. The wife therefore held the estate, subject to no trust for the use and benefit of the plaintiff, and the respondents cannot be call- ed upon to release and assign to him any title they may have therein, as her heirs at law. The statute is peremptory that no convey- ance of real estate by a married woman shall be valid without the assent of her husband in writing, or his joining with her In the con- veyance. Gen. St. c. 108, § 3. As the plain- tifC's wife made the deed to Wiley without such assent or joinder no title passed. Demurrer sustained; bill dismissed. RESULTING TRUSTS. 439 BOTSFORD V. BURR. (2 Johns. Ch. 405.) Court of Chancery of New York. 1817. The bill, filed March the 9th, 1815, stated, that the plaintiff, on the first of May, 1813, applied to the defendant for the loan of 900 dollars, to which the defendant agreed, pro- vided he was permitted to purchase in a farm of the plaintiff, bought by him of S. Skidmore, subject to a mortgage given by Skidmore to J. Bogardus, and which was ad- vertised for sale under that mortgage, as security for the payment of the loan. That the defendant accordingly purchased the farm. That the plaintiff had made an agree- ment to purchase of Peter Blmendorf, lot No. 3, lying opposite to the farm of the plain- tiff, for 3,C00 dollars; that the defendant consented to assume this contract, and be- come responsible to Elmendorf for the pur- chase money. That this lot was accordingly conveyed to the defendant, who executed a mortgage to Elmendorf, to secure the pur- chase money. That part of the purchase money, being 500 dollars, was to be paid down, to make up which sum, the plaintiff advanced to the defendant 90 dollars; that he also endorsed to the defendant a note of Edmund Bruyn, dated 10th of March, 1809, for 1,150 dollars, as security for the plain- tiff's advances and responsibilities; and the amount of which note the defendant after- wards recovered. That the defendant has since sold the property for 7,000 dollars. The bill prayed for an account, and that the defendant might be decreed to pay over to him the balance, after deducting his advan- ces, &c. and that he assigii over to the plain- tiff the securities taken, &c. The defendant, in his answer, admitted that the plaintiff applied to him for a loan of about 900 dollars to pay off the mortgage on his farm, then advertised for sale. The defendant refused to lend the money, but offered to purchase the farm, and that if the plaintiff repaid the money and Interest, and the costs and charges. In one month there- after, the defendant would reconvey to him the farm, but on no other condition what- ever. That on the 20th of May, 1813, he pur- chased the property (the Bogardus farm) at auction, being the highest bidder, for 930 dollars, which he paid to the mortgagee, and received his deed. He admitted the verbal agreement between the plaintiff and Elmen- dorf, but the plaintiff being embarrassed, El- mendorf applied to the defendant to purchase the lot No. 3, and he accordingly made the purchase, for 3,600 dollars, with a view to secure to himself certain advantages for pine timber and a mill dam, &c. essential to the Bogardus farm, and for no other object or benefit, and without any understanding, ex- press or implied, with the plaintiff. The deed was dated 1st of May, 1818, but exe- cuted the 28th of .Tune; that to make up 500 dollars to be paid to Elmendorf, the de- fendant borrowed of the plaintiff 90 dollars, AAhich was not understood to be any part of the purchase money, or to give the plaintiff any interest in the purchase, which was made solely for the defendant's benefit, and without any trust, expressed or implied, whatever. For the residue of the pm-chaae money, he executed a mortgage to Elmen- dorf, which had been paid off. That the plaintiff' was insolvent, and had committed waste on the premises; that in the fall of 1813, the plaintiff being desirous to have some part of the property, tlie defendant told him, if he would pay 100 dollars month- ly, he would convey to him some part of the Bogardus farm, in proportion to the money paid; but that if the plaintiff failed, the de- fendant would enter on the premises. That on the 30th of December, 1813, the plaintiff formally assigned to the defendant, the note of E. Bruyn, as an Indemnity for the waste committed, and for boards of the defendant sold by the plaintiff, and agreed to pay 100 dollars a month, and if he failed to do so, there was to be an end of the business. The defendant recovered the amount of the note; but the plaintiff never paid a single sum ac- cording to the agreement. The assignment of the note expressed the consideration to be the amount of the note paid by the defend- ant to the plaintiff. That on the 31st of January, 1814, he contracted to sell the whole property, on both farms, for 7,000 dol- lars, but no conveyance had been executed; and he sold it in his own right, and for his own use, without any reference to the plain- tiff, or any agreement with him. The material parts of the evidence are stated in the judgment of the court. R. Tillotson, for plaintiff. Mr. Sudam, for respondent. THE CHANCELLOR. The bill proceeds on the assumed fact that the defendant pur- chased the Bogardus farm, and the Blmen- dorf lot, as trustee for the plaintiff, and took the deeds in his own name, by agreement between them, for his better security and indemnity, as he was obliged to advance, or become bound for nearly the whole of the consideration money. The defendant is, therefore, called on, as trustee, to account for the proceeds of the subsequent sale of the lands, after being credited for the ad- vances which he has been obliged to make, together with a reasonable allowance for his services as the plaintiff's agent. But as the defendant purchased, at public auction, what is called the Bogardus farm, and took the deed in his own name, and paid his own money; and as he purchased, at private sale, the Elmendorf lot, and paid part of the purchase money, principally with his own funds, and gave his bond and mort- gage for the residue; and as both these pur- chases were made with the knowledge and assent of the plaintiff. It will be somewhat uo RESULTING TRUSTS. difficult to raise a trust In favour of the plaintiff, witbout violating the statute of frauds. The statute (session 10, c. 44, §§ 12, 13) declares, "That all declarations, or creations of trusts, or confidences of any lands, &(■., shall be manifested and proved liy some writing signed by the party, vyho is, or shall be, by law, enabled to declare such trust, or else they shall be utterly void." The statute, however, excepts the case where "any conveyance shall be made of any lands, &c., by which a trust, or confidence, shall arise, or result, by implication or construc- tion of law." It is well settled that such a resulting trust may be established by parol proof. This point was fully considered in Boyd v. llc- I^ean, 1 Johns. Ch. .':>82. The only real doubt or controversy, in this case, is, whether the facts make out a resulting trust under the statute. If A. purchases an estate with his own money, and takes the deed in the name of B., a trust results to A., because he paid the money. The T\hole foundation of the trust is the payment of the money, and that must be clearly proved. "\\'illis v. Willis. 2 Atk. 71. If, therefore, the party who sets up a resulting trust made no payment, he cannot be permitted to show, by parol proof, that the purchase was made for his benefit, or on his account. This would be to overturn the statute of frauds, and so it was ruled by Lord Keeper Henley, in the case of Bartlett v. Pickersgill, 4 l>:ast, 577, note; Hughes v. Moore, 7 Cranch, 17(i. The plaintiff does not pretend, in this case, to have paid any part of the consideration, for the purchase by the defendant, at auction, of the Bogardus farm. The defendant pur- chased that farm for 930 dollars, and paid the money himself, without any advance from the plaintiff. There is then no pretext for set- ting up a resulting trust here, and all parol proof, for that purpose, is inadmissible. The conveyance by Bogardus, the mortgagee, and the payment of the purchase money by the defendant, completed the contract; and no parol proof of parol declarations, inconsistent with the deed, can be received. To admit it, would be repealing the statute of frauds, and would endanger the security of real property resting on title by deed. Nor would a subse- quent advance of money to the purchaser, after the purchase is thus complete and end- ed, alter the case. It might be evidence of a new loan, or be the ground of some new agreement, but it would not attach, by rela- tion, a trust to the original purchase; for the tmst arises out of the circumstance that the moneys of the real, and not of the nominal purchaser, formed, at the time, the considera- tion of that purchase, and became converted into the land. The only money that the plaintiff alleges he advanced was 90 dollars, at the time of the purchase of the Elmendorf lot, and this, he says, was part of the 500 dollars paid by the defendant on receiving the conveyance. It is not pretended, that any further payment was made by the plaintiff at the time of the pur- chase, though it is alleged, that, some time afterwards, he assigned over to the defendant the note of Edmund Bruyn, in furtherance of the same object. A doubt has been suggested In the books, whether a resulting trust can be sustained, where only a part of the consideration was paid by the party claiming to be cestuy que trust. Lord Hardwicke held that it could not, according to the case of Crop v. Norton, 2 Atk. 74, 9 Mod. 2a;!. He there said, that where the purchase money was paid by one, and the conveyance taken in the name of an- other, there was a resulting trust for the per- son who paid the money, but that this was where "the whole purchase money" was paid by one person, and that he never knew it to be so, where the consideration moved from several persons. He, accordingly, held, that as only part of the consideration, in that case, moved from N., there was no resulting trust in him. I doubt whether this case is to be understood to apply; and it cannot be re- ceived as correct, where only a single indi- vidual claims the benefit of the trust; for the cases recognize the trust where the money of A. formed only a part of the consideration of the land purchased in the name of B. The land, in such case, is to be charged pro tanto. This seems to be the language of the case of Ryal V. Ryal, 1 Atk. 59, Amb. 413, and of Bartlett v. Pickersgill, already referred to. So, also, in Lane v. Dighton, Amb. 409, only part of the consideration of the purchase arose from trust moneys, and yet the decree followed the money into the land. This is the most reasonable application of the rule; and, in the late case of Wray v. Steele, 2 Ves. & B. 388, the vice chancellor held, that there might be a resulting trust by a joint advance, by two or more, upon a purchase in the name of one, and that there was no reason for con- fining the advance to a single individual, to constitute a resulting trust. He did not be- lieve that Lord Hardwicke, ever used the dic- tum imputed to him in Crop v. Norton, 2 Atk. 74, 9 Mod. 233. We will now examine the proof of the pay- ments charged to have been made by the plaintiff. The defendant, in his answer, admits the loan of the 90 dollars, to make up the first payment of the 500 dollars to Elmendorf. He says, it was simply a loan, and not ad- vanced as a payment by the plaintiff of any part of the consideration. The plaintiff's vntnesses, Hixson and Couch, say, that these 80 dollars, or 90 dol- lars, were advanced by the plaintiff, on ac- count of the purchase under the mortgage sale; one of them says, he was present at the sale under the mortgage, and that the defendant then told him that the plaintiff had, on that day, advanced him the 80 dollars on account of the purchase. It will be recollect- ed, that this sale, under the mortgage of the BESULTING TRUSTS. 441 Bogardus farm, was on the 12th of May, and the purchase from Blmendorf, on the 28th of June, and that the plaintiff charges, and the defendant admits, that the advance of the 80 dollars, or 90 dollars, was at the latter pur- chase. None is pretended to have been made at the former purchase, and yet these wit- nesses fix, with so much precision, the ad- vance at that time. This is a remarkable in- stance of the inaccuracy and fallacy of parol testimony, and shows the great danger there is of giving much latitude to these imphed trusts, founded on naked declarations, in op- position to the solemnity and certainty of written documents. Another witness (Wm. Doll) says, he heard the defendant acknowledge the receipt of from 80 to 100 dollars from the plaintiff, "on account of their contracts." This is too loose and general to be of much weight. Henry Upham is the only witness who directly sup- ports the allegation in the bill. He says the defendant told him, in the autumn of 1803, that "he had received 80 dollars of the plaintiff, towards purchasing the Elmendorf lot." Here is an inaccuracy in this witness: for both parties admit, that the sum advan- ced in aid of that purchase, was 90 dollars; but the question still arises, was the money advanced as a loan to the defendant, or as a payment, pro tanto, by the plaintiff to the vendor. The testimony which I have stated as to this point (and it is all there is) is ex- tremely imperfect. There was, no doubt, an advance by the plaintiff of 90 dollars, at the time of the purchase of the Elmendorf lot, but whether it was advanced to accommodate the defendant, or as payment of so much by the plaintiff to the vendor, through the agen- cy of the defendant, is a point not clearly as- certained. All the proof seems to consist of confessions of the defendant; yet those con- fessions will, most of them, apply as well to the pretence on one side as on the other. He received 90 dollars of the plaintiff towards paying for the Elmendorf lot; but it is still uncertain whether it was considered as an advance by the plaintiff towards the pur- chase, on his own, or on the defendant's ac- count. It is dangerous to trust to such in- accurate witnesses, as those who testify con- cerning this payment. The observation of Sir Wm. Grant, 10 Ves. 517, is very applica- ble to this case, and he was speaking on a similar point. "The witness swears to no fact or circumstance, capable of being inves- tigated or contradicted, but merely to a naked declaration of the purchaser, admitting that the purchase was made with the trust money. That is, in all cases, most unsatisfactory evi- dence, on account of the facility with which it may be fabricated, and the impossibility of contradicting it. Besides, the slightest mistake or failure of recollection, may totally alter the effect of the declaration." The situation of the parties, at the time, is sufficient to throw doubt on the suggestion, that the 90 dollars were advanced by the plaintiff, as part payment of a purchase ac- tually made on his account. He was, at the time, absolutely insolvent, and could not pay a debt of 50 dollars, which he owed to an- other person. He had not been able, a few weeks before that purchase, to redeem a farm, with its mills, for 930 dollars, but suf- fered the same to be purchased by the de- fendant, without any payment on his part. The Elmendorf lot was then purchased for 3,600 dollars, and of which sum 500 dollars were to be paid immediately. The plaintiff was utterly unable to engage in this purchase. Is it then probable that, under all these cir- cumstances, 90 dollars would be seriously con- sidered, by either party, as paid by the plain- tiff on his own account, or that the purchase was made for his benefit? But the plaintiff, on the 30th of December, 1813, which was six months after the pur- chase of the Elmendorf lot, assigned to the defendant a note against Edmund Bruyn; and this is put forward as a payment of part of the purchase money, from which the resulting trust was to arise. The bill charges, that the note was en- dorsed to the defendant, "as a security for the advances and responsibilities entered in- to by the defendant for the plaintiff';" and it says, afterwards, that it was "for the purpose of procuring a reconveyance or as- signment of the said farm, so bid off at public auction by the defendant, and of the lot No. 3, purchased of Elmendorf." It is not easy to reconcile these distinct reasons, stated in the bill, for the assign- ment of the note; but if we adopt either of them as the true reason. It does not appear that the note was assigned, truly and dis- tinctly, as a part payment, by the plaintiff, of the purchase money belonging to the ven- dor, upon either of the sales. The note af- fords no ground for a resulting trust spring- ing out of the purchase of either farm by the defendant, because such a trust arises only from the paj'ment, originally, of the purchase money (or, at least, a part of it) by the party setting up the trust. The as- signment of this note was an after thought and transaction: and, according to the latter reason mentioned in the bill, it was made for the purpose of procuring a reconveyance, a matter entirely distinct from the trust we are considering. The answer of the defend- ant puts the assignment of the note on other ground. It was made "as an indemnity for the waste committed on the property by the plaintiff, and for the boards belonging to the defendant (which had been sold by the plaintiff), and in order to induce the defend- ant to give to the plaintiff the only oppor- tunity he required of making some payment, so as to induce the defendant voluntarily to convey to him some part of the tract pur- chased under the mortgage sale." The plaintiff's witnesses who speak of this note, give a different reason for the assign- ment, and one not exactly consistent with 442 RESULTING TRUSTS. the allegations of either party. Hixsan says, it was assigned "on account of moneys ad- vanced by the defendant for the plaintiff, on the purchase of both the farms." It does not appear how the witness came to the Icnowledge of this fact; and considering his great Inaccuracy on another point, as I have already shown, we cannot place much re- liance upon the correctness of this assertion, unaccompanied with any reason or authority for making it. But assuming the fact as stated (and we may do it with the more safety, since Upham. another witness, tes- tifies to the same fact, as coming to him from the repeated acknowledgments of the defendant) the assignment of the note, even for such a purpose, cannot raise a trust out of either of the conveyances to the defend- ant. The trust must have been coeval with the deeds, or it cannot exist at all. After a party has made a purchase with his own moneys or credit, a subsequent tender, or even reimbursement, may be evidence of some other contract, or the ground for some other relief, but it cannot, by any retro- spective effect, produce the trust of which we are speaking. There never was an in- stance of such a trust so created, and there never ought to be, for it would destroy all the certainty and security of conveyances of real estate. The resulting trust, not within the statute of frauds, and which may be shown without writing, is when the pur- chase is made with the proper moneys of the cestuy que ti'ust, and the deed not taken in his name. The trust results from the original transaction, at the time it takes place, and at no other time; and it is found- ed on the actual payment of money, and on no other ground. It cannot be mingled or confounded with any subsequent dealings whatever. They are to be governed by dif- ferent principles, and the doctrine of a re- sulting trust would be mischievous and dan- gerous, if we once departed from the sim- plicity of this rule. It is a very questionable doctrine, in the view of policy, even under this limitation; and it has been admitted with great caution, as is manifest from the cases which were reviewed in Boyd v. Mc- Lean, 1 Johns. Ch. 582. But there is an objection to the parol proof, in respect to the assignment of the note. It was assigned to the defendant by a very formal instrument under seal, and, as the Instrument stated, "in consideration of the said sum of money now due on said note, and to him in hand paid by the de- fendant." The parties were concluded by this deed from setting up a different con- sideration, except upon the allegation of fraud, mistake, or surprise. 1 Johns. Ch. p. 429. On no other ground can a deed be con- tradicted by parol proof. We must take the consideration to be what it is stated to be in the assignment, except so far as the de- fendant has admitted, in his answer, a differ- ent consideration; and that admission in this case, even if we join with it the ad- mission of the plaintiff, is of no use as to the charge of a resulting trust. We are, then, brought to this conclusion, that the defendant was not, in any respect, a trustee to the plaintiff in the purchase of the Bogardus farm; and that he was not a trustee in the purchase of the Elmendorf lot, unless in a very small degree, or in the ratio that 90 dollars bear to 3,600. If the payment of part of the consideration raises a trust, it, certainly, cannot raise it beyond the proportion of the money paid. It can only be a charge, as one of the cases ex- presses it, pro tanto; and in this case the trust, even if admitted, is to so inconsider- able an amount, as not to be worth contend- ing for. The difference between the 90 dol- lars with interest, considered as a loan, and a rateable proportion of the price for which the Elmendorf lot was sold by the defend- ant, is very immaterial. But if the plain- tiff is entitled to pursue that sum into the land, the smallness of the demand will not be an obstacle. The proof of the payment of the 90 dollars by the plaintiff, as a part of the purchase money, is not, however, sat- isfactory; and if it was, there is evidence that the plaintiff afterwards discharged the trust. It is well settled that parol evidence is admissible to rebut a resulting trust. If the plaintiff, by his bill, sets up an equity founded on parol proof, it may be rebutted, put down, or discharged, by parol proof. Walker v. Walker, 2 Atk. 98; Lake v. Lake, Amb. 126; Roe v. Popham, Doug. 24. There may be a parol waiver even of a written agreement. Price v. Dyer, 17 Ves. 356. Now, in this case, it is in proof that after the sale of the Elmendorf lot by the defend- ant, the plaintiff disclaimed any right or title to It. He declared to Wm. Tremper, "that the defendant had sold the land to Hendrickson and others, and made some- thing by it. That the whole was the de- fendant's, and he had nothing to do with It. That he had failed in every one of his contracts with the defendant; and that he had no Interest in either of the said tracts of land. That the defendant did with it as he pleased, and that he had no claim on the defendant, unless the defendant chose to give him something." I am, accordingly, of opinion, that the plaintiff has failed in charging the defend- ant as a trustee, in the purchase of either of the tracts of land mentioned in the bill. The defendant Is, therefore, bound to ac- count for the 90 dollars, with interest, and for the amount of the note assigned to him, with Interest. This is what he offered to do by his answer. But he claims likewise the benefit of the consideration, for which he admits the note to have been assigned, and which was for waste committed on the lands between the time of the purchase by the defendant and the assignment of the note, and for boards of the defendant's RESULTING TRUSTS. 443 which the plaintiff sold. It appears, also, hy the testimony of two of the witnesses (Hixson and Upham), that after the pur- chase of the Elmendorf lot by the defend- ant, and before the sale by him, the plain- tiff had made beneficial improvements upon it; and as It appears that the plaintiff was suffered to continue in possession, under some indistinct encouragement held out by the defendant, that he might eventually be- come interested in the lands, it is equitable, imder all the circumstances of this case, that the plaintiff should have a reasonable allow- ance made him, for such beneficial and per- manent improvements as he may have made on the lands, between the time of the pur- chase and sale of the defendant, as stated in the pleadings. I shall, accordingly, direct a reference to a master, to take and state an account be- tween the parties upon the following prin- ciples, viz. That he compute the amoimt of the loan of 90 doUars, and of the note as- signed, with interest; that he ascertain, by proof, the damages, if any, arising from waste, committed by the plaintiff, or by his direction, on any part of the lands, between the time of the purchases and the sale there- of by the defendant; also the amount of boards belonging to the defendant upon the said lands, and sold, or otherwise converted by the plaintiff; and that he further ascer- tain the value of the beneficial and lasting improvements, if any, made by the plaintiff on either of the tracts of land, during the period aforesaid; also, what would be a reasonable allowance to the defendant for the use and occupation of the said lands by the plaintiff, during the same period. All further questions are reserved until the com- ing in of the report. Decree accordingly. 444 RESULTING TRUSTS. DYER V. DYER. 2 Cox, Ch. 92. Court of Chancery. Nov. 27, 1788. In 1737 certain copyhold premises holden of the manor of Heytesbury, in the county of Wilts, were granted by the lord, accord- ing to the custom of that manor, to Simon Dyer (the plaintiff's father), and Mary, his wife, and the defendant William (his other son), to take in succession for their lives, and to the longest liver of them. The pur- chase money was paid by Simon Dyer, the father. He survived his wife, and lived un- til 1785, and then died, having made his will, and thereby devised all his interest in these copyhold premises (amongst others) to the plaintiflf, his younger son. The present bill stated these circumstances, and insisted that the whole purchase money being paid by the father, although, by the form of the grant, the wife and the defendant had the legal interest in the premises for their lives in succession, yet in a court of equity they" were but trustees for the father, and the bill therefore prayed that the plaintiff, as devisee of the father, might be quieted in the pos- session of the premises during the life of the defendant. The defendant insisted that the insertion of his name in the grant operated as an ad- vancement to him from his father to the ex- tent of the legal interest thereby given to him. And this was the whole question in the cause. This case was very fully argued by Mr. Solicitor General and Ainge for plain- tiff, and by Burton & Morris, for defend- ant. The following cases were cited, and very particularly commented on: Smith v. Baker, 1 Atk. 385; Taylor v. Taylor, Id. 386; Mumma v. Mumma, 2 Vern. 19; Howe v. Howe, 1 Vern. 415; Anon., 1 Freem. Ch. 123; Benger v. Drew, 1 P. Wms. 781; Dickinson V. Shaw, before the lords commissioners in 1770; Bed well v. Froome, before Sir T. Sewell, on the 10th May, 1778; Row v. Bow- den before Sir L. Kenyon, siting for the lord chancellor; Crisp v. Pratt, Cro. Car. 549; Scroope v. Scroope, 1 Ch. Cas. 27; Elliot v. Elliot, 2 Ch. Cas. 231; Ebrand v. Dancer, Id. 26; Kingdon v. Bridges, 2 Vern. 67; Back V. Andrew, Id. 120; Bundle v. Bundle, Id. 264; Lamplugh v. Lamplugh, 1 P. Wms. Ill; Stileman v. Ashdown, 2 Atk. 480; Pole v. Pole, 1 Ves. Sr. 76. LORD CHIEF BARON, after directing the cause to stand over for a few days, delivered the judgment of the court. The question between the parties in this cause Is whether the defendant is to be considered as a trustee for his father in re- spect of his succession to the legal interest of the copyhold premises in question, and whether the plaintiff, as representative of the father, Is now entitled to the benefit of that trust. I intimated my opinion of the question on the hearing of the cause, and I then Indeed entertained very little doubt upon the rule of a court of equity, as ap- plied to this subject; but as so many cases have been cited, some of which are not In print, we thought it convenient to take an opportunity of looking more fully Into them, in order that the ground of our decision may be put in as clear a light as possible, espe- cially in a case in which so great a differ- ence of opinion seems to have prevailed at the bar. And I have met with a case in ad- dition to those cited, which is that of Rum- boll V. Rumboll, 2 Eden, 15, on the 20th April, 1761. The clear result of all the cases, without a single exception. Is that the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers and others jointly, or in the name of others without that of the pur- chaser; whether in one name or several; whether jointly or successive,— results to the man who advances the purchase money. This is a general proposition, supported by all the cases, and there is nothing to con- tradict It; and it goes on a strict analogy to the rule of the common law that, where a feoffment is made without consideration, the use results to the feoffer. It is the estab- lished doctrine of a court of equity that this resulting trust may be rebutted by circum- stances in evidence. The cases go one step further, and prove the circumstance of one or more of the nominees, being a child or chil- dren of the purchaser, is to operate by re- butting the resulting trust; and It has been determined in so many cases that the nom- inee, being a child, shall have such operation as a circumstance of evidence, that we should be disturbing landmarks if we suf- fered either of these propositions to be called in question, namely, that such circumstance shall rebut the resulting trust, and that it shall do so as a circumstance of evidence. I think it would have been a more simple doctrine if the children had been considered as purchasers for a valuable consideration. Natural love and affection raised a use at common law. Surely, then, it will rebut a trust resulting to the father. This way of considering it would have shut out all the circumstances of evidence which have found their way into many of the cases, and would have prevented some very nice distinctions, and not very easy to be understood. Con- sidering it as a circumstance of evidence, there must be, of course, evidence admitted on the other side. Thus It was resolved into a question of intent, which was getting into a very wide sea, without very certain guides. In the most simple case of all, which is that of a father purchasing In the name of his son, it is said that this shews the father in- tended an advancement, and therefore the resulting trust is rebutted; but then a cir- cumstance is added to this, namely, that the son happened to be provided for. Then the question is, did the father intend to ad- vance a son already provided for? Lord Not- RESULTING TRUSTS. 445 tlngham could not get over this, and he ruled that in such a case the resulting trust was not rebutted; and in Pole v. Pole, 1 Ves. Sr. 76, Lord Hardwicke thought so too; and yet the rule in a court of equity as rec- ognized In other cases is that the father is the only judge as to the question of a son's provision. That distinction, therefore, of the son being provided for or not, is not very solidly taken or uniformly adhered to. It is then said that a purchase in the name of a son is a prima facie advancement, and, indeed, it seems difficult to put it in any way. In some of the cases some circumstan- ces have appeared which go pretty much against that presumption, as where the father has entered and kept possession, and taken the rents; or where he has surrendered or devised the estate; or where the son has given receipts in the name of the father. The answer given is that the father took the rents as guardian of his son. Now, would the court sustain a bill by the son against the father for these rents? I should think it pretty difficult to succeed in such a bill. As to the surrender and devise, it is answered that these are subsequent acts; whereas the intention of the father in taking the pur- chase in the son's name must be proved by concomitant acts; yet these are pretty strong acts of ownership, and assert the right, and coincide with the possession and enjoyment. As to the son's giving receipts in the name of the father, it is said that, the son being under age, he could not give re- ceipts in any other manner; but I own this reasoning does not satisfy me. In the more complicated cases, where the life of the son is one of the lives to take in succession, other distinctions are taken. If the custom of the manor be that the first taker might surren- der the whole lease, that shall make the other lessees trustees for him; but this cus- tom operates on the legal estate, not on the equitable interest; and therefore this is not a very solid argument. When the les- sees are to take successive, it is said that, as the father cannot take the whole in his own name, but must insert other names in the lease, then the children shall be trustees for the father; and to be sure, if the cir- cumstance of a child being the nominee is not decisive the other way, there is a great deal of weight in this observation. There may be many prudential reasons for putting in the life of a child in preference to that of any other person; and if in that case it is to be collected from circumstances wheth- er an advancement was meant, it will be difficult to' find such as will support that idea. To be sure, taking the estate in the name of the child, which the father might have taken in his own, affords a strong ar- gument of such an intent; but where the estate must necessarily be taken to him in succession, the inference is very different. These are the difficulties which occur from considering the purchase in the son's name as a circumstance of evidence only. Now, if it were once laid down that the son was to be taken as a purchaser for a valuable consideration, all these matter of presump- tion would be avoided. It must be admitted that the case of Dick- inson v. Shaw is a case very strong to sup- port the present plaintiff's claim. That came on in chancery, on 22d May, 1770. "A copy- hold was granted to three lives to take in succession, the father, son, and daughter. The father paid the fine. There was no custom stated. The question was whether the daughter and her husband were trustees during the life 'of the son, who survived the father. At the time of the purchase the son was nine and the daughter seven years old. It appeared that the father had leased the premises from three years to three years to the extent of nine years. On this case Lords Commissioners Smythe and Aston were of opinion that, as the father had paid the purchase money, the children were trus- tees for him." To the note I have of this case it is added that this determination was contrary to the general opinion of the bar, and also to a case of Taylor v. Alston, in this court. In Dickinson v. Shaw there was some little evidence to assist the Idea of its being a trust, namely, that of the leases made by the father. If that made an in- gredient in the determination, then that case is not quite in point to the present; but I rather think that the meaning of the court was that the burthen of proof laid on the child; and that the cases which went the other way were only those in which the estate was entirely purchased in the name of the children. If so, they certainly were not quite correct in that idea, for there had been cases in which the estates had been taken in the names of the father and son. I have been favoured with a note of Rum- boll V. RumboU, before Lord Keeper Henley on the 20th April, 1761, where a copyhold was taken for three lives in succession, the father and two sons. The father paid the fine, and the custom was that the first taker might dispose of the whole estate (and his lordship then stated that case fully). Now, this case does not amount to more than an opinion of Lord Keeper Henley, but he agreed with me in considering a child as a purchaser for good consideration of an estate bought by the father in his name, though a trust would result as against a stranger. It has been supposed that the case of Taylor v. Alston in this court denied the authority of Dickinson v. Shaw. That cause was heard before Lord Chief Baron Smythev myself, and Mr. Baron Burland, and was the case of an uncle purchasing In the names of himself and a nephew and niece. It was decided In favour of the neph- ew and niece, not on any general idea of then: taking as relations, but on the result of much parol evidence, which was admit- ted on both sides, and the equity on the ^16 RESULTING TRUSTS. Side of the nominees was thought to pre- ponderate. Lord Kenyon was In that cause, and his argument went solely on the weight of the parol evidence. Indeed, as far as the circumstance of the custom of the first tak- er's right to surrender, it was a strong case in favour of a trust. However, the court determined the other way on the parol evi- dence. That case, therefore, is not material. Another case has been mentioned, which is not in print, and which was thought to be materially applicable to this (Bed well v. Froome, before Sir T. Sewell) ; but that was materially distinguishable from the present. As far as the general doctrine went, it went against the opinion of the lords commis- sioners. His honour there held that the copy- holds were part of the testator's personal estate, for that was not a purchase in the name of the daughter. She was not to have the legal estate. It was only a contract to add the daughter's life in a new lease to be granted to the father himself. There could be no question about her being a trustee, for it was as a freehold in him for his daughter's life. But in the course of the argument his honour stated the common principles as applied to the present case, and ended by saying that, as between father and chUd, the natural presumption was that a provision was meant. The anonymous case in 1 Freem. Ch. 123, corresponds very much with the doctrine laid down by Sir T. Sewell, and It observes that an advance- ment to a child is considered as done for valuable consideration, not only against the father, but against creditors. Kingdon v. Bridges, 2 Vem. 67, is a strong case to this point,— that is, the valuable nature of the consideration arising on a provision made for a wife or for a cUld; for there the ques- tion arose as against creditors. I do not find that there are in print more than three cases which respect copyholds where the grant is to take , successive, — Run- die v. Rundle, 2 Vern. 264, which was a case perfectly clear; Benger v. Drew, 1 P. Wms. 781, where the purchase was made partly with the wife's money; and Smith v. Baker, 1 Atk. 385, where the general doctrine as applied to strangers was recognized; but the case turned on the question whether the In- terest was well devised. Therefore, as far as respects this particular case, Dickinson v. Shaw is the only case quite In point; and then the question Is whether that case Is to be abided by. With great reverence to the memory of those two judges who decided it, we think that case cannot be followed; that it has not stood the test of time, or the opinion of learned men; and Lord Kenyon has certainly Intimated his opinion agamst it. On examination of its principles, they seem to rest on too narrow a foundation, namely, that the inference of a provision bsiug Intended did not arise, because the purchase could not have been taken wholly in the name of the purchaser. This, we think, is not sufficient to turn the presump- tion against the child. If it Is meant to be a trust, the purchaser must shew that intention by a declaration of trust; and we do not think it right to doubt whether an estate In succession is to be considered as an advancement, when a moiety of an es- tate in possession certainly would be so. If we were to enter into all the reasons that might possibly influence the mind of the purchaser, many might perhaps occur in every case upon which it might be argued that an advancement was not intended. And I own it is not a very prudent conduct of a man just married to tie up his property for one child, and preclude himself from providing for the rest of his family. But this applies equally In case of a purchase in the name of the child only, yet that case is admitted to be an advancement; Indeed, If anything, the latter case is rather the strongest, for there it must be confided to one child only. We think, therefore, that these reasons partake of too great a degree of refinement, and should not prevail against a rule of property which Is so well estab- lished as to become a landmark, and which, whether right or wrong, should be carried throughout This bill must therefore be dismissed; but, after stating that the only case in point on the subject Is against our present opinion, It certainly will be proper to dismiss It with- out costs. RESULTING TRUSTS. 447 COOK et al. v. PATRICK et al. (26 N. E. 658, 135 111. 499.) Supreme Court of Illinois. Jan. 21, 1891. Errorto circuit court, McDonough coun- ty ; Charles J. Schofield, Judge. Bill by Hannah C. Cook and others, heirs of William L. Stinson, (alias Steven- son,) deceased, against Charles Patrick, Oeorgetta Patrick, and others, t& estab- lish title to certain real and personal prop- erty. Complainants bring error. Smith & Helmer and Prentiss & Baily, for plaintiffs in error. TuanicliO & Tunni- cliff and C. F. Wheat, for defendants in er- ror. Baker, J. In 1820. a .young man, who was known in the community as William L. Stevenson, was living and keeping ho- tel at a place called Downingsville, in the state of Kentucky. He subsequently re- moved to Lexington, in that state, and was there engaged in the boot and shoe business for a number of .years. He was married at Lexington, on May 4, 1834, to one Catherine B. Patrick, and four chil- dren were born of the marriage. A few years after the birth of these children he failed in business, and became insolvent; and then his wife and two of the children died. In 1856 he removed, taking his two remaining children with him, to Colches- ter, in the state of Illinois, where several brothers of his deceased wife were living, and were engaged in merchandising. He was at first a clerk in the store of John Patrick, then a clerk in the store of Will- iam Patrick, and then took charge of the store of the latter. Subsequently he was engaged in a partnership business with Charles Patrick, one of the defendants herein, who was son of another brother of his deceased wife. His other two daughters, Ellen and Mary, died without issue, in 1856 and 1857, respectively. In the years 1859, 1860, 1861, 1863, 1865, 1866, 1869, and 1874, said William L. Stevenson bargained for and purchased various tracts of land and town lots, and paid for the same with his own money, and at the time of the purchase of each of said several premises the deeds therefor were by his special direction made to Martha P. Pat- rick, (now Ringen,) Charles Patrick, and Georgetta Patrick, the defendants in er- ror, respecti vely ; some of said conveyances being made to one and some to another of said three persons. These conveyances were delivered to Stevenson, were not re- corded until after his death, and were held and retained in his possession until after or shortly before his decease. Upon the delivery of each of said deeds to Stevenson he took possession of the premises in each deed desci'ibed, and used and controlled the same, and received the rents, Issues, and profits thereof, and repaired and built housefj thereon, with his own money, or with money received from rents, and paid all taxes thereon out of his own moneys, but taking receipts lor such taxes in the names of the several grantees men- tioned in each of said respective deeds, severally. Said Stevenson also loaned various sums of his own money to different persons, and other persons became other- wise indebted to him in various amounts, and for such loans and other indebtedness he took promissory notes. Some of these notes were made payable to himself, and others, by his special direction, made pay- able to Georgetta Patrick ; and many of these latter notes were secured by mort- gages on real estate, and the mortgages, by his direction, made to said Georgetta. These notes and mortgages were delivered to said Stevenson, and retained in his pos- session, and he collected all the accrued interest tliereon which was paid prior to his death. Said Stevenson died intestate at Colchester on April 6, 1881, being some 80 or 90 years of age, and leaving surviv- ing him no widow or descendants. Charles Patrick was appointed adminis- trator of his estate. The deeds to said Charles Patrick and to Martha C. Patrick (now Ringen) and Georgetta Patrick were placed upon record by them, and they thereupon severally claimed the absolute ownership of the tracts of land and town lots deeded to them respectively, and took possession of the same, and collected and appropriated the rents, and made sales and conveyances to other persons of vari- ous parcels thereof. The present bill in chancery was exhibit- ed in the McDonough circuit court by the plaintiffs in error, Hannah C.Cook and others, against Charles Patrick and his two sisters and the purchasers of real estate from them. It is claimed in the bill that the man commonly called William L. Stevenson, who died intestate at Col- cliester on the 6th day of April, 1881, was in truth and in fact one William L. Stin- son, a son of one Robert Stinson, of Boden- ham, in the state of Maine, and that they (plaintiffs in error) are the heirs at law of the said William L. Stinson, deceased. It is also claimed in the bill that the deeds to the Patricks were not delivered to them in the life-time of the Intestate, and that the latter, when he died, was the real owner of all the real estate described in said deeds; and that the notes and mort- gages taken by the intestate remained in his possession and control during his life- time, and were his property at the time of his death. The prayer of the bill, suc- cinctly stated, is that the real estate and personal property in question be decreed to be the property of the plaintiffs in er- roi , that all conveyances made bj' the Patricks of said real estate be set aside; and that the Patricks account for all monej's collected from notes, bonds, ac- counts, and sales of said property. An- swers were filed and issues formed, and upon the hearing of the cause the court found that the promissory notes which were made payable to W. L. Stevenson were not given by said Stevenson in his life-time to Georgetta Patrick so as to in- vest her with the title to them or the pro- ceeds thereof; and that said Georgetta had, under claim of ownership, and since the death of said Stevenson, collected $547.47 on said notes ; and that said $547.47. and the unpaid notes which had been made payable to said Stevenson, belonged and were due to the estate of said Steven- son. It was ordered and decreed that said Georgetta pay said S547.47 collected 448 RESULTING TRUSTS. by her, and deliver the residue of tlie notes so payable to Stevenson, within 60 days to the administrator, and that the administrator account to the estate for said money and notes. The court further found that plaintiffs in error were not en- titled to any other or further relief in the premises than that above mentioned, and as to all other and further matters the bill was dismissed. Plaintiffs in error are dissatisfied with the limited measure of relief that was de- creed to them upon their bill of complaint, and bring the record to this court. We deem it unnecessary to consider in detail the various assignments of error. There are several matters in controversy which may be disposed of quite briefly. We are inclined to think that the evidence suffi- ciently shows the identity of the man commonly called William L. Stevenson, who died at Colchester, in this state, in 1S81, with the William L. Stinson of Bo- denham, in the state of Maine, who left that state early in the present century for the purpose of avoiding the vengeance of the brother of a girl whom he had wronged. We will also assume for the purposes of the decision that the allega- tions of the bill and the proofs introduced at the hearing make it manifest that plaintiffs in error are heirs at law of said William L. Stinson, deceased. It is claimed that by plaintiffs in error there was no such delivery of the deeds to the grantees named therein as would pass to them the titles to the lands. It would seem that, in order to divest the several grantors in said deeds of their titles, it is essential to the claim made by said plain- tiffs in error that the deeds should be re- garded as properly delivered. But, waiv- ing this, and waiving any consideration of the testimony tendingto show an actual delivery of the conveyance by Stevenson, Hlias Stinson, to Georgetta Patrick for said grantees, we think that a sufficient delivery of the deeds and acceptance of the same by the several grantees named there- in appears from the evidence. Stevenson, in making the purchases and taking the deeds, assumed to be acting as agent of the nominal purchasers mentioned in the respective deeds, although he was in fact acting without their knowledge. At the times of the various purchases the gran- tors in theseveral deeds delivered the same to Stevenson, the supposed agent, abso- lutely and unconditionally, and for the express purpose of divesting themselves of their respective titles and vesting such ti- tles in the grantees named in said several conveyances. Subsequently said grantees accepted and approved the acts of the self- constituted agent, and fully ratified and confirmed the same by accepting the deeds, and having the same recorded, and claiming title under them. If a deed is de- Mvered to one who has no authority from Ihe grantee to receive it, yet the grantee may ratify the act of acceptance, and the delivery will be good, even In cases vphere the deed is nj^ade without the grantee's knowledge. Morrison v. Kelly, 22 111. 610; Eawson v. Fox, 65 111. 200; Crocker v. Lowenthal, 83 111. 579; Bryan v. Wash, 2 Oilman. 557; Byars v. Spencer, 101 111. 429. The grantors In the several deeds parted with all dominion over them when they delivered them to Stevenson, alias Stin- son, and, as the latter was not a grantor in any of the deeds, it was not essential that he should deliver them or any of them to the grantees, or that there should be a delivery of them to such grantees in his life-time. The absolute delivery of the deeds to Stevenson, and the accept- ance of them by him, and the subse- quent ratification by the grantees of such acts of acceptance, were amply suf- ficient to invest such grantees with title. We do not regard the cases cited by plain- tiffs in error, where the deeds were not delivered by the grantors, and did not pass from their control and dominion in their life-times, and where it was held thatthere was no divestiture of the titles of such grantors, as here in point. We think the material questions in the ease whether or not there were resulting trusts in favor of Stevenson, alias Stin- son, and, if so, in respect to the nature, character, and extent of such trusts. It is suggested by counsel that if Stinson bought the lands, and paid for them wifh his own money, then he was the equitable owner of such lands, although the deeds were made to third persons. It is a prin- ciple of the law that where one buys proper- ty and pays the purchase money with his own funds, and has the title placed in the name of another person, a resulting trust arises in favor of him who has so paid the purchase money, and he is regarded as the equitable owner of the property bought. But to this doctrine of implied trusts there are various exceptions, quail- fications, and limitations. Such a trust is a mere creature of equity, founded upon presumptive intention, and designed to car- ry that intention into effect, not to defeat it. Itit is not the intention that the estate shall vest in him who pays the purchase price, then no resulting trust in his favor attaches to the property ; and there may be a resulting trust as to a part of the property, or a part of the interest therein, and not as to the residue, according to the intent existing in such particular case. In 2 Story, Eq. Jur. § 1202, it is said: "There are other exceptions to the doc- trine of a resulting or implied trust, even where the principal has paid the purchase money ; or, perhaps, more properly speak- ing, as the resulting or implied trust is, in such cases, a mere matter of presumption, it maybe rebutted by other circumstances established in evidence, and even by parol proofs, which satisfactorily contra- dict it. And resulting and implied trusts In such cases may, in like manner, be re butted, as well to part of the land as to part of the interest in the land purchased in the name of another. Thus, where A. took a mortgage in the name of B., declar- ing that he intended the mortgage to bo for B.'s benefit, and that the principal, after his own death, should be B.'s, and A. received the interest therefor during his life-time, it was held that the mortgage belonged to B. after the death of A. " In Lewin, Trusts, p. 169, § 15, it is said : "As the trust results to the real purchaser by presumption of law, which is merely an arbitrary implication in the absence of i reasonable proof to the contrary, thf RESULTING TRUSTS. 44a nominal purcliasei- is at liberty to rebut the preHumption by the production of parol evidence showing the intention of conferring the beneficial interest. And as he may repel the presumption id toto, so he may in part; as, by proving the purchasers' intention to permit the legal tenant to enjoy beneficiall.y for life." See, also, 1 Perry, Trusts, § 139; 2 Pom. Eq. .lur. § 1040. and note 1; and Bisp. Eq. § 63, p. 94. Benbow v.Townsend,! Mylne & K. 506, was in many respects like the case at bar. It was there held that, where land was purchased with the money of A. in the name of B., the resulting trust to A. may be rebutted as to part of the land or part of the interest in the land ; and also held that, where A. took a mortage in the name of B., declaring that the principal sum should be for the benefit of B., and received the interest during his life, it was held that the property, after the death of A., will belong to B. by force of the parol declaration. The master of the rolls there said: "In the case of Lloyd v. Spil- let, 2 Atk. 148, and also in the case of Lane v. Dighton, 1 Amb. 409. it is express- ly decided that a resulting trust may be rebutted as to part of the land comprised in a deed, and prevail as to the remain- der; and if it can be rebutted as to a part of the land, there can be no reason why it may not be rebutted as to a part of the interest in the land. But in this case, the trust being of personal estate, the case is not within the statute of frauds or the doctrine of resulting trusts under that statute, but the property will belong to the brother after the testator's death, by force of the testator's declara- tion that the t",'o thousand pounds should, after his death, be the property of his brother Job. " It appears from the report of the case that the brother, Job, knew nothing of the transaction of the taking of the mortgage, etc. It also ap- pears therefrom that the same point was there made in argument that seems to be made in the case at bar, — that the equita- ble title raised by the parol evidence must be exactly commensurate with the legal title on the face of the instrument. From the conclusion reached it is mani- fest that it was considered that it was competent for A., who loaned the money, to reserve a portion of the equitable in- terest in the mortgage to himself, giving the remainder of it, as well as the legal title, to his brother. See. also, Maddison v. Andrew, 1 Ves. Sr. 58. In Rider v. Kid- der, 10 Ves. 360, while the case was the re- verse in respect to the interests retained and donated, the principle was the same; and Lord Chancellor Ei-i)ON said: "Upon the evidence, the utmost intended was to secure to her [meaning the nominal pur- chaser] an income; and, if that only was intended, it by no means destroys the ex- istence of trust, for, if the intention was to give to her an estate for life, not depend- ent upon his will, still the capital would be his." Emmons v. Moore, 85 111. 304, is an authority in this state which fully rec- ognizes the principle that, where a person buys land and pa.ys the consideration money, and takes the deed in the name of another, parol evidence is admissible to show that the real purchaser Is not in- HUTOH.& BUNK.EQ.— 29 tenaea to be the beneficiary of the result- ing trusts, and to indicate who is the donee of the beneficial interest under such trust. It only remains to apply the rules of eq- uity above recited to the facts of the pres- ent case. William L. Stinson abandoned the home of his boyhood, and left behind him his relatives and the friends of his youth. He went to another and a distant state, changed his name, and formed other and different attachments. He married, and a family of children were born to him. Then, one b.y one, his wife and all four of his chidren died. It is manifest from the evidence that after the last of his own im- mediate famil.y he was more intimate with the relatives of his deceased wife than with any one else, and that he was par- ticularly attached to the nephews and the nieces of his deceased wife, who are the defendants herein. Shortly after the death of his last surviving child he com- menced bu.ying real estate, paying therefor with his own money, and taking convey- ances of the propert.v bought, some in the name of Charles Patrick, the nephew, and some in the name of Martha P. Patrick, now Ringen, one of the nieces. He per- sisted for more than 10 years in making such purchases and taking such deeds. He also, from time to time, loaned money be- longing to himself, and took notes and mortgages therefor, and had the notes made payable to the other of said nieces, Ueorgetta Patrick, and had the mort- gages executed to him as mortgagee. He retained possession of the deeds, notes, and mortgages. He also took and retained possession of the lands and lots pur- chased, and received the rents of the same, and repaired and built houses thereon, and paid the taxes levied on the same. He was always particular, however, to have the tax receipts made out in the names of the respective grantees to whom the par- ticular lot or tract of land had been deed- ed. He also collected and used, as he saw fit, the interest moneys falhng due on th 3 notes and mortgages. He expressly directed the deeds to be made as they were made. He refused to accept conveyances, made to himself as grantee, and insisted that the deeds should name one or another of the Patrick children as grantee. He frequently announced to different vendors, borrowers, and others that he was buy- ing the property, or loaning the money, as the case might be, for the Patrick chil- dren, or the Patrick girls. He often spoke of the property as Mattie's, Charley's, or George's. He frequently spoke of having bought property, and of having caused the deeds to be made to said children ; and said that when he got through with the property Charley and the girls should have it. He often said that he intended the property should go to the Patrick chil- dren ; that Charley and the girls should have it ; that no one else had an.y right to it, or should touch it; thathehad it fixed, — had it all arranged; and that no one else could do anything with it. From these facts, and from numerous other cir- cumstances that appear in the record, it is evident that when William L. Stinson, alias William L. Stevenson, made his vari- ous purchases of real estate, and took 4.")0 RESULTING TRUSTS. deeds in the name of one or another of the defendants in eri'or, he, as well as the sev- eral vendors, fully intended to vest in said several defendants in error the legal titles to such real estate; and that when he loaned money and took notes and mort- gages in the name of Georgetta Patrick he intended to vest in her the legal title to said ra(jney and mortgages; and that he also fully intended to reserve and retain to his own use a life-estate in the equitable interest in said realty, notes, and mort- gages, and to give to defendants in error, respectively, and to vest iu them, several- ly, the remainder and residue of the equi- table interest, estate, and title in such real estate, notes, and mortgages, respective- ly. Such was the manifest intention of the intestate. There is no rule of law or of equity that will operate to prevent such intention from being earned into effect. The means that were adopted by the in- testate for the purpose of accomplishing the disposition he desired to make of his own property were such as violate no rule of law, and such as the rules of equity recognize and enforce. The decree of the circuit court is affirmed. RESULTING TRUSTS. 451 HAGAN V. POWERS. (72 N. W, 771, 103 Iowa, 593.) Supreme Court of Iowa. Oct. 29, 18&7. Appeal from district court, Union county; W. H. Tedford, .Tudge. Plaintiff states as his cause of action that in December, 1873, he purchased from Joseph Shaw a certain quarter section of land in Adair county, with his own property and funds, and caused the same to be conveyed to his then wife, Mary E. Hagan, by reason of which she thereafter held the title as trustee for plaintiff;, that she received said trust, and agreed to safely hold said land for plaintiff's benefit; that at the purchase the land was un- improved; that plaintiff improved it, and has ever since controlled it; that Mrs. Hagan died. Intestate, without issue, October 10, 1894, leaving the defendant as her only surviving parent; that defendant claims an undivided one-half of said land by inheritance through said Mary E. Hagan, but that, in truth and in fact, said Mary B. Hagan did not own said land at the time of her death, but held it as trustee, as aforesaid. Plaintiff prays that he may be decreed to be the owner in fee simple in said premises, and that he be quieted in his title as against the claims of the defend- ant. The defendant answered, admitting that the title was in Mary E. Hagan, but denying that the plaintiff paid for the land with his own money or property, and denying that Mrs. Hagan held the same in trust for the plaintiff, or ever recognized such trust; admits the death of Mrs. Hagan, and that he is her only surviving parent. He avers that Mary B. Hagan had owned and controlled said land since December, 1873, and that her possession and claim of ownership were adverse to the claim of the plaintiff, and that the claim of the plaintiff is barred. He prays for decree awarding him the ownership of an undivided one-half Interest in said land. The action was brought in Adair county, where the land is situated, but, by stipulation of parties, was transferred to and heard in the district court of Union county, by which a decree was en- tered in favor of the plaintiff as prayed, from which the defendant ap])ealed. Affirmed. D. W. Higbee, for appellant. Maxwell & Winter, for appellee. GIVEN, J. 1. A consideration of the ques- tions involved renders it necessary that we first determine the facts. There is no dispute that the plaintiff purchased the land in con- ti'oversy in 1873, it being then unimproved; that he caused the title to be conveyed to his wife, who continued to .hold the same until her death October 10, 1894, when she died, intestate, and without issue, leaving the de- fendant her only surviving parent. During these years the plaintiff and his wife resided upon an adjacent farm in Union county, and the plaintiff improved, controlled, and used the land in question as his own. Plaintiff, being somewhat addicted to the use of strong drink, and not always prudent in the management of his financial affairs, caused the deed for this land to be made to his wife, without her knowledge, intending that she should hold it In trust for him; and thereafter, when informed of the fact, Mrs. Hagan acquiesced in it, and repeatedly and uniformly throughout said years acknowledged that the land was the property of her husband. Appellant states his contention as follows: "The matters neces- sary to be proven in order to create the result- ing trust claimed by appellee (neither fraud nor mistake being claimed) are: (1) Payment by appellee with his own money; (2) inten- tion on the part of appellee at time of convey- ance to create a trust; (3) conveyance to de- ceased; (4) knowledge on the part of deceased of appellee's intention to create a trust, and assent or failure to dissent after that knowl- edge." The claim of the plaintiff that he paid for said land with his own money is denied, and the defendant contends that after the con- tract of purchase from Shaw, and prior to the execution of the deed or payment of the pur- ' chase price, appellant promised appellee that, in consideration of a promise on the part of the appellee that he would place the title in the name of Mrs. Hagan, appellant would fur- nish him help in various ways, to the amount of the cost of the land, and that appellant did so furnish such help by contributnig horses and other property at various times. Upon this issue of fact, we think, the appellant 'has failed to support his contention. It is true, he did furnish to the plaintiff and his wife horses and other property at various times, but it was mostly before this land was contracted for, and without reference thereto. It fairly appears that in every instance that money or property was received from appellant it is ac- counted for as having been a gift without coq- dltion, or as being settled for otherwise than on account of the purchase of this land. That appellee paid for the land, and caused the con- veyance to be made to deceased, with the intention to thereby create a trust, and that, after knowledge of these facts, deceased as- sented thereto, we think, is abundantly prov- en. 2. It is contended on behalf of the defendant that much of the evidence from which these facts are found is incompetent, because it re- lates to communications between husband and wife, and communications and transac- tions with the deceased Mrs. Hagan. In Dy- sart V. Furrow, 90 Iowa, 59, 57 N. W. &44, it is said: "If the transaction or communication was personal, it must be known alike to both, and therefore edther may deny. * * * per- sonal transactions and communications, as contemplated by the statute, are communica- tions between the parties of which both must have had personal knowledge." This rule is approved in the later cases of Cole v. Marsh, 92 Iowa, 379, 60 N. W. 659, and Martin v. Shannon, 92 Iowa, 375, 60 N. W. 645. The purchase, payment, and conveyance of the land were exclusively transactions between 452 RESULTING TRUSTS. tde piaintiir and tne venaor, Mr. snaw. it was not until after the transaction was com- pleted by the making of the conveyance that Mrs. Hagan learned that the conveyance was to her, and assented thereto, as shown by a number of witnesses other than appellee. Thi; only evidence appearing in the record that comes within the objection is the statement of the plaintiff, as follows: "I then told her I had deeded to her, to take ca:re of it for me, and she said, 'I can do it.' " This statement is clearly incompetent, and must therefore be disregarded. 3. We now inquire whether, under the facts as we find them, the law raises a resulting, or, as It is sometimes called, a presumptive, trust in favor of appellee. In Cotton v. Wood, 25 Iowa, 44, the familiar rule Is thus an- nounced: "Where, upon the pm'chase of prop- erty, the consideration is paid by one, and the legal title conveyed to another, a resulting tiTist is thereby raised, and the person named in the deed will hold the property as trustee of the party paying the consideration." In Per- ry on Trusts (section 124) it is said: "The general foundation of this kind of trusts is the natural equity that arises when parties do certain things. Thus, if one pays the pur- chase money of an estate, and takes the title deed in the name of another, in the absence of all evidence of intention the law presumes a trust from the natural equity that he who pays the money for property ought to enjoy the beneficial interest." The parties to this trans- action being husband and wife, another rule requires consideration. In Cotton v. Wood ii is further said: "But if the person to whom the conveyance is made be one for whom the party paying the consideration is under obli- gation, natural or moral, to provide, the trans- action will be regarded prima facie as an ad- vancement, and the burden will rest on the one who seeks to establish the trust for the bene- fit of the payee of the consideration to over- come the presumption in favor of the legal title by suflicient evidence." In the absence of the obligation to provide, it could not be questioned that the law would raise a trust in favor of appellee from the facts established. We think appellee has fully overcome the presumption of advancement, by his own evi- dence as to his intention, by evidence of re- peated admissions of ilrs. Hagan that the land was his, and his continued occupation and improvement of it. This being a trust ra.ised by operation of law, and not by reason of any declaration or creation of the parties, section 1935 of the Code of 1873 does not ap- ply. The facts in this case are in many re- spects the same as those alleged in Cotton v. Wood, supra, and the rulings in that case support our conclusion in this. We think the decree of th'e district court is correct. Af- firmed. CONSTRUCTIVE TRUSTS. 453 FERRIS V. VAN VECHTEN. (73 N. Y. 113.) Court of Appeals of New York. 1878. Charles A. Fowler, for appellants. J. New- ton Fiero, for respondent. ALLEN, J. This is, I think, a case of the iirst Impression, but it is sought to be brought within the principle of equity by which, at tlie instance of a cestui que trust, trust funds which have been misappropriated by the ti'ustee may be followed and reclaimed, so long as they can be traced and identified, and any property or choses in action into which they have been converted impressed with the same trusts as those upon which the original funds were held. The claim of the plaintiff briefly stated is, that moneys realized from real estate sold under a power of sale for the payment of debts, and held by Van Vechten, the sur- viving executor, in trust for the plaintiff, a creditor, have been wrongfully and in viola- tion of the trust applied to the payment of charges and incumbrances upon the lands of the testator described in the complaint, and which were devised to the executors in trust, to receive the rents, issues and profits thereof, and pay the same to the wife of a son of tlie testator, to be applied by her to the support of the family of such son, and' upon her death to convey the same to the children of said son. The relief demanded by the plaintiff is in substance, although not so stated, that she be subrogated to the rights of the creditors and lienors, whose incum- brances have been pro tanto discharged as against the lands to the amount paid thereon from the trust funds. The funds can hardly be said to have been invested in the lands, or in the mortgages, or other charges paid by the executor. There was no pm-chase of either, but the incumbrances were partially satisfied. The lands were relieved from cer- tain charges by the diversion to that purpose of funds held in trust for creditors, as al- leged, and it is sought to revive the liens by subrogating the plaintiff to the rights of the original creditors. Whether a cestui que trust can be subrogated to the claims of cred- itors, to the payment of whose debts the trust fund has been misapplied, need not be determined. See Winder v. Diffenderffer, 2 Bland, 198. Regarding the payments by Van Vechten as investments in the lands, in relief of which they were made, the primary ques- tion Is whether in that view a case was made upon the evidence for the relief de- manded. It must be conceded that trust moneys may be followed into lands to the purchase of which they have been applied, and the cestui que trust may elect whether to hold the unfaithful tnistee personally re- sponsible, or claim the lands, the fruits of the misappropriation of the funds, or cause the lands to be sold for his indemnity, and look to the trustee for any deficiency. Lane V. Dighton, 1 Amb. 409, per Lord EUenboi- ough; Taylor v. Plumer, i! Maule & S. oij'2; Thornton v. Stokill, 19 Jur. 751; Oliver v. Piatt, 3 How. 333, per Story, J.; Story, Eq. Jur. § 1258 et seq.; Shepherd v. McEvers, 4 Johns. Ch. 136, 8 Am. Dec. 561; Dodge v. Manning, 1 N. Y. 298. To follow money Into lands, and impress the latter with the ti-ust, the money must be distinctly traced and clearly proved to have been invested In the lands. While money, as such, has no ear-mark by which, when once mingled in mass, it can be traced, it is, nevertheless, capable under some circumstan- ces of being followed to, and identified with, the property into which it has been converted; but the conversion of the trust money ' spe- cifically, as distinguished from other money of the trustee into the property sought to be subjected to the trust, must be clearly shown. It does not sufiice to show the possession of the trust funds by the trustee, and the pur- chase by him of property— that is, payment for property generally by the trustee does not authorize the presumption that the pur- chase was made with ti'ust funds. The pro- duct of, or substitute for, the original trust fund follows the nature of the fund as long as it can be ascertained to be such; .and if a trustee purchase lands with trust money, a court of equity will charge them with a re- sulting trust for the person beneficially inter- ested. But it must be clear that the lands have been paid for out of the trust money. This is Illustrated by Perry v. Philips, 4 Ves. 108. There a ti'ustee for the purchase of land died without personal assets, but having purchased lands, the estates purchased were held not liable to the trust, the circumstan- ces affording no presumption that they were purchased in execution of the trust. If the purchase of land with the trust moneys could not be presumed when such purchase would be in execution of the trust, a fortiori it should not be presumed when it would be a violation of the trust. The right of following the trust property, in the new form which has been given to It, or in the property substituted for it, ceases only when the means of ascertainment fail, "which of course is the case when the sub- ject-matter is turned into money and mixed and confounded in a general mass of prop- erty of the same description." 2 Story, Eq. Jur. § 1259, and note 4. When the purchase- money, paid by a trustee for lands pur- chased, corresponds very nearly with that of the trust fund to be invested, that with other circumstances, as the coincidence of the time of the receipt and disbursement, may suffice to show that the property was actu- ally purchased with trust funds. Lowden v. Lowden, 2 Browne, Ch. 583; Price v. Blake- more, 6 Beav. 507. The money paid by the trustee for lands or other property, or for choses in action sought to be subjected to the original trust, must be identified as trust 454 CONSTRUCTIVE TRUSTS. luonpys; and this Is clearly recognized in all the eases, and in very many of them this has been the difficult question of fact upon which they have hinged, and the principle to be de- duced from them is, that when the trust fund has consisted of money, and been min- gled with other moneys of the trustee in one mass, undivided and undistinguishable, and the trustee has made investments generally from moneys in his possession, the cestui que trust cannot claim a specific lien upon the property or funds constituting the invest- ments. Hill, Trustees, m. p. 522. This is consistent with the cases cited and relied upon by the counsel for the plaintiff, and the doctrine is recognized and applied in each case, and as the facts were proved to exist in them respectively. In Moses v. ilurga- troyd, 1 Johns. Ch. 119, 7 Am. Dec. 478, the property held in trust was readily and cer- tainly traced. In Kip v. Bank, 10 Johns. 63, the money, the subject-matter of the trust, was kept separate and distinct, and deposited as such. The court say the only check to the operation of the rule now under consid- eration is when the property is converted into cash, and has been absorbed in the gen- eral mass of the estate so that it cannot be followed or distinguished. It is the diffi- culty of tracing the trust money, which has no ear-mark, that prevents the application of the rule. See, also, Hutchinson v. Reed, Hoff. 316, and cases by Asst. V. Ch., 2 Kent Comm. 623, 624; Trecothick v. Austin, 4 Mason, 29, Fed. Gas. No. 14,164. There can be no presumption as against the defendants whose property is sought to be affected by the trust, which attached to the moneys realized by A'an A'echten from the sale of lands under the power. So far as appears they are innocent of all wrong- doing, and have not colluded or combined with the executors to violate the trust, and it is not found that they assented to or had any knowledge of any misapiiropriation of the fund, and if made trustees in virtue of their ownership of the lands they are made so, not by reason of any act of theirs, but as the legal result of the fact that trust moneys have been misapplied by a trustee of the fund to relieve of a burden their lands, held in trust for another purpose by the same trustee. The fact should be clearly, at least satisfactorily proved. This principal fact, upon which the right of the plaintiff to any relief in this action depends, is only alleged argumentatively in the complaint by the statement that it appeared in the account of the executors filed with the surrogate that large sales of real estate of the testator had been made by the executors, on account of which they had realized large sums of money, and that it also appeared that large amounts of money arising therefrom were issued and applied in keeping the homestead farm in repair, and large sums were paid out for interest and taxes on said farm. There was no proof that one dollar of the moneys received for lands, and which con- stituted the trust fund, was paid or applied to any of the purposes mentioned, nor is the fact of such misappropriation of the trust moneys found, nor was any fact proved or found from which such diversion and mis- appropriation of si^ecific trust moneys can be legitimately inferred. The only proof given upon this branch of the case consisted of the proceedings before and the decree of the sur- rogate upon the settlement of the accounts of the executor. If these proceedings were competent evidence for any purpose, or to establish any fact as against the defendants, the present appellants, they were only com- petent m respect of the matters then in is- sue, and which were determined by the sur- rogate. The questions before that tribunal related solely to the accounts of the execu- tors and their liability to the creditors, and those entitled under the will of the testator. The executors were charged with tlie amount of the inventory of the personal estate of the deceased, together with the amounts received upon the sale of real estate. The moneys realized from the sale of lands were the pri- mary fund for the payment of debts, and creditors had the first claim to be paid from those moneys, and the first liability of the executors In respect of such moneys was to creditors. Such liability was discharged by proof of payment to creditors, whether made from the identical moneys received by the executors, or from other moneys of their own, or subject to their control. The moneys real- ized from lands sold in excess of the debts of the testator belonged to the present ap- pellants, as devisees of the land subject to the power of sale, and the liability of the executors to them was discharged by like proof of payment to them or for their use, from any moneys of the executors, whether received for lands sold under the power or from other sources. Upon proof of the plaintiff's debt she was of course entitled to a decree for Its pay- ment on the admission by the executors in their filed account of the moneys received by them properly applicable to its payment. Proof of payment to or for the use of the devisees of the lands was no discharge of the liability to the plaintiff, and the fact that payments to or for the devisees were set up In discharge of the plaintiffs claim was wholly unimportant. It was unimportant upon that accounting whether Van Vechten, the surviving executor, had the money In his own pocket, or had disposed of it to some third person. His liability to the plaintiff upon that accounting was the same, and the decree was necessarily the same In either event. In no aspect of the case was the sur- rogate called upon to trace and Identify the money received by the accounting executor on the sale of lands. The charges against the executors consisted of the gross receipts, and the discharges of the gross amount of the several payments and disbursements as al- CONSTRUCTIVE TRUSTS. 455 lowed by the surrogate, and the decree was for the payment of a gross amount, and was a general judgment against a surviving ex- ecutor for a general balance due, not for a surrender or paying over of specific moneys or securities, and as between the plaintiff, a creditor, and the appellant's devisees it was adjudged that payment claimed to have been made by the executor to or for the latter did not discharge the obligation to the former, and such payments were merely disallowed as credits claimed by the executor. It was not found upon the trial of the present action by the court, as a fact, that the specific moneys received by the executors for lands sold, and which were trust moneys for the payment of debts, were In any way paid to or applied for the use of the devisees in payment of the incumbrances upon the homestead farm, al- though the general forms of expression, to a limited extent, seem to imply the fact. The learned judge did not intend to so find and does not seem to have regarded it as Impor- tant. He merely spealis of the moneys which the executor used as, or in place of, the trust moneys and in discharge of his ob- ligation, as ti'ust moneys; but that does not make them the specific trust funds received. It Is found ill general terms that moneys to an amount stated were received from the sale of real estate under the power, and that the executors had paid various sums for principal and interest upon mortgages upon and repairs of the farm to the amount in the aggregate stated, but the times and amounts of the various receipts, or of the several pay- ments, are not found, nor is it f oimd that the payments were made from the moneys re- ceived, or that the moneys were misapplied to these payments. If reference is had to the accounts and schedules filed by the ex- ecutors with the surrogate as the basis of the accounting, which Is the only evidence of the dates and amounts of the several receipts and disbursements, there is nothing by which the moneys received for lands sold can be traced and identified as the moneys paid for the improvement of the homestead farm, or in discharge of incumbrances upon it. There is neither coincidence in the times or amount of the receipts and disbursements of moneys upon the account, and for the purposes men- tioned, to connect the one with the other and lead to a presumption that the money re- ceived from the one source was the same money that was paid out. The Inference would rather be that the moneys, when re- ceived, were mingled with other moneys of the executors and used as occasion required, either for purposes connected with the ad- ministration of the estate or the individual purposes of the executor. Whatever pre- sumptions might be indulged in favor of the equities of the plaintiff as a creditor against the defaulting trustee or his representatives, were he or they the holders and claimants of the property sought to be realized, none can be indulged as against the present appellants who are innocent of any participation In the wrongful acts of the executor. If, upon the statement of the accounts by and before the surrogate, the evidence in this case and the findings of fact by the judge, the principle contended for by the plaintiff could be so far extended as to authorize a lien upon the lands in aid and relief of which payments were made by the executor for the benefit of the plaintiff as a cestui que trust, there would be no difficulty in giving every cestui que trust, as creditor having a debt of a fiduciary character, a preference in respect to the gen- eral assets and creditors at large of the trus- tee or debtor, a lien upon property which the trustee or debtor might have purchased dur- ing the existence of the trust or other fidu- ciary relations. This might be convenient and in furtherance of a general equity in favor of one class of creditors, but would be an unauthorized extension of the equitable doctrine invoked by the plaintiff, which de- mands for its application that the trust fund or money shall be traced and identified as existing in the new form into which it has been converted. In no other way can the equitable title of a cestui que trust to spe- cific property be established. This question, which is decisive of this ap- peal, is fairly raised by the exception to the admission, as evidence generally in the case, of the proceedings before the suiTogate over the objection of the appellants that they were immaterial and incompetent, and also by the exceptions to the conclusions of law and the judgment of the court upon the trial. It is proper to say that in passing only upon this one question we do not intend to intimate an opinion upon any of the other questions made and ably argued by the learned counsel for the respective parties. The case bristles with interesting and difficult questions, but as the one considered is decisive of this appeal, and the other questions may not re-appear or be obviated by evidence upon another trial, we do not deem it necessary to consider them. Upon another trial it may be shown by com- petent evidence that the moneys received upon the sale of lands were kept separate from all other moneys, and specifically ap- plied to the payment of the charges and in- cumbrances upon the homestead farm, and if so the difficulty which the plaintiff now en- counters will be obviated. The equities are clearly with the plaintiff, but they cannot override the legal rules of evidence, or be en- forced by an unauthorized enlargement and extension of the equitable doctrine which lies at the foundation of the action. There is in truth no competent proof as against the ap- pellants other than Van Vechten, that the payments claimed to have been made by him in relief of the homestead were ever made. The proof consists of the accounts unverified filed with the surrogate by the executors; in which they credit themselves with these payments, and the decree of the surrogate disallowing them, and adjudging an amount 456 COXSTKUCTIVE TRUSTS. stated to be due the estate from the said executors, and In their hands properly ap- plicable to the payment of the plaintifiE's claim, wliich was less than one-half in amount of the sum decreed to be in the hands of the executors. The surrogate mere- ly held and decided that if the payments had been made as claimed, they could not be al- lowed to the executors upon that accounting. This is the extent of the decree. It is possible, although we do not intend to intimate an opinion upon the subject for the reason that parties have not been heard, and tlie question is not before us, that the plaintiff may have relief in the present ac- tion without tracing and identifying the trust moneys as now being invested in the home- stead farm, and by treating this complaint as a' creditor's bill, filed upon the return of an execution against Van Vechten unsatis- fied. Upon proof that Van Vechten had made the payments alleged, under circum- stances which would give him as a trustee a lien upon the trust estate for the benefit of which they were made. It may be that the court would deem it a proper case to enforce tlie lien for the benefit of the plaintiff— that is, apply a debt due the judgment debtor to the satisfaction of the judgment. Such a claim in favor of a judgment debtor would not be beyond the reach of a creditor's bill. As Van Vechten's account as trustee of the homestead farm has not been settled, there would arise none of the questions made upon the last trial as to the effect of the statute of limitations as affecting the claim of the plaintiff, upon the theory upon which the case was tried. But without considering this suggestion farther, the judgment must for reasons stated be reversed, and a new trial had. All concur. Judgment reversed. CONSTKUCTIVB TRUSTS. 457 LITTLE et al. v. CHADWICK et al. (23 N. E. 1005, 151 Mass. 109.) Supreme Judicial Court of JNIassacliusetts. Suffolk. Feb. 26, 1890. In equity , Bill by Samuel Little and Phiueas B. Smith, trustees, against Josepli H. Chad- wick, the Koxbury Institution tor Savings, and others. George E. Smith, for defendants. Hor- ace G. Allen and Wm. R. Howland, for Roxbury Institution for Savings. G. Ai.LEN, J. The executor and trustee under the -will of Mrs. Williams, having as- signed his property in trust for the benefit of his creditors, the annuitants under that will seek to establish a trust in that prop- erty, and to obtain a decree that .¥10,000 be set apart by the assignees, and appro- priated to secure and raise the annuities. It was, however, found at the hearing that none of the property so conveyed was charged with any such trust, and this find- ing appears to be the only one that the evidence would warrant. There is nothing to show that there was ever any distinct trust fund in the hands of Williams, the executor and trustee, which was represent- ed by any specific property. He was also the residuary legacee, and nearly oiie-iiii,ii of the assets of the estate consisted of a debt due from himself. The rest was chiefly notes secured by mortgages. There was no real estate. The moneys received by Williams from the estate were mixed with his own. He paid the debts and other leg- acies, and rendered a,n account, called "final," in which he charged himself with "balance of this account retained to pay annuity of .f600 per annum to Charles Bug- bee, 110,000. " It was his duty to set apart this sum, and to keep it separately invest- ed, but he did not do so. The settlement of the account merely showed that he was held responsible for that sum ; and, if he had set it apart, as he ought to have done, the trust would have attached to the prop- erty thus set apart. But, since this was never done, the trust was never impressed upon any specific property or money held by Williams. There was merely an indebt- edness or liability on his part to account for that sum. This indebtedness or liabil- ity might itself be the subject of a trust, just as if it has been the indebtedness of another person. The trust, however, in such case, attaches merely to the indebted- ness, and to whatever may be realized from it, and not to anj' particular property held by the debtor. The view most favorable to the annuitants that could be taken is that Williams had the sum of $10,000 in money in his hands, which was retained for the purpose of raising the annuities. The evidence shows that this was not the case. But assume that it was, the trust would then attach to it as long as the money could be identified or traced, but no longer. When trust money be- comes so mixed up with the trustee's indi- vidual funds that it is impossible to trace and identify it as entering into some spe- cific property, the trust ceases. The court will go as far as it can in thus tracing and following trust money; but when, as a matter of fact, it cannot be traced, the eq- uitable right of the cestui que trustto fol- low it fails. Under such circumstances, if the trustee has become bankrupt, the court cannot say that the trust money is to be found somewhere in the general es- tate of the trustee that still remains. He may have lost it with property of his own. And in such case the cestui que trust can only come in and share with the general creditors. The Attorney General v. Brig- ham, 142 Mass. 248,7 N. E.Rep. 851; How- ard v. Fay. 138 Mas.s. 104: White V. Cha- pin, 134 Mass. 230; Bresnihan v. Sheehan, 125 Mass. 11; Harlow t. Dehon, 111 Mass. 195, 198, 199; Andrews v. Bank, 3 Allen, 313; LeBretonv.Peirce,2Allen,8,13; John- son V. Ames, 11 Pick. 173, 181, 182; Tre- cothick V. Austin, 4 Mason, 16. 29;> Ferris V. Van Vechten, 73 N. Y. 113; Frith v. Cart- land, 2 Hem. & M. 417; Holland v. Hol- land, L.E.4Ch.449; Isaacson v. Harwood, L. E.3 Ch. 225; Perry, Trusts, §§ 345, 836- 842; Story, Eq. Jur. §§ 1258, 1259; Lewin, Trusts, (8th Ed.) 241,857,892. Thereis noth- ing to the contrary in Bank v. Insurance Co., 104 U. S. 54, 66-71, and In re Hallett's Estate, 13 Ch. Div. 696, 708-721, which are chiefly relied on by the annuitants. In Wisconsin a majority of the court has de- clared that it is not necessary to trace the trust fund into any specific property in or- der to enforce the trust, and that, if it can be traced into the estate of the defaulting agent or trustee, this issufBcient. McLeod V. Evans, 66 Wis. 401, 409, 28 N. W, Eep. 173, 214. But this seems to us to be stated too broadly. In the present case, there is no such thing as tracing the $10,000 into any particular pieces of property covered by the assign- ment by Williams for the benefit of his creditors. The most that can be said is that he had this money, and also other moneys of his own, and used all the mon- eys together, as his own, for several years, in buying, building, and selling, and that he finally failed. There is no means of as- certaining, as a matter of fact, that the trust money, if it ever was trust money, is now represented by any property in the hands of the assignees. Decree affirmed. 1 Fed. Cas. No. 14,16<, 458 CONSTRUCTIVE TRUSTS. SLATER et al. v. ORIENTAL MILLS et al. (27 A. 443, 18 R. I. 352.) Supreme Court of Rhode Island. July 12, 1893. Bin in equity by "WiUiam A. Slater and an- other against the Oriental MUls and others to establish a charge in favor of the Forest- dale Manufacturing Company, of which com- plainants are stockholders, on the assigned estate of the Oriental MiUs. Defendant filed a demiuTer to the bOl. Demurrer sustained. Joseph 0. Ely and James M. Ripley, for complainants. James TiUinghast and Wil- liam G. RoeUier, for respondents. STINESS, J. The question raised by the demurrer to the biU is whether the Forest- dale Manufacturing Company, of which the complainants are stockholders, has a prefer- red claim upon the respondent assignee of the Oriental Mills, an insolrent corporation, for funds wrongfully taken from the former company and used to pay liabilities of the latter company, and otherwise, by persons who were officers in control of both compa- nies. The rule is clear that one has an equitable right to follow and reclaim his property, which has been wrongfully ap- propriated by another, so long as he can find the property, or its substantial equivalent if its form has been changed, upon the ground that such property, in whatever foi-m, is impressed with a trust in favor of the oAxner. If the trustee has mingled it with his own. he will be deemed to have used his own, rather than another's, and so to leave the remainder under the trust; and this is a sufficient identification for the owner. But in this case we are asked to go further, and to hold that, where one's property has been wrongfully applied and dissipated by another, a charge remains upon the estate of the latter for the amount thus wrongfully taken, upon the ground that his estate is thereby so much larger, and that the trust property is reaUy and clearly there, in a substituted form, although it can- not be directly traced. This view is pressed with much skiU and some authority, but we are unable to adopt it. While one who has been wronged may follow and take his own property, or its visible product, it is quite a different thing to say that he may take the property of somebody else. The gen- eral property of an insolvent debtor belongs to his creditors, as much as particular trust property belongs to a cestui que trust. Cred- itors have no right to share in that which is shown not to belong to the debtor, and, conversely, a claimant has no right to take from creditors that which he cannot show to be equitably his own. But right here comes the argument that it is equitably his own because the debtor has taken the claim- ant's money and mingled it with his es- tate, wiiereby it is swelled just so much. But, as applicable to all cases, the argument is not sound. Where the property or Its substantial equivalent remains, we concede its force; but, where it is dissipated and gtne, the appropriation of some other prop- erty in its stead simply takes from creditors that which clearly belongs to them. In the former ease, as in Pennell v. DefCell, 4 De Gex, M. & G. 372, and In re Hallett's Estate, (KnatchbuU v. Hallett,) 13 Ch. Div. 696, the illustration may be used of a debtor min- gling trust funds witih his ovsm in a chest or bag. Thotigh the particular money cannot be identified, the amount is swelled just so much, and the amount added belongs to the cestui que trust. But in the latter case there is no swelling of the estate, for the money is spent and gone; or, as respondent's counsel pertinently suggests, "Knight Bruce's chest— -Jessel's bag— is empty." Shall we therefore order a like amount to be taken out of some other chest or bag, or out of the debtor's general estate? Suppose the general estate consists only of mills and machinery acquired long before the com- plainants' money was appropriated. Upon wliat principle could that property be taken to reimburse them? But the complainants say: "Otu" money has been misappropriated by the debtor without our consent and with- out our fault Why should we not be reim- bursed out of his estate?" Undoubtedly, it is right that every one should have his own; but, when a claimant's property canmot be found, this same principle prevents the tak- ing of property which equitably belongs to creditors of the trustee to make it up. The creditors have done no wrongful act, and should not be called upon, in any way, to atone for the misconduct of .their debtor. It is an ordinary case of misfortune on the part of claimants, whose confidence In a trustee or agent has been abused. In examining the question upon author- ity we think it is equally clear that there can be no equitable relief except in cases where the fund clajmed is in some way ap- parent in the debtor's estate. Of the cases cited by the complainants, only four go to the extent of holding that a cestui que trust is entitled to a lien for reimbursement on the general estate of the trustee where the trust fund does not, in some form, so ap- pear. These are Plow Co. v. Lamp, 80 Iowa, 722, 45 N. W. Rep. 1049; McLeod v. Evans, 66 Wis. 401, 28 N. W. Rep. 173, 214; Francis V. Evans, 69 Wis. 115, 33 N. W. Rep. 93; Bowers v. Evans, 71 Wis. 133, 36 N. W. Rep. 629. In the first of these cases the court lost sight of the distinction, which we desire to make clear, between funds re- maining in the estate, which go to swell the assets, and funds which, having been dissi- pated or used in the payment of debts, do not remain in the estate, and so do not sweU the estate. Upon the former fact, as we have stated above, we concede the right to relief. But the court in the Iowa case seems to ignore this very important distinc- tion, and in so doing overthrows the founda- tion on which its decision is based, for it CONSTRUCTIVE TRUSTS. 459 says: "The creditors, tf permitted to enforce their claims as against the trust, would se- cure the payment of their claims out of trust moneys." Now, how can this be so if the trust moneys, or their substantial equiva- lent, are not there? The court assumes that the payment of debts is the same thing as an increase of assets, or perhaps that it works the same result to a creditor by in- creasing his diyidends. But this Is not so. How the satisfaction of a debt by incurring another of equal Amount either decreases one's liabilities or increases his assets can only be comprehended by the philosophic mind of a Micawber. If a debtor is solvent, it is aU right either way, because he will have enough to pay everything he owes; but, if he is insolvent, the injustice of the doctrine of the Iowa court is made almost painfully plain by the following illustration from the dissenting opinion of Taylor and Gassoday, JJ., in Francis v. Evans, supra: "Suppose that an insolvent debtor, D., has only $1,000 of property, but is indebted to the amount of $2,000, one-half of which is due to A., and the other half to B. In this condition of things D.'s property can only pay fifty per cent, of his debts. By such dis- tribution A. and B. would each be equitably entitled to $500. Now, suppose D., while In that condition, collects $1,000 for P., but in- stead of remitting the money, as he should, he uses it in paying his debt in full to A. By so doing, D. has not Increased his as- sets a penny, nor diminished his aggregate indebtedness a penny. The only difference is that he now owes $1,000 each to B. and F., whereas he previously owed $1,000 each to A. and B. Now if F. is to have preference over B., then his claim will absorb the en- tire amount of D.'s property, leaving noth- ing whatever for B. In other words, the $500 to which B. was equitably entitled from his insolvent debtor, upon a fair distribution of the estate, has, without any fault of his, been paid to another, merely in consequence of the wrongful act of the debtor." It is impossible to state the case more clearly. The illustration demonstrates that the mere fact that a trustee has used the money does not show that it ihas gone into his estate. If used to pay debts, he has simply turned it over to a creditor, thereby giving him a preference, while his own estate and indebt- edness remains exactly as before. Suppose he had stolen the money, and turned it over to somebody from whom it could not be re- claimed. Can any one say .the owner shotdd have an equitable lien upon the thief's in- solvent estate in preference to his creditors? They and the owner are equally innocent, and each must bear his own misfortune. There seems to be some confusion, also, up- on the ground that, because there might be an equitable lien upon the trustee's property in his own hands, the same lien must follow it into the hands of the assignee, because he has no greater rights than the assignor. The assignee is primarily a trustee for cred- itors; yet it is indeed true that he has no greater right than the assignor to specific property. But suppose, after a creditor had attached property in possession of a debtor, a complainant should seek an equitable lien upon it for the reason that the debtor had misappropriated property which belonged to the complainant, and of which the attached property was in no way a part. We see no ground upon which he could succeed. When the creditor seeks to establish his lien for his debt he stands equal in equitable right with a claimant who can show no peculiar equitable claim to the property in question. The fact that the cestui que trust has not entered into the relation of debtor and cred- itor with the trustee does not affect the question. So long as he seeks to recover what he can show to be his own, he is in the position of an owner; but when he can- not do this, and seeks to recover payment out of the trustee's general estjite, he Is in the position of a creditor. Substantially the same criticisms are applicable to the Wis- consin cases, with the additional remarks that tliey are decisions of a court nearly evenlj^ divided, and that, in our opinion, the better reason and weight of authority are with the dissentient .iudges. In support of the views we have expressed, it is sufficient to select the following cases: Little V. Chadwick, 151 Mass. 109, 23 N. E. Rep. 1005; National Bank v. Insurance Co., 104 U. S. 54; Gavin v. Gleason, 105 N. Y. 256, 11 N. E. Rep. 504; Englar v. Offiutt, 70 Md. 78, 16 Atl. Rep. 497; Thompson's Ap- peal, 22 Pa. St. 16; Bank v. Armstrong, 3» Fed. Rep. 084. The question whether any of the property of the Forestdale Company has gone into the hands of the assignee in original or substituted form, whereby the assets are so much larger, is a question of fact. As to the sum of $149.39 on deposit in the Columbian National Bank of Boston, no question being made that it was a part of the funds of the Forestdale Company, it may, according to National Bank v. In- surance Co., 104 U. S. 54, be claimed by the owner; but that question cannot be deter- mined in tMs suit, as the money is not in the hands of the assignee, and the bank is not a party to the suit. As to the $3,103.33 invested in cotton, and made into manufac- tured goods, following the doctrine of the cases cited, the court wiU attribute owner- ship in such goods, if any such came to the assignee, to be m the cestui que trust to tlie amount or value disclosed. This being a question of fact, it must stand for hear- hig, and the demurrer to the biU, upon the jioints argued, must be overruled. 460 CONSTRUCTIVE TKUSTS. -NONOTUCK SILK CO. v. FLANDERS. (58 N. W. 383, 87 'NMs. 237.) Supreme Court of Wisconsin. March 16, 1894. Appeal from circuit court, Bayfield count.v; J. K. Parish, Judge. The Nonotuck Silk Company filed a claim against the estate of A. C. Probert, an in- solvent, and procured an order to show cause why said claim should not be declared pre- ferred. On the hearing the claim was so de- clared, and the assignee appeals. Reversed. The other facts fully appear in the follow- inu statement by CASSODAY, J.: It appears from the record that for sever- al years prior to June, 1893, the defendant's assignor, A. C. Probert, conducted a banking business at ^^'ashbm•n under the name of the Bank of Washbm-n; that May 24, 1893, the plaintiff, a corporation at Chicago, sent a draft for $99.07, on one Lemke, to the Bank of Washbm-n for collection; that June 2, 1S93, the draft was presented to Lemke, and paid by his check ou the Banlc of Washburn on the same day; that June 3, 1893, the Bank of Washburn issued its draft on the Union National Bank, its Chicago coiTe- spondent, for the proper amount, and for- warded the same to the plaintiff; that the plaintiff did not receive the draft until June 9, 1893, and deposited the same immediately in the Fu-st National Bank of Chicago; that that bank presented the draft to the Union National Bank June 10, 1893, but payment thereof was refused; that the Union Nation- al Bank then had no money to the credit of the Bank of Washburn, but did have collat- erals, left there expressly to protect over- drafts, more than enough to protect the di-aft in question, as well as all other drafts issued upon that bank by the Bank of Washburn; that June 7, 1893, the Bauk of Washburn closed its doors. Probert having failed; that June 26, 1893, Probert perfected an assign- ment for the benefit of his creditors, and on that day the defendant, his assignee, took possession of all his property, including the Bank of Washburn and its effects; that Pro- bert's assets at the time of such assignment amounted to $261,716.31, and his liabilities to $236,492.31; that such assets consisted of commercial paper, secured and unsecured, stocks, real estate, etc.; that no money what- ever came Into the hands of said assignee, except a few pennies and a $2.50 gold piuce; that all money in the Bank of Washbm'n on and after June 1, 1893, was used in paying checks drawn against deposits, and in pay- ing clerk hire or employes of the Bank of Washburn; that none of the moneys of Pro- bert, and none of the proceeds of the collec- tion made for the plaintiff, was used in ac- quiring other property or invested in other property of any kind, but that all money in the possession of Probert at and after re- ceiving said check of Lemke for the plaintiff was used in paying the debts of Probeii, so that no money, or the proceeds of the mon- ey, in the Bank of Washburn, or the plain- tiff's collection, or the proceeds of said collec- tion, ever came into the hands of said as- signee in the shape of property of any kind whatsoever; that September 18, 1893, the plaintiff filed its claim against said estate; that October 17, 1893, the plaintiff procured an order to show cause why Its said claim should not be declared preferred; that on the final hearing of that application, Decem- ber 6, 1893, it was ordered by the court that said claim be, and the same was thereby, de- clared a preferred claim, and the money and effects upon which the same was fomided were thereby declared to be trust funds, and the said assignee was thereby ordered to pay said claim of $99.42, in full, out of any mon- eys in his hands belonging to said estate, in preference of all claims against said estate not preferred, together with costs and dis- bursement of such hearing, taxed at $20. From that order the defendant brings this appeal. Lamoreux, Gleason, Shea & Wright, for appellant. Warden & Alvord, for respond- ent. CASSODAY, J. (after stating the facts). The amoimt involved is small, but the case ia important by reason of others dependent upon it, and the nature of the question in- volved. It appears that A. C. Probert was the sole owner of the Bank of Washburu; that June 7, 1893, he failed, and his bank closed its doors; that June 26, 1893, he made a voluntary assignment of all his property to the defendant for the benefit of his cred- itors. There is some force in the suggestion that the receiving of Lpmke's check in pay- ment of the plaintiff's draft on him, held by Probert's bank for collection, and the send- ing to the plaintiff of a draft made by Pro- bert's bank on the Chicago bank for the amount of such collection, four days prior to such failm-e, was nothing more than the substitution on the books of Probert's bank of a credit to the plaintiff, or to the Chicago bank, for the amount, in lieu of the former credit for the same amount to Lemke. But it appears that, at the time of giving the check, Lemke had funds in Probert's banlc to the amount of the check, and hence the transaction would seem to be substantially the same as though Lemke had actually drawn the money on the check, and then im- mediately handed the same back in payment of the draft on him in favor of the plaintiff, and then held by Probert's bank for collec- tion; and that Probert's bank then retained the money so paid in by Lemke, and In lieu thereof sent to the plaintiff its draft on the Chicago bank, as mentioned in the foregoing statement. As therein indicated, the money so represented by the check was, with o'ther moneys, used up in paying the debts of Pro- bert, so that no part of that money or the proceeds of that collection, either in the shape of money or of property of any kind. CONSTRUCTIVE TRUSTS. 461 ever came into the hands of the defendant, as such assignee. Such being the facts, it is manifest that the plaintiff is not here re- claiming his own property intrusted to Pro- bert's bank, nor the avails or the proceeds thereof, but is here claiming a preference over other creditors out of other assets and property of Probert received by the defend- ant by virtue of such assignment. Certainly, there is no statute in this state giving any such preference, nor any authorizing an in- solvent debtor, by way of a voluntary assign- ment, to give such preference. Laws 1883, c. 349; Laws 1885, c. 48; sections 1693a, 1693c, Sanb. & B. Ann. St. It follows that, if the plaintiff is entitled to such preference at all, it must be by virtue of some established principle of equity or the common law. The early English cases only went to the extent of holding, in effect, that the owner of property intmsted to an agent, factor, bailee, or other trustee could follow and retake his property from the possession of such trus- tee, or others in privity with him, and not a bona fide purchaser for value, whether such property remained in its original form, or in some different or substituted form, so long as it could be ascertained to be the same property, or the product or proceeds thereof, but that such right ceased when the means of ascertainment failed, as when the subject of the tmst was money, or had been con- verted into money, and then mixed and con- founded in a general mass of money of the same description, so as to be no longer di- visible or distinguishable. This is apparent from the opinion of Lord Ellenborough, G. J., written nearly 80 years ago, reviewing the adjudications prior to that date. Taylor V.' Plumer, 3 Maule & S. 575. But the more recent rule in England as to following trust moneys is broader, and goes to the extent of holding, in effect, that "if money held by a person in a fiduciary character, though not as trustee, has been paid by him to his ac- count at his banker's, the person for whom he held the money can follow it, and has a charge on the balance in the ' inker's hands;" that "if a person who holds money as a trustee, or in a fiduciary character, pays it to his account at his banker's, and mixes it with his own money, and after- wards draws out sums by checks in the oi'di- nary manner, * * * the drawer must be taken to have drawn out his own money, in preference to the trust money." In re Hallett's Estate (Knatchbull v. Hallett), 13 Ch. Div. 696, overruling some former En- glish cases. In that case there was no dis- pute but what the money received by the trustee for the property wrongfully con- verted was deposited with his bankers to the credit of his account, and that the same "remained at his banker's, mixed with his own money, at the time of his death." But in the leading opinion, by Jessel, M. R,, in that case, and by way of quoting Mr. Justice Fry approvingly, it is said: "The guiding principle is that a trustee cannot assert a title of his own to trast property. If he de- stroys a trust fund by dissipating it alto- gether, there remains nothing to be the sub- ject of the trust. But, so long as the trust property can be traced and followed int» other property into which it has been con- verted, that remains subject to the trust." Id. p. 719. That case is as favorable to the claim of the plaintiff as any in the English courts; and yet it nowhere sanctions the proposition that the owner of the property or money intrusted is entitled to a prefer- ence over other creditoi-s of an insolvent es- tate out of property or assets to which no part of th^ trust fund, or the proceeds there- of, is traceable. All such cases turn upon the question of fact whether the trust prop- erty or fund, or the proceeds thereof, are traceable into any specific' property or fund. Ex parte Hardcastle (In Re Mawson), 44 Law T. 524. Thus, in Re Gavin v. Gleason, 105 N. Y. 256, 11 N. E. 504, it was held that, "to entitle the trust creditor to such a pref- erence, it must, at least, be made to appear that the fund or property of the insolvent, remaining for distribution, includes proceeds of the trust estate." To the same effect, At- kinson V. Printing Co., 114 N. Y. 168, 21 N. E. 178; Holmes v. Gilman, 138 N. Y. 376, 34 N. E. 205. In Little v. Chadwick, 151 Mass. 110, 23 N. E. 1005, the coittt said: "When trust money becomes so mixed up with the trustee's individual funds that it is impos- sible to trace and identify it as entering into some specific property, the trust ceases. The court will go as far as it can in thus tracing and following tmst money; but when, as a matter of fact, it cannot be traced, the equi- table right of the cestui que trust to follow it fails." To the same effect are Goodell v. Buck, 67 Me. 514; Steamboat Go. v. Locke, 73 Me. 370; Englar v. OfiCutt, 70 Md. 78, 16 Atl. 497; Thompson's Appeal, 22 Pa. St. 16; Columbian Bank's Estate, 147 Pa. St. 440, 23 Atl. 625, 626, 628; Appeal of Hopkins (Pa.) 9 Atl. 867; Bank v. Goetz, 138 111. 127. 27 N. E. 907; Neely v. Rood, 54 Mich. 134, 13 N. W. 920; Sherwood v. Bank, 94 Mich. 78. 53 N. W. 923; Elevator Co. v. Clark (N. T>.) 53 N. W. 175; National Bank v. Insur- auce Co., 104 U. S. 54, 68; Peters v. Bain, 133 U. S. 670, 693, 10 Sup. Ot. 354; 2 Story, Eq. Jur. §§ 1258, 1259; 2 Pom. Eq. Jur. § 1058; 1 Lewin, Trusts (1st Am. Ed.) 241. In speaking of following trust moneys in- to other property, it is stated in one of the New York cases cited that "the right has its basis in the right of property." It never was based upon the theory of preference by reason of an unlawful conversion. This is made clear by a recent and well-considered opinion by the supreme court of Rhode Island. Slater v. Oriental Mills (R. I.) 27 Atl. 443. It follows that the mere fact that Probert's bank used the plaintiff's money towards paying its indebtedness, before mak- ing the assignment, did not authorize a pref- erence to the plaintiff, over Probert's other creditors, out of his other property and as- 462 CONSTRUCTIVE TRUSTS. sets. This Is made plain, by an Illustration having judicial sanction in the case last cited: "Suppose that an insolvent debtor, D., has only $1,000 of property, but Is indebted to the amount of $2,000, one-half of which is due to A., and the other half to B. In this condition of things, D.'s property can only pay fifty per cent, of his debts. By such distribution, A. and B. would each be equi- tably entitled to $500. Now, suppose D., while in that condition, collects $1,000 for F., but instead of remitting the money, as he should, he uses it in paying his debt in full to A. By so doing, D. has not increased his assets a penny, nor diminished his aggregate indebtedness a penny. The only difference is that he now owes $1,000 each to B. and P., whereas he previously owed $1,000 each to A. and B. Now, if F. is to have prefer- ence over B., then his claim will absorb the entire amount of D.'s property, leaving noth- ing whatever for B. In other words, the $500 to which B. was equitably entitled from his insolvent debtor, upon a fair distribution of the estate, has, without any fault of his, been paid to another, merely in consequence of the wrongful act of the debtor." Id., and dissenting opinion in 69 Wis. 123. See, also, McClure v. Board (Colo. Sup.) 34 Pac. 763. We must hold that the plaintiff has no legal right to a preference over Probert's other creditors In the distribution of his estate in the hands of the defendant, as assignee, and into which no part of the plaintiff's money has been traced. This is not a mere question of practice, nor the construction of a local statute long acqmesced in, but is a question of general equity jurisprudence; and it Is very Im- portant to the people of the state that this coui-t should, at least on such questions, ad- here to the principles of the common law so well esrablished as to become elementary. It Is especially essential that the state and federal courts, on such questions, should be in harmony. In so far as McLeod v. Evans, 66 Wis. 401, 28 N. W. 173, 214; Francis v. Evans, 69 Wis. 115, 33 N. W. 93; and Bow- ers V. Evans, 71 Wis. 133, 36 N. W. 629,— are in conflict with the rules above Indicated, they must be regarded as overruled. The order of the circuit court Is reversed, and the cause Is remanded for further proceedings in accordance with this opinion. ORTON, C. J. (dissenting). This case is ruled by McLeod v. Evans, 66 Wis. 401, 28 N. W. 173, 214; Francis v. Evans, 69 Wis. 115, 33 N. W. 93; and Bowers v. Evans, 71 Wis. 133, 36 N. W. 629. It was a case of a special deposit or trust or agency. It was the employment of the bank to collect a draft. It ought not to make any difference that the bank embezzled the proceeds. The plaintiff was clearly entitled to be a preferred creditor. If this was the first case of the kind, I might not dissent. I respectfully dissent on the ground that the decision in this case overrules three well-considered and reconsidered decisions of this court. In the long history of this court, there have been very few overruled cases. The interests of the public are best subserved by the sta- bility of decisions. If former cases are to be overruled by every change of the per- sonality of the bench, we may soon have no line of decisions on important questions, to which the business of the country has been long adapted and adjusted, and everything will become unsettled. CONSTRUCTIVE TRUSTS. 463 AMERICAN SUGAR-REPINING CO. v. FANCHER. (40 N. E. 206. 145 N. Y. 552.) Court of Appeals of New York. April 9, 1895. Appeal from supreme court, general term, First department. Action by the American Sugar-Refining Company against Cliarles H. Fancher, as- signee. From a judgment of the general term (30 N. Y. Supp. 482), reversing a judg- ment for plaintifC, plaintiff appeals. Re- versed. Charles E. Hughes, for appellant. James B. Dill, for respondent. ANDREWS, O. J. This case presents a question of considerable practical importance. It relates to the equitable jurisdiction of the court, under special circumstances, to foUov^ proceeds of personal property in the hands of a fraudulent vendee or his genei-al as- signee for the benefit of creditors at the suit of a defrauded vendor, who by false pre- tenses was induced to part with the property upon credit, the proceeds sought to be reached being the sums due from subvendees of the fraudulent purchaser arising on re- sales by him made before the discovery by the plaintiff of the fraud. The facts upon which the question arises are substantially conceded and are free from complication. Between the 20th day of September, 1892, and the 20th day of October following, the plaintiff sold and delivered to the mercantile firm of O. Burkhalter & Co., doing business in the city of New York, sugars of various qualities on credit for the price in the aggre- gate of $19,121.41, no part of which has been paid, the last sale having been made Oc- tober 19, 1892. On the next day the firm, being insolvent and owing debts greatly in excess of its assets, made a general assign- ment to the defendant for the benefit of its creditors. Among the assigned assets were a portion of the sugars sold by the plaintiff to the firm, which he replevied from the as- signee; but the firm, prior to the assignment, had sold to numerous persons, customers of the firm, in the ordinary course of trade, por- tions of the sugars on credit, and claims held by the firm against the subvendees arising out of such sales, exceeding in the aggre- gate the sum of $10,000, were among the as- sets which passed by the assignment. These claims were collected by the assignee after the assignment, and (excepting a small sum) after notice had been served by the plaintiff on the assignee that it rescinded the original sale for fraud, which notice was accompanied by a demand for the sugars then in the pos- session of the assignee, and for an account- ing and the delivery to the plaintiff of the outstanding claims against the customers of Burkhalter & Co. in their hands for the sugars sold by the firm as above stated. The assignee declined to accede to the demand made. On the trial the parties by stipulation fixed the amount of the claims for sugara sold which had come to the hands of th« assignee, and which had been collected by him. The fraud of Burkhalter & Co. was not controverted. It was shown that the sales were induced by a gross misrepresenta- tion in writing made by one of the members of the firm to the plaintiff as to the solvency of the firm, made on or about September 20, 1892, within 30 days before the assignment, and when the firm was owing several hun- dred thousand dollars more than the value of its whole assets. The case presented is singularly free from any unceiiainty in respect to the facts upon which the equitable jurisdiction to follow the proceeds of the sugars is claimed. They are definite and ascertained, but it is insisted that the court is impotent to give relief by way of subjecting the choses in action or their proceeds, representing the sugars, to a lien in favor of the defrauded vendor, or to ad- judge that they shall be applied in partial recompense and restitution for the property so wrongfully obtained, because, as is claimed, such relief is not in any such case within the scope of the powers of courts of equity as heretofore defined and exercised, and for the further reason that new rights have intervened by reason of the assignment. The fraud of Burkhalter & Co. was, as we have said, admitted. They are hopelessly insolvent, and were so at the time they took the plaintiff's goods. They disposed of a large part of the sugars before the plaintiff became cognizant of the fraud. The plaintiff was only apprised of it after the assignment was made. The remedy at law upon the con- tract against the fraudulent and insolvent purchaser is, under the circumstances, inef- fectual. Tlfe pursuit of the property, except the small part of it which was unsold and passed to the assignee, is impracticable. If it could yet be found unconsumed and cap- able of identification, the multiplicity of suits which would be rendered necessary to re- claim it would make the remedy expensive, burdensome, and inadequate. The identifi- cation of the proceeds sought to be reached Is complete and unquestioned. It is not claimed that the credits or tlie money into which they have been converted are not the very proceeds of sugars of which the plaintiff was defrauded. The jurisdiction of a court of equity to fol- low the proceeds of property taken from the true owner by felony, or misapplied by an agent or trustee, and converted into property of another description, and to permit the true owner to take the property in its altered state as his own, or to hold It as security for the value of the property wrongfully taken or mis- applied, or, in case the original property or its proceeds have been mingled with that of the wrongdoers in the purchase of other prop- erty, to have a charge declared in favor of the person injured to the extent necessary for his 4(>4 CONSTRUCTIVE TRTSTS. iademuity, so long as the rights of bona fide purchasers do not intervene, has been fre- quently exerted, and is a jurisdiction founded upon the plainest principles of reason and jus- tice. The case of Xcwton v. Porter, 69 N. Y. 1.33, is an illustration of the application of this principle in a case of the larceny of negotiable bonds, sold by the thieves, in which the court subjected securities in which they invested the money, and which they had transferred with notice to third persons as security for services to be rendered, to a charge in favor of the owner of the stolen bonds. The cases upon this head are very numerous, where there has been a misapplication of trust funds by trustees, or persons standing in a fiduciary relation, and the money or property misap- plied has been laid out in land or converted in- to other species of property. The court in such cases lays hold of the substituted proper- ty and follows the original fund, through all the changes it has undergone, until the pow- er of identification is lost or the rights of bona fide purchasers stop the pursuit, and hclds it in its grasp to indemnify the innocent victim of the fraud. And even in case of mnney, which is said to have no earmark, its identity will not be deemed lost, though it is mingled with other money of the wrongdoer, if it can be shown that it forms a part of the general mass. Pennell v. Deffell, 4 De Gex, M. & G. 372; In re Hallett's Estate, 13 Oh. Div. 696; Holmes v. Oilman, 138 N. Y. 369, 34 N. E. 205. In the cases of stolen property, or of misapplication by a trustee or agent of the funds of the principal or cestui que trust, the title of the real owner of the property has been in most cases lost, without his con- sent, and the court, by a species of equitable substitution, repairs, as far as practicable, the wrong, and prevents the wrongdoer from profiting by his fraud. And, indeed, courts of law, borrowing the equitable principle, in cases of misappropria- tion by agents, vest in the principal at his election the legal title to a chattel or security in the hands of the agent, purchased exclu- sively by the application of the embezzled or misappropriated fund. Taylor v. Plumer, 3 Maule & S. 562. It is at this point that the controversy in the present case commen- ces, and the divergence arises which has led to this litigation. It is claimed, on behalf of the defendant, that courts of equity in com- mercial cases, where the claim of the plaintiff originates in a fraud in the sale of personal prciperty, do not undertake to follow pro- ceeds in the hands of the wrongdoer, but that the defrauded party, having consented to part with his title, is remitted exclusively to such legal remedies as are given for the redress of the wrong. The jurisdiction of courts of equi- ty in cases of trust or agency, or cases of like character, it is insisted, is founded upon the ancient jru-isdiction of these courts over trusts and fiduciary relations, and has not been and ought not to be extended beyond these cases. It is very true that trusts and trust relations are peculiarly cognizable in equity, and have been so cognizable from the earliest period of equitable jurisprudence. But it is to be said that these are hut branches of the larger ju- risdiction over frauds, which equity, abhors, and of which it has cognizance admittedly in many cases not connected with technical trusts or agency. It cannot be denied that the protection of cestuis que trustent against frauds of the trustee is an object of pecuUar solicitude in the courts of equity. They, in many cases, are incapable, by reason of age, inexperience, or other incapacity, from looking out for themselves, and the court stands in the attitude of guardian of their interests. But, as has been said, a court of equity does not restrict its remedial processes to the aid of the helpless or the ignorant. It embraces within its view the general claims included within what are called quasi trusts, and inter- venes to prevent violations of equitable duty by whomsoever committed or whoever may suffer from the violation. It goes altogether outside of trust relations in many cases to prevent fraud, or to compel a restoration of property obtained by fraud. The exercise of the jurisdiction to set aside fraudulent transfers of real or personal property made in fraud of creditors is familiar. And the ju- risdiction is most beneficially invoked in cases of private fraud to rescind transfers of real estate procm'ed by fraudulent representations, and to restore to the defrauded vendor the title of which he has been defrauded. It often happens in cases of transfers of real estate procured by fraud that, before the action is brought or the plaintiff is apprised of the fraud, the fraudulent vendee has disposed of the land in whole or in part, or has created liens thereon in favor of the bona fide pur- chasers for value. In such cases the court will mold the relief to suit the circumstances, and will, at the election of the plaintiff, re- scind the contract and compel a reconveyance of the part of the land still remaining in the hands of the vendor, and compel the wrong- doer to account for the proceeds of the land sold, or award compensation in damages. The court in many cases resorts to the fiction of a trust, and, by construction, adjudges that the proceeds in the hands of the wrongdoer are held by him as trustee of the plaintiff. This was the exact nature of the relief grant- ed in the case of Trevelyan v. White, 1 Beav. 589, as appears by the recital of the decree In the opinion of the master of the rolls, where part of the estate had been sold by the fraud- ulent vendee. In Cheney v. Gleason, 117 Mass. 557, a bill was filed by the defrauded vendor of real estate to reach a mortgage tak- en by the vendee on the land on a resale by him, and the court sustained the bill and granted the relief. In Hammond v. Peimock, 61 N. Y. 145, the court rescinded, at the in- stance of the plaintiff, a contract for the ex- change of real and personal property, owned by the plaintiff, for a farm of the defendant ui Michigan, which had been consummated CONSTRUCTIVE TRUSTS. 4G5 on the plaintiff's part by a conveyance and transfer, the contract and conveyance having been obtained by the defendant by fraudulent representations; and the defendant having, after the conveyance to him, conti-acted to sell part of the land conveyed to him by the plaintiff, the court adapted the relief to the circumstances, and rescinded the conveyance so far as practicable, and adjudged that the defendant account for the proceeds of the per- sonal property included in the sale. If the jurisdiction exercised by courts of equity in respect to undoing fraudulent con- veyances of real estate, and following the proceeds in the hands of the fraudulent grantee, appertains in like manner and de- gree to sales of personalty, it would seem that the plaintiff in the present case was en- titled to relief. The fact that, before the action was brought, Burkhalter &. Co. had made a general assignment for the benefit of creditors to the defendant is no obstacle to the relief, if, except for the assignment, the court would have interposed, on the prayer of the plaintiff, its preventive and other remedies, to have enabled the plaintiff to reach the unpaid claims against the sub- vendees. An assignee for creditors is not a purchaser for value, and stands in no other or better position than his assignor as re- spects a remedy to reach the proceeds of the sales by Burkhalter & Co. Goodwin v. Wert- Keimer, 99 N. Y. 149, 1 N. E. 404; Barnard V. Campbell, 58 N. Y. Y6; Eatcliffe v. Saiig- ton, 18 Md. 383; Bussing v. Rice, 2 Cush. 48. It is claimed that the general creditors of the firm will be prejudiced if the plaintiff is allowed to prevail, and that he will thereby acquire a preference over the other cred- itore of the insolvent firm. But general cred- ■itors have no equity or right to have appro- priated to the payment of their debts the property of the plaintiff, or property to which it is equitably entitled as between it and Burkhalter & Co. They, so far as appears, advanced nothing, and gave no credit on the faith of the firm's possession of the sugars, assuming that that element would have had any bearing on the case. If the sugars had existed in specie in the hands of the assignee, it cannot be doubted that the plaintiff on rescinding the sale would have been entitled to retake them, and the general creditors are in no worse position, if the plaintiff is awarded the pro- ceeds, than they would have been if the sugars had remained unsold, iluch was said on the argument upon the difference be- tween a trespasser taking and disposing of the property of another and the case of a sale of personal property to a vendee induced by fraud. It is the law of this state, as in England, that title passes on such a sale to the fraudulent vendee, notwithstanding that the crime of false pretenses is Included in the statute definition of a felony, but which was not such at common law. Barnard V. Campbell, supra; Wise v. Grant, 140 N. Y. HUTCH.& BUKK.BQ.— 30 593, 35 N. E. 1078; Benj. Sales (6th Ed.) § 433; Fassett v. Smith, 23 N. Y. 252; Ben- edict V. Williams, 48 Hun, 124. But a pur- chase procured by fraud is in no sense, as between tne vendor and vendee, rightful. It was wrongful, and, while a transfer so in- duced vests a right of property in the vendee until the sale is rescinded, the means anfi act by which it was procured was a violatioii of an elemental principle of justice. But the rule is that a sale of personal property in- duced by fraud is not void, but is only void- able on the part of the party defrauded. "This does not mean that the contract is void until ratified; it means that the contract is valid until rescinded." When a contract of sale infected by fraud of the vendee is consummated, and the property delivered, the vendor on discovering the fraud may pur- sue one of several courses. He may affirm the contract, and an omission to disaflirm within a reasonable time after notice of the fraud will be deemed a ratification. He may elect to rescind it, and thereby his title to the property is reinstated as against the pur- chaser and all persons deriving title from him, not being bona fide purchasers for value, and a purchaser is not such who takes the propertj' for an antecedent debt, or who pur- chased the property on credit, and has not paid the purchase money or been placed in a position where payment to a transferee of the claim cannot be resisted. Barnard v. Campbell, supra; Dows v. Kidder, 84 N. Y. 121; Matson v. Melchor, 42 Mich. 477, 4 N. W. 200; 1 Benj. Sales, p. 570, note. Upon rescission the vendor may follow and retake the property wherever he can find it, except in the case mentioned, or he may sue for conversion. When these legal rem- edies are available and adequate, clearly there is no ground for going to a court of equity. The legal remedies in such case are and ought to be held exclusive. But in a case like the present, where there is no ad- equate legal remedy, either on the contract of sale or for the recovery of the property in specie, or by an action of tort, is the power of a court of equity so fettered that where it is shown that the property has been con- verted by the vendee, and the proceeds, in the form of notes or credits, are identified beyond question in his hands, or in posses- sion of his vohintary assignee, it cannot im- pound such proceeds for the benefit of the defrauded vendor? The only reason urged in denial of this power which to our minds has any force is based on the assumption that it would be contrary to public policy to admit such an equitable principle into com- mercial transactions. But with the two lim- itations adverted to, and which ought strictly to be observed, (1) that it must appear that the plaintiff has no adequate remedy at law, either in consequence of insolvency, the dis- persion o-f the property, or other cause, and (2) that nothing will be adjudged as pro- ceeds except what can be specifically identi- 4GG CONSTRUCTIVE TRUSTS. fieil as such, business interests will iiave ad- i equate protection. Indeed, the disturbance | would be much less than is now permitted in following the property from hand to hand until a Ixjna fide purchaser is found. The case of Small v. Attwood, Younge, 507, is a very instructive case, which involved a large amount, was argued by eminent coun- sel, and received great consideration. It sup- ports, we think, the equitable jurisdiction invoked in the present case. It was an ac- tion by the purchaser to rescind a contract for the sale of mines and mining property induced by fraudulent representations, and to recover the purchase money paid to the amount of about £200,000. The court found the fraud and rescinded the contract, and made a decree for an accounting. On a sup- plemental bill being filed, showing that the purchase money paid had been invested by the seller in public securities in his name, which he afterwards caused to be put in the name of his mother, and that the purchaser had no otl»er means adequate to repay the pur- chase money, the chancellor, on an application for an Injunction restraining the transfer of the securities, held that tha money paid could be followed into the stock purchased, and granted the Injunction. The ease of Oavin V. Gleason, 105 N. Y. 256, 11 N. E. 504, was an attempt to fasten upon the estate of an insolvent a preferential lien for money put into his hands by the plaintiff for the pur- chase of a mortgage for her, and which he applied, without authority, to the payment of his debts before the assignment, with the exception of a small sum ($30), which went Into the hands of the assignee. The court held that the money, which the insolvent had used to pay debts prior to the assignment, was not a perferred debt, but sustained her right to be paid the small sum which the assignee received belonging to' tlie trust. This case points the distinction. The char- acter of the debt gave it no priority. The fund had been dissipated, and could not be traced among the assigned assets. There was no equitable ground of prefei-ence ex- cept for the small sum mentioned. Upon the whole case, we are of the opinion that the judgment on the report of the referee was correct, and the order granting a new trial should thc'»;fore be reversed, and the judgment on the report of the referee aflSirm- ed, with costs. Judgment accordingly. All concur. CONSTRUCTIVE TRUSTS, 467 GAVIN V. GLEASON.i (11 N. B. 504, 105 N. Y. 256.) Court of Appeals of New York. April 19, 1887. J. B. Gleason, for appellant. W. H. John- son, for respondents. ANDREWS, J. It may properly be conced- ed that the $3,000, received by White from the petitioners on the third day of January, 1883, for investment in the Gould mortgage, constituted in his hands a quasi trust fund, which White was bound to use for the spe- cific purpose contemplated, and which he could not divert to any other use without commit- ting a breach of trust. The securities which formed the greater part of the fund were im- mediately convertible into money, and au- thority in White to make such conversion was implied, but only as a means of realizing the money with which to make the mortgage loan. The securities, while in the hands of White, remained the property of the petition- ers; and, when converted by him, their title attached to the proceeds of the converted property. White collected the securities actu- ally or constructively. He collected the notes against third persons, and drew the money deposited in the Delaware National Bank. The two certificates of deposit issued by him- self, amounting in the aggregate to $780, he accepted as money. It is material to a proper understanding of the question presented, to state a few other facts which appear in the record. White was a private banker. On the fifth of January, 1883, two days after the transaction with the petitioners to which we have alluded, he was taken sick, and on or about the ninth of Janu- ary a run commenced on the bank, and on the twelfth of January he made a general assign- ment to the defendant, Gleason, for the bene- fit of creditors, having at the time on hand in cash assets only the sum of $64.75. The Gould mortgage was never procured by White, and he made no investment for the petition- ers of the $3,000 received on the third day of January. On the contrary, it was found by the judge at special term that White, after receiving and collecting the securities, and prior to the eleventh day of January, in vio- lation of his trust, used the entire fund of $3,- 000 excepting the sum of $30, which came to the hands of the assignee. In paying his per- sonal debts and liabilities. But on the elev- enth of January, the day prior to the mak- ing of the assignment, for the purpose of se- curing the claim of the petitioners, he trans- ferred to them a land contract, from which and other sources the petitioners have real- ized sufficient to reduce their claim to the sum of $877.27. It was admitted on the hear- ing of the petition, which took place in Janu- ary, 1885, that the assignee had then on hand proceeds of the assigned estate sufficient to pay the said sum of $877.27, but it was con- 1 Modifying 39 Hun, 655. ceded by the petitioners that the assigned es- tate was insufficient to pay in full the debts of the assignor. The special term granted the prayer of the petitioner, and made an order directing the assignee to pay the claim of the petitioners out of the money in his hands, and this order was affirmed by the general term. The order in effect appropriates out of the assigned es- tate the sum of $877.27 to the payment of the claim of the petitioners, in preference to the claims of the general creditors. The petitioners, to maintain the order in question, rely upon the rule in equity that, as between cestui que trust and trustee, and all parties claiming under the trustee otherwise than by purchase for valuable consideration, without notice, all property belonging to a trust, however much it may be changed or altered in its nature or character, and all the fruit of such property, whether in its orig- inal or altered state, continues to be subject to or affected by the trust. Pennell v. DefCell, 4 De Gex, M. & G. 387, Turner, L. J. This settled doctrine of equity has its basis in the right of property. The owner of personal property which, by the wrongful act of his agent or trustee, lias been changed and con- verted into chattels of another description, may elect to treat the property into which the conversion has been made as his own. Upon such election the title to the substituted prop- erty is vested in him as fully as if he had originally authorized the wrongful act, which title he may assert in a legal action to the same extent as he could have asserted title in respect to the original property. The rea- son of the doctrine is stated by Lord Ellen- borough in the leading case of Taylor v. Plumer, 3 Maule & S. 562, in language often quoted: "For," he says, "the product or sub- stitute for the original thing still follows the nature of the thing itself, so long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fail." The question in that case involved the legal title to certain stock and bullion which an agent of the defendant, intrusted by his principal with money to invest in exchequer bills, had wrongfully misapplied to the pur- chase of the stock and bullion, intending to abscond with it and go to America, and the court sustained the defendants' title. Courts go very far to protect rights of prop- erty as against a wrong-doer. They follow It through whatever changes and transmuta- tions it may undergo in his hands, and as against him, transferred to the changed and altered product the original title, however much the original property has been in- creased in value by his labor or expenditure, provided only that the prodnct is still a chat- tel, and is composed of the original materials. Silsbury v. McCoon, 3 N. T. 379. But a court of law, as a general rule, deals only with the legal title; and when the legal identity of the property is destroyed, or the property cannot be traced specifically into another thing, it is 4f)8 CONSTRT'CTIVB TRT'STS. powerless to give relief, except by action for damages agaiust tbe wrong-doer. The lan- guage of Lord EUenborough, already quoted, that the right to follow property only ceases when the means of ascertainment fail, is il- lustrated by what follows, "which," he adds, "is the case when the subject is turned into money and mixed and compounded in a gen- eral mass of the same description." It is not important to inquire whether later decisions have not established, even in re- spect to strictly legal actions, a somewhat less stringent limitation upon the right of pursuit than that Indicated in the language just quot- ed. But it is unnecessary to pursue this in- quiry here. It is clear that in this case the trust fund has been dissipated and lost by the act of the trustee. It is neither specific- ally in the hands of the trustee or of his as- signee, nor it is represented by other proper- ty into which it has been converted. The fund, according to the finding, (with the ex- ception of the sum of $30,) was paid out on the debts of White before the assignment Plainly, there is no room for any contention that the petitioners have legal title to any of the assigned property. The sole inquiry Is whether a case is made for equitable inter- vention in favor of the petitioners in the ad- ministration of the insolvent estate. It is clear, we think, that, upon an accounting in bankruptcy or insolvency, a trust creditor is not entitled to a preference over general cred- itors of the insolvent, merely on the ground of the nature of his claim; that is, that he is a trust creditor as distinguished from a gen- eral creditor. We know of no authority for such a contention. The equitable doctrine that, as between creditors, equality Is equi- ty, admits, so far as we know, of no excep- tion founded on the greater supposed sacred- ness of one debt, or that it arose out of a vio- lation of duty, or that its loss involves great- er apparent hardship In one case than anoth- er, unless it appears, in addition, that there Is some specific recognized equity founded on some agreement, or the relation of the debt to the assigned property, which entitles the claimant, according to equitable principles, to preferential payment If it appears that trust property specifically belonging to the trust is included in the assets, the court doubtless may order It to be restored to the trust So, also. If it appears that trust property has been wrongfully converted by the trustee, and con- stitutes, although in a changed form, a part of the assets, it would seem to be equitable, and in accordance with equitable principles, that the things Into which the trust property has been changed, should, if required, be set apart for the trust, or. If separation is impos- sible, that priority of lien should be adjudged in favor of the trust-estate for the value of the trust property or funds, or proceeds of the trust property, entering into and constituting a part of the assets. This rule simply asserts the right of the true owner to his own prop- erty. But It Is the general rule, as weU In a court of equity as In a court of law, that, in order to follow trust funds, and subject them to the operation of the trust, they must be Identi- fied. A court of equity, In pursuing the in- quiry and in administering relief, is less ham- pered by technical difficulties than a court of law; and it may be sufficient, to entitle a party to equitable preference In the distribu- tion of a fund in insolvency, that it appears that the fund or property of the insolvent re- maining for distribution includes the proceeds of the trust-estate, although it may be impos- sible to point out the precise thing in which the trust fund has been invested, or the pre- cise time when the conversion took place. The authorities require at least this degree of distinctness In the proof before preference can be awarded. See Van Alen v. American Nat. Bank, 52 N. Y. 1; Newton v. Porter, 69 N. Y. 133; Ferris v. Van Vechten, 73 N. Y. 113; Pennell v. Deffell, supra; Frith v. Cartland, 2 Hem. & M. 417. The facts in this case fall short of the proof required within any case which has come to our notice. The trust fund, with the single exception mentioned, was misappropriated by White to the payment of his private debts prior to the assignment It cannot be traced Into the property in the hands of the as- signee, for the plain reason that It is shown to have gone to the creditors of White in sat- isfaction of their debts. The courts below seem to have proceeded upon a supposed eq- uity springing from the circumstance that, by the application of the fund to the payment of White's creditors, the assigned estate was re- lieved pro tanto from debts which otherwise would have been charged upon it and that thereby the remaining creditors, if entitled to distribution without regard to the petition- er's claim, will be benefited. We think this is quite too vague an equity for judicial cogni- zance, and we find no case justifying relief upon such a circumstance. In a very general sense, all creditors of an insolvent may be supposed to have contributed to the assets which constitute the residuum of his estate. The case of People v. City Bank of Roches- ter, 96 N. Y. 32, seems to have been misun- derstood. The question considered in this case was not raised there, and it was not claimed in that case that the proceeds of the checks of Sartwell, Hough & Co., the petition- ers, had not gone into the general fund of the bank, or that they had not passed in some form to the receiver. The court did not de- cide that the petitioners would have been en- titled to a preference in case the proceeds of. the checks had been used by the bank, and were not represented In Its assets In the hands of the receiver. For the reasons stated, we are of opinion that the orders of the special and general terms should be modified by reducing the sum directed to be paid by the assignee to the sum of $30, with Interest from April 19, 1883,, but without costs to either party. All concur. Ordered accordingly. CONSTRUCTIVE TRUSTS. 469 NEWTON V. PORTER et al, (69 N. Y. 133.) Court of Appeals of New York. March 27, 187T. Action to recover proceeds of stolen bonds. There was a judgment for plaintiff, from which defendants appealed. M. Goodrich, for appellants. M. M. Wa- ters, for respondent. ANDREWS, J. This is an equitable action brought to establish the right of the plaintiff to certain securities, the proceeds of stolen bonds, and to compel the defendants to ac- count therefor. In March, 1869, the plaintifE was the owner of $13,000 of government bonds, and of a rail- road bond for $1,000, negotiable by delivery, which, on the 12th of March, 1869, were stol- en from her, and soon afterward $11,500 of the bonds were sold by the thief and his con- federates, and the proceeds divided between them. William Warner loaned a part of his share in separate loans and took the promis- sory notes of the borrower therefor. George Warner invested $2,000 of his share in the purchase of a bond and mortgage, which was assigned to his wife Cordelia without consid- eration. In January, 1870, William Warner, George Warner, Cordelia Warner and one Lusk were arrested upon the charge of stealing the bonds, or as accessories to the larceny, and were severally indicted in the county of Cort- land. The Warners employed the defendants, who are attorneys, to defend them in the criminal proceedings, and in any civil suits which might be instituted against them in re- spect to the bonds, and to secure them for their services and expenses, and for any lia- bilities they might incur in their behalf; Wil- liam Warner transferred to the defendants Miner and Warren promissory notes taken on loans made by him out of the proceeds of the stolen bonds, amounting to $2,250 or there- abouts, and Cordelia Warner, for the same purpose, assigned to the defendant Porter the bond and mortgage above mentioned. The learned judge at special term found that the defendants had notice at the time they received the transfer of the securities, that they were the avails and proceeds of the stolen bonds, and directed judgment against them for the value of the securities, it appear- ing on the trial that they had collected or dis- posed of them and received the proceeds. The doctrine upon which the judgment in this case proceeded, viz.: that the owner of negotiable securities stolen and afterward sold by the thief may pursue the proceeds of the sale in the hands of the felonious taker or hia assignee with notice, through whatever changes the proceeds may have gone, so long as the proceeds or the substitute therefor can be distinguished or identified, and have the proceeds or the property in which they were invested subjected, by the aid of a court of equity, to a lien and trust in his favor for the purposes of recompense and restitution, is founded upon the plainest principles of jus- tice and morality, and is consistent with the rule in analogous cases acted upon in courts of law and equity. It is a general principle of the law of personal property that the title of the owner cannot be divested without his consent. The purchaser from a thief, how- ever honest and bona fide the purchase may have been, cannot hold the stolen chattel against the true proprietor, but the latter may follow and reclaim it wherever or in whoseso- ever hands it may be found. The right of pursuit and reclamation only ceases when its identity is lost and further pursuit is hope- less; but the law still protects the interest of the true owner by giving him an action as for the conversion of the chattel against any one who has interfered with his dominion over it, although such interference may have been innocent in intention and under a claim of right, and in reliance upon the title of the fe- lonious taker. The extent to which the com- mon law goes to protect the title of the true owner has a striking illustration in those cases in which it is held that where a willful trespasser converts a chattel into a difCerent species, as for example, timber into shingles, wood into coal, or corn into whisky, the prod- uct in its improved and changed condition be- longs to the owner of the original material. Silsbury v. McCoon, 3 N. Y. 380, and cases cited. The rule that a thief cannot convey a good title to stolen property has an exception in case of money or negotiable securities transferable by delivery, which have been put into circulation and have come to the hands of bona fide holders. The right of the owner to pursue and reclaim the money and securi- ties there ends, and the holder is protected in his title. The plaintiff was in this position. The bonds, with the exception stated, had, as the evidence tends to show, been sold to bona fide purchasers, and she was precluded from following and reclaiming them. The right of the plaintiff in equity to have the notes and mortgage while they remained in the possession of the felons or of their as- signees with notice, subjected to a lien and trust in her favor, and to compel their trans- fer to her as the equitable owner, does not, we think, admit of serious doubt The plain- tiff, by the sale of the bonds to bona fide purchasers, lost her title to the securities. She could not further follow them. She could maintain an action as for a conversion of the property against the felons. But this remedy in this case would be "fruitless, as they are wholly insolvent. Unless she can elect to regard the securities in which the bonds were invested as a substitute, pro tanto, for the bonds, she has no effectual remedy. The thieves certainly have no claim to the securities in which the proceeds of the bonds were invested as against the plaintiff. They, without her consent, have disposed of her property, and put it beyond 470 CONSTRUCTIVE TRUSTS. lier reach. If the avails remained in their hands, in money, the direct proceeds of the sale, can it be doubted that she could reach it? It is not necessary to decide that in the case supposed she would have the legal title to the money, but if that question was in- Aolved in the case I should have great hesi- tation In denying the proposition. That she could assert an equitable claim to the money I have no doubt. And this equitable right to follow the proceeds would continue and attach to any securities or property in which the proceeds were invested, so long as they could be traced and identified, and the rights of bona flde purchasers had not intervened. In Taylor v. Plumer, 3 Maule & S. 562, an agent, intrusted with a draft for money to buy exchequer bills for his principal, re- ceived the money and misapplied it by pur- chasing American stocks and bullion, intend- ing to abscond and go to America, and ab- sconded, but was arrested before he quitted England, and surrendered the securities and bullion to his principal, who sold them and received the proceeds. It was held that the principal was entitled to withhold the pro- ceeds from the assignee in bankruptcy of the agent, who became bankrupt on the day he received and misapplied the money. Lord Ellenborough, in pronouncing the opinion in that case, said: "1 makes no difference, in reason or law, into what other form differ- ent from the original the change may have been made, whether it be into that of prom- issory notes for the security of money pro- duced on the sale of the goods of the princi- pal, as in Scott v. Surman, Willes, 400, or into other merchandise, as in Whitecomb v. Ja- cob, Salk. 160, for the product or substitute for the original thing still follows the na- ture of the thing itself so long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fails." If, in the case now under consideration, the plaintiff had intrusted the Warners with the possession of the bonds, and they had sold them in violation of their duty, for the purpose of embezzling the proceeds, and In- vested them in the notes and mortgage in question, the plaintiff could, within the au- thority of Taylor v. Plumer, have claimed them while in their hands, or in the hands of their assignees with notice, and would be adjudged to have the legal title. In courts of equity the doctrine is well settled and is uniformly applied that when a person, standing in a fiduciary relation, misapplies or converts a trust fund Into an- other species of property, the beneficiary will be entitled to the property thus acquired. The jurisdiction exercised for the protection of a party defrauded by the misappropria- tion of property, in violation of a duty, ow- ing by the party making the misappropria- tion, is exceedingly broad and comprehen- sive. The doctrine is illustrated and applied most frequently in cases of trusts, where trust moneys have been, by the fraud or violation of duty of the trustee, diverted from the purposes of the trust and converted into other property. In such case a court of equity will follow the trust fund into the property into which it has been converted, and appropriate it for the indemnity of the beneficiary. It is immaterial in what way the change has been made, whether money has been laid out in land, or land has been turned into money, or how the legal title to the converted property may be placed. Eq- uity only stops the pursuit when the means of ascertainment fail, or the rights of bona fide purchasers for value without notice of the trust, have intervened. The relief will be moulded and adapted to the circumstan- ces of the case, so as to protect the inter- ests and rights of the true owner. Lane v. Dighton, Amb. 409; Mansell v. Mansell, 2 P. Wms. 670; Lench v. Lench, 10 Ves. 511; Lewis V. Madocks, 17 Ves. 56; Perry, Trusts, § 829; Story, Eq. Jur. § 1258. It is insisted by the counsel for the defend- ants that the doctrine which subjects prop- erty acquired by the fraudulent misuse of trust moneys by a trustee to the influence of the trust, and converts it into trust property and the wrong-doer into a trustee at the elec- tion of the beneficiary, has no application to a case where money or property acquired by felony has been converted into other prop- erty. There is, it is said, in such cases, no trust relation between the owner of the stol- en property and the thief, and the law will not imply one for the purpose of subjectiui; the avails of the stolen property to the claim of the owner. It would seem to be an anom- aly in the law if the owner who has been de- prived of his property by a larceny should be less favorably situated in a court of eq- uity, in respect to his remedy to recover it, or the property into which it had been con- verted, than one who by an abuse of trust has been injured by the wrongful act of a trustee to whom the possession of trust prop- erty has been confided. The law in such a case will raise a trust in invitum out of the transaction, for the very purpose of subject- ing the substituted property to the purposes of indemnity and recompense. "One of the most common cases," remarks Judge Story, "in which a court of equity acts upon the grourl of implied trusts in invitum, is when a party receives money which he cannot con- scientiously withhold from another party." Story, Eq. Jur. § 1255. And he states it to be a general principle that "whenever the property of a party has been wrongfully misapplied, or a trust fund has been wrong- fully converted into another species of prop- erty, if its identity can be traced, It will be held in its new form liable to the rights of the original owner, or the cestui que trust." Id. § 1258. See, also, Hill, Trustees, p. 222. We are of opinion that the absence of the conventional relation of trustee and cestui que trust between the plaintiff and the War- CONSTRUCTIVE TRUSTS. 471 ners is no obstacle to giving the plaintiff the benefit of the notes and mortgage, or the proceeds In part of the stolen bonds. See Bank of America v. Pollock, 4 Edw. Oh. 215. It is however strenuously Insisted that the defendants had no notice when they received the securities that they were the avails or proceeds of the bonds. That if they had no- tice they would stand in the position of their assignors, and that the property in their hands would be affected by the same equi- ties as if no transfer had been made, is not denied. Murray v. Ballon, 1 Johns. Oh. 566; Hill, Trustees, p. 259. The learned judge at special term found as has been stated, that the defendants had notice of the larceny of the bonds, and the use made of the money arising from their sale, at the time they re- ceived the notes and mortgage. The duty of this court upon the question of notice is limited to the examination of the case, with a view of ascertaining whether there was evidence to support the finding of fact. If such evidence exists, the finding of the trial judge is conclusive. We have examined with much care the voluminous record before us, and are of opin- ion that the finding is sustained by the evi- dence. The testimony was conflicting. The circumstances under which the defendants took the transfer of the securities were cer- tainly unusual, and the facts then known by the defendants were calculated to create a strong presumption that the notes and mort- gage came from investments of the stolen property. It was for the trial court to weigh the testimony, and in the light of all the facts developed on the trial, to determine the question of notice. It would be a use- less labor to collate the testimony on this subject, and we content ourselves with stat- ing our conclusion, that the finding was war- ranted by the evidence. The objection to the evidence, under a com- mission issued to William Jessup of Mon- trose, Pennsylvania, and which was execut- ed by William H. Jessup as commissioner was, we think, properly overruled. In sup- port of the objection, one of the defendants testified that he resided at Montrose in 1858, and that at that time two attorneys resided there, named respectively William and Wil- liam H. Jessup, and an offer was made to prove that the judge who granted the order for the commission consulted a register of at- torneys in which both names appeared, and selected the name of William Jessup, and in- serted it In the order. The commission was executed two years and a half before the trial. It does not appear at what time It was returned to the clerk, but the presump- tion is that it was returned within a reason- able time after its execution. The objection that the commission was not executed by the person intended was not made until the evidence taken under it was offered on the trial. That the defendants were apprised of the facts upon which the objection was founded before the trial is quite evident. Prima facie a commission directed to a person, omitting any mention of a middle name, and returned executed by a person of the same name, with the addition of a mid- dle name, is executed by the person named in the order. Franklin v. Talmadge, 5 Johns. 84. The ruling of the judge, in respect to the objection made to the commission, was clearly in furtherance of justice. The de- fendant had ample opportunity to raise the objection to the commission before the trial by a motion to suppress, and it should not be permitted that a party may lie by, and spring an objection of this kind on the trial for the first time, when the other party may be unable to meet It by proof, and when there is no opportunity to issue a new com mission, or sen(f it back to be executed by the proper person. It is we think a whole- some rule that objections to the execution of a commission where the party has an op- portunity to make them before the trial, should be raised by motion, and if not raised in that way when such opportunity exists, they should be deemed to have been waived. Whether such objection is to formal defects merely, or as in this case goes to the right of the person who executed the commission to act as commissioner, makes, we think, no difference in the application of the rule. If the fact of disqualification is known to the party who seeks to exclude the evidence a sufficient time before the trial, to enable him to make his motion. See Kimball v. Davis, 19 Wend. 438; Sturm v. Atlantic Mut. Ins. Co.. 63 N. Y. 77; Drury v. Foster, 2 Wall. 33; Sheldon v. Wood, 2 Bosw. 267; Zellweger v. OafCe, 5 Duer, 100. The judgment should be affirmed. All concur. Judgment affirmed. CONSTRUCTIVE TRUSTS. MITCHELL y. READ. (61 N. Y. 123.) Court of Appeals of New York. May 21, 1874. Appeal from judgment of the general term of the supreme court in the First judicial de- partment, affirming a judgment in favor of defendant, entered upon decision of the court at special term. Reported below, 61 Barb. 310. This action was brought to have certain leases, obtained by the defendant during the existence of a copartnership between him and plaintiff, for terms to commence at its termination, of premises leased and occupied by the firm, declared to have been taken for the partnership, and to have it adjudged that the defendant held them as trustee for the partnership. The facts found were substan- tially as follows: The plaintiffs were copartners, conducting and carrying on the Hoffman House, in the city of New York. The copartnership, by its terms, expired May 1, 1871; it owned vari- ous leases of premises which were used for the partnership business. All of the leases expired at the same time with the copartner- ship. The firm had spent large sums of money in making valuable improvements and In fitting up the leasehold premises so thai they could be benefleially used in connection, and also in fixtures and futaishing, and by their joint efCorts had built up a profitable business, and largely enhanced the rental val- us of the premises. In 1869 the defendant, without any notice of his intent to apply therefor, and without the knowledge of plain- tiff, procured renewal leases, in his own name, of the premises, for terms commencing at the termination of the partnership leases and of the partnership, which, upon discovery there- of having been made by plaintiff, defendant claimed were his property exclusively, and refused to recognize or acknowledge that the partnership or plaintiff had any right or in- terest therein. Other facts appear in the opinion. The court found as conclusions of law that the defendant Read was the sole owner of the leases executed to him as aforesaid, and that the plaintiff had no right, title, nor in- terest in or to them, or either of them, and that the defendants have judgment accord- ingly, to which plaintiff duly excepted. Judgment was rendered accordingly. The plaintiff commenced this action soon after he ascertained that the defendant had taken the new leases, to wit, in March, 1870, and the cause was brought to trial in Febru- ary, 1871. A. J. Vanderpoel and J. B. Burrill, for ap- pellant. John K. Porter and Willard O. Bart- lett, for respondents. EARL, O. The relation of partners with each other is one of trust and confidence. Each is the general agent of the firm, and is bound to act in entire good faith to the oth- er. The functions, rights and duties of part- ners in a great measure comprehend those both of trustees and agents, and the general rules of law applicable to such characters are applicable to them. Neither partner can, in the business and affairs of the firm, clan- destinely stipulate for a private advantage to himself; he can neither sell to nor buy from the firm at a concealed profit to him- self. Every advantage which he can obtain in the business of the firm must inure to the benefit of the firm. These principles are ele- mentary, and are not contested. Story, Partn. §§ 174, 175; Colly. Partn. 181, 182. It has been frequently held that when one partner obtains the renewal of a partner- ship lease secretly, in his own name, he will be held a trustee for the firm as to the re- newed lease. It is conceded that this is the rule where the partnership is for a limited term, and either partner takes a lease com- mencing within the term; but the conten- tion is that the rule does not apply where the lease thus taken is for a term to com- mence after the expiration of the partner- ship by its own limitation, and whether this contention is well founded is one of the grave questions to be determined upon this appeal. It is not necessary, in maintaining the right of the plaintiff in this case to hold that in all cases a lease thus taken shall inure to the benefit of the firm, but whether, upon the facts of this case, these leases ought to in- ure to the benefit of this firm I will briefly allude to some of the prominent features of this case. These parties had been partners for some years; they were equal in dignity, although their interests differed. The plaintiff was not a mere subordinate in the firm, but so far as appears, just as important and efli- cient in its affairs as the defendant. They procured the exclusive control of the leases of the property, to terminate May 1, 1871, and their partnership was to terminate on the same day. They expended many thousand dollars in fitting up the premises, a portion thereof after the new leases were obtained, and they expended a very large sum in fur- nishing them. By their joint skill and in- fluence they built up a very large and profit- able business, which largely enhanced the rental value of the premises. More than two years before the expiration of their leases and of their partnership, the defend- ant secretly procured, at an increased rent, in his own name, the new leases, which are of great value. Although the plaintiff was in daily intercourse with the defendant, he knew nothing of these leases for about a year after they had been obtained. There is no proof that the lessors would not have leased to the firm as readily as to the de- fendant alone The permanent fixtures, by the terms of the leases at their expiration, belonged to the lessors. But the movable CONSTRUCTIVE TRUSTS. 473 fixtures and furniture were worth vastly- more to be kept and used in the hotel than to be removed elsewhere. Upon these facts 1 can entertain no doubt, both upon princi- ple and authority, that these leases should be held to inure to the benefit of the firm. If the defendant can hold these leases, he could have held them if he had secretly ob- tained them immediately after the partner- ship commenced, and had concealed the fact from the plaintiff during the whole term. There would thus have been, during the whole term, in making permanent improve- ments and in furnishing the hotel, a conflict between his duty to the firm and to his self- interest. Large investments and extensive furnishing would add to the value of his lease, and defendant would be under constant temptation to make them. While he might not yield to the temptation, and while proof might show that he had not yielded, the law will not allow a trustee thus situated to be thus tempted, and therefore disables him from making a contract for his own benefit. Terwilliger v. Brown, 44 N. Y. 237, and cases cited. It matters not that the court at spe- cial term found upon the evidence that the improvements were judicious and prudent for the purposes of the old term. The plaintiff was entitled to the unbiased judgment of the defendant as to such improvements, unin- fluenced by his private and separate interest. But, further, the parties owned together a large amount of hotel property in the form of furniture and supplies, considerably exceed- ing, as I infer, $100,000 in value. Assuming that the partnership was not to be continued after the 1st day of May, 1871, this property was to be sold, or in some way disposed of for the beneflt of the firm, and each partner owed a duty to the firm to dispose of it to the best advantage. Neither could, without the violation of his duty to the firm, place the property in such a situation that it would be sacrificed, or that he could purchase it for his separate benefit, at a great profit. Much of this property, such as mirrors, carpets, etc., was fitted for use in this hotel, and it is quite manifest that all of it would sell better with a lease of the hotel, than it would to be re- moved therefrom. It is clear that one or both of these parties could obtain advantageous leases of the hotel for a term of years, and hence, if the parties had determined to dis- solve their partnership, it would have been a measure of ordinary prudence to have ob- tained the leases and transferred the prop- erty with the leases as the only mode of real- izing its value. This was defeated by the act of the defendant, if he is allowed to hold these leases, and thus place himself in a position where the proprty must be largely sacrificed or purchased by himself at a great advantage. This the law will not tolerate. The language of Lord Eldon, in Featherstonhaugh v. Fen- wick, 17 Ves. 311, a case in many respects resembling this, is quite in point. He says: "If they [the defendants] can hold this lease and the partnership stock Is not brought to sale, they are by no means on equal terms. The stock cannot be of equal value to the plaintiff, who was to carry it away and seek some place in which to put it, as to the de- fendants who were to continue it in the place where the trade was already establish- ed, and if the stock was sold the same con- struction would give them an advantage over the bidders. In effect they would have se- cured the good-will of the trade to themselves in exclusion of their partner." For these rea- sons, independently of the consideration that the leases themselves had. a value to which the firm was entitled upon other grounds and upon authorities to be hereafter cited, the plaintiff, who commenced his suit about one year before the term of the partnership ex- pired, was upon undisputed principles and au- thorities applicable to all trustees and per- sons holding a fiduciary relation to others, entitled to the relief he prayed for. It has long been settled by adjudications, that generally when one partner obtains the renewal of a partnership lease secretly, in his own name, he will be held a trustee for the firm, in the renewed lease, and when the rule is otherwise applicable, it matters not that the new lease is upon different terms from the old one, or for a larger rent, or that the lessor would not have leased to the firm. The law recognizes the renewal of a lease as a reasonable expectancy of the tenants in pos- session, and in many cases protects this ex- pectancy as a thing of value. I will briefly notice a few of the cases upon this subject. In Holridge v. Gillespie, 2 Johns. Ch. 30, Chancellor Kent says: "It is a general prin- ciple pervading the cases, that- if a mortgagee, executor, trustee, tenant for life, etc., who has a limited interest, gets an advantage by being in possession, 'or behind the back' of the party interested in the subject, or by some contrivance or fraud, he shall not re- tain the same for his own benefit, but hold it In trust." That was a case where a lease was assigned as security, and the assignees surrendered it to the lessor and took a new lease for an extended term of years. In Phyfe V. Warden, 5 Paige, 268, Chancellor Walworth lays down the general rule: "That if a person who has a particular or special in- terest in a lease obtains a renewal thereof from the circumstance of his being in posses- sion as tenant, or from having such particu- lar interest, the renewed lease is in equity considered as a mere continuance of the orig- inal lease, subject to the additional charges upon the renewal, for the purpose of protect- ing the equitable rights of all parties who had any interest, either legal or equitable, in the old lease." That case was followed in Gibbes V. Jenkins, 3 Sandf. Ch. 131, where it was held that one purchasing a leasehold which was subject to a mortgage and contained no covenant of renewal, could not escape the lien of the mortgage by suffering the lease to ex- pire and afterward obtaining a new lease of -174 CONSTRUCTIVE TRUSTS. the premises; that the new lease in such case, though not a renewal, was a continuance of the original lease for the purpose of protecting the rights of the parties interested in the orig- inal lease, both legal and equitable. In these two cases church leases were involved, and some stress was laid upon that fact, as the continuance of such leases was expected as a matter of course, without any covenant of renewal. But the fact that they were church leases could make no real difference in the principle upon which the decisions were based. The fact that a renewal or continuance of a lease is more or less certain can make no dif- ference with the principle; that springs from the fact that the party obtained a new lease from the position he occupied, being in pos- session and having the good-will which ac- companies that, or being connected with the old lease in some way, and thus enabled to take an inequitable advantage of other par- ties also interested, to whom he owed some duty. In Struthers v. Pearce, 51 N. Y. 357, it was held that when during the existence of a continuing copartnership of undetermined du- ration, three or tour copartners, without the knowledge of the other, obtained a new lease in their own names, of premises leased and used by the firm, the same became partner- ship property, and upon dissolution the other partner was entitled to his proportion of the value. In that case the defendants Intended to dissolve the copartnership as early as Au- gust, and gave written notice on the 18th day of September, 1865, for the dissolution on the 31st day of December following. On the 11th day of September, the defendants secretly ob- tained a new lease, in their own names, of the same premises, for a term of five years, to commence May 1, 1866. I think that case is fairly decisive of this. It is true that a period for a dissolution of the partnership had not been fixed when the new lease was taken, but negotiations were pending for its dissolu- tion, and a few days after the new lease was taken, a time for its dissolution was fixed by a written notice. But it can make no differ- ence that the partnership might have been continued by the parties until after the new term commenced. So it might here, if the parties had so willed. There they had the right to dissolve it at any time. The principle which lies at the foundation of the decision of that and all similar cases must be the one above stated, that the defendants in posses- sion took advantage of their position to pro- cure the new lease, and thus deprived the plaintiff of a benefit to which he, with them, was equally entitled. In a note to Moody v. Matthews, 17 Ves. (Sumn. Ed.) 185, the learn- ed editor says, as a deduction from adjudged cases, that "with a possible exception in favor of a bona fide purchaser, it seems to be an vmiversal rule that no one who is in posses- sion of a lease or a particular interest in a lease, which lease is affected with any sort of equity in behalf of third persons, can renew the same for his own use only; but such re- newal must be construed as a graft upon the old stock." In Clements v. Hall, 2 De Gex & J. 173, where one partner In a mining part- nership died in 1847, and the surviving part- ner thereafter worked the mine without a new lease thereof, claiming to do so for his own benefit, until 1850, when the lessor gave him notice to quit in March, 1851, when he entered into new negotiations with the lessor for a new lease, and obtained one of the greater part of the mine, on terms much more burdensome than those of the old tenancy, it was held that those who claimed under the will of the deceased partner were entitled to a share of the benefit of the new lease. In Clegg V. Fishwick, 1 Macn. & G. 294, one of several partners working a mine under a lease died, and the firm business was there- after carried on for several years between the surviving partners and the plaintiff, widow of the deceased partner. Finally the old lease expired, and some of the partners took a new lease of the mine without the privity of the plaintiff. It was held that the estate of the deceased partner was interested in the new lease. The lord chancellor says: "The old lease was the foundation of the new lease, and the tenant's right of renewal arising out of the old lease giving the partners the benefit of this new lease; at least, the law assumes it to be so. Without saying at all what cir- cumstances there may be to Interfere with that ordinary right, we know that the rule of equity is that parties interested jointly with others in a lease cannot take to themselves the benefit of a renewal to the exclusion of the other parties interested with them." In Clegg V. Edmondson, 8 De Gex, M. & G. 787, the managing partnei-s of a mining partner- ship at will gave notice of dissolution to the rest, and intimated their intention, after the dissolution, to apply for a new lease for their own exclusive benefit, and did so and obtain- ed a lease, and it was held to inure to the benefit of the partnership. See, also, the lead- ing cases of Featherstonhaugh v. Fenwick, 17 Ves. 298, and Keech v. Sandford, 2 Eq. Cas. Abr. 741, and notes to the latter case in 1 Lead. Cas. Eq. 32, where the whole doctrine is discussed, and .conclusion reached in har- mony with the views above expressed. I therefore conclude that it makes no difference that these leases were obtained for a term to commence after the partnership, by its own limitation, was to terminate. I can find no authority holding that it does, and there is no principle sustaining the distinction claimed. The defendant was in possession as a member of the firm, and the firm held the good-will for a renewal, which ordinarily attaches to the possession. By his occupancy, and the payment of the rent, he was brought into inti- mate relations with the lessors; he became well acquainted with the value of the prem- ises, and he took advantage of his position, during the partnership, secretly to obtain the new leases. He must hold them for the firm. CONSTRUCTIVE TRUSTS. 475 I am therefore of opinion that the judg- ment should be reversed, and new trial grant- ed, costs to abide the event. DWIGHT, C. The question at issue in this case is, whether a member of a commercial partnership, during its continuance, and with- out the consent or knowledge of his associate, can take a renewal of a lease of property used in the business, In his own name and for his own benefit, the partnership having a definite termination, and the renewal lease commencing at its expiration. The general power of a partner to take a lease of such property for his own benefit must be considered as settled in this court by the decision in Struthers v. Pearce, 51 N. Y. 357. In that case the lease was taken during the existence of the partnership, which was of indefinite duration. No notice had been given of its termination when this lease was taken. The facts presented the case of a lease taken during the existence of the part- nership, and to begin in enjoyment during that time. The court expressely distinguished it from the present case, which had then been decided in the supreme court. Page 362. The only point now open for discussion is, whether the fact that when Read took the renewal of the lease the partnership had a precise limit, and was to terminate before the lease commenced, is material. Before 'considering that point, it may fairly be claim- ed that this case comes within the precise decision in Struthers v. Pearce, on a ground not mentioned in the argument. Read, though his lease was not to commence in pos- session until after the expiration of the orig- inal lease, acquired an immediate interest by way of an interesse termini. This precise point was decided in Smith v. Day, 2 Mees. & W. 684, 699 ; 2 Piatt, Leas. 60. This, it is true, is not an estate, but a right. Still it is the subject of grant before entry. 1 Steph. Comm. 268; Burt. Real Prop. 18, pi. 61; 2 Crabb, Real Prop. 227. If the partnership had acquired this interesse termini, it might, as the facts of the case show, have been dis- posed of for a large sum of money. If the doctrine of Struthers v. Pearce establishes that the partner cannot acquire a lease in his own behalf, to commence while the partner- ship lasts, by parity of reasoning he cannot obtain an interesse termini under the same circumstances. If however this view is not correct, the main question must be disposed of. Can a partner take a lease for himself, to commence in possession after the partnership has ex- pired? In order to settle this point It is essential to give the subject a more full ex- amination than was requisite in Struthers v. Pearce, and to consider more at large the prin- ciples on which this branch of the law rests. It grows out of the relation of trust and con- fidence between partners, and is a branch of the rule that a trustee cannot profit from the estate for .which he acts. It largely has its roots in a principle of public policy, as shown in one of the early decisions. Keech v. Sand- ford, Sel. Cas. Ch. 61; Griffin v. Griffin, 1 Schoales & L. 352, per Lord Redesdale. The general rule is so well settled that it would be a waste of time to refer to authorities. The text-writers on the law of partnership, without exception, assert the applicability of this rule of law to partnership transactions. Lindl. Partn. 495; Story, Partn. §§ 174, 175; Parsons, Partn. §§ 224-226; CoUy, Partn. §§ 281, 282. The special rule that a trustee cannot take, for his own benefit, a renewal of a lease which he holds In trust, is enforced in a great number of cases. The principle on which it rests is nowhere more fully or clearly stated than in the argument of Sir Francis Har- grave in Lee v. Vernon, 5 Brown, Pari. Cas. (10th Eng. Ed.) 1803. Although the passage is somewhat long, it is quoted aa shedding much light on a subject, the principle of which has in course of time, become somewhat obscure. He said: "It has long been an established practice to consider those who are in posses- sion of lands under leases for lives or years as having an interest beyond the subsisting term, and this interest is usually termed the tenant right of renewal, which though accord- ing to language and ideas strictly legal, is not any certain or even contingent estate; but only a chance, there being no means of compelling a renewal, yet is so adverted to in all transactions relative to leasehold proper- ty, that it influences the price in sales, and is often an inducement to accept of it in mortgages and settlements. This observation is more especially applicable to leases from the crown, the church, colleges or other cor- porations, and indeed from private persons, where the tenure is of ancient date. • * ♦ This 'tenant right' of renewal as it is termed, however imperfect or contingent in its na- ture, being still a thing of value, ought to be protected by the courts of justice, and when those who are entitled to its incidental advantages, whether by purchase or other der- ivation, are disappointed of them by fraud, imposition, misrepresentation, or unfair prac- tice of any kind, it is fit and reasonable that this injury should have redress. Accordingly courts of equity have so far recognized the tenant right of renewal as frequently to in- terpose in its favor by decreeing that new or reversionary leases gained by means or sup- position of the tenant right of renewal should be for the benefit of the same persons as were interested in the ancient lease, and those who procured such new leases and were le- gally possessed of them, should be trustees for that purpose. There is a great variety of authorities on this head, but the cases which have hitherto occurred have been principally of two kinds, some being cases of persons not having any beneficial interest in the old lease, as guardians and executors, and others being cases of persons having only partial and limited interests, as tenants for life, mort- 176 CONSTRUCTIVE TRUSTS. gagees and mortgagors, and In cases of both descriptions those who have procured a new lease in such situations have been uniformly declared trustees for the persons beneficially Interested in the ancient lease, either wholly or in part, according to the particular circum- stances, the court ever presuming that the new lease was obtained by means of a con- nection with and a reference to the Interest in the ancient one, without in the least re- garding whether the persons renewing intend- ed to act as trustees, or for their own emolu- ment." From this exposition so luminous and judi- cial in Its tone, which is fully sustained by the autliorities, it is clear that the rule un- der consideration is not confined to crown, church or college leases, but embraces those of every kind. The same principle apper- tains to all. The cestui que trust has a right to the chance of renewal. Though this is termed a "tenant right" as between the les- see and the landlord, that is a mere phrase. It is a hope, an expectation, rather than a right. Such as It is the trustee shall not take it to himself, but if it results in any substantial benefit he shall hold it for his beneficiary. Phyfe v. Wardell, 5 Paige, 26S; Bennett v. Van Syckel, 4 Duer, 162; Glbbes V. Jenkins, 3 Sandf. Ch. 130; Davoue v. Fanning, 2 Johns. Ch. 252; Armour v. Alex- ander, 10 Paige, 572; Dickinson v. Codwise, 1 Sandf. Ch. 226. Some of these were In- stances of church or other corporation leases, and others were not. In no case has it been held that the rule is confined to these, as It cei-tainly cannot be on principle. The whole doctrine is extended to the case of partners in Featherstonhaugh v. Fenwick, 17 Ves. 29S; Clegg v. Edmondson, 8 De Gex, M. & G. 787; Clements v. Hall, 2 De Gex & J. 173; Clegg v. Fish wick, 1 JIacn. &, G. 294; Struthers v. Pearce, supra. The principle cannot depend on the fact whether the lease is made to begin during the continuance of the partnership or at its close. Once admit the general principle, ajid it must result in this. While the rela- tion lasts, one partner cannot clandestinely and exclusively profit by the trust relation. There may perhaps be cases where the act is openly done by the trustee and acquiesced In by the beneficiary that woiild admit of different considerations. It is not now nec- essary to decide that in no case can a part- ner take a lease for his own benefit. What Is now to be decided is, whether he can do so behind the back of his associate and with- out his consent. The bad consequences of making any such distinction as the defend- ant seeks to maintain In the present case is easily shown by a reference to the relation of a guardian' and his ward. A guardian, we may suppose, holds a lease in his official character which is to expire at his ward's majority. While the relation of guardian and ward exists, he takes a lease to himself to commence at the termination of the ex- isting lease. Could that be sustained? Has he not profited by the trust relation? When he takes a lease to himself, can a tenable distinction be taken between one commenc- ing immediately and one beginning at a future day, even though that day be post- poned until the trust relation expires? The sound rule is that he cannot make any profit to himself from a secret transaction initiat- ed while the relation of trustee and cestui que trust exists, no matter when it springs into active operation. It must never be for- gotten that on general principles of the law of contracts his right to the lease, as between him and his landlord, commences as soor as he has made his agreement for it. Thi& is an immediate subject of sale, and If the trustee can hold it he will be allowed to profit by the trust relation which, as has been shown, he cannot do. The cestui que trust may accordingly say: "All the value of this lease you hold in trust for me. Grant that it is not yet an estate but only a right- make it over to me in tlie condition in which you hold it." While no case has been found presenting the precise facts in the case at bar, the principles which should govern it may be derived from the result in Feather- stonhaugh V. Fenwick, supra, Clegg v. Ed- mondson, and Clegg v. Fishwick, supra. In the first of these cases the partnership was for an indefinite period, and might be dissolved at the pleasure of either party, on notice. It was dissolved November 22, 1804, the day on which the lease expired. Two of the partners, without communication with the plaintiff, had applied for a renewal of the lease, and obtained It before giving notice of the dissolution of the partnership. The new lease was to run for eight years from the expiration of the old one. On October 19 they gave notice to dissolve the partnership. The court held that the new lease belonged to the partnership and was assets of the firm. Much stress was laid on the fact that the transaction was a clandestine one, and the court thought if notice had been given the case might have admitted of different consideration. The case is not in all respects parallel in its facts with the case at bar, for at the time the lease was taken the pe- riod for the termination of the partnership had not been fixed, and only became subse- quently ascertained by notice. In the case of Clegg v. Edmondson, which was also an instance of a partnership to be dissolved at the pleasure of the parties, the effect of a notice to dissolve, preceding the execution of the renewal lease, came before the court. In that case five managing part- ners had determined to dissolve their part- nership, and had communicated their intent in June, 1846, and their determination to take a renewal to themselves. To this two other partners objected, claiming that the renewal should be for the benefit of all. For- mal notice of dissolution was given In July, to take effect on September 30. On the sue- CONSTRUCTIVE TRUSTS. 477 ceeding 11th of December a new lease was executed for twenty-one years to the man- aging partners, to take effect from Septem- ber 29, 1846. The defendants endeavored to distinguish this case from that of Feather- stonhaugh v. Fenwick, on the ground of the openness and fairness of the transaction. The court however held that the mere com- munication of an intent on the part of the managing partners to apply for a lease for their own benefit was not sufficient to give them an exclusive right to it. This case, on the point of time, is stronger than the case at bar, for the new lease was taken after the partnership was dissolved, though some stress was laid upon a point which does not appear here, that the act was that of man- aging partners. On principle, in many cases, it is of but lit- tle consequence whether the partnership is dissolved or not before the renewal, since, if the former partners become tenants in com- mon, the result is the same. Clements v. Hall, 2 De Gex & J. 173; Van Home v. Fonda, 5 Johns. Ch. 388; Baker v. Whiting, 3 Sumn. 475, Fed. Cas. No. 787. The case of Clegg V. Fishwick is still nearer to the one under consideration. In this instance, the renewal lease was obtained during the exist- ence of the partnership, and the lease com- menced at its expiration. This lease was de- clared to be held in trust for the firm. Without further collation of authorities, the fair deductions from the principles on which they rest may be summed up as fol- lows: 1. A trustee holding a lease, whether cor- porate or individual, holds the renewal as a trustee, and as he held the original lease. 2. This does not depend upon any right which the cestui que trust has to the re- newal, but upon the theory that the new lease is, in technical terms, a "graft" upon the old one; and that the trustee "had a fa- cility," by means of his relation to the estate, for obtaining the renewal, from which he shall not personally profit. 3. This doctrine extends to commercial partnerships, and one of several partners cannot, while a partnership continues, take a renewal lease clandestinely, or "behind the backs" of his associates, for his own benefit It is not material that the landlord would not have granted the new lease to the other part- ners, or to the firm. 4. It is of no consequence whether the partnership is for a definite or an indefinite period. The disability to take the lease for individual profit grows out of the partner- ship relation. While that lasts, the renewal cannot be taken for individual purposes, even though the lease does not commence until after the expiration of the partnership. 5. It cannot necessarily be assumed that the renewal can be taken by an individual member of the firm, even after dissolution. The former partners may still be tenants in common; or there may be other reasons, of a fiduciary nature, why the transaction can- not be entered Into. The authorities cited on behalf of the de- fendant do not disprove these conclusions. In Lee v. Vernon, supra, there was no trust. The question arose between a stran- ger to the lease and the claimant. The point made by the plaintifE was that the "tenant right" of renewal had become strictly a right, so that even a stranger could not take a re- newal and hold it for his own benefit. It was an extraordinary claim, having no foundation in principle, and was rejected. In Van Dyke v. Jackson, 1 B. D. Smith, 419, the party had made a special contract with his partner to abandon the place where the business was carried on. The case turn- ed on the special contract to leave the busi- ness in the hands of the other party. Musselman's Appeal, 62 Pa. St. 81, does not raise the question. It was not sought there to charge a partner with the value of a re- newal lease which he had taken to himself during the existence of the partnership, but rather with that of the good-will as it exist- ed after the partnership was dissolved. In fact the place where the business was car- ried on was sold for the benefit of the firm, and it was held, in substance, that the good- will had been realized in the enhanced value of the property sold. It is said, in the present case, that Read was not authorized, by the articles of part- nership, to contract for Mitchell after the ex- piration of the firm; and that therefore Mitchell cannot take advantage from the re- newal lease. The answer is that he madi' the contract while the firm was in existence, and Mitchell may adopt and ratify it. The objection also proves too much, as it applies to all the cas'es in which the partner, acting clandestinely, has been declared a trustee. In Phillips V. Reeder, 18 N. J. E'q. 95, one of the partners, R., prior to the partnership, owned the lease, exclusively, of certain stone quarries. He entered into a partnership with P. for three years, and so much longer as R. should continue lessee of the quarries. In the lease, there was a covenant of renewal at the option of R. He having declined to renew, it was held that the pai-tnership ex- pired; or, in other words, that R. was un- der no obligation to renew, and thus to con- tinue the partnership. There could be no pretense in this case that the doctrine under the review applied, since the original lease did not itself belong to the firm. It was the private property of one of the partners, which he was under no obligation to preserve for the firm's benefit. In Achenson v. Fair, 3 Dru. & War. 512, the i)oint decided was, that the doctrine was not to be extended to additional lands pur- chased by trustee; in other words, the rule was fully recognized, but nothing was to be governed by it except that which could be fairly regarded as a graft on the former lease. 478 CONSTRUCTIVE TRLSTS. In Nesbitt v. Tredennick, 1 Ball & B. 29, 48, a mortgagee, not In possession, obtained a renewal, the original lease having been for- feited, both In law and equity, for nonpay- ment of rent. Here there was no violation of trust The rule under discussion was ful- ly recognized, but its application to the ex- isting case denied. The court said: "'In all the cases upon this subject, either the party, by being in possession, obtained the renewal, or it was done behind the back, or by some contiivance in fraud of those who were In- terested in the old lease; and there was ei- ther a remnant of the old lease, or a tenant right of renewal, on which a new lease could be engraited." There could be no plainer recognition of the general principle maintain- ed by the plaintiff. In Munsell v. O'Brien, 1 Jones, Ir. 184, the facts were, that there was an under-tenant who took a new lease from the original land- lord without advising his own immediate landlord. The court held that there was no fiduciary relation between these parties. The principle was fully admitted, but the facts did not raise a case for its application. Joy, C. B., said: "It is admitted that there is no authority which can be produced where such a lease as the present has been declared to be a trust; and that we are now called upon to go further than any decision has ever gone before, and to make an authority for future decisions. We are called upon to do this on what are called the principles of a court of eauity; namely, that where a per- son is clothed with a fiduciary character, and in that character becomes possessed of an in- terest in land, held under a determinable lease, any acquisition by him of a new inter- est in those Jands is a continuation of the old lease, and a 'graft' upon it. This however is the first time that I have heard It asserted that If an under-tenant obtains a lease of his lands from the head landlord without con- sulting his own immediate landlord that lease Is a trust for his immediate landlord, because that person had a tenant right of renewal. But there is no fiduciary character imposed on an under-tenant. In reference to his landlord, by the creation of the relation of landlord and tenant, which would entitle the plaintiff to the relief he seeks, on the ground of his having a tenant right of re- newal. A cestui que trust is entitled to the benefit of a new lease, obtained by a trustee by means of a tenant right of renewal, which the latter became entitled to as trustee, but there Is no such person in the present case.'" This language plainly shows that the court was but following In the wake of Lee v. Vernon; and holding that the doctrine of tenant right of renewal, and that the new lease is a graft on the old stock, are not to be extended to strangers, but confined to per- sons acting in a fiduciary character. The only other case that wUl be noticed Is Anderson v. Lemon, 8 N. Y. 236, which holds, that one partner may In good faith purchase and hold, for his own use, the reversion of real estate occupied by the copartnership, un- der a lease for years, with the qualification that if he secretly makes such purchase in his own name while the other partner with his concurrence Is negotiating with the own- er to obtain the property for the use of the firm, the purchaser will be declared a trustee. This decision carefully admits the genera) doctrine, but considers it not applicable to the case where one of the pai'tners purchases in good faith the landlord's Interest as dis- tinguished from taking a new lease. It Is simply a case of an exception to a general rule. It can scarcely be considered as a de- cision m favor of a partner's right to pur- chase, since he was, under the circumstances, a trustee. Should the question be distinctly presented, it will deserve consideration whether the view In Anderson v. Lemon, that one partner may even in good faith buy the reversion for himself, is correct. There is a great cogency In the remarks of Sir Wil- liam Grant, that the partner may in this way intercept and cut off the chance of future re- newals and consequently make use of his situation to prejudice the interests of his as- sociates. Randall v. Russell, 3 Mer. 190, 197. There appears to be no direct decision allow- ing the partner thus to purchase, and the right to do so is treated as doubtful by ap- proved text-writers. 1 Lead. Cas. Eq. (3d. Am. Ed.) 43, 44, marg. paging. The application of the principles discussed In this opinion to the case at bar Is obvious. The plaintiff and defendant were owners, as partners, of a lease of premises In the city of New York, on which a hotel business was carried on, yielding a large profit. These consisted of Nos. 1111, 1113, 1115 Broadway and Nos. 1 and 3 West Twenty-fourth street The leases of the Twenty-fourth street prop- erty were made directly to them, November 17, 1866. The Broadway property, through a series of transactions not necessary to be detailed, becames vested, according to the fair construction of the various agreements respecting it, in the partnership. The leases expired on the same day. May 1, 1871, when the partnership terminated. While the part- nership continued, both parties thought it necessary to provide a place for a bar-room, and with this view the premises No. 3 West Twenty-Fourth street were connected with the rear of the premises fronting on Broad- way, known as the "Hoffman House," and the first story fitted up and used for that purpose. A considerable expenditure was made with this view, and large profits were realized, as the course taken was judicious. While all of the leases owned by the firm were still in existence, viz. April 20, 1869, and on January 21, 1869, the owners of tJie hotel property made leases to the defendant, to commence from May 1, 1871, and to con- tinue as to part of the property for five years, and as to another portion for ten years from that date, at specified rents. The leases CONSTRUCTIVE TRUSTS. 479 were obtained by Read without notice to tlie plaintiff, and he now claims that they are his exclusive property. They are of great value, and the hotel at the commencement of the action, March, 1870, was still in opera- tion. The furniture, fixtures, stock, etc., were valuable, and the business carried on was profitable. The case has in it -every element of the equity which has been already considered. The partnership is undisputed; the leases were in existence when the renewal was made. The act of renewal was clandestine, or occurred "behind the back" of the plain- tiff. It took place while the partnership was in force. The right to renewal was imme- diate and vested in Read during the partner- ship's continuance. The property belonging to the firm, ajid which will be prejudiced by the prospect of disposing of it at a sacrifice at the close of the existing lease, is large and valuable. Common justice and a due regard to rules of public policy demand that the renewal lease should be declared to belong to the firm, and that the defendant should be re- quired to account to the plaintiff for his por- tion of its value. The clauses in the leases to Read that there shall be no assignment without the consent of the landlord do not stand in the way of the plaintiff's relief. This does not consist in an assignment in the ordinary sense of that term. On the con- trary, the ground of relief is that the defend- ant acted inequitably when he entered into the contract; that he must therefore be con- sidered as a trustee, while the assignment to the firm simply follows as an incident to the giving complete effect to the trust relation declared by the court to exist between the parties. Featherstonhaugh v. Fenwick, su- pra. The judgment must be reversed, and a new trial ordered. All concur; REYNOLDS, C, not sitting. Judgment reversed. ISO CONSTRUCTIVE TRUSTS. RYAN V. DOX, (34 N. Y. 307.) Court of Appeals of New York. Jan., 1866. Henry R. Selden, for appellants. Alexan- der S. Johnson, for respondent DA VIES, C. J. This action was tried by a referee who held as matter of law, that unless the agreement set out In the complaint in relation to the purchase by the defendant at the master's sale of the premises in ques- tion, or some note or memorandum thereof, expressing the consideration be in writing, the same was void, and created no interest in the plaintiffs in said premises, and could not be enforced against said defendant in law or equity. And he further reported, as matter of fact, that no proof was made or offered on said trial by or in behalf of the plaintiff of any such agreement in writing, or of any note or memorandum in writing of such an agreement, or of any deed, con- veyance or instrument in writing subscribed by the defendant or his lawful agent, creat- ing or declaring any trust or interest in said premises in favor of said plaintiffs, and that no proof was made or testimony or evidence offered on the part of the defendant. The judgment entered for the defendant upon the report of the referee was affirmed at the general term, and the plaintiffs now appeal to this court. We are at liberty to assume from this find- ing, that the agreement set out in the com- plaint was proven on the trial before the referee. To ascertain what that agreement was, we must have reference to the com- plaint and the offer made by the plaintiffs on the trial. The plaintiffs averred in the complaint that the plaintiff Michael Ryan, being seized of certain lands in the town of Seneca, made and executed a mortgage thereon In the year 1839, to secure the sum of $800, part of the purchase-money thereof, and that in the month of October, 1841, said plaintiff Ryan conveyed to the said Nev- ins, the other plaintiff, an equal undivided half of the said premises; that plaintiffs being unable to pay the installments on said mortgage as they became due, the said mort- gage was foreclosed, and said plaintiffs pro- cured of one Lewis the sum of $300, which was paid on account of said judgment of foreclosure, and a portion thereof, to the extent of $300, was assigned to said Lewis as his security for such advance; that said Lewis becoming importunate for his money, and the plaintiffs being unable to raise the same for him, Lewis proceeded to advertise said premises for sale on the 12th day of October, 1843, for the purpose of raising said sum of about $300, while said premises were worth the sum of $4,000. The complaint further averred that while said premises were thus advertised for sale, and before the day of sale had arrived, the plaintiffs being men of limited means, and unable to raise the money which would be needed to stop the said sale, and to pay up the amount due on the said decree for the debt and the costs which had accrued, applied to the defendant Dox, reported to be a man of ready money, and who had always professed to be inter- ested in their behalf, and asked him to assist them, and aid them to raise the money to pay the amount due on said decree and save the said premises from being sold away from them, and from being sacrificed for the small amount, compared with their value, which was claimed upon said decree. That said Dox did then profess and declare a will- ingness to help said plaintiffs for such pur- pose, and did then and there agree with the said plaintiffs that on the day of said sale, he, the said Dox, would attend the same and bid off and purchase the said premises at such sale, upon the express agreement and understanding, between the plaintiffs and said Dox, that such bidding and purchase, if made by the said Dox, should be for the benefit and advantage of these plaintiffs, and the plaintiffs upon such agreement and understanding agreed that they would not find any other one to go their friend at the said sale, and to bid in and purchase the said premises for them; and that it was expressly understood and agreed between the plaintiffs and said Dox, that if he became the purchaser of said prem- ises at said sale he should take the deed of the same from the said master in his own name, but only by way of and as security to himself for what money he should have to advance and pay on such purchase, and with the agreement, promise and undertak- ing between said Dox and these plaintiffs, that whenever these plaintiffs should repay him the amount which he should pay to pro- cure and effect such purchase and to get the deed therefor, with the interest there- on, and a reasonable compensation for his services therein, he, the said Dox, should con- vey the said premises to these plaintiffs and again vest the title thereto in them, and should in the mean time hold the said prem- ises in his own name as security only for the said moneys, and always subject to the above agreement and defeasance. That in pursuance of said agreement, said Dox at- tended said sale and bid off the same for the sum of $100, he being the only bidder at said sale, and the same was strutk off to him and he received the deed therefor. That at said sale it was talked about and understood by those present thereat, that said Dox was bidding for the benefit of these plaintiffs, and that said premises were struck off to him only as security to him for the repay- ment to him by these plaintiffs of the moneys he should advance and pay for the same and interest thereon, and his reasonable charges for his attention thereto. And the plaintiffs averred that such was the fact, and that In truth said Dox did bid off and purchase the said premises for these plain- CONSTRUCTIVE TRUSTS. '481 tiffs, and to save the same for them, and took the deed In his own name, only as such security as aforesaid, and that in conse- quence of such understanding other persons Rbstained from bidding on said premises, and the same was struck oft to said Dox without any opposing bid, although the plain- tiffs aver that the same were then worth $4,000 and upwards. And the plaintiffs also averred that if they had not relied upon said agreement, promise and undertaking of said Dox, they would not have allowed the said premises to have been struck off for the said sum of $100, but would have found other persons to have purchased the said premises, and saved the same from sacrifice, but that as said agreement was made more than a month before said sale, these plain- tiffs relied upon it and made no other effort to procure the money, or the assistance of friends to save and buy said premises. That at the time of said sale these plain- tiffs were in the possession of said premises, and continued in possession thereof and made payments on account of the incumbrances thereon until ■ some time in the year 1849, with the knowledge, privity and consent of said Dox. And that during all that time said Dox never exercised any acts of own- ership over said premises, or interfered with the ownership, use, occupation or possession thereof by the plaintiffs, and that during all that time the assessments and taxes there- on were paid by the plaintiffs, with the knowledge, privity and assent of said Dox. That in the year 1849, the said plaintiffs were induced by said Dox to surrender the possession of said premises to him, and in the year 1851 he refused to come to a set- tlement with the plaintiffs, and denied that he held the said premises for their benefit, or that they had any interest therein. The referee excluded such evidence, and decided that he would not receive any parol evi- dence to establish, or tending to establish, the said agreement, and that upon the case made by the pleadings, assuming there was uo agreement in writing as stated in the an- swer, there can be no recovery by the plain- tiffs. To this decision and ruling, the plain- tiffs' counsel duly excepted. This exception presents the main question for consideration and decision upon this ap- peal, and the referee in his report states the ground or reason of his decision to be that unless the agreement mentioned, or some note or memorandum thereof expressing the consideration be in writing the same was void, and could not be enforced against the defendant. If the referee was right in this conclusion, then the plaintiffs were properly nonsuited, and the judgment for the defend- ant should be aflBrmed. If in error then it follows that there must be a reversal and a new trial. The Revised Statutes declare that no estate or interest in lands, nor any trust or power over or concerning lands, or in any manner relating thereto, shall be created, HUTCH.& BUNK.EQ.— 31 granted or declared, unless by act or opera- tion of law, or by a deed or conveyance in writing, subscribed by the party creating, granting or declaring the same. 1 Rev. St. p. 134, § 6. It is manifest that the referee had this provision before him, and that his decision was based upon the assumption of its applicability to the case in hand. In ar- riving at this conclusion he entirely ignored all consideration of fraud or of part perform- ance, as elements of the transaction. Section 10 of the same title declares that "nothing in this title contained shall be construed to abridge the powers of a court of equity to compel the specific performance of agree- ments in cases of part performance of such agreements." 1 Rev. St. p. 135, § 10. It is well settled that courts of equity will en- force a specific performance of a contract within the statute when the parol agreement has been partly carried into execution. 2 Story, Eq. Jur. § 759. And the distinct ground upon which courts of equity interfere in cases of this sort is, that otherwise one party would be enabled to practice a fraud upon the other, and it could never be the intention of the statute to enable any party to commit such a fraud with impunity. In- deed fraud in all cases constitutes an answer to the most solemn acts and conveyances, and the objects of the statutes are promoted instead of being obstructed by such a ju- risdiction for discovery and relief. And when one party has executed his part of the agreement in the confidence that the other party would do the same, it is obvious that if the latter should refuse it would be a fraud upon the former to suffer his refusal to work to his prejudice. In Fonblanque's Equity it is said: "If the contract be carried into execution by one of the parties, as by delivering possession, and such execution be accepted by the other, he that accepts it must perform his part, for when there is a performance the evidence of the bargain does not lie merely upon the words but the facts performed, and it is unconscionable that the party that received the advantage should be admitted to say that such contract was never made." Fonbl. bk. 1, p. 181, c. 338. And the universal rule la correctly enunciated by Brown on Frauds, when he says: "The correct view appears to be that equity will at all times lend its aid to defeat a fraud, notwithstanding the statute of frauds." Brown, St. Frauds, § 438. In the present case we are to assume that the agreement was made as set out in the complaint, and performed on the part of the plaintiffs as therein stated. We then have a distinct and unequivocal agreement established, and performance by one party of all that was to be done in pursuance of it on his part We find the other party, by reason of the acts and omissions of this par- ty, obtaining the possession and title to a large amount of real estate for a trifling sum compared to its actual value, and refusing 1S2 CONSTKUCTIVB TRUSTS. to fulfill the agreement on his part. He In- terposes the statute of frauds as a shield, thus using a statute designed to prevent frauds as an instrument whereby one can be perpetrated with impunity. This a court of equity cannot tolerate. Wetmore v. White, 2 Gaines, Gas. 87, was an action brought in chancery to compel the specific performance of a contract by parol relating to lands. The chancellor dismissed the bill, but the court of errors unanimously reversed his decree. Thompson, J., in delivering the opinion of the court, says: "The appellant's claim resting altogether upon parol contract, It becomes necessary to examine whether any obstacle to relief is interposed by the statute for the prevention of fraud. I think there is not. It is an established rule in equity that a parol agreement in part performed is not within the provisions of the statute. Citing 1 Fonbl. Eq. 182, and cases there noted. To allow a statute having for its object the pre- vention of frauds to be interposed in bar of the performance of a parol agreement in part performed, would evidently encourage the mischief the legislature Intended to pre- vent. * * * Possession delivered in pur- suance of an agreement is such a decree of performance as to take a contract out of the statute." The same doctrine was reaffinned in Pai-khurst v. Van Gortlandt, 14 Johns. 15, 35, 36. In Lowry v. Tew, 3 Barb. Ch. 407, 413, the chancellor said the principle upon which courts of equity hold that a part per- formance of a parol agreement is sufficient to take a case out of the statute of frauds is, that a party who has permitted another to perform acts on the faith of an agreement shall not be allowed to insist that the agree- ment is invaUd, because it was not in writ- ing, and that he is entitled to treat those acts as if the agreement, in compliance with which they were performed, had not been made. In other words, upon the ground of fraud in refusing to execute the parol agree- ment after a part performance thereof by the other party, and when he cannot be pla- ced In the same situation that he was before such part performance by him." See, also, Phillips v. Thompson, 1 Johns. Gh. 131; Mur- ray V. Jayne, 8 Barb. 612. In Hodges t. Tennessee Marine & Fire Ins. Go., 8 N. Y. 416, this court held that in eq- uity parol evidence was admissible to show that a deed absolute on its face was in fact a mortgage, and so intended by the parties thereto. And in Despard v. Walbridge, 15 N. y. 374, this court also held that an as- signment of a lease, absolute on its face, was in fact made for the purpose of securing a debt, and that such debt had been fully paid; and that under the Gode of Procedure, parol evidence is admissible to show that such as- signment, though absolute In its terms, was Intended as a mortgage. The case of Brown v. Lynch, 1 Paige, 147, Is so like to that now under consideration that it may be profitable to refer to it at length. A mortgage upon a farm was fore- closed In chancery and advertised for sale by a master. Before the sale, Brown, the defendant, made an arrangement with the plaintiffs, the Lynches, whereby he agreed to purchase the farm in for their benefit, for which he was to receive a stipulated compensation. The mortgagee, In order tx) favor the Lynches, agreed with Brown that he might bid off the property for about half the amount of the mortgage. Brown, at the sale, prevented others bidding by represent- ing that he Intended to buy for the Lynches, and he purchased the farm at the master's sale for $1,500, about $1,000 below Its value. Afterward Brown refused to convey the farm to the Lynches, or to accoimt to them for the value, although they tendered to him the amount of his bid, with interest, and the sum agreed for his services. And It was held by the court of chancery that Brown was a trustee for the Lynches, and had no other Interest in the farm than that of mort- gagee to secure the repayment of the pur- chase-money, and of the payment of the sum agreed to be allowed him for his services. And that the court of chancery would re- lieve against a fraud by converting the per- son guilty of It into a trustee for those who have been injured thereby. Bmott, vice chancellor, decreed for the plaintiffs, holding the defendant had committed a fraud upon the plaintiffs by agreeing to purchase for their benefit, when, in truth, he meant to purchase for himself, and that he had com- mitted a fraud upon the plaintiffs, by his acts and representations, in preventing bid- ding at the sale. And he proceeds to show, by the citation of numerous authorities, that a court of equity can provide adequate re- lief by declaring the purchaser a trustee for the person defrauded. And he quotes with approbation the remarks of Lord Eldon, In Mestaer v. Gillespie, 11 Ves. 626, where he says: "Upon the statute of frauds, though de- claring that interest shall not be barred ex- cept by writing, cases in this court are per- fectly familiar, deciding that a fraudulent use shall not be made of that statute; when this court has Interfered against a party meaning to make It an instrument of fraud, and said he should not take advantage of his own fraud, even though the statute has declared that in case these circumstances do not exist, the Instrument shall be absolutely void." The chancellor affirmed the decree, and observed, that the Lynches had an In- terest in the premises which they had a right to protect and preserve, and It would have been a gross fraud for any one to hold out to them, under such circumstances, that he was bidding off the property for their ben- efit, when he in fact Intended to appropriate It to his own use. If the appellant did in fact bid It off for them, under the agreement, he held It in trust for them, and had no CONSTRUCTIVE TRUSTS. 483 other Interest In It than that of a mort- gagee, to secure the repayment of the pur- chase-money and the $60 agreed to be paid him for his trouble. But If he had no such intention, and did not in fact Bid off the property In trust for them, he was guilty of a fraud which the court will relieve against The cases referred to by the circuit judge (vice-chancellor), fully establish the principle that this court has power to relieve against such fraud, and the means to be employed is to convert the person who has gained an advantage by means of his fraudulent act, into a trustee for those who have been in- jured thereby." This case was cited with approbation In Anderson v. Lemon, 8 N. Y. 239, and the principle of it adopted by this court in that case. Its principle was also adopted and ap- proved of in Sandford v. Norris, decided at special term of supreme court in May, 1859, and affirmed at general term in the First district in June, 1861. 4 Abb. Dec. 144. In that case, certain premises were owned by the plaintiff's husband, and he made an as- signment thereof, and his assignees adver- tised the same for sale. The plaintiff was anxious to purchase them in at the sale, and made an arrangrement with the defendant, Norris, by which he agreed to attend the sale and bid them off in his name for the plaintiff, and on payment of the sum bid convey the same to the plaintiff. In conse- quence of this arrangement, the plaintiff re- frained from bidding at the sale, and the premises were struck ofl: to the defendant for the sum of $20, subject to the prior in- cumbrances. The defendant subsequently sold the premises so purchased for the sum of $2,000, of which the plaintiff had received one-half, and the action was brought to re- cover the residue. It was held that the plaintiff was entitled to recover, and that the defense of the statute of frauds, interposed by the defendant, was no bar to the relief sought by the plaintiff; that the agreement was established beyond controversy, and the defendant was bound as well by sound morals as established principles of law to the performance of it On the hearing of that case, the opinion of Mr. Justice Emott, in the case of Bergen v. Nelson (not report- ed), was read, distinctly affirming the doc- trine of Brown v. Lynch, supra. The case of Osborn v. Mason, before the vice-chan- cellor of the first circuit (not reported), also affirming the doctrine of that case, was also •cited. Mason in that case agreed with Osborn to attend a sale of certain premises, Osborn be- ing either owner or a subsequent incum- brancer. Mason also having a claim upon the premises as an incumbrancer. Mason agreed to bid in the premises at the sale, and then to let Osborn have them for the amount at which they stood him in, includ- ing his own incumbrance. Mason bid off the premises and then refused to fulfill his agree- ment which was by parol. The vice-chan- cellor held that the statute of frauds was no bar to the suit for a specific performance of the agreement which was decreed, and on appeal to the chancellor the same was af- firmed. Voorhies v. St John was argued and decided in this court in December, 1863. It was an action brought to recover moneys received by the defendant on a sale of a house and lot in the city of New York, and a leasehold estate in two buildings on other lots therein, and for an account of the rents and profits received therefrom. The prop- erty had formerly belonged to the husband of the plaintiff, and consisted of three par- cels, and upon a sale thereof by his as- signees, the plaintiff requested two of her friends to attend the sale and bid off two of said parcels for her benefit They subse- quently, at her request, transferred their bids to the defendant, St John, and he took the conveyance therefor to himself, and paid the assignee for the same, declaring at the time that the plaintiff wished him to buy that property for her. At the sale of the other parcel, St. John attended the assignee's sale and bid off the same himself, and the as- signments of the two bids and the titles to aU the three pieces of property made out to him together in his own name. AU these acts were done by St John for Mrs. Voor- hies, at her request and for her benefit. The referee reported in favor of the plaintiff, and the judgment thereon was affirmed at the general term of the First district, on the authority of Sandford v. Norris, supra. On appeal to this court, that judgment was af- firmed in December, 1863, and distinctly on the ground that the statute of frauds was no bar to the performance of the agreement. We must hold this case as decisive of that now under consideration. The same doc- trine has frequently been affirmed in other cases. In Cox V. Cox, 5 Rich. Eq. 365, the ovraer of land, in danger of being summarily dis- possessed by a sheriff's sale, agreed with his brother, the defendant, that the latter should bid off the land and pay the bid and make a reconveyance on repayment. This agree- ment was declared to the bystanders at the sale, and competition being thus prevented, the land was bought by the brother for one- tenth of its actual value. The whole trans- action was alleged to be "a fraudulent con- trivance on the part of the defendant to obtain his brother's land for one-tenth of its value." The court enjoined the defendant from proceeding at law under the title thus fraudulently obtained, saying: "This court has often repeated that the statute of frauds should never be perverted to an instrument of fraud. Thus, in a case of an agreement such as the statute plainly declares void, if not reduced to writing, yet if this was omit- ted by fraud, the defendant would not be permitted to avail himself of the statute. In Whitchurch v. Bevis, 2 Brown Ch. 565, 484 OOXSUTiL'CTlVE TRISTS, Lord Thurlo-w says, If you Interpose the medium of fraud, by which the agreement is prevented from being put in writing, 1 agree the statute is inapplicable. See Keith V. Purvis, 4 Desaus. Eq. 114." In the case cited of Keith v. Purvis, a creditor induced his debtor's agent not to bid at a sale of his debtor's land by promis- ing to give the debtor time to pay the debt, and then to reconvey the land. This agree- ment was disclosed at the sale, and pre- vented other bids, whereby the creditor bought the land at one-third of its value, but afterward refusing to reconvey, the debtor brought his bill for relief. To this it was objected that the agreement was void by the statute of frauds; but the court held, '-'that if the agreement was void, the creditor must surrender up his advantage under it and be liable to make good the loss sustained by the adverse party from his conduct." "Can it be tolerated," says the court at page 121, "that a creditor shall, at a sale of his debt- or's property, lull him to sleep and keep off other purchasers by an agreement under which he buys in the land for a small sum much below the value, and then that he should declare that the agreement was void under the statute of frauds, and that the other party should have no benefit from the agreement, whilst he reaped all the fruits? Surely not. Courts of justice would be blind indeed if they could permit such a state of things." In Peebles v. Reading, 8 Serg. & R. 492, the supreme court of Pennsylvania said: "If by the artifice of the purchaser declaring he was to buy for the owner, others were pre- vented from bidding, and the land was sold at a great undervalue, this would make him a trustee."^ And in Trapnall v. Brown, 19 Ark. 49, propeity of the value of $5,000 was, by agreement similar to the one in the pres- ent case, bought in for $176, other persons declining to bid on being informed of the ob- ject of the agreement. "Under these cir- cumstances," the court said, "we think it would be a fraud in the purchaser to keep the property in violation of the agreement. That the statute which was designed to pre- vent fraud would be used as a shield and in the commission of fraud, which the coui'ts of equity will not tolerate. We think there- fore that the court below did not err in treating the purchaser as a trustee." These observations, made in these cases, are as per- tinent to that now under consideration, as they were in them. Many of these cases are identical in all important particulars with this, and there is no good reason why the same rules of law and morals enunciated in them should not govern and control the decision in this case. The fact that an agreement is void, under the statute of frauds, does not entitle either party to re- lief in equity, but other facts may; and when they do, it is no answer to the claim for relief, that the void agreement was one of the instrumentalities through which the fraud was effected. Ormond v. Anderson, 2 Ball & B. 369. Where one of the parties to a contract, void by the statute of frauds, avails himself of its invalidity but uncon- scientiously appropriates what he has ac- quired under it, equity will compel restitu- tion; and it constitutes no objection to the claim, that the opposite party may happen to secure the same practical benefit, through the process of restitution, which would have resulted from the observance of the void agreement Floyd v. Buckland, 2 Freem. Ch. 268; Oldham v. Lltchford, Id. 284; Dev- enish V. Baines, Finch, Prec. 3; Thynn v. Thynn, 1 Vern. 296; Reech v. Kennegal, 1 Ves. Sr. 125; Davis v. Walsh, 2 Har. & J. 329; Wilcox v. Morris, 1 Murph. 116; Stod- dard V. Hart, 23 N. Y. 500. It is very clear to my mind, both upon principle and authority, that the referee erred in excluding the evidence offered, and that the judgment must be reversed and a new trial ordered, with costs to abide the event PORTER, WRIGHT, LEONARD, and MORGAN, JJ., concurred. HUNT, J., dis- sented. Judgment reversed, and new trial ordered^ CONSTRUCTIVE TBUSTS. 485 EDWARDS V. CULBBRTSON. (16 S. E. 233, 111 N. 0. 342.) Supreme Coui't of North Carolina. Nov. 22, 1892. Appeal from superior court, Chatham coun- ty; Whl taker, Judge. Action by Samson Edwards against Jen- nie Culbertson for money paid and for a lien on land purchased therewith. Judgment for plaintiff for amount paid without a lien. Plaintiff appeals. Modified. T. B. Womacli, for appellant. John Man- ning, for appellee. SHEPHERD, C. J. According to the find- ing of the jury the defendant fraudulently obtained of the plaintiff the sum of $275.25, for the purpose of purchasing the land de" scribed in the complaint, and that the fraud consisted in "falsely and fraudulently prom- ising and pretending that, if the plaintiff would let her have the said sum of money tor said purpose, she would marry him in a very short time, and that the land to be pur- chased with the said money should be in lieu of her right of dower which she would acquire" by the said marriage. Upon this verdict, his honor rendered a judgment in favor of the plaintiff for the recovery of the amount so fraudulently obtained, but re- fused to declare it a charge upon the land purchased by the defendant with the said money, the land still remaining in her hands. Were there nothing more than a mere prom- ise to marry, it is plain that a violation of it would not entitle the plaintiff to any equi- table relief, but we must infer from the ver- dict that the defendant did not intend to per- form the promise at the time it was made, and that she intended it, as well as the additional agreement to hold the land in lieu of dower, simply as a trick or contrivance by which to cheat and defraud the plaintiff of his money. By submitting to the verdict and judgment, the defendant (even if she could successfully do so) is precluded from denying that she obtained the money under circumstances which the law denounces as fraudulent, and, this being so, it cannot be doubted that if the specific money had been retained by her and could have been identi- fied, the plaintiff, in a proper action, could have recovered it. If this be true, why may not the money be traced into the land and de- clared to be a charge thereixpon? This is a somewhat novel question in this state, but in view of well-settleu equitable principles, as well as authorities in other jurisdictions, it is believed to be unattended with any very serious ditfieulty. The only decision of this court to which we have been referred as bearing upon the question Is that of Campbell v. Drake, 4 Ired. Bq. 94. The plaintiff filed a bill in equity against the heirs at law of one Far- row, praying that they be declared trustees of certain land purchased by their ancestor with money stolen by him of the plaintiff while in the employment of the latter as his clerk. The court said that it was "not at all like the eases of dealings vnth trust funds by trustees, executors, guardians, factors, and the like, in which the owner of the fund may elect to take either the money or that in which It was invested;" and It was ac- cordingly held that the plaintiff was not en- titled to the particular relief asked for. It was strongly intimated, however, by Ruffln, C. J., in delivering the opinion, that the plaintiff might "have the land declared liable as a security for the money laid out for it." It was not stated upon what principle this could be done, but we apprehend that it was based upon the general proposition that, whenever a person has obtained the property of another by fraud, he is a trustee ex male- ficio for the person so defrauded, for the pur- pose of recompense or indemnity. "One of the most common cases," remarks Judge Sto- ry, "in which a court of equity acts upon the ground of implied trusts in invitum, is when a party receives money which he cannot con- scientiously withhold from another party." Story, Eq. Jur. § 1255. And he states it to be a general principle that "whenever the property of a party has been wrongfully mis- applied, or a trust fund has been wrong- fully converted into another species of prop- erty, if its identity can be traced, it will be held in its new form liable to the rights of the original owner, or cestui que trust." Id. § 1258; Hill, Trustees, 222; Whitley v. Foy, 6 Jones, Eq. 34; Taylor v. Plumer, 3 Maule & S. 562; KnatchbuU v. Hallett, 13 Ch. Div. 696; People v. City Bank, 96 N. Y. 32; Na- tional Bank v. Insurance Co., 104 U. S. 54. Jlr. Pomeroy says: "In general, whenever the legal title to property, real or personal, has been obtained through actual fraud, or through auy other circumstances which ren- der it unconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity imposes a constructive trust on the property thus acquired in favor of the one who is truly and equitably entitled to the same, although he may never, perhaps, have had any legal estate therein, and a court of equity has jurisdiction to reach the property either in the hands of the original wrong- doer or in the hands of any subsequent hold- er, until a purchaser in good faith and with- out notice acquires a higher right, and takes the property relieved from the trust. The forms and varieties of these trusts, which are termed 'ex maleficio' or 'ex delicto,' are prac- tically vpithout limit. The principle is appli- ed whenever it is necessary for the obtaining of complete justice, although the law may al- so give the remedy of damages against the wrongdoer." Pom. Eq. Jur. 1053. A con- fidential relation is not necessary to estab- lish such trust, and there is no good reason why the owner of property taken and con- verted by one who has no right to its pos- session should be less favorably situated in 4SC^ OOXSTRUCTIVE TRUSTS. a court of equity, in respect to his rem- edy, (at least for the purpose of "recom- pense or indemnity,") than one who by an abuse of trust has been injured by the wrong- ful act of a trustee to whom the possession of trust property has been confided. "The beautiful character— pervading excellence, if one may say so — of equity jurisprudence," sa.ys Judge Story, "is that it varies its ad- justments and proportions so as to meet the very form and pressure of each particular case in all its complex habitudes." The trusts of which we are speaking are not what is known as "technical trusts," and the ground of relief in such cases is, strictly speaking, fraud, and not trust. Equity de- clares the trust in order that it may lay its hand upon the thing and wrest it from the possession of the wrongdoer. This principle is distinctly recognized by our leading text writers, and it is said by ilr. Bispham (Bisp. Eq. 92) that "equity makes use of the ma- chinery of a trust for the puiTDOse of afford- ing redress in cases of fraud." The princi- ples above stated are illustrated by many de- cisions to be found in the reports of other states, and as our case may easily be assim- ilated to those in which money or other prop- erty has been stolen and converted, such cases must be recognized as pertinent author- ity in the present investigation. In Newton V. Porter, 69 X. Y. 133, it was held that the owner of negotiable securities, stolen and aft- erwards sold by the thief, may follow and claim the proceeds In the hands of the felo- nious taker or of his assignee with notice; and that this right continues and attaches to any securities or property in which the pro- ceeds are Invested, so long as they can be traced and identified. The law, it was said, "will raise a trust in invitum out of the transaction, in order that the substituted property may be subjected to the purposes of indemnity and recompense." Andrews, J., said that "equity only stops the pursuit when the means of ascertainment falls, or the rights of bona fide purchasers for value, without notice of the trust, have Intervened. The relief will be molded and adapted to the circumstances of the cases, so as to protect the rights of the true owner." Lane v. Digh- ton, Amb. 409; Mansell v. Mansell, 2 P. Wms. 679; Lench v. Lench, 10 Ves. 511; Perry, Trusts, § 829; Story, Kq. Jur. § 1258. In Bank v. Barry, 125 Mass. 20, it was held that equity will charge land, paid for in part with the proceeds of stolen property, with a trust in favor of the owner of the property for the amount so used. In Humphreys v. Butler, 51 Ark. 351, 11 S. W. Rep. 479, the defendant. In paying for a house and lot purchased by him for $400, wrongfully used $149.52 belonging to the plaintiff, and of which he had obtained possession without her authority, knowledge, or consent. The court declared the defendant a trustee to the extent of the money of the plaintiff used by him, and charged the same upon the prop- erty, and in default of its payment by a cer- tain time decreed that the same be sold to satisfy the said lien. These and other au- thorities that could be cited abundantly sus- tain the intimation of Chief Justice Ruffln, to which we have referred, and we are there- fore of the opinion that the money fraudu- lently obtained of the plaintiff may be fol- lowed into the land described in the com- plaint, and that the judgment of his honor should be so modified as to declare It to be a charge upon the same. Modified. OONSTRUCTIVE TRUSTS. 487 In re O'HARA. (95 N. Y. 403.) Court of Appeals of New York. 1884. Appeal from surrogate court, Kings coun- ty. The facts of the case are stated in the opinion of the court. Geo. H. Starr and Samuel D. Morris, for appellants. William N. Dykman, for re- spondents. FINCH, J. The testatrix gave to three persons, who were her lawyer, her doctor and her priest, absolutely, but as joint ten- ants, the bulk of her estate. Practically she disinherited her relatives in favor of strangers, who had no claim upon her bounty, except such as originated in their professional characters, and the confidence and friendship thus engendered. For this reason probate of the will was resisted. While the testatrix was shown to have been superstitious, whimsical, blindly devoted to her church and its ecclesiastics, habitually under the influence of stimulants, and seri- ously dependent upon the advice of those who became her residuary legatees, it is yet certain that there was no want of tes- tamentary capacity. But although the at- tack failed upon that ground, the charge of undue influence was somewhat supported by the evidence relating to her character and surroundings, which made possible and tended to render probable the exist- ence of an outside power capable of mould- ing her wishes to its own. The exigency demanded of the proponents some ade- quate and reasonable explanation of a diversion of the estate to strangers hold- ing the power and influence derived from confidential relations, consistent with the free action and untrammeled exercise of the testamentary intention. The explana- tion came. A letter of instruction, address- ed to the residuary legatees, contemporane- ous with the will, and dictating the pur- pose as well as explaining the reason of the absolute legacy, was produced upon the hearing. These written instructions demon- strated that the residuary clause was not intended by the testatrix to pass to the legatees any beneficial interest. The abso- lute devise, on its face diflicult of explana- tion except upon a theoi-y of undue in- fluence, thereby lost its suspicious character and put the legatees in more of a disinter- ested attitude. It apijeared that the testa- trix did not at all desire or intend to be- stow her estate upon those to whom she gave it; that her real intention was to de- vote it to certain charitable purposes; that these, she was advised, could not effectively be accomplished by her will, except through an absolute devise to individuals, in whose honorable action she could confide; and. therefore, and for that reason, and to ef- fect that ulterior purpose, she gave her es- tate in form to the professional friends, not meaning any beneficial legacy to them or for their use. With this development of the defense the attack took on a new phase. The heirs at law and next of kin began an action in equity to set aside and annul the residuary devise and bequest, or to estab- lish a trust, which, failing as to the intend- ed beneficiaries, should result to those who would otherwise have taken by descent or distribution. Both cases are now before us, and it is convenient to consider them to- gether, since our conclusion in one may tend seriously to affect the result in the other. The proof is uncontradicted that the testa- trix made the residuary devise and bequest in its absolute and unconditional form in reliance upon a promise of the legatees to apply the fund faithfully and honorably to the charitable uses dictated in the letter of instructions. It does not disprove this statement to assert that no express promise to that effect was made, or that it was the pledge of Judge McCue alone. One of the legatees, Father McGuire, is dead, and the title is in the two survivors, and it is with them only that we need to deal. The trial judge did, indeed, find as a fact that Dr. Dudlej' did not know until after testatrix's death that the unattested letter of instruc- tions existed, but he certainly did know be- fore the will was made the character of the intended disposition; that he was se- lected as one of the exeeutor.s; that the relatives by blood were to take but a trifle, and that the bulk of the estate was to be applied to charitable purposes by the ex- ecutors; and with this knowledge he ac- cepted the proposed trust. The trial judge further finds that Judge McCue "made no promise to obtain the bequest or devise and practiced no fraud." This finding is as- sailed, but unsuccessfully so far as it frees the legatees from a charge of actual fraud. In that respect we agree that there was no evil or selfish intention on their part. But the finding that Judge McCue "made no promise to obtain the bequest or devise" cannot be sustained. If anything is render- ed certain by the evidence it is that the testatrix made the absolute devise and be- quest upon the suggestion of a necessity therefor by Judge JlcCue, and upon the un- derstanding that he and his associates would faithfully and honorably carry out her expressed intentions. If we say that ilcCue made no such promise, that he came under no such honorable obligation, then we must say that the testatrix was misled into a false belief, upon which, as true, she un- mistakably acted. For it is not possible to doubt that if the legatees had said— we will not promise; we will do as we please; we will not be even honorably bound not to 4S8 CONSTRUCTIVE TRUSTS. take tliis money for oi'.selvo:— the absolute bequest would never have been made. It matters little that McOue did not make in words a formal and express promise. Everything that he said and everything that he did was full of that interpretation. When the testatrix was told that the legal effect of the will was such that the lega- tees could divert the fund to their own use, which was a statement of their power, she was told also that she would only have tlieir honor and conscience on which to rely, and answered that she could trust them; which was an assertion of their duty. AVhere in such case the legatee, even by silent acquiescence, encourages the testa- trix to make a bequest to him to be by him applied for the benefit of others, it has all the force and effect of an express promise. Wallgrave v. Tebbs, 2 Kay & J. 321; Schultz's Appeal, SO Pa. St. 405. If he does not mean to act in accord with the de- clared expectation which underlies and in- duces the devise, he is bound to say so, for his silent acquiescence is otherwise a fraud. Russell v. .Jacksou, 10 Hare, 204. So far then as McCue is concerned he stands in the attitude of having procured and induced the testatrix to make a devise or bequest to himself and his associates, by asserting its necessity and promising faith- fully to carry out the charitable purposes for which it wi»s made, and whether his as- sociates knew or promised, or did not, makes no difference where the devise is to them as joint tenants, and all must get their rights through the result accomplished by one. Itowliotham v. Dunnett, 8 Ch. Div. 430; Hooker v. Oxford, 33 Mich. 453; Rus- sell V. Jackson, 10 Hare, 206. If, therefore, in her letter of instructions, the testatrix had named some certain and definite bene- ticiary. capable of taking the provision in- tended, the law would fasten upon the lega- tee a trust for such beneficiary and enforce it, if needed, on the ground of fraud. Eq- uity acts in such case not because of a trust declared by the testator, but because of the fraud of the legatee. For him not to carry out the promise by which alone he procured the devise and bequest, is to per- petrate a fraud upon the devisor which equity will not endure. The authorities on this point are numerous. Thynn v. Thynn, 1 Vern. 296; Oldham v. Litchford, 2 Freem. 284; Reech v. Kennegal, 1 Ves. Sr. 124; I'odmore v. OJunning, 3 Sim. 485; Muckle- ston V. Brown, 6 Ves. 52; Hoge v. Hoge, 1 Watts, 163; McKee v. Jones, 6 Pa. St. 42.j; Dowd V. Tucker, 41 Conn. 197; Hooker v. Oxford, 33 Mich. 454; Williams v. Vreeland, 32 N. J. Eq. 135. The circumstances in these cases were varied and sometimes pe- culiar, but all of them either recognize or enforce the general doctrine. It has been twice applied in our own state. Brown v. Lynch, 1 Paige, 147; Williams v. Fitch, 18 N. Y. 546. In the last of these cases the making of a bequest to the plaintiff was pre- vented by an agieement of the father, who was next of kin, to hold in trust for the plaintiff; and the English casein were cited with approval and the trust enforced. All along the line of discussion it was steadily claimed that a plain and unambiguous de- vise in a will could not be modified or cut down by extrinsic matter lying in parol, or unattested papers, and that the statute of frauds and that of wills excluded the evi- dence; and all along the line it was steadily answered that the devise was untouched, that it was not at all modified, that the property passed under it, but the law dealt j with tlie holder for liis fraud, and out of the facts raised a trust, ex maleflcio, in- stead of resting upon one as created by the testator. The character of the fraud which .justifies the equitable interference is well described in Glass v. Hulbert, 102 Mass. 40. It was said to consist "in the attempt to take advantage of that which has been done in performance or upon the faith of the agreement while repudiating its obligation under cover of the statute." Yet that is not the position of the defend- ants here. By their answer they deny any promise, whatever, made by them; any trust accompanying the request; any agree- ment to hold for the benefit of others; and insist that the property is theirs "for their own use and disposal." Yet this is evidently intended merely aa an assertion of what they insist Is their legal position, and is not meant as a re- pudiation of their promise or its honorable oliligation, and no beneficiary claiming any such violation of duty, or even as threaten- ed or intended, is lief ore us. But it may happen, as It does happen here, that all of the charitable uses en- joined are for the benefit of those incapa- ble of taking, or of a character in direct violation of the law of the state. What then becomes the duty of a court of equity? A fraud remains, except that It takes on graver proportions, and becomes more cer- tain and inevitable. The agreement which induced the absolute device, and the fraud of a beneficial holding secured by a con- trary promise, still confront us. And what is worse, it does not need that the abso- lute legatees repudiate their promise, for if ever so honorably willing to perform it, they cannot do so without setting at defiance and secretly evading the law and general policy of the state. The alternative is plain, and offers no chance of escape. If the legatees repudiate their obligations, that is a fraud upon the dead woman, who acted upon the faith of their promise. If they are willing to perform they cannot perform, except by a fraud upon the law to which they and the testatrix are equally parties. In such a case the fraud remains and ex- CONSTRUCTIVE TRUSTS. 48!) Ists, Identical In its character as to the tes- tatrix, but an injury to the heir at law and next of kin instead of an identified and ca- pable beneficiary. And it becomes not only a fraud against them, but a fraud upon the law, since it is a declared and admitted ef- fort to accomplish by a secret trust what could not on the face of the will be done at all. If, on the ground of fraud, equity, as it has often done, and wUl always do, fas- tens a trust ex maleficio upon the fraudu- lent legatee or devisee for the protection of a named and definite beneficiary, no reason can be given why It should 'not do the same thing when the fraud attempted assumes a more serious character, because aimed at an evasion of the law, and seeking the shelter of unauthorized purposes. In such event. If equity withholds its power, one of two things is accomplished; either the legatee holds the estate beneficially, which is a fraud upon the testatrix and the intended objects of her bounty, or the fund Is devoted to unauthor- ized purposes. In fraud of the law, and of the heirs and next of kin. If a trust ex Bialeficio may be fastened upon the prop- erty In the hands of the fraudulent legatee in the one case, why not also in the other? If in the one the fraud grows out of a re- fusal to perform, which would be the volun- tary act of the legatee repudiating his prom- ise, and so an actual fraud; in the other it grows out of the impossibility of perform- ance, except in defiance of the public law, which is legally a fraud. In neither event can the legatee honestly hold. In both, ei- ther fraud triumphs, or equity defeats it through the operation of a trust, and pro- tects those justly entitled. And so are the cases. In Jones v. Badley, L. R. 3 Eq. Cas. 635, the suit was by the co-heiresses and next of kin to make the defendants trustees for them, on the ground that a devise made to them of a residue absolute on Its face was, In fact, for charitable purposes in vio- lation of the mortmain act, and made on the faith of an agreement by the legatees that they would make such application. One of them was the confidential medical adviser of the testatrix; the devise to the two was in joint tenancy; no purposed or Intentional dishonesty was charged against them; In- stead of wholly repudiating their duty, they alleged in their aaswer a design to carry out the charitable purposes; and yet the court did not hesitate on the ground of fraud to fasten a trust upon the property in their hands for the benefit of the heir and next of kin. Wallgrave v. Tebbs, 2 Kay & J. 313. 321, and Russell v. Jackson, 10 Hare, 207, were cited with approval. The latter case was a bill filed by the next of kin, alleging that the absolute devise of a residue was upon a secret trust either for charitable or illegal purposes. The court so held as to the proceeds of the freehold, and leasehold estates, and because the dispositions "could not by law take efiCect," declared the dev- isees trustees for the heir and next of kin. In Muckleston v. Brown, 6 Ves. 63, 65, Lord Bldon intimated that where the devisees took under an agreement to hold upon such trusts as the testator should declare, but he omitted to declare any, there would be a trust to the heir which equity would decree; and added, as to a case of evasion of the statute, the pointed inquiry: "Is the court to feel for individuals, and not to . feel for the whole of its own system, and compel a discovery 'of frauds that go to the root of its whole system?" In Schultz's Appeal, 80 Pa. St. 405, the plaintiff failed solely for want of proof of an agreement by the legatee inducing the devise; and the same difficulty existed In Rowbotham v. Dunnett, 8 Ch. Div. 430; and as to three of the four tenants In common in Tee v. Ferris, 2 Kay & J. 367; but all confirm the general doctrine asserted. It is needed now that we consider the char- acter of the charitable uses upon which these legatees agreed to hold the residuary estate. The testatrix began her letter of Instructions by saying: "I am desirous of accomplishing certain purposes, some of which at least can- not be legally carried out by express provi- sions of my will; and, therefore, in order more certainly to effect my purposes I have constituted you such residuary devisees and legatees." The first purpose indicated is to "set apart" the income of $20,000 to the ecclesiastical education of poor young men for the Roman Catholic priesthood. She di- rected that this provision be made "a per- manent one" and that the legatees make such arrangements that after their death the income should continue so to be appro- priated. This purpose contemplated and re- quired that the principal of the fund should be held inalienable and without an absolute power of disposition during the three lives of the legatees and for an indefinite period beyond. During this period the legal' title to both the real and personal property would remain In the trustees and they pay over the income, and after the death of two the survivor was directed in some undefined manner to provide for the continuance of such Income in the future. The plan vio- lated the statute against perpetuities both as to real and personal estate, and the active trust was unlimited in Its duration. Schet- tler V. Smith, 41 N. Y. 334; Adams v. Perry, 43 N. Y. 497; Garvey v. McDevitt, 72 N. Y. 561. What the respondent replies is that "the legatees may hand over the designated sum to an Incorporated college" engaged in educating that class of young men. But the testatrix neither authorized nor contemplat- ed any such thing. She chose her trustees for three lives, and no other was to be sub- stituted till the death of the third, and then there might be another will, with an abso- lute bequest of the $20,000 to three other trustees, all honorable men, acting under a mo CONSTRUCTIVE TRUSTS. letter of Instructions, and so tlie process go on in evasion and defiance of the law. If, indeed, the testatrix intended a gift to a college coiTporation, that could have been done by her will. She could have made the devise or bequest without the risk of de- pending on some one's honor that the fund would not be diverted to private use, so that, in so far as this devise or bequest was represented to require an absolute devise or bequest to individuals, she was either mis- led or deceived, or else did not intend a gift to a college corporation. The legatees, therefore, cannot perform their promise as they made it and as the testatrix understood it without violating the law of the state against perpetuities. The letter of instruction then proceeds: "I desire $3,000 set apart, the income where- of shall be applied to the purchase of shoes for poor children attending the parochial schools "of St. Paul's R. C. Church, Brook- lyn." This provision offends in the same way with the first as to the duration of the trust with also the difficulty that the bene- ficiaries are indeterminate. Levy v. Levy, 33 N. Y. 99. Again the respondent answers, both as to this clause and the one following which requires -'$3,000 set apart for the St. Vincent de Paul Society connected with St. Paul's Church," that the church is incor- porated, "and will receive $6,000 with a re- quest from the i-esiduary legatees to use one-half the income to purchase shoes for poor children attending the parochial school." The request would bind nobody. What the testatrix directed was not a gift to the church, but an application by her own chos- en trustees of income to the two specified purposes. And if she intended the disposi- tion now suggested, once more it is true that she could have given $0,000 to the church corporation with a request as to the supply of shoes quite as well as her legatees can do it, and there was no need of the absolute devise and bequest represented to exist. Then follow these provisions, viz.: "The sum of $3,000 for the benefit of the Home of the Good Shepherd, and the sum of $5,000 for the Little Sisters of the Poor, both in Brooklyn." It is said that these two so- cieties are incoi-porated, but they may not be entitled to the principal, if the trustees refuse it, for the latter are authorized to "limit the use of said bequests to the income thereof." And again the obsei"vation recurs that a bequest to these corporations could easily have been made in the wiU if that had been understood to be the real intention. Finally the letter prescribes that any resi- due of the fund remaining should be applied "in aid" of the charities and purposes named in the will or in the letter, "or in any other charity which you or a majority of you may prefer." The respondent says that just such a provision as this in the body of a will has been upheld. Power v. Cassidy, 79 N. X. 602. That is not true. On the conti-ary this court has very recently declined to carry the doctrine of that case beyond its own essen- tial limits, and is not likely to agree that a devise may become the mere equivalent of a general power of attorney. Prichard v. Thompson, 95 N. Y. 76. All through this letter the duty of the legatees is denominated a "trust," the gifts provided are sometimes called "bequests," and at its close, after charging the legatees to impose upon her beneficiaries "as far as you can" the "obligation" of "'the offering of the holy sacrifice of the mass" in her own behalf and that of certain named relatives, she expresses her own sense of the force and chai-acter of her letter in the concluding sentence, "I desire to give to these instruc- tions all the force and solemnity of a last will and testament." This letter of instructions clearly and un- mistakably shows the real nature of the transaction. The writer leaves almost noth- ing to the discretion of the trustees. She se- lects out her own objects of charity in the main, describes them in detail, fixes the amounts to be given and impresses upon her directions the "solemnity of a last will and testament." It is not at all the case of a devise to one absolutely to be expended at his discretion, but a definite and distinct trust having in view specific purposes and contemplating their precise performance. If we construed this document to mean such disp happens that the person who sold the coal to be produced from a gir- 592 SPECIFIC PERFORMANCE OF CONTRACTS. en colliery was also at that time the owner of the colliery. I apprehend there Is no dif- ficulty about entering into a contract for the sale of coal coming from a particular colliery by persons not owners of that col- liery; that is the common practice. The coals not being delivered, and there being no means of obtaining their delivery with- out compelling the defendant Rowland to raise them, it has been admitted before me that this Is a contract of which you can- not obtain a si)ecific performance in a court of equity. Therefore any relief to be obtained by the plaintiffs in the shape of compensation must be obtained at law, and I do not understand that the plaintiffs, coming here for an injunc- tion which they ask, are willing to abandon their claim to compensation at law in the shape of damages. Then it is said, assuming this contract to be one which the court cannot specifically perform, it is yet a case in which the court will restrain the defendants from breaking the contract. But I have always felt, when at the bar, a very considerable diflScuIty in understanding the court on the one hand professing to refuse specific performance be- cause it is difficult to enforce it, and yet on the other hand attempting to do the same thing by a roundabout method. If it is right to prevent the defendant Rowland from sell- ing coal at all, he not having stipulated not to sell coal, but having stipulated to sell all the coal he can raise to somebody who has promised valuable consideration, — why is it not right to compel him to raise it and de- liver it? It is difficult to follow the distinc- tion, but I cannot find any distinct line laid down, or any distinct limit which I could seize upon and define as being the line divid- ing the two classes of cases — that is, the class of cases in which the court, feeling that it has not the power to compel specific performance, grants an Injunction to restrain the breach by the contracting party of one or more of the stipulations of the contract, and the class of cases in which it refuses to interfere. I have asked (and I am sure I should have obtained from one or more of the learned counsel engaged in the case every assistance) for a definition. I have not only not been able to obtain the answer, but I have obtained that which altogether com- mands my assent, namely, that there is no such distinct line to be found in tht authori- ties. I am referred to vague and general propositions,— that the rule is that the court is to find out what it considers convenient, or what will be a case of sufficient Impor- tance to authorize the interference of the court at all, or something of that kind. That being so, and not being able to dis- cover any definite principle on which the court can act, I must follow what Lord St. Leonards says, in Lumley v. Wagner, 1 De Gex, M. & G. 604, is the proper conduct for a judge, in not extending this jurisdiction. I am not, however, entirely without assist- ance from authority, because it appears to me that this very case has been put, though only by way of illustration, by a very great judge, Lord Cottenham, in Heathcote v. Rail- way Co., 2 Macn. & G. 112, where he aays: "If A. contract with B. to deliver goods at a certain time and place, will equity interfere to prevent A. from doing anything which may or can prevent him from so delivering the goods?" That is the exact case I have to deal with, because I have decided that the contract is a contract for the delivery of goods. Finding the dictum of Lord Cotten- ham express on the subject, and the plain- tiffs' counsel not having been able to pro- duce to me any authority in which there has been such an Injunction granted on the sale of goods or any chattel, in a case in which specific performance could not be granted, I think I shall do right in following that au- thority; and I say, although I say it with much regret, that it is a case in which equity can afford no relief. With regard to the question of costs, I think it is undesirable to take the technical admission of the facts of the bill, when a person files a demurrer, to be an admission of the truth of the facts against him for the purpose of costs. If there is no remedy at all at la,w, I think the rule that the costs should follow the result too valuable a one to be tampered with. On these grounds I allow the demurrer, with the usual conse- quences. A petition of appeal was presented against this decision, but the case was compromised before it came to a hearing. \ SPECIFIC PERFORMANCE OF CONTRACTS. 593 ©ANFORTH et al. v. PHILADELPHIA & CAPE MAY S. L. RY. CO. (30 N, J. Eq. 12.) Court of Chancery of New Jersey. Oct. Term, 1878. Bill for specific performance. Heard on biU and answer. J. W. Griggs, for complainants. W. A. House, for defendants. RUNYON, Ch. The bill is filed to obtain a decree for specific performance, by the de- fendants, of a contract entered into between the complainants, partners in business, and them, on the 19th of December, 1877, by which the former agreed to construct, equip and finish, for the latter, a single-track, nar- row-gauge railroad, and telegraph line In con- nection therewith, from the terminus of the Camden, Gloucester & Mount Ephraim Rail- way to high-water mark in the city of Cape May, with stations, engine and freight houses, machine and repair-shops, turn-tables, water- stations, &c., &c., and all necessary terminal facilities, for $2,000,000, payable in the capital stock and first mortgage bonds of the com- pany. By the contract, the complainants were to complete the work within five months after the bonds were negotiated and sold at a price not less than ninety cents on a dollar of the par value thereof; and it was stipulated that they should not be sold at less than that price without the consent of both parties. The bill states that the complainants entered on the work, and proceeded with it from the date of the contract to the 20th of February following; that there was, at the latter date, due to them, under the contract, the sum o'f $40,000, or thereabouts; that they were then entitled to have an estimate made, but the defendants refused to make it, or to pay them, or to carry out the contract, which the com- plainants allege would be of great value to them if performed; and, further, that the de- fendants cannot respond in damages for their refusal to carry out the agreement; and that the complainants could profitably dispose of the bonds and stock stipulated for as payment. The bill prays that the defendants may be de- creed to specifically perform the contract gen- erally, and, also, that they may be required to make the estimate before mentioned, and de- liver bonds and stock to the complainants for the amount which may be found due them thereon. The defendants' answer admits the con- tract and declares their willingness to perform it, but alleges their inability to do so by rea- son of the provisions of an act of the legisla- ture of this state (a supplement to the general railroad law), approved on the 19th of Feb- ruary, 1878. By pne of those provisions the provision of the original act requiring that the articles of association should not be filed until at least $2,000 of stock for every mile of the HUTCH.& BUNK.EQ.— 38 proposed railroad should have been subscribed and ten per cent, paid thereon, was altered so as to require that the entire amount of $2,000 per mile shall be paid to the treasurer of this state, to be repaid by him to the di- rectors or treasurer of the company in the manner specified in the supplement, as the work of constructing the railroad shall pro- gress. By the other, the provision of the orig- inal act which authorized the mortgaging of the road, &c., of the company, to secure the payment of their bonds to an amount not ex- ceeding the amount of the paid-up capital stock, was altered by adding a provision that if any person or persons shall issue such bonds to any greater amount than the amount which at the time of such issue shall have been actually paid up on the capital stock of the company, he, she or they shall be guilty of a misdemeanor, and, on conviction, be punished by fine of not more than $5,000 or imprison- ment at hard labor for not more than three years, or both, at the discretion of the court. These provisions of the supplement were there- in expressly made applicable to corporations already organized under the original act. The defendants state that they have expended all the money received by them on account of their capital stock in the work on the road, and that they are not able to comply with the provisions of the supplement, and that, by the terms of the supplement, their charter is for- feited, by reason of their failure to comply with the provisions of that act. There are several considerations which for- bid the granting of the relief prayed for in this suit. If this court would undertake the performance of such a contract as that stated in the bill, a contract for building and equip- ping a long line of railroad, building station, freight and engine houses, &c., &c. (and the current and great weight of authority is de- cidedly against it,— Story, Eq. Jur. § 726; Ross V. Union Pac. R. Co., 1 Woolw. 26, Fed. Cas. No. 12,080; Fallon v. Railroad Co., 1 Dill. 121, Fed. Cas. No. 4,629; South Wales R. Co. V. Wythes, 5 De Gex, M. & G. 880), Ji£_ais;i ability^ifttie defendants would be a sufiicient reason for fef using. Courts of equity will never undertake to enforce specific perform- ance of an agreement where the decree would be a vain or imperfect act. Tobey v. County of Bristol, 2 Story, 800, Fed. Cas. No. 14,065. And the incapacity of the defendant to carry the contract into execution affords a ground of defence in a suit for specific performance. Fry, Spec. Perf. § 658. In this case the defendants are willing to perform their part of the contract if they can lawfully do so. They have never refused to issue their bonds and stock to the complain- ants in accordance with the terms of the con- tract, except because of the provisions of the supplement above referred to, under which they apprehend they may have lost their cor- porate existence, and by which, if their corr porate existence be not lost, their directors and officers who should act in the matter 594 SPECIFIC PERFORMANCE OF CONTRACTS. would be liable to severe and ignominious punishment for so doing. P. L. 1878, p. 23. They have not complied with the provisions of the supplement in reference to the amount to be paid in on their capital stock, and have not been able and are not able to do so. Only ten per cent of the amount of their capital stock has been paid in. Their corporate pow- ers are, according to the supplement, extinct, and the corporation is dissolved. P. L. 1878, p. 22. The complainants, however. Insist that the supplement is an unconstitutional law; that it destroys their contract, which existed when it was passed, and which was founded on the faith of the original act; that it deprives them of their vested rights thereunder, and that it should be declared to be unconstitu- tional, and Its provisions, so far as they are subject to that objection, disregarded. But it is in nowise necessary to consider that ques- tion; for, If there were no other valid objec- tion, this court would not, under the circum- stances of the case, declare that the appre- hensions, or doubts at least, of the defendants, as to the validity of the supplement, are whol- ly groundless, and direct them to proceed, not- withstanding the penalties above mentioned, to issue bonds according to the contract and in violation of the prohibition of the supplement; to subject themselves to indictment for mis- demeanor and the consequences of conviction. It is enough that the legislature has forbidden them to issue the bonds to induce this court to refuse to order them to issue them. But, further, there is at least doubt whether the company still has a corporate existence. Though the court might, If the case were free from these difficulties, direct the defend- ants to make the estimate of work already done prayed for In the bill (Waring v. Rail- way Co., 7 Hare, 482), yet, for the considera- tions already presented, that relief must also be denied. The bill wUU be dismissed. SPECIFIC PERFORMANCE OF CONTRACTS. 595 ^■i SOUTHERN EXP. CO. v. WESTERN NORTH CAROLINA R, CO. (99 U. S. 191.) Supreme Court of the United States. Oct. 1878. Appeal from the circuit court of the Unit- ed States for the Western district of North Carolina. This is a bill In equity, filed June 18, 1875, by the Southern Express Company, a cor- poration of Georgia, against the Western North Carolina Railroad Company, a corpo- ration of North Carolina, W. A. Smith, and Henry Clews, for the specific performance of a contract entered into December 2, 1865, between the railroad company and the com- plainant. The bill alleges that the railroad company was organized for the purpose of construct- ing a railroad from Salisbury, North Car- olina, to a point on the Tennessee line; that it completed that portion of its line between Salisbury and Morganton, and put it in run- ning order; that the road-bed, roUing-stock, &c., became dilapidated during the war, and that the company in 1865 was without the means to repair the road and make it safe for the transportation of passengers and freight; that the company, having been un- successful elsewhere, applied to the com- plainant for a loan or advance of $20,000; that the complainant having agreed to loan or advance that sum in consideration of se- curing the exclusive privilege of transporting freights over said road as far as Morganton, and of certain other advantages, entered, with the advice and consent of the stock- holders of the railroad company, into the fol- lowing contract with that company: "This Indenture of agreement, made and entered Into this second day of December, A. D. eighteen hundred and sixty-five, be- tween the Western North Carolina Railroad Company, as party of the first part, and the Southern Express Company, as party of the second part, witnesseth as follows: "Whereas the party of the second part has agreed to loan and advance to the party of the first part the sum of twenty thousand ($20,000) dollars upon the notes of said rail- road company, bearing Interest at the rate of six per cent per annum, which sum is to be expended in repairs and equipments for said road. And whereas the party of the first part is desirous of securing the services of an efficient and responsible agent for the trans- action of all of the express business over its road, and is willing to provide the requisite facilities for the proper transaction of said express business in the manner and upon the terms hereinafter specified: "Now, therefore, in consideration of said loan and advance, and the rents, covenants, and agreements hereinafter made and provid- ed, said party of the first part hereby agrees and binds itself to grant to the said party of the second part the necessary privileges and requisite facilities for the transaction of all the express business over the entire length of their road, extending from Salisbury to Mor- ganton, in North Carolina, and furnish such facilities by all its passenger trains running each way over its road as may be necessary to forward without delay all the express mat- ter that may be offered by said party of the second part, and to do all in its power to promote the convenience of said party of the second part in the transaction of its express business, both at way and terminal stations. "Said party of the second part agrees to load and unload said express matter by its own agents, at its own proper costs and char- ges, and save harmless said party of the first part against all claims for loss and damage to the express matter of the party of the sec- ond part, except that which occurs from the negligence and carelessness of said party of the first part or its agents. "The said party of the first part agrees to carry free of charge the messengers in charge of express matter and the officers and agents of the said party of the second part passing over the road upon express business. The said party of the second part agrees to pay to the said party of the first part fifty cents per hundred pounds for all express matter car- ried over the road. An account of the weights of all express matter shall be taken by said party of the first part whenever they shall see fit to do so, and delivered to the agent of the party of the first part, weekly or monthly, as may be desired. "The accounts for transportation to be made up monthly, and the sum found to be due to said railroad company for transporta- tion, at the rate hereinafter specified, shall be applied monthly toward the payment of sai(^ twenty thousand ($20,000) dollars, until the whole sum, with interest, is paid, after which payments for transportation shall be made by said party of the second part monthly In cash. "This contract shall remain in force for the full term of one year, from the first day of January, eighteen hundred and sixty-six. If the said sum of twenty thousand ($20,000) dollars, with interest thereon, shall not have been repaid to the said second party at the expiration of said one year, this contract shall continue in force for a further period, and until the whole of said twenty thousand ($20,- 000) dollars, with interest thereon, shall have been repaid. And the said party of the first part hereby covenants and agrees that it will not furnish express privileges over said road to any other parties during the existence of this contract on any more favorable terms than those herein made with the said party of the second part, both as to rate of trans- portation paid, advance payments, and total amount paid per annum. It is mutually cove- nanted and agreed by the parties hereto that any other contracts that may now exist, whether verbal or written, for express service 596 SPECIFIC PERFORMANCE OF CONTRACTS. between the parties hereto, shall terminate and cease on the thirty-first day of December, eighteen hundred and sixty-flve, at which time this contract shall take effect. "In witness whereof, the parties to these presents have hereunto set their hands and seals the day and year first above written. "Tod R. Caldwell, "Pres't W. N. C. R. R. Co. "H. B. Plant, "Pres't Southern Express Company." The bill then alleges that the $20,000 was paid in compliance with the contract, and that shortly thereafter the complainant en- tered upon the road, transported freight ac- cording to the terms of the contract, kept regular accounts and exhibited them to the company, which were always approved, and it continued to act under said contract until July, 1873; that in 1870 the railroad com- pany conveyed to Tod R. Caldwell and Henry Clews, as joint tenants, and to the survivor of each,— the former of whom has since de- ceased,— all its real and personal property, in- cluding its franchises, in trust, to secure a large number of its bonds then about to be issued; that $1,400,000 of said bonds were sold or hypothecated, and came into the hands of persons unknown to the complainant, but for much less than their value and not by a bona fide sale; that, notwithstanding, the al- leged creditors of the company instituted fore- closure proceedings in the circuit court of the United States for the Western district of North Carolina, and in 1873 obtained a de- cree ordering the sale of all the property of said company; that the defendant, Smith, having in that suit been appointed receiver of the company, forbade the complainant, in July, 1873, from further using the cars of the company, unless upon conditions where- by said contract was virtually surrendered or ignored; that thereupon the complainant was compelled to abandon said railroad, al- though the money so loaned, with a portion of the Interest thereon, is still due and un- paid. It then alleges that the suit is brought with the consent of said court, and with the privilege of making such parties defendant as might be deemed necessary for that pur- pose; that the trustees in the mortgage to secure the bonds of the railroad company had express notice of the contract when they ac- cepted the trust, and that it was claimed by the complainant as an existing lien; that the substance of said contract had been published separately at the instance of the stockholders of the railroad company, and was well known to its creditors and to the purchasers of its bonds at the time, and especially to the de- fendant Smith; and that the railroad com- pany having conveyed away Its property, and being in part insolvent, the violation of the contract cannot he compensated by any dam- ages which would be recovered at law. The bill therefore prays for a decree compelling the railroad company to specifically perform its contract, and for such other and furthe- relief as the nature and circumstances of the case may require, and for process against the defendants. The charter of the railroad company grant- ed in February, 1855, is annexed to the bill and made a part thereof. Its twenty-fifth and twenty-sixth sections are as follows: "Sect. 25. Be it fm-ther enacted, that the said company shall have the exclusive right of conveyance, transportation of persons, goods, merchandise, and produce over the said railroad, to be by them constructed, at such charges as may be fixed on by the board of directors. "Sect. 26. Be it further enacted, that said company may, when they see fit, farm out their right of transportation over said rail- road, subject to the rules above mentioned; and the said company and every one who may have received from it the right of trans- portation of goods, wares, and merchandise over the said railroad, shall be deemed and taken to be a common carrier, as respects all goods, wares, produce, and merchandise in- ti'usted to them for transportation." At rule-day in July, 1875, the writ of sub- poena was returned executed, and the cause continued until the October term, when it was ordered that the commissioners in pos- session of the road in the Western district of North Carolina, and Howerton, president of the company, be notified to appear and an- swer or demur to the bill of complaint at rule-day in January, 1876. The commission- ers appeared and demurred. The demurrer was sustained and the bill dismissed. The express company then brought the case here. Clarence A. Seward, for appellant. A. S. Merrimon, for appellee. SWAYNE, Justice. The bill avers that it was filed against the receiver appointed by the court below, that he was in possession of the railroad, and that the institution of the suit was by the consent of the court. With- out this latter fact the bill could not have been filed or maintained. The suit would have been a contempt of the court which had appointed the receiver, and punishable as such. Davis v. Gray, 16 Wall. 203. The citizenship of the complainant corpo- ration is sufficiently averred. Express Co. v. Kountz, 8 Wall. 342. Such a complainant need not prove its existence, unless the fact is directly put in issue by the defendant. Society for Propagation of Gospel v. Town of Pawlet, 4 Pet. 480. To the objection that the requisite corpo- rate power of the complainant is not shown, there are two answers. The contract of a corporation is presumed to be infra vires, un- til the contrary is made to appear. 2 Waite, Act. & Def. 334. The charter is set out in the record, and forms a part of it. That leaves no room for doubt upon the subject. SPECIFIC PERFORMANCE OF CONTRACTS. 597 Adequate capacity on the part of the rail- road company to make the contract is to be presumed in like manner. No party defendant was necessary but the receiver. He was In the possession of the property and effects of the railroad com- pany, subject to the order of the court, and could have specifically performed the con- tract, or paid back the money loaned if the court had so directed. The presence of the other parties was immaterial, and the bill might well have been dismissed as to them. Davis V. Gray, supra; Doggett v. Railroad Co., 99 U. S. 72. The contract between the express company and the railroad company was that the lat- ter should give to the former the necessary facilities for the transaction of all Its busi- ness upon the road, forward without delay by the passenger trains both ways all the express matter that should be offered, do all in its power to promote the convenience of the express company, both at the way and terminal stations, and carry free of charge the messengers in charge of the express mat- ter, and the officers .and agents of the ex- press company passing over the road on ex- press business. The consideration for these stipulations was a loan by the express com- pany to the railroad company of $20,000, to be expended in repairs and equipments for the road, the loan to bear interest at the rate of six per cent per annum, and the payment of fifty cents per hundred pounds for all ex- press matter carried over the road, to be ap- plied in discharge of the loan and interest. The contract was to continue for one year from the first day of January, 1866, and un- til the principal and interest of the debt should be fully paid. The bill avers that the receiver had refused to carry out the contract, and that the principal of $20,000 and a part of the interest were unpaid. The enforcement of contracts not relating to realty by a decree for specific perform- ance is not an unusual exercise of equity jurisdiction. Such cases are numerous in both English and American jurisprudence. They proceed upon the ground that under the circumstances a judgment at law would not meet the demands of justice, that it would be less beneficial than relief in equity, that the damages would not be an accurate satisfaction, that their extent could not be exactly shown, or that the pursuit of the legal remedy would be attended otherwise with doubt and difficulty. Judge Story, after an elaborate examina- tion of the subject, thus lays down the gen- eral rule: "The just conclusion in all such cases would seem to be that courts of equity ought not to decline the jurisdiction for a specific performance of contracts whenever the remedy at law is doubtful in its nature, extent, operation, or adequacy." 2 Story, Eq. Jur. § 728. See, also, Stuyvesant v. Mayor, etc., 11 Paige, 414; Barr v. Lapsley, 1 Wheat. 151; Storer v. Railway Co., 2 Younge & C. 48; Wilson v. Railroad Co., L. R. 9 Eq. 28. But we need not pursue the subject further, because there is one provision of the con- tract in this case which is fatal to the relief sought. A court of equity never interferes where the power of revocation exists. Frye, Spec. Perf. 64. The contract stipulates that after the first year it shall cease upon the payment of the $20,000 and interest. This might be made immediately upon the rendition of the decree. The action of the court would thus become a nullity. There is another objection to the appel- lant's case which is no less conclusive. The road is in the hands of the receiver appointed in a suit brought by the bondhold- ers to foreclose their mortgage. The appel- lant has no lien. The contract neither expressly nor by implication touches that sub- ject. It is not a license as insisted by coun- sel. It is simply a contract for the trans- portation of persons and property over the road. A specific performance by the receiv- er would be a form of satisfaction or pay- ment which he cannot be required to make. As well might he be decreed to satisfy the appellant's demand by money, as by the serv- ice sought to be enforced. Both belong to the lien-holders, and neither can thus be di- verted. The appellant can, therefore, have no locus standi in a court of equity. Both these objections appear by its own showing. It was, therefore, competent and proper for the court below, sua sponte, to dismiss the bill for the want of equity upon its face. Brown v. Piper, 91 U. S. 37. Decree affirmed. 598 SPECIFIC PERFORMANCE OF CONTRACTS. McCATTLL V. BRAHAM. (16 Fed. 37.) Circuit Court, S. D. New York. March 20, 18S3. In Equity. A. J. Dittenhoefer, for plaintiff. Howe & Hummel, for defendant. BROWN, J. This action was brought in the state court to restrain the defendant, Helen Braham, otherwise known as Lilian Russell, from violating her agreement with the plaintiff by singing during the current season in any other employment than at the plaintiff's theater, which the complaint alleges she is about to do. A preliminary injunction having been obtained at the time of the commencement of the action, the cause was removed by the plaintiff to this court before answer; and the defendant now moves upon affidavits to dissolve the injunc- tion. By the agreement in writing between the parties, the defendant agreed to sing in comic opera in the employment of the plain- tiff whenever required during the season of 1882 to 1883, commencing on or about Sep- tember ] , 1882, at a stipulated weekly salary. By article 1 the agreement provides that "the artist is engaged exclusively for Mr. John Mc- Caull, and during the continuance of this en- gagement will not perform, sing, dance, or otherwise exercise her talent in theater, con- cert halls, churches, or elsewhere, either gratuitously or for her remuneration or ad- vantage, or for that of any other person or other theater or establishment (although not thereby prevented from fulfilling her engage- ment with Mr. McCaull) without having first obtained permission in writing of Mr. Mc- Caull; and for each and every breach of this rule the artist shall forfeit one week's salary, or her engagement, at the option of Mr. Mc- Caull; but such forfeiture of one week's sal- ary shall not be held to debar Mr. McCaull from enforcing the fulfillment of this con- tract in such a manner as he may think fit." By article 3 it is provided that "no salaries will be paid for any night or days on which the artist may not be able to perform through Illness or other unavoidable cause; and the artist absenting herself, except from illness or other unavoidable cause, will forfeit one week's salaiy, or her engagement, at the op- tion of Jlr. McCaull, and will also be held liable for any loss that may be sustained by Mr. McCaull owing to such absence. Illness, to be accepted as an excuse, must be attested by a medical certificate, which must be de- livered to Mr. McCaull or his representative as early as possible, and before the com- mencement of the performance. Should such absence exceed two weeks, the engagement may be canceled at the option of Mr. Mc- Caull." The defendant entered upon the perform- ance of her engagement at the Bijou Opera House in this city in September, 1882, with great success, which was continued until pre- vented from further performance by pro- tracted illness. Having partially recovei'ed, she attempted to renew her appearances, but after three nights' performances, in Decem- ber, she suffered a relapse from which she did not recover until about the middle of February, 1888. By the written contract the plaintiff was to furnish all costumes. This was modified, prior to September, by an oral agreement by which the plaintiff was to pay a larger sal- ary and the defendant to furnish her own costumes. Both parties agree as to the modi- fication of the contract to this extent. The defendant contends that in ' addition to the above the oral contract was further modified by the plaintiff agreeing to pay her weekly salary as at first fixed during the continuance of any illness; that the sum of about $350, paid to her by the plaintiff during her illness, was paid in pursuance of this modification of the contract; and that since the middle of December the plaintiff has refused to con- tinue such payment during that part of her illness, in violation of the agreement as modi- fied. The plaintiff denies that the modification of the contract included any agreement to pay her during illness, and asserts that the moneys actually paid her while ill were mere- ly advances on account of future salary to be earned, and so expressly stated at the time. Each party sustains its respective claims in this respect by several witnesses. They leave this branch of the subject in so much doubt that I feel obliged to reject it from consideration, without prejudice to either in regard to their mutual claims in respect to it, since neither party made it a ground of ter- minating the contract. Up to the time this action was commenced the defendant had given no notice to the plaintiff terminating the agreement; nor had the plaintiff, as he might have done according to the express provision of the agreement, notified the defendant that it was canceled, owing to her absence beyond two weeks. I must, therefore, hold the agreement as still in force. Contracts for the services of ar- tists or authors of special merit are personal and peculiar; and when they contain nega- tive covenants which are essential parts of the agreement, as in this case, that the artists will not perform elsewhere, and the dam- ages, in case of violation, are incapable of definite measurement, they are such as ought to be observed in good faith and specifically enforced in equity. That violation of such covenants will be restrained by injunction, is now the settled law of England. Lumley v. Wagner, 1 De Gex, M. & G. 60i; Montague V. Flockton, L. R. 16 Eq. 189, 199. The subject was exhaustively considered by Freedman, J., in the case of Daly v. Smith, 49 How. Prac. 150, in whose conclusions, in accordance with the English eases above cited, I fully concur. In the present case it SPECIFIC PERFORMANCE OF CONTRACTS. 599 is, however, urged jthat the rerqedy by . In- junction should not be alToWeclT on the groimd ffiat the "pTaintiff's damages have been llq- uiffated by the first article of the contract above qiioted; na:mely, that "for each and every breach of this rule the artist shaU'f or- feit onie week's salary;" and the cases of Bameg V. McAllister, 18 How. Prac. 534; Nessle v. Reese, 29 How. Prac. 382; Mott v. Mott, 11 Barb. 127, 134; and Trenor v. Jack- son, 46 How. Prac. 389, are cited in support of this view. There is no doubt of the general principle that where the damages for the violation of a covenant are either liquidated by the agreement, or may be easily and definitely as- certained, the parties will be left to their remedy at law. But it is clear that in cases of contract like the present, the damages are not capable of being definitely ascertained or measured; and in the cases first above cited, injunctions were for that reason al- lowed. The only question in this case, there- fore, which distinguishes the present agree- ment from those, is whether the provision for the forfeiture of a week's wages for every violation of article 1 is such a liquida- tion of the damages as bars the remedy by injunction. In Barnes v. McAlister and in Nessle v. Reese and Mott v. Mott, supra, there was a covenant to pay a specific sum for failure to observe the covenant in these cases; and these sums were held by the court to be strictly liquidated damages. Where the provision of the contract is in the nature of a penalty, and not liquidated damages, it is well settled that such a pro- vision will not prevent the remedy by in- junction to enforce the covenant specifically; and the provision will be construed as a penalty, and not as liquidated damages, where its plain object is to secure a per- formance of the covenant, and not intended as the price or equivalent to be paid for a nonobservance of it. Howard v. Hopkyns, 2 Atk. 371; Bird v. Lake, 1 Hem. & M. Ill; Fox V. Scard, 33 Beav. 327; Sloman v. Wal- ter, 1 Brown, C. C. 418; Jones v. Heavens, 4 Ch. Div. 636. Whether the language of the contract Is to be construed as a penalty or as liquidated damages is to be determined from^ its lan- guage and its presumed intent to be gath- ered from the circumstances of the parties and the nature of the agreement. "A pen- alty," says Lord Loughborough, in Hardy v. Martin, 1 Cox, Ch. 26, "is never considered in this court as the price of doing a thing which a man has expressly agreed not to do; but if the real meaning and intent of the contract is that a man should have the pow- er, if he chooses, to do a particular act upon the payment of a certain specified sum, the power to do the act upon the payment of the sum agreed on is part of the express contract between the parties." Vincent v. King, 13 How. Prac. 234-238; Kerr, Inj. 409. In Coles V. Sims, 5 De Gex, M. & G., Lord Justice Turner says, upon this point, (p. 1:) "The question in such cases, as I conceive, is, whether the clause is inserted by way of penalty or whether it amounts to a stipula- tion for liberty to do a certain act on the payment of a certain sum." That the clause providing for the forfei- ture of one week's salary for each violation of this contract was in the natm-e of a pen- alty, and designed solely to secure the ob- servance of article 1, is manifest both from the general nature of the employment and the requirements of a manager of opera, as well as the express language of this article; because (1) the stipulation is not for the payment of a certain sum as liquidated dam- ages, but only for the forfeiture of a week's salary; (2) it gives an option to the plaintiff, instead of such forfeiture, to annul the en- gagement; (3) it declares that such forfeiture shall not disbar the plaintiff! from' enforcing the fulfillment of this contract in such a manner as he shall think fit, i. e., by any available legal or equitable remedy. As the remedy by injunction is one of the remedies available, this language is equivalent to an express declaration that the provision for the forfeiture of a week's salary for each vio- lation shall not affect his right to a remedy by injunction. This last stipulation would not, indeed, influence the court, provided it was clear that the damages were intended to be liquidated at a specific sum, for which the defendant was to have the option of sing- ing at any other theater. But these several clauses taken together show conclusively that no such thing was Intended, and that the sole object was to secure the specific ob- servance of the contract that the defendant should not sing elsewhere; and the plaintiff is therefore entitled to restrain the violation of it. As the season will close on May 15th and the contract then terminate, there are certain equitable conditions which should be observed, and which it is competent for the court, in continuing the injunction, to im- pose. Russell V. Farley, 105 U. S. 433, 438. The injunction of this court must not be used directly or indirectly to enforce the col- lection by the plaintiff of his alleged but disputed claim' for previous advances, through the nonpayment of salary hereafter earned, at least until his right is legally adjudicated. (2) Considering the short period remaining, the defendant must not be sent to California, where by the contract she might have been taken without salary en route going and re- turning; nor, having respect to her precari- ous health, should she be sent to any very distant point; (3) the plaintiff should fur- nish satisfactory seciu-ity for the prompt payment weekly for the defendant's services at the rate of $150 per week, the contract price, from the time the defendant gives notice in writing of her readiness to sing under the contract, so long as she shall continue in readiness to perform her duties. In case of failure to pay any future salary 600 SPECIFIC PERFORMANCE OF CONTRACTS. earned, the defendant may apply, on tv/o days' notice, to the plaintiff's attorneys for the dissolution of this injunction. An order may be entered continuing the injunction subject to the above provisions and conditions. NOTE. Enjoining Employe from Serving Rival of Bmploj-ei-.— The decisions upon the judicial en- forcement of the stipulations common between actoi-s. artists, authors, lecturers, or other pro- fessional workers and their employers, that the employs shall not exercise his skill and talent for any other person, are not very numerous, and are somewhat conflicting; but they estab- lish the modern general doctrine to be that the employer is not obliged to submit to a breach of the covenant, and content himself with an ac- tion for damages, but, .in a proper case, may have an injunction restraining the employe from engaging in any rival service; and this, whether compelling the latter to perform his affirmative engagement to labor for his em- ployer is practicable or not. To reconcile the decisions would be difficult, except upon the explanation that, when suits of this nature were first brought, the inadequacy of the ac- tion for damages, as a remedy, was not fully perceived; but that, gradually, as one case aft- er another was presented, it became better un- derstood, and equity judges grew more prompt and willing to exercise their jurisdiction on the ground that employers of public performers can- not well be compensated in damages for de- partures of artists from their establishments. If an actor, continuing to perform for his gen- eral employer, according to his engagement, plays on "off nights" for a rival theater, the question how much the receipts of his employer have been diminished by the opportunity given the public of hearing the favoritfe elsewhere, is too vague and uncertain to be shown by legal proof. And if, as is frequently the case, he withdraws from his first engagement wholly, and devotes himself to the service of a com- petitor, the question of damages is rendered still more perplexing by the difficulty of showr ing wliat profits the deserted manager would have realized had the performances been con- tinued as agreed; and the latter needs, also, to have some indemnity, difficult to be estimated in money, for his liability to refund for tickets or boxes sold in advance, and for his loss of prestige through failure of his announced en- tertainments. Obviously courts of justice can- not compel public performers or members of the professions to perform specific services they have promised; there are no means at the com- mand of a tribunal for compelling a person to act, sing, speak, or write, nor is there any standard for determining whether one has done so in good faith and with his best skill. The result, therefore, is that a properly-framed stip- ulation, in a contract for services of this de- scription, forbidding the employe to serve else- where, may be enforced by injunction. Such injunctions are equally obtainable under the codes of procedure, upon complaint in a civil action; or, in states adhering to the old prac- tice, upon bill in equity; or, in the United States circuit court, sitting in equity, if the parties are citizens of different states. In what eases the fact that the contract of the parties, by liquidating the damages or oth- erwise, gives the employer a better remedy by action than usual, precludes his resort to in- junction, is the question particularly discussed in the text, and nothing need be added to Judge Brown's able and lucid exposition of the prin- ciples governing that branch of the subject. This note will indicate the development of the general power of equity to enjoin in these cases. Early English decisions went upon the theory that although an independent, simple covenant not to undertake specified services may be en- forced, when reasonable and consistent with public policy, yet in a contract between A. and B. that B. shall act or sing, etc., for A., and shall not perform for any one else, the negativi' clause is merely incidental to the affirmative; and unless the case is one in which the court can enforce the affirmative stipulation it ought not to enjoin a proposed breach of the negative. These decisions, therefore, generally denied A.'s prayer for an injunction to restrain B. from performing in the employment of C, unless some special ground of equitable jurisdiction over the case existed. The following are illus- trative cases : Price agreed to prepare exchequer reports for Clarke to publish, without, however, engaging not to write for any one else. The lord chancellor refused an injunction, saying that as he had no jurisdiction to compel Price, directly, to write reports for Clarke, he ought not to do so indirectly, by forbidding him to write for any one else. Clarke v. Price (1819) 2 Wils. Ch. 157. A similar application was de- nied for the same reason, where the engage- ment of the Society for the Diffusion of Useful Knowledge with Baldwin's publishing firm was simply to furnish them with certain maps and charts for publication, a thing which the court had no means of compeUing directly. Baldwin V. Society (1838) 9 Sim. 393. The actor Kean was advertised to play at DruiT Lane theater, while there was yet 10 days unexpired of a prior engagement at Covent Garden. The vice- chancellor denied the application of the Covent Garden proprietors to enjoin him, for the same reason, viz., that there was no jurisdiction to compel him to perform his 10 days' service. Kemble v. Kean (1829) 6 Sim. 333. Upon ex- amination of a special agreement for mercan- tile services of defendant, containing a stipula- tion forbidding his working for any other house, the affirmative stipulations of the contract were pronounced too vague and too onerous towards the employs to allow of decreeing a specific performance, and the court would not enjoin the breach of the negative covenant alone. Kimber- ley V. Jennings (1836) 6 Sim. 340. Upon the other hand, the case of Morris v. Col- man (1812) IS Ves. 437, illustrates the principle that a covenant not to serve may be enforced by injunction where other facts give equitable jurisdiction of the controversy. Colman, noted as a dramatist, became manager of the Hay- market theater, under an agreement in the na- ture of a copartnership, which contained a clause restraining him from writing dramatic pieces for any other theater. In a suit which arose between the parties interested in the man- agement, the validity of this clause was ques- tioned before Lord Chancellor Eldon. He pro- nounced it valid and enforceable, it being be- tween partners, and being neither contrary to public policy nor unreasonable as between the parties. The decision has generally been ex- plained in later cases on the ground that the stipulation was one of several in an agreement of copartnership, and that equity has jurisdic- tion of disputes among partners, though this ex- planation has been questioned. 2 Philli. 597. Early American decisions ran in the wake of the English; our courts did not deny the juris- diction, but were loth to exercise it. De Biva- finoli, while manager of the Italian theater in New York, engaged Corsetti as fipst bass in operas, the latter agreeing not to make use of his talents in any other theater. But before the opening of the season Corsetti was announced to sail for Cuba, to perform there under another manager. De Rivafinoli then sought an in- junction, (and ne exeat,) which Chancellor Wal- worth refused, on the ground that under the circumstances the application was premature, for before commencement of the actor's engage- ment the manager could not have a right of action. On the general question he said, in ef- fect, that while it is theoretically proper that "a bird that can sing and will not sing must be made to sing," yet there is an obstacle to making a vocalist sing by order of the court of SPECIFIC PERFORMANCE OF CONTRACTS. 601 chancery, in the fact that no officer of the court has that perfect knowledge of the Italian lan- guage, or possesses that exquisite sensibility in the auricular nerve, which is necessary to the understanding and enjoyment of Italian opera; and it would be dilflcult for a master to deter- mine whether a defendant sang in faithful per- formance of his engagement, or ascertain what effect the coercion might produce upon his sing- ing, especially in the livelier airs. De Riva- finoli V. Corsetti (1833) 4 Paige, 264. Similar considerations led Edwards, J., to refuse a simi- lar application in Sanquirico v. Benedetti, 1 Barb.' 314, The comedian Ingersoll agreed with Hamblin, the manager of the Bowery theater in New York, to play for him for three years, also, not to act except for Hamblin during the term; but an injunction was refused because there was no ground of jurisdiction over the affirmative part of the agreement, while the negative was a mere matter between employer and employe. Hamblin v. Dinneford (1835) 2 Edw. Ch. 529. When Burton, the famous comedian of a genera- tion ago, was manager of Front Street theater, Baltimore, he bargained with Bm-ke to with- draw Mrs. Burke's services from the employ- ment of Manager Marshall and bring her to join Burton's company. Marshall then sued for an injunction, which was issued below. On ap- peal the court held that either of three facts shown, viz., there was no express restrictive clause in the contract between the Burkes and complainant; complainant was prosecuting an action at law; and Mrs. Burke's engagement, if any, would be void as that of a feme covert, — was enough to defeat the suit. Burton v. Mar- shall (1846) 4 Gill, 487. De Pol v. Sohlke (18C9) 7 Rob. Ecc. 280, was decided after Lum- ley V. Wagner (1 De Gex, M. & G. 604), yet does not mention it, but takes the older doctrine for granted. The opinion assumes, however, that irreparable damage to follow from a breach of a negative covenant may be ground of equi- table jurisdiction, and the judge refused to en- join the danseuse Sohlke from performing for other employers, not for want of power, but be- cause, as the plaintiffs had not a theater in op- eration in which they could use her services, therefore they could not be irreparably damaged by her dancing elsewhere for the time being. Thus American as well as English courts, down to the middle of our century, were unwilling to enjoin an employe's breach of a collateral prom- ise not to serve elsewhere, unless the affirmative engagement were a proper subject-matter of equitable relief. Development of the Modern Doctrine.— Since about 1850 a broader and more liberal position has been taken. An advance was distinctly made in Dietrichsftn v. Cabburn, 2 Philli. 52, and Rolfe V. Rolfe, 15 Sim. 88, (both 1846,) in which the rule adverse to enforcing a negative stipulation was distinctly questioned and lim- ited; though these were not cases of profes- sional services, but of contracts for exclusive employment in mercantile duties. The circum- stances of a controlling decision, Lumley y. Wagner, which soon followed them, were that Manager Lumley engaged Mile. .Johanna Wag- ner to sing at Her Majesty's Theater, London, for three months, in certain specified operas, at a weekly salary of £100. The agreement, as originally signed, did not in so many words for- bid her from singing for any other employer; but a few days afterwards the manager ob- jected to the omission, and Mile. Wagner's agent then added an article, saying: "Mile. Wagner engages herself not to use her talents at any other theater, nor in any concert or reunion, public or private, without the written authorization of Mr. Lumley." Notwithstand- ing this, she did accept (for a higher salary, it was said) an engagement from Manager Gye to sing at the Italian opera, Covent Garden, and Lumley sued for an injunction. It was granted below. Lumley v. Wagner, 5 De Gex & S. 485. On appeal the familiar objection was urged that equity will not enjoin the breach of a negative covenant where it cannot decree performance of the afBrmative one to which it is incident. 6 Sim. 333; Id. 340; 3 Macn. & G. 393. But Lord Chancellor St. Leonards said that when the reason why tho court could not decree specific performance is not that the plaintiff is not entitled to it, but merely the want of means to compel the de- fendant to perform, he thought the court need not on that account refrain from doing what was within its power, viz., forbidding a per- formance which will violate the contract. To the objection that there was a remedy at law by action for damages, the lord chancellor re- plied that such remedy was no better than ex- ists upon covenants not to practice as attorney, surgeon, etc., within certain limits, which are often enforced by injunction. Another objec- tion was that the promise not to sing else- where was not in the original agreement; but the chancellor said that the two papers were not independent, but were in effect one con- tract; and that even if the stipulation not to sing elsewhere had never been made in writ- ing, he thought it was implied in the original contract; in other words, singing for Mr. Gye was a breach of the spirit and meaning of the contract to sing for Mr. Lumley. Another ob- jection was that the injunction would be mis- chievous, because it would prevent a popular artist from singing at one theater, while the court could not promote her performing at an- other; hence the tendency would be to prevent the public from hearing her anywhere; but the chancellor said that the artist had no right to complain on this ground; the injunction would merely forbid her doing what she had engaged not to do. The temporary injunction was, there- fore, continued. Lumley v. Wagner (1852) 1 De Gex. M. & G. 604; 13 Eng. Law & Eq. 252. The opinion embodies an elaborate review of the previous English cases on the extent to which equity may go in enjoining breach of negative covenants of various kinds; and the decision has been generally followed in both countries as establishing the jurisdiction to en- force contracts not to serve in public perform- ances or intellectual work. A firm of Frer.ch photographists, Fredricks & Co., employed Constant Mayer as "artist painter" for three years, at an annual salary, to retouch proofs in oil at their New York house, and he engaged not to work for any one else; yet he left them and engaged with Gurney. The question whether the court could grant an injunction was decided in their favor, the judge saying that this remedy is not ap- plicable to all restrictive covenants, for many may be protected by action for damages; but contracts for employment of a great actor, or for services which involve exercise of high powers of mind peculiar to the one person, cannot be treated by ordinary rules, but re- quire the special remedy of injunction. Fred- ricks V. Mayer (1857) 13 How. Prac. 566. But, on the merits of the application under the par- ticular circumstances, the judge denied it; and this was affirmed in Fredricks v. Mayer, 1 Bosw. 227. Annetti Galletti agreed to dance at the Broadway Music Hall, New York, for six months at a weekly salary, and to "exercise her utmost abilities for the promotion of the ex- hibition." But the agreement did not contain an express clause forbidding her to perform elsewhere ; and on account of this omission the employer's motion for an injunction was denied. Butler V. Galletti (1861) 21 How. Prac. 465. Hayes, manager of the Olympic theater in New York, engaged Willio to play at the Olym- pic for three months, and "not to perform at any other establishment," etc. After playing two months, ^Villio accepted an offer of a high- er salary from a Boston theater. An injunc- tion was granted, the court mentioning, with 602 SPECIFIC PERFORMANCE OF COXTRACTS. approval, the modern doctrine that a definite contract by an actor not to perform at any oth- er theater than his employer's may be enforced: and saying that this remedy is not impaired by the Code of Procedure. Hayes v. Willio (1871) 11 Abh. Prac. (N. S.) 167. Montague, manager of the Globe theater, London, engaged Flockton to act at the Globe, without exacting an express stipulation that he should not act elsewhere. But the vice- chancellor said that such a stipulation was implied. An engagement to perform for a defi- nite term at one theater involves an engage- ment not to perform during the term at any oth- er theater. When a person agrees to act at a particular theater, he agrees not to act any- where else as plainly as if a negative clause were inserted. Montague v. Flockton (1873) L. R. 16 Eq. Cas. 189; 28 Law J. (N. S.) 581. And the same opinion was expressed, obiter, in Fechter v. Montgomery, 33 Beav. 22, where the suit was by Fechter as manager: and, ex parte, in Webster v. Dillon, 3 Jur. (N. S.) 432. Manager Daly engaged Fanny Morant Smith to play at his theater in New York city dur- ing the seasons of 1874. 1875, and 1876. the contract containing a stipulation that she should not act during the term of the contract at any other New York city theater without his written consent; and that if she should attempt to do so, the plamtiff might, "by legal process, or otherwise, restrain her from so performing on payment to her, during such restraint," of one- fourth her salary under the contract. She, however, allowed herself to be advertised to play at a rival establishment, the Union-square theater, and he brought suit for an injunction. The New York superior court pronounced the stipulation not to perform, valid, and proper to be enforced by injunction; saying that, al- though the clause as to plaintiffs restraining a breach on paying a quarter salary could not give jurisdiction, yet, as the court had jurisdiction without it, the clause might be regarded as a guide in fixing the terms of the injunction. Therefore, the actress was enjoined from play- ing within the city, provided the manager should punctually pay to her one-quarter of her agreed salary. Daly v. Smith (1874) 49 How. Prac. 150. The opinion has been com- mended for its review of the authorities. For other cases in which the modern doctrine (of Lumley v. Wagner) has been incidentally recognized of discussed, and applied in a way not aiding materially to support it, see Maple- son V. Bentham, 20 Wkly. Rep. 176, where the vice-chancellor denied an application by Mapleson, lessee of the Royal Italian Opera, to enjoin his first tenor from singing elsewhere; Wolverhampton, etc.. Ry. Co. v. London, etc., Ry. Co., L. R. 16 Eq. Cas. 433, involving an agreement relative to use of a railroad; and Manufacturing Co. v. Cook, Bost. Law Rep. 547, in which an employe of a manufacturing company was enjoined from breaking his cove- nant with his employers that he would not for five years disclose their secrets or engage with any other employer; with which latter case compare Estcourt v. Estcourt Hop Essence Co., 32 Law T. (N. S.) 80; reversing same case 31 Law T. (N. S.) 567; Gower v. Andrew, 14 Cent. Law J. 50; and Deming v. Chapman, 11 How. Prac. 382. Judge Lowell's opinion in Singer Sewing-machine Co. v. Union Button- hole, etc., Co., 1 Holmes, 253, is an instructive discussion of the application of the doctrine to ordinary mercantile contracts, in which a prom- isor agrees not to deal with any other than the promisee; with which case compare Bick- ford V. Davis, 11 Fed. 549, and Fothergill y. Rowland, L. R. 17 Eq. 132. See, also, a note by E. H. Bennett, to Bowen v. Hall, 20 Am. Law Reg. (N. S.) 578, 587. The suggestion made at the close of this note, that, since mod- ern equity enjoins a breach of a contract not to reveal secrets of business (9 Hare, 241; 9 Eng. Law & Eq. 182), of a contract not to write a particular d(:>cription of book (2 Sim. & S. 1; 18 Ves. 437), of a contract not to practice a particular trade or calling (125 Mass. 258; 16 Vt. 176 ; 22 Law Rep. 693 ; 5 Jur. [N. S.] 976 ; 15 Sim. 88), although in either case the injured party could maintain an action for damages, there is no good reason for refusing an injunc- tion to forbid breaking a contract for exclusive professional services, is forcible and sound. A curious German case is recounted in 26 Alb. Law J. 3. Cases involving a claim of the artist that the manager first broke the contract by assigning the artist to a part or position less desirable than that which the contract assured, or by failing to give due opportunity for ap- pearances, are: Daly v. Smith, 49 How. Prac. 150, Roserie v. Kiraify, 12 Phila. 209, and De Pol V. Sohlke, 7 Rob. Ecc. 280. Must there be an Express Negative Contract? — Several English cases support the view that an engagement not to serve elsewhere is fair- ly to be implied from a contract, in general terms, to perform under one manager or at one establishment. But American judges have generally refused to interfere unless there were an express stipulation forbidding the serv- ice sought to be enjoined. In other words, in this country a simple engagement to serve leaves the employ^ at liberty to talie other serv- ice, provided he faithfully performs the first engagement. Burton v. Marshall, 4 Gill, 48't; Butler V. Galletti, 21 How. Prac. 465; Wal- lace V. De Young, 98 111. 638. But compare Manufacturing Co. v. Cook, Bost. Law Rep. 547, 549. Form of a Restrictive Covenant. — The re- strictive clause may well be drawn in the fol- lowing form — maliing variations appropriate to the circumstances of the particular case: And it is further agreed, in consideration of the premises, that the party of the second part (the actor, artist, or other employe) will not, during the term of this agreement, exercise his professional skill and talents as an actor (or artist, etc.) in public, (within the city of New York, or otherwise state the limits to which the restriction is intended to be confined; and the courts are more willing to enforce these restric- tions when the locality is limited), either for compensation or gratuitously, and either upon his own account or for another employer or establishment, without the consent in writing of the party of the first part first obtained, un- der pain of injunction, action for damages, or any other available judicial remedy: provided, however, that the party of the second part may at any time and as often as he thinks fit per- form gratuitously at any entertainment char- itably given for the burial expenses and relief of the family of a deceased actor, (or other- wise sta'te explicitly any right which the actor desires to reserve.) Procedure. — Several of the cases indicate that it is proper to join the second employer as co-defendant, and to draw the injunction so as in terms to forbid him to employ the chief defendant, as well as prohibit the latter from performing. Clarke v. Price, 2 Wils. Ch. 157; Lumley v. Wagner, 1 De Gex, M. & G. 604; Burton v. Marshall, 4 Gill, 487; Hamblin v. Dinneford, 2 Edw. Oh. 528. Whether the practitioner may have a ne exeat as well as injunction, see De Rivafinoli v. Corsetti, 4 Paige, 264; Sanquirico v. Benedetti, 1 Barb. 315; Hayes v. Willio, 11 Abb. Prac. (N. S.) 167. What action lies in behalf of an injured manager or other employer against a rival or cempetitor for inducing artists of his company or employes in his establishment to leave his service, see Bowen v. Hall, 20 Am. L. Reg. (N. S.) 578. and note, Id. 587. BENJAMIN VAUGHN ABBOTT. New York, N. Y. > S'^ SPECIFIC PERFORMANCE OF CONTRACTS. 603 CLARKE V. PRICE. (2 Wils. Ch. 157.) Cases in Chancery. July 21, 22, 1819. The bill, filed the 15th of June, 1819, stated that in 1814 the defendant George Price, Esq., proposed to compose and write reports of cases argued and determined in the court of exchequer; and the plaintiffs entered into a treaty with him as to the terms upon which the same should be printed and published; and that on the 27th of April, 1814, the follow- ing agreement was signed by him: "Memo- randum: It is agreed between George Price, Esq., and William Clarke and Sons, as fol- lows: Mr. Price undertakes to compose and write the cases In the court of exchequer, commencing with Easter term, 1814, and to be published periodically; the said William Clarke and Sons to be at the charge of all ex- penses of paper, printing and advertising, which expenses, when discharged, to divide the profits of the said work equally (that is to say), one moiety to the said George Price, the other to the said William Clarke and Sons; all accounts to be adjusted at Christ- mas in every year, at the customary trade price and commission: And it Is further agreed that Messrs. Clarke shall be at liberty to relinquish the undertaking should they think it advisable." The bill further stated that, in pursuance of the agreement, Mr. Price composed and wrote divers reports of cases argued and de- termined in the court of exchequer, and that the plaintiffs printed and published them at their owm costs and charges, periodically and in parts; that the first volume consisted of three parts, the first being published in Au- gust, 1814, the second in May, 1815, and the third in March, 1816; that on the 2d of March, 1816, a variation in the agreement was made between the plaintiffs and Mr. Price, and that a memorandum thereof was made in writing and signed by Mr. Price, in the words following: "March 2d, 1816. Memorandimn of agreement between George Price and William Clarke & Sons: Whereas, by an agreement bearing date the 27th of Ap- ril, 1814, between the above parties, it was there stipulated that Mr. Price should take the reports in the exchequer, and Messrs. Clarke should print the same, and divide the profits between the respective parties: And whereas the first volume of the Reports in the Court of Exchequer has been printed and published by the said George Price and Wil- liam Clarke & Sons: And whereas the said George Price is desirous of selling all his copyright and interest in the first volume: In consideration of which, the said William Clarke & Sons agree to give, and the said George Price agrees to accept, of the sum of £166. And the said George Price further agrees to give any further assignment of the copyright, if required from him by the said William Clarke & Sons." That, in pursuance of the second agreement, the plaintiff duly paid to Mr. Price the £166. That in further pursuance of the agreement of the 27th of April, 1814, Mr. Price continued to write and compose reports of cases argued and deter- mined in the court of exchequer; and that before the publication of the first part of the second volume, and on or about the 11th of November, 1816, a further agreement was made between the plaintiffs and Mr. Price, and a memorandum thereof made as follows: "November 11th, 1816. Memorandum of agree- ment between George Price, Esq., and Wil- liam Clarke & Sons: Mr. Price agrees to the following terms for writing and composing the second volume of his Reports in the Ex- chequer, sale of his copyright, and interest in the said volume; Messrs. Clarke, for the con- siderations above, to pay to Mr. Price, within one month after the publication of each part, the sum of £6 10s. for each sheet of sixteen pages royal octavo, and in the same propor- tion for any less quantity than a sheet; Mr. Price to be allowed the sum of £2 on each part for corrections; all above that sum to be paid by Mr. Price, and deducted out of the payment for each part; Mr. Price to give a further assignment, if required, at Messrs. Clarke's expense." The bill further stated that, in pursuance of the agreements, Mr. Price composed and wrote a second volume of reports of cases argued and determined in the court of ex- chequer, and which the plaintiffs, at their ex- pense, printed and publishe (22 Ch. Dlv. 835.) Chancery. Feb. 8, 1883. By an agreement dated the 15th of De- cember, 18S2, and made between the plain- tiff, J. Donnell, a manure manufacturer, of the one part, and Cormack, a fish curer and fish smoker, of the other part, it was agreed that Cormack should sell and that the plain- tiff should buy all parts of fish not used by Cormack in his business of a fish curer and fish smoker at the price of 23s. per ton for the space of two years from the 81st of De- cember, 1882, and in consideration thereof Cormack further agreed that he would not sell during the said space of two years any fish or parts of fish to any other manufac- turer whatever; and the plaintiff further agreed that he would take and t)ay for all fish or parts of fish which Cormack should deliver to bim at the said price of 23s. per ton delivered at the plaintiff's works. It was admitted that the defendant never delivered any fish or parts ot fish under the contract to the plaintiff', but that he entered into a contract with the defendant Bennett to deliver all the parts of fish which he did not require in his business to Bennett; it was also admitted that the plaintiff had suf- fered damage by this breach of contract, and that the defendant Bennett had paid Cor- mack considerable sums of money to induce him to break his contract with the plaintiff, in order that Bennett might obtain the sub- stantial monopoly of all the refuse of fish In Grimsby or the neighborhood. This was an action by the plaintiff against Bennett and Cormack as co-defendants ask- ing for an injunction to restrain Cormack from selling any fish to Bennett or any other manufacturers except the plaintiff, and to re- sti-ain Bennett from buying any such fish from Cormack. H. A. Giffard, Q. C, and Mr. Hall, for plaintiff. Cozens-Hardy, Q. C, and Mr. Wil- liamson, for defendants. Bower, Cotton & Bower, for plaintiff. Williamson, Hill & Co., for defendants. FRY, J. The question which arises is by no means an easy one. It is difficult because of the state of the authorities upon the point. It appears to me that the tendency of recent decisions, and especially the cases of Fother- gill V. Rowland, L. R. 17 Eq. 132, and of Wolverhampton and W. Ry. Co. v. London and N. W. Ry. Co., L. R. 16 Eq. 433, is towards this view — that the court ought to look at what is the nature of the contract between the parties; that if the contract as a whole is the subject of equitable jurisdic- tion, then an injunction may be granted in support of the contract whether it contain or does not contain a negative stipulation; but that if, on the other hand, the breach of the contract is properly satisfied by damages, then that the court ought not to interfere whether there tie or be npt the negative stip- ulation. That, I say, appears to me to be the point towards which the authorities are tending, and I cannot help saying that in my judgment that would fijrnlsli a proper line by which to divide the cases. But the ques- tion which I have to determine is not wheth- er that ought to be the way in which the line should be laid down, but whether it has been so laid down by the authorities which are binding on me. Now several cases have been cited by the plaintiff as authorities in favor of his con- tention, in the first place there Is the case of Dietrlchsen v. Cabburn, 2 Phil. Ch. 52, in which undoubtedly the court enforced by way of Injunction a stipulation not to sell except in a particular manner, and there the whole contract was one which could not have been performed specifically by the court. Still more, in Lumley v. Wagner, 1 De Gex, M. & G. 604, the court enforced by way of injunction a portion of a contract the whole of which could not have been enforced by way of specific performance; and Lord SL Leonards in considering that case discussed the question whether an injunction ought to be granted in some cases in which specific performance cannot be granted, and he de- termined that question plainly in the aflirm- ative. He made these observations (Id. 619): "Wherever this court has not proper jm'Is- dictlon to enforce specific performance it operates to bind men's consciences, as far as they can be bound, to a true and literal performance of their agreements; and it will not suffer them to depart from their con- tracts at their pleasure, leaving the party with whom they have contracted to the mere chance of any damages which a jury may gis^e. The exercise of this jurisdiction has, I believe, had a wholesome tendency towards the maintenance of that good faith which exists in this country to a much greater degree perhaps than in any other; and al- though the jurisdiction is not to be extend ed, yet a judge would desert his duty who did not act up to what his predecessors have handed down as the rule for his guidance in the administration ot such an equity." It is plain, therefore, that Lord St. Leon- ards did not adopt the view which has oc- cm'red to me as that towards which the more recent cases have been tending. That is the way in which the direct au- thorities stand in cases in which there is a negative clause, and they appear to me to show that in cases of this description where a negative clause is found, the court has en- forced it without regard to the question whether specific performance could be grant- ed of the entire contract. Then it is said by Mr. Cozens-Hardy that In all those cases the negative contract en- forced was but a part of a larger contract, and that it was a separable part of that larger contract, and that those cases do not SPECIFIC PERFORMANCE OF CONTRACTS. 619 apply to a case like the present, In wMcJi, as lie suggestB, the negatiye contract Ip co- extensive witli the positive contract. Upon that argument two inquiries arise. In the first place, is it true to say that the negative contract is in the present instance coextensive vfith the positive? In my judg- ment it is not. The affirmative contract is that tlie vendor will sell all his fish refuse for' two years to the purchaser. The nega- tive contract is that during two years he will not sell any refuse fish to any other manu- factiurer whomsoever; leaving it open to him so far as regards the negative contract, either not to sell at all, or to sell to some person other than a manufacturer. But in the next place one must inquire whether the authori- ties support any such distinction as that which has been urged by Mr. Cozens-Hardy. It appears to me that they do not. In Lumley v. Wagner, 1 De Gex, M. & G. 604, the contract was that Mdlle. Wagner would sing three months at Her Majesty's Theater in London. The negative contract was that she would not "use her talents at any other theater, nor in any concert or re- union, public or private, without the written authorization of Mr. Lumley." It Is quite true that the contract contains certain stipu- lations as to how many nights she should be required to sing, but it appears to me to be evident that the substantial conti-act— the af- firmative contract— was that she would sing there for three months. Of course she could not be always singing, and therefore the con- tract must state necessarily some limits as to how often she was to sing, but when she did sing during the three months she was to sing at Her Majesty's Theater; the negative terms were that during tli? tJbree months she would not sing anywhere else than at Her Majesty's Theater. It appears to me that those two contracts are substantially coex- tensive. But further than thAt it is to be borne in mind that Lord St. Leonards does not dwell on the distinction which is now sought to be drawn, and so far as I am aware no trace of it is to be found in the earlier authorities. But then comes the case of Catt v. Tourle, L. R. 4 Ch. 654, before the Lords Justices, in which Hills v. Croll, 2 Phil. Oh, 60, was re- ferred to. Now HiUs V. Croll was a case which contained an affirmative and negative con- tract, and Lord Justice Giffard expressly said that if that case is to be taken as laying down that the court is to refuse to act on a negative covenant wherever there is a cor- relative obligation which it cannot enforce, it does not apply. If it is taken as going that length, it is contrary to the case of Lum- ley V. Wagner, 1 De Gex, M. & G. 604, and must be considered as overruled. It appears to me, therefore, that that point which has been urged upon me does not re- ceive any sanction from the earlier authori- ties. I have come to the conclusion, therefore, upon the authorities, which are binding upon me, that I ought to grant this injunction. I do so with considerable difficulty because I find it hard to draw any substantial or tangi- ble distinction between a contract containing an express negative stipulation and a con- tract containing an affirmative stipulation which implies a negative. I find it exceed- ingly difficult to draw any rational distinc- tion between the case of Fothergill v. Row- land, L. R. 17 Eq. 132, and the case now be- fore me. But at the same time the courts have laid down that, so far as the decisions have already gone in favor of granting in- junctions, the injunction is to go. It appears to me that this case is within the earlier decisions, and although I should be far from sorry if the court of appeal were to take a different view, I think I am bound here by the authorities, and therefore I grant the injunction till the hearing of the cause. G2a SPECIFIC PEEFORMAXCE OP CONTRACTS. WM. ROGERS MANUF'G CO. v. ROGERS. (20 Atl. 467, 58 Conn. 356.) Supreme Court of Errors of Connecticut Feb. 17. 1890. Appeal from superior court, Hartford county; Fbnn, Judge. This was a suit to enjoin the violation of a contract between F'rank W. Rogers and the Wm. Rogers Manufacturing Com- pany and the Rogers Cutlery Company as follows: "(1) That said companies will employ said Rogers in the business to be done by said companies, according to the stipulations of said agreement, for the pe- riod ot twenty-five years therein named, if said Rogers shall so long live and dis- charge the duties devolved upon him by said Watrous as general agent and man- ager of the business to be done incommon by said companies, under the directions and to the satisfaction of said general agent and manager; It being understood that such duties may include traveling for said companies, whenever, in the judg- ment of said general agent, the interest of the business will be thereby promoter^ (2) The said companies agree to pay said Rogers for such services so to be rendered, at the rate of $1,000 per year for the first five years of such services, and thereafter the same or such larger salary as may be agreed upon by said Rogers and the di- rectors of said companies, said salary to be in full during said term of all services to be rendered by said Rogers, whether as an employe or an ofiicer of said companies, unless otherwise agreed. (3) The said Rogers, in consideration of the foregoing, agrees that he will remain with and serve said companies under the direction of said Watrous, as general agent and manager, including such duties as traveling for said companies, as said general agent may de- volve upon him, including also any duties as secretary or other officer of either or both of said companies, as said companies may desire to have him perform at the salary hereinbefore named for the first five years and at such other or further or dif- ferent compensation thereafter during the remainder of the twenty-five years as he, the said Rogers, and the said companies may agree upon. (4) The said Rogers during said term stipulates and agrees that he will not be engaged or allow his name to be employed in any manner in any other hardware, cutlery, flatware, or hollow-ware business either as manufact- urer or seller, but will give, while he shall be so employed by said companies, his en- tire time and services to the interests of said common business, diminished only by sickness, and such reasonable absence for vacations or otherwise as may be agreed upon between him and said general agent. " The complaint was held insufficient, and the plaintiffs appealed. F. Cbamberlin and E. S. White, for ap- pellants. C. iJ. IngersoII and F. L. Hud- gerford, for appellee. ANDREWS, C.J. Contracts for personal service are matters for courts of law, and equity will not undertake a specific per- formance. 2 Kent, Comm. 258, note b; Hambllnv.Dinneford,2Edw.Ch.529; San- quirico v.Benedetti,] Barb. 315; Haight v. Badgeley, 15 Barb. 499; De Rivafinoli v. Corsettl, 4 Paige, 264. A specific perform- ance in such cases is said to be impossible because obedience to the decree cannot be compelled by the ordinary processes of the court. Contracts for personal acts have been regarded as the most familiar Illus- trations of this doctrine, since the court cannot in any direct manner compel the party to render the service. The courts in this country and in England formerly held that they could not negatively enforce the specific performance of such contracts by means of an injunction restraining their violation. 3 Wait, Act. & Def. 754; Marble Co. V. Ripley, 10 Wall. 340; Burton v. Mar- shall, 4 Gill, 487"; De Pol v. Sohlke, 7 Rob. (N. Y.)280; Kemble v. Kean, 6 Sim. 333; Baldwin v. Society, 9 Sim. 393; Fothergill V. Rowland, L. R.17Eq.l32. The courts in both countries have, however, receded somewhat from the latter conclusiim, and it is now held that where a contract stipu- lates tor special, unique, or extraordinary personal services oracts, or where the serv- ices to be rendered are purely intellectual, or are peculiar and individual In their character, the court will grant an injunc- tion In aid of a specific performance. But where the services are material or mechan- ical, or are not peculiar or individual, the party will be left to his action for dam- ages. The reason seems to be that serv- ices of the former class are of such a nat- ure as to preclude the possibility of giv- ing the injured party adequate compensa- tion in damages, while the loss of serv- ices of the latter class can be adequately compensated by an action for damages. 2 Story, Fq. Jur. § 958a ; 3 Wait, Act. & Def. 754; SPom.Eq. Jur.§ 1343: California Bank V. Fresno Canal, etc., Co., 53 Cal.201 ; Singer Sewing-Machine Co. v. Union Button- Hole Co., 1 Holmes, 253, Lumley v. Wagner, 1 De Gex, M. & G. 604; Railroad Co. v. W'y- thes, 5 De Gex, M. & G. 880; Montague v. Flockton, L. R. 16 Eq. 189. The contract between the defendant and the plaintiffo is made a part of the complaint. The serv- ices which the defendant was to perform for the plaintiffs are not specified therein, otherwise than that they were to be such asshould be devolved upon him bythegen- eral manager; "it being understood that such duties may include traveling for said companies whenever, in the judgment ol said general agent, the interests of the business will be thereby promoted ; " and also "including such duties as traveling for said companies as said general agent may devolve upon him, including also any duties as secretary or otherofficerofeither or both of said companies as said compa- nies may desire to have him perform." These services, while they may not be m«i- terial and mechanical, are certainly not purely intellectual, nor are they special, or unique, or extraordinary; nor are they so peculiar or individual that they could not be performed by any person of ordinary intelligence and fair learning. If this was all there was in the contract it would be almost too plain for argument that the plaintiffs should not have an injunction. The plaintiffs, however, insist that the negative part of the contract, by which SPECIFIC PERFORMANCE OF CONTRACTS. 621 the defendant stipulated and agreed that he would not be engaged in or allow his name to be employed In any manner in any other hardware, cutlery, flatware or hollow-ware business, either as a manu- facturer or seller, fully entitles them to an injunction against its violation. They aver in the complaint, on information and belief, that the defendant is planning with certain of their competitors to engage with them in business, with the intent and purpose of allowing his name to be used or employed in connection with such business as a stamp on the ware manufactured; -nd they say such use would do them great and irreparable injury. If the plain- tiffs owned the name of the defendant as a trade-mark, they could have no difficulty in protecting their ownership ; but they make no such claim, and all arguments or analogies drawn from the law of trade- marks may be laid wholl.y out of the case. There is no averment in the complaint that the plaintiffs are entitled to use, or that in fact they do use, the name of the defendant as a stamp on the goods of their own manufacture, nor any averment that such use, if it exists, Is of any value to them. So far as the court is informed, the defendant's name on such goods as the plaintiffs manufacture is of no more value than the names of Smith or Stiles or John Doe. There is nothing from which the court can see that the use of the defend- ant's name by the plaintiffs is of any value to them, or that its use as a stamp by their competitors would do them any in- jury other than such as might grow out of a lawful business rivalry. If by reason of extraneous facts the name of the defend- ant does have some special and peculiar value as a stamp on their goods, or its use as a stamp on goods manufactured by their rivals would do them some special injury, such facts ought to have been set out so that the court might pass upon them. In the absence of any allegation of such facts we must assume that none exist. The plaintiffs also aver that the defendant in- tends to make known to their rivals the knowledge of their business, of their cus- tomers, etc., which he has obtained while in their employ. But here they have not shown facts which bring the case within any rule that would require an employe to be enjoined from disclosing business secrets which he has learned in the course of his employment, and which he has con- tracted not to divulge. Peabody v. Nor- folk, 98 Mass 452. There is no error in the judgment of the superiorcourt. Theother Indges concurred. 622 SPECIFIC PERFORMANCE OP CONTRACTS. METROPOLITAN EXHIBITION CO. v. EWING. (42 Fed. 19a) Circuit Court, S. D. New York. March 25, 1890. In Equity. On bill for injunction. Joseph F. Choate and George F. Duysters, for plaintiff. Henry Bacon, for defendant WALLACE, J. This action is brought to restrain a threatened breach of contract for the performance of personal services which require special aptitude, skill, and experience. It is a case in -which an action at law would not afford the plaintiff an adequate remedy for the breach, and in which the power of the court should be exercised by preventive inter- position, if it is found that the contract is such as the plaintiff claims it to be. The circumstances are such that, unless a pre- liminary injunction is granted, the plaintiff will obtain no effectual remedy, because, be- fore the cause can be brought to final hear- ing, the time will have passed within which the relief sought would be practically useful, and, if it be then adjudged that the plaintiff is entitled to a permanent injunction, the judgment will be declaratory merely. Al- though preliminary relief is not to be granted in a case in which it is doubtful whether the plaintiff will be finally successful, yet, where the questions are such that they can be fully considered and as safely decided upon a mo- tion for a preliminary injunction as at iinal hearing, it Is the duty of the court to consider and determine them, and not defer the party invoking its assistance to a time when a de- cree, if awarded, would be too late. The contract upon which the plaintiff founds its claim for relief is in form between the New York Base-Ball Club as party of the first part, and the defendant as party of the second part; but there is no reason to doubt that the New York Base-Ball Club was the agent of the plaintiff in entering into the contract, that the plaintiff is the real prin- cipal, that the contract was intended to inure for the benefit of the plaintiff, and that the plaintiff is entitled to enforce it against the defendant to the extent that the New York Base-Ball Club could do so. The doctrine is now generally recognized that, while a court of equity will not ordinarily attempt to en- force contracts which cannot be carried out by the machinery of a court, like that in- volved in the present case, it may neverthe- less practically accomplish the same end by enjoining the breach of a negative promise, and this power will be exercised whenever the contract is one of which the court would direct specific performance, if it could prac- tically compel its observance by the party re- fusing to perform through a decree for spe- cific performance. It is indispensable, where the contract does not relate to realty, that it be one for the breach of which damages would not afford an adequate compensation to the plaintiff. It must be one in which the plaintiff comes into court with clean hands, and which is not so oppressive as to render it unjust to the defendant to enforce it. It must be one in which there are mutual prom- ises, or which is founded on a sufficient con- sideration. It must be one the terms of which are certain, and in respect to which the minds of the parties have distinctly met, so that there can be no misunderstanding of their rights and obligations. The contract Is executed as of the date of April 29, 1889. It is a formal document, con- sisting of 20 articles, by which the New York Base-Ball Club employs the defendant, and the defendant undertakes to perform profes- sional services as a base-ball player for the club for the season (specified in ai-tiele 2) be- ginning April 1, 1889, and ending October 31, 1889. Article 20 provides that the salary to be paid the defendant shall be $2,000, pay- able semi-monthly. Among other things, the contract provides by different articles that the club may at any time terminate the con- ti'act on 10 days' notice to the defendant, whereupon the obligations of both parties are to cease; that the club shall provide the de- fendant while "abroad" with proper board and lodging, and pay all necessary traveling expenses; that if the defendant, during the term of his employment, be guilty of any ex- cessive indulgence In liquor, or of gambling, or of insubordination, he shall be liable to certain specified penalties; and that, if the club ceases to be a member of the National League of Professional Base-Ball Clubs, either compulsorily or voluntarily, the "de- fendant shall. If the right of reservation be transferred" by the club to any other club, receive from that club at least the same amount in salary that he receives by the present contract. It contains, also, the fol- lowing provision: "Article 18. It is further understood and agreed that the party of the first part shall have the right to 'reserve" the said party of the second part for the season next ensuing the term mentioned In para- graph 2, herein provided, and that said right and privilege is hereby accorded to said party of the first part upon the following condi- tions, which are to be taken and construed as conditions precedent to the exercise of such extraordinary rights or privileges, viz.: (1) That the said party of the second part shall not be reserved at a salary less than that mentioned in the 20th paragraph herein, except by the consent of the party of the sec- ond part; (2) that the said party of the sec- ond part, if he be reserved by the said party of the first part for the next ensuing season, shall not be one of more than 14 players then under contract,— that is, that the right of res- ervation shall be limited to that number of players, and no more." The plaintiff alleges that the defendant was one of 14 players, and no more, so re- served under said contract; that on the 22d SPECIFIC PERFORMANCE OF CONTRACTS, 623 day of October, 1889, plaintiff exercised its option to reserve the defendant for the sea- son of 1890 by giving the defendant due and timely notice, in writing, of its intention to do so; and that, noth withstanding the exer- cise of this option, the defendant has en- gaged his services for the season of 1890 to another organization, to act for it as a base- ball player during that season. The plaintiff insists that, by the terms of the contract, it is entitled to the services of the defendant as a base-ball player for the season of 1890 upon the terms and conditions of the con- tract for the season of 1889, except the con- dition giving a right to reserve him for a subsequent season. The case turns upon the meaning and ef- fect of the clause and contract which gives the club the right to reserve the defendant for the season next ensuing. It is plain enough that the option is a right of reserva- tion for the next ensuing season only,— the season ensuing the term mentioned in arti- cle 2, — and does not extend beyond the term from April 1, 1890, to October 31, 1890. It is equally plain that the salary for the ensu- ing season is to be the same as that for the season of 1889, unless the parties mutually consent to a change. But what is the char- acter of the option which the plaintiff is per- mitted to exercise? What is the right to "re- serve" the defendant? If it is the right to retain and have his services as a base-ball player for the season of 1890, when is the right of election to be manifested, and upon what terms are these services to be ren- dered? Can the club wait until April 1, 1890, before it manifests its intention to exercise the option? Is the club to pay the defend- ant's board and lodging while he is "abroad," serving the club, during the season of 1890? Can the club discharge him at any time dur- ing that season on 10 days' notice? Are the penalties for intoxication, gambling, or in- subordination enforceable during the season of 1890? In short, does the contract em- body the definite understanding of the par- ties to it in respect to their reciprocal rights and obligations after the season of 1889 shall have ended? If the term, "the right to re- serve," has no defined meaning, and there were no extrinsic sources by which to ascer- tain the sense in which it is used by the par- ties, it would be an ambiguous phrase. As applied to a contract for personal services, the right to reserve would convey a very un- intelligible conception of the conditions and incidents of the service to be rendered or enjoyed. A contract by which one party agrees, for an equivalent, to reserve himself for another for a stated period, or to reserve himself as a lawyer or doctor or artist or laborer for a specified term, would very inad- equately express a promise to devote his pro- fessional or manual services exclusively to the other during that period; and the prom- ise of a base-ball player to reserve himself for a particular club for a given season would hardly, without more, convey any defi- nite meahing of the tmderstanding of the parties. It certainly would not bind him to submit to any special rules or regulations re- specting the performance of his services not expressly consented to, or not to be neces- sarily implied from the nature of the em- ployment and the situation of the contracting parties. If it had been the meaning of the contract to allow the club to renew the en- gagement of the defendant for a second sea- .son upon the same conditions as those for the first season, that intention could have been easily and unequivocally expressed. As it is, it is left wholly to implication, unless the "right to reserve" is a term having a de- fined and specific signification. This ambi- guity suggests such grave doubt as to the meaning of the clause that in two adjudged cases, in which it has been considered by the courts, the judges have thought it too indefi- nite to be enforceable. In Exhibition Co. v. Ward, 9 N. Y. Supp. 779, (in the supreme court of this state,) Mr. Justice O'Brien was of the opinion that the failure to provide for the terms and conditions of the contract for the second season rendered the clause so in- definite and uncertain that it could not be the basis of equitable relief, or that it meant that every player is bound for the ensuing season upon the s&me terms and conditions as those of the first season, including the signing of a new contract containing the op- tion to reserve. In Philadelphia Ball Club against Hallman, in the court of common pleas of Philadelphia, Judge Thayer was of the opinion that the failure to designate the terms and conditions of the new engagement under which the player is to be reserved rendered the contract of reservation wholly uncertain, and therefore incapable of enforce- ment. Where the terms employed to express some particular condition of a contract are am- biguous, and cannot be satisfactorily ex- plained by reference to other parts of the contract, and the parties have made other contracts in respect to the same subject-mat- ter, and apparently in pursuance of the same general purpose, it is always permissible to examine all of them together in aid of the in- terpretation of the particular condition; and, if it is found that the ambiguous term has a plain meaning by a comparison of the sev- eral contracts and an examination of their provisions, that meaning should be attrib- uted to it in the particular condition. So, also, if it appears that the term used has an established meaning among those engaged in the business to which the contract has ref- erence, and, unless it is given that meaning, is indefinite and equivocal, it should be treated, in interpreting the contract, as used according to that understanding; and in con- struing a contract the court is always at lil>- erty to look at the surrounding and ante- cedent circumstances, and avail itself of the light of any extrinsic facts which will enable 624 SPECIFIC PERFORMANCE OF CONTRACTS. it to view the contract from the standpoint of the parties at the time when it was made. In the present case, it will satisfactorily ap- pear, by resort to these sources of interpre- tation, that the term "right to reserve" is used in the contract in the sense that ob- tains in base-ball nomenclature, and that it is intended to signify an option, the charac- ter of which was well understood by base- ball clubs and professional players when the present contract was made. Obviously, the right to reserve given by the eighteenth clause of the contract is the same thing as the right of reservation mentioned in that part of the contract which provides that the present club may disband, and transfer its right of reservation to some other club. The agreement is in a form common to all con- tracts between base-ball clubs organized un- der what is known as the "national agree- ment" and professional players, a form which is prescribed by the national agree- ment. The national agreement is a compact between the various base-ball associations constituting the National League Base-Ball | Clubs and the American Association of Base- \ Ball Clubs, made with a view to regulate the rights and obligations of the members as re- spects one another. One of its paramount features consists of provisions regulating the privilege of clubs to reserve a stated number of players. The provisions are framed to prevent any club of the National League or the American Association from engaging a player already reserved by another, and to render the player so reserved ineligible for employment by any other club. They re- quire each club, on the 10th day of October in each year, to transmit to all the other clubs a reserved list of players, not exceed- ing 14 in number, then under contract, and of such players reserved in any prior list who have refused to contract for another year, and declare such players ineligible to contract with any other club. Inasmuch as the parties to the national agreement com- I prise all, or substantially all, the clubs in the country which employ professional players, this national agreement, by indirection, but practically, affects every professional player, and subordinates his privilege of engaging as he chooses to the option of the club by which he is under reservation. As Is stated in a recent publication edited by a prominent professional player: "The most important feature of the national agreement, unques- tionably, is the provision according to the club members the privilege of reserving a stated number of players. Xo other club of any association under the agreement dare en- gage any player so reserved. To this rule, more than any other thing, does base-ball, as a business, owe its present substantial standing. By preserving intact the strength of the team from year to year, it places the business of base-ball on a permanent basis, and thus offers security to the investment of capital. The reserve rule itself is a usur- pation of the player's rights; but it is, per- haps, made necessary by the peculiar nature of the ball business, and the player is indi- rectly compensated by the improved stand- ing of the game. The reserve rule takes a manager by the throat, and compels him to keep his hands off his neighbor's enterprise." In the contracts between clubs and play- ers as framed prior to November, 1887, there was no provision by which the player con- sented to the option for reserve on the part of the club. But the contracts did contain a condition that the player should conform to, and be governed by, the constitution and provisions of the national agreement; and the player thereby assented to become in- eligible for engagement by any other club of the league during the season of his en- gagement by a particular club, or while the option of re-engaging him for an ensuing year on the part of that club remained in force. Changes were made from time to time in various features of the national agreement. The players were obliged to in- form themselves of the latest changes, in order to understand the precise terms of their contract with the clubs. They became unwilling to consent to a form of contract by which they were to be subjected to con- ditions not mentioned in the contract itself. In November, 1887, a committee represent- ing the professional players met a commit- tee representing the parties to the national agreement for the purpose of agreeing upon certain changes to be made in the form of the contract. The committees finally agreed that the obnoxious clause in the con- tract should be omitted, and the clause now found in the eighteenth article should be in- serted. This was the origin of the clause giving to the club, by the contract itself, the option of reserve. The clause was manifest- ly inserted in order to give, by an express condition, the right of reservation to the clubs which theretofore the players had only given by agreeing to be bound by the terms of the national agreement. By ascertaining what that right of reservation was, it can be plainly seen what the parties had in mind in using the term in the present contract. If, when the contract was made, the term had a well-understood definition, there was no necessity to particularize in the contract the conditions or characteristics of the op- tion. Reference has already been made to the provision of the nat'onal agreement requir- ing each club, on the 10th day of October in each year, to transmit to all the other clubs a reserved list of players, and declar- ing such players ineligible to contract with any other club. This provision is to be read in connection with another provision of the national agreement, which prescribes that no contract shall be made "for the services of any player by any club for a longer per.od than seven months, beginning April 1st and terminating October 31st, and no such con- SPECIFIC PERFORMANCE OF CONTRACTS. 625 tract for services to be rendered after the expiration of the current year shall be made prior to the 20th day of October of such year." The two provisions, read together, allow a period of 10 days to intervene be- tween the time when a club can exercise the privilege of placing a player upon its reserv- ed list and the time when it can make a contract with him for services to be render- ed in an ensuing year, thus emphasizing a distinction between the right to treat the player as reserved and the contract which is to fix the terms upon which the reserva- tion is to be complete. The effect of these provisions is that, when the club has exer- cised its privilege of reservation, no other club is permitted to negotiate with the play- er; but the club which has placed him upon the reserved list, and no other, is then at liberty to enter into a contract with him to obtain his services for an ensuing year. Con- sequently the right of reservation is nothing more or less than a prior and exclusive right, as against the other clubs, to enter into a contract securing the player's services for another season. Until the contract is made which fixes the compensation of the player and the other conditions of his service, there is no definite or complete obligation upon his part to engage with the club. He agrees that he will not negotiate with any other club, but enjoys the privilege of engaging with the reserving club or not, as he sees fit. Head with this understanding, the clause in question by which the privilege of re- serving the defendant is given to the club expresses definitely the terms of the option. If the club exercises the right of reserva- tion, it agrees in advance that the player shall receive at least as large a salary as he has received during the current year, and leaves it open to him to contract on that basis for the next season, or to insist on a larger salary. All the other terms of the engagement are matters of negotiation be- HUTCH.& BUNK.EQ.-40 tween the club and the player. The law implies that the option of reservation is to be exercised within a reasonable time; but when this has been done the right to reserve the player becomes the privilege, and the exclusive privilege, as between the reserving club and the other clubs, to obtain his serv- ices for another year if the parties can agree upon the terms. As a coercive condition which places the player practically, or at least measurably, in a situation where he must contract with the club that has re- served him, or face the probability of losing any engagement for the ensuing season, it is operative and valuable to the club. But, as the basis for an action for damages if the player fails to contract, or for an action to enforce specific performance, it is wholly nugatory. In a legal sense, it is merely a contract to make a contract if the parties can agree. It may be that heretofore the clubs have generally insisted upon treating the option to reserve as a contract by which they were entitled to have the services of the player for the next season upon the terms and conditions of the first season, and even requiring him to enter into a new con- tract containing the option for reservation; and it may be that the players have gen- erally acquiesced in the claims of the clubs. However this may be, the players were not in a position to act independently; and, if they had refused to consent to the terms proposed by the clubs, they would have done so at the peril of losing any engagement. The facts, therefore, are not such as to per- mit any weight to be given to the acts of the parties as evincing their own construc- tion of the contract. It follows that the act of the defendant in refusing to negotiate with the club for an engagement for the season of 1890, while a breach of contract, is not the breach of one which the plaintiff can enforce. The motion for an iniunctlon Is denied. 626 SPECIFIC PERFORMANCE OF CONTRACTS. ALLEGHENY BASE-BALL CLUB v. BENNETT. (14 Fed. 257.) Circuit Court, W. W. Pennsylvania. Novem- ber 18, 1882. In Equity. BiU to enforce compliance with agreement to enter into contract to give personal services. Bill in equity by the Allegheny Base-hall Cluh, a corporation of Pennsylvania, against Charles W. Bennett, a citizen of Michigan, to compel the respondent to execute a formal cpntract to give his exclusive services as a base-hall player to the complainant during the base-ball season of 1883, and also for an injunction to restrain him from executing a lilie agreement with the Detroit Base-ball Club, and from performing such services for any other person or corporation than the complainant during the season named. The bill was filed on the fifth day of Oc- tober, 1882, and was based upon the follow- ing written instrument, to-wit: "It Is hereby agreed, this third day of August, 1882, between the Allegheny Base- ball Club and Charles W. Bennett, that said Charles W. Bennett hereby promises and binds himself that between the fifteenth and thirty-first days of October, 1882, he will sign a regular contract of the Allegheny Base- ball Club, a chartered company belonging to the American Association of Base-ball Clubs, which contract shall bind him to give his services as a base-ball player to said club for the season of 1883, and shall bind said Allegheny Club to pay him the sum of $1,- 700 for and during such season of 1883; and in consideration of his agreement to sign such a contract in October, the sum of $100 is now paid to said C. W. Bennett, the re- ceipt of which is hereby acknowledged. Wit- ness our hands and seals this third day of August, 1882. "The Allegheny Base-baU Club, by "H. D. McKnight, President. [Seal.] "C. W. Bennett. [Seal.] "A. G. Pratt, Witness." The bill averred substantially that the complainant was engaged in the business of playing base-ball for profit, and that by the expenditure of much time and large sums of money it made preparations for the exhi- bition of such games, and expected to re- ceive large returns from the same; that the respondent was a skillful player of base-ball, and. In consequence of his agreement with complainant, B. N. Williamson and James F. Galvin, two other skillful players, had en- tered into a similar agreement with com- plainant; that respondent had refused to sign the "regular contract" referred to, and had entered into a like contract with the Detroit Base-ball Club; that, accordingly, Williamson and Galvin refused to keep their said engagement with complainant, and that the base-ball season had now so far advan- ced that complainant could not secm-e other players of equal skill with said Bennett, Wil- liamson, and Galvin, whereby complainant "would be seriously damaged, to an amount of not less than $1,000." The bill prayed that Bennett be required to sign the "regular contract," and perform his coveuants, and also that he be restrained from entering into a similar contract with the Detroit Base-ball Club, or any other as- sociation or person, and from playing base ball "for hire, ' during the base-ball season of 1883, for any other than complainant. The complainant moved for a preliminary injunction. The motion was argued by James Bakewell, and was opposed by A. Tausig, and was denied. The respondent then filed a general demurrer, on the grounds: (1) That the bill was prematurely brought; (2) that the agreement was a mere preliminary arrangement, anticipating the making of a final contract, and that, there- fore, there was no contract before the court capable of specific enforcement; (3) that the agreement was unlimited as to place, and was, therefore, unreasonable and void as against public policy, as covenants in re- straint of trade; (4) that the complainant had an adequate remedy at law. A. Tausig, A. W. Duff, and Marshall Brown, for demurrer. To maintain a suit there must be a cause of action Avhen such suit is commenced. 55 Ga. 329; 29 111. 497; 4 Sneed, 583. One who has anything to do on a particular day has the whole of that day to perform such act, so that suit for a breach of performance cannot be instituted until the next day. 102 Mass. 65; 6 Watts & S. 179; 18 Cal. 378. And, in general, the time within which a contract is to be executed is as much the essence of it as any other part. 6 Wis. 120; 43 Me. 158; 18 Ind. 365; 17 Me. 316; 22 Me. 133. (1) The present bill for an injunction to restrain the defendant from playing with the Detroit Club, as in violation of the alleged agreement, will not lie for the reason the con- tract is a mere preliminary arrangement, and not a final agreement. What are the terms of the alleged contract? They provide and contemplate the execution of a regular agree- ment, in order to bind the parties and render the contract mutual, final, and conclusive. The preliminary contract shows that it was executed with reference to a future and final agreement between the parties. A contract requires mutuality as to all its essential terms, stipulations, and conditions. Is there any allegation upon the face of the bill that a final, regular contract was ever agreed up- on between the parties? There Is no con- tract, therefore, capable of being enforced in a court of equity, and the present bill must be dismissed. Railway Co. v. Wythes, 5 De Gex, M. & G. 888. Specific performance will not be decreed if it is not clear that the SPECIFIC PERFORMANCE OF CONTRACTS. 627 minds of the parties have come together. Wistar's Appeal, 80 Pa. 484. (2) Specific performance will not be enfor- ced, directly or indirectly, unless the agree- ment Is mutual, its terms certain, its enforce- ment practicable, and the complainant is without adequate redress In an action at law, (Blsp. Eq. § 377, and cases cited; 10 Wall. 339; 5 De Gex, M. & G. 888;) and it will not be enforced when it Is doubtful whether an agreement has been concluded, (14 Pet. 77; 81 Pa. 484;) nor where the duties are continuous and require siiill and judgment, (10 Wall. 339.) A court of chancery will not decree the specific performance of a contract, where it would be impossible for the court to enforce the execution of its decree, or where the literal performance, if enforced, would be a vain and idle act. Bisp. Bq. 436. (3) Even if the alleged contract is legal and binding on the defendant, the demurrer should be sustained, because the plaintiff has an adequate remedy at law. It may have to pay a higher salary to secure a player of Bennett's skill, and the difference would be the measure of damages for breach of con- tract. (4) Even if the court should be of the opin- ion that a contract was executed, full, final, and mutual as to all its terms, conditions, and stipulations, and also of opinion that negative covenants not to exercise a trade, profession, or calling within reasonable lim- its may be enforced by injunction, such con- elusion would have no application to enjoin and restrain the defendant. The contract is unreasonable and void on grounds of public policy, as in cases of covenants in restraint •of trade, because It Is unlimited. McClurg's Appeal, 58 Pa. 51; Gillis v. Hall, 2 Brewst. 342; Catt v. Tourle, L. R. 4 Ch. App. 654. (5) The demurrer should be sustained be- cause equity will not indirectly enforce spe- cific performance of a contract for personal ■services where the services require a succes- sion of acts whose performance cannot be accumulated by one transaction, but will be continuous and require the exercise of special knowledge, skill or judgment. Pom. Spec. Per. § 312; Ford v. Jermon, 6 Phlla. 6; De Pol V. Sohlke, 7 Rob. (N. Y.) 280; Sanqulricio V. Benedetti, 1 Barb. 315; Kemble v. Kean, ■6 Sim. 333; Hills v. Croll, 2 Phila. 60; Rolfe v. Rolfe, 15 Sim. 88; Fothergill v. Rowland, L. R. 17 Eq. 132; Kimberley v. Jennings, 6 Sim. 340. The personal acts with respect to which courts of equity entertain jurisdiction to decree specific performance have refer- ence to property of some kind. There is none where a contract for personal services alone has been actively enforced. There are sev- eral, however, In which the court has inter- fered negatively. Thus, in the case of a the- ater, considered as a partnership, a contract with the proprietors not to vprite dramatic pieces for any other theater Is valid, and a violation of it will be restrained by injunc- tion. Clark V. Price, 2 Wils. 157; Willard, Eq. 278. But where there is no partnership between the parties, and the defendant has violated his engagement to one theater and formed a conflicting engagement with anoth- er, a court of equity will not interfere either actively to compel performance of one con- tract, or negatively to prevent the perform- ance of the other. Willard, Eq. 278; Kem- ble V. Kean, 6 Sim. 333. The cases where injunctions have issued relate (1) to partner- ship agreements; (2) to property of some kind; (3) to express negative covenants. Willard, Eq. 277, 278. (6) If the court should be of opinion that the alleged contract is complete, mutual, cer- tain, and final, and that under it the plaintiff has no full, complete, and adequate remedy at law, the present biU will not lie for the following reasons: (1) It is prematurely brought. No injury to plaintiff (if any) can arise until the ball season of 1883 commen- ces. As the plaintiff will not be actively en- gaged under the alleged contract until the regular season of 1883 opens, no damage can result until that time from the act which it is sought to enjoin. (2) There is no right to, or necessity for, an Injunction, for it cannot appear, at the present time, that defendant will play ball during the season of 1883, in violation of said alleged contract. De Riv- afinoli V. Corsettl, 4 Paige, 264; De Pol v. Sohlke, 7 Rob. (N. Y.) 283. If the injury be doubtful, eventual, or contingent, equity will not enjoin. Rhodes v. Dunbar, 57 Pa. 274; Huckenstein's Appeal, 70 Pa. 108. If the alleged Injury is only problematical, accord- ing as other circumstances may or may not arise, or if there is no pressing need for an injunction, the court will not grant it until a tort has actually been committed. Kerr, Injunc. 339. James Bakewell and J. S. Ferguson, contra. AOHESON, D. J. (orally). Demurrer sus- tained and bill dismissed. 628 SPECIFIC PERFORMAXCE OF CONTRACTS. McGOWIN V. REMINGTON. (12 Pa. 56.) Supreme Court of Pennsylvania. Sept. 20, 1849. Appeal from district court, Allegheny comi- ty, in equity. Ou the 6th September, 1847, Z. W. Reming- ton filed a bill in equity, setting forth that, prior to the grievances complained of, he had been for many years a surveyor and regulator of the streets, lanes, and alleys of the city of Pittsburgh, and other places around said city, and as such had made many plans and plots of ground in said city and throughout said county, and maps of lands and grades of streets and roads, and drafts of surveys of plantations in other counties adjoining, and possessed certain furniture and instruments of surveying, v^hich vrere of great value to him, a list of which is appended to this bill, and prayed to be made and taken as part thereof,— marked as "Exhibit A." That on or about 1st April, 1843, intending to engage in other occupations and to remove from Pittsburgh, vphere he had before re.sided and had his oflBce for several years, and re- posing all confidence in the defendant, the defendant having been for several years un- der the complainant's tuition and under his service as a surveyor, the complainant, de- sirous and Intending to benefit defendant, who purposed to succeed and follow in the business pursued by the complainant, left in the care and custody of defendant, and for the mere purpose of promoting the interest and business of defendant, all his plots of survey and plans, drafts and property, as set forth in Exhibit A, besides other plots and drafts, which he cannot recollect, that defend- ant might refer to and use in his said busi- ness until they would be required by com- plainant, he, complainant, expecting some day to resume his old business of surveyor at Pittsburgh, in case he should not succeed in his new occupation. That complainant, after he had left the said plots, plans, drafts, and property with defendant, went to dwell in Beaver county, and left them in the office which complainant had occupied before and at his said departure from Pittsburgh, and the possession of which said oflSce he gave up to defendant along with the said plots, plans, drafts, and furniture and instruments aforesaid, all which things are of real value to complainant, and very diflScuIt and impossible to replace or procure, and no damages for which in a court of law could compensate. That complainant had used efforts since to procure his papers, furniture, and instru- ments, to no purpose, defendant refusing to deliver them up, and uow threatening that he will destroy them rather than give them up to complainant. And complainant believes and is informed that the defendant is now engaged in copying many of said plots, plans, and drafts for his own use, and to be used by him as a surveyor in and about said city of Pittsburgh and ad- joining counties, to the great Injury of com- plainant; and complainant believes that de- fendant is disposed and is likely to injure, and fraudulently intends to destroy or secrete said plots, plans, drafts, and instruments, so that complainant may not recommence his business. That complainant returned to Pittsburgh in the spring of this year, and some time in July last went to defendant's office and demanded of defendant the return of his said plots, plans, drafts, and instruments, informing him that he had returned to Pittsburgh and open- ed an office, and resumed his business as a surveyor; defendant refused to deliver them to complainant, and said there were some of them he, defendant, could not get along with- out. The bill then went on to propound Inter- rogatories to the defendant touching the sev- eral allegations of fact before made, and prayed that JIcGowin be decreed to deliver up to the plaintiff the said plots, etc., and any copies thereof made since demand. The bill further prayed an injunction to resti'ain Mc- Gowln from copying, and from destroying, or injuring, or secreting said plots, etc., and -a subpoena to answer. The exhibit, marked A, contained a detailed list of plots, drafts, fur- nitui-e, instruments, etc., demanded. The subpoena issued forthwith, and Sep- tember 9, a bond having been filed, applica- tion was taade for an injunction, which was awarded and issued. 4th October rule to plead, answer or demur by first Monday in November. 2&th October demurrer filed, which was overruled 22d December, and a second special injunction awarded. 3d Jan- uary, 1848, answer filed, and motion to dis- solve injunction. The answer was to the following effect: It admitted that Remington was a surveyor, and as such had in his possession plans, plots, maps, etc., such as were specified in the bill, with certain exceptions, particularized in a schedtile of explanations; that he removed to Beaver, and that respondent occupied his office after he left The answer affirmed that the plans, etc., were greatly overrated in value, and have no such peculiar character- istics as to make them subjects of equity ju- risdiction, by reason of their unique and orig- inal description; that most, if not all of them, could be supplied or substituted from other offices, and from private individuals, and from the public records of the county and state, being generally copied, and mostly from papers unofficial and unauthenticated. It af- firmed that the plans, etc., belonged, some of them to the respondent, some to other persons, and denied the demand for them, etc. The complainant filed a replication, and took evidence of his having made the de- mand mentioned in his bill. On 13th Jan- uary, 1849, the cause having been heard on the bill, answer, exhibits, and proofs, and on SPECIFIC PERFORMANCE OF CONTRACTS. 629 argument of counsel, tbe court ordered and decreed that the clerk of the court do de- liver to the complainant the papers, maps, and plans, which have been placed by order of the court in his custody, and it is ordered and decreed further that the defendant de- liver unto Read Washington, Esq., one of the masters in chancery, all the plots, plans, drafts, furniture, and instruments, left in de- fendant's possession as set forth in the hill of complainant, and vehich are not now in the possession of the clerli of this court, and also of any copies thereof which may have been made by respondent since the day of the de- mand thereof stated in the bill, and that the master have power, and is hereby required to ascertain by interrogatories to be exhibited in writing to defendant, whether there are any of the said plans, maps, plots, drafts, furni- ture, or instruments disclosed in said bill in his possession undelivered, and that the mas- ter require defendant to answer thereto upon oath, and to Inquire upon interrogatories of defendant, to be administered to him under oath, what copies of or copying from said pa- pers he may have made, and whether the same have been delivered up; and that said master mali;e report (if required by further order) to this court thereof. And further ordered that the injunction heretofore issued be continued and made per- petual, and that the said master deliver to the complainant the said plans, plots, drafts, furniture, and instruments which may be placed in his hands by virtue of this decree. And further ordered that the costs and fees in this suit be taxed by the clerk, and that the bill thereof be immediately paid by the defendant into court. On 20th January, 3849, defendant appealed from this decree, and 20th June following de- cree was made for a specific delivery, for re- fusing obedience to which a rule for attach- ment was taken, and on 4th September re- spondent appealed. In this court these ex- ceptions were taken: (1) Want of jurisdiction over subject-mat- ter of the bill. (2) The bill presents no sufficient groimd for the interference of a court of equity in Pennsylvania. (3) The courts of law have adequate rem- edies. (4) The decree covers some descriptions of property which are not the subject of equity jurisdiction under any state of facts. Craft & McCandless, for appellant. Mr. Dunlop, for appellee. BELL, J. The defendant having failed to sustain, by proof, his allegation of sale or gift of the articles sought to be recovered by this bill, the contest in this court is re- duced to two questions: First, whether the bill presents sufficient grounds to warrant the interference of a court of equity, in this state, under the statute conferring equitable jurisdiction? Secondly, whether that portion of the decree which covers the surveying instruments and furniture described in the exhibits annexed to the bill can be sustained? As to the first point, the defendant insists that the only remedy is at law. Though the action of replevin is, with us, a broader remedy than in England, lying in all cases where one man Improperly detains the goods of another, it is in no instance efCective to enforce a specific return of chattels, since a claim of property and bond given is always sufficient to defeat reclamation, no matter what may be the eventual issue of the con- test. As, therefore, our common-law tri- bunals are as powerless for such a purpose, as the similar English courts, the propriety of exerting the equitable jurisdiction now Invoked must depend with us on the same reasons that are deemed sufficient to call it into action there. Here, as there, the In- quiry must be whether the law alfords ade- quate redress by a compensation in damages, where the complaint is of the detention of personal chattels. If not, the aid of a court of chancery will always be extended to rem- edy the Injury, by decreeing a return of the thing Itself. The precise ground of this jurisdiction is said to be the same as that upon which the specific performance of an agreement Is en- forced, namely, that fruition of the thing, the subject of the agreement, is the object, the failure of which would be but illy sup- plied by an award of damages. Lowther v. Lowther, 13 Ves. 389. In the application of this rule some difficulty has been experi- enced. The examples afforded by the Eng- lish books are usually those cases, where, from the nature of the thing sought after, its antiquity, or because of some peculiarity connected with it. It cannot easily, or at all, be replaced. Of these may be instanced the title deeds of an estate and other muniments of property, — valuable paintings (Lowther v. Lowther, supra); an antique silver altar piece (Duke of Somerset v. Cookson, 3 P. Wms. 389); an ancient horn, the symbol of tenure, by which an estate Is held (Pusey V. Pusey, 1 Ves. 273); heirlooms (8 Ves. & B. 18); and even a finely carved cherry- stone (Amb. 77). Such articles as these are commonly esteemed not altogether, or per- haps at all, for their Intrinsic value, but as being objects of attachment or curiosity, and, therefore, not to be measured In damages by a jury, who cannot emter Into the feel- ings of the owner. So too the impossibility, or even great difficulty, of supplying their loss, may put damages out of the question as a medium' of redress. But these are not the exclusive reasons why chancery inter- feres, for there may be cases in which the thing sought to be recovered Is susceptible of reproduction or substitution, and yet where damages could not be so estimated as to cover present loss or compensate its future consequent inconvenience. And I take It (i30 SPECIFIC PERFORllAXCE OF CONTRACTS. this is always so, 'where, from the nature of the subject or the immediate object of the parties, no convenient measure of damages can be ascertained; or, where nothing could answer the justice of the case but the per- formance of a contract in specie. Of this Buxton V. Lister, 3 Atk. 384, furnishes an example in the analogous instance of a con- tract for the sale of personalty, — contracts, which are most commonly left to be dealt with at law. It was a bill to enforce the performance of an agreement for the pur- chase of several large parcels of growing wood, to be severed by the defendants, who were to have eight years to dispose of it, and to pay for it in six yearly Installments. Lord Hardwicke was, at first, exti-emely re- luctant to entertain the bill, but after dis- cussion came to the conclusion that, though relating to a personal chattel, it was such an agreement that the plaintiff might come into chancery for a specific performance. He instanced the case of Taylor v. Neville, which was a bill for the performance of ar- ticles for the sale of eight hundred tons of iron, to be paid for in a certain number of years, by installments, where the decree prayed for was made; and proceeded to observe: "Such sort of contracts as these dif- fer from those that are immediately to be executed. There are several circumstances wliich may concur. A man may contract for the purchase of a great quantity of tim- ber, as a ship carpenter, by reason of the vicinity of the timber; and this is on the part of the buyer. On tlie part of the seller, suppose a man wants to clear his land iu order to turn it to a particular sort of hus- bandry; there nothing can answer the jus- tice of the case but the performance of the contract in specie." Similar in principle is the case of Falls v. Reid, 13 Ves. 70, where the plaintiffs prayed the restoration of an engraved silver snuffbox, used for many j-ears by a society, as the symbol of their association; and Nutbrown v. Thomson, where a tenant brought a bill against his lessor, who, under the pretense of the ten- ant's covenant, had repossessed himself of the land, and seized upon the stock of cattle, wliich by the lease the tenant was to enjoy for seven years. The objection was that the tenant's remedy, if he was entitled to one at all, was at law. In damages. But how, asked Lord Eldon, are damages to be esti- mated in such a case? The direction to a jury must be to give, not the value of the chattels, but their value to the tenant! A similar question may well be propounded in our case. By what standard would you measure the Injury the plaintiff may sustain in future from being deprived, even for a brief period, of the use of papers essential to the prosecution of his business? Their intrinsic value might, perhaps, be ascertained by an estimate of the labor necessary to their reproduction, admitting the means to be at hand, and within the power of the plaintiff. But how could a tribunal ascer- tain the probable loss which, in the mean- time, might be sustained? The present pe- cuniary Injury might be little or nothing, and so possibly of the future; or it might be very great, depending upon the unascer- tainable events of coming time, as these may be influenced by the misconduct of the de- fendant. These considerations show, I think, the case is not one for damages. Besides, as many of the maps, plans, surveys, aud calculations are said to be copies of private papers, we are by no means satisfied they could be replaced at all. Certainly not with- out permission of the owners; a risk to which the plaintiff ought not unnecessarily to be exposed. If to these reflections we add the fact that some of these documents are the original work of the plaintiff, of value as being predicated upon data possibly no longer accessible, a wrong is perpetrated which a chancellor ought not to hesitate iu relieving. It is enough for this purpose that a perfect relief at law Is not apparent The thing to be guarded against is, not the in- vasion of the defendant's rights, for he stands here absolutely without any, except the common interest every citizen has in preserving the proper line of distinction that divides the jurisdiction and limits the pow- ers of the several courts. What Is to be avoided is an unnecessary trespass upon the province of the common-law tribunals, and this is to be tested by the simple query whether they offer a full remedy for the wrong complained of? But there is another ground upon which this proceeding may be sustained. In Falls V. Reid, the snuffbox was deposited with the defendant, as a member of the society, upon certain terms, to be redelivered upon the happening of certain events. Lord Rosslyn held that under these facts, the defendant was a depositary on an express trust which, upon a common ground of equity, gave the plaintiff title to sue in that court; and In this he was supported by Lord Eldon, In the subsequent case of Nutbrown v. Thornton. According to the proof in our case, the pa- pers and documents claimed were left with the defendant under the express understand- ing that they were to be redelivered when- ever the plaintiff should see fit to resume the business of his then profession in this city. It is then the case of direct confidence violated,— a spell sufficiently potent to call Into vigorous activity the authority invoked. As to the second question. It Is perhaps enough to say that, when once a court of equity takes cognizance of a litigation, it will dispose of every subject embraced with- in the circle of contest, whether the question be of remedy or of distinct yet connected topics of dispute. If the jurisdiction once attaches from the nature of one of the sub- jects of contest. It may embrace all of them, for equity abhors multiplicity of suits. Thus, in the case last cited, the chancellor ruled SPECIFIC PERFORM A.NCE OF CONTRACTS, 631 that where a nerson is found wrongfully in possession oT a farm, over which the comt had undoubted power, and also in pos- session of the stock upon it, at the same time and under the effect of the same wrong, the court will undoubtedly make him account for and deliver back the whole. In the case at bar the surveying instruments and office furniture stand in the same category with the maps, drafts, etc., were delivered to the defendant at the same time, and are with- held by an exertion of the same wrong. In short, tliey enter into and make part of the same transaction, and may, therefore, be the objects of the same measure of redress. Decree affirmed. 632 SPECIFIC PERFORMANCE OF CONTRACTS. PROSPECT PARK & C. I. R. CO. v. CONEY ISLAND & B. R. CO. (39 N. E. 17, 144 N. Y. 152.) Court of Appeals of New York. Dec. 11, 1894. Appeal from supreme court, general term, Second department Action by the Prospect Park & Coney Is- land Railroad Company against the Coney Ifland & Brooklyn Railroad Company for specific performance. From a judgment of the general term (21 N. Y. Supp. 1046) re- versing a judgment for plaintiff, It appeals. Reversed. George W. Wingate, for appellant Wil- liam N. Dykman, for respondent BARTLBTT, J. The parties to this action entered into a contract June 1, 1882, and the plaintiff seeks to compel Its specific perform- ance. The special term rendered judgment fi>r plaintiff; the general term reversed the judgment; and the plaintiff comes here un- der the usual stipulation in case of affirm- ance. The reversal was for error both of law and fact, and, the failure to insert a certificate that the case contains all the evi- dence having been cured by the amendment of the return by the supreme court, we are called upon to review the facts as well as the law. At the time of making the contract, the plaintiff owned a steam surface railroad, usually known as "Culver's Coney Island Railroad," which extended from Coney Is- land to a depot at the comer of Ninth ave- nue and Twentieth street, in the city of Brooklyn, and adjoining Greenwood Cem- etery; the plaintiff also owned certain horse- car railroads, which were entirely distinct from the steam railroad, extending from the depot to Fulton ferry; the plaintiff also owned a charter entitling it to construct a horse-car line from the depot to Hamilton Ferry and other points. The defendant, at the time of executing the contract, was op- erating certain horse-car lines which ran from Hamilton, Fulton, and other ferries, and from the East River bridge, to Ninth street and Ninth avenue, and through Ninth avenue to Fifteenth street, on Fifteenth street to Coney Island avenue, and thence to Coney Island. These lines were operated wholly by horses. By the contract the plain- tiff granted the defendant the right to use its tracks on Ninth avenue from Fifteenth street to the depot at Ninth avenue and Twentieth street, free of charge, for 21 years from June 1, 1882. The defendant covenant- ed to run during the spring, summer, and fall months, to plaintiff's depot, cars to con- nect with the ferries and all plaintiff's trains to and from Coney Island. The plaintiff agreed to furnish defendant necessary ter- minal facilities at the depot. This contract was obviously advantageous to both parties. The plaintiff secured passmgers to Coney Island from defendant's lines, and the de- fendant greatly increased its travel by hav- ing a direct connection with steam transit to Coney Island. The defendant's horse-car line to Coney Island could not successfully compete with plaintiff's steam route. The plaintiff provided defendant with the neces- sary terminal facilities as required, and the contract was acted upon by both parties un- til the month of October, 1889. At that time there was a change in defendant's manage- ment, and the compa,ny contracted for an electrical equipment from the Parade Ground to Coney Island, commonly known as the "Trolley System." The plaintiff, in May, 1800, finding that defendant was not running cars to the depot as required by the contract, requested performance, and was advised that the defendant was under no obligations to run the cars, and did not Intend to do it This action was commenced the following October. It is Insisted by the defendant that the adoption of the trolley system is. In contem- plation of law, a use of steam, under the clause in the contract which provides that if the defendant shall use steam as a motive power between Ninth avenue and Fifteenth street, in the city of Brooklyn and Coney Island, either pai'ty can terminate the con- tract on six months' notice, and that the cor- respondence and answer in this • case are equivalent to notice, and the contract no longer exists. We agree with the special term that the electrical system adopted by the defendant cannot be regarded as the use of steam as a motive power. Hudson River Tel. Co. v. Watervliet Turnpike & Ry. Co., 135 N. Y. 393, 402, 32 N. E. 148. It would be In disregard of the natural and obvious mean- ing of language to hold otherwise. We can- not agree with the general term that the use of the words "steam as a motive power" was only another form of referring to rapid tran- sit, by whatever means accomplished. To so hold would be to make a new contract for the parties. The defendant Insists, further, that by rea- son of certain acts of plaintiff, and by changes in the surrounding circumstances, ic would be Inequitable and unjust to enforce a specific performance of the contract This leads us to consider some additional facts disclosed by the record. On the 9th of December, 1885, plaintiff leased to the Atlantic Avenue Railroad Com- pany aU Its franchises to construct and oper- ate horse-car railroads in the city of Brook- lyn, and on May 27, 1887, in pursuance of chapter 282 of the Laws of 1886, conveyed said rights and Interests absolutely. "The lease and conveyance were made expressly subject to the contract In question, and re- served all the defendant's rights thereunder. They also required the Atlantic Avenue Rail- road Company to operate the VanderbUt Ave- nue Railroad Company as had been prevl- SPECIFIC PERFORMANCE OF CONTRACTS. 633 ously done by the plaintiff. The defendant made no objection to this transfer until after its refusal to perform the contract Defend- ant lu-ges that It was greatly damaged by the fact that the Atlantic Avenue Railroad Company had completed, under the franchise obtained from plaintiff, a horse-car line to the Hamilton ferry. We are imable to per- ceive how defendant has suffered any dam- age, in view of the fact that it purchased with full knowledge of plaintiff's franchise, and its desire to dispose of the same. It appears by the uncontradicted evidence that defendant sought to purchase of plaintiff this franchise to complete a route to the Hamilton ferry either just before or about the time the contract was executed. The defendant further contends that the plaintiff, under a proper construction of the contract, was not at liberty to sell out its street-car interests, although not restrained by any positive provision. This contention is based mainly on the alleged fact that the AUantio Avenue Railroad Company is an active rival of defendant, and did not have the same motive to deal fairly with defend- ant that plaintiff had while seeking to build up its Coney Island business. The principal complaint against the Atlantic Avenue Rail- road Company is based upon the manner in which it performed the contract in regard to defendant's terminal facilities at the depot, corner Ninth avenue and Twentieth street. The evidence does not satisfy us that there was any persistent effort to delay the cars of defendant at that point, or to prevent pas- sengers from the steam road selecting from the cars in waiting the one in which to ride, without undue interference. We think the contract was substantially performed by plaintiff and its grantee in regard to terminal facilities of defendant, and, even if this were not the case, the defendant could have com- pelled the observance of its contract rights in every particular by resort to the court The fact already referred to, that defendant continued to act under the contract for more than four years after this lease to the At- lantic Avenue lUiilroad Company, without objection, must be taken very strongly against it in a court of equity. It seems to us very clear that when the management of defendant was changed in October, 1889, and the road from the Parade Ground to Coney Island was operated by electricity, it at once became an active and successful rival of the plaintiff in securing passengers to and from Coney Island, and had every motive to rid itself of the contract, if it could be legally done. We agree with the learned trial judge that while it is impossible, under the state of the proofs, to determine to what extent plaintiff has been damaged by defendant's adoption of the trolley system, yet it is dear that it has suffered considerable loss. It is, of com^e, entirely legitimate for defendant to secure to itself whatever share of the Coney Island travel it can by ttue exercise of proper business methods, but we are unable to perceive any reason, unuer the proofs as presented, why defendant should be released from the obligations of a contract entered into in good faith by both parties, and that has been practically construed by years of performance. It may very well be that, un- der a contract having 21 years to run, chere may be such a change of conditions as will affect unfavorably the one party or the other; but this offers no reason for refus- ing specific performance, unless subsequent events have made performance by the de- fendant so onerous that the enforcement would impose great hardship and cause little or no benefit to the plaintiff. Trustees v. Thacher, 87 N. Y. 316, 317; Murdfeldt v. Railroad Co., 102 N. Y. 703, 7 N. E. 404. In the case at bar the plaintiff, we think, would be benefited by defendant running the trans- fer car in Ninth avenue from Fifteenth street to its depot at Twentieth street. On the other hand, it may be assumed that the de- fendant, by cheaper fare, and its ability to carryi passengers to Coney Island without transfer, wiU be able to secure its fuU share of the passengers to and from the seashore. The result of compelling the specific per- formance of this contract wiU be to afford the general public an opportunity, when traveling over the line of defendant from the ferries, to make choice of the route they will take to Coney Island when arriving at Ninth avenue and Fifteenth street While it may be somewhat to the disadvantage of defendant to perform its contract, under the present circumstances, when active competi- tion exists between plaintiff and defendant, yet that fact presents no legal reason for dis- charging it from the obligations of its con- tract. As a final point, the learned counsel for the defendant insists that equity will not enforce the specific performance of a con- tract having some years to run, which re- quires the exercise of skill and judgment, and a continuous series of acts. While there is some conflict in the cases, and all are not to be reconciled, yet the great weight of au- thority permits specific performance in the case at bar. The special term enjoined the defendant from operating any of its cars un- less it performs its contract with the plain- tiff. The provisions of this contract are neither complicated nor diflicult, and are such as a court of equity can enforce, in its discretion. A few of the cases may be re- ferred to, as illustrating the power vested In a court of equity to compel the specific performance of contracts similar to the one at bar. In Storer v. Railroad Co., 2 Younge & C. N. R. 48, the court compelled the de- fendant to construct and forever maintain an archway and its approaches. The court said there was no difficulty in enforcing such a decree. In Wilson v. Railway Co., L. R. 9 Eq. 28, the defendant was compelled to erect and maintain a wharf. See, also, 634 SPECIFIC PERFORMANCE OF CONTRACTS. Greene v. Railroad Co., L. R. 13 Bq. 44. In Wolverhampton & W. R. R. v. London & N. W. R. R., L. R. 16 Eq. 433, the agreement between the two companies was that the defendant should work the plaintiff's line, and, during the continuance of the agree- ment, develop and accommodate the local and through trade thereof, and carry over it certain specific traffic. The bill was filed to restrain the defendant from carrying a por- tion of the traffic which ought to have pass- ed over the plaintiff's line by other lines of the defendant The point was made that the court could not undertake to enforce specific performance, because It would require a series of orders and a general superintend- ence to enforce the performance, which could not conveniently be administered by a court of justice. The Injunction issued, and Lord Selborne said (page 438): "With regard to the argument that, upon the principles ap- plicable to specific performance, no relief can be granted, I cannot help observing that there is some fallacy and ambiguity in the way in which, in cases of this character, those words 'specific performance' are used. * * * The common expression, as applied to suits known by that name, presupposes an executoi7, as distinct from an executed, agreement • • • Confusion has some- times arisen from transferring considera- tions applicable to suits for specific perform- ance, propei'ly so called, to questions as to the propriety of the court requiring some- thing or other to be done in specie. • • • Ordinary agreements for work and labor to be performed, hiring and service, and things of that sort, out of which most of the cases have arisen, are not, In the proper sense of the word, cases for 'specific performance'; In other words, the nature of the contract Is not one which requires the performance of some definite act such as the court Is in the habit of requiring to be performed by way of administering superior justice, rather than to leave the parties to their remedies at law. • • • Tiie question is whether, the defend- ants being in possession, they are not at lib- erty to depart from the terms on which it was stipulated that they should have that possession." The American cases are equally clear. In Lawrence v. Railway Co., 36 Hun, 467, the defendant was, among other things, to erect a depot at which all trains were to stop. Specific performance was de- creed; the court heading that although, imder the agreement the defendant could not be compelled to run trains upon Its road, yet It might properly be enjoined fi-om running any regular trains which did not stop at the sta- tion. The objection that the judgment In this case Involves continuous acts, and the constant supervision of the court Is well met by the reasoning In Central Trust Co. v. Wabash, St Louis & P. Ry. Co., 29 Fed. 646, being affirmed as Joy v. St. Louis, 138 U. S. 1, 47, 50, 11 Sup. Ct 243, where Judge Blatchfbrd wrote the opinion. As to In- convenience, or circumstances which affect the Interest of one party alone, constituting a reason why performance should not be de- creed, the case of Marble Co. v. Ripley, 10 Wall. 339, 358, furnishes a clear discussion of the general principles Involved. The rule established by the above and kindred cases Is that a contract Is to be judged as of the time at which it was entered into,, and, if fair when made, the fact that It has become a hard one by the force of subsequent cir- cumstances or changing events will not neces- sarily prevent its specific performance. See, also, Stuart v. Railway Co., 15 Beav. 513; Mortimer v. Capper, 1 Brown, Ch. 156; Jack- son v. Lever, 3 Brown, Oh. 605; Paine v. Meller, 6 Vea 349; Paine t. Hutchinson, L. R. 3 Eq. 257; Telegraph Co. v. Harrison, 145 U. S. 459, 472, 473, 12 Sup. Ct 900. A large nimaber of other cases might be cited, sus- taining the power of the court to decree the specific performance of this contract, b\it we do not deem It necessary. There can be no well-founded doubt as to the power of the coiu't in the premises, and the Important question is whether, in the exercise of a wise discretion, and in view of all the circum- stances, specific performance should be de- creed. After a most careful consideration of this case, we have reached the conclusion that the plaintiff Is entitled to have the con- tract specifically performed. The order of the general term is reversed, and the judg- ment of the special term is affirmed, with costs In all the courts. All conciu*, except ANDREWS, C. J., who dissents on the ground that plaintiff, having established a rapid- transit road, although the propulsion is by electricity, has met the condition of the con- tract which entitled it to terminate such con- tract, or at least has placed itself In such a position that a court of equity will not en- force specific performance. Ordered accord- ingly. SPECIFIC PERFORMANCE OF CONTRACTS. 635 WILLARD V. TAYLOE. (8 Wall. 557.) Supreme Court of the United States. Dec, 1869. Appeal from the supreme court of the Dis- trict of Columbia. This was a suit in equity for the specific performance of a contract for the sale of certain real property situated in the city of Washington, in the District of Columhia, and adjoining the hotel owned by the complain- ant, Willard, and known as Willard's Hotel. The facts out of which the case arose were as follows: In April, 1854, the defendant leased to the complainant the property in question, which was generally known in Washington as "The Mansion House," for the period of ten years from the 1st of May following, at the yearly rent of twelve hundred dollars. The lease contained a covenant that the lessee should have the right or option of purchasing the premises, with the buildings and improve- ments thereon, at any time before the ex- piration of the lease, for the sum of twenty- two thousand and five hundred dollars, pay- able as follows: two thousand dollars in cash, and two thousand dollars, together with the interest on all the deferred instal- ments, each year thereafter until the whole was paid; the deferred payments to be se- cured by a deed of trust on the property, and the vendor to execute to the purchaser a warranty deed of the premises, subject to a yearly ground-rent of three hundred and ninety dollars. At the time of this lease gold and silver, or bank hills convertible on demand into it, were the ordinary money of the country, and the standard of values. In 1861 the rebel- lion broke out, lasting till 1865. In the inter- val, owing to the influx of people, property In the metropolis used for hotels greatly In- creased in value, and as was alleged by Tay- loe, who produced what he deemed a record to show the fact, the complainant, Willard, assigned an undivided half of the property which had been leased to him as above-men- tioned to a brother of his. In December, 1861, the banks throughout the country sus- pended payments in specie, and in 1862 and 1863, the federal government issued some hundred millions of notes, to be used as money, and which congress declared should be a tender in the payment of debts. Coin soon ceased to circulate generally, and peo- ple used, in a great degree, the notes of the government to pay what they owed. On the 15th of April, 1864, two weeks be- fore the expiration- of the period allowed the complainant for his election to purchase — the property having greatly increased in value since 1854, the year in which the lease was made — the complainant addressed a let- ter to the defendant, inclosing a check, pay- able to his order, on the Bank of America^ in New ¥ork, for two thousand dollars, as the amount due on the 1st of May following on the purchase of the property, with a blank receipt for the money, and requesting the defendant to sign and return the receipt, and stating that if it were agreeable to the defendant he would have the deed of the property, and the trust deed to be executed by himself, prepared between that date and the 1st of May. To this letter the defendant, on the same day, replied that he had no time then to look into the business, and returned the check, expressing a wish to see the com- plainant for explanations before closing the matter. On the following morning the complainant called on the defendant and informed him that he had two thousand dollars to make the first payment for the property, and offer- ed the money to him. The money thus of- fered consisted of notes of the United States, made by act of congress a legal tender for debts. These the defendant refused to ac- cept, stating that he understood the pur- chase-money was to be paid in gold, and that gold he would accept, but not the notes, and give the receipt desired. It was admit- ted that these notes were a,t the time greatly depreciated in the market below their nominal value.i On repeated occasions subsequently the complainant sent the same amount — two thousand dollars— in these United States notes to the defendant in payment of the cash instalment on the purchase, and as oft- en were they refused by him. On one of these occasions a draft of the deed of con- veyance to be executed by the defendant, and a draft of the trust deed to be executed by the complainant, were sent for examina- tion, with the money. This last was prepared for execution by the complainant alone, and contained a pro- vision that he might, if he should elect to do so, pay off the deferred payments at earlier dates than those mentioned in the lease. These deeds were returned by the defend- ant, accompanied witli a letter expressing dissatisfaction at the manner in which he was induced to sign the lease with the clause for the sale of the premises, but stating that as he had signed it he "should have carried the matter out" if the complainant had prof- fered the amount which he knew he had of- fered for the property, meaning by this state- ment, as the court understood it, if he had proffered the amount stipulated in gold. No objection was made to the form of either of the deeds. Soon afterwards the defendant left the city of Washington, with the intention of being absent until after the 1st of May. On the 29th of April the complainant, find- ing that the defendant had left the city, and perceiving that the purchase was not about to be completed within the period prescribed 1 Between" the 15th of April and May 1st, 1864, one dollar in gold was worth from one dollar and seventy-three cents to one dollar and eighty cents in United States notes. r.36 SPECIFIC PERF0EMA2^CE OF CONTKACTS. by the covenant in the lease, and apprehen- sive that unless legal proceedings were taken by him to enforce its execution his rights thereunder might be lost, instituted the pres- ent suit. In the bill he set forth the covenant giving him the right or option to purchase the prem- ises; his election to purchase; the notice to the defendant; the repeated efforts made by him to obtain a deed of the property; his of- fer to pay the amount required as the first instalment of the purchase-money in United States notes, and to execute the trust deed stipulated to secure the deferred payments, and the refusal of the defendant to receive the United States notes and to execute to him a deed of the premises. It also set forth the departure of the defendant from the city of Washington, and his intended absence beyond the 1st of May following, and al- leged that the appeal was made to the equi- table interposition of the court, lest on the return of the defendant he might refuse to allow the complainant to complete the pur- chase, and urge as a reason that the time within which it was to be made had passed. The bill concluded with a prayer that the court decree a specific performance of the agreement by the defendant, and the execu- tion of a deed of the premises to the com- plainant; the latter offering to perform the agreement on his part according to its true intent and meaning. The bill also stated some facts, which it is unneeessarj^ to detail, tending to show thai the acquisition of the property in question was of especial importance to the complain- ant. The answer set up that the complainant, even on his own showing, had no case; that there was no proper tender; that even if the complainant once had a right to file a bill in his sole right— the way in which the pres- ent bill was filed— he had lost this right by the transfer of the half to his brother; that the complainant had not demanded an exe- cution even of the contract which he himself set forth, but by the drafts of the tnist deed sent to Tayloe, and which was the trust deed of which he con+emplated the execution, he proposed to pay, at his own option, the whole purchase-money before the expiration of the ten yeare, and thus would interfere with the duration of that security and investment in the identical property leased, which had been originally contemplated and provided for; thus subjecting the defendant to risk and expense in making a new investment. The answer concluded with an allegation, that "by the great national acts and events which had occurred when the complainant filed his bill, and which were still Influencing all values and interests in the country, such a state of things had arisen and now existed, as according to equity and good conscience ought to prevent a decree for specific per- formance in this case, upon a demand made on the last day of a term of ten years, even if in strict law (which was denied) the com- plainant was entitled to make such demand." Both Tayloe and Willa:rd were examined as witnesses. The former testified, that when the lease was executed he objected to a stipulation for a sale of the premises, and that Willard said it should go for nothing. Willard swore that he had said no such thing. The court below' dismissed the bill, and Willard took the present appeal. Curtis, Poland & Howe, for appellant. Cox & McPherson, contra. Mr. Justice FIELD, after stating the facts of the case, delivered the opinion of the court. The covenant in the lease giving the right or option to purchase the premises was in the nature of a continuing olfer to sell. It was a proposition extending through the period of ten years, and being under seal mtist be regarded as made upon a sufficient consideration, and, therefoi-e, one from which the defendant was not at liberty to recede. When accepted by the complainant by his notice to the defendant, a contract of sale between the parties was completed. Rail- road Co. V. Bartlett, 3 Cush. 224; Welchman V. Spinks, 5 Law T. (N. S.) 385; Warner v. Willington, 3 Drew. 523; Railroad v. Evans, 6 Gray, 25. This contract is plain and cer- tain in its terms, and in its nature and in the circumstances attending its execution ap- pears to be free from objection. The price stipulated for the property was a fair one. At the time its market value was under fif- teen thousand dollars, and a greater increase than one-half in value during the period of ten years could not then have been reason- ably anticipated. When a contract is of this character It is the usual practice of courts of equity to en- force its specific execution upon the applica- tion of the party who has complied with its stipulations on his part, or has seasonably and in good faith offered, and continues ready to comply with them. But it is not the invariable practice. This form of re- lief is not a matter of absolute right to either party; it is a matter resting in the discretion of the court, to be exercised upon a consideration of all the circumstances of each particular case. The jurisdiction, said Lord Erskine (12 Ves. 332), "is not compul- sory upon the court, but the subject of dis- cretion. The question is not what the court must do, but what it may do under [the] circumstances, either exercising the jurisdic- tion by granting the specific performance or abstaining from it." And long previous to him Lord Hardwicke and other eminent equity judges of England had, in a great variety of cases, asserted the same discretionary power of the court. In Joynes v. Statham, 3 Atk. 388, Lord Hard- wicke said: "The constant doctrine of this SPECIFIC PERFORMANCE OF CONTRACTS. 637 court is, that it is in their discretion, wheth- er in such a bill they will decree a specific performance or leave the plaintiff to his rem- edy at law." And in Underwood v. Hitct»- cox, 1 Vas, Sr. 270, the same great judge said, in refusing to enforce a contract: "The rule of equity in cari-ying agreements into spe- cific performance is well known, and the court is not obliged to decree every agree- jnent entered into, though for valuable con- sideration, in strictness of law, it depending on the circumstances." Later jurists, both in England and in the United States, have reiterated the same doc- trine. Chancellor Kent, in Seymour v. De- lancy, 6 Johns. Ch. 222, upon an extended review of the authorities on the subject, de- clares it to be a settled principle that a spe- cific performance of a contract of sale is not a matter of course, but rests entirely in the discretion of the court upon a view of all the circumstances; and Chancellor Bates, of Delawai'e, in Godwin v. Collins, recently de- cided, upon a very full consideration of the adjudged eases, says, that a patient exam- ination of the whole course of decisions on this subject has left with him "no doubt that, as a matter of judicial history, such a discretion has always been exercised in administering this branch of equity jurisprudence." It is true the cases cited, in which the discre- tion of the court is asserted, arose upon con- tracts in which there existed some inequality or unfairness in the terms, by reason of which injustice would have followed a specific per- formance. But the same discretion is exer- cised where the contract is fair in its terms, if its enforcement, from subsequent events, or even from collateral circumstances, would work hardship or injustice to either of the parties. In the case of City of London v. Nash, 1 Ves. Sr. 12, the defendant, a lessee, had covenanted to rebuild some houses, but, in- stead of doing this, he rebuilt only two of them, and repaired the others. On a bill by the city for a specific performance Lord Hardwicke held that the covenant was one which the court could specifically enforce; but said, "The most material objection for the defendant, and which has weight with me, is that the court is not obliged to decree a specific performance, and will not when it would be a hardship, as it would be here upon the defendant to oblige him, after hav- ing very largely repaired the houses, to pull them down and rebuild them." In Faine v. Brown (cited in Ramsden v. Hylton, 2 Ves. Sr. 306) similar hardship, flowing from the specific execution of a contract, was made the ground for refusing the decree prayed. In that case the defendant was the owner of a small estate, devised to him on condition that if he sold it within twenty-five years one-half of the purchase-money should go to his brother. Having contracted to sell the property, and refusing to carry out the con- tract under the pretence that he was intoxi- cated at the time, a bill was filed to enforce its specific execution, but Lord Hardwicke is reported to have said that, without regard to the other circumstance, the hardship alone of losing half the purchase-money, if the contract was carried into execution, was sufficient to determine the discretion of the court not to interfere, but to leave the par- ties to the law. The discretion which may be exercised in this class of cases is not an arbitrary or capricious one, depending upon the mere pleasure of the court, but one which is con- trolled by the established doctrines and set- tled principles of equity. No positive rule can be laid down by which the action of the court can be determined in all eases. In general it may be said that the specific relief will be granted when it is apparent, from a view of all the circumstances of the particu- lar case, that it will subserve the ends of justice; and that it will be withheld when, from a like view, it appears that it will pro- duce hardship or injustice to either of the parties. It is not sufficient, as shown by the cases cited, to call forth the equitable inter- position of the court, that tlie legal obliga- tion under the contract to do the specific thing desired may be perfect. It must also appear that the specific enforcement will work no hardship or injustice, for if that result would follow, the court will leave the parties to their remedies at law, unless the granting of the specific relief can be accom- panied with conditions which will obviate that result. If that result can be thus ob- viated, a specific performance will generally in such cases be decreed conditionally. It is the advantage of a court of equity, as ob- served by Lord Redesdale in Davis v. Hone, 2 Schoales & L. 348, that it can modify the demands of parties according to justice, and where, as in that case, it would be inequi- table, from a change of circumstances, to en- force a contract specifically, it may refuse its decree unless the party will consent to a conscientious modification of the contract, or, what would generally amount to the same thing, take a decree upon condition of doing or relinquishing certain things to the other party. In the present case objection is taken to the action of the complainant in offering, in payment of the first instalment stipulated, notes of the United States. It was insisted by the defendant at the time, and it is con- tended by his counsel now, that the covenant in the lease required payment for the prop- erty to be made in gold. The covenant does not in terms specify gold as the currency in which payment is to be made; but gold, it is said, must have been in the contemplation of the parties, as no other currency, except for small amounts, which could be discharged in silver, was at the time recognized by law as a legal tender for private debts. Although the contract in this case was not I completed until the proposition of the de- B38 SPECIFIC PERFORM^tNCE OF COXTRACTS. fondant was accepted In April, 1864, after the passage of the act of congress making notes of the United States a legal tender for private debts, yet as the proposition contain- ing the terms of the contract was previously made, the contract itself must be construed as if it had been then concluded to take effect subsequently. It is not our intention to express any opin- ion upon the constitutionality of the provi- sion of the act of congress, which makes the notes of the United States a legal tender for private debts, nor whether, if constitu- tional, the provision is to be limited in its ap- plication to contracts, made subsequent to the passage of the act. See Hepburn v. Griswold, 8 Wall. 603. These questions are the subject of special consideration in other cases, and their solution is not required for the determination of the case before us. In the view we take of the case, it is immaterial whether the constitutionality of the provi- sion be affirmed or denied. The relief which the complainant seeks rests, as already stat- ed, in the sound discretion of the court; and, if granted, it may be accompanied with such conditions as will prevent hardship and insure justice to the defendant. The suit it- self is an appeal to the equitable jurisdiction of the court, and, in asking what is equitable to himself, the complainant necessarily sub- mits himself to the judgment of the court, to do what it shall adjudge to be equitable to the defendant. The kind of- currency which the complain- ant offered, is only important in considering the good faith of his conduct. A party does not forfeit his rights to the interposition of a court of equity to enforce a specific per- formance of a contract, if he seasonably and in good faith offers to comply, and continues ready to comply, with its stipulations on his part, although he may err in estimating the extent of his obligation. It is only in courts of law that literal and exact, performance is required. The condition of the currency at the time repels any imputation of bad faith in the action of the complainant. The act of congress had declared the notes of the United States to be a legal tender for all debts, without, in terms, making any distinction be- tween debts contracted before, and those contracted after its passage. Gold had al- most entirely disappeared from circulation. The community at large used the notes of the United States in the discharge of all debts. They constituted, in fact, almost the entire currency of the country in 1864. They were received and paid out by the govern- ment; and the validity of the act declaring them a legal tender had been sustained by nearly every state court before which the question had been raised. The defendant, It is true, insisted upon his right to payment in gold, but before the expiration of the pe- riod prescribed for the completion of the pur- chase, he left the city of Washington, and thus cut off the possibility of any other tender than the one made within that period. In the presence of this difficulty, respecting the mode of payment, which could not be ob- viated, by reason of the absence of the de- fendant, the complainant filed his bill, in which he states the question which had arisen between them, and invokes the aid of the court in the matter, offering specifically to perform the contract on his part according to its true intent and meaning. He thus pla- ced himself promptly and fairly before the court, expressing a willingness to do what- ever it should adjudge he ought in equity and conscience to do in the execution of tlie contract. Nothing further could have been reason- ably required of him under the circumstances, even if we should assume that the act of con- gress, making the notes of the United States a legal tender, does not apply to debts cre- ated before its passage, or, if applicable to such debts, is, to that extent, unconstitutional and void. In the case of Chesterman v. Mann, 9 Hare, 212, it was held by the court of chancery of England, that where an underlessee had a covenant for the renewal of his lease, upon paying to his lessor a fair proportion of the fines and expenses to which the lessor might be subjected in obtaining a renewal of his own term from the superior landlord, and o any increased rent upon such renewal, and there was a difference between the parties as to the amount to be paid by the under- lessee, he might apply for a specific perform- ance of the covenant, and submit to the court the amount to be paid. So here in this case, the complainant applies for a specific per- formance, and submits the amount to be paid by him to the judgment of the court. We proceed to consider whether any other circumstances have arisen since the covenant in the lease was made, which render the en- forcement of the contract of sale, subsequent- ly completed between the parties, inequitable. Such circumstances are asserted to have aris- en in two particulars; first, in the greatly in- creased value of the property; and second, in the transfer of a moiety of the complain- ant's original interest to his brother. It is true, the property has greatly in- creased in value since April, 1854. Some in- crease was anticipated by the parties, for the covenant exacts, in case of the lessee's elec- tion to purchase, the payment of one-half more than its then estimated value. If the actual increase has exceeded the estimate then made, that circumstance furnishes no ground for interference with the arrangement of the parties. The question, in such cases, always is, was the contract, at the time it was made, a reasonable and fair one? If such were the fact, the parties are consid- ered as having taken upon themselves the risk of subsequent fluctuations in the value of the property, and such fluctuations are not allowed to prevent its specific enforcement. Wells V. Railway Co., Hare, 129; Iiow.v. SPECIFIC PERFORMANCE OF CONTRACTS, 639 Treadwell, 12 Me. 441; Fry, Spec. Pert. §§ 235, 252. Here the contract, as already stat- ed, was, whien made, a fair one, and in all its attendant circumstances, free from objec- tion. The rent reserved largely exceeded the rent then paid, and the sum stipulated for the property largely exceeded its then market value. The transfer, by the complainant to his brother, of one-half Interest in the lease, as- suming now, for the purpose of the argu- ment, that there is, in the record, evidence, which we can notice, of such transfer, in no respect affects the obligation of the defend- ant, or impairs the right of the complainant to the enforcement of the contract. The brother is no party to the contract, and any partial interest he may have acquired therein, the defendant was not bound to notice. The owners of partial interests in contracts for land, acquired subsequent to their execution, are not necessary parties to bills for their enforcement. The original parties on one side are not to be mixed up in controversies between the parties on the other side, in which they have no concern. If the entire contract had been assigned to the brother, so that he had become sub- stituted in the place of'the complainant, the case would have been different. In that event, the brother might have filed the bill, and insisted upon being treated as represent- ing the vendee. The general rule is, that the parties to the contract are the only proper parties to the suit for its performance, and, except in the case of an assignment of the entire contract, there must be some special circumstances to authorize a departure from the rule. The court, says Chancellor Cottenham, in Tasher v. Small, 3 Mylne & C. 69, "assumes jurisdiction in cases of specific performance of contracts, because a court of law, giving damages only for the non-performance of the contract, in many cases, does not afford an adequate remedy. But in equity, as well as at law, the contract constitutes the right, and regulates the liabilities of the parties; and the object of both proceedings is to place the party complaining, as nearly as possible, in the same situation as the defend- ant had agreed that he should be placed in. It is obvious, that persons, strangers to the contract, and, therefore, neither entitled to the rights nor subject to the liabilities which arise out of it, are as much strangers to a proceeding to enforce the execution of it as they are to a proceeding to recover damages for the breach of it." When the complainant has received his deed from the defendant, the brother may claim from him a conveyance of an interest in the premises, if he have a valid contract for such interest, and enforce such convey- ance by suit; but that is a matter with which the defendant has no concern. It seems that the draft of the trust deed, to secure the deferred payments, sent to the defendant for examination, was prepared for execution by the complainant alone, and con- tained a stipulation that he might, if he should so elect, pay off the deferred pay- ments at earlier dates than those mentioned in the covenant in the lease; and it is ob- jected to the complainant's right to a specific performance, that the trust deed was not drawn to be executed jointly by him and his brother, and that it contained this stipula- tion. A short answer to this objection is found in tht, fact, that the parties had dis- agreed in relation to the payment to be made, and until the disagreement ceased no deeds were required. It is admitted that the form of the trust deed was not such a one as the defendant was bound to receive, but as it was sent to him for examination, good faith and fair dealing required him to indi- cate in what particulars it was defective, or with which clauses he was dissatisfied. Whether it was the duty of the complainant or defendant to prepare the trust deed, ac- cording to the usage prevailing in Washing- ton, is not entirely clear from the evidence. There is testimony both ways. The true rule, independent of any usage on the sub- ject, would seem to be that the party who is to execute and deliver a deed should pre- pare it. It is, however, immaterial for this case, what rule obtains in Washington. Un- til the purchase-motiey was accepted, there was no occasion to prepare any instrument for execution. So long as that was refused the preparation of a trust deed was a work of supererogation. Besides, the execution of the trust deed by the complainant was to be simultaneous with the execution of a con- veyance by the defendant. The two were to be concurrent acts; and if the complainant was to prepare one of them, the defendant was to prepare the other, and it is not pre- tended that the defendant acted in the mat- ter at all. The objection to the trust deed, founded upon the omission of the name of the com- plainant's brother as a co-grantor, does not merit consideration. All that the defendant had to do was to see that he got a trust deed, as security for the deferred payments, from the party to whom he transferred the title. The defendant states in his testimony that when the lease was executed he objected to the stipulation for a sale of the premises, and that the defendant told him that it should go for nothing. And it has been argued by counsel that this evidence should control the terms of the covenant. The an- swer to the position taken is brief and deci- sive. First, nothing of the kind is averred in the answer; second, the testimony of the defendant in this particular is distinctly contradicted by that of the complainant, and is inconsistent with the attendant circum- stances; and third, the evidence is inadmis- sible. When parties have reduced their con- G40 SPECIFIC PERFORMANCE OF CONTRACTS. tracts to writing, conversations controlling or changing tlieir stipulations are, in the ab- sence of fraud, no more received in a court of equity than in a court of law. Upon a full consideration of the positions of the defendant we perceive none which should preclude the complainant from claim- ing a specific performance of the contract. The only question remaining is, upon what terms shall the decree be made? and upon this we have no doubt. The parties, at the time the proposition to sell, embodied in the covenant of the lease, was made, had reference to the currency then recognized by law as a legal tender, which consisted only of gold and silver coin. It was for a specific number of dollars of that character that the offer to sell was made, and it strikes one at once as inequita- ble to compel a transfer of the property for notes, worth when tendered in the market only a little more than one-half of the stipu- lated price. Such a substitution of notes for coin could not have been in the possible ex- pectation of the parties. Nor is it reasona- ble to suppose, if it had been, that the cove- nant would ever have been inserted in the lease without some provision against the substitution. The complainant must, there- fore, take his decree upon payment of the stipulated price in gold and silver coin. Whilst he seeks equity he must do equity. The decree of the court below will, there- fore, be reversed, and the cause remanded with directions to enter a decree for the ex- ecution, by the defendant to the complainant, of a conveyance of the premises with war- ranty, subject to the yearly ground-rent spec- ified in the covenant in the lease, upon the payment by the latter of the instalments past due, with legal interest thereon, in gold and silver coin of the United States, and upon the execution of a trust deed of the premises to the defendant as security for the payment of the remaining instalments as they respectively become due, with legal interest thereon, in like coin; the amounts to be paid and secured to be stated, and the form of the deeds to be settled, by a mas- ter; the costs to be paid by the complain- ant. The CHIEF JUSTICE, with NELSON, J., concurred in the conclusion as above an- nounced, — that the complainant was entitled to specific performance on payment of the price of the land in gold and silver coin,— but expressed their inability to yield their assent to the argument by which, in this case, it was supported. SPECIFIC PERFORMANCE OF CONTRACTS. 641 FISH V. LESER et al. (69 111. 394.) Supreme Court of Illinois. Sept. Term. 1873. Appeal from superior court, Cook county; Joseph B. Gary, Judge. This was a bill for specific performance, filed by John Fish against John Leser and Johanna Leser, his wife. The substance of the material facts is given In the opinion of the court. Nissen & Barnum, for appellant. Wilkin- son, Sackett & Bean, for appellees. CRAIG, J. This was a bill, filed in the su- perior court of Cook county, by John Fish, ap- pellant, against John Leser and Johanna Le- ser, appellees, to enforce the specific perform- ance of a contract for the sale of a certain lot In Chicago. Upon the hearing of the case, the court entered a decree dismissing the bill and the complainant prosecuted this appeal. Courts of equity will not always enforce the specific performance of a contract. Such applications are addressed to the sound legal discretion of the court, and the court must be governed, to a great extent, by the facts of each case, as it is presented. A specific performance will not be decreed unless the agreement has been entered into with perfect fairness, and without misappre- hension, misrepresentation or oppression. Frisby v. Ballance, 4 Scam. 287; Underwood V. Hitchcock, 2 Ves. Sr. 279. The contract must be fair, equitable and just, and the com- plainant should be prepared to show that it will not be unjust or oppressive on the de- fendant to have the contract enforced. Stone V. Pratt, 25 111. 25. We will, then, examine some of the lead- ing facts in this case, and see if the com- plainant has brought himself within the prin- ciples announced, which are necessary in or- der to enable him to obtain the relief he asks, in a court of equity. It appears that the defendants, or one of them, in the fall of 1871, were the owners of the property in question, and had owned and resided upon It for many years. The appel- lees are foreigners by birth with but little education, and are not well acquainted with our language; they transacted but little busi- ness, — indeed, the evidence shows that John Leser has, for several years, been scarcely competent to transact any business; they can write, but are unable to read our writing. The house In which they resided, on the property In question, together with other property on the same street, was destroyed by the fire of October 9, 1871. Previous to the fire their property was not desirable, and could not readily be sold in the market, on account of the bad repute of other houses on the same street. The fire, however, removed this objection to the street, and property immediately began to advance. Farwell & Co. commenced to build on the same street, HUTCH.& BUNK.EQ.-41 on the next block west, which also caused property to advEince. These facts were un- known to the Lesers, but were well known to enterprising business men. Under these circumstances, the Lesers, soon after the fire, were sought out by one John P. White, a real estate agent in the city, who desired to get an agency to sell their property. This property, at the time of the sale, as near as we are able to judge from the evi- dence, was worth $30,000— some of appellees' witnesses place It as high as $35,000, while appellant's witnesses fix its value at $21,000 to $22,000. Burt, who owned the east half of the same lot, testifies he fixed the price of his lot at $30,000, but withdrew it from market, and would not sell at that price, and his opinion Is this lot is worth that amount. White had several interviews vsrith the Lesers. He wanted to act as their agent; advised them to sell; claimed that property would depreciate rather than increase in value. He never informed them that Far- well & Co., and others, were buying and pre- paring to build in that neighborhood,— a fact that was well known to business men. Johanna Leser, in her evidence, says: "White came again; said he had a man to buy the lot, and he would give $20,000, and we told him we wonld not sell for that; he said It would not be worth more in ten years. My husband said, if you give me $21,000 I will sell to you. This he refused. White told me to coax my husband to take $20,000. I told him I would not. He then said, well, I will not take another step to- wards selling your lot, and before spring you will offer it to me for $18,000." L">uring this time appellant was frequently at White's office, ana he and White were negotiating on the lot. White, in his testimony, says, they had given him verbal authority to sell the lot; that, after having several interviews, he called on them with an offer from appellant of $20,000 cash for the property. This they did not decide to take, but the next day he called again to see if they would accept the offer he had made them for appellant. He prepared and took with him a paper for them to execute, authorizing him to sell the lot. After discussing the matter some time, they would not accept appellant's offer, but they made this proposition: they would take $16,- 000 cash, and the purchaser assume and pay a mortgage of $5,000 that was on the lot, and pay commissions to White; he informed them he did not believe appellant would give that, but he would make him the offer. The next day, which was November 1st, White called on John Leser, where he and his two sons were at work, and obtained his signature to a paper, which turned out to be authority to sell the lot, which reads as follows: 'Chicago, Oct. 31, 1871. "John P. White, real estate agent. In consideration of one dollar, by us received. U42 SPECIFIC PERFORMANCE OF CONTEACTS. we hereby authorize you to sell our lot, be- ing the west half of lot 7, in block 94, in the school section addition to Chicago, for the sum of twenty one thousand dollars ($21,- 000) net; you to hare all over that amount you can get, for your commissions for sruch sale. The terms- of payment we require is all cash, except the assumption of a mort- gage of $5,000 by the buyer, now upon said lot; we to furnish abstract showing title good in us, subject to the said $5,000 mort- gage. This proposition good for ten days from date hereof. "Yours, etc., "John Leser. [Seal.] "Johanna Leser. [Seal.]" White testifies that the paper was read to Leser, and he and his two sons understood what it was. But in this he is contradict- ed by Leser and his two sons. They swear a portion of it was read in a low tone, but none of them imderstood it. They did not know that Leser was giving any authority to White to sell the lot; supposed It was a writing that Leser would wait ten days be- fore making a sale, but did not know it was anything further. White then carried the paper to Johanna Leser, and she, as she testifies, saw her hus- band had signed it, and not knowing what it was, also executed the paper. On November 8th White sold the property to appellant, by written contract, as follows: "Chicago, Nov. 8, 1871. "Received of John Fish five hundred dol- lars ($500) to apply as a payment on the fol- lowing described real estate, this day bar- gained and sold to the said Fish, to wit: the west half of lot seven (7), In block ninety-four <94), in the school section addition to Chicago, sold at and for the price or sum of twenty- one thousand dollars ($21,000), upon the fol- lowing terms of payment, to wit: the said Fish is to assume and pay a certain mortgage of five thousand ($5,000) dollars, which is now upon said property, with interest from date hereof, according to its tenor and effect, and the remainder of the purchase money, to wit: fifteen thousand five hundred ($15,500) ■dollars, as soon hereafter as we deliver him & good and sufficient deed of conveyance to the said described real estate, with release of dower, free and clear of aU liens or incum- brances, except the above mentioned $5,000 mortgage, which the said Fish assumes; we to furnish an abstract showing title good in us, said abstract to be delivered within ten days from date hereof, and the said deed to be delivered within thirty days from date hereof. "Witness our hand and seals this day and date first above written. "John Leser, [Seal.] "Johanna Leser. [Seal.] "By John P. White, Their Agent "John Fish." When appellees were notified of the con- tract, they refused to ratify it. Can it be said that this contract, which appellant is seeking to enforce, has been en- tered into with fairness, and without misap- prehension? Important facts were artfully concealed from the Lesers by one who claim- ed to be their agent, and if they had been known, it cannot be pretended the authority would have been given to sell. The fact is apparent, the Lesers, who were weak-minded and unacquainted with busi- ness,— terror-stricken with the great fire which, in a moment, swept away the home they had occupied for years, — were overreach- ed by a shrewd real estate dealer, who acted in the interest of another, under the guise of a friend and agent of them. The contract can neither be said to be fair, equitable, or just. To take from them prop- erty worth $30,000 for $21,000, when consid- ered in connection with the other facts dis- closed by this record, is an outrage that a court of equity cannot for a moment tolerate or sanction. There is, however, another principle which, when applied, to this case, forbids a court of equity from decreeing a specific perform- ance of this contract. An agent employed to sell, cannot himself become the purchaser; or an agent employed to buy, cannot be the seller. And, upon the same principle, it is held that a contract made by one who acts as the agent of both parties may be avoided by either principal. Story, Ag. § 211. Before this written authority to sell was given. White came to the Lesers with a prop- osition from appellant of $20,000, and urged them to accept it. His commissions were to come from appellant. As soon as he ex- ecutes the contract of sale, he goes with ap- pellant to the recorder's office and has it placed on record. Under his counsel and ad- vice, appellant makes a tender of the pur- chase money. He takes appellant to an at- torney for advice, and introduces him; nor does he stop at this. He offers to pay appel- lees' counsel their fees, not to exceed $1,000, if, upon an examination of the papers, they should advise and effect a ratification of the contract by appellees. These facts tend to show that this agent was employed to buy as well as to sell. Ap- pellees had bargained for the skill and labor of White, their agent, and had a right to ex- pect and demand his undivided services In their behalf and for their Interest. This they have not secured, and a court of chan- cery will not lend its aid to enforce a con- tract which. In equity, is regarded as con- structively fraudulent. Other questions have been discussed by the counsel on each side of this case, but, in the view we have taken of the case, it becomes unnecessary to decide them. The decree of the superior court will be affirmed. Decree affirmed. SPECIFIC PERFORMANCE OF CONTRACTS. 643 STONE V. PRATT. (25 111. 16.) Supreme Court of Illinois. April Term, 1860. Appeal from the superior court of Chicago. This was a bill of chancery, filed by Hora- tio O. Stone against Jeremiah H. Pratt and Amos Pratt. The bill charges, in substance, that, in 1849, one Calvin D'Wolf was the owner in fee of the north fifteen acres of the W. %, S. W. qr., see. 34, T. 39 N., R. 14 E., in Cook comity. 111., and that, in May, 1852, by subsequent sales and conveyances, Amos Pratt acquired the title to said land; that on September 28, 1852, Amos Pratt, by an agreement in writing, sold the same, with other lands, to Clement H. D'Wolf for the sum of $4,050, of which sum $100 was paid in hand, and said D'Wolf agreed to pay the balance, as follows: $600 in one year, $670 in two years, $670 in three years, $670 in four years, $670 in fi^ve years, and $670 in six years from the date of the agreement, and to pay all assessments and taxes on the land. The agreement provided that, up- on the performance on the part of the pur- chaser, Pratt should make and deliver to D'Wolf a quitclaim deed for the premises, with covenant of warranty as to the acts of Pratt only, and also provided for a forfei- ture of the agreement, at the election of Pratt, in case of default of any of the pay- ments, in which event D'Wolf was to be treated as tenant of Pratt. The bill then charges that on September 23, 1853, Amos Pratt purchased certain oth- er lands of one Warren Parker, for the sum of $8,000, payable as follows: $2,666.66 on October 10, 1853, the like sum on September 23, 1854, and the same sum on September 23, 1855; that, to secure the payment of the first installment, he assigned to Parker his agreement with D'Wolf, before stated, and the same, with hia written agreement with Parker, was deposited with Brown & Hurd, to be held by them till Pratt's first install- ment became due; and If Pratt paid the same when due, the papers were to be re- turned to him, otherwise to be delivered to Parker, who was to have the right to sell at public sale the agreement between Pratt and D'Wolf, and retain out of the proceeds $1,000 as liquidated damages for Pratt's de- fault; that Pratt failed to pay Parker the first installment, and that he, on January 24, 1854, sold said agreement at public auc- tion, having first given due notice of the sale, and that complainant became the purchaser of the same for the sum of $1,000. The complainant insisted that by said pur- chase he became the owner of all Pratt's right, title, and interest in the land, and the said agreement with D'Wolf, with power to enforce the same, and that if Pratt had any interest in the land, he held only a naked legal title as trustee for the complainant. The bill then charged that on January 15, 1853, the complainant bought of Clement H. D'Wolf the said fifteen acres of land for $4,225 to be paid in the manner following: $275 cash; $600 on September 28, 1853, and $670 on September 28th in each of the years 1854, 1855, 1856, 1857, and 1858; that the contract gave complainant the right to make all the payments, except the first, to Amos Pratt, upon his agreement with D'Wolf, and that, upon payment in either way D'Wolf was to convey the fifteen acres to complain- ant; that after the purchase, by complain- ant, of the agreement between Amos Pratt and D'Wolf, the latter made a deed of the land to complainant, and the agreement be- tween the complainant and D'Wolf was can- celed; that complainant had requested Pratt to execute to him a deed for said fifteen acres of land, which he refused to do, and that the complainant had been informed that he had conveyed the premises to Jeremiah H. Pratt, his brother, and that the deed to him was mthout consideration, and made to defraud the complainant, and that Jere- miah H. Pratt had full notice of the rights and equities of complainant; that complain- ant had demanded a conveyance also from said Jeremiah H. Pratt, but that he refused to make it, and claimed to own the land. The bill prayed for a decree compelling the Pratts to release and quitclaim the fif- teen acre tract to the complainant, and for general relief. Jeremiah H. Pratt answered the bill, and also filed a cross-bill, making Clement H. D'Wolf a party, praying for the cancellation of the agreement between Amos Pratt and D'Wolf as rescinded for nonpayment of the purchase money. The complainant answered the cross-bill, and replications were filed to the several an- swers. The original bill was taken as con- fessed as to Amos Pratt. The cause was heard by the court upon the pleadings and proofs, and a decree entered, dismissing the original bill. Scates, McAllister & Jewett, for appellant. S. W. Randall and Snapp & Cone, for ap- pellees. CATON, C. J. On the 23d of September, 1852, A. Pratt by Indenture, agreed to sell, and convey to D'Wolf, or his assigns, several par- cels of land for the gross sum of four thousand and fifty dollars, all on time except one hun- dred dollars; and D'Wolf, by the same instru- ment, agreed to pay the purchase money as therein stipulated. On the 23d of September, 1853, Pratt agreed that certain covenants with one Parker should be performed on the 10th of October. 1853, and, upon his failure to do so, was to forfeit and pay the sum of one thousand dollars as stipulated damages, to secure which he de- posited with Brown & Hurd the obligation of D'Wolf to pay him the purchase money, and they were authorized to deliver it to Parker, in case Pratt failed to perform or to 644 SPECIFIC PERFORMAJSICE OF CONTRACTS. pay the thousand dollars. And Parker was authorized to sell this contract of D'Wolf, in open market, and thus raise the money with which to pay himself the thousand dollars. Before the 11th of October, 1853, Pratt, alleging that he had been defrauded by Parker, forbade Brown & Hurd delivering the contract, which had been deposited with them, to Parker. On the 15th of January, 1853, Stone purchased of D'Wolf fifteen acres, part of the premises which Pratt had sold and agreed to convey to D'Wolf. Brown & Hurd delivered the contract which Pratt had left with them, as above stated, to Parker, who, on the 28th of January, 1854, sold it in pursuance of his original contract with Pratt, and Stone became the purchaser for one thousand dollars, which was just suffi- cient to pay the forfeiture provided for in the contract between Pratt and Parker. Stone, insisting that by the purchase of the contract, he was entitled to recover the mon- ey due thereon in place of Pratt, and that Pratt was thereby in effect fully paid the purchase money for which he had agreed to convey the premises sold to D'Wolf, filed this bill to compel Pratt to convey to him the fif- teen acres, which he had purchased of D'Wolf, parcel of that which D'Wolf had bought of Pratt. With the view we take of the case, it is unnecessary to advert to the sale of the premises by A. Pratt to J. H. Pratt. It is a well settled rule of law, that an entire contract cannot be divided so as to compel a party to perform it in parcels, ei- ther to different persons or at different times. When D'Wolf sold a part of the premises to Stone, he could not thereby impose the legal obligation upon Pratt to convey that portion to Stone, and the balance to himself. That would be making it in fact two contracts in- stead of one. It was asking him to make satisfaction of two instead of one. In case of disagreement it exposed him to two prose- cutions instead of one, and required him to make two deeds instead of one. This is a hardship which the common law will never allow to be imposed upon a promisor or an obligor. Nor is this principle of the common law ignored by courts of equity, although in exceptional cases they will overlook it, where it is necessary to protect the rights of an innocent, fair, and bona fide purchaser against a contemplated fraud. This is a bill for the specific performance of an agreement by one who at law has no claims whatever upon the defendant, at least in his own name. Such a bill is always ad- dressed to the sound discretion of the court, which must be governed by the circumstan- ces of each case as it is presented. In the case of Lear v. Chouteau, 23 111. 39, this court said: "In order to induce a court of equity to enforce specifically a contract, it must be founded on a good consideration, it must be reasonable, fair and just. If its terms are such as our sense of justice revolts at, this court will not enforce it, though admitted to be binding at law." It may be added that the complainant must show no oppression or unconscionable advantage, when he comes in- to a court of conscience asking for a remedy beyond the letter of his strict rights. He must not ask for a favor beyond his technical legal rights when he bases his claim to that favor upon a hard, oppressive, technical ad- vantage. He must stand before the court prepared to meet its scrutiny without a blush, relying upon the advocacy of a well regulated conscience in his favor. Such must not only be his own position, but he must show that it is not unjust or oppressive to the defendant, to compel him to perform specifically. Let us then examine for a moment the posi- tion of these parties respectively. Waiving the question of the division of the contract, the complainant, before he could call on the defendant to convey to him this land, was obliged to satisfy an obligation which secured to the defendant about four thousand dollars. He attempts to do this, not by paying him or any one else having a right to receive the money, the actual amount due, or to become due, on the contract, but he purchases the contract at a forced sale for one thousand dollars. This is the extent of his merit. The defendant, by his contract with D'Wolf, was entitled to receive about the sum of four thousand dollars, before he could be asked, even by D'Wolf himself, to convey any por- tion of the premises. Now, what has he real- ized for this four thousand dollars' worth of land? Absolutely nothing. His claim, or right to receive the money, was sold (and up- on the validity or effect of that sale we pass no opinion) to pay a forfeit. Nothing more, — nothing for which he had received value. Now all of this may have been a strictly le- gal transaction. The defendant, by his own folly, may have frittered away his legal right to this money or to the land, but it is not such a transaction as should induce a court of equity to throw down the legal barriers which surround the defendant, and compel him to do more for the ease and benefit of the complainant than the strict rules of law will give him. Equity will never give the pound of flesh, although it Is in the bond, but will leave the law to give its value only. We shall not compel the defendant to recog- nize a dividing up of his obligations under this contract, but shall allow him, without regret, to insist upon his legal rights. The decree of the court below is affirmed. Decree affirmed. SPECIFIC PERFORMANCE OF CONTRACTS. 645 !>■ / THOMPSON V. WINTER. ^43 N. W. 796, 42 Mien. 121.) 'Supreme Court of Minnesota. Nov. 30, 1880. Appeal from district court, Redwood coun- ty; Webber, Judge. John H. Bowers, for appellant /. M. Thompson, for respondent. GiLFiiiLAN, C. J. This is an action to compel speciflc performance of a contract in the nature of one to convey real estate. The defendant had purchased the land from the state, paying 15 per cent, of the purchase price, and receiving certificates of purchase. February 1, 1886, these parties entered into a contract In writing, whereby defendant agreed that, upon full performance on the part of the plaintiff, he would transfer by deed of assignment the said land certificates. Plaintiff was to pay therefor $590, accord- ing to two promissory notes, — one for $190, due October 1, 1886, with interest at IX) per cent., and one for $400, due two years from February 1, 1886, with interest at 8 per cent., — and pay all taxes and assessments, and the unpaid purchase money to the state. The plaintiff fully performed this contract on his part. In March, 1886, the parties made an oral agreement, by wliich defendant agreed to make certain improvements for the plain- tiff on the land, by breaking, erecting build- ings, and digging a well, for which plaintiff agreed to pay him the cost thereof, with in- terest; such payment not to be made before the expiration of five years from the time of making the improvements' Afterwards, pur- suant to such agreement, defendant made such improvements to the amount of $500, no part of which has been paid. The plain- tiff was insolvent. On these facts the court below denied speciflc performance. From the memorandum filed by the court below it appears that the speciflc perform- ance was refused, in the exercise of what the court deemed its discretionary power, the reasons for so exercising that power being stated; that plaintiff has become insolvent; tliat the value of the improvements is equal to the purchase price; and that plaintiff can be compensated in damages. The mere fact that a person has a contract for the convey- ance to him of real estate does not entitle him, as of right, to the interposition of a court of equity to enforce it. The matter of compelling specific performance is one of sound and reasonable discretion,— of judi- cial, not arbitrary and capricious, discretion. There must be some reason, founded in equity and good conscience, for refusing the relief. Such reason has been generally found, by the court refusing it, in some mistake or fraud or unconscionableness in the contract, or in some laches on the part of the plaintiff changing the circumstances so as to make it inequitable to compel a conveyance, or where the claim is stale, or there is reason to be- lieve it was abandoned. But, whatever the reason may be, it must have some reference to, some connection with, the contract itself, or the duties of the parties in relation to it. We have never found a case where the court refused the relief as a means of enforcing some independent claim of the defendant against the plaintiff, nor because the defend- ant had some iniiependent claim which he might not be able to enforce against the plaintiff. If such could be regarded as an equitable reason for denying relief, every ac- tion of the kind might involve the investiga- tion of all unclosed transactions between the parties, whether relating to the contract or subject-matter of the action, or entirely dis- tinct from it. In this case there is no reason to suppose the contract other than a fair one. The plaintiff has been prompt in performing on his part, and in seeking his remedy. The defendant has a claim against plaintiff, en- tirely independent of the contract to convey, which claim, by the terms of the agreement under which it arose, was not to become due for more than three years after the time when he was to convey. The possibility that when it becomes due he may not be able to enforce it, by reason that plaintiff's in- solvency may continue, does not make it in- equitable to enforce this contract already matured. That a purchaser may have an adequate remedy by action for damages, al- though a reason for not holding what he has done to be part performance to take the case out of the operation of the statute of frauds, is of itself no reason for withholding the proper remedy, where the contract is valid under the statute. The order is reversed, and the court below will enter judgment on the findings of fact in favor of plaintiff for the relief demanded in the complaint. 64€ SPECIFIC PERFORMANCE OF CONTRACTS. V FALCKE V. GRAY. (4 Drew. 651.) High Court of Chancery. 1859. In this case the bill was filed for a specific performance of a contract entered into be- tween the plaintiff, Mr. Falcke, and Mrs. Gray, one of the defendants, by which Mrs. Gray had agi-eed that, at the expiration of a six-months lease to the plaintiff of her fur- nislied house, he should have the optionj)f purchasing two china"^ jars at the price of £40. ^ — ~ In January, 1859, the plaintiff, being de- sirous of finding a furnished house, applied to Mrs. Gray, who was willing to let hers, and, on looking over it, he observed the two jars, the subject of the suit. He had for twenty-five years carried on the business of a dealer in curiosities, china, etc., and was eminent in his trade, and was well acquaint- ed with the prices which articles of this kind would fetch. Shortly afterwards he had an interview with Mrs. Gray at her house; and Mr. Brend, from the office of Boyle & Bryden, estate and house agents, who were Mrs. Gray's agents in the matter, attended to advise Mrs. Gray. A discussion arose as to the terms of letting, and ultimately a rent of seven guineas i>er weeli was agreed upon, with an option to the plaintiff that he should, at the end of the term, be at liberty to purchase certain arti- cles of fm-niture at a valuation, to be inserted in the agreement, including the two china jars, which were valued at £40. With regard to the valuation of these jars at £40, it appeared from the evidence that Mr. Brend told Mrs. Gray that he did not know the value of the jars, but he should think they were worth £20 apiece; and the agree- ment was drawn up, putting the value of £40 on the jars, and was signed by Mrs. Gray and the plaintiff. On the 26th of January the plaintiff went to the house while his agent was taking the inventory, and then the jars had been removed; and on the same day Mrs. Gray came to Mr. Falcke's house, and inform- ed him of the removal of the jars. During the interval between the 19th and the 26th of January Mrs. Gray, having begun to doubt whether the price placed on the jars was fair, was advised that it would be as well to take the opinion of Mr. Watson, also a dealer in curiosities; and, on the 26th, she accord- ingly w-ent to Mr. Watson, and desired him to come in the evening to value the jars. This he did; and on seeing the jars he was so much struck with their beauty, etc., that he offered Mrs. Gray his check for £200 for them at once. Mrs. Gray then asked Mr. Watson if he thought she would be doing any- thing wrong in so selling them, and he told her it was all right; and she then took his check and Mr. Watson took away the jars. Mr. Watson was made a defendant to the bill. The plaintiff now insisted that he was en- titled to a decree for specific performance against Mrs. Gray, and to delivery of the jars as against Mr. Watson; and on that part of the case the question was whether the transaction was a bona fl^e one on the part of Watson, or whether he knew of the con- tract between Mrs. Gray and the plaintiff. The defendant insisted that it was a contract for chattels, and could not be enforced. The evidence as to the actual value of the vases was conflicting, but, putting it at the lowest, it greatly exceeded £40. Mr. Baily and Mr. Waller, for plaintiff. Mr. Glasse and Jones Bateman, for Mrs. Gray. Mr. Greene and Mr. Speed, for Mr. Watson. THE VICE CHANCELLOR (after stating the facts above stated). The first ground of defense is that, this being a bill for the spe- cific performance of a contract for the pur- chase of chattels, this court will not interfere; but I am of opinion that the court will not refuse to interfere simply because tlie con- tract relates to chattels, and that if there were no other objection the contract in this case Is such a contract as the court would specifically perform. What is the difference in the view of the court between realty and personalty in respect to the question whether the court will inter- fere or not? Upon what principle does the court decree specific performance of any eon- tract whatever? Lord Redesdale in Harnett V. Yeilding, 2 Schoales & L. 549, says: "Whether courts of equity in their determina- tions on this subject have always considered what was the original foundation for decrees of this nature, I very much doubt. I believe that, from something of habit, decrees of this kind have been carried to an extent which has tended to injustice. XJnqliestionably the original foundation of these decrees was sim- ply this, that damages at law would not give the party the compensation to which he was entitled; that is, would not put him in a sit- uation as beneficial to him as If the agree; ment were specifically performed." So that the principle on which a court of equity pro- ceeds is this: "A court of law gives damages for the nonperformance, but a court of equity says, "that is not sufficient, — justice is not satisfied by that remedy"; and therefore a court of equity will decree specific perform- ance, because a mere compensation in dam- ages is not a sufficient remedy and satisfac- tion for the loss of the performance of the contract Now why should that principle apply less to chattels? If in a contract for chattels damages will be a sufficient compensation, the party is left to that remedy. Thus if a contract is for the purchase of a certain quan- tity of coals, stock, etc., this court will not decree specific performance, because a person, can go into the market and buy similar arti- cles, and get damages for any difference in the price of the articles In a court of law; SPECIFIC PERFORMANCE OP CONTRACTS. 647 iDUt, If damages would not be a sufficient com- pensation, the principle on wliicli a court of equity decrees specific performance is just as applicable to a contract for the sale and pur- chase of chattels as to a contract for the sale and purchase of land. In the present case the contract is for the purchase of articles of unusual beauty, rari- ty, and distinction, so that damages would not be an adequate compensation for non- performance; and I am of opinion that a contract for articles of such a description is such a contract as this court will enforce; and, in the absence of all other objection, I should have no hesitation in decreeing spe- cific performance. The next ground of defense is that the contract in the present case is a hard bar- gain between the plaintifE and Mrs. Gray; and it is insisted that the inadequacy in price is so great that on that ground the court will not decree specific performance. Now the price put on these jars was £40. What was their actual value? Certainly to talk of their value is to talk of something which is very artificial and fluctuating, de- pending upon the taste and caprice of the community; but still the jars derive their value from their beauty, distinction, and rarity, and those qualities give them a sell- ing value. They have a value in the mar- ket. According to the plaintiff's own state- ment their value would be £100, or, if be- tween persons not brokers, £125; and it is the interest of the plaintiff to represent their value as low as possible. A better test of their value is what Mr. Watson has given for them; and I think I may assume that £200 at least would be a fair price, though I cannot help thinking that their real value rather exceeded than fell short of that sum; but, taking £200 as the fair value, the price placed on the jars by Mr. Brend was only one-fifth of their selling value. That this was a hard bargain in the sense of its be- ing for a very inadequate price there can be no doubt; and the defendant insists that, on this ground, the court will not enforce spe- cific performance. On the other hand, the plaintiff insists that, although it is true that in hard bar- gains, using the terms in one sense, the court will not decree specific performance, still that that does not apply to cases of mere inadequacy of price; and this is the question I have now to consider. The general rule with regard to hard bar- gains is that the court will not decree spe- cific performance, because specific perform- ance is in the discretion of the court for the advancement of justice; such discretion, indeed, to be exercised, not according to ca- price, but on strict principles of justice and equity. In the case of White v. Damon, 7 Ves. 30, Lord Eldon says: "I agree with Lord Rosslyn that giving a specific perform- ance is matter of discretion, but it is not an arbitrary, capricious discretion. It must be regulated upon grounds that will make it judicial." The principle upon which the court acts with respect to hard bargains ap- pears to me to have been truly expressed by Lord Langdale in the case of Wedgwood v. Adams, 6 Beav. 600; and the passage in which he enunciates the principle has been quoted with approbation by Lord Justice Turner in Watson v. Marston, 4 De Gex, M. & G. 239. Lord Langdale in Wedgwood v. Adams says that the court exercises its dis- cretion and decrees specific performance un- less it would be highly unreasonable to do so, and that what is more or less unreason- able cannot well be defined. It must depend on the circumstances of each particular case. As it Is admitted by the plaintifE that in cases of hard bargains generally the court will not interfere, it is not necessary to go into any of the cases on the subject other than those which turn more or less on in- adequacy of price; and here I may observe that in some cases the court has refused specific performance on the ground of the hardness of the bargain, where there has been not the least impropriety of conduct on the part of the person seeking specific per- formance. In most of the cases there has been some other ingredient besides mere in- adequacy of price, but I will refer to those in which I find the opinion of the judges express on that particular point. - 1 In Young v. Clerk, Prec. in Chan. 538, the defendant agreed to grant a lease of certain lands to the plaintiff for fom'teen years at a rent of £40. The plaintiff had already beea lessee of the same lands for many years,, and knew that the value of the lands was not £40, but £167, and in that case specific- performance was refused; but there was im that case the circumstance that the defend- ant, having recently come into possession of the land, came to look at it, and stayed at the plaintiff's house, and desired to see the plaintiff's underleases, in order to ascertain what the plaintiff had realized from the property. The plaintiff evaded showing him the underleases, and the defendant remained in ignorance of the true value of the land. If the bill had been to set aside the con- tract, it would not have succeeded. Lord Thurlow said: "I must take it to be the law that if a man contracts to purchase an estate for a certain price, and the intending purchaser knows at the time that there are mines under the estate of which the vendor is ignorant, still, as this court is not a court of honor, the court will not set aside the contract on a bill by the vendor; but no- body can doubt that the court would not decree specific performance of such a con- tract, and there is a wide distinction between a case in which the court would, on the one hand, decree specific performance of an in- complete contract, and, on the other, set aside a complete contract." And in giving judgment the lord chancellor said that this court was not bound to decree a specific exe- 648 SPECIFIC PERFORMANCE OF CONTRACTS. cutlon of articles where they appeared to be unreasonable or founded on a fraud, or where it would be unconscionable to assist them. The next case is Kien v. Stulieley, 1 Brown, Pari. Cas. 191; Gilb. 155, which was a bill in the equity side of the court of exchequer by the vendor for the specific performance of an agreement for the purchase of land, for which the purchaser had agreed to pay forty years' value. It was proved in the case that the plaintiff bad left his deed with the de- fendant, and that there were no objections to the title; but a decree was made for spe- cific performance. On appeal, the house of lords entertained great doubt whether such a bargain should be carried out by a court of eq'i'ty. but they came to no decision on that point The next case is Southwell v. Nicholas, re- ported in a note to Howell v. George, 1 Mad. 9. In this case the plaintiff's father and the defendant Nicholas' brother, having some houses in Spring Gardens, agreed to purchase two old houses and pull them down to make an entrance into Spring Gardens. The houses were pulled down, and the plaintifiE's father paid his share of the purchase money. The defendant's brother died, and his estates were sold for the payment of his debts. On a bill by the plaintiff for the specific per- formance of the agreement as to the two houses, it was contended by the defendant that there should be no specific performance, as his brother's estates had been sold, and there would be no consideration accruing to him for the expense he would be at. The master of the rolls was inclined to decree that the parties should pay for the two houses in proportion to the value of their houses to be benefited, but the matter was compromis- ed by parties agreeing that the plaintiff should pay two-thirds and the defendant one- third for the two houses. The next case Is Vaughan v. Thomas, 1 Brown, C. C. 556. In this case the defend- ant agreed with the plaintiff for the sale to him of an annuity of £300 a year for the defendant's life,' at five years' purchase. The defendant then represented himself as being only fifty-five of age, and the plaintiff Insured the defendant's life on that footing; but two years afterwards he discovered that the de- fendant was sixty-one years of age at the time of granting the annuity, and the plain- tiff was obliged in consequence to increase the insurance. Upon his representing this to the defendant, it was agreed that the plain- tiff should grant to the defendant an addi- tional annuity, which was expressed to be granted for £250, but in fact no money was paid on that occasion. In December, 1779, the defendant applied to the plaintiff to re- purchase the annuity, and an agreement was entered into by them by which the plaintiff agreed to give up the annuity on payment of £1,500, the original purchase money, and all arrears then due, deducting the sum of £200, the amount for four years of the addi- tional annuity of £50. The arrears then due were £475, so that the sum settled for the repurchase was £1,775. After the agreement had been signed the plaintiff struck out his name, and two days after another agreement was prepared, whereby the plaintiff relin- quished the annuity and all arrears for £2,000. The plaintiff filed a bill for the specific per- formance of this agreement. It was referred to the master to find the value of the original and additional annuity and the defendant's age. The master found that the annuity was worth nine years' purchase when it was granted. The plaintiff contended that the bargain was fair, and that he was entitled to the assistance of the court to carry it into execution; but the master of the rolls was of opinion that if they assisted the plaintiff they would be sanctioning a very unconscien- tious bargain, and that the plaintiff was not entitled to the aid of the court. The bill was therefore dismissed. In the case of Heathcote v. Paignon, 2 Brown, 167, there was nothing but inade- quacy of price, and the master of the rolls referred it to the master to report on the actual value. The master found a value of £500, for which only £200 had been given, and the court refused specific performance. On appeal, this decision was aflirmed by Loi'd Thurlow, and the contract was set aside as being unjust. The next case 1 shall mention is Day v. Newman, 2 Cox, 77. In that case the court refused to decree specific performance, but left the parties to their remedies at law on the ground of Inadequacy in price. That case appears to me to be a distinct decision on the question. White V. Damon, 7 Ves. 30, was a case of a purchase at an auction; yet Lord Rosslyn, on the simple ground of inadequacy in price, refused specific performance. This case therefore shows that inadequacy in price is a suflicient ground for refusing specific per- formance. Lord Eldon took a different view, but it was on the ground that the sale was by auction. Now these two last-mentioned cases ap- pear to me to be decisive on the point; and I am of opinion that in the present case I ought to refuse specific performance on the mere ground of inadequacy of price, even if there were none other. But there is another circumstance in this case besides mere inadequacy. What was the nature of the transaction? It was not the case of a bargain between seller and buy- er, the one trying to get the highest, and the other to give the lowest, price. The intention of the parties was that a fair and reasonable price should be placed on the articles, and that the plaintiff should have the option of purchasing at such fair and reasonable price. Mrs. Gray, though she was told by Mr. Brend that he was not a judge of the value, thought that the £40 mentioned by him was SPECIFIC PERFORMANCE OF CONTRACTS. 649 such a fair price as a competent person would place on the jars; and it was upon that foot- ing that she made the agreement. She was not herself a competent judge, though she knew they were of considerable value. Mr. Falcke knew that she was contracting on that footing, and he knew that the price put up- on the jars by Brend was not a fair price. (The vice chancellor, after going through the plaintiff's evidence, from which it appeared that he, knowing that £40 was greatly insuf- ficient, it being only two-fifths of the value, as he said, allowed the contract to be sign- ed on that footing, proceeded:) The question is whether he can come to the court to com- pel Mrs. Gray to sell the jars to him for £40. I admit that this court is not a court of hon- or, but it appears to me that, although Mr. Falcke has done nothing he was legally bound not to do, yet, consistently with the authorities and justice of the case, I must refuse specific performance. It has, however, been contended that Mrs. Gray, having sold the jars to the defendants the Watsons, should not have been made a defendant; but Mrs. Gray has placed herself in such a position that the suit could not go on without her being made a party. The bill, therefore, must be dismissed without costs as against her. With regard to the defendants the Wat- sons, the question is whether they had no- tice, when they purchased from Mrs. Gray, that she had entered into an agreement by virtue of which she could not sell them to another person. Now I cannot help enter- taining some suspicion that the Watsons knew something more than that a mere ques- tion had arisen as to value; but the onus of proving that they had notice lies on the plaintiff, and I think that, although there is some doubt on the evidence, notice to them has not been sufliciently proved. Under all the circumstances, I think the bill, as against the defendants the Watsons, must be dis- missed, with costs. G50 SPECIFIC PERFORMANCE OF CONTRACTS. PAINE V. MELLER. (6 Ves. 349.) Chancery. July 22, 1801. Upon tbe 1st of September, 1796, the plain- tiffs sold to the defendant, by auction, some houses in Ratcliffe Highway, upon the usual terms, a deposit of 251. per cent, and a prop- er conveyance to be executed upon payment of the remainder of the purchase money at Michaelmas next. The premises were with others subject to certain annuities: but a trust of stocli was declared for the payment of these annuities. The first abstract de- livered was clearly defective: so that the purchase could not be completed at that time. A further abstract was delivered to the solicitor for the defendant, at the end of September, or the beginning of October. He insisted upon having a release fi'om the annuitants. The treaty continued through October; and about the end of that month the defendant's solicitor agreed to waive all objections, ii the plaintiff would allow him eleven guineas, and if the trustees of the stock would join in the conveyance; and re- fused a proposal to give up the purchase. The plaintiff agreed to make the allowance desired. On the 4th or 5th of November the defendant's solicitor sent a draft of a con- veyance. The trustees of the stock were pre- vailed upon to join in the conveyance by a new declaration of trust. The draft was re- turned to the defendant's solicitor; the deeds were engrossed; and upon the 16th or 17th of December he declared himself satisfied with the title; and said, the deeds would be ready in two or three days; and that he should complete the purchase under the promise of the eleven guineas. Upon the ISth of December the houses were burnt: the insurance having been suffered to expire at Michaelmas 1796. On the 20th of Decem- ber the defendant's solicitor wrote a letter; observing, that he had taken an objection to the freehold title; and should not have thought anything more of the purchase, but for the covenant of indemnity from the trus- tees, inserted in the draft by him, and ap- proved by one of the trustees of the stock: but as that had been struck out by another trustee, he could not advise his client to ac- cept the title; and he should call for the deposit. The bill was then filed, praying a specific performance of the contract; and a decree was made by the late lord chancellor, simply referring it to the master to see whether a good title could be made. This decree was dissatisfactory to both parties, as not decid- ing the question; and a petition of rehearing was presented by the plaintiff. Mr. Mansfield and Mr. Cox, for plaintiff, Insisted, that the objection to the title from the charge of the annuities was frivolous: there being a fund of stock with a trust de- clared upon It. Mr. Sutton and lur. Lewis, for defendant. — The delay in performing this contract arose from the defect of the title; and the plaintiff ought to have acquainted the de- fendant with the circumstance of the insur- ance expiring. In Stent v. Baylis, 2 P. Wms. 217, referred to in Mortimer v. Capper, 3 Brown, Ch. 156, Sir Joseph Jekyll expresses a clear opinion upon this case. 2 P. Wms. 220. Pope V. Roots, 7 Brown, Oh. 184. Mr. Mansfield, in reply. — All the cases re- ferred to are got rid of by Jackson v. Lever, 3 Brown, Ch. 605. The former cases pro- ceeded upon this fallacy, that the party could not have the thing bought; for chance had decided against him: but he had the chance; and he must take it each way. In the case of a life it might last fifty years, and might drop the next day. But this is not a pur- chase of property depending upon the con- tingency of life, like an annuity. A man pur- chasing a house is to consider with himself, whether he will insure or not. Not a word was said about insurance: therefore notice was not incumbent on the plaintiffs; and there was as much negligence in the defend- ant in not inquiring about that. Such an accident did not occur to either of them. If in the sale of a house nothing is said about insm-ance, it could not enter into the bargain. LORD CHANCELLOR.— The abstract first delivered was undoubtedly imperfect in cer- tain respects. It did not go back further than forty-three years; and there was no specific mention of the property in Ratcliffe Highway in the abstract. There was also the objection upon the annuities. Unques- tionably that abstract was not satisfactory; and the express condition of the sale could not be complied with. Harrington v. Wheel- er, 4 Ves. 686; Seton v. Slade, 7 Ves. 265. Of course the defendant could not be called on to pay his purchase money. Then it was with the vendee to choose to go on with the bargain, or to put an end to the contract. The agent however chose not to put an end to it; and though a circumstance took place at Michaelmas sufficient to put an end to any action of law, the contract was kept alive, at least to the 10th of December. It Is clear, the objection was given up as to the freehold title; and the only difference was as to the indemnity against the annuities, af- fecting these with other premises. I do not consider whether this objection is of form or substance: but leave it to be determined, when it may be necessary, whether the pur- chaser under such circumstances has not a right to insist, that the annuitants shall re- lease the premises; or whether this court will say, under all circumstances the pur- chasers shall take the premises burthened with the annuities, with a great number of others, and seek their indemnity against the trust property and the trustees, if they pre- ferred a personal covenant by the trustees. If in equity these premises belonged to the SPECIFIO PERFORMAiSrCE OF CJONTRACTS. 6.51 vendee, he woulcl have a title to the rents and profits at Michaelmas by relation; and he must pay the purchase money with interest from that time. First, It is said, tbe title was never accepted In fact: 2dly, If not, un- der these circumstances a court of equity will not compel a specific performance. As to the second point, the objection is ground- ed upon two circumstances: 1st, the simple fact of the fire; 2dly, that the premises had been insured prior to the contract; that that fact, and the fact that the insurance ex- pired at Michaehnas 1796, were not disclos- ed; and that the premises afterwards re- mained uncovered by any insurance. The authority of Sir Joseph Jekyll has been men- tioned: but no case has been cited in support of that dictum ; and it is in a degree suggest- ed, not admitted, at the bar, that it may be considered over-ruled by subsequent cases. As to the mere effect of the accident itself no solid objection can be founded upon that simply; for if the party by the contract has become in equity the owner of the premises, they are his to all intents and purposes. See Foster v. Foust, 2 Serg. & R. 11. They are vendible as his, chargeable as his, capable of being incumbered as his; they may be devised as his; they may be assets; and they would descend to his heir. If a man had signed a contract for a house upon that land, which is now appropriated to the Lon- don Docks, and that house was burnt, it would be impossible to say to the purchaser, willing to take the land without the house, because much more valuable on account of this project, that he should not have it. As to the annuity cases and all the others, the true answer has been given; that the party has the thing he bought, though no payment may have been made; for he bought sub- ject to contingency. If it is a real estate, he of course has it. Then as to the non- communication, I cannot say that, in my judgment, forms an objection; for I do not see how I can allow it, unless I say this court warrants to every buyer of a house that the house is insured, and not only in- sured, but to the full extent of the value. The house is bought, not the benefit of any existing policy. However general the prac- tice of insuring from fire is, it is not imiver- sal; and it is yet less general that houses are insured tg their full value, or near it The question, whether instu-ed or not, is with the vendor solely, not with the vendee; unless he proposes something upon that; and makes it matter of conti'act with the vendor, that the vendee shall buy according to that fact, that the house is insured. 1 am there- fore of opinion, that if the agent on behalf of this purchaser did accept this title pre- viously to the destruction of the premises, the vendors are in the situation in which they would have been if the title aild the conveyance were ready at Michaelmas 1796, but by the default of the vendee were not executed, but the title was accepted, and the premises were burnt down on the quarter day. As to the fact, where there has been a great deal of treaty, and a considerable hardship must fall upon one party, if the case is to be put entirely upon the fact, the court must guard against surprise; and I am not sure, even the plaintiff's witnesses accurately understand the nature of the facts they depose to. It is to be observed, they are aU the plaintiff's agents, subject to the influence necessarily belonging to that situation. The case is therefore not suffi- ciently clear upon the fact, and there ought to be some reference to the master or an inquiry before a jury; but that must not be upon the validity of the title; for it is clear, the objection to the freehold title, that it was not old enough, and the other objection, that the purchaser had a right to insist upon a release of the annuities, were waived. The question between them is, whether the par- ties agreed that an indemnity should be giv- en in any form; and if so, in what form. The inquiry must be, whether the title had been accepted by the agent on behalf of the defendant on or before the 18th of December 1796. That inquiry'will miscarry, unless the master, or the jury. If satisfied that there was an acquiescence in the proposal, shall be of opinion, that is an acceptance of the proposal. I should think, a court of law would hold that: but if there is any doubt of It, I would rather refer it to the master to inquire, whether the agent on behalf of the defendant had accepted or acquiesced in the proposal; with a direction, that he should be ijxamined; and they will appre- ciate the credit due to him; and will not forget, that he was bartering for himself for eleven guineas; if that appears. The decree was reversed; and the refer- ence to the master directed accordingly. 652 SPECIFIC PERFOKMANCB OF CONTRACTS. GOULD V. MURCH. (70 Me. 288.) Supreme Judicial Court of Maine. Oct 20, 1879. C. L. Jones, for plaintiff. Walton & Wal- ton, for defendant. LIBBBY, J. The notes in suit, mtli three others, were given in payment for a lot of land on which were a dwelling house and other buildings; and on payment of the notes at maturity, the plaintiff agi'eed to convey the premises to the defendant. The defend- ant was to have possession of the premises till he made default of payment as agreed, and he entered into possession under the agreement. Within a year from that time the buildings were burnt without the fault of either party. The question presented to the court is whether the destruction of the buildings can be set up by the defendant as a defense to the notes. We think it can be. When the owner of a lot of land with build- ings upon it agrees to convey it at a future day on payment of the purchase money by the purchaser, and before payment and con- veyance the buildings are destroyed by fire without the fault of either party, the loss must fall upon the vendor; and if the build- ings formed a material part of the value of the premises, the vendee cannot be com- pelled to take a deed of the land alone, and pay the purchase money; and if he has paid it he may recover It back. Thompson v. Gould, 20 Pick. 134, and cases there cited. Gould V. Thompson, 4 Mete. (Mass.) 234; Wells V. Calnan, 107 Mass. 514. In Thompson v. Gould, the authorities bear- ing upon the question were elaborately ex- amined and considered, and Wilde, J., in the opinion of the court says: "In respect to the loss of personal property, under the like cir- cumstances, the principle of law is perfectly clear and well established by all the author- ities. When there is an agreement for the sale and purchase of goods and chattels, and after the agreement and before the sale is completed the property is destroyed by cas- ualty, the loss must be borne by the vendor; the property remaining vested in him at the time of the destruction. Tarling v. Baxter, 9 Dowl. & B. 276; Hlnde v. Whitehouse, 7 East, .558; Rugg v. Mmett, 11 East, 210. No reason has been given, nor can be given, why the same principle should not be applied to real estate. The principle in no respect de- pends upon the nature and quality of the property, and there can therefore be no dis- tinction between personal and real estate." In Wells V. Calnan the same rule was af- firmed. Gray, J., In the opinion of the court, very clearly and tersely states it as follows: "When property, real or personal, is destroy- ed by fire, the loss falls upon the party who is the owner at the time; and if the owner of a house and land agrees to sell and convey it upon the payment of a certain price which the purchaser agrees to pay, and before full payment the house is destroyed by accidental fire, so that the vendor cannot perform the agreement on his part, he cannot recover or retain any part of the purchase money." The reasons upon which the rule is based are clearly and fully stated In the cases cited, and it is unnecessary to repeat them here. But the use and occupation of the premises by the defendant, from the time the agree- ment for the sale and purchase was made, formed a part of the consideration for the notes; and the plaintiff can recover in this action a sum equal to the value of the use of the premises while the defendant occupied them. Wells v. Calnan, supra. In accordance with the stipulations In the report, the action must stand for trial. APPLETON, C. J., WAI/rON, BARROWS and DANFORTH, JJ., concurred. SYMONDS, J., did not sit. ir' SPECIFIC PERFORMANCE OP CONTRACTS. 653 MARKS et al. v. TICHBNOR.i (4 S. W. 225, 85 Ky. 536.) Court of Appeals of Kentucky. May 5, 1887. Appeal from circuit court, McLean comity. Owen & Ellis and W. B. Noe, for appel- lants. Jep. C. Jonson, for appellee. LEWIS, J. Appellee having sold, and by deed executed October 24, 1884, conveyed, to appellants three tracts of land adjoining, and constituting one farm, instituted an ac- tion to recover judgment on the notes given for the purchase money, and to subject the land to satisfy it. In defense, appellants state that the deed as written does not con- tain the whole contract entered into between the parties, but a portion of it was by mis- take omitted, and that they accepted the deed upon the condition of the execution by appellee of the following writing, which em- braces the omitted part: "I have this day sold to James A. and Samuel C. Marks my farm known as the 'Daniel McParland Farm.' I agree to cover said house, and put two coats of paint on the outside, and deliver the same to said parties by or on the first day of January, 1885. Eleven thousand of the shingles is to be hand-shaved shingles, and the remainder to be cut shingles. I also agree to furnish as much as 200 feet of sheeting if needed on said house; and, if any more is needed, said Marks is to furnish it. T. C. Tichenor." It is further stated that about November 29, 1884, the dwelling-house mentioned was destroyed by fire, in consequence of which appellee never did deliver it, and they there- fore ask that the notes sued on be credited 1 The purchaser under an executory contract for the sale of land is the equitable owner. Burkhart v. Howard (Or.) 12 Pac. 79 ; Gilbert V. Sleeper (Cal.) Id. 172; Alpers v. Knight (Cal.) 8 Pac. 446; Taylor v. Holmes, 14 Fed. 498; Martin v. Carver (Ky.) 1 S. W. 199; Bartle v. Curtis (Iowa) 26 N. W. 73. Any ac- cidental loss accruing between the time of his purchase and the conveyance of the legal title must be borne by him, and he is entitled to all the benefits. Martin v. Carver (Ky.) 1 S. W. 199. by the value of the house, which they aver was $1,000. It is stated in the reply, and not controverted, that, at the time of the sale of the land, it was in the possession of a tenant of appellee, whose term did not ex- pire until January 1, 1885, of which fact appellants were aware, and that time was agreed on in view of such tenancy. In the sale of land it becomes the real property of the vendee from the execution, delivery, and acceptance of the written con- tract. "It is vendible as his, chargeable as his, and capable of being devised or descend- ing as his." Consequently it is a well-estab- lished and reasonable rule that the destruc- tion of buildings thereon by fire, between the time of such contract of sale and the time fixed upon in the contract for the de- livery of possession by the vendor to the vendee, must be the loss of the latter and not of the former. Calhoon v. Belden, 3 Bush, 674. There are only two exceptions to this rule. The first is when, as was the case in Combs v. Fisher, 3 Bibb, 51, there is an express contract to deliver the possession of the land, with the improvements or build- ings thereon, in the same situation as was the case when the sale was made. The second is when, as was in Cornish v. Strut- ton, 8 B. Mon. 586, the building has been destroyed by the culpable negligence of the vendor. There is no allegation or proof that the destruction of the dwelling-house in this case was caused by the negligence of the vendor, or any other person; nor do we think the contract, fairly construed, amounts to an ex- press agreement by the vendor to assume the risk of the destruction of the buildings by fire. The purpose of the supplemental contract executed by appellee was to provide for the repair by him of the house as there- in agreed, and which the evidence shows he did do, but not to insure it against de- struction by fire, or to shift the risk from appellants to himself. He simply covenanted to deliver possession, without any express undertaking to sustain any loss that might arise from the burning of the house. Judgment afiirmed. 05J. SPECIFIC PERFORMANCE OF COXTRACTS. BOSTWICK V. BEACH et al. (12 N. B. 32, 105 N. T. 661.) Court of Appeals of New York. April 26, 1887. Application to modify interlocutory judg- ment. This was an action for specific perform- ance, brought against defendants, as execu- tors, upon a contract for the sale of land, in pursuance of a power in the testator's will. The plaintiff deposited the unpaid por- tions of the purchase money at the time when the conveyance should have been exe- cuted. Upon a former appeal (9 N. E. 41) the interlocutory judgment against the exec- utors was, with some modifications, affirmed, by which the plaintiff's prayer for specific performance was granted, and he was not required to pay interest on the purchase money. The object of this application is to have such interest allowed the executors. Milton A. Fowler, for appellants. O. D. M. Boker, for respondent. RAPALLO, J. When this case was be- fore us on the appeal from the interlocutory judgment, it appeared from the findings that the unpaid portion of the purchase money ($10,500) had been tendered to the executors on the first of March, 1882, and that, on their refusal to accept the same, and deliver the deed, that sum had been deposited by the plaintiff in the First National Bank of Lowville to the credit of the executors, to be paid to them on the delivery of the deed. There was nothing to show that after that deposit the plaintiff had derived any bene- fit from the use of the fund, and presump- tively it had lain idle and unproductive. Therefore the purchaser was not charged with interest on the purchase money. It is now shown, by affidavits, that, short- ly after this deposit, the fund was wholly or in part withdrawn from the bank by the plaintiff, and we are now asked to add to the modifications directed in the opinion a further provision charging the plaintiff with interest on the amount so withdrawn. If the fact had appeared in the case when before us on appeal, this modification would doubt- less have been proper, and even now we might find means to make it, if no other facts were shown on the part of the plain- tiff raising a counter equity. But, in op- position to the application of the defend- ants, the plaintiff presents affidavits showing that during the pendency of this action, in consequence of neglect and mismanagement on the part of the defendants, the ditches on the premises have been allowed to be filled up, the buildings to become dilapidated, the water-works to go to decay, the fences to be destroyed, and the value of the prop- erty to be thus depreciated to an amount ex- ceeding the interest on the unpaid purchase money. If these facts had appeared, they undoubtedly would have influenced our judg- ment in respect to allowing interest tipon the purchase money, or making some other provi- sion for compensating the plaintiff for the dam- ages alleged to have been sustained. Where specific performance is decreed, the court will, so far as possible, place the parties in the same situation they would have been in it the contract had been performed at the tjme agreed upon, and by the application of the rule of courts of equity, by which things which ought to have been done are consider- ed as having been done at the proper time, the vendor is regarded as trustee of the land for the benefit of the purchaser, and liable to account to him for the rents and profits, or for the value of the use and occupation, and the purchaser is treated as trustee of the purchase money unpaid, and charged with interest thereon, unless the purchase money has been appropriated, and no bene- fit has accrued from it to the purchaser. But this is not the only manner which the court has adopted to adjust the equities of the parties. For instance, where the sub- ject of the piu-chase was a leasehold estate in a mill, and the ielay of performance of the contract was attributable to the vendor for his failure to show good r^ght to assign his lease, and dilapidations had occurred, he was charged with the expenses of repairs required to put the mill in tenantable con- dition, and of those which had been incurred for keeping up the machinery until the pur- chaser could prudently take possession. And in Ferguson v. Tadman, 1 Sim'. 530, where the estate had deteriorated in value by rea- son of mismanagement and neglect, during five years which elapsed between the filing of the bill for specific performance and the decree, the amount of the deterioration, with interest, was ascertained, and allowed to the plaintiff out of the purchase money which had been paid into court. In Worrall v. Munn, 38 N. Y. 137, these principles were recognized; and the vendee, having obtained a decree for specific performance, was allow- ed the damages sustained, during the pen- dency of the suit, by deterioration from waste committed by the defendant during the pendency of the suit. If the matter should now be opened for the purpose of letting the defendants in to claim interest on the purchase money, it would be no more than just that the same indulgence should be extended to the plain- tiff, to let him in to prove the damages he claims by reason of deteriorations caused by mismanagement and neglect. These points appear to be the only ones as to which the parties have been unable to agree, in settling the form of the judgment. From the affi- davits presented, it would seem that the damages claimed by the plaintiff would about equal the interest claimed by the defend- ants; but, if the judgment below i» modified so as to admit the allowance of Interest, it should also be modified so as to admit proof of the damages claimed. If the statements SPECIFIC PERFORMANCE OF CONTRACTS. 655 In the affidavits are correct, justice would apparently be done by leaving the matter as it is, and confining the modifications of the interlocutory judgment to those directed in the original opinion of this court, which ap- pear to be substantially contained in the modified judgment as proposed on the part of the plaihtlfC. The details, however, are subject to settlement in the supreme court. But If the defendants desire to insist upon their claim to be allowed Interest, and to contest the amount of damages resulting from deterioration and mismanagement, the modified judgment should contain provisions referring it to the referee to ascertain what amount of the sum deposited in the bank was withdrawn by the plaintiff, or subject to his control, and for what length of time, and charging him with interest thereon dur- ing that time. The amount of deterioration of the property, by reason of mismanage- ment and neglect, between the first of March, 1882, and the time of plaintiff's ob- taining possession, should also be ascertain- ed and charged, either to the defendants, as executors, or to the 'defendant Emily P. Beach, as the equities may appear. She cer- tainly has no reason to complain of any loss she may sustain through this litigation, as it appears to have been caused by her per- sistent refusal^ to carry out the contract, which, according to the findings of fact, was Intelligently entered into by her, and was a fair contract for the full value of the farm, and was beneficial to all concerned in the estate. By this unjustifiable refusal on her part, all parties have been subjected to dam- age, and there Is no reason why the loss should fall upon the plaintiff, who seems to have been always ready to perform' his part of the contract. It is to be hoped that, upon the principles here indicated, the counsel for the respective parties may be able to agree upon the form of judgment to be entered. Otherwise it may be settled by the supreme court, and the interlocutory judgment may be modified so as to provide for the ascertainment and allowance of the interest claimed by the defendants, and also of the damages claimed by the plaintiff, at the election of the de- fendants. If the defendant shall not con- sent to have the damages ascertained and allowed, the application for the allowance of interest is denied. (All concur.) 656 SPECIFIC PERFORMANCE OF CONTRACTS. LEWIS V. HAWKINS et al. (23 Wall. 119, 23 L. Ed. 113.) Supreme Court of the United States. Oct. 1874. Appeal from the Circuit Court for the AVestern District of Arkansas. A. H. Garland, for appellant Pike & John^ son, for the widow. SWATNE, Justice. Upon the execution of the notes and the title-bond between Lewis aud Hawkins, Lewis held the legal title as trustee for Hawkins; and Hawldns was a trustee for Lewis as to the purchase-money. Hawkins was cestui que trust as to the for- mer and Lewis as to the latter. 1 Story, Eq. Jur. § 789; 2 Story, Eq. Jur. § 1212; 1 Sugd. "Vend. 175; Swartwout v. Burr, 1 Barb. 499; Champion v. Brown, 6 Johns. Ch. 402. The seller mider such cii'cumstances has a ven- dor's lien, which is certainly not impaired by withholding the conveyance. The equitable estate of the vendee is alienable, descendible, and devisable In like manner as real estate held by a legal titla The securities for the purchase-money are personalty, and in the event of the death of the vendor, go to his personal representative. 2 Story, Eq. Jur. § 1212. It does not appear that the title-bond authorized Hawkins to take possession, or that he did so. If there were no such au- thority, and he entered into possession, he held as a licensee or tenant at will. Suffam V. Townsend, 9 Johns. 35; Dolittle v. Eddy, 7 Barb. 75. The vendee cannot in such cases dispute the title of his vendor any more than the lessee can dispute that of bis lessor. Whiteside v. Jackson, 1 Wend. 422; Hamil- ton V. Taylor, 1 Litt. Sel. Cas. 444. Any other person coming into possession under the vendee, either with his consent or as an in- truder, is bound by a like estoppel. Jackson v. Walker, 7 Cow. 637. Hamiter, having bought and assumed the payment of the pur- chase-money stipulated to be paid by Hawk- ins, took the property subject to the same lia- bilities, legal and equitable, to which it was subject in the hands of Hawkins. 1 Story, Eq. Jur. § 789; 1 Sugd. Vend. (Perkins' Ed.) 175; Champion v. Brown, 6 Johns. Ch. 402; Muldrow's Ex'rs v. iluldrow's Heirs, 2 Dana, 387; 2 Har. & J. 64; Shipman v. Cook, 16 N. J. Eq. 254. The discharge in bankruptcy released Hawkins from personal liability for his debt, but the statute of limitations cannot avail to protect the land from the vendor's lien upon it, for the purchase-money which Hawkins agreed to pay, and which Hamiter, when he bought the land, assumed and agreed to pay for hun. We have already shown that as between Lewis and Hawkins there was a trust which embraced the purchase-money and fastened itself upon the land. The debt did not affect his assignee personally, but as we have shown also it continued to bind the land In all re- spects as if the transfer had not been made. The trust was an express one. Its terms and purposes were evinced by the title-bond, and the promissory notes to which that instru- ment referred. "As between trustee and ces- tui que trust, in the case of an express trust, the statute of limitation has no application, and no length of time is a bar. Accounts have been decreed against trustees extending over periods of thirty, forty, and even fifty years. The relations and privity between trustee and cestui que trust are such that the possession of one is the possession of the other, and there can be no adverse possession during the continuance of the relation. * * * A cestui que trust cannot set up the statute against his co-cestui que trust, nor against his trustee. These rules apply in all cases of express trusts." Perry, Trusts, § 863. "As between trustees and cestui que trust, an express trust, constituted by the act of the parties themselves, will not be barred by any length of time, for In such cases there is no adverse possession, the possession of the trus- tee being the possession of the cestui que trust." Hill, Trustees, 264*. The same principle applies where the cestui que trust is in possession. He is regarded as a tenant at will to the trustee. "Therefore, until this tenancy Is determined there can be no adverse possession between the parties." Id. 266"*. The relation once established is presumed to continue, unless a distinct de- nial, or acts, or a possession inconsistent with it are clearly shown. Whiting v. Whiting, 4 Gray, 236; Creigh's Heirs v. Henson, 10 Grat. 231; Spickerneln v. Hotham, Kay, 669; Gar- ard V. Tuck, 65 E. C. L. 249, 8 Man. G. & S. 231; Decouche v. Savetier, 3 Johns. Ch. 190; Anstiee v. Brown, 6 Paige, 448; Kane v. Bloodgood, 7 Johns. Ch. 90. In many of the cases it is held that the lien of the vendor under the circumstances of this case is substantially a mortgage. Lin- gan V. Henderson, 1 Bland, Ch. 236; Moreton V. Harrison, Id. 491; Relfe v. Relfe, 34 Ala. 504. It is well settled that the possession of the mortgagor is not adverse to that of the mortgagee. In the case last cited it is said that to apply the statute of limitations "would be like making the lapse of time the origin of title in the tenant against his land- lord." That the remedy upon the bond, note, or simple contract for the purchase-money is barred in cases like this, in no wise affects the right to proceed in equity against the land. As in respect to mortgages, the lien will be presumed to have been satisfied after the lapse of twenty years from the maturity of the debt, but in both cases laches may be explained and the presumption repelled. Moreton v. Harrison, supra. The principles upon which this opinion proceeds are distinct- ly recognized in Harris v. King, 16 Ark. 122. That case alone would be decisive of the case before us. The considerations which apply SPECIFIC PERFORMANCE OF CONTRACTS. 657 where the vendor In such cases resorts to an action of ejectment were examined by this court In Burnett v. Caldwell, 9 Wall. 290. The bill avers the tender of a deed by the complainant to Hawkins before the bill was filed. The answer of Hawkins denies the al- legation. The testimony of Lewis sustains the bill; that of Hawkins the answer. The averment is not established. Except as to the costs the point is of no significance. If the tender of a deed had been properly made, and there had been no unjustifiable resistance to the taking of the decree by the complain- ant, to which he is entitled, he would have been required to pay all the costs. There be- HUTCH.& BUNK.BQ.-^2 ing a contest, and it appearing that a tender would have been without effect, the costs must abide the result of the litigation. Keis- selbrack v. Livingston, 4 Johns. Ch. 144; Han- son V. Lake, 2 Younge & C. 328. TheM is manifest error in the decree, but the bill is defective in not making the heirs- at-law of Hamiter parties, unless there is some statutory provision of the State of Ar- kansas which obviates this objection. If necessary the bill can be amended in the court below. Decree reversed, and the cause remanded with directions to proceed in conformity with this opinion. 658 SPECIFIC PERFORMANCE OF CONTRACTS. BISSELL V. HEYWARD. (96 U. S. 580, 24 L. Ed. 678.) Supreme Court of the United States. Oct. 1877. Appeal from the circuit court of the United States for the district of South Carolina. William C. He.yward, who was seised in fee of certain lands in the state of South Carolina, made his last will and testament, bearing date Jan. 20, 1852. So much there- of as relates to them is as follows: "I give to my brother, Henry Hey ward, of New Yorli" (here is a description of the lands), "for and during the term of his natural life, and, after the determination of that estate, I give the same to my friend, WilUam C. Bee, and his heirs, to prevent the contingent remainders hereinafter limited from being barred; in trust, nevertheless, during the lifetime of my said brother, to apply the income thereof to his use and benefit; and, from and after his decease, I give the use of the same estate, real and personal, to his eldest son, Henry Heyward, Jr., if then living, until he attains the age of twenty-one years; and if he should survive his father, and attain the age of twenty-one years, to him and his heirs for ever: but in case the said Henry Heyward, Jr., should not survive his father, and attain the age of twenty-one years, then I give the whole of the said estate, real and personal, after the decease of my brother, Henry Hey- ward, for the use of the person who may thereafter, from time to time, sustain the character of heir male of the body of my said brother, Henry Heyward, as such term was used in the common law before the abolition of the rights of primogeniture, un- til such person shall attain the age of twen- ty-one years, or the expiration of twenty-one years from the death of my said brother, whichever may first happen; and, after the happening of either of those events, to the then heir male of the body of my brother, absolutely and for ever." On the eighteenth day of June, 1863, Wil- liam C. Heyward contracted to sell, for $120,000, said lands, to John B. Bissell; who tools; immediate possession of them, which he has ever since retained. On July 31, follow- ing, he paid $20,000 of the purchase-money. During that year, and before the completion of the purchase, Heyward died, and said Bee, appointed the executor of his will, duly qualified as such. Owing to the civil war and other causes, matters remained unaltered in their main features until March, 1870, when said Henry Heyward, a citizen of New York, filed his bill against said Bissell and said Bee, citizens of South Carolina, to com- pel the specific performance, by Bissell, of his agreement to purchase. The answer of Bissell admits the agreement and his pos- session of the property, and his payment of $20,000; and alleges that he was provided with the means of paying the balance of the purchase-money; that neither said William C. Heyward, nor, since his death, said Bee, tendered him a conveyance; and that he was willing to pay when he should receive a valid conveyance; that he sold sixty-three bales of cotton, for cash in Confederate notes, and on Feb. 11, 1864, tendered the said bal- ance, in said notes, to the executor, who de- clined to receive them, on the ground that he could not malie a good title. Bee, in his answer, admitted the tender to him by Bis- sell, and his refusal to accept it, on the ground that he was advised that he could neither malse a title nor safely accept pay- ment in Confederate currency. It was ad- mitted, on the hearing below, that said mon- ey was tendered at that date, in such curren- cy; that the parties through whom a good title could be made lived in New Yorii; and that, after Bee's refusal to accept the notes tendered, Bissell used them for other pur- poses. It does not appear by the pleadings, the evidence, or the agreed statement of facts on file, whether Henry Heyward, Jr., who was living when the bill was filed, and had then attained the age of twenty-one years, is now living. There is neither allegation nor proof of his death. The court decreed that Bissell should per- form his contract of purchase, and pay, in United States currency, a sum equal to the value of $100,000 in Confederate currency on June IS, 1863, the day of sale, with interest thereon until Feb. 11, 1864; from and after which day he should pay interest only on such a sum as was the value of $100,000 on said 18th of June, less its value on said 11th of February; said values and interest to be ascertained by the clerli of the court to whom the cause was referred, as master, to state and report the same; that upon Bissell's maliing the payment as stated and reported, that the clerl£, "as master to said WilUam C. Bee, executor of William C. Heyward," con- vey the premises In fee-simple; but that, up- on his failure so to pay, the master should sell the property, at public auction, for cash. Said Henry Heyward died before the ex- ecution of the decree. On Nov. 23, 1874, Zef a Heyward, his wife, Zefita Heyward, his daughter, and Franli Heyward, his son, filed their bill of revivor, reciting the original bill, the proceedings thereunder, the reference to the master, the death of said Henry,— leav- ing a last will and testament, which was du- ly proved before the surrogate of the county of New York,— their appointment to execute the same, and that said Zefa alone took up- on herself the execution thereof, and quali- fied accordingly, and praying that the bill might be revived. This bill was duly serv- ed; no answer was made, and an order of re- vivor was entered accordingly. The master subsequently reported that the balance found by him to be due upon the contract was $28,353.50; and that, in reach- ing that result, he compared the value of the Confederate currency, in which the contract SPECIFIC PERFORMANCE OF CONTRACTS. 659 was payable, with United States paper cur- rency at the date of the contract and of the tender. He found that, on the 18th of June, 1803, $1 In United States currency was worth $5.20 in Confederate currency; and that on the 14th of February, 1864, the value was §1 to $13.01. The court confirmed the report, Dec. 15, 1874; and decreed that the Inteiv locutory decree previously rendered be car- ried into execution. Bissell thereupon appeal- ed to this court. Bee declining to join in the appeal. William A. Maury, for appellant. Edward McCrady, for appellee. MR. JUSTICE HUNT, after stating the case, delivered the opinion of the court. It is objected that there is a fatal defect of parties complainant. The point of this ob- jection is that Henry Heyward and William C. Bee were not able together to make a title that ought to be satisfactory to Bissell, and hence that the decree should be reversed. The will of William C. Heyward took ef- fect only upon his death. Until the occur- rence of that event, the devisees therein nam- ed had no more title to or interest in the property in question than If their names had not been mentioned in the will. If he had consummated his contract with Bissell by executing a deed of the property, this would have worked an absolute revocation of the devise as to this property. The execution of the contract (with the partial payment there- on) was a transfer in equity of the title of the land to Bissell; leaving in the representa- tives of William 0. Heyward simply a naked title as trustee for Bissell, to be conveyed upon performance on his part. By the terms of the will, this legal title was vested in William C. Bee, the trustee to preserve re- mainders. Henry Heyward was tenant for life, and as such offered to convey to Bissell, "by feoff- ment, and livery of seisin, and to procure the release of right of entry and action by Wil- liam C. Bee, the remainder-man for preserv- ing contingent remainders;" and he avers in his bill that this would have made a good and effectual conveyance of the legal estate. Bee held the legal title under the will, and his title to the legal estate continued in force as long as the remainders were contingent; and there is nothing in any part of the rec- ord showing that such was not the condi- tion of tlie title when Heyward offered to convey, and that it is not so at the present time. Chancellor Kent says (4 Kent, Comm. p. 25G), "The trustees are entitled to a right of entry in case of a wrongful alienation by the tenant for life, or whenever his estate for hfe determines in his lifetime by any other means. The trustees are under the cogni- zance of a court of equity, and it will con- trol their acts, and punish them for a breach of trust; and if the feoffment be made by the purchaser with notice of the trust, as was the fact in Chudleigh's Case, a court of chan- cery will hold the lands still' Subject to the former trust. But this interference of eq- uity is regulated by the circumstances and justice of the particular case. The court may, in its discretion, forbear to interfere; or it may and will allow, or even compel, the trustees to join in a sale to destroy the contingent remainder, if it should appear that such a measure would answer the uses orig- inally intended by the settlement." To this he cites many authorities. We think this objection is not well taken. Was there error in the amount decreed to be paid? One of the statements of fact in the case sets forth that Bissell tendered the money; and fails to state that he deposited it, or in any manner set it apart or appropriated it for the purpose of the tender. The other states that he used the money he had thus provided. The legal effect is the same. To have the effect of stopping interest or costs, a tender must be kept good; and it ceases to have that effect when the money is used by the debtor for other purposes. Roosvelt V. Bank, 45 Barb. 579; Giles v. Hart, 3 Salk. 343; Sweatland v. Squire, 2 Salk. 623. The defendant insists that the value of the Confederate notes should be reduced to gold or sterling exchange, which would still far- ther depreciate their value. This objection cannot be sustained. By the laws of the United States, all contracts between Individuals could then be lawfully discharged in the legal-tender notes of the United States. These notes, and not gold or sterling exchange, were the standard of val- ue to which other currencies are to be redu- ced to ascertain their value. Knox v. Lee, 12 Wall. 457; Thorington v. Smith, 8 Wall. 1; Dooley v. Smith, 13 Wall. 604; Rev. St. S. C. p. 285. Confederate notes, although without the authority of the United States, and, indeed, in hostility to it, formed the only currency of South Carolina at the date of the trans- actions in question. United States currency was unknown, except when found upon the person of the soldiers of the United States taken and held as prisoners. Confederate notes can in no proper sense be treated as commodities merely. The con- tract in question was made payable in terms in dollars; but both parties agree in writing that Confederate-note dollars were intended. The $20,000 was paid in Confederate notes; and, when the defendant tendered his $100,- 000, he tendered it in Confederate notes as dollars, and he obtained them by selling six- ty-three bales of cotton for Confederate dol- lars. Stewart v. Salamon, 94 U. S. 434. Decree affirmed. GGO SPECIFIC PERFORMANCE OF CONTRACTS. WETZLER V. DUFFX. (47 N. W. 184, 78 Wis. 170.) Supreme Court of Wisconsin. Nov. 25, 1890. Appeal from circuit court, Asliland county; J. K. Parish, Judge. Cole & O'Keefe, for appellant. Sleight & Foster, for respondent. TAYLOR, J. The facts in this case are substantially as follows: On the 14th of j\Iay, 1887, the plaintiff agreed to convey to the said defendant a certain lot of land sit- uate in Ashland county, described as follows: "Commencing at the north-west corner of lot No. one, (1,) in block No. six, (6,) of the vil- lage of Hurley, according to the recorded plat thereof; thence east twenty-five (25) feet; thence south ninety (90) feet; thence west twenty-five (25) feet; and thence north ninety (90) feet to lue place of beginning," —for the consideration of $2,500 agreed to be paid by the defendant. That on the same day the plaintiff executed a deed of convey- ance to the said defenaant, which both par- ties supposed contained a correct description of the property sold to the defendant; but, in fact, the description was imperfect, and does not describe the land sold and intended to be conveyed. The description in the deed is as follows: "The following described real estate situated in the county of Ashland, and state of Wisconsin, — to-wit: commencing at the north-west corner of lot number one, (1,) in block number six, (6,) in the village of Hurley, according to the recorded plat there- of; running thence west twenty-five (25) feet; thence south ninety (90) feet; thence east twenty-five (25) feet; thence north nine- ty (90) feet to the original point of begin- ning." Said deed was recorded in the proper recorder's olBce, and on the same day the defendant executed and delivered to the plaintiff a mortgage upon the property sold by the plaintiff to the defendant, in which mortgage the property is correctly described, to secure the payment of $1,000, part of the purchase money. The complaint alleges the non-payment of a part of the money due up- on the mortgage, and asks judgment, first to correct the description in the deed from the plaintiff to the defendant, and for a judg- ment to foreclose the said mortgage. The answer admits all the material allegations of the compla!int, and further admits that, supposing the plaintiff's deed had conveyed to her the land she purchased, she went into the possession of the same, and paid $300 of the sum secured by said mortgage; that on the 27th day of June, A. D. 1887, a fire broke out In the frame store building sit- uate on said lot, and It was wholly destroyed by fire, the defendant having no insurance thereon, thereby destroying the greater part of the value of saidilot to the defendant. It is admitted that this frame building was on the lot when the plaintiff agreed to convey the same to the defendant, and at the time the deed was in fact made, and the mort- gage back to the plaintiff given to secure the $1,000, part of the purchase price. The defendant also alleges in her answer that, at the time she purchased the lot of the plaintiff, the building on said lot was in- sured by the plaintiff for the sum of $800, in a reliable insurance company; and that he agreed to transfer said Insurance policy to the defendant, for the sum of $40, to be paid by the defendant; and that the plain- tiff neglected and refused to transfer said insurance policy to the defendant, to her damage. The defendant also alleges a re- fusal on the part of the plaintiff to make a good deed of conveyance of the property actually purchased by her, and sets up, as a counter-claim, a demand for the money actually paid by her upon such purchase. The action was tried by the court, and, after hearing the testimony offered by the re- spective parties, the court decided in favor of the plaintiff and gave judgment reform- ing the deed and for a foreclosure of the mortgage. The defendant excepted to the findings of fact and conclusions of ing . " I refuse to accept said notes, excepting the two which vrere paid, and have this day sent them to your bank- ers, Messrs. Russell & Holmes, of Tecumseh, Neb., for your use and benefit, and subject to your order. I shall make payments as fast as they become due, and shall require you to execute a conveyance of the land in accordance with the terms of the con- tract. It will be useless for you to send meany ofthesenotes,exceptyou send them for payment. " Under date ot.June 29,1885, Russell* Holmes advised Cheney that they had received from Libby his notes, amount- ing to $6,679.20, subject to his (Cheney's) order. The latter wrote July 9, 1885, In re- ply to Libby's letter of June 25th, that he did not recognize the notes placed with Russell & Holmes as being subjeet to his order. On the 20th of August, 1885, Libby, by his attorney, made a tender to Russell & Holmes of $120 in gold coin as a balance of one-half of the purchase money, and offered to surrender the contract and execute a mortgage and notes for the balance of the purchase money, as stipulated in the con- tract, and demanded a deed; of all which Cheney was notified. The latter replied, under date of August 22, 1885, that he would not receive any money from Libby, and refused to make a deed. It further appears that the plaintiff punctually paid into the bank of Russell & Holmes the amounts of the notes due In 1886 and 1887. The funds remained in that bank and are now there, subject to Che- ney's order, on presenting the notes. Of these payments he was promptly informed. Shortly before the commencement of this suit Libby again offered to Cheney to pay in cash all the unpaid portion of the princi- pal debt named in the contract, and all in- terest due at that date. He also renewed his offer to execute a mortgage on the land to secure all unpaid installments not due, and demanded a deed. But those offers being declined, the present suit was brought. A. A. Goodrich, for appellant. S. P. Da- vidson, for appellee. •Mr. Justice Haelan, after stating the facts in the foregoing language, delivered the opinion of the court. The peculiar wording of the written con- tract renders itsomewhatdoubtful wheth- er there was a sale of the lands to the ap- pellee to be made complete by a convey- ance of the legal title or defeated altogeth- er, according to his performance or failure to perform the conditions upon which he was to receive a deed ; or whether he was simply given possession, paying a fixed amount, annually, for use and occupancy, with the privilege of purchasing, and with the right to demand a conveyance in fee- simple, upon the performance of those conditions. Taking the whole contract together, we incline to adopt the former as the true interpretation. Such was the viewtaken bythe supreme court of Nebras- ka of a similar contract as to land be- tween Cheney and one Robinson. Robin- son V. Cheney, 17 Neb. 673, 679, 24 N. W. Rep. 378. But it is not necessary to express any decided opinion upon this question ; for, in any view, it is clear from the con- tract, not only that appellant could re- tain the legal title until the appellee's ob- ligations under it had all been performed, but that he could resume possession im- mediately upon the failure of the appellee to meet, punctually, any of the conditions to be performed by him. Time may be made of the essence of the contract" "by the express stipulations of the parties, or it may arise by implication from the very nature of the property, or the avowed objects of the seller or the pur- chaser." Taylor v. Longworth, 14 Pet. 172, 174; Secombe V.Steele, 20 How.94,104; Holgate V. Eaton, 116 U. S. 33, 40, 6 Sup. Ct. Rep. 224; Brown v. Trust Co., 128 U S. 403, 414, 9 Sup. Ct. Rep. 127. The parties In this case, in words too distinct to leave room lor construction, not only specify the time when each condition is to be per- SPECIFIC PERFORMANCE OF CONTRACTS. 689 formed, but declare that " time and punct- uality are material and essential ingredi- ents " in the contract, and that it must be "strictly and literally" executed. How- ever harsh or exacting its terms may be, as to the appellee, they do not contravene public policy; and therefore a refusal of the court to give effect to them, according to the real intention of the parties, is to make a contract for them which they have not chosen to msike for themselves. 1 Sugd. Vend. (8th Amer. Ed.) 410, (268;) Barnard v. Lee, 97 Mass. 92, 94; Hipwell V. Knight, 1 Tounge & C. 401, 415. These observations are made because counsel for theappellant insists, witheomeconfidence, that an affirmance of the decree below will necessarily be a departure from the gen- eral principles just stated. But there are other principles, founded in justice, that m ust control the decision of the presentcase. Even where timeis made ma- terial, by express stipulation, the failure of one of the parties to perform a condition within the particular time limited will not in every case defeat his right to specific per- formance, if the condition be subsequently performed, without unreasonable delay, and no circumstances have intervened that would render it unjust or inequitable to give such relief. The discretion which a court of equity has to grant or refuse spe- cific performance, and which is always ex- ercised with reference to the circumstances of the particular case before it, (Hennessy V. Woolworth, 128 U. S. 438, 442, 9 Sup.Ct. Rep. 109,) may and of necessity must often be controlled by the iconduct of the party who bases his refusal to perform the con- tract upon the failure of the other party to strictly comply with its conditions. Seton V. Slade, 7 Ves. 265, 279; Levy v. Lindo, 3 Mer. 81, 84; Hudson v. Bartram,3 Madd. 440, 447; Lilley v. Fifty Associates, 101 Mass. 432, 435; Potter v. Tuttle, 22 Conn. 512, 519. See, also, Ahl v. Johnson, 20 How. 511, 518. To this class belongs, in our judgment, the case before us. Although the contract between Cheney and Libby called for pay- ment in dollars, the latter might well have supposed, unless distinctly informed to tlie contrary, that the former would be willing to receive current funds; that is, such as are ordinarily received by men of business or by banks; and such funds were received in payment of all of Libby 's notes falling due in 1880 to 1884, inclusive. While this course of business was not an abso- lute waiver by Cheney of his right to de- mand coin or legal-tender paper in pay- ment of notes subsequently falling due, such conduct, during a period of several years, was calculated to produce the im- pression upon Libby's mind that current or bankable funds would be received in payment at any of his notes ; and there- fore, upon every principle of fair dealing, Cheney was bound to give reasonable no- tice of his purpose, after 1884, to accept only such funds as under the contract, strictly interpreted, he was entitled to de- mand. No such notice was given. On the contrary, the just inference from the testi- mony is that Cheney designed to throw Libby off his guard, and render it impos- sible for the latter, or for the bankers to HUTCH.& BUNK.EQ.— 44 whom he sent drafts to be used In paying his notes, to supply the requisite amount of coin or legal-tender paper on the very day the notes matured, and at the moment of their presentation for payment. The efforts of Russell & Holmes, within a few moments after Cheney left theirbank on the 1st of June to find him, and to pay off the notes in legal-tender paper, and the efforts of Libby, by his agent, as soon as he was informed of Cheney's demand for payment in coin or legal-tender paper, to reach him, and to pay off the notes maturing In 1885, in lawful money, and his repeated offers, subsequently, to pay them in such money, showed the utmost diligence, and suffi- ciently excuse his failure to pay in coin or legal-tender paper on the very day his notes matured. To permit Cheney, under the circumstances disclosed, to enforce a forfeiture of the contract, would enable him to take advantage of his own wrong, and to reap the fruits of a scheme formed for the very purpose of bringing about the non -performance of the contract. But it is contended that the provision in thecontract forbidding its modification or change, "except by entry thereon in writ- ing signed by both parties, " coupled with the provision that no court should relieve Libby from a failure to comply strictly and literally with the contract, stands in the way of a decree for specific performance. It is sufficient, upon this point, to say that such provisions — if they could in any case fetter the power of the court to do justice according to the settled principles of law — cannot be applied where the efficient cause of the failure of the party seeking specific performance to comply strictly and literally with the contract was the con- duct of the other party. If the defendant had agreed, in writing, signed by himself alone, to accept current funds, and not to demand coin or legal-tender notes, and, notwithstanding such agreement, he had demanded coin or legal-tender notes, un- der circumstances rendering it impossible for the plaintiff to meet the demand on the day limited by the contract, would he be permitted to say that the contract was for- feited for the failure to make payment ac- cording to its provisions? We suppose not, although, according to his argument, such an agreement, not having been signed by both parties and indorsed on the con- tract, would not estop him from insisting upon a strict and literal compliance with its terms. It results from what has been said that the failure of the plaintiff, Libby, in person or by agent, to pay the notes maturing in 1885 in coin or legal-tender paper, at the time they were presented by Cheney for payment at the banking-house of Russell & Holmes, did not work a forfeiture of the contract, and does not stand in the way of a decree for specific performance. In respect to the notes falling due in 1886 and 1887, the evidence satisfactorily shows that the plaintiff, at the times and place ap- pointed for their payment, offered, and was then and there ready, to pay them in lawful money, but, the notes not being on either occasion in the hands of Russell & Holmes for collection, he could not make actual payment, but left the money at 690 SPECIFIC PERFORMANCE OP CONTRACTS. their bank to be paid over to Cheneywhen- ever the notes were presented at that place. The notes due in those years were, It is true, in the manual possession of Bus- sell & Holmes, but they were not in their custody by direction of Cheney, for collec- tion or for any other purpose. Libby did all that he could do with respect to the notes falling due iu those years in order to comply "strictly and literally" with the contract. Indeed, after the surrender by Cheneyin 18S5 of the notes due in that ana subsequent years, and his formal notifica- tion to Libby that he regarded the con- tract as forfeited and would not receive any money from him, Libby was not bound, as a condition of his right to claim specific performance, to go through the use- less ceremony of tendering payment at the banking-house of Russell & Holmes of the notes maturing in 1886 and 1887. Brock v. lidy, 13 Ohio St. 306 ; Deichmann v. Deich- .nann,49 Mo. 107, 109 ; Crary v. Smith, 2 N. Y. 60. In Hunter v. Daniel, 4 Hare, 420, 438, it "vassaid ■ "The only remaining point insist- ed upon was that the making ofevery pay- ment was a condition precedent to the right of the plaintiff to call for the execution of the agreement, or, in fact, to call for the benefit of it ; and it was argued that the bill could not properly be tiled before the plaintiff had, out of court, fully performed his agreement. The general rule in equity certainly is not of that strict character. A party filing a bill submits to do every- r.hingthatis required of him; and the prac- r.ice of the court is not to require the party to make a formal tender where, as in this case, from the facts stated in the bill, or from the evidence, it appears that the ten- der would have been a mere form, and that the party to whom it was made would have refused to accept the money." "Whether that be a sound view or not with reference to the particular contract here in question, Libby did, in fact, make a proper tender of payment as to these notes. Be- fore the bringing of this suit he had paid, and offered to pay, more than one-half of the price for the land and all accrued in- terest and taxes, and therefore was en- titled by the terms of the contract to a deed, he executing notes and a mortgage for the remaining payments to run the un- expired time, as stipulated in the agree- ment. The court below found that the notes falling due in 1885, 1886, and 1887 were paid ; that the plaintiff had deposited with the clerk for the defendant a mortgage on the land to secure the payments due 8, 9, and 10 years after the date of the contract; and that he had fully done and performed every obligation imposed upon him to en- title him to a deed. It was adjudged that the defendant, within 40 days from the de- cree, execute, acknowledge, and deliver to the plaintiff a good and sufficient deed, with the usual covenants of warranty, (excepting the right of way that maybe de- manded forpublic usefor railways or com- mon roads,) conveying to him the land in question, and in default of which it was adjudged that the decree itself should oper- ate, and haye the same force and effect, as a deed of the above description. We are not able to concur in the finding that the notes falling due In 1885,1886, and 1887 had been paid when this decree was passed. If those notes had been placed by Cheney with Russell & Holmes for collec- tion, and the latter had collected the amounts due on them^ then they would have been paid; for, in such case, that firm would have been the agent of the payee to collect the notes, and the money received by them would have belonged to him. In Ward v. Smith, 7 Wall. 447, 450, the question arose as to whether a bank at which certain bonds were made xJayable was the agent of the holder to receive pay- ment. The court said : " It is undoubted- ly true that the designation of the place of payment in the bonds imported a stipula- tion that their holder should have them at the bank, when due, to receive payment, and that the obligors would produce there the funds to pay them. It was inserted for the mutual convenience of the parties. And it is the general usage in such cases for the holder of the instrument to lodge it with the bank for collection, and the party bound for its payment can call there and take it up. If the instrument be not there lodged, and the obligor is there at its ma- turity with the necessary funds to pay it, he so far satisfies the contract that he can- not be made responsible for any future damages, either as costs of suitor interest, for delay. When the instrument is lodged with the bank for collection, the bank be- comes the agent of the payee or obligee to receive payment. The agency extends no further, and without special authority an agent can only receive payment of the debt due his principal in the legal currency of the country, or in bills which pass as mon- ey at their par value by the common con- sent of the community. In the case at bar only one bond was deposited with the Farmers' Bank. That institution, there- fore, was only agent of the payee for its collection. It had no authority to receive payment of the other bonds for him or on his account. Whatever it may have re- ceived from the obligors to be applied on the other bonds, it received as their agent, not as the agent of the obligee. If the notes have depreciated since in its posses- sion, the loss must be adjusted between the bank and the depositors ; it cannot fall upon the holder of the bonds. " See, also, Adams v. Commission, 44 N. J. Law, 638, where this question is elaborately exam- ined ; Hills V. Place, 48 N. Y. 520 ; Gas Co. v. Pinkerton, 95 Pa. St. 62, 64; Wood v. Sav- ing Co., 41 111. 267. Russell & Holmes, then, did not become the agent of Cheney to receive the amount of the notes, by reason simply of the fact that the notes were made payable at their bank. The funds left by Libby with them to be applied in payment of the notes of 1885, 1886, and 1887 are therefore his prop- erty, not the property of Cheney. The ut- most effect of Libby's offer, within a rea- sonable time after June 1^ 1885, to pay the note of that year in lawful money, and of his offers, at the appointed times and place, to pay the notes of 1886 and 1887, was to prevent the forfeiture of the contract, and to save his right to have it specifically per- formed, so far as that right depended upon his paying those notes. But they must be SPECIFIC PERFOEMAJJCE OF CONTRACTS. 691 actually paid by him before he is entitled to a deed, or to a decree that will have the force and effect of a conveyance. Under the circumstances it was not absolutely neces- sary thathe should havebrought the mon- ey into court for the defendant at the time he filed his bill. His offer in the bill to per- form all the conditions and stipulations of the contract was sufficient to give him a standing in court. Irvin v. Gregory, 13 Gray. 215, 218; Hunter y. Bales, "24 Ind. 299, 303; Fall v. Hazelrigg, 45 Ind. 576, 579. But the decree of specific performance ought not to become operative until he brings into court for the defendant the full amount necessary to payoff the notes for principal and interest falling due in 1885, 1886, and 1887 Caldwellv.Cassidy,8Cow.271; Hax- tonv. Bishop, 3 Wend. 13, 21; Hills v. Place, supra; Wood v. Saving Co., supra; Web- ster V. French, 11 111. 254, 278; Carley v. Vance, 17 Mass. 389, 891 ; Doyle v. Teas, 4 Scam. 202, 261, 267 ; McDaneld v. Kimbrell, 3 G. Greene, 335. The defendant is not en- titled to interest after the respective ten- ders were made, because it does not appear that the plaintiff has, since the tenders, realized any interest upon the moneys left by him for Cheney at the bank of Russell & Holmes. Davis v. Parker, 14 Allen, 94, 104; January v. Martin, 1 Bibb, 586, 590; Hart V. Brand, 1 A. K. Marsh. 159, 161; 2 Sug. Vend. (8th Amer. Ed.'' 314,315, (627, 628.) The decree below is attirmed. But it is adjudged and ordered that the said decree be and is hereby suspended, and shall not become operative until the plaintiff brings into the court below for the defendant the full amount of the notes for principal and interest executed by him to the defendant, and made payable on the 28th days of May, 1885, 1886, and 1887, Without interest upon any note after its maturity. 692 SPECIFIC PERFORMANCE OP CONTRACTS. CHICAGO, M. & ST. P. RX. CO. v. DURANT et al. SAME v. HOSPES. SAME v. STAPLES. SAME v. UNION DEPOT ST. EX. & T. CO. (46 N. W. 676, 44 Minn. 361.) Supreme Court of Minnesota. Oct. 7, 1890. Appeal from district court, Washington county; McCluer, J udge. W. H. Norris, for appellant. Fayette Marsh, for E. W. Durant and others. J. N. & I. W. Castle, for E. L. Hospes and Isaac Staples. Searles & Gail, for Union Depot St. Ry. & T. Co. Vandeebukgh, J. The demurrers to the complaint interposed in behalf of defend- ants Durant, Hospes, Hersey, Staples, the Union Depot Company, and O'Gorman, receiver, were sustained by the trial court, and the complaint held sufficient as to the othpr defendants. From the order sus- taining the demurrer the plaintiff appeals, and the principal question presented for our determination is whether the com- plaint states a cause of action in respect to the defendants above named. Gener- ally, in equitable actions of this liind, the merits can be best determined upon proofs after answer; but we will examine and consider such questions as are fairly be- fore us on this appeal. 1. If the action were brought solely against the defendants who executed the contract for the right of way, whom, for convenience, we will style "obligors," though equitable relief is demanded, a re- covery might be had for damages, and treating it as an action for damages, the defendants would, if they required it, be entitled to a jury trial. Davison v. Asso- ciates, 71 N. Y. 334. But certain lots, through which the right of way was bar- gained for, are alleged to have been con- veyed to certain other defendants, who are joined in the action, and who are not parties to the agreement, and against whom 'equitable relief, by way of specific performance, is sought. The two causes of action — one for damages and one for the special relief — cannot properly be unit- ed, and this is one ground of the demurrer. The action, then, must be treated as an equitable one for specific performance, with incidental relief, by way of compen- sation for such portion of the property in question as cannot be reached ; and the sufficiency of the complaint must be deter- mined solely in respect to the right of the plaintiff to such relief. 2. It is charged in the complaint that, in order to induce the plaintiff to con- struct a line of its railroad from a point on its River Division from Hastings to the city of Stillwater, the defendants Staples, Durant. Hospes, Hersey, and Sabin, with one Torinus, since deceased, on the 15th day of July, 1881, agreed in writing with this plaintiff that the cits' of Stillwater would and should give this plaintiff a right of way, 56 feet wide, through certain real property, as described in the com- plaint; and that on its part the plaintiff, ill •■id by the same agreement, in considor- . . (Ill iif tlie nremises, undertook and agreed, among other things, that It would at once begin the construction of such branch line, and continue the same with all practical dispatch until the completion thereof; and that it did in all things well and truly fulfill and perform such agree- ment on its part. There is no doubt as to the sufficiencj- of the consideration to uphold the undertaking of the defendants, or that the parties are mutually bound , subject to the conditions of the contract. Railroad Corp. v.Babcock,6 Mete. (Mass.) 346. 3. In resi)ect to the defendants in whose favor the demurrer was sustained, it is not claimed that any of them now own or are interested in the property in question here, except the Union Depot Company, and O'Gorman, receiver. The last named are not parties to the agreement, but are properly joined as having some interest in the property. But the decree of the court for specific performance of the contract could only be made operative against them, or anj' other persons than the original obligors', in so far as they have acquired from the latter portions of the right of way contracted for with notice. As to such lands, such parties would stand in their shoes, and be bound ; but as to the lots acquired by the Union De- pot Company of other parties, by pur- chase or condemnation, the contract is en- tirely nugatory, and in respect to the sev- eral tracts of land designated in the com- plaint as having been so acquired by the Union Depot Company, it could not be bound in this action. From the terms of the contract providing that the city would give a right of way, and the specifi- cation of the ownership of the several lots set forth in the complaint, it will not be implied that the defendants at any time owned or had title to any of them, save as therein set forth. From the complaint it appears that the Union Depot Company acquired title to the north 49 feet of lot 2, in block 28, from Helen M. Torinus and Louis E. Torinus, her husband. What the latter's interest was, does not appear. The defendant Sabin, one of the signers of the agreement in question, acquired, by purchase from Torinus, an undivided half of the south 35 feet, in width, of lot 7, and of the north 56 feet of lot 8, Septem- ber 16, 1881. Sabin also purchased of defend- ant Durant and another, September, 1881, the north 15 feet in width of lot 7, and the undivided halt of the south 35 feet in width thereof, and the undivided half of the north 56 feet in width of lot 8; and at the same time purchased of Torinus the other undivided half of south 35 feet of lot 7, and north 56 feet of lot 8. Sabin also pur- chased lot 5, and a portion of lots 5, 7, and 8, described In the complaint, was con- veyed by him to the Union Depot Compa- ny, and is included in the right of way, 56 feet in width, described in the agreement. It is also alleged that the title in fee to the south 30 feet in width of lot 8 to lot 9, and the north 75 feet in width of lot 10, block 28, appear to be in the city of Stillwater, since 1875, as and for a part of Nelson street, and as part and parcel of the "Le- vee, "so called. It further appears that the depot company have acquired divers SPECIFIC PERFORMANCE OF CONTRACTS. 693 other parcels of the same block from other persons, not parties to the contract, and have also granted to the plaintiff a cer- tain portion of the lots 2, 3, 4, 5, 7, 8, 9, 10, 11, in block 28, lying witliin such 56-feet strip, or right of way. The defendant Sa- bin is the only one of the signers of the contract who appears to have title to any of the land in question, in block 28, and his interest is confined to that part of lots 5, 7, and 8, above described, and not already conveyed to the depot company. The on- ly land in block 28, within the right of way, which, in case specific conveyance were decreed under the contract, would be subject to be so conveyed, is the land held by Sabln, and so much of the land of the depot company within the right of way not already conveyed to the plaintiff by it as it derived from Sabin, as above stated. As before intimated, land pro- cured by the depot company from stran- gers to the contract would not be affected by it. As to block 27, the obligors, by the same contract, further agreed to purchase so much of block 27 as lay east of the al- ley, and to grant such right of way, as aforesaid, through the same to the plain- tiff. As respects the lots in this half block, through which the right of way in ques- tion was in fact located, it appears that on September 15, 1881, the Union Depot Company, defendant, acquired title from Isaac Staples to one-half of lot 1, and lots 3, 4, and 5 ; and March 1, 1882, from de- fendant Hersey and ottiers, to the other half of lot 1 ; and March 23, 1882, to lot 2, from Seymour, Sabin & Co., of which firm defendant Sabin was .; member. It does not appear, however, what Interest Her- sey and Sabin had in the lots conveyed. 4. The city has not furnished the right of way, as agreed, and the defendants have not caused it to be done, or procured it themselves, through either block. The question now arises whether, upon the facts herein stated, a case is made for the interposition of a court of equity so as to warrant a decree for specific performance as to the defendants tJnion Depot Com- pany and Sabin, and to award a judg- ment for damages against other defend- ants, by way of compensation for the defi- ciency. The court will not undertake to compel the defendants, jointly or severally, to purchase the specific property, or to procure the right of way from the city. And it is not a case for compensation, be- cause, conceding that the court might compel the depot company and Sabin to convey a partial interest representing a relative or proportionate share of individ- ual obligors, as above described, the same would be relatively so small, as compared with the whole amount embraced in the contract, that the compensation or dam- ages would apparently be the main object of the suit. In such cases a court of equity will not assess damages as com- pensation, but only where they are inci- dental to the principal ground of relief, and the court will leave the party to his action at law, unless he will consent to accept the part subject to conveyance without damages. Earl of Durham v. Legard, 34 Law J. Ch. 590. In some cases, however, where the vendor shows title to a portion only of the land con- tracted, or has wrongfully parted with part, justice maybe done by an apportion- ment of the consideration, if the vendee consent to take part with an abatement of the price. 2 Lead. Cas. Eq. (4th Ed.) pt. 2, p. 1146. So, where the vendee knows at the time of entering into the contract (as may be implied in this case from the terms of the contract) that the vendor has title to a part only of the land, com- pensation will be denied. Wat. Spec. Perf. § 506; 5 Wait, Act. & Def.781. This is not a case between vendor and vendee. By the contract the right of way was to be procured by or from others by gift or pur- chase. The plaintiff did not contract for a conveyance from the defendants. It did not rely upon the individual ownership of the obligors. The city was to give the right of way ; and, as to block 27, the de- fendants were to purchase the entire half block jointly, and jointly bear the burden. It was not fairly within the contempla- tion of the parties that the interests which the individual obligors might have in some of the land embraced in the pro- posed right of way should be made sub- ject to enforced conveyance under the con- tract, if unfulfilled in its scope and pur- pose by the obligors, who jointly entered into it. Equity, it is true, looks at the substance of the contract, and, when the agreement can be substantially, though not literally, carried out, without chang- ing the nature of the contract, or substi- tuting a new one, and do justice between the parties, it will be so enforced. The doctrine of compensation rests upon this principle. And so where land is held as tenants in common by several persons, who have jointly agreed to convey the same, some of whom are not bound, or are deceased, those who are liable, or who survive, may be compelled, in a suit on the contract, to convey their individ- ual or proportionate interests as tenants in common. Hooker v. Pynchon, 8 Gray, 550. But such is not this case. The con- tract did not contemplate a conveyance of individual interests, but the acquisition of the right of way by the public, and by the joint act or purchase by the obligors ; and, as to block 27, an essential condition and inducement to the parties was the purchase of the half block, and not the right of way merely. In any view of the ease, and apart from the question of laches, considering the nature of the con- tract, the state of the title, the indefinite- ness and uncertainty in the description set forth in the contract, we think that the parties should be left to their action at law, and the Interposition of a court of eq uity is not warranted. Order affirmed. G94 SPECIFIC PERFOEMANCE OF CONTRACTS. HAFFEY V. LYNCH. (38 N. E. 298, 143 N. Y. 241.) Court of Appeals of New York. Oct. 9, 1894. Appeal from supreme court, general term, first department. Action by Michael H. Haffey against Sarah Lynch for specific performance of a con- tract for the sale of land. From a judg- ment of the general term (23 N. Y. Supp. 59) affirming a judgment dismissing the com- plaint, plaintiff appeals. Reversed. Charles Strauss, for appeUant. Henry H. Anderson, for respondent EARL, J. At an auction sale of the de- fendant's real estate the plaintiff purchased a parcel of land described in the complaint at the price of $7,800, and paid 10 per cent, of the purchase price, besides certain fees and expenses. The parties signed a written con- tract specifying the terms of sale, and the time and place of full performance by the parties. By the written contract the defend- ant was to convey the land "by the usual deed containing full covenants with warran- ty." The defendant did not tender to the plaintiff such a deed as he claimed he was en- titled to, and then he commenced this action against her to compel the specific perform- ance of the contract Until the trial of the action it appeared that she had at the time of the sale such a title to the land as she was bound to give. But subsequently one Nathaniel Jarvls, Jr., claiming the land in fee, brought an action of ejectment against her to recover the land, and filed a lis pen- dens. The plaintiff knew of this claim and the lis pendens when he commenced this action; and solely on account of the exist- ence of the lis pendens, and such knowl- edge thereof, the court refused specific per- formance, and dismissed the complaint We think the learned court fell into error, and that, upon the undisputed facts found, it should have given to the plaintiff judgment for specific performance. We must first notice the issue joined by the pleadings. The plaintiff alleged in his, complaint the contract; that he had perform- ed the same, and was ready and willing to perform the same upon receiving such a conveyance as he was entitled to; that after several postponements of time for the per- formance of the contract at the request of the defendant, her attorney tendered to him a deed of the land, at the same time saying to him that she could not give him a valid and marketable title to the land, because it was incumbered; that he rejected the deed on the ground of the alleged incumbrance upon the land, at the same time notifying her that he was ready and willing to perform on his part if she would give him such a deed as he was entitled to; that she refused to give him such a deed; that the title to the land was incumbered and rendered unmar- ketable by the lis pendens filed in the eject- ment action; that the defendant could at all times have obtained the cancellation and dis- charge of the lis pendens, and could have conveyed to him such a title as the contract entitled him to. She, in her answer, ad- mitted the making of the contract; denied that he had performed, or was ready and willing to perform, the contract, on his part; admitted the commencement of the ejectment suit, and the filing of the lis pendens; al- leged that she had tendered to him such a deed as she was bound to give; denied that she was at any time unable or unwilling to convey the land; and alleged that she could at all times since the execution of the contract have conveyed the title of the land to him according to the contract, had she been so disposed, and that she has at all times been ready and willing so to do. It thus appears that the issue between the par- ties was as to the performance of the con- tract, the plaintiff alleging that he had per- formed, and was ready and willing to per- form, and the defendant alleging that she had performed, and was ready, willing and able to perform, on her part. On the trial the plaintiff was the sole witness sworn, and the trial judge, after finding the ownership of the land by the defendant, and the making of the contract, found as follows: "That the plaintiff has in all things performed all the terms and conditions of said contract, and has been, on his part, ready and willing to fulfill the same, and accept a conveyance of the fee of the said property." "That the said defendant, through her attorneys, has, prior to the commencement of this action, re- fused to make said conveyance under the said agreement, notwithstanding the plain- tiff's frequent requests therefor." "That such refusal on the part of the defendant to make such conveyance was due to the fact that one Nathaniel Jarvis, Jr., had, after said sale, but before the day fixed for the delivery of the deed thereunder, commenced an action in ejectment in this court against said defendant, claiming the ownership of the premises in question, and had filed a notice of the pendency of said action in the office of the clerk of the city and county of New York, on March 6, 1889." "That there- after, and before the trial of this action, the said ejectment suit was brought to trial, and the complaint therein was dismissed, and from the judgment entered on which dis- missal an appeal was taken to the general term of this court, which court affirmed said judgment; and no appeal from said order of the general term has been taken to the court of appeals, and the time to do so has now expired." "That the said plaintiff has ex- pressed his consent at the trial of this action to accept from the defendant a conveyance of said land by the usual deed containing full covenants with warranty, subject to the reservations contained in the eighth para- graph of the said terms of sale." "That less than three years have passed since the SPECIFIC PEKFOEMANOE OF CONTRAGTiS. 695 rendering of judgment and the filing of the judgment roU in the said decision of Jarvis V. Lynch." And he found, as conclusions of law, "that the sale having been made in good faith, and the question as to the title of the said premises having arisen since the sale, the defendant should not be compelled to give a warranty deed, or procure a policy of title insurance of the Lawyers' Title In- surance Company, insuring the title to the said premises to the plaintifC;" "that the de- fendant is entitled to judgment dismissing the complaint upon the merits of the action;" "that such judgment should be without prej- udice to the right of the plaintifC to bring an action for damages for breach of the con- tract set forth in complaint." The plaintiff has been defeated In his ac- tion thus far on the ground that it was im- possible for the defendant to perform her contract at the time of the commencement of the action, and that he knew it was. She did not set up such a defense in her answer, but, on the contrary, alleged that she was able and ready to perform her contract, and there was no proof showing that It was then impossible for her to perform the contract. There was no evidence showing what basis, if any, the claim of title to the land by Jarvis had. It may have been colorable, and not real or substantial. It did not appear that she had made any effort whatever to re- move the incumbrance of the lis pendens. It was her duty to perform the contract, and to make all reasonable efforts to remove any obstacle which stood in the way of her per- formance. The plaintiff was not In fault for refusing to accept a deed which the de- fendant at the time declared would convey an incumbered title. He was entitled to a marketable title. Moore v. Williams, 115 N. Y. 586, 22 N. E. 233; Vought v. Williams. 120 N. Y. 257, 24 N. E. 195. It is a gen- eral rule in equity that the specific perform- ance of a contract to convey real estate will not be granted when the vendor, In con- sequence of a defect in his title, is unable to perform. In such cases specific perform- ance is denied because the court cannot en- force its judgment, and because, also, it would be oppressive to the vendor. But if the defect in the title existed at the date of the contract, or was due to some fault or to some act of the vendor subsequent to the contract, the court will generally entertain an action for specific performance, and re- tain jurisdiction for the purpose of award- ing damages for the breach of the contract. But where, as in this case, the defect in the title arises after the making of the contract, without any fault of the vendor, and the vendee knew of the defect in the title when he commenced his action, the court will not retain the action for the purpose of award- ing the damages. Wiswall v. McGowan, Hoff. Ch. 125; Morss v. Elmendorf, 11 Paige, 277. This rule was adopted because the vendee should not commence a fruitless ac- tion in equity simply to recover there his damages for a breach of conti^act. The rule has been modified since the Code practice, which authorizes the joinder of legal and equitable causes of action; and, while the equitable relief will be denied in such a case, now the action will be retained, and the issue as to the breach of contract and dainages will be sent to a jury for trial. Sternberger v. McGovem, 56 N. Y. 12. But this rule was adopted in equity not solely because at the time of the commencement of the action the defects in the title existed, to the knowledge of the vendee, but also because the case was such that at the time of the rendition of the judgment the court could not grant the equitable relief. The rule and the ground upon which it is based have no application to a case where the defect has disappeared at the time of the trial, and the court can then give an effective judgment for the equitable relief demanded; and no case can be found, prior to this, where an equity court has de- nied specific performance because the ven- dor's title was defective at the commence- ment of the action, but valid and perfect at the time of the trial. In such a case, why should not the vendor perform? He is able to, and the vendee is entitled to performance unless some other defense has intervened, and the court is able to enforce performance. Here the plaintiff was willing to take such a title as the defendant could convey at the trial. The ejectment suit had finally re- sulted in favor of the defendant. The lis pendens had ceased to be operative, and could, if necessary, have been removed. The fact that Jarvis could have paid the costs and taken a new trial under the statute is of no importance. There was final judgment against him, and the contingency that he might take a new trial is of no more im- portance than the contingency that some other person might at some time commence an action to recover the same land. Equity courts, in awarding relief, generally look at the conditions existing at the close of the trial of the action, and adapt their relief to those conditions. The plaintiff in an equity action, as a general rule, should not be turn- ed out of court on account of any defense Interposed to his action, if at the time of the trial the facts are such that if he then com- menced his action he would be entitled to the equitable relief sought If a vendor has no title, or a defective title, to laud which he contracts to sell, and subsequently ob- tains a perfect title, he can be compelled by his vendee to perform his contract. Fry, Spec. Pert. (3d Ed.) 480. And why should the vendor not be compelled to perform if he perfects his title while the action for spe- cific performance is pending? A perfect title by the vendor is no part of the vendee's cause of action, and he is just as much en- titled to the equitable relief, and the equity court is just as competent to give it, wheth- er the title of the vendor was perfected be- fore or after the commencement of the action. It does not appear that anything oc- GOG SPECIFIC PERFORMANCE OP CONTRACTS. curred after the commencement of the ac- tion which should bar the relief asked by the plaintifC. There are no complications grow- ing out of the lapse of time, and no material change In the situation of the parties, or of the land in controversy. We therefore see no reason to doubt, upon the facts found, that the plaintiff was entitled to specific per- formance of the contract; and the Juflg^ ment should be reversed, and a new trial granted, costs to abide event. FINCH, O'BRIEN, and BARTLETT, JJ., concur. PBCKHAM and GRAY. JJ., dis- sent ANDREWS, C. J., not sitting. Judgment reversed. SPECIFIC PERFORMANCE OF CONTRACTS. 697 GOTTHELF v. STRANAHAN. (34 N. E. 286, 138 N. Y. 345.) Court of Appeals of New York. June 6, 1893. Appeal from city court of Brooklyn, gen- eral term. Action by Charles Gotthelf against James S. T. Stranahan to compel specific perform- ance of a contract for the sale of lands. From a judgment of the general term (19 N. Y. Supp. 161) affirming a judgment for plaintiff, defendant appeals. Modified. George G. Dutcher, (Wm: C. De Witt, of coimsel,) for appellant. George G. & F. Reynolds, for respondent. ANDREWS, O. J. The original contract, made on the 7th day of January, 1891, was by its terms to be completed by a convey- ance and payment of the unpaid purchase money on the 9th day of February in the same year. The vendee was to pay for the property the sum of $22,500, as follows: $2,000 on the execution of the contract, $4,750 on the execution of the deed, and the balance of $15,750 in five years, with in- terest, to be secured by mortgage on the land. The vendor was to convey the land by warranty deed in fee simple, free from aU incumbrance. The vendee, on the exe- cution of the contract, paid the sum of $2,000 as provided. If the contract had been per- formed on the 9th day of February, 1891, according to its terms, the question now presented would not have arisen. The as- sessments had not then been laid and, if the deed had been given on that day, they would have become a charge on the land subsequent to the conveyance, and the de- fendant would have been under no obliga- tion, legal or equitable, to pay them. They would have attached as a charge upon the title acquired by the plaintiff. But by the mutual assent of the parties the completion of the contract was postponed from time to time, in all for a period of three months, imtil May 4, 1891. The first postponement, until February 16, 1891, was for the accom- modation of the plaintiff; the others were for the accommodation of the defendant, to enable him to clear the land of squatters who had gone upon it without permission and erected shanties and hovels in which they lived, and between whom and the de- fendant, in some cases, an irregular sort of tenancy had grown up by the payment and receipt from time to time of small sums as rent. During this period of three months two assessments on the property for local improvements were laid and confirmed by the city of Brooklyn, — one on the 3d day of March, 1891, for $901.12, for the grading and paving of Bush street; and one on the 20th day of April, 1891, for $1,079.33, for the grading and paving of William street. This action is brought by the vendee against the vendor to compel a specific performance of the contract of sale. The defendant is ready and willing and has offered to convey the premises with covenant of warranty as of the 9th day of February, 1891, the day originally fixed for the execution of the deed. The plaintiff insists that the vendor is bound to warrant the title as against the assess- ments mentioned. This is the controversy in the case, and the point for determination is whether the plaintiff, upon equitable prin- ciples, is entitled to the relief he seeks, and to cast upon the defendant the burden of paying the assessments. He does not ask to be relieved from the contract He elects to have a decree for performance upon such conditions as the court shall determine, in case it shall be held that upon principles of law or equity he is not entitled to demand a covenant by the defendant covering the lien created by the assessments. The premises contracted to be sold con- sisted of a block and part of a block of land in one of the outlying wards of Brooklyn, which, when the contract was made, was partly covered by water, and was unfenced and commons. Bush street, adjoining the southerly side of the land, was a traveled road, and had been such for many years. It was graded to some extent, but had not been paved. It was an ordinary country road. One of the assessments was for the contemplated improvement of Bush street. William street, to which the other assess- ment related, was mostly under water. In view of the peculiar system of local improve- ments prevailing in Brooklyn, one question presented is whether the assessments in question constituted incumbrances on the land in May, 1891, when the defendant of- fered to convey, within the true meaning of the contract of sale. The charter of Brook- lyn is unique in respect to its system of local improvements. The district of assess- ment is to be prescribed, and the estimated cost of contemplated local improvements is required to be assessed on the district bene- fited, and a warrant for the collection of the assessments issued, and at least one-third of the aggregate assessment must have been collected before any contract for making the improvement is authorized to be made; and the city may, even after the assessments have been collected, decline to make a con- tract, or to go on with the improvement, and may discontinue the proceedings, returning the money collected on the assessments. Laws 1888, c. 583, tit. 19, §§ 1-^, inclusive. In oth- er cities, assessments for local improvements follow the performance of the work. In Brooklyn they precede the execution, and are collectible in advance. The contemplated im- provements of Bush and William streets, for which the assessments in question were laid have not yet been made. There is no explana- tion of the delay. When the proceedings were initiated does not appear, and, referring to G98 SPECIFIC PERFOEMAJMCE OF CONTRACTS. tbe charter provisions, there can be no infer- ence that any step whatever had been taken when the contract of sale was executed, or prior to the 9th of February, 1891, when, by the original contract, the deed was to have been given. The parties entered into a con- tract for the sale of unimproved land. The consideration to be paid and received was pre- sumably based on the value of the land in its existing condition. William street had no ex- istence except on the city map, and Bush street was an ordinary road. Whether this condition would be changed at any time, and whether William street would be raised and made dry land, and Bush street be improved and brought to the condition of an ordinary city street, could not be known by the parties to the contract. If they anticipated that at some time the city would enter upon the im- provement of this section of the city, they knew that any charge which might be im- posed on the property embraced in the con- tract for the expense of such improvement would represent the benefit received by it from the improvement, as the theory of such as- sessment is that the value of the land would be enhanced by at least an equivalent amount. It is impossible to suppose that the parties contemplated when the contract was executed that incumbrances created by the force of public law for improvements initiated after the making of the contract and intermediate that date and the time fixed for the convey- ance should be paid by the vendor. If the contract can have this construction, then the plaintiff is entitled to property not in the con- dition it was in when he contracted to pur- chase it, but an improved estate, improved at the expense of the vendor by the act of the city, which he could not control, initiated aft- er the contract was made. This construction would compel the vendor to pay out of the purchase money the cost of an improvement which by so much has increased or will in- crease the value of the property, and the vendee would acquire property which he did not pay for. The question as to the true meaning of the contract to convey free from aU incumbrances is quite different from that which would be presented by an assessment made interme- diate the date of the contract and the time fixed for the conveyance for a local improve- ment made before the contract was entered into. In that case the purchaser buys with the improvements made, and presumably pays a price fixed with reference to the land in its existing condition. The case of periodical taxes for the support of government, assessed and laid between the date of a contract and the time fixed for the conveyance, would con- stitute an incumbrance within the meaning of the covenant. The time of the imposition of such taxes is known in advance, and unless excepted from the covenant would be deem- ed to be covered thereby. But under the char- ter of Brooklyn assessments for local im- provements are made in advance of the execu- tion of the work. They represent, or are sup- posed to represent, benefits thereafter to be secured to the property assessed. The time when improvements will be initiated cannot be known. The contract to convey free from incum- brances ordinarily has reference to incum- brances or liens actually existing when the contract is executed, or thereafter created, or suffered by the act or default of the vendor. While the assessments in question constituted, under the charter of Brooklyn, liens on the lands assessed from the time of their confir- mation by the common council, and are, in a strict sense, incumbrances thereon, we are of opinion that they are not incumbrances with- in the meaning of the contract. They did not diminish the value of the subject of the con- tract. The plaintiff will acquire what the de- fendant intended to sell and what he expected to receive, and, but for the postponement of the time of the execution of the deed, the plaintiff would have taken his title before the assessments were laid. This incident ought not to impose upon the defendant a loss pro tanto of so much of the purchase money. But even if the contract, by its true interpretation, imposes upon the defendant the legal obliga- tion to pay the assessment, this is not de- cisive of the right of the plaintiff to relief by way of specific performance. This equi- table remedy cannot be claimed as a matter of right. It is discretionary with the court to grant or withhold it in furtherance of jus- tice or to prevent injustice. Where, by rea- son of circumstances attending the making of the contract, such as fraud, accident, mistake, or where unconscionable advantage has been taken, or where, by reason of circumstances which have intervened between the making of the contract and the bringing of the action, the enforcement of the equitable remedy would be inequitable, and produce results not within the intent or understanding of the par- ties when the bargain was made, and there has been no inexcusable laches or inattention by the party resisting performance, in not foreseeing and providing for contingencies which have subsequently arisen, the court may and will refuse to specifically enforce the contract, and will leave the party to his legal remedy. The cases are very numerous under this head, and no hard and fast rule can be formulated by which it can be readily deter- mined how the discretion of the court in a giv- en case should be exercised. But it seems to us to be very clear that to enforce the con- tract in this case by requiring the defendant to covenant against the assessments in ques- tion would violate the spirit of the contract, and convert the equitable power of the court into an instrument for the accomplishment of rank injustice. The case of Willard v. Tay- loe, 8 Wall. 564, contains an able discussion of the principles governing the courts in ad- ministering relief by way of specific perform- SPECIFIC PERFORMANCE QF CONTRACTS. 699 ance of contracts, and Mr. Justiqe Field, In his opinion In that case, so fully cites the au- thorities that a further reference to them here is unnecessary. We think the judgment of the special and general terms should be mod- ified by excepting from the scope of the cove- nant in the deed to be given by the defendant the assessments in question, and that, as modified, the judgment should be affirmed, with costs to the defendant in all courts. All concur, except GRAY, J., not voting. Judg- ment accordingly. 700 SPECIFIC PERFORMANCE OF CONTRACTS. OORBIN V. TRACY et aL (34 Conn. 325.) Supreme Court of Errors of Connecticut Sept. Term, 1867. Bill In eqiiity, brought by the petitioners, a joint stock corporation, to the superior court for Hartford county, to compel the specific performance of a contract to as ^gn a patent righ t. The superior court (jubomis, ~3.) passecTa^ decree in favor of the petition- erg, and the respondents filed a motion for a new trial and a motion in error. The case is sufficiently stated in the opinion. C. E. Perkins, in support of the motions. Mr. Hubbard and C B. MitcheU, contra. CARPliiNTER, J. It appears that the con- tract set out in the plaintiffs' bill was not, at the time of its execution, duly stamped pm-suant to the laws of the United States. On the 26tlj day of March, 1867, the collect- or of the first collection district of this state caused said instrument to be stamped, and then and there entered upon its margin the following certificate: "I have this day affixed the proper stamp, required by law, to this instrument, and sat- isfactory evidence having been furnished that the omission to affix a stamp at the proper time was the result of inadvertence, and without design to evade the law, the penalty is remitted. Hartford, March 26, 1867. H. A. Grant, Collector." To the admission of this instrument, thus stamped, in evidence, the respondents ob- jected, but the court received it. The cor- rectness of this ruling is the only question presented by the motion for a new trial. The law of the United States (Stat. 1865- 66, p. 142) makes the instrument, if executed without a stamp, "with intent to evade the provisions of this act," "invalid and of no effect." The act fiulher provides that the collector of the revenue shall, upon the pay- ment of the price of the proper stamp re- quired by law, and of a i)enalty of fifty dol- lars, affix the proper stamp to such instru- ment, and note upon the margin thereof the date of his so doing, and the fact that such penalty has been paid; and the same shall thereupon be deemed and held to be as valid, to all intents and purposes, as if stamped when made or issued. But this provision does not apply to this case as the respond- ents seem to suppose; for there is no pre- tense that this instrument was executed without a stamp with the Intent to evade the provisions of this act, but, on the con- trary, the proper officer has expressly found that the omission to fix stamps was the re- sult of inadvertence, and without design to evade the law. There is, however, a proviso In the act which Is applicable to this case. That pro- viso is as follows: "That when It shall ap- pear to said collector, upon oath or other- wise, to his satisfaction, that any such in. strument has not been duly stamped at the time of making or issuing the same, by rea- son of accident, mistake, inadvertence, or urgent necessity, and without any willful de- sign to defraud the United States of the stamp, or to evade or delay the payment thereof, then and in such case, if such in- strument, &c., shall within twelve calendar months after the first day of August, eight- een hundred and sixty six, or within twelve calendar months after the making and issu- ing thereof, be brought to the said collector of revenue to be stamped, and the stamp tax chargeable thereon shall be paid, it shall be lavrful for the said collector to remit the penalty aforesaid, and to cause such instru- ment to be duly stamped." The act further provides that such instrument "may be used in all courts and places in the same manner and with like effect as if the instrument had been originally stamped." The certificate of the collector brings this case within the spirit and letter of this part of the act, and the contract was properly received in evidence. A new trial is not advised. 2. Under the motion in error, It Is objected that the petitioners have not made out a case for the interference of a court of equi- ty,— that coiu:ts of equity in this state vnll not interfere to enforce agreements to sell personal property unless the circumstances are such as to make a trust, because there is in such a case a remedy at law by an action for damages. The objection assumes that there is a dis- tinction, in questions of this character, be- tween real and personal property. If any such distinction exists, it does not go to the extent claimed. The ground of the jurisdiction of a court of equity in this class of cases is that a court of law is inadequate to decree a specific per- formance, and can relieve the injured party only by a compensation in damages, which, in many cases, would fall far short of the re- dress which his situation might require. Whenever, therefore, the party wants the thing in specie, and he cannot otherwise be fully compensated, courts of equity will grant him a specific performance. They will decree the specific performance of a contract for the sale of lands, not because of the peculiar na- ture of land, but because a party cannot be adequately compensated in damages. So In respect to personal estate; the general rule that courts of equity will not entertain juris- diction for a specific performance of agree- ments respecting goods, chattels, stocks, chos- es in action, and other things of a merely per- sonal nature, is limited to cases where a com- pensation in damages furnishes a complete and satisfactory remedy. 2 Story, Eq. Jur. §§ 717, 718. The jurisdiction, therefore, of a court of eq- uity, does not proceed upon any distinction between real estate and personal estate, but SPECIFIC PERFORMANCE OF CONTRACTS. 701 upon the ground that damages at law may not, in the particular case, afford a complete remedy. 1 Story, Eq. Jur. §§ 716-718, and cases there cited; Clark v. Flint, 22 Pick. 231. When the remedy at law is not full and com- plete, and when the effect of the breach can- not be known with any exactness, either be- cause the effect will show Itself only after a long time, or for any other reason, courts of equity will enforce contracts in relation to per- sonalty. 3 Pars. Cont. (5th Ed.) 373. An application of these principles to the case before us relieves it of all difficulty. The contract relates to a patent right, the value of which has not yet been tested by actual use. All the data by which its value can be estimat- ed are yet future and contingent. Experience may prove it to be worthless, another and bet- ter invention may supersede it, or it may itself be an Infringement of some patent already existing. On the other hand it may be so sim- ple in its principle and construction as to defy aU competition, and give its owner a practical monopoly of all branches of business to which it is applicable. In any event its value cannot be known with any degree of exactness until after the lapse of time; and even then it is doubtful whether it can be ascertained with sufficient accuracy to do substantial justice be- tween the parties by a compensation in dam- ages. On the whole we are satisfied that .iustice can only be done. In a case like this, by a specific performance of the contract There is therefore no error In the decree complained of. The other judges concurred. '702 SPECIFIC PERFORMANCE OF CONTRACTS. HICKS et al. v. TURCK et al. (40 N. W. 339, 72 Mich. 311.) Supreme Court of Michigan. November 1, 1888. Appeal from circuit court, Cllntou county, in chancery; Vernon H. Smith, Judge. This is a suit by John Hiclis, Robert M. Steel, Josiah Upton, and Cornelius Bennett against William S. Turcli and Townsend A. Ely, for the specific performance of a con- tract. Defendants appeal from an order overruling their demurrer to the bill. James L. Clark and Geo. P. Stare, for ap- pellants. O. L. Spaulding, for appellees. SHERWOOD, C. J. The bill in this case is filed to obtain a decree for the specific per- formance of a contract reading as follows: "Riverton, Neb., October 81, 1885. "Due David S. French, attorney in fact for Hicks, Bennett & Co., eighteen thousand three hundred and sixty-six dollars, ($18,366.- 00,) being the balance on consideration of one-half interest in personal property and lands this day sold Robert M. Steel, John Hicks, William' S. Turck, and Tovcnsend A. Ely; above sum to be paid by assignment of a certain mortgage on lands in Gratiot county, Michigan, to said David S. French, attorney, for $2,000; and balance of sixteen thousand three hundred and sixty-six dol- lars ($16,366) to be paid by promissory note due and payable on or before five years from date, with annual interest at seven per cent, per annum, said note secm-ed by mortgage on the undivided one-half interest in said ranch property, as collateral security for payment of said sum of sixteen thousand three hundred and sixty-six dollars, and in- terest as aforesaid. Wm. S. Turck. "Townsend A. Ely." The bill states that at the time the note was given the complainants were a firm lo- cated and doing business under the name of Hicks, Bennett & Co., in Michigan, and were seized of a large quantity of lands in the county of Franklin, in the state of Ne- braska, the particular description of which is fully set out in the bill; that on that day said firm' by David S. French, its attorney in fact, conveyed by full covenant warranty deed the lands described in the bill to John Hicks and Robert Steel, who resided at St. Johns, Mich., and the defendants, who re- sided at Alma, Mich., for the sum of $32,- 732; that the purchasers upon said sale en- tered upon said premises, and ever since have had the actual possession thereof; that on the same day Hicks, Bennett & Co. sold to the grantees in said deed all the cattle, stock, hay, grain, farming implements, tools, and other personal property on said land for the sum of $10,000; that in consideration of the premises, and in payment to the com- plainants for the undivided one-half of the said real and personal property, Turck and Ely, who knew all about the lands, the title of complainants thereto, dnd the condition of the personal property, agreed to pay to complainants $21,366, being one-half of the total purchase price of the land and per- sonal property, the payments to be made as follows: $3,000 in their promissory note due in two years, and which they gave, and that they would secure and pay the balance of the purchase price by assigning to the said French, who was attorney in fact of the complainants, a certain real-estate mortgage of $2,000 on lands in Gratiot county, Mich., and for the remaining siun of $16,366 would at once execute and deliver to French, for complainants, their promissory note for that amount, due on or before five years from the date thereof, with annual interest at 7 per cent, and secure the payment of the same by mortgage on the undivided half of the lands so deeded to them; that the said $2,000 mortgage was assigned, as promised by the said defendant Turck, but the said defendants refused to and have not made the note and mortgage to complainants for the $16,366, as they agreed to do, and still refuse to comply with complainants' request for them so to do. Complainants further say and aver in their bill that they have complied in all things with and fully kept their agreement with said defendants, and performed all its requirements on their part in the premises, and are now entitled to have said note and mortgage from said de- fendants as they promised to make it, in accordance with the written agreement here- inbefore referred to, and which was, after being made by defendants, duly given to said French, for the complainants, who now have the same. The complainants ask the court, upon the foregoing facts, to decree that defendants specifically perform their agreement with the complainants, and ex- ecute and deliver to them said note and mortgage. The defendants appeareji in the case, and demurred to complainants' bill, as- signing two grounds of demurrer: (1) That the facts set up in the bill are not sufficient to entitle complainants to the relief prayed; (2) that complainants have a complete and adequate remedy at law touching all matters set up in the bill. The cause was heard before Judge Smith in the Clinton circuit, who made a decree overruling the demurrer, and allowing defendants 20 days in which to answer. We are satisfied this decree was proper. The defendants had received the full con- sideration for what the complainants asked. The complainants might have had a remedy at law; but we are by no means sure it would be an adequate one. On the contrary, the remedy at law, when resorted to, is lia- ble to a very great variety of perplexities and embarrassments arising from the want of the note promised, the refusal to give which is a gross violation of their contract, for which the demurrer concedes no excuse can be given. The note was liable to run SPECIFIC PERFORMANCE OF CONTRACTS. 703 live years, and. complainants had the right to have the amount ovying thereon during all the time it did run secured by the mortgage. The land was not within the jurisdiction of the courts in this state. It could he easily transferred to bona fide holders, and the per- ils of insolvency are not beyond the possibil- ities among business men, as all experience shows. All these are circumstances of more or less embarrassment when the remedy at law is resorted to. It is but equitable and just that this contract should be specifically performed upon the showing made in this bill. This bill is not filed for an accounting, nor to enforce payment of a debt, but to compel a party to comply with his promise, of+er receiving the full consideration upon which it was made, to make and execute evidence of indebtedness, and give security for the payment thereof. There is no pro- ceeding at law which can accomplish this. Equity alone can take cognizance of such a case, and do justice between the parties. The bill furnishes a clear case for the ex- ercise of that sound legal discretion which the court must always use in awarding specific performance, and the learned circuit judge was right in so holding. The decree be- low will be affirmed, and the cause remanded, with instructions to the circuit judge to al- low defendants 20 days in which to answer the bill after remittitur shall have been filed. The complainants will recover their costs. The other justices concurred. 704 SPECIFIC PERFORMANCE OF CONTRACTS. GAGE V. FISHER. (65 N. W. 809, 5 N. D. 297.) Supreme Court of North Dakota. Nov. 11, 1895. Appeal from district court, Burleigli coun- ty; W. H. Winchester, Judge. Action by J. K. Gage against Asa Fisher. Judgment for defendant, and plaintiff ap- peals. Reversed. G. W. Newton and S. L. Glaspell, for ap- pellant. Alexander Hughes, (or respondent. CORLISS, J. We have reached the con- clusion in this case that we must decide against the defendant and respondent, on his own theory. Taking the view of the facts which is most favorable to him, we are yet compelled to hold that he has neither any defense to the note sued on, nor any valid counterclaim against the plaintiff for money paid by him to plaintiff in part payment of such note. We will state our reasons for this conclusion as briefly as the complicated nature of the case wiU permit. The action Is on a promissory note for $3,- 000 given by defendant to plaintiff. The consideration for the note was the sale by plaintiff to defendant of 10 shares of the stock of the First National Bank of Bis- marck, N. D. The date of this transaction was December 19, 1893. The capital stock of the bank was $100,000, divided into 1,000 shares of $100 each. For some time prior to 1888, plaintiff and defendant had both been directors of this bank, and defendant had been president thereof. In 1888 plaintiff was dropped from the directory, and in 1889 the defendant also ceased to be a director. The control of the bank was then in the hands of a. number of stockholders, who acted In unison, and who were more or less hostile to defendant and plaintiff. Among these stockholders were George H. Fairchild, H. R. Porter, and Daniel Eisenberg. This group of stockholders will be designated in the course of this opinion as the "Fairchild in- terest." The defendant, for the purpose of securing control of the bank, began purchas- ing its stock, and in the summer of 1892 he found himself the owner of 489 shares of such stock, and in the possession of a proxy to vote 16 shares more, owned by a Mrs. Shaw. Had this condition of affairs re- mained unchanged until the next annual stockholders' meeting, in January, 1893, the defendant would have been master of the situation, and would have secured full con- trol of the bank, electing his own board of directors, and, through them, such officers of the corporation as he might see fit to elect. While this condition existed, the de- fendant claims that he was induced to part with his control over the Shaw stock at the suggestion of plaintiff, and under his prom- ise to allow him (the defendant) to control, or in other words to direct, the voting of this stock at the next annual stockholders' meet- ing, in January, 1893. Relying on this prom- ise of the plaintiff to defendant, who, un- questionably, could have voted the Shaw stock at such meeting, had he so desired, de- fendant notified Mrs. Shaw that she could sell this stock to the Fairchild interest. The plaintiff, the defendant, and Mrs. Shaw were all hostile to the Fairchild interest; and the motive which prompted defendant in re- leasing his control over the Shaw stock, and in suggesting to Mrs. Shaw that she sell it to the enemy, was apparently a desire to in- duce the Fairchild interest to assume the heaviest possible burden, without at the same time giving them control of the ma- jority of the stock. Defendant, having pur- chased 2 more shares, was now the owner of 491 shares; and, when plaintiff promised him control of his 10 shares, defendant felt sure of a majority, and therefore permitted the control of the Shaw stock to pass from him. Plaintiff now held the balance of pow- er. The Fairchild interest began to bid for his stock. Finding that plaintiff, despite his promise to allow defendant to control his stock at the meeting, intended to sell to the enemy unless he (the defendant) purchased It for the sum of $5,000, he finally yielded to this demand, and the contract of sale was en- tered into on this basis. It is not claimed, however, that plaintiff, from the, start, in- tended to inveigle by his promises the de- fendant into a position where he could take advantage of the necessities of his situation to extort from him an exorbitant price for the stock. Fraud is not claimed, except as it Is urged that plaintiff's subsequent conduct was fraudulent in contemplation of law. Two thousand dollars of the purchase price was paid at the time of the sale, and the note m suit, for $3,000, was given for the balance of the consideration. Subsequently the defendant paid $1,000 on this note, and thereafter this suit was brought to recover the remaining $2,000 due thereon, with inter- est. The defendant interposed as a counter- claim a claim to recover back the $3,000 so paid; having, as he insists, rescinded the contract, and offered to restore to plaintiff the 10 shares of stock delivered under it. The trial court rendered judgment in his fa- vor, both on the plaintiff's claim against him, and on his claim against the plaintiff ; directing that the note be canceled, and that defendant recover from plaintiff the consideration paid, namely, $3,000. It is true that the plaintiff claims, and he so testified, that the agreement between him and the defendant was that he would give defendant the preference in pur- chasing the stock, in case he offered as much for it as the Fairchild interest; and, if this be the case, he was acting strictly under the contract, in demanding the sum of $5,000 for his stock from the defendant. In that event, both law and good morals would approve the course. But the trial court found that the contract was as we have stated, and we will SPECIFIC PERFORMANCE OF CONTRACTS. 705 assume, for the purpose of this decision, that this finding is correct. The defendant certainly cannot, and he does not, claim that he proTed a case more favorable to himself than the findings, nor does he pretend that he can ever establish a stronger case on an- other trial. Taking these findings as the basis of our decision, we are very clear that the court erred in deciding the case in favor of the de- fendant. The court erred in its conclusions of lav? that the facts found established a defense to the note, and also a valid counter- claim for the $3,000 paid on account of the purchase price. We regard the contract for the sale of the 10 shares of stock for $5,000 as entirely legal, and we do not consider that the defendant is in position legally to claim that, because an unconscionable price was extorted from him on account of the ne- cessities of the situation, he has any right, after having, with full knowledge of the facts, submitted to the demand, to rescind the contract he deliberately made. If it Is true (but we express no opinion on this question of fact) that the plaintiff, after hav- ing induced the defendant to part with the control of the corporation, by letting the Shaw stock slip from him on promise to sub- stitute his (plaintiff's) stock for the Shaw stock, and to allow defendant to use the plaintiff's stock as he (the defendant) could have used the Shaw stock at the next annual meeting, his subsequent conduct in repudiat- ing his agreement was an act of gross per- fidy, and the using of his power, under such circumstances, to coerce the defendant into paying an exorbitant price for this stock, which was worth in the general market not over $500, was base and dishonorable in the ecstreme. But the decision of this case turns on a larger question,— the question of public policy. There is no pretense that plaintiff was guilty of any fraud in the sale of the stock. The parties both dealt at arm's length. There was no concealment of any fact. Q'here was no misrepresentation. Whatever relation of confidence which theretofore ex- isted between the plaintiff and defendant must have ceased, whatever esteem which the defendant had entertained for the plain- tiff must have instantly perished, when he was confronted by the plaintiff with this, to the defendant, unconscionable demand that he pay him $5,000 for stock which, as de- fendant understood, the plaintiff had agreed he was to have the right to use at the meet- ing without compensation. Whatever defend- ant did at this time must have been done, not cheerfully, in a spirit of confidence, but reluctantly, with anger in his heart, and therefore with no disposition on his part to yield to any demand, except so far as coerced by the necessities of his position. It is said that plaintiff having, by his prom- ises, induced the defendant to place himself in the plaintiff's power, the plaintiff should not be allowed to take advantage of the sit- HUTCH.& BUNK.EQ.— i5 uation to extort from him an exorbitant price for the stock. The fallacy of this reasoning lies in its untenable assumption that defend- ant, at the time he bought the stock for $5,000, under the stress of necessity, could have maintained an action against plaintiff to compel the specific performance by him of his contract to allow defendant to vote his (the plaintiff's) stock. If, at the time de- fendant agreed to pay $5,000 for this prop- erty, he was powerless to secure redress in a court of equity,— if at that time the plain- tiff could not be compelled to permit him (the defendant) to vote the stock,— then plain- tiff had a perfect legal right to sell to whom he pleased, for such price as he could ob- tain, and therefore had an undoubted legal right to sell to defendant for $5,000, so long as defendant, being under no other pressure than that of his necessities, agreed to pay that sum for it. Defendant has no right to insist that he was unexpectedly placed in this peculiar position, relying on the promise of plaintiff; for, if it was a promise which a court of equity would not enforce, he had no right to rely on such promise. He was bound to know that the plaintiff might refuse to carry out his agreement, atid that in that event he (the defendant) would be powerless to compel its performance, but must, to save himself from being baflled in his scheme, buy the stock at such a figure as it could be purchased for. Even assuming the contract to allow defendant to control the stock to be valid, so that its breach would subject plain- tiff to liability for damages, still defendant cannot use the breach of that promise as a basis for rearing upon it this argument that plaintiff took advantage of his neces- sities, unless such contract could be specif- ically enforced in equity. Plaintiff had a le- gal right to take advantage of his necessities, and exact such price as he could under the circumstances secure, if he could not be com- pelled by a court of equity to allow defend- ant to vote the stock. If plaintiff could break this promise without liability for damages, because it was void, he could charge what he chose for the stock, and defendant would have no legal ground for complaint. So if the breach of this promise, assuming it to be valid, subjected him to liability only for damages, he yet could break it, and compel the defendant to buy the stock and pay him what he asked for it, without rendering him- self liable to the charge of having, in legal contemplation, extorted an unconscionable contract from the defendant. Suppose that the contract was valid, and that its breach would have subjected the plaintiff to liabil- ity for $500 damages. He might have broken it, and then have taken the position that, while he was liable for these damages, he yet had the undoubted legal right to break such contract and incur such liability, and thereupon sell the stock to whom he pleased, without being liable for anything more; and, if the defendant desired to purchase on the 706 SPECIFIC PERFORMANCE OF CONTRACTS. same terms as another person had offered, he had a legal right to make a new contract of sale with him (the defendant), and the contract would be as valid as a sale to a stranger. The defendant could not complain that an unfair advantage had been taken of him, for, if it Is the law that a court of eq- uity will not enforce such an agreement as the original one in this case, but will leave the party to his action for damages, then defendant was bound to know that he was all the time at the mercy of the plaintiff, who might at any moment repudiate the con- tract, without other liability than for dam- ages; and the defendant was in this posi- tion because he had failed to take the pre- caution to secure a promise that would fully protect him. He has no legal right to ap^ peal to equity for relief because the plain- tiff took advantage of this struggle for su- premacy to exact from him (defendant) an enormous price for his stock. If he (the de- fendant) failed to secure from plaintiff such a contract to protect him against such exac- tion as a court of equity would enforce for his protection. Before this promise to al- low the defendant to vote the stock was made, plaintiff might have sold his stock to defendant for IfOjOOO without the possibility of any rescission of the contract. If defend- ant saw fit to let the Shaw stock go, without securing in place of it an agreement that he could enforce in equity against the plaintiff, and without securing the plaintiff's stock it- self, he voluntarily relinquished his vantage ground without taking the precaution to pro- tect himself legally, and trusted himself and his interests to the honor of the plaintiff; knowing full well, as he testifies himself, that the plaintiff, in the impending struggle for su- premacy, would be sorely tempted to desert him, and, being only human, might falL If we should affirm this judgment, we would give the defendant all the benefit he could have obtained from a decree of specific performance, rendered before the stockhold- ers' meeting, that defendant be allowed to vote the stock. Defendant would recover his money; plaintiff would have back his stock; and it is undisputed that defendant has in fact voted the stock in the manner he desired to vote, and has, through the use of this stock, secured control of the corporation. We are satisfied that, both on principle and under sound authority, the true rule is that a court of equity should never specifically en- force a contract by which one person agrees that another should control his stock without purchasing it, where the sole ground of the appeal to equity is the desire of the party making the appeal to seciu-e control of a cor- poration through the use of the stock he is thus seeking to control. It is a general rule that a court of equity will not enforce a specific performance of a contract for the sale of personal property. Corporate stock comes within the scope of this rule, unless there are peculiar features calling for the in- terposition of a court of equity. But, when such peculiar features exist, equity will de- cree specific performance. Eckstein v. Down- ing (N. H.) 9 Atl. 626; Appeal of Goodwin Gas-stove & Meter Co. (Pa. Sup.) 12 Atl. 736; Cook, Stock, Stockh. & Corp. Law, 5§ 737, 738; White v. Schuyler, 1 Abb. Prac. (N. S.) 300; Treasurer v. Mining Co., 23 Cal. 390; True V. Houghton, 6 Colo. 318; Bumgard- ner v. Leavitt (W. Va.) 13 S. E. 67. When the only peculiar feature Is the desire of the plaintiff, with the aid of the stock he is seek- ing to obtain, to secure the control of a cor- poration, this, perhaps, so far from being a ground for taking the case out of the ordi- nary rule, may be a reason for denying the relief sought. While It Is not illegal for a stockholder to buy up a controlling interest in a corporation, and so absolutely rule Its affairs, and while it is also true that agree- ments to vote stock together are not, when carried out, illegal, in the sense that the law regards the vo'te as void or voidable, yet it may be contrary to public policy for a court of equity to decree specific performance of contracts touching the control of stock, where the sole object of the person who Is seeking to enforce the contract is thereby to secure control of the corporation. We do not say that such a contract Is necessarily void, as repugnant to public policy, but we are by no means clear that a court of equity would specifically enforce it. It may be that sound public i)olicy demands that a court of equity should never lend its aid to the enforcement of a contract relating to stock, when the sole object of the person who wishes It enforced Is to give that person control of the cor- porate affairs. Efforts are often put forth to secure the management of a corporation, which are Inspired by laudable motives. But it is also true that many of these schemes to obtain the control of a corporation are con- ceived and carried on in a spirit Inimical to the interests of the minority stockholders, and not infrequently for the purpose of so m.anaging the affairs of the corporation as to force them to sell their holdings at practical- ly such a figure as the majority stockholders should dictate. Should courts of equity adopt the practice of giving to a minority stockhold- er the right to enforce specific performance of a contract to buy stock, simply to enable him to control the corporation, or, what Is still more Indefensible, the right to vote or control the voting of stock that he does not own, to enable him to secure control of the corporation, they would find that In many cases they had suffered their functions to be perverted by designing rren; that they had in fact been lending to dishonorable schemes such effectual aid as to insure their consum- mation. Proof that the object was legiti- mate, that the motive was pure, would fur- nish no guaranty that the real purpose was not to wreck or mismanage the corporate af- fairs. In no case can a court determine with certain^ just what course the minority SPECIFIC PERFORMANCE OF CONTRACTS, 707 Stockholder, when armed by the court with this absolute power over the corporation, will pursue when he has attained his vantage ground. It is therefore possible that the question whether specific performance should be decreed ought not to turn on the court's surmise or guess as to the ulterior purpose of the person who is seeking to secure control; but because there is always danger that such purpose may be dishonest, and because the court can never surely know the truth as to the real motive, it may be that courts of eq- uity should inflexibly refuse to aid the mi- nority stockholder in his effort to obtain con- trol. In this case the defendant's motive ap- pears to have been honorable, and we have no doubt that such is the fact. He was merely seeking to take the management of the bank from persons who, in his judgment, were mismanaging it, and resume control of its affairs, that it might be built up for the benefit, necessarily, of all stockholders. But perhaps this fact should not influence us. If the specific enforcement of such a contract is to turn on the opinion of the court touch- ing motives, it is obvious that in many cases dishonest projects will receive effectual eq- uitable aid. The decision of the Pennsylva- nia supreme court in Poll's Appeal, 91 Pa. St. 434, strongly supports the view that eq- uity would not specifically enforce a contract for the sale of stock where the only ground for invoking the aid of the court is the pe- culiar value of the stock to the person who has contracted to buy It, because of his de- sire to secure control of the corporation. The bill in that case was filed to compel specific performance of a contract to pur- chase stock in a national bank. The basis of the application to equity was the desire of the plaintiff to secure control of the bank. The court unanimously held that, on grounds of public policy, the relief should be denied. The court said: "While the legal right of the complainant to buy up sufilcient of the stock of this bank to control it in the interest of himself and friends may be conceded, it is by no means clear that a court of equity will lend its aid to help him. A national bank is a quasi public institution. While it is the property of the stockholders, and its profits inure to their benefit, it was nevertheless in- tended by the law creating it that it should be for the public accommodation. It fur- nishes a place, supposed to be safe, in which the general public may deposit their moneys, and where they can obtain temporary loans upon giving the proper security. There are three classes of persons to be protected,— the depositors, the noteholders, and the stock- holders. We have no intimation that the bank, as at present organized, is not prudent- ly and carefully managed. The stock, as now held, is scattered among a variety of people, and held in greater or lesser amounts. It is dilfieult to see how the small stockholders, who have their modest earnings invested in It, the depositors, who use it for the safe- keeping of their moneys, or the business pub- lie, who look to it for accommodation in the way of loans, are to be benefited by the con- centration of a majority of its stock in the hands of one man, or in such way that one man and his friends shall control it. * * ■* We are in no doubt as to our duty in the premises. We are of opinion that the end sought to be attained by this bill is against public policy, and for that reason we refuse our aid." It is true that some stress was laid by the court on the fact that the plaintiff was op- erating with borrowed capital, in his efforts to secure control of the bank. But this fact was not treated as decisive, and it is clear from the Whole trend of the opinion that the absence of this fact would not have resulted in a different ruling in the case. Moreover, this fact was adverted to as tending to show that the object was to speculate, and not to Invest funds in corporate stock. But in the case at bar the defendant never intended to invest a dollar in plaintiff's stock until he was compelled to do it to enable him to accom- plish his real purpose, which. was to secure control of the bank. In Moses v. Scott (Ala.) 4 Sohth. 742, after stating that a vote based upon a prior agreement to vote as a unit would not necessarily be illegal, the court say, at page 744: "Whether an agreement to vote as a unit, or as an agreed majority may dictate, for any given length of time, is a contract so binding in its terms that no party to it can withdraw from it or disregard it vrithout the consent of his fellows, may be a different question. Possibly public policy may exert an influence in the solution of this problem. And even if such a contract be lawful, and on its face exert a continuing force, the grave question comes up, will a court of chancery, in its enlightened discre- tion, lend its aid to the enforcement of a con- tract of so doubtful policy?" However, we are not called upon to settle this interesting question in this case. The case before us presents a stronger one against the exercise of the equitable powers of the courts to en- force specific performance than a contract for the purchase of stock; for here the contract was to give the minority stockholder the right to dominate and direct the judgment of the plaintiff, as stockholder, in the voting of his stock, without owning the stock himself. Evei-y other stockholder in the bank had the right to demand that the plaintiff should, if he desired so to do, exercise at the very time of the annual meeting his own judgment as to the best interests of all the stockhold- ers, untrammeled by dictation, and unfetter- ed by the obligation of any contract. We know of no case where a court of equity has enforced such an agreement We regard as controlling on this question the rule that an irrevocable proxy to vote stock is revocable. See Cook, Stock, Stockh. & Corp. Law, § 610, note 6. There is another reason, and to Our mind a 708 SPECIFIC PERFORMANCE OF CONTRACTS. still stronger reas(l»s, for holding that defend- ant could not have tecured in a court of equi- ty a decree specfflcally enforcing this con- tract. The plair'fiff's promise to allow the defendant to cor irol his stock was based up- on an illegal consideration, — one condemned by public policy,— and the promise was there- fore not binding in law. The trial court found that before defendant suffered the Shaw stocli to pass beyond his control, and before plaintiff had agreed to permit defend- ant to control his stock, defendant had in- formed the plaintiff that it was his purpose to vote his own and the Shaw stock to make plaintiff one of the directors of the bank, and that it was also his purpose to cause him (plaintiff) to secure employment in the bank when the new board of directors was elected; that he desired the advice and co-operation of plaintiff in securing such control, and the se- lection of suitable persons to put in the di- rectory to carry out his plans, etc. The court also found that thereafter plaintiff represent- ed to defendant that he did not need the Shaw stock "to accomplish his said purpose," that he had better let the Fairchild inter- est purehase that stock, and that he (the plaintiff) would not permit his stock to be bought or controlled by the Fairchild inter- est, but that he would vote his stock with the defendant's stock at the next annual stockholders' meeting, for the persons agreed upon by plaintiff and defendant for directors, and would in every way aid and assist de- fendant in the consummation of his plans for securing the possession, control, and manage- ment of the bank and its affairs. These find- ings make it apparent that one of the con- siderations, if not the main consideration, which influenced plaintiff in agreeing to give defendant control of his stock, was the pre- vious statement of defendant that he intend- ed to make plaintiff a director, and see that he was employed in the bank by the new board of directors to be elected at the ap- proaching stockholders' meeting. That both parties understood that at least a portion of the consideration for plaintiff's co-operation with defendant in the project to obtain con- trol of the corporation was the promise of defendant to give him employment in the bank is apparent from a written contract subsequently entered into between the par- ties. On the 19th of December, but entirely separate from the contract of sale, the de- fendant signed and delivered to plaintiff, who accepted the same, the following memoran- dum of agreement: "Bismarck, N. D., Dec. 19, 1892. In consideration of J. R. Gage joining me in effecting the controlling inter- est of the capital stock of the First National Bank of Bismarck, I hereby agree to furnish said J. R. Gage a position as cashier of said bank at a salary of not less than $100 per month, payable monthly, beginning at the 11th day of January, 1893, and during his ability to perform his duties as cashier, pro- vided such control is assumed at such time. Asa Fisher." In connection with this agree- ment the court made a finding of fact which conclusively shows that, all along, one of the inducements to plaintiff's promise to vote his stock with defendant's stock was the promise of the latter to give him a place in the bank. "That said agreement was signed by the de- fendant, Fisher, and was then and there, on said 19th day of December, 1892, delivered to plaintiff, J. R. Gage, by the defendant, and was then and there accepted and retained by said plaintiff, and he, the said plaintiff, then and there promised to perform said agreement on his part; that said contract, interpreted and explained by the circum- stances under which it was made and the subject to which it relates, was intended by each of the parties thereto as follows: That the plaintiff would vote his said ten shares of stock at the annual meeting of the stock- holders of said bank, to occur in the month of January following, for the persons agreed upon by the plaintiflf and defendant for the directors of said bank, and that he would aid, assist, and co-operate with the defendant in carrying out the plans which they had pre- viously discussed and agreed upon for the management of said corporation, as herein- before set forth, and that the defendant would use his influence with the said per- sons proposed and agreed upon for directors, when chosen, to elect the plaintiff to the posi- tion of cashier of said bank, at a salary of not less than $100 per month, during his abil- ity to perform said duties." It is apparent from the findings that this written agreement represents the previous oral understanding between the parties, re- duced to writing. It is not claimed that the parties entered into three different contracts. There were only two agreements made. One related to the control of the stock by defend- ant without buying it. The other was the contract of sale. The court expressly finds that this written contract was no part of the contract for the sale of the stock. That one of the considerations which induced plaintiff to enter into an agreement to vote his stock with defendant's stock was the defendant's promise to seciu*e his employment in the bank, is apparent from the findings to which we have referred; and as it is not pretended, and does not appear, that two different con- tracts relating to the control of plaintiff's stock by defendant preceded the contract of sale, we can find no escape from the conclu- sion that the promise on which defendant re- lied in parting with the Shaw stock was a promise made by plaintiff under the expecta- tion, justified by defendant's promise, that he (plaintiff) was to have a place on the board of directors, and also a position in the bank, at a salary. We are strengthened in this view by the consideration that, unless the promise to give plaintiff employment was part of the original arrangement, the subse- quent written promise of defendant would be without consideration. If plaintiff, for a suf- SPECIFIC PERFORMANCE OF CONTRACTS. 709 fldent consideration, had already promised to let defendant control his stock, an agree- ment on the part of defendant to give him an additional consideration for the right which was already his would be a purely gratuitous promise, not binding in law. So far from its appearing that defendant regarded that he was making such a promise, he shows by the written agreement signed by him that the sole consideration running to plaintifE for liis agreement to permit defendant to control his stock was defendant's promise to secure him a position as cashier in the bank. It is im- possible to conceive that so shrewd a man as the defendant would have promised in writ- ing to give plaintiff a position in the bank, if such had not been part of the original un- derstanding; for, unless it was part of it, the defendant had already secured, by his contract with plaintiff, all he could ever ob- tain by making additional promises. The case would be similar to that of a person, aft- er having secured a contract for the sale to him of stock for a specified consideration, promising in writing that in consideration of such sale he would give the owner of the stock a place in the corporation. Such a promise would not be made by a reasonable being under such circumstances. The fact that such a contract was made in this case is convincing to our minds that the real con- sideration running to plaintiff for his original promise to let defendant control the stock was the promise of defendant to give him em- ployment in the bank. This was what in- duced plaintiff to make the promise. At least, we are satisfied that it was one of the inducements. The contract was therefore con- trary to public policy and void. At least a portion of the consideration was illegal, and hence the promise founded on it was a prom- ise which no court would enforce. The law In such a case leaves both parties where it finds them. To neither will it give redress. That a contract relating to the purchase or control of corporate stock, founded in whole or in part upon a promise to secure for the person who owns the stock employment in the corporation, and an office therein, is ille- gal and void, is a doctrine supported by the unanimous voice of the decisions. Woodruff V. "Went worth, 133 Mass. 309; Noel v. Drake, 28 Kan. 265; Guernsey v. Cook, 120 Mass. 501; Forbes v. McDonald, 54 Cal. 96; Cone's Ex'rs V. Russell (N. J. Oh.) 21 Atl. 847; West V. Camden, 135 U. S. 507, 10 Sup. Ct. 838. In the case last cited the court, referring to a contract, one element of which was a promise to give one of the parties to it permanent em- ployment as manager of a corporation in which he was a stockholder, said: "It was a contract, the purpose and effect of which was to influence the defendant, as a stockholder and officer of the company, 'in the decision of a question affecting the private rights of oth- ers, by considerations foreign to those rights,' and the defendtait, by the contract, was pla- ced under direci and very powerful 'induce- ment to disregard his duties to other mem- bers of the corporation, who had a right to demand his disinterested action in the selec- tion of suitable officers.' He was to be in a relation of trust and confidence, which would require him to look only to the best interests of the whole uninfluenced by private con- tracts. We think this salutary rule is appli- cable in this case, notwithstanding the al- leged contract was not corruptly made for pri- vate gain on the part of the defendant. There were other stockholders in the company. The defendant and the Standard Oil Com- pany, for whose benefit it is alleged the con- tract was made, were not all the stockholders; and it seems to us that it was certainly the right of those other stockholders to have the defendant's judgment, as an officer of the company, exercised with a sole regard to the interests of the company." It cannot be claimed that the illegal parts of this contract could have been separated from the remain- der, and the agreement sustained to that ex- tent. The case falls within no exception to the general rule that where a part of a con- tract is illegal the whole agreement is void. It was not a case where the contract had been executed on one side, and the person who had received the benefit of It was asked I to pay only the legal consideration he had agreed to pay, the illegal consideration being waived. In such a case the agreement can be sustained to the extent of the legal consid- eration. Casady v. Woodbury County, 13 Iowa, 113; 1 Pars. Cont. 380. So far as any consideration ran to plaintiff, there was only a single consideration to induce him to make his promise to allow defendant to vote his stock, 1. e. the promise to give him employ- ^ ment in the bank. But even if he had been in- duced to make this promise for money, in ad- dition to the agreement to give him a position In the bank, still the legal part of the consid- • eration could not have been separated from the illegal, for no court could say, in the light of the actual contract, that he would have made the promise to allow his stock to be vot- ed by another solely for the cash considera- tion. To separate the legal from the illegal con- sideration, under such circumstances, and then sustain and enforce the contract as so radically altered, would be to make a new contract for one wrongdoer, to enable him to enforce against the other wrongdoer, who would be no more culpable, an agreement which he never made. See Greenh. Pub. Pol. p. 17, rule 21, and page 24, rule 25, and cases cited; 2 Add. Cont pt. 2, bottom paging, 762, and cases in note 1; Tobey v. Robinson, 99 111. 222-233; Comp. Laws, §3533. For both of the reasons set forth in this opinion, we are clear that, at the time plaintiff and defendant made the contract of sale sought to be re- scinded by defendant, the latter was power- less to compel the plaintiff to carry out hl3 promise to allow defendant to vote his stock, and that, therefore, as defendant, to secure control of the bank, saw fit to buy the plain- 710 SPECIFIC PERFORMANCE OF CONTRACTS. tiff's stock for the sum of $5,000, he could not, after availing himself of all of the ad- vantages growing out of the possession of such stock, rescind the sale, on the theory that he was coerced by his necessities into making a hard bargain. The confidential relations existing betwe«i the plaintiff and defendant would not trans- mute into a contract binding in equity a con- tract which otherwise would not be enforced by a court of equity. Equity will not grant or withhold relief because the promisor was or was not trusted by the promisee, but it will withhold relief, in all cases of this char- acter, irrespective of the question of confiden- tial relations, because public policy demands that equitable aid should not be extended to what is in fact an illegal scheme. Nor is there any force in the contention that the case is brought within the scope of the doc- trine that a court will relieve a party who has made a contract under the stress erf great necessity. As we have already demonstrat- ed, the defendant has only himself to blame for trusting to a promise the fulfillment of which equity would not compel. He was in no different position from that which he would have occupied had the promise of plain- tiff never been made. And it is too clear to justify argument that had plaintiff de- manded $5,000 for this stock, without having made any prior promise to permit defendant to control it, the defendant, if he saw fit to yield to this demand, would have been enti- tled to no relief on the ground that It was a hard bargain, extorted from him by the ne- cessities of his situation. It-would be a novel and dangerous doctrine that a party who, In his anxiety to secure property, had paid more than Its market value, could appeal to equity to relieve him, because he had been Impelled by his desires to pay a large price for the thing bought. The cases cited by counsel for defendant do not lay down any such doc- trine. They are cases where one person has taken advantage of the financial distress of another to extort from him an unconsciona- ble contract. See Hough's Adm'rs v. Hunt, 15 Am. Dec. 569, and note. Neither can it be said that the defendant was compelled to pay more for the stock than the market price. The strife of the controlling factions to se- cure control of the majority of the stock, to be used at the approaching stockholders' meeting, had temporarily given to this stock a value above its Intrinsic value. To the pur- chaser of it, it meant victory and supremacy in the management of corporate affairs. Why should defendant claim that an exorbitant price had been extorted from him, if he was paying only what plaintiff could have secured from the opposing faction, had defendant de- clined to buy at that figure? The counsel for the defendant, in his learned and exhaustive brief, and in his very able oral argument be- fore the court, has presented everything that could possibly be urged in favor of the case he represents; and this, too, with great ingenui- ty and force. But while we fully agree with him that, if the facts found be true, his client has a just grievance in the forum of con- science, yet we are unable, because of the considerations of public policy to which we have alluded, to give him any legal redress. The judgment of the district court is in all things reversed, and that court is directed to modify its conclusions of law in accordance with this opinion, and to enter judgment for the plaintiff for the full amount due on the note, for principal and interest. All concur. SPECIFIC PERFORMANCE OF CONTRACTS. 711 NEW ENGLAND TRUST CO. v. ABBOTT. (38 N. E. 432, 162 Mass. 148.) Supreme Judicial Court of Massachusetts. SufEolk. Oct. 18, 1894. Report from superior court, Suffolk county. Action by the New England Trust Com- pany against Abbott, executor of the will of Josiah G. Abbott, deceased, to—comBel a tr ansfer to th e company of certain share s of its stock held by defendant's testaiQr,_and to enjoin defendant from further prosecuting an action at law to recover the dividends on said shares. Judgment for plaintiff. W. G. Russell and J. L. Stackpole, for plaintiff. L. S. Dabney and F. J. Stimsom, for defendant MORTON, J. This is a bill brought by the plaintifC to compel the transfer to it, by the defendant, as executor of the will of Josiah G. Abbott, of certain shares in the plaintifC corporation, which were held by said Abbott at his decease, and which, It is alleged, he agreed, when the certificates were issued to him, should be appraised at his death by the directors, and transferred to the plaintifC at the appraisal. If the di- rectors so elected. The bill also seeks to enjoin the defendant from prosecuting an action at law brought by him against the plaintiff to recover certain dividends upon said shares that have been declared by it. The plaintiff was organized in 1869, under a special charter (Acts 1869, c. 182), with a capital of $500,000, which was afterwards increased to $1,000,000. The terms of the alleged agreement are found in the by-laws, of which all that is now material Is as follows: "Art 7. Any member of this corporation who shall be desirous of selling any of his shares, the executor or administrator of any member, deceased, and the grantee or as- signee of any shares sold on execution, shall cause such, their shares, respectively, to be appraised by the directors, which it shall be their duty to do on request and shall thereupon offer the same to them for the use of the corporation at such appraised value; and. If said directors shall choose to take such shares for the use of the corpora- tion, such member, executor, administrator, or assignee shall, upon the payment or ten- der to him of such appraised value thereof, and the dividends due thereon, transfer and assign such slxai-e or shares to said corpora- tion; prx)yided, however, the said directors shall not bfi obliged to take said shares at the appraised value, unless they shall think it for the intCTests of the company; and if they shall not, within ten days after sucU shares are offered to them in writing, take the same, and pay such member, executor, administrator, or assignee the price at whicli tlie same shftU have been appraised, such member, executor, administrator, or assignee shall be at liberty to sell and dispose of the same shares to any person whatever. "Art 8. The directors shall have power, and it shall be their duty, to sell and dispose of the shares which may be transferred as aforesaid to the corporation, whenever, in their judgment. It can be done with safety and advantage to the corporation; and in all sales made by the directors, imder any of the aforesaid provisions, it shall be their duty to sell the shares to such persons as shall appear to them, from their situation and character, most likely to promote con- fidence in the stability of the institution; no greater number than one hundred shares being assigned to any one person, nor, in the case of a person ah-eady a member, a greater number than will be siiflicient to increase his previous number to one hundred shares." These by-laws were adopted before any certificates of stock were issued. After- wards, but before the capital was increased, article 7 was duly amended by adding to it the following: "It shall be the duty of such executor, ad- ministrator, grantee, or assignee to offer said shares for appraisal, and to be taken by the corporation, if it shall so elect, when- ever requested by the actuary or secretary, and no dividends or interest shall be paid or allowed after a failure to comply with such request: provided, that such request shall not be made until after the payment of one dividend and the expiration of six months from the death of the owner or sale as aforesaid, but the offer may be made at any earlier period if the party shall prefer." Every certificate contained on its face, as part of the certificate, the provision that "said shares are transferable only in person or by attorney, duly constituted, on the books of the company, and in the manner and upon the conditions expressed in the by- laws of the company, printed upon the back of this certificate." On the backs of the certificates were printed by-laws 7 and 8. By-law 7 was printed as amended on the backs of those issued after the increase. There were also on the stubs from which the certificates were detached, in the certificate books, two receipts given and signed by the defendant's testator at the time the two cer- tificates were issued to him In the original and increased capital, which were each as follows: "Received the above certificate subject to the conditions and restrictions therein referred to, and to the by-laws of the company, to which I agree to conform." The defendant contends that these by-laws are void. We have not found it necessary to consider that question, and we express no opinion upon it. We think that the case may well stand on the ground that the de- fendant's testator entered into an agreement wipx the plaintiff to do what the plaintiff now seeks to compel his executor to do. It ip manifest that a stockholder may make a 712 SPECIFIC PERFORMANCE OF CONTRACTS. conti-act with a corporation to do or not to do certain tilings in regard to his stoclc, or to waive certain rights, or to submit to certain restrictions respecting which the stockhold- ers might have no power of compulsion over him. In Adley v. Whltstable Co., 17 Ves. 315, 322, Lord Eldon says: "It has been frequently determined that what may well be made the subject of a contract between the different interests of a partnership would not be good as a by-law. For instance, an agreement among the citizens of London that they would not sell except in the mar- kets of London would be good; yet it has been declared by the legislature that a by- law to that effect is void." See, also, Davis V. Proprietors, etc., 8 Mete. (Mass.) 321; Bank of Attica v. Manufacturers' & Traders' Bank, 20 N. Y. 505, 6 Cook, Stocks & S. § 408. In the present case the certificates were is- sued to the defendant's testator in consid- eration of the payment by him to the cor- poration of the amount due for the stock, and of the agreements with it on his part which they contained. By accepting them without objection, and by signing the re- ceipts, he must be held to have agreed to the conditions printed on the backs of the certificates. The fact that the conditions were contained in by-laws which may have been invalid as such does not render his agreement void, if the contract was in substance one which the corporation had power to make. We think that it had such power. It is held in this state that a cor- poration, unless prohibited, may purchase its own stock (Dupee v. Water Power Co., 114 Mass. 37); and we see nothing opposed to public policy in such an agreement as this, with corporations like this. If honestly car- ried out by the directors, it tends to secure a trustworthy body of stockholders, from which those having the care and manage- ment of the affairs of the corporation nat- urally would be selected. It certainly can- not be contrary to public policy that the managers of this and similar institutions should be persons of skill who possess the confidence of the public. The restraint upon alienation is no greater than Is often agreed to. In England it is not unusual to find in the deeds of settlement or articles of associa- tion under which corporations or joint-stock companies have been organized, and which correspond to the charter and by-laws here, provisions requiring the stockholder, in case he wishes to transfer his stock, to offer it to the directors, or to submit to them the name of the transferee for approval. Bargate v. Shortrldge, 5 H. L. Cas. 297; Poole v. Mid- dleton, 29 Beav. 646; Ex parte Penney, 8 Ch. App. 446; MofCatt v. Farquhar, 7 Ch. Div. 591; ChappeU's Case, 6 Ch. App. 902. No objections seem to have been made to these provisions. In this state, the legisla- ture, in numerous instances, has provided, In the charters of corporations like this, that the shares shall be transferable according to such rules and regulations as the stockhold- ers shall establish, and not otherwise. It is hardly possible that the legislature was ig- norant of the construction which has been put upon the power thus conferred, and which in the case of the first corporation of the kind chartered in the commonwealth, the Massachusetts Hospital Life Insurance Company (Acts 1818, c. 180), was shown. It is said, by the adoption of by-laws from which those in this case were copied. It is true that this charter contains no provision in regard to by-laws or to the transfer of shai-es; but the policy of the legislature can- not be affected by such an omission, es- pecially in view of the fact that many of the charters since granted contain this provi- sion. Neither do we think that the agreement Is void for the reason that it authorizes the plaintiff to invest, as the defendant con- tends, in its own stock, or because it compels the defendant to submit to the appraisal of the directors. If the enumeration in its char- ter of certain things in which it may invest Is to be construed as excluding, among others, its own stock, we think that the object of the agreement is not to secure the transfer of the shares to the plaintiff as an investment, but to enable the directors to dispose of it to such person or persons as shall appear to them, from their situation and character, most likely to promote confidence in the sta- bility of the institution; and though, pending its disposition by the directors, it may, for convenience's sake, be placed with the com- pany's securities, and dividends, if declared, collected upon it, that does not alter the es- sential character of the tenure upon which the company holds it. It is settled that one may agree to sell his property at a price to be determined by another, and that he will be bound by the price so fixed, even though the party establishing it was interested; pro- vided the interest was known, and no ob- jection made by the parties, and no fraud or bad faith is shown. Brown v. Bellows, 4 Pick. 179, 189; Palmer v. Clark, 106 Mass. 373, 389; Haley v. Bellamy, 137 Mass. 357, 359; Fox V. Hazelton, 10 Pick. 275; Strong V. Strong, 9 Cush. 569; Benj. Sales (6th Am. Ed.) § 88, note 3. The defendant objects that there was no real appraisal, and that he did not offer the stock for appraisal. The records of the plain- tiff show that at a directors' meeting, at which were present 16 directors, it was voted that the defendant's stock be appraised at $220 per share, and taken for the use of the corporation. The directors were not bound to give the defendant notice or a hearing (Palmer v. Clark, supra); and we must as- sume that they gave the matter such atten- tion as, in their opinion, was necessary, and that the appraisal correctly expresses their judgment, after taking into account such matters as they thought should be consider- ed. There is nothing to show that they were SPECIFIC PERFORMANCE OF CONTRACTS. 713 so mistaken about the facts that what they did was In no fair sense an appraisal of this stock, but of something else. It is said that they omitted the good will. If so, it was, at most, an error of judgment, which would not Invalidate the appraisal. It was not a condi- tion precedent to the appraisal that the de- fendant should offer the stock. The agree- ment of defendant's testator was, in sub- stance, that the stock should be appraised by the directors, and that it might be taken at the appraisal by them if they so elected; and that has been done. The offer was for the purpose of fixing a time from which the 10 days should begin to run at whose expiration the stockholder could dispose of his stock if the directors had not elected to take it. If the directors appraised the stock, and voted to take it at the appraisal, an offer was unnecessary. Lastly, the defendant contends that the plaintiff is not entitled to specific perform- ance, because the stock was greatly under- valued, and because the plaintiff has a rem- edy at law. It is evident that to remit the plaintiff to an action at law for damages would defeat the very purpose of the con- tract, and would not, we think, furnish an adequate remedy. No stock in the plaintiff company has ever been sold in the market, and all the shares that have been transferred have been transferred to the plaintiff, and disposed of by the directors in the manner provided. About three-fourths of the stock of the original subscribers has been thus transferred. There is no evidence that the testator ever objected to this mode of dealing with it; and we see no good reason why the plaintiff should be obliged to accept dam- ages for which it might be difficult to lay down a clear rule, instead of performance. Railroad Coi-p. v. Babcock, 6 Mete. (Mass.) 346; Cushman v. Manufacturing Co., 76 N. Y. 365. The case would perhaps stand differ- ently if the shares were bought and sold in the market like most stocks. Adam v. Mes- slnger, 147 Mass. 185, 17 N. E. 491. The de- fendant does not charge the directors with any fraud in the appraisal. He expressly dis- claims that. It is well settled that where one agrees that another may fix the price for cer- tain property, or the sum to be paid for ma- terial or services, the decision of the party selected cannot be impeached by showing that he has committed an error of judgment, or failed to avail himself of all the informal tion which he might have obtained, or has valued the property too high or too low. Palmer v. Clark, supra; Flint v. Gibson, 106 Mass. 891; Robbins v. Clark, 129 Mass. 145; Railroad Co. v. March, 114 U. S. 549, 5 Sup. Ct. 1035; Stevenson v. Watson, 4 C. P. Div. 148; Sharpe v. Railway Co., 8 Ch. App. 597; Richards v. May, 10 Q. B. Div. 400; Tullis v. Jacson [1892] 3 Ch. Div. 441; Ranger v. Rail- way Co., 5 H. L. Cas. 72. The evidence that was offered by the defendant relating to the value of the stock was therefore rightly ex- cluded. It is equally well settled that specific performance of an agreement to convey will not be refused merely because the price is inadequate or excessive. The difference must be so great as to lead to a reasonable conclu- sion of fraud, mistake, or concealment in the nature of fraud, and to render it plainly in- equitable and against conscience that the contract should be enforced. Chute v. Quincy, 156 Mass. 189, 30 N. E. 550; Lee v. Kirby, 104 Mass. 420; Park v. Johnson, 4 Allen, 259; Railroad Co. v. Babcock, 6 Mete. (Mass.) 346, 352; Cathcart v. Robinson, 5 Pet. 271; Underhill v. Van Cortlandt, 2 Johns. Ch. 339; Belchier v. Reynolds, 2 Keny. pt 2, p. 87; Weekes v. Gallard, 21 Law T. (N. S.) 655; Fry, Spec. Perf. (3d Am. Ed.) § 424, note 1. It is to be observed that this Is a suit direct- ly between the company and a stockholder, to enforce a contract made with the com- pany by the latter, and that the rights of third parties are not involved. Many of the cases cited and relied upon by the defend- ant are cases where the rights of third par- ties are involved, and therefore inapplicable to this. The result is that the plaintiff is entitled to a decree compelling the defendant jto con- vey the shares upon payment by it of the ainount of the appraisal, with interest, and enjoining him from prosecuting the action at law. Ordered accordingly. 714 SPECIFIC PBEFORMANCK OF CONTKACTS. CONGER et al. v. NEW YORK. W. S. & B. R. CO. (23 N. E. 983, 120 N. Y. 29.) Court of Appeals of New York, Second Divi- sion. March 18, 1880. Appeal from supremocourt, general term, Becond department. Action by Clarence E. Conger and an- other against the New York, West Shore & Buffalo Railroad Company. A judg- ment in favor of defendant, entered npon the decision of the special term, was af- firmed at the general term, and plaintiff again appeals. Clarence R. Conger, for appellants. Cal- vin Frost, for respondent. Haight, J. This action was brought to compel a specific performance of a con- tract. The Jersey City & Albany Rail- way Company was incorporated for the purpose of constructing and operating a railroad from Fort Montgomery, in the county of Orange, to a point on the Hud- eon river opposite to the city of New York. As such incorporation it entered into a written agreement with one Catherine A. Hedges, the plaintiffs' grantor, in and by the terms of which she gave to the com- pany a right of way across her premises in Rockland county upon certain condi- tions, one of which was that the company should locate a station in the gorge com- inonly known as the "Long Clove," and stop thereat five express trains each way daily. Subsequently the Jersey City & Al- bany Railway Company was consolidated with the North River Railway Company, under the name of the North River Rail- road Company, and that company was consolidated with the defendant, which was incorporated for the purpose of con- structing and operating a railroad from the New Jersey state line, through the state of New York, to the city of Buffalo. The defendant has entered upon the lands of the said Catherine A. Hedges, and con- structed its road-bed across the same, but It has not constructed any station there- on in the Long Clove gorge, or stopped any of Its express trains thereat. The trial court has found as facts that asuita- ble station for the accommodation of pas- sengers, and the receipt and delivery of freight, at the Long Clove gorge, could be built by the defendant only at a consid- erable expense, because of the nature of the ground at that point; that the place where the plaintiffs demand that the sta- tion be located is near the mouth of a long tunnel, and at a sharp curve in the de- fendant's railroad, upon the side of a steep mountain approached by steep grades in both directions ; that it is sparsely settled. and if a station were establlBhed there It would be of no use to the public ; that very little, if any, benefit would result to the plaintiffs, by the erection of a station, or the stoppage of the trains thereat; that the public convenience would not he promoted, but the public travel would be delayed ; and, as a conclusion of law, that a specific enforcement of the agreement would work hardship and injustice to the defendant, and such enforcement will not subserve the ends of justice; that specific performance should be denied, and the plaintiffs left to their action for damages for a breach of the contract. The evi- dence sustains the findings of the trial court, which have been affirmed by the general term. The questions for our con- sideration are therefore narrowed to a determination as to whether the conclu- sions of law reached are justified under the findings of fact. It has been the well-settled doctrine of this court that the specific performance of a contract is discretionary with the court, and that performance will not be decreed where it will result in great hardship and injustice to one party, without any con- sideration, gain, or utility to the other, or in a case where the public interest would be prejudiced thereby. Clarke v. Railroad Co., 18 Barb. 350; Trustees v. Thacher, 87 N. Y. 811-317; Murdfeldt v. Railway Co., 102 N. Y. 703, 7 N. E. Rep. 404; Day v. Hunt, 112 N. Y. 191-19.5, 19 N. E. Rep. 414. As we have seen, the Long Clovegorgeis located upon the side of a steep mountain, in a sparsely settled district, and is ap- proached by a steep grade, and that a passenger station, with an approach there- at, could be constructed only at a consid- erable expense. These are reasons wor- thy of consideration, but, if there were no others, the trial court might not have deemed them sufficient to refuse specific performance. But they are followed by another, which gives additional force and weight, and that is that the public travel will be delayed by the stoppage of the trains, and that the public convenience will not be promoted. The defendant is a corporation organized under the laws of the state, and is a common carrier of pas- sengers and freight. Its duties are large- ly of a public nature, and it is bound to so run its trains and operate its road as to promote the public interest and conven- ience, and, in view of the fact that but lit- tle if any benefit would result to the plain- tiffs by the erection of a station and the stoppage of trains thereat, as found by the trial court, it appears to us that that court properly refused to decree specific performance and remanded the plaintiffs to their action for damages. The judgment should be aflBrmed, with costs. All con- cur, except Brown, J., not sitting. SPBCXFIO PERFOEMANCE OF CONTBA0T8. 715 HOSS et a}. V. PARKS. (8 South. 368, 93- Ala. 153.) Supreme Court of Alabama. Nov. 18, 1890. Appeal from chancery court, Jackson coun- ty; Thomas Cobbs, Chancellor. Bill to enforce specific performance of a contract to convey land. The title to the land in controversy was in one Jeremiah French. On the 15th day of December, 1887, French agreed, in writing, to convey the land to the complainant. Parks, if Parks would pay him $200 by December 15, 1888. At the execution of this option, 50 cents was paid, and expressed in the contract as the consideration. This contract to sell, or op- tion, was signed by French and his wife, but was not signed by Parks. It was re- corded in the probate office, and defendants, Ross and McClendon, had actual notice of its execution. After the execution of this contract, French moved to Texas. Subse- quently, Ross and McClendon sent an agent out to Texas where French was, and through said agent ofEered French $300 for the land in controversy, and thereby, on November 21, 1888, procured a deed from French and his wife, conveying to Ross and McClendon the legal title to the land in controversy. Be- fore the expiration of his option, under the contract of French, Parks paid French the $200 purchase money aa therein agreed, and received a deed to said lands from said French and his wife, which was executed on and bore the date of 2Sd of November, 1888. On December 21, 1888, the said Ross and McClendon brought an action of eject- ment against Parks to recover the posses- sion of the land in controversy, of which Parks was in possession. Thereupon, on January 29, 1889, Parks filed the bill in this case against said Ross and McClendon, and prayed to have the ejectment suit enjoined; the deed made by French and wife to Ross and McClendon canceled; and to have Ross and McClendon specifically perform the con- tract entered into by French and wife,— making to the complainant a good and per- fect title to the land in controversy. On a final hearing upon the pleadings and proof, the chancellor granted the relief prayed, and the defendants now appeal, and assign this decree as error. J. B. Brown and Watts & Son, for appel- lants. L. W. Days and D. D. Shelby, for appellee. COLEMAN, J. A general rule governing cases of specific performance is that the contract must be mutual, and that either party is entitled to the equitable remedy of a specific performance. Exceptions to this general rule are well established, and one class of contracts to which the exceptions may be applied are those which are unilat- eral in form. Pom. Cont. §§ 167, 168: The exception as to unilateral contracts has been fully recognized and adopted in this state. The ease of Moses v. McClaIn, 82 Ala. 370, 2 South. 741, was for a si>ecific performance of the following contract: "For and in consid- eratioa of the gum of one dollar in hand paid, I hereby give A. J. Moses an option on my lands and improvements situated near Shef- field, and known as my 'House. Place,' con- taining one hundred and twenty acres, more or less, for the sum of eight thousand dol- lars. * * * This option good for 2 days. [Signed] J, W. McClain." It was contended that Moses, the covenantee, bound himself by no writing, and not having bound him- self, he could not in this proceeding hold McClain bound; that the contract not being mutually binding, chancery will not compel its specific performance. The court declared as follows: "Mutuality is frequently said to be one of the conditions of a rightful suit for specific performance. The authorities, however, do not carry it to the length con- tended for. Where the contract is fair, just, and reasonable in all its parts, and the party sought to be charged has so bound himself as to meet the requirements of the statute of frauds, the election of the other contract- ing party to treat the contract as binding, and to enforce it, meets all the requirements of the rule;" citing Wilks v. Railroad Co., 79 Ala. 180; 3 Pom. Eq. Jur. § 1405, and notes; Wat. Spec. Perf. Cont. § 201; Cherry V. Smith, 39 Am. Dec. 150. The case of Johnston v. Trippe (C. C.) 33 Fed. 530, is an authority directly on the point in question, the contract being almost identical in its pro- visions. The different authorities are very generally quoted and commented on, and the conclusion the same as held by this court. The evidence fails to show that there w^as such forcible entry and unlawful detainer as to deprive complainant of his right to file a bill to remove a cloud from title, but the equity of the bill does not depend upon that principle. "The complainants, holding _ the equitable title, bring their bill to comi>el a conveyance of the legal title by those who hold it in trust for them. In such a case, the jurisdiction in no wise depends upon pos- session." Gray v. Jones (0. C.) 14 Fed. 83; Shipman v. Furniss, 69 Ala. 562. The doctrine is well settled that when the vendor, after entering into a contract of sale, conveys the land to a third person, who has knowledge or notice of the prior agreement, such grantee takes the land impressed with the trust in favor of the original vendee, and holds it as trustee for such vendee, and can be compelled, at the suit of the vendee, to specifically perform the agreement by con- veying the land in the same manner, and to the same extent, as the vendor would have been liable to do had he not transferred the legal title. Pom. Cont. § 465, and note. The same rule Is declared in Dickinson v. Any, 25 Ala. 424; Meyer v. Mitchell, 75 Ala. 475. It may be stated as a sound principle of law, if an owner of land in writing gives 716 SPECIFIC PERFORMANCE OF CONTRACTS. another an option on land, for a valuable consideration, whether adequate or not, agree- ing to sell It to him at a fixed price, if ac- cepted within a specified time, it Is binding upon the owner, and upon those who pm'- chase from the owner with a knowledge of such agreement. Moses v. JlcClain, 82 Ala. 370, 2 South. 741; 33 Fed. 530, supra; MauU V. Vaughn, 45 Ala. 134, and authorities. Under such circumstances, the fixed time Is a material part of the contract, and when supported hy a valuable consideration, the owner of the land cannot revoke the offer be- fore the time has expired within which the offer may be accepted. We do not declare that if no specified, definite time was fixed by the parties, and the contract of offer was not supported by a valuable consideration, such an offer could not be revoked. We ex- press no opinion upon this question. John- ston V. Trippe (C. 0.) 33 Fed. supra; Wilks v. Railway Co., 79 Ala. 185; Falls v. Gaither, 9 Port. 617; Cherry v. Smith, 3 Humph. 19; 1 Story, Cont § 496; 1 Pars. Cent. *481, bot- tom p. 511; Bish. Cont. § 325; Benj. Sales. § 42. We find no error in the decree of the chancellor. AfiBrmed. SPECIFIC PERFOEMANCB OF CONTRACTS. 717 JOHNSTON V. TRIPPE.1 (33 Fed. 530.) Circuit Court, N. D. Georgia. December 19, 1887. ill equity. Bill for specific performance by complainant J. L. Johnston against R. B. Trippe, defendant. On demurrer. G. A. Howell, for complainant. Hopkins & Glenn, for defendant. NEWMAN, J. This is a bill filed by com- plainant against defendant to enforce the spe- cific performance of a certain conditional or optional contract for the sale of land. The bill, after stating some preliminary corre- spondence and negotiation between complain- ant and defendant, relative to the sale of cer- tain, land in White county, Georgia, by the latter to the former, alleges that in January, 1887, defendant prepared and executed the following written instrument: "Georgia, Fulton County. This agreement witnesseth, that the undersigned E. B. Trippe, of said state and county, agrees that if said J. Lamb Johnston, of Charleston, S. C, or any one for him, pays or causes to be paid to the said R. B. Trippe, one thousand dollars, on or before January 20, 1888, that the said R. B. Trippe, for himself, his heirs and as- signs, covenants and agrees that he will make to the said Johnston good and sufficient title to lots of land numbers 9 and 25, in 3d dis- trict. White county, said state. And it is fur- ther agreed that if a draft for $50.00 this day drawn by R. B. Trippe, with this option bond attached, is paid at sight, then said R. B. Trippe will make said title, if nine hundred and fifty dollars is paid him on or before Jan- uary 20, 1888; if said sums of money are not paid within the time mentioned, that is, $50.00 on sight draft and $950.00 within twelve months from this date, then this bond to be nuU and void; and it is understood that if the balance of one thousand dollars (i. e., $950.00) is not paid by January 20, 1888, the $50.00 paid on sight draft is forfeited to said R. B. Trippe, and that this option bond is null and void, otherwise of full force and ef- fect "Witness my hand and seal, this January 20, 1887. "[Signed] E. B. Trippe. "Witness: "[Signed] J. H. Curtright, M. L. Cohen." This instrument was sent, about the time of its execution, by defendant to complain- ant by mail to his home in Charleston, South Carolina, and received by complainant. De- 1 That equity will not specifically enforce a contract wanting in definlteness or mutuality, see Bourget v. Monroe (Mich.) 25 N. W. Rep. 514; Hall v. Loomis (Mich.) 30 N. W. Rep. 374; Mosea v. McClain (Ala.) 2 South. Rep. 741; Recknagle v. Sehmalz (Iowa) 33 N. AV. Rep. 365; Durkee v. Cota (Oal.) 16 Pac. Rep. 5 ; Fogg y. Price (Mass.) 14 N. E. Rep. 741. fendant also drew on complainant a sight draft for $50, which was sent, veith the fore- going written instrument, to Charleston. His draft was honored and paid at once by com- plainant, and defendant received the $50. Some time after this, defendant wrote to com- plainant, saying he had an offer of $1,500 for the land, and offering, if complainant would release him from his obligation, to return the $50 paid him, and to pay complainant $50 in addition, if the other sale was made. In the same letter defendant stated that the bond sent by him to complainant was not legally binding anyway. Complainant promptly re- plied, both by wire and letter, to defendant, refusing to release him from his obligation to convey the land in pursuance of the before stated contract. In the same letter in which the complainant refused to release defendant, he instructed defendant to submit his deeds to complainant's attorney, and that, upon their approval by him, complainant would pay the balance, $950. This defendant failed and refused to do, but wrote complainant that he declined to furnish the titles or convey the land in accordance with his contract; and in the same letter inclosed a check payable to his, defendant's, order, and indorsed by him in blank, which he tendered as a repayment of the $50. This letter was received by com- plainant in Nacoochee, Georgia, on the night of March 17, 1887. On the next day, March 18th, complainant went to Atlanta, the home of defendant, sought an interview with him, and immediately returned to him the $50 check which he had received from him; stat- ing to defendant that he refused to receive it; and defendant now has the check in his pos- session. Complainant at the same time ten- dered to defendant $950 in cash, and demand- ed that defendant make complainant a good and sufficient title to the land in controversy, which tender defendant refused, and refus- ed to convey, and repeatedly refused tp carry out his contract with complainant. A tender is made in the bill of $950; and the prayer is for a decree for specific performance against defendant, with an alternative prayer for dam- ages, in the event specific performance can- not be obtained. An amendment has been fil- ed to this bill, which amendment alleges that the property described in the bUl, bargained by defendant to complainant, is now worth the sum of $3,000, and also that the damages to complainant resulting from such refusal and the failure of the defendant to perform his contract, exceed $3,000. To this bill a de- murrer has been filed, which demurrer is on two grounds: First, that this court has no jurisdiction of the subject-matter in the bill stated; and, second, that the complainant has not shown a right to any relief against de- fendant. The first ground is based upon the fact that the amount in controversy, as shown by the original bill, is not sufficient to give this court jurisdiction; the bill having been filed since the passage of the act of March ri8 SPECIFIC PERFORMANCE OF CONTRACTS. 3, 18S7. This objection seems to be obvi- ated by the amendment since filed, fixing the value of the land at $3,000 and the dam- ages at not less than that sum. There was very little discussion upon this point, in the argument, and it was not strongly urged. The serious and main question in the case arises under the second ground of the de- murrer, that the complainant has not shown a right to any relief against defendant. The question made is that this contract between defendant and complainant lacks the ele- ment of mutuality, which is necessary to au- thorize a court of equity to decree a spe- cific performance. That is to say, that, as complainant was not compelled by his con- tract to take the land and pay defendant the remainder of the purchase money, de- fendant could not be required to carry out the agreement. There is a general rule of law, un- doubtedly, that this element of mutuality must exist to justify enforcement of specific per- formance. Fry, Spec. Perf. § 286; Wat Spec. Perf. § 196. It is also true that there are clear exceptions to this rule. In Fry on specific performance it is stated in sec- tion 291, as follows: "The contract may be of such a nature as to give a right to the performance to the one party which it does not give to the other; as, for instance, where a lessor covenants to renew upon the request of his lessee, or where the agreement is in the nature of an undertaking. But the more accurate view of such cases as the first, — perhaps of all that could be treated as want- ing mutuality,— seems to be that they are conditional contracts; and when the condi- tion has been made absolute, as, for instance, in the case above stated, by a request to renew, they would seem to be mutual, and capable of enforcement by either party alike." In Wat Spec. Perf. § 200, in discusslns the matter of exceptions to this general rule, the author says: "But it is well settled that an optional agreement to convey, or to renew a lease, without any covenant or obliga- tion to purchase or accept, and without any mutuality of remedy, will be enforced in eq- uity if it is made upon proper consideration, or forms part of a lease or other contract between the parties that may be the true consideration for it, though such an agree- ment can perhaps scarcely be called an ex- ception; for, being in fact a conditional con- tract, when the condition has been made absolute by a compliance with its terms, the Contract becomes mutual, and capable of enforcement by either party. A contract for the sale of real estate, at the option of the vendee only, upon election and notice, may not only be Specifically enforced, but the refusal of the vendor to accept the purchase money will not destroy the mutuality, though the vendee could thereupon withdraw his election." The decisions upon this question have been nnmerous, and it has been discussed ably and at length by many courts of high au- thority. The case very generally referred to and relied upon to sustain the rule re- quiring that a contract must be mutually binding to justify its enforcement, is the decision of Lord Redesdale in the case of Lawenson v. Butler, 1 Schoales & L. 13. A careful examination of that case and the argument and reasoning of the Lord Chan- cellor will show that the decision was put mainly upoil the ground that where parties enter into an agreement, each supposing the other to be bound thereby, and it transpires that one was not bound, such party could not have specific performance of the con- tract by the other. He says, in concluding the opinion, (page 21:) "No man signs an agreement but imder a supposition that the other party is bound, as well as himself; and therefore, if the other party is not bound, he signs It under a mistake. That mistake might be a ground for relief in equity, but is surely not a ground for spe- cific performance. Under these circumstan- ces, the impression upon my mind is that I must dismiss the bill. This agreement was signed in mistake. It Is manifest that But- ler could not have executed a lease in com- pliance with it; and as he could not, it is manifest that this is not the agreement he meant to sign." From a note to this case, (page 21,) it would seem that the Lord Chancellor was not himself entirely satisfied with the deci- sion, as he proposed that the case lie over until the next day to look into the cases cited, when plaintiff's counsel stated that they were content with a dismissal of the bill without costs, and it was ordered ac- cordingly. These comments upon and cita- tions from this much-quoted case, are not made to question the existence of the gen- eral rule alluded to, but to show that its application, even in its origin, was a matter of difficulty, and its extent uncertain. Counsel for defendant relied in argument here mainly on the cases of Marble Co. v. Ripley, 10 Wall. 339; Tyson v. Watts, 1 Md. Ch. 1; Duvall v. Meyers, 2 Md. Ch. 401; and Peacock v. Deweese, 73 Ga. 570. In the case of Marble Co. v. Ripley, other questions were made growing out of com- plex and intricate partnership relations; but one reason why specific performance should not be decreed was want of mutuality. After stating this as a reason why specific performance should be refused in that case, the court proceeds to give what is termed a "still more satisfactory reason for with- holding a decree for specific performance." But want of mutuality was undoubtedly rec- ognized as applicable to that case. In the later case of Butler v. Thomson, 92 TJ. S. 412, the Court, in the opinion, uses the fol- lowing language: "There may be an offer to sell subject to acceptance, which would bind the party offering, and not the other party until acceptance. The samie may be SPECIFIC PERFORMANCE OF CONTRACTS. 719 said of an optional purchase upon a suflB- clent consideration." Tlie court then alludes to a class of cases under the statute of frauds where one party signed a contract and the other did not. The language as quoted seems to me to indicate a recognition by the court of offers to sell subject to ac- ceptance, and optional purchases upon suffi- cient consideration, as exceptions to this gen- eral rule requiring mutuality of obligation in the contract. It would be far from clear that Marble Co. v. Ripley, even standing alone, should be regarded as controlling in this case; but the language used in the later case of Butler v. Thomson shows clearly, I think, that that court would not so regard it. The two cases from the Maryland Chan- cery Decisions referred to may be disposed of with the remark that in neither case cited were the facts at all like the facts that are presented in the case now before this court. In the case of Peacock v. Deweese, the supreme court of Georgia held that the contract sought to be enforced in that case lacked the element of mutuality, and stated that as one reason why specific performance would not be decreed. The court also stated, however, that "the agreement Is gratuitous, and entirely voluntary on the part of the defendant in error. A court of equity never decrees a specific performance of a voluntary or gratuitous contract. Code, § 3189. Any fact showing the contract to be unjust or unfair or against good conscience, justifies the court In refusing to decree a specific performance. Code, § 3190." The undertak- ing of the two Deweeses in that case was en- tirely without consideration to them. Pea- cock agreed to make such tests of the land for the discovery of minerals as were "sat- isfactory to himself." The two Deweeses had their land tied up by this option for six months without receiving any remuneration therefor, and it was evidently the view of the court that the agreement by Peacock to make such tests as were "satisfactory to himself" was not such a consideration as would support the contract. This may be gathered, I think, from the use of the lan- guage "voluntary or gratuitous contract." This, then, was an optional agreement to sell, wholly without consideration. I have thus far given attention principallj* to the authorities relied upon by the eminent counsel for defendant in this case, without referring to the long line of decisions which, it seems, hold that contracts such as the one be- fore the court will be enforced. In the case of Fowle V. Freeman, 9 Ves. 351, it was held that an agreement in writing for the sale of an estate was binding if signed only by the vendor, and followed by direction to his at- torney to prepare a proper agreement for both parties to sign. In the case of Ormond v. Anderson, 2 Ball & B. 363, where the court dismissed the bill upon another ground, the following language was used in the opinion: "An objection has been made to the execu- tion of this agreement, on the ground that it has not been signed by the plaintiff, and that the defendant could not have enforced it against the plaintiff. I am very well aware that a doubt has been entertained by a judge in this court, of very high authority, [refer- ring to Lord Bedesdale, in Lawenson v. But- ler,] whether courts of equity would specifi- cally execute an agreement where one party only was bound. There exists no provision in the statute of frauds to prevent the execu- tion of such an agreement; and Sir James Mansfield, who certainly had great experience in courts of equity, lays it down in the case of Allen V. Bennet, [3 Taunt. 169,] that a con- tract signed by one party would be enforced in equity against that party, and that such was the daUy practice of that court." He proceeds to say that "in a case where the court finds a party who has been and is endeavoring to obtain some undue advantage, or has been playing what is called 'fast and loose,' the court would not assist him." In the case of Clason v. Bailey, 14 Johns. 484, the chancellor, after discussing, among other cases, those I have just cited, concludes thus: "1 have thought, and often intimated, that the weight of argument was in favor of the con- struction that the agreement concerning lands, to be enforced in equity, should be mutually binding; and that the one party ought not to be at liberty to enforce, at his pleasure, an ■ agreement which the other was not entitled to claim. It appears to be settled (Hawkins v. Holmes, 1 P. Wms. 770) that though the plain- tiff has signed the agreement he never can enforce it against the party who has not sign- ed it. The remedy, therefore, in such cases is not mutual. But, notwithstanding this objec- tion, it appears from the review of the cases that the point is too well settled to be now questioned." In a later case in New York— In re Hunter, 1 Bdw. Ch. 1 — ^the vice-chancellor uses the fol- lowing language: "In the next place, it is said the covenant to seU is not mutual, the lessee not being bound to purchase, and that, as this is a 'one-sided' agreement, the court will not decree a specific performance. The cases of Parkhurst v. Oortlandi, 1 Johns. Ch. 282, and Benedict v. Lynch, Id. 370, have been referred to as esfablishing this point. Chancellor Kent there intimated that such was the rule; but in a subsequent case in the court of errors— Clason v. Bailey, 14 Johns. 484— he had occasion to review that opinion, which he found to be erroneous, and admits that the point is too well settled the other way to be questioned. The court may, therefore, in a proper case, where there is a covenant on one side, and no mutuality, decree a perform- ance. Besides, in a case like the present, it may be peculiarly proper. The rent may have been fixed at $500 as an inducement to the power of purchasing the property. This is a fair inference." In the case of Van Doren v. Robinson, 16 N. J. Eq. 256, it is held that "the general prin- 720 SPECIFIC PERFORMANCE OF CONTRACTS. clple is that where the contract is Incapahle of being enforced against one party, that par- ty is equally incapable of enforcing it against the other. But the principle does not apply ■where the contract, by its terms, gives the one party a right to the performance, which it does not give to the other party." And in the case of Howralty v. Warren, 18 N. J. Eq. 124, after stating the general rule as the existence of mutuality, and that unilateral or optional contracts are not favored in equity, the court proceeds: "But modern authorities have narrowed this doctrine down to cases in which there is no other consideration. And it is now well settled that an optional agree- ment to convey, or renew a lease, without any covenant or obligation to purchase or ac- cept, and without any mutuality of remedy, will be enforced in equity, if it is made upon proper consideration, or forms part of a lease or other contract between the parties, that may be the true consideration for it." A number of cases are then cited by the court to sustain this view, among them the cases I have just referred to. The language last quoted seems to me to be a very clear statement of the correct rule in this matter. In Smith's Appeal, 69 Pa. 474, the matter be- fore the court being an optional contract for the sale of land, it was held that the contract would be enforced. In the case of Rogers v. Saunders, 16 Me. 92. 33 Amer. Dec. 63" t'lo court cites the decision of Chancellor Kent in Clason v. Bailey, and states tliac this uy- pears to be now the generally received doc- trine. In Vassault v. Edwards, 43 Cal. 458, it is held that: "A proposal to sell real estate, reduced to writing and signed by the vendor alone, in which he recites that he has sold to the vendee the land for a price named, and has received a certain sum as a deposit, as part payment, which the vendor was to refund if the title was rejected or bad, the sale to be subject to a search of and approval of title, the vendee to have twenty days for the exam- ination of the title, is a valid contract of sale entered into between the parties." To the same effect is the case of Schroeder V. Gemeinder, 10 Nev. 355. The court, after stating that there are many exceptions to the rule in the cases, as to mutuality, says: "We think it may now be considered as well set- tled by all, or nearly aU, of the modem au- thorities, that a court of equity, in actions for the specific performance of optional contracts and covenants to lease or convey land, will en- force the covenant, although the remedy is not mutual, provided it is shown to have been made upon a fair consideration, or where it forms part of a contract, lease, or agreement, -which may be the true consideration for it." Entering into the discussion of this ques- tion, in many of the cases, Is that part of the statute of frauds providing that contracts for the sale of land must be in writing, signed by the party to be charged thereby, or some per- son by him lawfully authorized. (This law as codified in Georgia, is in section 1950, Code 1882.) It is held in some of these cases that the question should be controlled by the lan- guage of the statute just quoted; and that, as the contract need be signed by only one par- ty, viz., the party to be charged thereby, it is only necessary that he should be bound. It seems to me, however, that the question of mutuality is one distinct and apart from any question that might arise under the sratute of frauds. It is a matter separate from, if not over and above it, and I have considered it in that view. I thinli it is settled by the above authorities, and others that might be cited, that where an owner of land gives another, for a suflicient consideration, an option or privilege to purchase the land within a given time, in writing, with full knowledge of the fact that he is bound and the other party is not, it is such a contract as will be enforced in equity at the instance of the party holding the option. Does such a contract indeed lack mutuality? The seller, for fair consideration, agrees to give the proposed purchaser a cer- tain fixed time in which to make the contract mutual, by acceptance of the offer to sell. If he accepts within the specified time, both par- ties are fully bound. Now, as to this case. Here, for a reason- able consideration, the sum of $50, the de- fendant agrees that the complainant shall have the privilege of buying his land within a year; that is, the defendant sells to him for $50 the privilege of purchasing the land with- in a year. That contract, the sale by defend- ant to complainant of the privilege of purchas- ing, is executed by the payment by complain- ant of the sum agreed upon. The remainder of the contract is conditional upon the com- plainant's accepting within a year the con- tinuing offer of the defendant to sell him the land. I see no reason why a court of equity should not enforce such a contract. On the contrary. It seems to me it would be inequi- table to refuse its enforcement. I am clear, therefore, that this case does not come with- in the class where lack of mutuality will pre- vent enforcement of the contract, and that it does come within a well-recognized exception to that rule, of optional sales upon fair consid- eration. This case is considered now, of course, upon the facts as stated in the bill. How it may be affected by what the defend- ant can hereafter show must be a matter for future consideration. My conclusion is that the demurrer must be overruled on both grounds, and It wlU be ordered accordingly. SPECIFIC PERFORMANCE OF CONTRACTS. 721 O'CONNOR V. TYRRELL St al. (30 Atl. 1061, 53 N. J. Eq. 15.) Court of Chancery of New Jersey. Jan. 21, 1895. Bill by Lawrence O'Connor against Peter Tyrrell and others for specinc performance of a contract to convey land. On motion to dismiss bill. Motion denied. Charles L. Corbin, for the motion. John Garrlck, opposed. McGILL, Ch. The motion is made in vir- tue of the 213th rule, and takes the place of a demurrer to the bill. The case presented by the bill is this: James Tyrrell, for himself, and as attorney In fact for others, who are cotenants with him of certain land In the city of Bayonne, on the 20th of April, 1894, agreed to sell that land to the complainant for $7,250, of which $250 was to be paid up- on the execution of the agreement of sale, and the balance was to be paid upon the de- livery of the deed, on the 21st of the follow- ing May,— $5,000 in cash, and the remainder by assumption of the payment of a mortgage of $2,000, by which the property was incum- bered. Upon examination of the title, it was discovered that the power of attorney under which James Tyrrell assumed to act for his cotenants, who lived in Ireland, though duly executed, was defectively acknowledged by some of the cotenants. Therefore, it was agreed that, instead of having the power of attorney reacknowledged, the deed should be directly executed by all owners of the prop- erty, and be sent to Ireland for that purpose. As more time would be required in such exe- cution than the terms of the contract of sale would admit of, a new agreement was enter- ed into on the 8th of May, by which the for- mer contract was annulled, and the 26th of June w?s fixed for the delivery of the deed, and the full consummation of the transaction. The lottcr agreement contains this stipula- tion. "Said party of the second part [O'Con- nor] shall have possession of said premises on the 14 th day of May, 1894; and, in the event of the failure of said parties of the first part to deliver the deed at the time and in the manner hereinafter referred to, the said parties of the first part hereby agree to repay to said party of the second part the said sum of $250, heretofore paid as part of the consideration money, and, in addition thereto, such sum, not exceeding $1,250, as said party of the second part shall have paid upon the examination or guaranty of the ti- tle to said premises, or in the repair, im- provement, or furnishing of the building, or ground, or the survey thereof, or shall have in any way Incurred or expended in the prep- aration for the purchase of and 'taking of ti- tle to said premises, not exceeding the said sum of $1,250; such payment to be accepted by said party of the second part as liquidated damages for any breach of this agreement by the said parties of the first part; and, in HUTCH.& BUNK.EQ.^6 I event of the failure of said parties of the first part so to deliver said deed at the time herein stated, said party of the second part hereby agrees to surrender possession of said premises, within fifteen days from June 26th, 1894, to James Tyrrell, one of said parties of the first part hereto. And said party of the second part shall not, under any circumstan- ces, be held to be liable for any rental for the occupancy of said premises." In piu-su- anee of this agreement, the complainant paid $250 in cash, broke up his home in the city of New York, and moved to the premises con- tracted to be conveyed to him, upon which he made repairs which have cost him near- ly $2,000. On the 26th of June, 1894, he du- ly tendered the $5,000 he was then to pay, and demanded a deed, in accordance with the terms of the agreement. To which ten- der and demand, James Tyrrell replied that, as attorney In fact, he was unable to deliver the deed, and that he desired a statement of the complainant's expenditures, contemplated by the clause of the contract which has been quoted, in order to ascertain and pay the sum agreed upon as liquidated damages, and also that he desired to fix a day, within the terms of the contract, upon which the complainant would surrender to him possession of the land. The only question presented In the argu- ment was whether this court will compel a conveyance to the complainant, notwithstand- ing the provision for the payment of liqui- dated damages upon the breach of the con- tract; the contention in behalf of the defend- ants being that by the agreement the par- ties have expressly stipulated the measure of the damages which will result from the defendants' nonperformance of the agree- ment, and therefore equity will leave the complainant to the recovery of those dam- ages, on the ground that an appeal to equity is unnecessary, since the legal relief, by agreeinent, has been rendered adequate. For the breach of contracts the common law gives a single remedy. It requires the wrongdoer to pay a sum of money as com- pensation. When the contract broken is an obligation to pay money, that remedy amounts to specific performance. But there are many conti-acts, for the breach of which such a remedy Is Inadequate; and that inadequacy has given rise to the jurisdiction of chancery to enforce specific performance of contracts, requiring the performance or omission of the very acts agreed upon. The remedy is thus made identical with the right withheld, and the defendant is thereby deprived of the op- tion, which the legal remedy practically gives him, to disregard the actual obligation by which he is boimd, and pay a sum of money in the place thereof. Pom. Spec. Perf. Cont. § 3. The inadequacy of the legal remedy, by com- pensation in damages, Is generally regarded as conspicuous in cases of agreements for the sale and piurchase of real estate, each parcel of which differs In some respects from others. 722 SPECIFIC PERFORMANCE OF CONTRACTS. Such property Is usually bought because It possesses some feature which attracts by per- sonal gratification, and determines the pur- chaser to make some particular use of it. The present case is not an exception to this usual condition. The description of the prop- erty discloses its boundary upon the shore of the Newark Bay, with its expanse of water, and the occupancy of it by the complainant indicates that he has determined to make it his residence, and his expenditures upon it give evidence of his appreciation of its situa- tion and surroundings. It is thus made plain that compensation in damages will not be the full measure of relief which a breach of the contract by the defendants, in justice, demands. This situation primarily leads to a critical examination of the contract and the meaning of its clause which I have quoted, to ascertain the correctness of the defendants' assumption that a stipulated sum has been fixed as damages to be had for the mere non- performance of the contract by the defend- ants. That which was contracted fol* was the purchase and sale of land. A portion of the purchase money was to be paid at once, and the purchaser was to go into possession pending the execution and delivery of the deed, when the remainder of the purchase money was to be paid. It was in contem- plation that he would proceed to repair, im- prove, and furnish the property. In the event of the defendants' failure to deliver the deed, he was to surrender the possession of the land to their agent; receive back the pur- chase money paid, together with his expendi- tures, not exceeding $1,250. That repayment and surrender were expressly made depend- ent upon the failure of the defendants to de- liver the deed. In this arrangement, which contemplated repayment upon the happening of the one event, — failure to deliver the deed, —was Interpolated the parenthetical clause, that such repayment was to be accepted by the complainant as liquidated damages for "any breach" of the contract by the defend- ants. As the repayment was limited to a single event, and made payable upon the hap- pening of that event only, the words "any breach," In the parenthetical clause, could not have a broader significance than failure to deliver the deed, for the complainant was bound to accept the repayment only in that event. It is to be noted that, upon the de- fendants' failure to deliver the deed, the com- plainant is to have merely pecuniary reim- biu'sement, and not compensatory damages. He is to have nothing for his disappointment, trouble, and discomfort The inference from a submission to such inadequate damages Is, I think, that a stronger meaning was intend- ed to be given to the word "failm'e" than mere arbiti-ary refusal of the defendants to deliver the deed. "Failiu-e" is the result of action which predicates earnest effort, and not mere inaction and refusal to do. It is in this sense, I think, that the word was used in this contract. It demanded from the de- fendants a bona fide effort to deliver the com- plainant a deed which would vest in him the title to the property. It was failure after such effort that was to constitute the breach for which reimbursement was to be accepted as satisfaction. It is obvious that the con- tract was not an alternative one, to convey or pay damages. Damages were to be paid upon a "breach" of the conti-act, which pri- marily required an honest effort to perform, and failure, and do not become a factor m the consideration of remedies until that preced- ent condition is performed. The professed inability of James Tyrrell to deliver the deed required does not prove the inability of him and his cotenants to carry out the contract upon their part. The case presented, then, is this: A certain sum is agreed upon as satis- faction to the complainant, if bona fide effort to make him title fails. So far as it appears by the bill, the defendants can make that title, and the aid of this court is invoked to compel them to do so. I think that, as the facts now appear, the complainant is clearly entitled to a decree, and that the case is not brought within the controversy referred to in Crane v. Peer, 43 N. J. Eq. 557, 4 Atl. 72, or affected by the Intimation of Chancellor Halsted in St Mary's Church v. Stockton, 8 N. J. Eq. 520, as the defendants' proposition suggests. The motion will be denied, with costs. SPECIFIC PERFORMANCE OF CONTRACTS. 723 GRUBB et al. v. SHARKEY et al. (20 S. E. 784, 90 Va. 831.) Supreme Court of Appeals of Virginia. Dec. 22, 1894. Appeal from circuit court, Botetourt county. Bill by one Sharkey and others against one Grubb and others. Decree for complainants, and defendants appeal. Afarmed. Benj. Haden and John H. Lewis, for ap- pellants. J. H. H. Figgatt and C. M. Luns- ford, for appellees. LEWIS, P. This was a suit for specific performance. In April, 1887, the appellees conveyed to the appellants a tract of land con- taining about 19 acres, adjoining the lands of the Lynchburg Iron Company, situate in Bo- tetourt county. Below and contiguous to this land is a grazing farm owned by the appel- lees, which, at the time of the conveyance to the appellants, was mainly, if not solely, wa- tered by a stream flowing through both tracts. The land was purchased by the appellants for the purpose of erecting and operating thereon an ore washer. It was accordingly covenanted in the deed of conveyance that If the said stream should.be made continuously muddy by the proposed ore washing, so as to render the water therein unfit for stock, the appellants would lay a %-inch pipe from a certain spring branch above, so as to conduct a supply of clear water over the land to a designated point on the appellees' farm, and there erect a trough for the use of stock. The bill, which was filed in October, 1889, after setting out substantially the foregoing facts, alleges that this covenant has not been observed by the defendants (the appellants here); that they have not laid a pipe and erected a trough, as they covenanted to do, notwithstanding the water in the said stream has been continually muddy and unfit for stock, in consequence of washing ores on the land, since the date of the conveyance, and although they have often been requested so to do. The bill also states that the complain- ants have been compelled, in consequence of the defendants' default, to drive their stock a considerable distance to water, whereby they have been greatly inconvenienced and dam- aged. And the prayer of the bill Is that the defendants be required to specifically perform their covenant, and to make proper compen- sation to the complainants for the damage sustained by them, etc. The defendants being nonresidents, there was an order of publication. An attachment was also sued out, which was levied on the said 19 acres of land. At the May term, 1890, a decree was entered for the specific perform- ance of the contract, with a further provision that the defendants pay to the complainants $750 damages for the breach of the contract. At the ensuing October term, the defendants appeared, and filed their petition, praying that the decree be set aside, and that they be al- lowed to make defense. They thereupon, with the leave of the court, demurred to the bill, and also answered. In their answer they stated, among other things, that since the commencement of the suit they had laid the pipe and erected a trough as they had agreed to do, and that this was done before the decree was entered. The cause was then referred to a commissioner, with directions to ascertain and report, among other things, what damages, if any, the complainants had sustained by reason of the alleged breach of the contract, in obedience to which the com- missioner subsequently reported that they had been damaged to the amount of $900. This finding was afterwards, upon exceptions to the report, reduced by the court to $750, and by the same decree it was ordered that "per- formance of said contract be confirmed to the complainants." 1. A number of objections have been urged to this decree, none of which, in our opinion, are well founded. In the first place, the case stated In the bill is undoubtedly within the jurisdiction of a court of equity. The con- tract therein sought to be enforced is not one requiring personal labor, or the exercise of any peculiar skill or judgment, or in- volving the performance of continuous duties and supervision. On the contrary, it is such a contract as could be readily performed by almost any ordinary workman, and its nature is such that the remedy at law for its breach is inadequate. This brings the case within the general rule that a court of equity has jurisdiction to enforce specific performance of a contract by a defendant to do defined work upon his own property, in the per- formance of which the plaintiff has a ma- terial interest, and which is not capable of adequate compensation in damages; as, for example, an agreement on the part of a rail- way company to make an archway under its tracks, or to construct a siding at a par- ticular point for the convenience of an ad- joining landowner. 1 Story, Eq. Jur. § 721a; Storer v. Railway Co., 2 Younge & C. Ch. 48; Greene v. Railway Co., L. R. 13 Eq. 44. It is, moreover, well settled that, as auxiliary to its authority to decree specific perform- ance, a court of equity may award damages for a breach of the contract, to be assessed either by an issue of quantum damnificatus or by a master, at its discretion. Phillips v. Thompson, 1 Johns, Ch. 181; Nagle v. New- ton, 22 Grat. 814; Campbell v. Rust, 85 Va. 653, 8 S. B. 664. This, indeed, is not dis puted. But the appellants contend that their performance of the contract in question be- fore the entry of the decree, although sub- sequent to the filing of the bill, left nothing to be specifically enforced, and consequently that the auxiliary power to decree damages was likewise at an end. In other words, the contention is that, after the pipe was laid and the trough erected, the suit was nothing more than a suit to recover dam- ages, of which equity has not jurisdiction. 724 SPECIFIC PERFORMANCE OF CONTRACTS. But this Is a mistaken view. The court having acquired jurisdiction of the case upon equitable ground, no subsequent act of the defendants could oust that Jurisdiction. It is a familiar principle, as laid down by Judge Staples in Walters v. Bank, 76 Va. 12, that, when a court of equity has once acquired .iurisdiction of a cause, it may go on to a complete adjudication, even to the ex- tent of establishing legal rights and grant- ing legal remedies, which would otherwise be beyond the scope of its authority. That is a very strong case. The object of the snit was to subject the estate of a married woman to the payment of a certain negotiable note, upon which the appellant was indorser, or to require the appellant to pay it. In the progress of the case, it appeared that there was no separate estate, whereupon it was insisted that, as the supposed existence of a sejiarate estate was the sole ground for going into equity, the court could proceed no further, and that the bill should be dis- missed. But this view was rejected, and a decree rendered against the appellant for the debt, which this court affirmed, on the principle above stated. So it has been held that where the complainant was originally entitled to a specific performance, but pend- ing the suit the subject-matter of the litiga- tion is established or destroyed, he wUl not be turned round to his remedy at law, but compensation or damages will be decreed him. 2 Story, Eq. Jur. § 794; Nelson v. Bridges, 2 Beav. 230; Chapman v. Railroad Co., 6 Ohio St. 119. 2. As to the further point made by the appellants in the petition for appeal, upon the authority of Pennoyer v. Neff, 95 U. S. 714, that state courts have no power to render judgments or decrees in personam against nonresident defendants, who are summoned merely by publication, it is enough to say that here the defendants, after rendition of the decree of the May term, 1890, appeared and defended on the merits, thus submitting themselves to the jurisdic- tion of the court; so that the case stands upon the same footing, so far as the power and jurisdiction of the court are concerned, as if they had been personally served with process at the commencement of the suit. 3. Both sides complain of the amount of damages awarded; the appellants contend- ing that the amount is excessive, while the appellees insist that the sum reported by the commissioner, viz. $900, ought to have been allowed, and that the circuit court erred in reducing the amount to $750. Without re- viewing the evidence before the commission- er, we deem It sufficient to say that we see no reason to disturb the decree on this or any other point. It is therefore affii-med. Decree affirmed. INJUNCTIONS. 725 ROGERS LOCOMOTIVE & MACHINE WORKS V. ERIE RT. CO. (20 N. J. Eq. 379.) Court of Chancery of New Jersey. Oct Term, 1869. This was a motion for a preliminary in- junction. The argument was had upon a rule to show cause upon the bill filed and an affidavit of James Fisk, Jr., in reply to the allegation of the hill as to the insolvency of the Brie Railway Company. The bill sets forth that the Erie Railway Company, by virtue of the provisions of the charter of the Paterson & Hudson River Railroad Company, of the lease of that road, and the acts of the legislature giving validity to that lease, and authorizing it to finish and extend that road to the Hudson river, and confirming the reorganization of the Erie Railway Company under its present name, became a common carrier between the city of Paterson and the present termination of its railway near the Hudson river, at the Long Dock; that It was boimd to carry freight from Paterson to Long Dock at the rates fixed in these acts, which, for a loco- motive engine of the size usually made and sent away by the complainants, would amount to $31.80 for each locomotive; that the company or some of its directors have devised ■ a scheme for the purpose of il- legally increasing the rate to be charged for such transportation; that they procured the company to be chartered by the name of the "Union Locomotive Express Company," with power to forward and carry locomotives and other property; and that the Erie Railway Company or Its stockholders or directors are using this express company, and combining with its directors, for the purpose of increas- ing the rates of transportation from Pater- son to Long Dock; and that it has entered into an agreement with the express company that it should have the exclusive right of transporting locomotives over the road; that the express company have the power to charge for forwarding without any limit as to amount, and do actually charge $250 for transporting each locomotive, and as- sume only the liability of forwarders, and the Erie Railway Company refuses to accept for transportation at its depot at Paterson any locomotive to be transported to Long Dock, or to transport the same, unless through the express company; that the com- plainant built two trucks, on which it was in the habit of placing its engines and draw- ing them over the street railway from the manufactory to the depot of the Erie Rail- way Company at Paterson, which were suita- ble to run upon that road, and which could be taken to Long Dock with the locomotives thus loaded upon them; that the Erie Rail- way Company, when these trucks so loaded were last tendered to it for transportation, caused them to be taken over its road in the opposite direction, into the state of New York, and detains and keeps them there, so that the complainant has no means to offer its locomotives to the Erie Railway Com- pany for transportation, and that this Is done intentionally to carry out the fraudulent com- bination with the express company, so that the latter must be employed, at their exorbi- tant rates, to carry all the locomotives; and that new trucks cannot be constructed or pro- vided under several months. The bill further alleges that the manufac- ture of locomotives has become a large and important business in Paterson, and that the complainant and others have established their works there on faith of the means of trans- portation provided by law over the railway of the defendants; that being compelled to pay such sum for transportation will compel them to add the amount to the price of their locomotives, and will injure their business in competition with other establishments, and omission to deliver would make them liable to damages. The bill alleges that this combination of the Brie Railway Company is a fraud upOn the stockholders, because they receive by the agreement only $10 for each locomotive transported by the express company, when, by law, they would be entitled to receive, and would receive from the complainant and others, more than three times that amount for the same service, if performed directly for them. The bill prays for an Injunction to direct and compel the Erie Railway Company to re- turn the two trucks to Paterson into the pos- session of the complainant, and to transport to the wharf, at Long Dock, all locomotive engines of the complainant that may be de- livered at the depot at Paterson, at the rates prescribed by law, and to direct and compel it to perform its duty as a common carrier; also to restrain it from removing the com- plainant's trucks out of its possession, and from preventing it from obtaining possession thereof, and restraining the other defendants, that is, Jay Gfould, James Fisk, Jr., the Union Locomotive Express Company, N. Marsh Kasson, James G. Dudley, Henry J. Smith, and C. Valletta Kasson, from entering into any agreement or doing anything to prevent or hinder the Erie Railway Company from transporting the locomotives of the complain- ant over its road. The bill charges that the Union Express Company was got up by Jay Gould, James Fisk, Jr., and Frederick A. Lane, three of the directors of the Erie Railway Company, in combination with N. Marsh Kasaon, James 6. Dudley, Henry J. Smith, C. Valletta Kas- son, and P. K. Randall, as a contrivance to shift the duties of common carriers from the Erie Railway Company, and to enable the defendants, or some of them, to make il- legal and exorbitant charges for transporta- tion. A. B. Woodruff, for the motion. L. Za- briskie, opposed. 726 INJUNCTIONS. THE CHANCELLOR. If the allegations of the bill are true, and they are supported by the affidavits annexed, and are not de- nied by answer or aflJdavit, they present a flagrant case of refusal to perform the du- ties imposed upon It by law, and for which Its franchises were granted, by a corpora- tion public in its object and almost such in its character. Railway companies have dele- gated to them as part of their franchises much of the sovereign power of the state, in consideration of their discharging part of what are the proper duties of government, that is, providing the means of commerce and intercourse by constructing the roads ■which are the avenues of that commerce. And when, being authorized, they assume to operate these roads, they have devolved up- on them in consideration of that franchise the additional duty, which is not one of the proper functions of the government, of com- mon carriers, and are obliged to transport all merchandise and passengers on the terma fixed in the grant through which they obtain their franchises. In this case the wrong is attempted to be aggravated by the charge that it is done through a corrupt combina- tion between the directors of the company and others, by which these directors, in vio- lation of their duties and trust, conspire for their own emolument to cause the company under their control to refuse to perform the duties imposed on it by law, in such manner that the public are injured by extortionate charges, and the stockholders defrauded of their just dues, and also in such manner that the state can cause the valuable fran- chises of which they are possessed as a right of property to be annulled and forfeited for the willful violation of the compact by which they were granted. These allegations may not be true, and may be totally disproved at the hearing; but as their truth is sworn to, and is not denied, I am bound to treat them as true for the pur- poses of this application. So far as they relate to dereliction in duty to the stockhold- ers of the Erie Railway Company, the com- plainant cannot have here any relief based upon them. I will also assume for the purposes of this application that the Erie Railway Com- pany having, as the legal assignees of the Paterson & Hudson River Railroad Comr pany, and of their franchises, including the right to finish the road to the Hudson river and to tunnel Bergen hill, constructed the extension of the road to the Hudson river, holds it as part of that road, and subject to all the restrictions and duties imposed upon that road by the charter of the original com- pany; and that it is therefore a common car- rier, bound to transport goods over this ex- tension, as well as over the residue of the road, at the rates fixed in the charter. Whether this duty could be performed by delegating to another person or company who would discharge it in the same manner. and for the same compensation, and with the same liabilities, need not be discussed here. They have attempted to delegate it to a company who do not attempt or offer to perform the duty as common carriers, or subject to the liabilities of common carriers,, but only as forwarders, and who charge for this imperfect performance more than four times the rate authorized to be charged by the Erie Railway Company. They there- fore do not provide any one to discharge the duty required of them, and they utterly re- fuse to perform it themselves, and have bound themselves by a contract that no one but the express company shall perform it. Such contract may be void, both as ultra vires and contrary to law, yet It is proper to be considered as showing the Intention of the company not to perform this part of their duty. The injury to the complainant, too, is of that nature, that while there may be a remedy at law, as by recovery of damages for injury, yet is such that cannot be ade- quately relieved by suits for damages. It is continually recurring, and will require continued and repeated suits, and continued litigation, and the expenses of each suit would make the recovery of the excess paid an Inadequate remedy. I now assume that the Erie Railway Company is, and will re- main, solvent. The affidavit of the proper officer of the company, which Is legally be- fore the court, clearly shows that the com- pany is not solvent, or likely to prove so. But, although the injury is proved, and the subject-matter is such that a court of equity will not refuse relief, on the ground that there Is adequate relief at law, the question remains whether the injunction here applied for can be granted, or any part of it. There are Injuries which this court cannot redress, although there may be no satisfactory remedy at law, and those which this court can redress, for which no pre- liminary injunction can issue. The two chief objects for which the in- junction is asked are to compel the railway company to return to the complainant Its trucks, and to compel It to transport the loco- motives of the complainant from Paterson to Long Dock at the legal rates of freight These are to compel the company to act, not to refrain from acting. And the act com- manded Is the whole duty of the company, and its performance is the whole right of the complainant It is not the case of a prohibition of keeping up a structure or maintaining some material object, the erec- tion and continuance of which is the act that deprives the complainant of his right, and the destruction or removal of which would restore the enjoyment of It It is contended by the defendant that a mandatory injunction, or one which com- mands the defendant to do some positive act, will not be ordered, except upon final hearing, and then only to execute the decree INJUNCTIONS. 727 or judgment of the court, and never on a preliminary or interlocutory motion. Or that, if it ever does so issue, it is only in cases of obstruction to easements or rights of like nature, in vyhich a structure erected and kept as the means of preventing such enjoyment will be ordered to be removed, as part of the means of restraining the defendant from interrupting the enjoyment of the right. Although there is some conflict in the au- thorities and decisions, I am of opinion, after examining into them, that this position, with the limitation, is the established doc- trine of the courts of equity, and that it is a proper and discreet limitation of the use of the preliminary injunction, as well as sus- tained by the weight of authority. Justice Story, in 2 Eq. Jur. § 861, says: "A writ of injunction may be described to be a judicial process, whereby a party is required to do a particular thing, or to re- frain from doing a particular thing, accord- ing to the exigency of the writ. The most common form of injunction is that which operates as a restraint upon the party in the exercise of his real or supposed rights, and is sometimes called the remedial writ of injunction. The other form, commanding an act to be done, is sometimes called the judicial writ, because It issues after a de- cree, and is in the nature of an execution to enforce the same." Mr. Eden begins his treatise on Injunc- tions by saying: "An injunction is a writ Issuing by the order and under the seal of a court of equity, and is of two kinds. The one is the writ remedial; for, in the endless variety of cases in which a plaintiff is enti- tled to equitable relief, if that relief con- sists in restraining the commission or con- tinuance of some act of the defendant, a court of equity administers it by means of the writ of injunction. The other species of Injunction is called the judicial vrrit, and issues subsequent to a decree, and is prop- erly described as being in the nature of an execution." In Drew, Inj. p. 260, it is laid down: "It seems settled that equity has not jurisdic- tion to compel, on motion, the performance of any substantive act." In 3 Daniell, Ch. Prac. 1767, it is said: "It is to be observed that the coiu-t will not, by injunction granted upon interlocutory appli- cation, direct the defendant to perform an act, but might, upon motion, order the de- fendant to pull down a building which was clearly a nuisance to the plaintiff." Lord Hardwicke, in an anonymous case in 1 Ves. Jr. 140, restained the further dig- ging of a ditch, but refused, on motion be- rore answer, to order the part dug to be filled up. Chancellor Vroom, in Attorney-General v. New Jersey R. & Transp. Co., 3 N. J. Eq. 141, says: "The injunction Is a preventive remedy. It interposes between the complain- ant and the Injury he fears or seeks to avoid. If the Injury be already done, the writ can have no operation, for it cannot be applied correctively, so as to remove it." In that case, the Injury done was driving piles for a bridge, so as to obstruct navi- gation. A mandatory injunction to remove them would have remedied the whole evil. In Hooper v. Broderick, 11 Sim. 47, a preliminary injunction to restrain a tenant from discontinuing to keep an inn was dis- solved on the ground that it was mandatory, the sam'e as if he was commanded to keep an Inn. in Blakeman v. Navigation Co., 1 Mylne & K. 154, Lord Brougham, after a review of the cases (page 183) and quoting with approbation what Lord Hardwicke said in Kyder v. Bentham, that "he had never known an order to pull down on motion, and but rarely by decree," refused so much of the injunction prayed for as directed the defendant, Powell, to fill up the collateral pond. The cases of the East India Co. V. 'Vincent, 2 Atk. 88; Spencer v. London and Birmingham Hallway Co., 8 Sim. 193; and of Diu-ell v. Pritchard, 1 Ch. App. 244, are to the same efirect. And in the last case. Lord Romilly, M. R., held that the court, upon final hearing, could not issue a mandatory injunction directing a wall to be taken down; yet the lords justices on ap- peal held that it had the power, but that in the case before them It should not be ex- ercised, and dismissed the appeal. There are cases in which mandatory In- junctions have been ordered on motion, but they are ail, or nearly all, cases In which some erection placed and maintained by the aerendant to effect the Injury complained of was ordered to be removed, or its mainte- nance forbidden, on the ground that the defendant effected the act he was restrained from doing by continuing such erection. In Robinson v. Lord Byron, 1 Brown, Ch. 588, which is referred to as the leading case for mandatory injunction. Lord Thurlow or- dered an injunction to restrain defendant from using his dams and other erections, so as to prevent the water from flowing to the com- plainant's mill in such quantities as It had ordinarily done before April 4, 1785. The ef- fect of this may have been to compel the re- moval of the part erected after 1785. But as the case states the injury complained of to be that Lord Byron so used his dam and gates as to let the water flow irregularly, to the complainant's injury, I do not see in the report any direction, express or implied, to take down anything, or to do any act what- ever. In Lane v. Newdigate, 10 Ves. 192, the ob- ject of the Injunction was to compel the re- storing of a stop gate which was wrongfully removed. Lord Eldon would not order it to be restored, but restrained the preventing the use of the water by complainant by the removal of a stop gate, which was equivalent to an order to restore it, and was so Intended. 728 INJUNCTIONS. In Raaken v. Huskisson, 4 Sims. 13, the court restrained tlae defendant from permit- ting an erection to remain. This was equiv- alent to an order to remove it; but it is lilie the, others, simply removing that by wliich the defendant continued the nuisance to be re- strained. In JNIexborough v. Bower, 1 Beav. 127, Lord Langdale ordered an injunction to restrain permitting the communication complained of, by which complainant's mine was flooded, to remain open. The injunction was to prevent the flowing of the mine, by restraining or re- moving the means by which the defendant continued to do it. In North of England Ry. Co. v. Clar- ence Ry. Co., 1 Colly. 507, the injunction prayed for was against maintaining a wall, and after the rights of the parties had been referred to, and settled in the court of the exchequer. Vice Chancellor Bruce hesitated to grant the injunction, although he held (page 521) that mandatory injunctions might be granted; yet he referred the case to Lord Chancellor Lyndhurst, who, it is stated, grant- ed the injunction in nearly the terms of the prayer; but whether it included this manda- tory part does not distinctly appear. The case established the right of the complainant to build a bridge over the railway of the defend- ant, and to rest the supports of the scaffolding on the soil; and the mandatory prayer was that defendants should remove a wall placed on their grounds to hinder it. In Greatrex v. Greatrex, 1 De Gex & S. 692, the injunction was against preventing the plaintiffs from having access to the books of the firm, and against removing them from, or keeping them at, any other place than the place of business of the partnership, as the defendant had removed the books. This was equivalent to an order to restore them, but yet it did not command any act to be done. In Heracy v. Smith, 1 Kay & J. 389, the injury was covering with tiles the chimneys from the butler's pantry of the complainant Lord Hatherly (the present lord chancellor, then vice chancellor. Sir W. P. 'Wood), on the authority of Robinson v. Lord Byron, granted an Injunction the effect of which was, and was intended to be, to compel the defendant to remove the tiles; but he declined to adopt the mandatory form, but restrained the de- fendant from doing any act to prevent the smoke from arising. The substance of the judgment is grounded on the power of the court to remove an erection made by the de- fendant to effect the injury to be redressed, when that erection is the means by which the defendant continues to inflict the injuries from which the court intended to restrain; and the form of it is an acknowledgment of the gen- eral principle that an interlocutory injunction should not command the doing of any positive act. A number of authorities and cases were cit- ed on the argument to show that courts of equity will, in certain cases, decree the resti- tution of particular chattels; hut these are all cases where it was so ordered upon final hearing. Tliere is no case of any interlocu- tory injunction being granted or even applied for, for such purpose. It would be a simple and easy substitute for the 'action of replevin; and there is nothing in this case to warrant such order, even upon final decree. The value of these trucks can be fully recovered at law, and, as to the use of them in the meantime, new ones could be built sooner than a suit in equity be brought to final hearing. I feel, therefore, constrained to refuse the injunction so far as these mandatory prayers are concerned. As to so much of the prayer as asks to restrain James Fisk, Jr., and the other defendants named in it, from entering In- to any agreement, or doing anything to pre- vent or hinder the Erie Railway Company transporting the complainant's locomotives, I think the injunction ought to be granted. They are conspiring with the Erie Railway Company to injure the complainants in a way for which the redress at law is not ade- quate, and therefore should be enjoined from doing any acts to that end. I do not intend to Intimate any opinion upon the question whether this court has power on the final hearing to give the complainants the relief they seek by compelling the Erie Rail- way Company to transport their locomotivea at the established fares. INJUNCTIONS. 729 WHITEOAR et al. v. MICHENOE et al. (37 N. J. Eq. 6.) Coutt of Chancery of New Jersey. Mav Term, 1883. Bill for injimction. On motion for manda- tory injunction. On order to show cause. On bill and answer. S. K. Robbins and B. D. Sireve, for com- plainants. R. S. Jenkins, for defendants. THE CHANCELLOR. The complainants are Rev. Dr. Charles 11. Whitecar, a minister of the Methodist Episcopal denomination, who has been duly appointed for the present conference year to the charge over the Meth- odist Episcopal Church at Moorestown, and certain of the members of that church. The defendants are the trustees of that church. The bill states that the defendants, on the 29th of March last, closed the church against the members and congregation, and have kept it closed ever since. It prays an in- junction to compel them to open it for the religious uses to which it was dedicated. It appears from the bill and the admissions of the answer that the church was organized under the rules, regulations, and discipline prescribed by the general conference of the Methodist Episcopal Church in the United States, and was duly incorporated on or about the 21st of August, 1815, under the act "to incorporate trustees of religious socie- ties," by the name of "The Methodist Epis- copal Church at Moorestown"; that Rachel S. Andrews, in September, 1858, conveyed to Deacon Brock, Caleb Penimore, Thomas Mar- ter, James Moore, John Ireland, Isaac Brown- ing, and Paul Crispin, "trustees of the Meth- odist Episcopal Church at Moorestown, in the ■county of Burlington and state of New Jer- sey," the lot of land on which the church ediflce is built, for the use and benefit of the members of the Methodist Episcopal Church at Moorestown, and that afterwards the members of that church buiJt thereon the chm'ch ediflce in question as a place of wor- ship, according to the rules of faith of the Methodist Episcopal Church in the United States, and subject to its discipline, and that the church edifice has been used as such from the time of its erection until it was clos- ■ed by the trustees on the 29th of March last; that on the 27th of that month the Rev. Dr. Wiley, one of the bishops of the Methodist Episcopal Church of the United States, and in whom, by the rules and reg- ulations of the general conference, was re- posed the power, and on whom was imposed the duty, of appointing for the present con- ference year the ministers for the various ■churches constituting the New Jersey Annual Conference, to which annual conference the n of the matters alleged in the blli. The bill alleges, among other things, that the orator is the owner of tht! land in question; that its substantial value is made up of the wood and timber growing thereon; that some of the de- fendants, under a license from the defend- ant, Hilliard, have entered upon the land, are engaged in cuttinganddra wing timber therefrom, and threaten to continue to do so. For the purpose of determining the question now before the court, these al- legations must be taken as true. To per- mit this wood and timber to be cut in the manner the defendants are doing, and threatening to do, under a license from defendant, Hilliard, is to permit a destruc- tion of the orator's estate as it has been held and enjoyed. The power of a court of equity to interpose by injunction to prevent irreparable injury and the de- struction of estates is well established, and this power has been construed to embrace trespasses of the character complained of In the orator's bill. Where trespass to property consists of a single act, and it is temporary in its nature and effect, so that the legal remedy of an action at law for damages is adequate, equity will not in- terfere; but if, as in this case, repeated acts are done or threatened, although each of such acts, taken by itself, may not be destructive to the estate, or inflict ir- reparable injury, and the legal remedy may, therefore, be adequate for each sin- gle act if it stood alone, the entire wrong may be prevented or stopped by injunc- tion. Smith V.Rock, 59 Vt. 232.9 Atl. Rep. B51; Langdon v. Templeton, 61 Vt. 119, 17 Atl. Rep. 839; Erhardt v. Boaro, 113 D. S. 539, 5 Sup. Ct. Rep. §fj5; Iron Co. v. Rey- mert, 45 N. Y. 703; Power Co. v. Tibbetts, 31 Conn. 165; Irwin v. Dixion, 9 How. 28; Livingston v. Livingston, 6 Johns. Ch. (Law Ed.) 496; High, Inj. 724-727; Shipley V. Ritter, 7 Md. 408; Scudder v. Trenton Delaware Falls Co., 1 N.J. Eq.694; 1 Pom. Eq. Jur. § 245; 3 Pom. Eq. Jur. § 1357; Murphy v. Lincoln, 63 Vt. 278, 22 Atl. Rep. 418. In the case of Murphy v. Lincoln, supra, the bill charged the committing of several trespaases by the defendants by drawing wood and logs across the orator's land. The defendants claimed a right of way. The court Sound the issue of fact in favor of the orator, and held that a court of equity had jurisdiction to enjoin the com- misBion of a series uf trespasses, although HUTCH.& BUNK.EQ.— 48 the legal remedy be adequate for each sin- gle act if it stood alone. It is said by Judge Story in his work on Equit.v Juris- prudence, (volume 2, §§ 928, 929:) "If the trespass be fugitive and temporary, and adequate compensation can be obtained in an action at law, there is uo ground to justify the interposition of courts of equity. Formerly, indeed, courts of eq- uity were extremely reluctant to interpose at all, even in regard to cases of repeated trespasses; but now there is not the slightest hesitation if the acts done or threatened to be done to the property would be ruinous or irreparable, or would impair the just enjoyment of the property in the future. In short, it is now granted in all cases of timber, coals, ores, and quarries, where the party is a mere tres- passer, or where he exceeds the limited right with which he is clothed, upou the ground that the acts are, or may be, an irreparable damage to the particular spe- cies of property. " In Iron Co. v. Rey mert, supra, it is said that mines, quarries, and timber are protected by injunction, upon the ground that injuries to and depreda- tions upon them are, or may cause, an irreparable damage, and also with a view to prevent a multiplicity of actions for damages, which might accrue from continuous violations of the rights of the owners; and that it is not necessary that the right should be first established in an action at law. In Erhardt v. Boaro, su- pra, Mr. Justice Field says: "It is now a common practice in cases where irre- mediable mischief is being done or threat- ened, going to the destruction of the sub- stance of the estate, such as the extract- ing of ores from a mine, or the cutting down of timber, or the removal of coal, to issue an injunction, though the title to the premises be in litigation. The author- ity of the court is exercised in such cases, through its preventive writ, to preserve the property from destruction pending legal proceedings for the determination of the title. " When It appears that the title is in dis- pute, the court may, in its discretion, is- sue a temporary injunction, and continue it in force for such time as may be neces- sary to enable the orator to establish his title in a court of law, and may make the injunction perpetual when the orator lias thus established his title; or the court may proceed and determine which party has the better title; or it may dismiss the bill, and leave the orator to his legal rem- edy. Bacon V. Jones, 4 Mylne & C. 433; Duke of Beaufort v. Morris, 6 Hare, 340; Campbell v. Scott, 11 Rim. 31 ; Kerr, Inj. 209; Ingraham v. Dunnell, 5 Mete. (Mass.) 118; Rooney v. Soule, 45 Vt. 303; Wing v. Hall, 44 Vt. 118; Lyon v. McLau&hlin, 32 Vt. 423- Hastings v. Perry, 20 Vt. 278; Barnes v. Dow, 59 Vt. 530, 10 Atl. Rep. 258; Barry v. Harris, 49 Vt. 392. In Bacon v. Jones, supra, Lord Cottenham says: "The jurisdiction of this court is founded upon legal right. The plaintiff comingin to court on the assumption that he has the legal right, and the "court granting its as- sistance on that ground. When a party applies for the aid of a court, the applica- tion for an injunction is made either dur- ing the progress of the suit or at the hear- r5J: INJUNCTIONS. Ing; and In both cases, I apprehend, great latitude and discretion are allowed to the court in dealing with the application. When the application is for an interlocu- tory injunction, several courses are open. The court may at once grant the injunc- tion simpliciter, without more,— a course which, though perfectly competent to the court. Is not very likely to be taken where the defendant raises a question as to the valid- ity of the plaintiff'stitle; oritmayfoUow the more usual, and, as I apprehend, more wholesome, practice in such a case, of either granting an injunction, and at the same time directing the plaintiff to proceed to establish his title at law, and suspend- ing the grant of the injunction until the result ot the legal Investigation has been ascertained, the defendant, in the mean Time, keeping an account. Which of these several courses ought to be takeu must depend entirely upon the discretion of the court, according to the case. When the cause comes to a hearing, the court has also a large latitude left to it; and I am far from saying that a case may not arise In which, even at that stage, the court will he of opinion that the injunction may properly be granted without having re- course to a trial at law. The conduct and dealings of the parties, the frame of the pleadings, the nature of the patent right and of the evidence by which it is estab- lished, these and other circumstances may combine to producesuch a result, although this is certainly not very likely to happen, and I am not aware of any case in which it has happened. Nevertheless it is a course unquestionably competent to the court, provided a case be presented which satisfies the mind of the judge that such a course, if adopted, will do justice between the parties. Again, the court may at the hearing do that which is the more ordi- nary course, — it may retain the bill giving the plaintiff the opportunity of first estab- lishing his right at law. There still remains a third course, the propriety of which must also depend upon the circum- stances of the case, — that of dismissing the bill atonee." Although Bacon v. Jones was a case relative to a oatent right, the re- marks of the lord chancellor are applicable to any case in which the orator's title is in dispute. The case of the Duke ot Beau- fort V. Morris, supra, was a bill for an in- jtmction to protect the orator's coal mines ' from injury from the water flowing into them from the defendant's colliery; and it was ordered that the bill be retained for 12 months, with liberty to the orator to bring such actions as he might be advised were necessary, and that the injunction is- sued In the cause be continued for such time. We think the granting of the temporary injunction in this case was a proper exer- cise ot the discretionary power which the court possesses. The orator, by his bill, makes out a strong case foreq.uitable con- sideration. The sole value of the prem- ises in question is in the wood and timber growing thereon. The orator has here- tofore held and occupied them for the pur- pose ot manufacturing lumber and char- coal from such timber and wood. He has expended large sums of money in the erec- tion of mills and coal kilns, in building roads, and in procuring teams and work- men for the prosecution of said business, and has made contracts for the sale of said manufactured products. The defend- ants are engaged in cutting and removing that which constitutes the chief value of the estate, and threaten to continue to do so. These acts, H continued, will work a destruction ot the estate, and render it of DO value for the purpose for which it has been held and enjoyed. The case is one peculiarly within the province of a court of equity, through its preventive writ, to interpose and stop the mischief complained of, and preserve the property from de- struction. The defendant, John H. Hil- liard, having, before any evidence has been taken or hearing had, put in issue the ora- tor's title, insisted that this issue be tried in a court of law, the case is one In which the court may properly, in its dis- cretion, require the orator to establish his title in such court before proceeding fur- ther with the cause, and such will be the order of this court. The pro forma decree of the court ot chancery is reversed ; the demurrer contained in the answer of the defendant, John H. Hilliard, is overruled; tlie orator's bill is adjudged sufficient, and defendant's (Hilliard's) answer is ordered brought forward, from which it appears that the orator's title to the premises is in controversy; therefore the cause is re- manded to the court of chancery, with di- rection to that court to retain the cause, and continue in force the injunction for such time as, in the opinion of said court, may be necessary to enable the orator to bring and prosecute to final judgment such action or actions as may be necessary to establish his title In a court of law; and, in default of the orator so establish- ing his title within the time aforesaid, the orator's bill to be dismissed, as against the defendant, John H. Hilliard, with costs. But if the orator shall, within the time aforesaid, by a final judgment in his favor in a court of law, establish hia title to the premises as against the defendant, John H. Hilliard, then the court will enter a decree making perpetual the temporary injunction, and make such order in rela- tion to costs as to the court shall seem meet. TAFT, J.,did not sit. INJUNGT?IONS. 755 WHEELOCK V. NOONAN. (15 N. E. 67, 108 N. Y. 179.) Oourt of Appeals of New York. January 17, 1888. Appeal from general term, superior court, ithe learned judge that to add anything to It would be a work of supererogation. We adopt it as the opin- ion of this court, and affirm the judgment. All concur. INJUNCTIONS. 773 CRAWFOBD et al. v. TYRRELL (28 N. B. 514, 128 N. Y. 341.) Court of Appeals of Ne^^^ York. Oct. 6, 1891. Appeal from supreme court, general term, Second department. Action by John P. Crawford and others against Martin B. Tyrrell, to restrain de- fendant from keeping a house of ill fame, and to recover damages for injury sustain- ed. Judgment for plaintiffs. Defendant appeals. Affirmed. J as. & Thos. H. Troy, for appellant. Al- fred E. Mudge, for respondents. GRAY, J. In this action, which was brought to restrain the defendant from keep- ing a house of ill fame and from using his premises as an assignation house, and to re- cover damages for injuries sustained, the trial court found as facts that the house, as maintained by defendant, was a resort for prostitutes and licentious men, and that the persons occupying rooms acted in a bolster- oiis and noisy manner, and indecently ex- posed their persons at the windows, "where- by the use and occupation of the plaintiffs' premises have been interfered with and ren- dered uncomfortable, and whereby the occu- pants of the plaintiffs' premises have been annoyed and seriously disturbed." Such a finding was amply justified by the evidence, and, indeed, It is not discussed by the ap- pellant; but he argues that the plaintiffs could not maintain a civil action of this na- ture, inasmuch as the damage they suffered was a damage common to the whole com- munity, and not special to them. If that position had been sustained by the facts, I do not doubt but that it would have been the duty of the trial judge to have denied the relief prayed for. The rule of law requires of him who complains of his neighbor's use of his property, and seeks for redress and to restrain him from such use, that he should show that a substantive injui-y to property is committed. The mere fact of a business be- ing carried on which may be shown to be immoral, and, therefore, prejudicial to the character of the neighborhood, furnishes of itself no ground for equitable interference at the suit of a private person; and, though the use of property may be unlawful or unrea- sonable, unless special damage can be shown, a neighboring property owner cannot base thereupon any private right of action. It Is for the public authorities, acting in the com- mon interest, to interfere for the suppression of the common nuisance. See Francis v. Schoellkopf, 53 N. Y. 152. If the business complained of is a lawful one, the legal question presented In a civil action for pri- vate damage Is whether the business is rea- sonably conducted, and whether, as con- ducted, it is one which is obnoxious and hurt- ful to adjoining property. If the business is unlawful, the complainant in a private ac- tion must show special damage, by which the legitimate use of his adjoining property has been interfered with, or its occupation rendered unfit or uncomfortable. That the perpetrator of the nuisance is amenable to the provisions and penalties of the criminal law is not an answer to an action against him by a private person to recover for injury sustained, and for an injunction against the continued use of his premises in a similar manner. The principle has been long settled that the objection that the nuisance was a common one is not available if it be shown that special damage was suffered. Rose v. Miles, 4 Maule & S. 101; Rose v. Groves, 5 Man. & G. 613; Francis v. Schoellkopf, su- pra; Lansing v. Smith, 4 Wend. 9. One who uses his property lawfully and reasona- bly, in a general legal sense, can do injury to nobody. In the full enjoyment of his legal rights in and to his property the law will not suffer a man to be restrained, but his use of the property must be always such as in no manner to invade the legal rights of his neighbor. The rights of each to the enjoyment and use of their several proper- ties should, in legal contemplation, always be equal. If the balance is destroyed by the act of one, the law gives a remedy in damages, or equity will restrain. If the use of a property is one which renders a neigh- bor's occupation and enjoyment physically uncomfortable, or which may be hurtful to the health, as where trades are conducted which are offensive by reason of odors, noises, or other injurious or annoying features, a pri- vate nuisance is deemed to be established, against which the protection of a court of equity power may be invoked. In the pres- ent case the indecent conduct of the occu- pants of the defendant's house, and the noise therefrom, inasmuch as they rendered the plaintiffs' house unfit for comfortable or re- spectable occupation, and unfit for the pur- poses it was intended for, were facts which constituted a nuisance, and were sufficient grounds for the maintenance of the action. If it was a nuisance which affected the general neighborhood, and was the subject of an indictment for its unlawful and immoral features, the plaintiffs were none the less entitled to their action for any injury sus- tained, and to their equitable right to have its continuance restrained. The judgment appealed from should be affirmed, with costs. All concur, except FINCH, J., absent. 774 INJUNCTIONS. WEINSTOCK, LUBIN & OO. v. MAKKS. (No. 18,375.) (42 Pac. 142, 109 Cal. 529.) Supreme Court of California. Oct. 12, 1895. Department 1. »Appeal from superior court, Sacramento county; Matt. F. Johnson, Judge. Action by Welnstock, Lubin & Co., a cor- poration, against H. Marks. There was a judgment for plaintiff, and defendant appeals. Reversed in part. HoU & Dunn, for appellant Johnson, Johnson & Johnson, for respondent GAROUTTB, J. Plaintiff is a corporation carrying on a large clothing and dry-goods business in the city of Sacramento. Defend- ant is also a dealer in clothing of the same general character, and is carrying on business in a building adjoining plaintiff's place of business. The present action is one of injunc- tion, and by its decree, among other things, the court ordered defendant to refrain from further use of the name "Mechanical Store" as the designation of his place of business, and further decreed that defendant maintain and place in a conspicuous part of his store, and also in a conspicuous place on the out- side or front thereof, a sign showing the pro- prietorship of his said store, in letters suffi- ciently large to be plainly observable by pass- ers-by and customers entering therein. De- fendant appeals from the foregoing portions of the judgment. The judgment Is based upon certain find- ings of fact made by the trial court upon the evidence offered at the trial, and no com- plaint is now heard that this evidence does not fully support these findings. It therefore follows that the merit of this appeal presents itself upon a consideration of those findings and the decree based thereon. These findings of fact are fuU and in detail, and, for present purposes, we deem it sufficient to state the general tenor and effect of some of them. (1) The court finds that on or about the 8th day of October, 1874, H. Wemstock and D. Lubin entered into a copartnership under the firm name and style of Welnstock & Lubin, of the city of Sacramento, and, as such partners, engaged in the business of dealing in wearing apparel for men, women, and children, and that said Welnstock & Lubin selected as the name of their place of business "Mechanics' Store," and designated the same by that ap- pellation, by which name their said store thenceforth was continually known; that, m the management and conduct of their business, they fixed a price upon each and every ar- ticle carried by them In the stock of said store, and marked the said prices in figures upon each article, and sold such articles at the prices so marked, and never deviated there- from; and they advertised the said method of doing business extensively throughout the entire Pacific coast by means of newspapers, etc., by means whereof their said method of doing business became wlddy known to the trade and public throughout the entire Pacific coast, and by reason whereof it became and was well known to the trade and public In California and the other states and territories of the Pacific coast that at the store of said Welnstock & Lubin only one price was char- ged for goods sold therein, and that no devia- tion from said price was permitted. (2) That, by care, attention, skill, and strict adherence to business and the rules as aforesaid, this plaintiff has materially increased the volume and Importance and value of said business, and enhanced the good will thereof, and the said plaintiff has established for the said store and business throughout the said states and ter- ritories a wide and honorable reputation, and thereby said business has become extensive and valuable and profitable, and the pub- lic have become accustomed to plaintiff's said method of doing business, and have been in- duced to rely, and do rely, upon the good faith of the plaintiff in managing and conducting its business In the manner aforesaid, and by reason thereof have been induced to bestow and do bestow upon the plaintiff their custom, trade, patronage, and business. (3) That on or about 1SS5 the defendant, who had pre- viously been engaged in business elsewhere, and was without any established reputation of his own, and whose business was unknown to the trade and general public, removed his business from the place he then occupied to the premises on the east of and near the premises of this plaintiff; and the defendant then and there engaged in a similar line of trade as this plaintiff, and ever since then he has maintained and conducted, and still main- tains and conducts, the said store at said place, and carries on the said business therein; and he named his store In the year 1887 or thereabouts the "Mechanical Store." (4) That the defendant, well knowing the foregoing facts, and contriving, intending, and design- ing fraudulently to injure this plaintiff, and to obtain undue advantage of plaintiff, and to deprive the plaintiff of its business, and fraudulently and unlawfully to increase his own business, and to pirate and make use of and appropriate to himself the good will of the plaintiff's business, and the said reputa- tion and honorable esteem and confidence that the plaintiff enjoyed Iq the minds of the peo- ple of the Pacific coast, and in order to create confusion In the public mind, and to take ad- vantage of the standing that the plaintiff by Its aforesaid acts had acquired in said ter- ritory, and fraudulently designing to deceive the public and people intending to trade with the plaintiff, and to divert the custom of the plaintiff to himself, and to deprive the plain- tiff of its customers and of the trade, and to induce the people to trade with the defend- ant tmder the belief that they were trading with the plaintiff, and for the purpose of de- ceiving plaintiff's customers and persons in- tending to trade with plaintiff Into believing that the defendant's store was that of the INJUNCTIONS. 775 plaintiff, and thereby Inducing them to enter said store of defendant to trade with said defendant, to his profit, and In order to carry out his fraudulent and corrupt designs as aforesaid, — the defendant has persistently car- ried out a system of deceit and misrepresen- tations concerning his store and its ownership, in connection with plaintiff's store and busi- ness, as follows: That in 1891 plaintiff, at its place of business, erected a store, the front of which is of pecuUar architecture, contain- ing arches and alcoves, of which there was none other similar in the city of Sacra,mento; that afterwards the defendant, at his said place of business, and adjoining plaintiffs store, erected a building which, so far as the first or lower story is concerned, was and is similar in architecture in every respect to the store of plaintiff, so much so that passers-by were liable to go into the store of defendant thinking that they were entering the store of plaintiff, and that customers of plaintiff in many instances did so enter the store of de- fendant thinking they were In the store of plaintiff; that defendant had no sign inside of his store or on the outside of his store by which customers could for themselves ascer- tain the true proprietorship thereof; that the erection of the defendant's building exactly the same as plaintiff's building in every par- ticular, and the adoption of the use of the words "Mechanical Store," and the absence of any name or sign upon or in defendant's store designating the true proprietorship of defendant's store, were all done by the de- fendant for the purpose of deceiving the pub- lic, and more especially plaintiff's customers, and enticing and pirating and securing the patronage of said customers from plaintiff to defendant (5) That, by the aforesaid means the defendant has diverted from the plaintiff a large part of plaintiff's trade and custom; has induced many persons to trade with the defendant who otherwise would have traded with the plaintiff; has sold large quantities of goods in his said store to persons who, but for said acts of defendant, would have pur- chased said goods of the plaintiff; has de- prived the plaintiff of a large share of its legit- imate profits; has injured the business and reputation of the plaintiff; has impaired the confidence of the public in the plaintiff and its method of doing business; and has deprived the plaintiff of a large number of its custom- ers and patrons. The foregoing chapter of facts makes In- teresting reading, and we first turn our at- tention to that portion of the judgment re- straining defendant from the further use of the words "Mechanical Store" as a designa- tion of his place of business. We see but little difficulty in arriving at a conclusion upon this branch of the case. Defendant assails the judgment in this particular with but a single weapon. He insists that the words "Mechanics' Store" are not the sub- ject of trade-mark, and that, therefore, plain- tiff can have no exclusive right to them. As we view the picture presented by the findings of fact, the question as to what may or may not be the subject of trade-mark Is not the problem to be solved. That these words are of a kind that may be used as a trade-name we have no doubt, and, having established that fact, we are required to pursue the investigation no further. That certain names and designations which may not become technical or specific trade-marks may become the names of articles or of places of business, and thereby the use thereof receive the protection of the law, cannot be doubted, for the cases evei-ywhere recognize that fact. The learned judge said in Ijee v. Haley, 5 Ch. App. 155: "I quite agree that they [the plaintiffs] have no property right In the name, but the prin- ciple upon which the cases on this subject proceed is not that there is property in the word, but that it Is a fraud on a person who has established a trade, and carried it on un- der a given name, that some other person should assume the same name, or the same name with a slight alteration, in such a way as to induce persons to deal with him in the belief that they are dealing with the person who has given a reputation to the name." A similar doctrine is declared in Manufactur- ing Co. V. Hall, 61 N. Y. 226, and also in the late case of Coats v. Thread Co., 149 V. S. 562, 13 Sup. Ct. 966. This court said in Pierce v. Guittard, 68 Cal. 71, 8 Pac. 645: "We are of opinion that it Is not necessary to de- cide whether the plaintiff's label, with the accompanying words and devices, constituted a trade-mark, and, as such, the exclusive property of the plaintiff, for the reason that it Is a fraud on a person who has established a business for his goods, and carries it on under a given name or with a particular mark, for some other person to assume the same name or mark, or the same with a slight alteration, in such a way as to induce persons to deal with him in the belief that they are dealing with a person who has given a reputation to that name or mark." The same general principle is also recognized and approved in Schmidt v. Brieg, 100 Cal. 672, 35 Pac. 623. While in these two cases the fact appears that the defendants were selling an inferior article, and thereby de- ceiving and defrauding the public, it is not apparent that such fact was a necessary ele- ment in pointing the judgment. Neither do we consider it so upon principle; and in cases without number, restraining defendants from trespassing upon the good will of plaintiff's business, such fact was an element foreign to the litigation. It may be said that the adjudged cases for relief are based solely upon the ground of loss and damage to the tradesman's business, by unlawful competi- tion. In Levy v. Walker, Cox, Man. Trade- Mark Cas. No. 639, the learned judge de- clared: "The court interferes solely for the purpose of protecting the owner of a trade or business from a fraudulent invasion of 776 INJUNCTIONS. that business by somebody else. It does not interfere to prevent the world outside from being misled into anything." While our statutes attempt to deal with trade-marks, and provide for the filing there- of with the secretary of state, with accom- panying affidavits, etc., yet trade-names are equally protected upon analogous principles of law. And that the words "Mechanics' Store" may be made a trade-name, and the user thereof become entitled under the law to protection from pirates preying upon the sea of commercial trade, we have no doubt. ^Ve think the defendant should be restrained from the use of the words "Mechanical Store." The court has declared the fact to be, and it is not challenged by defendant, that these words were used as a designation of his store for the purpose of deceiving the public, and especially plaintiff's customers, and thereby securing the advantages and benefits of the good will of plaintiff's busi- ness. To say that such conduct upon the part of defendant is unfair business compe- tition is to state the fact in the mildest terms. In Celluloid Manuf'g Co. v. Cello- nite Jlanuf'g Co., 32 Fed. 97, Justice Brad- ley, of the supreme court of the United States, in speaking to the question of sim- ilarity in name, said: "It was not identical with the plaintiff's name. That would be too gross an invasion of the complainant's rights. Similarity, not identity, is the usual recourse when one party seeks to benefit himself by the good name of another. What similarity is sufficient to effect the object has to be determined in each case by its circum- stances. We may say, generally, that a sim- ilarity which would be likely to deceive or mislead an ordinary unsuspecting customer, is obnoxious to the law." In this case the trial court determined that there was a suf- ficient similarity in the names to deceive the public; that the defendant adopted the name for the purpose of deceiving the pub- lic and securing plaintiff's business; and that such results had followed. These things being true, the decree must go against him. The remaining branch of the case presents a novel and original proposition of law. In its facts we apprehend no case like it can be found, either In this country or England. The decree orders the defendant to place, both upon the outside and inside of Ms store, a sign, plainly legible to customers and pass- ers-by, indicating his proprietorship; and, while the power of the court to issue manda- tory injunctions in many cases must be con- ceded, yet cases where such power has been exercised have generally involved matters of nuisance, or at least cases where courts have ordered the subject-matter of the litigation to be placed in its original condition; as, for instance, the removing of obstructions to an- cient lights. But let us for a moment turn oiu* attention to the facts of this case. The store of plaintiff was known as the "Mechan- ics' Store." By various kinds of advertising, and attention, honesty, and skill In the coo- duct of the business, it increased the volume thereof and enhanced its good will, and throughout the Pacific coast established for it a wide and honorable reputation as a fair and reliable house with which to deal. Plaintiff erected a store building of peculiar architecture, there being none like it In the city of Sacramento; and defendant thereupon erected a store building, immediately adjoin- ing that of plaintiff's, in every respect of sim- ilar architecture. It further appears that de- fendant erected this particular kind of build- ing for the purpose of deceiving the public, and securing the patronage of plaintiff's cus^ tomers; and for the same purpose he refrain- ed from placing any sign in or upon the building Indicating the proprietorship of the business, or designating it in any way so that It might be distinguished from the store of plaintiff. And, by reason of these acts of defendant, many of plaintiff's customers were deceived into purchasing goods in defendant's store, believing that they were trading In plaintiff's store; and defendant thus diverted from the plaintiff a large part of its trade and custom, and thereby injured its business and curtailed the value of its good will. Up- on this bald statement of facts, it cannot be gainsaid that defendant has done the plain- tiff wrong; and it is said that for every wrong there is a remedy. These facts cer- tainly indicate a case of unlawful business competition, and courts of equity have ever been ready to declare such things odious. It is strange if plaintiff may be deprived of the fruits of a long course of honest and fair dealing in business by such wicked contriv- ances, and, upon appeal to the courts for re- lief, should be told there was no relief. This cannot be so, for the whole law of trade- marks, trade-names, etc., Is recognized, ap- proved, and enforced for the very purpose of protecting the honest tradesman from a like loss and damage to that which threatens this plaintiff; and the fact that the question comes to us in an entirely new guise, and that the schemer has concocted a kind of de- ception heretofore unheard of in legal juris- prudence, is no reason why equity is either unable or unwilling to deal with him. It has been said by some judge or law writer that "no fixed rules can be established upon which to deal with fraud, for, were courts of equity to once declare rules prescribing the limitations of their power in dealing with It, the jurisdiction would be perpetually cramp- ed and eluded by new schemes which the fer- tility of man's invention would contrive." By device, defendant is defrauding plaintiff of its business. He is stealing its good will, —a most valuable property, — only secured aft- er years of honest dealing and large expendi- tures of money; and equity would be impo- tent, indeed, if it could contrive no remedy for such a wrong. The fundamental principle underlying this entire branch of the law Is that no man has INJUNCTIONS. 777 the right to sell his goods aa the goods of a rival trader. Mr. Browne, in his work upon Trade-Marks, declares the wrong to be, "not in imitating a symbol, deylce, or fancy name, for any such act may not involve the slight- est turpitude; the wrong consists in unfair means to obtain from a person the fruits of his own ingenuity or industry,— an injustice that is in direct transgression of the deca- logue, 'Thou Shalt not covet • • * any- thing that Is thy neighbor's.' The most de- testable kind of fraud underlies the filching of another's good name, in connection with trafficking." We think the principle may be broadly stated that when one tradesman re- sorts to the use of any artifice or contrivance for the purpose of representing his goods or his business as the goods or business of a rival tradesman, thereby deceiving the people by causing them to trade with him when they intended to and would have otherwise traded with his rival, a fraud is committed, —a fraud which a court of equity will not al- low to thrive. In Howard v. Henriques, 3 Sanf. 725, the court, in speaking of the com- petitor in business, said: "He must not by any deceitful or other practice impose on the public, and he must not by dressing himself in another man's gaiTaents, and by assuming another man's name, endeavor to deprive that man of his own individuality and of the gains to which by his industry and skill he is fairly entitled." It may well be said that the defendant, by duplicating plaintiff's building, with its peculiar architecture and immediately adjoining, entering into the same line of business, with no mark of iden- tification upon his store, has dressed himself in plaintiff's garments; and, having so dress- ed himself with a fraudulent intent, equity will exert itself to reach the fraud in some way. In the leading case of Lee v. Haley, supra, the whole question is condensed by the final conclusion of the court into the principle of law "that it is a fraud on the part of a defendant to set up a business un- der such a designation as is calculated to lead and does lead other people to suppose that his business is the business of another person." If the same evil results are accom- plished by the acts practiced by this de- fendant which would be accomplished by an adoption of plaintiff's name, why should equity smUe upon the one practice and frown upon the other? Upon what principle of law can a court of equity say, "If you cheat and defraud your competitor in business by tak- ing his name, the court will give relief against you, but, if you cheat and defraud him by assuming a disguise of a different character, your acts are beyond the law?" Equity will not concern itself about the means by which fraud is done. It is the re- sults arising from the means— it is the fraud itself— with which it deals. The foregoing principles of law do not ap- ply alone to the protection of parties having trade-marks and trade-names. They reach away beyond that, and apply to all cases where fraud is practiced by one in securing the trade of a rival dealer; and these ways are as many and as various as the ingenuity of the dishonest schemer can invent. In Glenny V. Smith, reported in the Jurist of 1865 (page 9(55), the court held: "Where a tradesman, in addition to his own name upon his shop front, placed upon his sunblind and upon his brass plate the words 'From Thresher & Glenny' (in whose employment he had been), the court, be- ing of opinion that this was done in such a way as to be likely to mislead, and there being evidence that persons had been actually misled, granted an injunction to restrain such a use of the name of the firm Thresher & Glenny." In Knott V. Morgan, 2 Keen, 213, the "Lon- don Conveyance Company" had its omnibuses painted green, and its servants clothed In the same colors. Another adopted the same name, and likewise its vehicles were so painted and Its servants so clothed. It was conceded that plaintiff could have no exclusive property right In any of these things, but the court issued Its Injunction, declaring that plaintiff had "a right to call upon this court to restrain the de- fendant from fraudulently using precisely the same words and devices which they have tak- en for the purpose of distinguishing their prop- erty, and thereby depriving them of the fair profits of their business by attracting custom on the false representation that carriages really the defendant's belong to and are under the management of the plaintiffs." The author, by a note, approves the doctrine here declared, saying: "There was an obvious attempt to trade upon the plaintiff's reputation, — a con- structive fraud, — coupled with pecuniary loss, which was made the ground for the Issuance of a broad Injunction." The same principle is reiterated by the same learned judge in Croft V. Day, 7 Beav. S4, in the following words: "It Has been very correctly said that the prin- ciple of these cases is this : That no man has a right to sell his own goods as the goods of an- other. You may express the same principle in a ditt'erent form, and say that no man has a right to dress himself in colors, or adopt and bear symbols to which he has no peculiar or exclusive right, and thereby personate another person, for the purpose of inducing the public to suppose either that he is that other person or that he is connected with and selling the manufacture of such other person while he is really selling his own. It is perfectly mani- fest that to do these things is to commit a fraud, and a very gross fraud." In the very recent case of Coats v. Thread Co., 149 U. S. 566, 13 Sup. Ct. 966, the court said: "There can be no question of the soundness of the plaintiff's proposition that, irrespective of the technical question of trade-mark, the defend- ants have no right to dress their goods up in such manner as to deceive an intending pur- chaser, and induce him to believe he is buy- ing those of the plaintiffs. • • * They have no right by imitative devices to beguile the public into buying their wares under the Im- 778 INJUNCTIONS. presslon they are buying those of their rivals." To the same point, see System Co. v. Le Bou- tiUier (Super. Ct.) 24 N. Y. Supp. 890; Ap- polinaris Co. v. Scherer, 27 Fed. 18; Burgess V. Burgess, 3 De Gex, M. & G. 896; Von Mumm V. Frash, 56 I'ed. 830. Having decided that defendant's acts con- stitute a fraud upon plaintiff, and that a court of equity will administer relief, the question then presents itself, what shall be the form of the decree/ How may the court reach the wrong y The defendant had the right to erect his building, and erect it in any style of archi- tecture his fancy might dictate. He had the right to erect it in the particular locality where it was erected. He had the right there to con- duct a business similar to that of plaintiff. He had a right to do all these things, for, of themselves, they did not offend against equity; but when they were done with a fraudulent Intent, when they were done for the purpose of tolling away the customers of plaintiff by a deception, a fraud is practiced, and equity- will do what It can to right the wrong. The decision of the trial court In effect ordered de- fendant to place signs both Inside and outside his building, showing to the.world the proprie- torship thereof. We think this decree holds defendant to a rule too strict, in that it re- quires the proprietorship of the store to be shown. In this particular we think the decree should be modified so as to require that, the defendant, in the conduct of this business, shall distinguish his place of business from that In which the plaintiff is carrying on Its business, In some mode or form that shall be a sufficient- Indication to the public that It Is a different place of business from that of the plaintiff. For the foregoing reason, the judgment in this respect only is reversed, and the cause remand- ed, with directions to the trial court to modify the same, as heretofore suggested; and there- upon it is ordered that said judgment stand affirmed. Appellant is to pay the costs of this appeal. We concur: HARRISON, J.; VAN FLEET, REFORMATION. 779 PURVINES et al. v. HARRISON. (37 N. E. 705, 151 111. 219.) Supreme Court of Illinois. June 16, 1894. Error to circuit court, Sangamon county. BiU by Frances A. Harrison against Fran- ces Purvines and others. Complainant ob- tained a decree. Defendants bring error. Affirmed. Conkling & Grout, for plaintiffs in error. Wm. J. Butler and Connolly & Mather, for defendant in error. MAGRUDER, J. This is a biU filed on July 18, 1890, by the defendant in error, Fran- ces A. Harrison, the mother of Peyton As- bury Purvines, deceased, by a former hus- band, against Frances Purvines, the minor daughter and only child of said Peyton As- bury Purvines, deceased; Samuel H. OlaspiU, the guardian of said minor; Alfred B. Pur- vines, the administrator of said deceased; and Edvrard Wyatt, a tenant occupying the premises hereinafter referred to under a lease from the complainant in the bill. The bill is filed for the purpose of reforming a deed of about 60 acres of land, executed by the de- fendant in error to her son, said Peyton A. Purvines, in his lifetime. The deed sought to be reformed bears date January 31, 1889, Vfas acknowledged August 30, 1889, and re- corded on September 2, 1889. It is a war- ranty deed, and conveys about 60 acres of land in Sangamon county to the grantee. The bill alleges that it was the intention of the complainant and her deceased son to in- sert words in the deed reserving to her a life estate in the land, so that she could have the use of it, and the rents from it, as long as she lived; but that, by the mutual mis- take of the parties to the deed, and by an oversight on the part of the scrivener who drew it, such reservation was unintentionally omitted from the deed. The prayer of the bill is that the deed be reformed by insert- ing therein a reservation of the life estate to the grantor. A guardian ad litem was ap- pointed for the minor, who answered; and answers denying the allegations of the biU were filed by said guardian and tenant, to which replications were filed. After proofs taken and hearings had, the circuit com^t rendered a decree finding the allegations of the biU to be true, and directing that the deed be reformed in the respect mentioned, and that such reformation take effect as of the date of the deed, and that the rents and profits of the land after that date should be- long to the complainant Evidence was introduced showing that an inquisition as to the insanity of the complain- ant was had in the county court of said coun- ty, and a verdict of the jury was returned therein on January 25, 1892, finding her to be an insane person; and thereafter her insan- ity was suggested in the present suit, and one B. F. Irwin was appointed to prosecute the same as next friend. Application had beea previously made to the court. In March, 1890, for the appointment of a conservator for de- fendant in error as a distracted person, but upon the trial of the issue whether she was a distracted person verdict had been returned in her favor. Some evidence was introduced tending to show that when she made the deed her mind had begun to fail, and she showed signs of absent-mindedness not theretofore noticeable in her. Her son, Peyton A. Pur- vines, had been divorced from his wife be- fore he died, and his habits up to the time of his death were those of a very intemperate man. There is no evidence, however, that he practiced any fraud upon his mother in order to obtain the deed. He lived with her at that time upon a farm of 80 acres, owned by her, and the consideration as expressed in the deed is "one dollar, and natural love and af- fection." He died unmarried and intestate on February 22, 1890, leaving, as his only child and heir at law, the minor plaintiff in error, Frances Purvines. After a careful ex- amination of the evidence, we think that both parties executed the deed under a common or mutual mistake, and did what neither of them intended to do. Warrick v. Smith, 137 m. 504, 27 N. B. 709. To justify the refor- mation of a written instrument upon the ground of mistake, it is necessary — First, that the mistake should be one of fact, and not of law (Sibert v. McAvoy, 15 lU. 106); second, that the mistake should be proved by clear and convincing evidence (2 Pom. Eq. Jm*. § 862); third, that the mistake should be mutu- al and common to both parties to the instru- ment (Sutherland v. Sutherland, 69 111. 481). A mistake of law is an erroneous conclusion as to the legal effect of known facts. Hurd V. Hall, 12 Wis. 113. The construction of words is a matter of law. Sibert v. MoAvoy, supra. Where parties instructed an ofGlcer to prepare a quitclaim deed for their execu- tion, but he drew a deed containing language which amounted in law to a covenant of title in fee, and they signed the deed knowing that such language was in it, they were held to have been mistaken in the law, — that is to say, in the legal effect of the language used, — and in the legal consequences of retaining such language in the deed. Gordere v. Down- ing, 18 lU. 492. Mistake of fact has been de- fined to be a mistake, not caused by the neg- lect of a legal duty on the part of the person making the mistake, and consisting in an un- conscious ignorance or f orgetfulness of a fact, past or present, material to the contract, or belief in the present existence of a thing ma- terial to the contract which does not exist, or in the past existence of a thing which has not existed. 2 Pom. Eq. Jur. § 839. It is mani- fest that the mistake in the present case was one of fact, and not one of law, because it had reference to the accidental omission from the deed of words which were intended to ba inserted therein; that is to say, words reserv- ing to the grantor a life interest In Sibert V. McAvoy, supra, we said: "It is where par- 780 REFORMATION. ties Intended to Insert words in a contract wliich were by accident omitted that equity can reform tlie contract by inserting them. * * * The insertion of words is a matter of fact. It is for mistakes of fact alone that contracts may be reformed." Nor can it be said in this case that the mistalie oc- curred on account of any want of reasonable diligence to ascertain the facts, or on account of any neglect, amounting to a violation of legal duty. 2 Pom. Eq. Jur. § 856. Where the relation of the parties Is one of confi- dence, such as that which existed here be- tween mother and son, and where a party executing the contract has a failing or weak mind arising from suffering or old age, the same degree of vigilance and care is not ex- pected or required as is expected or re- quired in the ordinary dealings of men with one another. Day v. Day, 84 N. C. 408. In Day V. Day, supra, a deaf and aged father made a deed to his son, in whom he reposed confidence, conveying a tract of land in fee, but omitting, either by mistake or contriv- ance of the son, under whose direction the deed was drawn, to reserve a life estate to the grantor; and it was held that an equity arose in favor of the father to have such in- strument reformed in accordance with the original intention of the parties. Counsel for plaintiffs in error claim that the evidence does not show want of mental capacity in the defendant in error, or want of capacity on her part to understand the ordinary affairs of life. This may be true. The proof shows merely a weakening of the mental povs^ers, growing out of domestic trouble, and grief for the recent death of her aged parents. This proof was not Introduced for the pur- pose of showing such insanity as would avoid the deed; but in a proceeding to re- form the deed It tended, in connection with the relations of the parties and other attend- ing circumstances, to excuse any apparent want of care in examining the phraseology of the deed. We think that the proof of a mutual mistake was clear and convincing. The burden of proof was upon the complain- ant, but the defendants offered no testimony whatever to contradict her witness. Some time after the deed was executed the de- ceased applied for a loan of money to be se- cured by mortgage upon his interest in the land. He then discovered for the first time that his mother's life estate had not been re- served in the deed. There is abimdant evi- dence, given by quite a number of witnesses, that he admitted the mistake, and stated that it was the Intention and agreement to retain a life estate for her in the deed, and that he intended to correct the mistake. He died, however, without doing so. These declara- tions, made many times, and challenged by no opposing evidence, were admissions against his own interest. It is well settled that parol proof may be received to show a mistake in a written instrument. McLennan v. John- ston, 60 lU. 306. For the reasons here stat- ed, and deeming it unnecessary to enter into a detailed discussion of the evidence, we think that the decree of the circuit court was correct, and it is accordingly aflirmed. Af- firmed, PHILLIPS, X, having heard this case In the circuit court, took no part here. REFORMATION. 781 WELLES T. YATES. (44 N. Y. 525.) Commission of Appeals of New York. May, 1871. Appeal from an order of the general term of the supreme court in the Sixth district, affirming a judgment of the special term in fa- vor of the plaintiff. The action was brought for the reformation of a deed executed by the plaintiff, he claim- ing that a reservation of certain timber had been omitted, through mistake on his part; and also for an accounting by the defendant for timber talien from the premises conveyed. An accoimt was ordered to ascertain the value of the lumber taken since March 10, 1851. The referee found the value at $2,- 041.72. Upon the coming in of the referee's report, judgment was entered for the plaintiff that the deed be reformed and corrected, and that he have judgment for the value of the tim- ber removed by the defendant. This judg- ment was affirmed by the general term in the Sixth district, and the defendant appeals to the court of appeals. The facts appear from the opinion of the court. E. H. Benn, for appellant. Geo. Sidney Camp, for respondent. HUNT, O. It will not be necessary to con- sider in detail the fifteen points presented by the appellant, and so ably argued by his counsel. The discussion of a few of them will settle principles that may serve to decide the case. The complaint, in substance, alleged that on the 28th of May, 1846, the plaintiff was the owner of one hundred and ten acres of land, being lot No. 4; that on that day he sold the same by executory contract, with the timber thereon, to T. & T. Trevor, for $17 per acre. That on the 7th day of December, 1846, he was the owner of lot No. 5, containing one hundred and forty-one acres, and then entered into an agreement with the same parties, by which they undertook to cut the timber stand- ing thereon, manufacture the same into boards and planks, and to give the plaintiff one-half of the lumber thus manufactured. Certain other details were provided, which it is not necessary to specify. At the same time, the, plaintiff entered into an executory contract with the same persons, for the sale of the one hundred and forty-one acres, at $4 per acre. That these two pieces of land were of the same value; that the timber growing on the latter piece was of the value of $5,000, and that such timber, in the understanding of the parties, was reserved to the plaintiff by the manufacturing contract mentioned, and that the price of $4 per acre was for the land simply, the timber reserved to the plaintiff. That, after proceeding for some time in the manufacture of the lumber, the purchasers became embarrassed, and the defendant took their place in the contract, and without new or further negotiations, a calculation was made of their payments, the balance found due paid by the defendant, and an absolute deed of the two pieces of land, without res- ervation of the timber, made by the plaintiff to the defendant. That the defendant well knew all of the facts in the complaint recited. The plaintiff then avers "that through and by mistake he failed to insert in the said last-mentioned deed (of the one hundred and forty-one acres) any reservation of the timber mentioned and em- braced in the contract secondly above men- tioned;" and also avers demand and refusal to amend. The prayer is that the deed may be corrected, so as to be made to contain a reservation of the timber, and that the plain- tiff may have an accounting as to the timber taken and removed by the defendant. The judge found that there was an error and mistake on the part of the plaintiff, as averred by him. He found also that there was no mistake on the part of the defendant, but that he well understood the plaintiff's er- ror. He knew that the timber was not re- served, and he knew that the plaintiff sup- posed and understood that It was reserved. He received the deed, failing to correct the plaintiff's error, but intending to reap the profits of it. He knew that he received of the plaintiff's estate $4,000 or $5,000 more than the plaintiff Intended to give him, or than he supposed he had given him. The mistake was unilateral; on the part of the plaintiff only. On the part of the defendant, there was no mistake, but something worse. It was a fraud, as palpable as if he had made affirma- tive representations to induce the error; as gross as If he had put his hands in the plain- tiff's pocket and feloniously abstracted his money. 1 Story, Eq. Jur. §§ 187, 137, 140, 147, 152, 153, 167, 168, 191, 214-217; Waldron v. Stevens, 12 Wend. 100; Wiswall v. Hall, 3 Paige, 313; Hill v. Gray, 1 Starkle, 434; 2 E. C. L. 167. The point here arises, can there be a judg- ment to reform the contract, there not being a mutual error, but error on one part and fraud on the other? It is laid down in many authorities report- ed and elementary works, that there must be a mutual error, to authorize this interposition of a court of equity. See Story, Eq. Jur. § 155; Story v. Conger, 30 N. Y. 673; Nevius V. Dunlap, 33 N. Y. 676; Lyman v. United States Ins. Co., 17 Johns. 376. The cases where this general statement is made are very nu- merous, and it is well said that to exercise this power, where one party only has been in error and the other has correctly understood it, would be making a new contract for the par- ties, and would be doing Injustice to the party who made no mistake. On this point two dis- tinctions may be noticed. 1st. Those cases wlU be found to have in them the element of the honesty on the part of the one correctly understanding the contract. Where two par- ties enter into a contract, and an error is r83 REFORMATION. claimed by one party to exist on an Important point, which Is claimed to be correct by the other party, it cannot be amended, as against the party correctly understanding it, he acting in good faith, and supposing the other to have understood the contract as he did. This rule does not apply where there is fraud. Either fraud or mutual mistake will authorize the reformation. See authorities supra; De Pey- ster V. Hasbrouck, 11 N. Y. 582; and Gillespie V. Moon, 2 Johns. Ch. 585; Barlow v. Scott, 24 N. Y. 40; Rider v. Powell, 28 N. Y. 310. In his supplementary points the appellant ex- pressly concedes this proposition. 2. This is the consummation of an existing contract, about the terms of which there was no dispute. This contract it was attempted to perform. There has been a failure to per- form it, by the misunderstanding, on the part of the plaintiff, of the effect of the instrument by which performance was attempted. A ref- ormation is permitted in such case, although the mistake be not mutual. See the cases be- fore cited, and Coles v. Bowne, 10 Paige, 534. The result of the cases justifies a reforma- tion of a contract, when there is either a mu- tual mistake, that is, a mistake common to both parties, or when there is fraud. In his complaint, the plaintiff has simply stated the facts on which he claims relief. After set- ting forth the facts, he adds, that by mistake, he failed to insert in the deed a reservation of the timber. He does not charge that it was a mistake common to both parties. Nor does he charge it to have been a fraud. He gives no name to the conduct of the defendant. The facts, as found by the referee, and the judg- ment rendered by him, are in conformity to the allegations of the complaint. They estab- lish, not a mutual or common error, but an error on the part of the plaintiff and fraud on the part of the defendant. The defendant, by the judgment of the court upon the facts, occupied the place of the orig- inal contractors and undertook to perform their contract. This was the finding of the judge, and the evidence, with the circumstan- ces, justified this finding. The fraud was in the deceitful performance. If the judgment of the court below is carried out, he wiU not be made a party to a new contract, which he would never have assumed. He did assume the original contract. He therefore became bound by it. When the court now compel him to abandon his fraudulent contract, he is re- mitted to the original agreement. He has no ground therefore to say that by being con- victed of a fraud, he is compelled to enter into a new contract. Nor is he to be relieved by the rule that a party seeking to be relieved from fraud, must be ready, prompt and eager In his demand for redress. When a party seeks to rescind a contract, on the ground of fraud, he must undoubtedly be prompt and ready in his disaffirmance. He has the elec- tion to affirm or disaffirm. If he elects the latter he must do it at once. He is not per- mitted to hesitate and balance advantages. Masson v. Bovet, 1 Denio, 69; Beers v. Hen- drlckson, 6 Rob. (N. T.) 54; Tomllnson v. Miller, •42 N. Y. 517. In the present case the party does not ask to have the contract rescinded. He does not seek to have it declared void. On the contrary he insists that it Is valid. He asks that it may read exactly as the parties originally agreed, and that all its parts may be complete- ly performed. In such case the rule is that the party must show himself ready and eager for its performance. 1 Story, Bq. Jur. § 776. The plaintiff has given sufficient evidence of his readiness and eagerness to perform. If there has been an unreasonable delay in seek- ing relief, the court will refuse it. Id., and 1 Fonbl. Eq. bk. 1, c. 6, § 2, note e. It is a question of discretion in the court whether under all the circumstances of time, repeated applications and refusals, the condition, knowledge, expectations and hopes of the par- ties, the relief should be granted. There is no positive or rigid rule, like that existing in the case of an attempted rescission. I am satis- fied with the decision on this point of the court below, and the judge trying the cause. 1 Story, Eq. Jur. § 529; Bidwell v. Insurance Co., 16 N. y. 268. The court having jurisdiction of the cause to amend the contract, thereby acquired the right incidentally to give relief in damages, or in such mode as justice required. Rathbone v. Warren, 10 Johns. 587; Kempshall v. Stone, 5 Johns. Ch. 193; Woodcock v. Bennett, 1 Cow. 711; Bidwell v. Insurance Co., 16 N. Y. 263; Story, Eq. § 794; Bundle v. Allison, 34 N. Y. 180. The defendant contends further, that no damages can be recovered by the plaintiff for timber that was cut more than six years be- fore the commencement of the action. The argument of the defendant's counsel is that the reformation of the deed is merely a means by which the plaintiff seeks to recover dam- ages for the timber taken, and that its cor- rection is simply a part of the evidence to au- thorize him thus to recover; that his claim is therefore a legal one and cannot extend back beyond six years. The authorities cited by the defendant do not sustain this position. The most plausible is that of Borst v. Corey, 15 N. y. 505, which was an action to enforce In equity a lien for the unpaid purchase-money of land. The court held that the action could not be sustained, for the reason that the debt sought to be enforced was barred by the stat- ute of limitations. The debt they held to be the principal, the lien the Incident, and the principal being ended the incident could not be enforced. At the same time the court con- ceded that where a mortgage was given to se- cure the payment of a simple contract debt, the lapse of six years was no bar to an action to foreclose the mortgage. The authority of Mayor v.- Colgate, 12 N. Y. 140, was conced- ed, where an assessment was attempted, to be enforced more than six years after the assess- ment had become due and payable. In the present case the question is not whs-t action can be sustained after the deed Is reformed, REFORMATION. 783 Out what action could have been sustained be- fore Its reformation? The reformation had not occurred when the suit was commenced, and the right of the parties was determined by the unreformed deed. That deed conveyed to the defendant without reservation, the one hundred and forty-one acres In question. It carried with It complete title to the trees. The plaintiff could not have sustained an ac- tion for their conversion. He would have been told that defendant had a legal title. The reformation of the deed In the present case is the principal and not the Incident. Dam- ages are the Incident, not the principal. It is the title which the judgment of reformation gives that warrants the claim for damages; not the claim for damages that creates the legal title. Complete justice and nothing more is done by the judgment in this respect as It stands. The defendant also Insists that In the view that the recovery against the defendant is sustained upon the groimd of fraud and not of mutual mistake, the cause of action Is bar- red In six years from the discovery of the fraud. He further says that the judge has expressly found as a fact that the cause of action has not accrued within six years from the commencement of the suit. I have looked through the testimony carefully, and I do not find any evidence that the plaintiff discovered the fraud perpetrated upon him as early as six years before the commencement of the suit. He did undoubtedly discover his own error soon after Its occurrence, and applied to the defendant's agents for its correction. He says that "he had confidence in them and expected all would have gone on as though It had been reserved." In other words, he had discovered his own mistake and believed it to be a mutual mistake, which the defendant would willingly rectify. He says further of the defendant's agent: "He seemed willing to do something. They proposed leaving it out. They never told me I could not have the tim- ber. They always gave me to understand that they would settle it in some way. They al- ways gave me to understand that they would do something about It. Neither of them ever told me I should not have so given the deed, if I did not mean to part with the timber." This evidence does not show a knowledge of the fraud. It does not show the plaintlfE's knowledge that the defendant knew, when he took it, that the deed conveyed the absolute ownership of the trees, and that the plaintiff was Ignorant of that fact, but supposed the trees were reserved, and that the defendant failed to correct his error. It does not even show that he supposed the defendant meant to Insist upon retaining the benefits of the er- ror. It shows rather that the plamtlfC was constantly deluded with the idea that the mis- take would be corrected. The judge has not found that the plaintiff discovered the fraud 'within more than six years before suit brought, and there was no evidence on which he could have been justified in so finding. When the cause of action accrued In this case Is a question of law. It was either when the transaction occurred or when the fraud was discovered. The judge has found that the cause of ac- tion did not accrue within six years before suit brought. He states. In his opinion, that the action being to reform the contract, and the accounting being Incidental, the action falls under the ninety-seventh section of the Code, which requires It to be brought within ten years after action accrued. He fixes the occurrence of the transaction as the time from which by law the statute begins to run. The defendant now asks us to hold this as a conclusive finding of fact, that the fraud was discovered more than six years before suit brought. This we cannot do. Upon the theory that the running of the statute begins with the date of the occur- rence more than six years had elapsed, and such was the theory of the judge trying the cause. On the theory that it runs from the discovery of the fraud, there is no such find- ing, nor is there evidence to prove It. All presumptions are in favor of the judgment, and the contrary must be taken to be the fact. I have thus considered the most Important of the questions raised by the appellant. There are several other objections stated in the points, which I have also examined. They furnish no valid ground for asking a reversal of the judgment. A majority of the court concur in the opin- ion that the plaintiff is entitled to relief. A majority of the court do not concur with me on the question of damages, and are of the opinion that the recovery of damages for a period exceeding six years prior to the com- mencement of the suit was erroneous. The judgment of the court will therefore be, that the judgment of the general term be affirm- ed, without costs of the court of appeals to either party, provided that the plaintiff shall, within thirty days after the entry of this or- der, serve on the defendant's attorney a stipulation, deducting from the judgment of April 6, 1863, the sum of $2,407.45 as of that date. If such stipulation be not served, then the judgment shall be reversed and a new trial ordered, with costs to abide the event. In case the attorneys do not agree as to the details of the judgment, the same can be set- tled before one of the commissioners. EARL, 0. (dissenting). As I cannot con- cur with my brethren in this case, I will briefly give the reasons for my dissent. No mistake is alleged In the contracts, and no reformation of them is claimed. And un- der no allegations or proof could the con- tracts be reformed, as a cause of action, for such purpose, would be barred by the stat- ute of limitations. If, as claimed by the plaintiff in his com- plaint, and by his counsel on the argument before us, the deed was given in pursuance 784 EEFORMATION. and In fulfillment of the contracts, then there can be no reformation of the deed, as it Is in precise conformity to the contracts. If the two contracts of December 7, 1846, are construed together, they must be read as if embodied in one; and the timber is not re- served, and the contract does not provide for any reservation in the deed. The vendees were to get out certain lumber upon shares, and were to pay $4 per acre besides. The contract In reference to the lumber was a binding contract and, if performed as the parties contemplated, it would be fully per- formed before the deed was required to be given; and such was manifestly the inten- tion of the parties, and hence no provision was made for any reservation in the deed. The deed was griven without any mention of the lumber, and hence the only claim the vendor could thereafter have, upon the lum- ber contract, was to sue for damages on ac- count of its non-performance. The only contract the defendant ever made or intended to malie, as found by the referee, is that which is embodied in the deed. He never intended or was willing to take a deed with any reservation in it. What right then has a court of equity to reform the deed, so as to give him such a deed as he was never bound to take? There was never a time when, by action for specific perform- ance, he could have been compelled to tate a deed with a reservation, and the court has no right to compel him to take such a deed by the reformation of the one he did take. If by fraud or mistake on his part, the plaintiff was induced to give this deed, the only relief he could have was to set aside the deed; and to obtain this relief, it was his duty, on the discovery of the fraud or mistake, to proceed promptly and not ratify the deed by taking the money on the note given for the purchase-price, after he discov- ered the mistake or fraud. As I understand the opinion in which my brethren have concurred, it sustains the re- lief granted to the plaintiff, upon the ground of fraud, and yet the complaint does not in any way intimate even that the defendant was guilty of any fraud, nor does it allege that the defendant used any artifices to pro- cure the deed to be drawn with the reserva- tion omitted, or that he knew it was omitted. The charge of fraud should have been dis- tinctly made In the complaint, so that the de- fendant could have taken Issue jpon It. And It does not appear that any claim was made, at the trial, that the defendant was guilty of fraud, and the case was manifestly not tried upon any such theory. The judge at special term did not put his decision upon the ground of fraud. If he had, he would certainly have decided against the plaintiff, under bis finding as to the statute of limita- tions, as follows: "That within a month after the execution of said deed, the plain- tiff dlscov«-ed said mistake, and shortly thereafter applied to the defendant to cor- rect the same, which he neglected and re- fused to do; but proceeded to cut large quan- tities of said timber and appropriate the same to his own use; that the cause of action for which this suit is brought has not ac- crued to the plaintiff within six years before the commencement of this suit." The learned judge evidently proceeded and granted relief upon the ground that the scriv- ener made a mistake In drawing the deed, and this was the ground upon which the gen- eral term placed its decision of affirmance. The cause of action for the mistake was not barred by the statute of limitations, because the action was commenced within ten years from the time the alleged mistake occurred. A cause of action, for such a fraud as is now alleged in this case, is deemed to accrue, when the aggrieved party discovers the facts constituting the fraud, and it is barred in six years from that time. Code, § 91. All the fraud, if any, that was perpetrated in this case was in procuring and taking the deed without the reservation, and this was dis- covered, according to the finding of the judge, more than nine years before the suit was commenced, and hence I cannot be mistaken in saying that relief was granted at Special Term upon the ground of mistake alone, and not of fraud. And still further, the counsel for respond- ent in his argument before us, did not claim to sustain the judgment below upon the ground of fraud, but upon the ground of mis- take alone. Hence under all the circumstances I cannot consent to uphold this judgment, or any part of it, upon the ground of fraud, against the decisions of both courts below, the claims of plaintiff's counsel, and the explicit finding of the judge at special term, that the cause of action for fraud was barred by the statute of limitations. It was the duty of the plaintiff to show that he discovered the fraud within six years before the commencement of the suit, and there can be no pretense that he gave any evidence to show this. I concur with my brethren in holding that In any view of the case the plaintiff could re- cover only for timber cut within six years be- fore the suit was commenced. For affirmance, as modified: LOTT, 0. C, and HUNT and LEONARD, CO. For reversal: EARL and GRAY, GO., not voting. Judgment affirmed without costs to either party In the court of appeals, provided the plaintiff within thirty days after the entry of this order, serves on the defendant's at- torney a stipulation reducing the judgment $2,407.45 and interest from the date of the judgment, April 6, 1863. If such stipulation be not served, then the judgment is reversed and a new trial ordered, costs to abide the event. Judgment affirmed. CANCELLATION. 785 TOWN OF VENICE v. WOOUKUFF. (62 N. Y. 462.) Cowt of Appeals of New York. 1875. Appeal from supreme court, genei~dl term. This was an action to secure the cancella- tion cf certain bonds issued by the supervisor and railroad commissioners of the plaintiff town, and to restrain the defendants, who were the holders of those bonds, from trans- ferring them. There was a finding of fact by a referee, tlie material part of which ap- pears in the opinion. RAPALLO, J. The referee has found that all of the bonds, which the plaintiff seeks by this action to have delivered up and can- celed, were made ' and issued without the requisite consent of two-thirds of the tax payers of the town. That fact, according to the decisions of this court, rendered the bonds void, even in the hands of bona fide holders. Starin v. Town of Genoa, 23 N. Y. 439; People v. Mead, 24 N. Y. 114, 36 N. Y. 224. It was further held in these cases that the burden of proving the requisite consent of the tax payers rested upon the party seeking to enforce payment of the bonds, and that the affidavit directed by the act under which the bonds purported to be issued, to be filed with the consent, was not evidence of the requisite consent. It is therefore settled by the adjudications of this court that no re- covery can be had in an action upon these bonds, without afiirmative extrinsic proof of the requisite consent. The fact being found that such consent was not given, it is clear that a perfect defense to the bonds exists, should an action be brought upon them in any court of this state, either by the present holders of the bonds, or by any person to whom they may be transferred. Upon this state of facts the question arises, whether an equitable action can be main- tained by the town to restrain the holders of the bonds from suing upon or transferring them, and to compel the surrender and can- cellation of the instruments. The cases in which a court of equity exer- cises its jurisdiction to decree the surrender and cancellation of written instruments are, in general, where the instrument has been obtained by fraud, where a defense exists which would be cognizable only in a court of equity, where the instrument is negotiable, and by a transfer the transferee may acquire rights which the present holder does not pos- eess, and where the instrument is a cloud upon the title of the plaintiff to real estate. Under the chancery system, where a bill of discovery was necessary to esti*)lish a de- fense, the court having acquired juri-idiction of the case for the purpose of discovery, might proceed and award relief, but this ground of jurisdiction no longer exUts. It is true that the jurisdiction of the «x)urt of chancery has been asserted to decree the sur- render of every instrument which ought not to HUTCH.& BUNK.EQ.— 50 be enforced, whether void at law or not, and whether void from matter appearing on its face, or from matter which must be estab- lished by extrinsic proof. Hamilton v. Cum- mings, 1 Johns. Ch. 520-522, 523. But Chan- cellor Kent in the case cited, in asserting this jurisdiction recognizes the necessity of show- ing strong grounds for the exercise of the power, and endeavors to reconcile the appa- rently conflicting English authorities by ad- verting to the general principle that the ex- ercise of the power is to be regulated by sound discretion, as the circumstances of the individual case may dictate, and that a resort to equity, to be sustained, must be expedient either because the instrument is liable to abuse from its negotiable nature; or because the defense not arising on its face may be difficult or uncertain at law; or from some other special circumstances peculiar to the case, and rendering a resort to equity highly proper. And it is now well established that equity will not interpose to decree the cancellation of an instrument, the invalidity of which appears upon its face. Story, Eq. Jur., § 700, a. There must exist some circumstance es- tablishing the necessity of a resort to equity, to prevent an injury which might be irrep- arable, and which equity alone is compe- tent to avert. If the mere fact that a de- fense exists to a written instrument were sufficient to authorize an application to a court of equity to decree Its surrender and cancellation, it is obvious that every con- troversy in which the claim of either party was evidenced by a writing could be drawn to the equity side of the court, and tried in the mode provided for the trial of equitable actions, instead of being disposed of in the ordinary manner by a jury. Whether therefore the question be regarded as one of jurisdiction or of practice, it is es- tablished by the later decisions that some special ground for equitable relief must be shown, and that the mere fact that the in- strument ought not to be enforced is insuffi- cient, standing alone, to justify a resort to an equitable action. Grand Chute v. Wine- gar, 15 Wall. 374; Minturn v. Fai-mers' Loan 6 Trust Co., 3 N. Y. 498; Perrine v. Striker, 7 Paige, 598; Morse v. Hovey, 9 Paige, 197; Field V. Holbrook, 6 Duer, 597; Allerton v. Belden, 49 N. Y. 373; Reed v. Bank of New- burgh, 1 Paige, 215, 218. In the present case in so far as the in- validity of the bonds results from the want of consent of the tax payers, there is no ground whatever shown for resorting to an equitable action. Not only is the want of the consent a perfect defense at law, but the onus of proving the consent is upon the party seeking to enforce the bond; and the court cannot assume that he will be able to establish a fact that does not exist, and of which there is no documentary evidence. If it be said that the town may by delay lose evidence now existing, which would be avail- r86 CANCELLATION. able to meet and rebut false testimony, one decisive answer is that the statutes now pro- vide a summarj' mode of perpetuating testi- mony in all cases, and an action is not neces- sary for that purpose. The case Is analogous to those of Field v. Holbrools, 6 Duer, 597, and Allerton v. Belden, 49 N. Y. 373. It is urged that the action should be sus- tained for the purpose of preventing a trans- fer of the bonds to a bona fide holder. This court has held that such a transfer could not prejudice the plaintiff, as the defense would be available even against a bona fide holder. Starin v. Town of Genoa, 23 N. Y. 439. But it is said that although such is the rule in this state, a different rule has been adopted in the courts of the United States, and the bonds might be transferred to a bona fide holder, who might sue in those courts. There would be force in this argu- ment provided it were established in the (_ase that the present holders of the bonds were not bona fide holders. In that case it might be proper for a court of equity to prevent their subjecting the town to liability by a transfer of the bonds. But if they are themselves bona fide holders, there is no justification for interfering with the right of transfer. In contemplation of law the trans- ferees would acquire no greater rights than are possessed by the present holders. The real pui-pose of the litigation seems to be to prevent a resort to the courts of the United States for the collection of these bonds; and the question is, whether it is the province of a court of equity in a state to interfere for the purpose of preventing a resort to the federal courts for the enforce- ment of obligations on the ground that they may be held in those courts to be valid, while according to the decisions of the state courts the same obligations are held to be void. I apprehend that the power of a court of equity to decree the surrender and can- cellation of instnrments has never before been appealed to or exercised for such a purpose. Equity will interfere to control the action of parties and restrain them from transferring negotiable obligations, on the ground that it is against conscience to al- low them to create in their transferee a right or equity which they themselves ao not pos- sess. But where the effect of a transfer is not to change in any respect the rights or equities of the parties, I am not prepared to hold that the allegation that the transferee might resort to a tribunal in which a rule of decision prevails, or may prevail, differing from that of the court which is asked to en- join the transfer, is sufficient to justify the interference asked. The wrong sought to be prevented by such a proceeding is not any wrongful act of any party, but a decision of another court. The facts of the case and the abstract rights of the parties are not changed by the transfer. The greatest effect it can have is to enable a transferee to sue in a court to which the present holder could not resort. This, In general, would not be re- garded as any wrong which a court of equity would restrain. If it is a wrong in this case it must be on the assumption that the federal court will render a decision at vari- ance with the decision of this court. I am of opinion that such an apprehension is not a legitimate ground for the action of a court of equity in restraining a transfer or di- recting the cancellation of the instrument. There is no finding that the present holders are not bona fide holders of the Donds. As the judgment entered upon the report of the referee was in favor of the defendants it could not be disturbed unless facts were found showing that the conclusions of law were erroneous. We have held over and over again that the facts showing error m the legal conclusions must be found, and that the appellate court will not search for them in the evidence. In this case the findings are in favor of the bona fides of the defend- ants. As to five of the bonds it is found that they were sold and delivered by the supervisor and railroad commissioner to Hutchinson & Murdock, who paid for them par in cash. This finding is not weakened by the further finding that the money was in the first instance advanced on a pledge of the bonds which was subsequently con- verted into a sale. As to the twenty bonds which were issued direct to the railroad com- pany, the referee finds that the holders pur- chased them without being informed that they had been delivered directly to the com- pany. No fact is found impeaching the bona fides of the holders of any of the bonds, and therefore it does not appear that any transfer of them can be made which will confer upon the transferees any greater equities than are possessed by the present holders. The fact that twenty of the bonds were delivered directly to the railroad company in- stead of being sold by the railroad com- missioners, is relied upon as a ground for granting relief as to those bonds. In the case of People v. Mead, 24 N. Y. 124, 125, it seems to be considered that this fact would not constitute a defense, even in the state court, as against a bona fide holder of the bonds. But to entitle the town to atflrma- tive equitable relief on that ground, it should have been made to appear that the defend- ants were not bona fide holders; which, as has already been shown, the plaintiff has failed to do. Another ground urged in support of the claim to equitable relief is, that it is neces- sary for the purpose of avoiding a multi- plicity of suits; and the case of New York & N. H. R. Co. V. Schuyler, 17 N. Y. 592, and 34 N. Y. 30, is referred to as an au- thority in point. But that case was essen- tially different from the present. There the defendants all claimed shares in the same corporation, which had authority to issue only a limited number; shares had been issued in excess of that limit, and some of them CANCELLATION. 787 must be rejected. The spurious shares were held to be a cloud upon the title of the hold- ers of the genuine shares, and the corpora- tion was held to be the proper representative of the genuine stockholders to seek the in- terposition of the court to remove that cloud. Here was a solid ground upon which the plaintifC could found its application for relief. The plaintiff having this standing in court, it was held that all the alleged spurious share- holders were properly joined as defend- ants. But jurisdiction was not entertained on the sole ground that the holders of spu- rious shares were numerous. In the present case there is no question of any cloud upon the title. The plaintiff seeks to nave can- celed certain written instruments purport- ing to be obligations for the payment of money, which are held by various independ- ent owners. If it fails to make out a case which would sustain an action for that pur- pose against any one of them alone, the mere fact that there are several such hold- ers is not of itself sufficient ground for en- tertaining the suit. If the facts were such as would have sustained the action against one person had he been the holder of all the bonds, then the case of the New Haven Rail- road Company would be an authority in favor of the position, that if there were sev- eral holders all might be joined as defend- ants. But it does not support the position, that the mere fact that numerous independ- ent parties hold separate instruments upon which they might bring separate suits is suf- ficient to justify a court of equity in enter- taining an action by the debtor to compel them to litigate their claims in an action in the form which he selects. Under any circumstances, I am inclined to concur with Judge Talcott, in the opinion that a court of equity would not interfere affirmatively to relieve the plaintiff against these bonds, except upon condition that it surrendered what it had received for them. The relief sought is discretionary with the court; and the plaintiff is not entitled to it as matter of absolute right. Actions of this class are in that respect governed by the same rules which apply to actions for specif- ic performance; and relief will never be granted except upon equitable terms, where the case is such as to call for the imposition of terms. Story, Eq. Jur., §§ 692, 693, 696, and cases cited section 742. But the reasons before given I deem sufficient to sustain the conclusion of the referee dismissing the com- plaint. There is great doubt whether the defense of the statute of limitations is available in this case. In respect to the limitation of time it is analogous in principle to an action to remove a cloud upon the title to land; and in such cases I do not understand the rule to be that the statute runs from the time the cloud was first created. See Miner v. Beek- man, 50 N. Y. 338; Hubbell v. Medbury, 53 N. Y. 99; Arnold v. Hudson R. R. Co., 55 N. Y. 661. On the ground that the facts of the case are insufficient to justify the interposition of a court of equity to decree the surrender and cancellation of the bonds, or to restrain their transfer, so much of the judgment as is appealed from should be affirmed, with costs. All concur; CHURCH, C. J., not sitting. Judgment affirmed. 788 RECEIVERS. BOOTH V. CLARK. (17 How. 322.) Supreme Court of the United States. Dec. Term, 1854. The case is stated in the opinion of the court. Mr. Bradley, for appellant. Lawrence & May, contra. WAYNE, J., delivered the opinion of the court. We learn from the record of this case that Juan de la Camara recovered a judgment in the supreme court of New York, against Ferdinand Clark, for $4,688.49, with interest at seven per cent.; that a fieri facias was issued upon the Judgment, and that there was a return upon it of "no goods, chattels, or real estate of the defendant to be levied upon." Upon this return, Camara filed a creditor's bill, before the chancellor of the First circuit in the state of New York, setting out his judgment and the return upou the fieri facias, in which he seeks, under the laws of that state, to subject the equitable assets and choses in action of Clark to his judgment; and he asks for a discovery of them from Clark, for an injunction, and the appointment of a receiver. Notice of this proceeding, and of the action upon it were served upon the solicitor of Clark, and the bill of complaint was taken as confessed, upon the defendant's default in not answer- ing. Booth, the present complainant, was appointed receiver on the 3d August, 1842. Clark had been previously enjoined under the proceeding from making any disposition of any part of his estate, legal or equitable. Thus matters stood from the time of the re- ceiver's appointment, in 1842, until June, 1851. Then Booth, as receiver, reports that no effects of Clark had come to his knowl- edge, except a claim upon Mexico, which had been adjudged to Clark by the United States commissioners, under the treaty with Mex- ico; and that, as receiver, he was contest- ing it; and he asks from the court authority to proceed for that purpose, which was granted. Such is an outline of the case in New York, containing every substantial part of it. We will now state the proceedings of this suit at the instance of the receiver, in the circuit court of the United States for the District of Columbia, from the decision of which, dismissing the receiver's bill, it has been brought to this court for revision. On the 29th May, 1851, Booth, the receiver, filed his bill in the circuit court for the Dis- trict of Columbia, reciting so much of the proceedings of the New York courts as was deemed necessary to support his suit. He declares that Clark, when the original suit was instituted against him by Camara, and from that time until after he had been ap- pointed receiver, had resided in New York. That his effects consisted principally, If not wholly, of the claim upon Mexico, and that he claimed that fund as receiver for the purposes of that appointment. Clark an- swered the bill. He denies that the pro- ceedings against him in the courts of the state of New York created any lien in behalf of Camara, or the receiver, upon the fund in controversy. He admits that no part of his property ever came into receiver's hands, under those proceedings, and that he had the claim upon Mexico whilst the suits were pending against him, and when the receiver was appointed under Camara's creditor's bill; but that all the evidences and papers in support of his Mexican claim were then in the public archives at Washington. He also states, that the board of commissioners under the act of congress of March, 3, 1849 (9 Stat. 393, 992), entitled "An act to carry into effect certain stipulations of the treaty between the United States and the republic of Mexico, of the 2d February, 1848," had made an award in his favor for the sum of $86,780.29, which sum was then in the hands of the secretary of the treasury of the Unit- ed States. He then alleges that, being a resident of the state of New Hampshire, he filed in the clerk's office of that district, on the 28th .January, 1843, his petition to be declared a bankrupt. That he had been de- clared a bankrupt on the 22d March follow- ing, pursuant to the "A-^t to establish a uni- form system of bankruptcy throughout the T^nited States," passed August 19, 1841 (5 Stat. 440). He then recites that there had been attached to his petition in the bank- rupt's court, a schedule of his property, rights, and credits of every kind and de- scription, in which his Mexican claim had been stated; and that it was upon that claim the commissioners had awarded to him the sum before mentioned. He declares that, under the decree of the court in bank- ruptcy, one John Palmer had been appointed assignee; and that, having given his bond in compliance with the order of the court, he was vested, as assignee, in virtue of the opei'ation of the bankrupt law, of all the defendant's property, for the benefit of his creditors, including the Mexican claim. It is also stated in his answer, that notice of all the proceedings in his matter of bank- ruptcy had been published in the leading newspapers of New Hampshire, and that the name of Juan de la Camara, and his residence, was placed among the list of his creditors attached to his petition to be de- clared a bankrupt. And he avers that all of his creditors had had notice of the pro- ceedings in bankruptcy. That neither Cam- ara nor any other creditor had filed or made any objections to those proceedings, or to the action of the assignee, until after the award had been made upon the Mexican claim. It is not necessary, for the purposes of this opinion, to state the defendant's recital of the sale of his effects by Palmer, the as- RECEIVERS. 789 signee; his purchase of them, including the Mexican claim, or the rights claimed by the defendant under his purchase, all relat- ing to the same having been fully acted up- on by this court at this term, in the case of Ferdinand Clark v. Benjamin C. Clark and W. H. Y. Hackett We state, however, that Palmer, the original assignee in Clark's bank- ruptcy, having died, he had been succeeded by the appointment of Hackett as assignee. This suit, then, is substantially between Hackett, as the assignee of Clark in bank- ruptcy, and Booth, the receiver under Cam- ara's creditor's bill; that it may be deter- mined by this court, which of them has the official right to the Mexican fund, for the distribution of it between the creditors of Clark, or whether Booth, as receiver, shall have from that fund a sufficient sum to pay Camara's entire debt, leaving the residue of it for distribution between Clark's other creditors. It appears also from the record that Booth, the receiver, took no steps to execute his official trust, from the time of his appoint- ment in 1842, until 1851, after the award of the Mexican claim had been made In Clark's favor. And, also, that the court of chan- cery, acting upon the creditor's bill brought by Camara, had not been applied to, either by Camara or by the receiver, for any order up- on Clark in personam, to coerce his com- pliance with its injunction and decree. Upon this statement of the case, we will now consider it. There is no dispute con- cerning the regularity or binding operation of the judgment obtained by Camara against Clark. None in respect to the proceedings under the creditor's bill. The leading point in the case is the effect of the proceedings under the last, to give a right to the receiver, in virtue of a lien which he claims upon the property of the debtor, to sue for and to recover any part of it, legal or equitable, without the jurisdiction of the state of New York. In other words, as an officer of a court of chancery, for a particular purpose, will he be recognized as such by a foreign judicial tribunal, and be allowed to take from the latter a fund belonging to a debtor, for its application to the payment of a pelt- ticuiar creditor within the jurisdiction of the receiver's appointment, there being other creditors in the jurisdiction in which he now sues, contesting his right to do so. Or can he as receiver claim, in virtue of a de- cree upon a creditor's bill given in one juris- diction, a right to have the judgment upon which the creditor's bill was brought, paid out of a fund of a bankrupt debtor in a for- eign jurisdiction; because his appointment preceded the bankrupt's petition. It is urged that the receiver in this case, by the decree of the court in New York, was entitled officially to the entire property of Clark, real, personal, or equitable, both with- in and without the state of New York. That he could, as receiver, maintain any action for the property and rights of property of the debtor which the latter could have done. That the fund now in controversy was a chose in action, belonging to the debtor when the receiver was appointed, and, though not within the state of New York, that it follow- ed the person of the owner and passed to the receiver, because the owner was domiciled in New York. And it was also said that, having such official rights or liens upon the property of the debtor, the comity of nations would aid him in the assertion of them in a foreign tribunal. The counsel for the re- ceiver cited from the reports of the state of New York several cases in support of tlie foregoing propositions. We have perused all of them carefully, without having been able to view them altogether as the learned counsel does. Whatever may be the opera- tion of the decree in respect to the receiver's powers over the property of the debtor with- in the state -of New York, and his right to sue for them there, we do not find any thing in the cases in the New York reports show- ing the receiver's right to represent the cred- itor or creditors of the debtor in a foreign juris- diction. It is true that the receiver in this case is appointed under a statute of the state of New York, but that only makes him an offi- cer of the court for that state. He is a rep- resentative of the court, and may, by its di- rection, take into his possession every kind of property which may be taken in execu- tion, and also that which is equitable, if of a nature to be reduced into possession. But it is not considered in every case that the right to the possession is transferred by his appointment; for, where the property is real, and there are tenants, the court is virtually the landlord, though the tenants may be compelled to attorn to the receiver. Jeremy, Eq. Jur. 249. When appointed, very little discretion is allowed to him, for he must apply to the court for liberty to bring or defend actions, to let the estate, and in most cases to lay out money on repairs, and he may without leave distrain only for rent in arrear short of a year. 6 Ves. 802; 15 Ves. 26; 3 Brown, Ch. Cas. 88; 9 Ves. 335; 1 Jac. & W. 178; Morris v. Elme, 1 Ves. .Tr. 139; Id. 165; Blunt v. Clithero, 6 Ves. 799; Hughes V. Hughes, 3 Brown, Ch. Cas. 87; 5 Madd. 473. A receiver is an indifferent person between parties, appointed by the court to receive the rents, issues, or profits of land, or other thing in question in this court, pending the suit, where it does not seem reasonable to the court that either party should do it Wyatt's Prac. Reg. 355. He is an officer of the court; his appointment is provisional. He is appointed in behalf of all parties, and not of the complainant or of the defendant only. He is appointed for the benefit of all parties who may establish rights in the cause. The money in his hands is in cus- todia legis for whoever can make out a title to it. Delany v. Mansfield, 1 Hogan, 234 -90 RECEIVERS. It Is the court itself which has the care of the property in dispute. The receiver is but the creature of the court; he has no powei's except such as are conferred upon him by the order of his appointment and the course and practice of the court. Verplanck v. In- surance Co., 2 Paige, Ch. 452. Unless where he is appointed under the statute of New York, directing proceedings against corpora- tions (2 Rev. St. 438), and then he is a stand- ing assignee, vested with nearly all the powers and authority of the assignee of an insolvent debtor. Attorney General v. Life & Fire Ins. Co., 4 Paige, Ch. 224. In the case just cited. Chancellor Walworth says, that the receiver has "no powers except such as are conferred upon him by the order of his appointment and the course and practice of the court." In the statement which has been made of the restraints upon a receiver, we are aware that they have been meas- urably qualified by rules, and by the prac- tice of the courts in the state of New York, as may be seen in Hoffman's Practice; but none of them alter his official relation to the court, and, so far as we have investigated the subject, we have not found another in- stance of an order in the courts of the state of New York, or in the courts of any other state, empowering a receiver to sue in his own name officially in another jurisdiction for the property or choses in action of a judgment debtor. Indeed, whatever may be the receiver's rights under a creditor's bill, to the possession of the property of the debt- or in the state of New York, or the permis- sions which may be given to him to sue for such property, we understand the decisions of that state as confining his action to the state of New York. Such an inference may be made from sev- eral decisions. It may be inferred from what was said by Chancellor Walworth, in Mitchell V. Bunch, 2 Paige, Ch. 615. Speak- ing of the property which might be put into the possession of a receiver, and of the pow- er of a court of chancery to reach property out of the state, he declares the manner in which it may be done, thus: "The original and primary jurisdiction of that court was in personam merely. The writ of assistance to deliver possession, and even the seques- tration of property to compel the perform- ance of a decree, are comparatively of re- cent origin. The jurisdiction of the court was exercised for several centuries by the simple proceeding of attachment against the bodies of the parties to compel obedience to Its orders and decrees. Although the prop- erty of a defendant is beyond the reach of the court, so that it can neither be seques- tered nor taken in execution, the court does not lose its jurisdiction in relation to that property, provided the person of the defend- ant is within the jurisdiction. By the or- dlnaiy course of proceeding, the defendant may be compelled either to bring the prop- erty in dispute, or to which the defendant claims an equitable title, within the juris- diction of the court, or to execute such a conveyance or transfer thereof as will be sufficient to vest the legal title, as well as the possession of the property, according to the lex loci rei sitae." It is very obvious, from the foregoing extract, that up to the time when Mitchell v. Bunch was decided, in the year 1831, it had not been thought that a court of chancery in the state of New York could act upon the property of a judg- ment debtor in a creditor's bill which was not within the state of New York, but by the coercion of his person when he was within the jurisdiction of the state; and that it had not been contemplated then to add to the means used by chancery to en- force its sentences, in respect to property out of the state of New York, the power to a receiver to sue in a foreign jurisdiction for the same. It is true that the jurisdiction of a court of chancery in England and the United States, to enforce e(luitable rights, is not confined to cases where the property is claimed in either country, but the primary movement in the chancery courts of both countries to enforce an injunction, is the at- tachment of the person of the debtor, where he is amenable to the jurisdiction of the court. We find in the second volume of Spence on the Jurisdiction of the Court of Chancery in England (pages 6, 7), this language: "When, therefore, a case is made out against a per- son resident within the jurisdiction of the court, in respect to property out of it, but within the empire, or its dependencies, which would call for the interference of the court of chancery if the property were situate in the country, the court, as it had the power, has assumed the jurisdiction, when such an interference is necessary to the ends of justice, of enforcing the equita- ble rights of the parties to or over property out of its jurisdiction, by the coercion of the person and sequestration of his property here, in the same manner as it would have done had the property been situate in this country." And Sir John Leach said: "When parties defendants are resident in England, and are brought upon subpcEna here, the court has full authority to act upon them personally, with respect to the subject of the suit, as the ends of justice require, and with that view to order them to take or to omit to take any steps or proceedings in any other court of justice, whether in this or in a foreign country. This court does not pretend to any interference with the other courts." It acts upon the defendant by punishment for his contempt, for his dis- obedience of the court. The court of chan- cery has no power directly to afCect prop- erty out of the bounds of its jurisdiction. Roberdeau v. Rous, 1 Atk. 544; 2 Spence. We believe such to be the proper course, in chancery, in cases of injunction, and that its jurisdiction, by injunction, rests entirely on RECEIVERS. 791 the coercion of the person. Such, however, was not the course pursued in this case, though the debtor was then a resident of the state of New York, and amenable to the jurisdiction of the court. No motion was made to force Clark to comijly with the in- junction which Oamara had obtained under the creditor's bill. The matter was allowed to rest for seven years, Camara being aware that Clark had a pecuniary claim upon the republic of Mexico, at least as early as in the year 1843. The receiver during all that time took no action. His first movement is an application to be permitted to sue for the fund in the hands of the government, which had been awarded to Clark by the commis- sioners under the treaty with Mexico. Per- mission was given to sue. He has brought his bill accordingly, and it directly raises the question, whether he can, as an oflScer of the court of chancery in New York, and in his relation of receiver to Camara. be permitted to sue in another political juris- diction. We have already cited Chancellor Wal- worth's opinion as to the course which is to be pursued in New York upon an injunction in a creditor's bill. Mr. Edwards, in his excellent work on Receivers in Chancery, after citing the language used in Mitchell v. Bunch, says: "Still, the difficulty remains as to a recognition of the powers or officers of the court, by persons holding a lease upon the property, especially realty, out of the jurisdiction. Then in Malcolm v. Montgom- ery, 1 Hogan, 93, the master of the rolls ob- served, that a receiver could not be effectu- ally appointed over estates in Ireland, by the English court of chancery, in any direct proceeding for the purpose; and that at- tempts had often been made to do so by serving orders made by the English court of chancery, but that they had failed, because the English court of chancery has no direct means of enforcing payment of rent to its receiver, by tenants who reside in Ireland. The attorney-general and another counsellor also said, that to their knowledge such at- tempts had been frequently made, but had been uniformly given up as impracticable. A conflict might also arise between the re- ceiver out of the jurisdiction and creditors, and also other persons out of the jurisdic- tion. The comity of nations and different tribunals would hardly help a receiver." We also infer, from the case of Storm v. Waddell, 2 Sandf. 494, that the receiver's right to the possession of the property of a debtor in the state of New York, and his right to sue for property there, is limited to that jurisdiction. The chancellor, in the last case mentioned, after having given an epitome of the cause of proceeding in a cred- itor's bill, and speaking of equitable inter- ests and things in action belonging to the debtor, without regard to the injunction, says: "The property of the defendant is sub- jected to the suit, wherever It may be, if the receiver can lay hold of it, or the com- plainant can reach it by the decree. The injunction, when served, prevents the debtor from putting it away or squandering it." This language indicates the receiver's locality of action. Taken in connection with that of Chancellor Walworth, in Mitchell v. Bunch, it shows that the receiver's right to the possession of the debtor's property is limited to the jurisdiction of his appointment, and that he has no lien upon the property of the debtor, except for that which he may get the possession of without suit, or for that which, after having been permitted to sue for, he may reduce into possession in that way. Our industry has been tasked unsuc- cessfully to find a case in which a receiver has been permitted to sue in a foreign ju- risdiction for the property of the debtor. So far as we can find, it has not been al- lowed in an English tribunal; orders have been given in the English chancery for re- ceivers to proceed to execute their func- tions in another jurisdiction, but we are not aware of its ever having been permitted by the tribunals of the last. We think that a receiver has never been recognized by a foreign tribunal as an actor in a suit. He is not within that comity which nations have permitted, after the man- ner of such nations as practise it, in respect to the judgments and decrees of foreign tri- bunals, for all of them do not permit it in the same manner and to the same extent, to make such comity international or a part of the laws of nations. But it was said that re- ceivers in New York are statutory officers, as assignees in bankruptcy are. That being so, he had, as assignees in bankruptcy have upon the property of the bankrupt, a lien up- on the property of a judgment debtor, under an appointment in a creditor's bill. But that cannot be so. An assignee in bankruptcy in England, and in this country when it had a bankrupt law, is an officer made by the statute of bankruptcy, with powers, priv- ileges, and duties prescribed by the statute, for the collection of the bankrupt's estate for an equal distribution of it among all of his creditors. In England, the property of the bankrupt is vested in the assignees in bankruptcy by legislative enactment. Where commissioners have been appointed, it is imperative upon them to convey to the assignees the proper- ty of the bankrupt, wherever it may be or whatever it may be, and it is done by deed of bargain and sale, which is after- wards enrolled. It vests the assignees with the title to the property from the date of the conveyance, it having been previously vested in the commissioners for conveyance by them to the assignees. As to the bank- rupt's personal estate, the statute looks be- yond the debts and effects of a trader with- in the kingdom, and vests them in the com- missioners in every part of the world. The last is done in England, upon the principle 792 RECKIVERS. that personal property has no locality, and is subject to the law which governs the per- son of the owner. As by that law the prop- erty of a bankrupt becomes vested in the assignee, for the purposes of the assignment, his title to such property out of England is as good as that which the owner had, ex- cept where some positive law of the coun- try, in which the personal property is, for- bids it. CuUen, 244. In claiming such a recognition of assignees in bankruptcy from foreign courts, England does no more than is permitted in her courts, for they give effect to foreign assignments made under laws analogous to the English bankrupt laws. Solomons v. Ross, 1 H. Bl. 131, note; JoUet v. Deponthieu, Id. 132, note. But such comity between nations has not become international or universal. It was not admitted in England until the middle of the last century in favor of assignees in bankruptcy. Lord Raymond decreed it in 1811, in the case of a commission of bank- ruptcy from HoUand. Sir Joseph Jekyll, in 1715, said, the law of England takes no no- tice of a commission in Holland, and there- fore a creditor here may attach the effects in the city of London, and proceed to con- demnation. 3 Burge, 907. Lord Mansfield, in Warring v. Knight, (sittings in Guildhall, after Hilary term, Geo. HI.) Cooke, Bankr. Law, 200, 3 Burge, 907, ruled, that where an English creditor proceeded subsequent to an act of bankruptcy, by attachment in a for- eign country, and obtained judgment there and satisfaction by the sale of the debtor's personal property, the assignees in an action In England could not recover from such cred- itor the amount of the debt which had been remitted to him. Again, his lordship ruled, that the statutes of bankrupts do not extend to the colonies or any of the king's domin- ions out of England, Lut the assignments un- der such commissions are, In the courts abroad, considered as voluntary, and as such take place between the assignee and the bankrupt, but do not affect the rights of any other creditors. So the law stood in England until the case of Folliott V. Ogden, 1 H. Bl. 123, when Chancellor Northington stimulated it into a larger comity, by giving effect to a claim to the creditors of a bankrupt in Amsterdam over an attaching creditor in England, who had proceeded after the bankrupt had been declared to be so, by the proper tribunal in Amsterdam. England had just then become the great creditor nation of Europe, and of her provinces in North America. Her inter- est prompted a change of the rule, and her courts have ever since led the way in ex- tending a comity which had before been de- nied by them. The judicial history of the change, until the comity in favor of as- signees became in England what it now is, is given in 3 Burge, c. 22; Bankr. Laws, 886, 906-912, inclusive, and from 912-929. It may now be said to be the rule of comity between the nations of Europe; but It has never been sanctioned in the courts of the United States, nor in the judicial tribunals of the states of our nation, so far as we know, and we know that it has been re- peatedly refused in the latter. Our courts, when the states were colonies, had been schooled, before the Revolution, in the ear- lier doctrines of the English courts upon the subject. The change in England took place but a few years before the separation of the two countries. That comity has not yet reached our courts. We do not know why it should do so, so long as we have no national bankrupt laws. The rule which prevailed whilst these states were colonies still continues to be the rule in the courts of the United States, and it is not otherwise between the courts of the states. It was the rule in Maryland, before the Revolution. It is the rule still, as may be seen in Birch v. McLean, 1 Har. & McH. 286; Wallace v. Patterso^, 2 Har. & McH. 463. An assignment abroad, by act of law, has no legal operation in Pennsylvania. We find from McNeil v. Colquhoon, 2 Hayw. (N. C.) 24, that it has been the rule in North Carolina for sixty years. South Carolina has no other. 1 Const. (S. C.) 283; 4 McCord, 519; Taylor v. Geary, Kirby, 313. In Mas- sachusetts, the courts will not permit an as^nment in one of the states, whether it be voluntary or under an insolvent law, to control an attachment in that state of the property of an insolvent which was laid after the assignment, and before payment to the assignees. The point occurred recently in the circuit court of the United States for that district. In the case of Betton v. Valentine, 1 Curt. 168; and it was ruled that the as- signee of an insolvent debtor, appointed un- der the law of Massachusetts, does not so far represent creditors in the state of Rhode Island as to be able to avoid a conveyance of personal property in the latter state, good as against the insolvent, but invalid as against creditors, by the law of Rhode Island. In New York, the "ubiquity of the operation of the bankrupt law, as respects personal property," was denied in Abraham v. Ples- toro, 3 Wend. 538. Chancellor Kent consid- ers it to be a settled part of the jurisprudence of the United States, that a prior assignment under a foreign law will not be permitted to prevail against a subsequent attachment of the bankrupt's effects found in the United States. The courts of the United States will not subject their citizens to the inconvenience of seeking their dividends abroad, when they have the means to satisfy them under their own control. We think that it would preju- dice the rights of the citizens of the states to admit a contrary rule. The rule, as it is with us, affords an admitted exception to the universality of the rule that personal prop- erty has no locality, and follows the" domicile of the owner. This court, in Ogden v. Saun- ders, 12 Wheat. 213, disclaimed the English RECEIVERS. 793 doctrine upon this subject; and in Harrison V. Sterry, 5 Orancli, 289, 302, this court de- clared that the banlirupt law of a foreign country is incapable of operating a legal transfer of property in the United States. Such being the rule in the American courts, in respect to foreign assignments in bank- ruptcy, and in respect to such assignments as may be made under the insolvent laws of the states of the United States, there can be no good reason for giving to a receiver, ap- pointed in one of the states under a cred- itor's bill, a larger comity in the courts of the United States, or in those of the states or territories. On the contrary, strong rea- sons may be urged against it. A receiver is appointed under a creditor's bill for one or more creditors, as the case may be, for their benefit, to the exclusion of all other creditors of the debtor, if there be any such, as there are in this case. Whether appoint- ed as this receiver was, under the statute of New York, or under the rules and practice of chancery as they may be, his official rela- tions to the court are the same. A statute appointment neither enlarges nor diminishes the limitation upon his action. His responsi- bilities are unaltered. Under either kind of appointment, he has at most only a pas- sive capacity in the most important part of what it may be necessary for him to do, until it has been called by the direction of the court into ability to act. He has no ex- tra-territorial power of official action; none which the court appointing him can confer, with authority to enable him to go into a foreign jurisdiction to take possession of the debtor's property; none which can give him, upon the principle of comity, a privilege to sue in a foreign court or another jurisdiction, as the judgment creditor himself might have done, where his debtor may be amenable to the tribunal which the creditor may seek. In those countries of Europe in which for- eign judgments are regarded as a foundation for an action, whether it be allowed by treaty stipulations or by comity, it has not as yet been extended to a receiver in chancery. In the United States, where the same rule pre- vails between the states as to judgments and decrees, aided as it is by the first sec- tion of the fourth article of the constitution, and by the act of congress of 26th May, 1790 (1 Stat. 122), by which full faith and credit are to be given in all of the courts of the United States, to the judicial sen- tences of the different states, a receiver under a creditor's bill has not as yet been an actor as such in a suit out of the state in which he was appointed. This court considered the effect of that section of the constitution, and of the act just mentioned, in McElmoyle v. Cohen, 13 Pet. 824r-327. But apart from the absence of any such case, we think that a receiver could not be admitted to the comity extended to judgment creditors, without an entire departure from chancery proceedings, as to the manner of his appointment, the securities which are taken from him for the performance of his duties, and the direction which the court has over him in the collec- tion of the estate of the debtor, and the ap- plication and distribution of them. If he seeks to be recognized in another jurisdiction, it is to take the fund there out of it, without such court having any control of his sub- sequent action in respect to it, and without his having even official power to give secur- ity to the court, the aid of which he seeks, for his faithful conduct and official account- ability. All that could be done upon such an application from a receiver, according to chancery practice, would be to transfer him from the locality of his appointment to that where he asks to be recognized, for the ex- ecution of his trust in the last, under the coercive ability of that court; and that it would be difficult to do, where it may be ask- ed to be done, without the court exercising its province to determine whether the suitor, or another person within its jurisdiction, was the proper person to act as receiver. Besides, there is much less reason for al- lowing the complainant in this case to be rec- ognized as receiver for the fund out of the state of New York, and in this jurisdiction, even if the practice in chancery in respect to receivers was different from what we have said it was. The remedies which the judgment creditor in New York had under his creditor's bill against his debtor, were not applied as they might have been in that state, according to the practice in chancery in such cases. When Clark had been en- joined under the creditor's bill, and the re- ceiver had been appointed, both judgment creditor and receiver knew at the time, — certainly, as the record shows, in a short time afterwards,— that Clark had a pecuniary claim upon the republic of Mexico. No at- tempt was made, according to chancery prac- tice, to coerce Clark by the attachment of his person under the injunction, to make an assignment of that claim for the payment of Camara's judgment. It cannot be said that Clark had not property to assign, and that it was therefore unnecessary to attach him. That would make no difference; for whether with or without property, he might have been compelled to make a formal assign- ment, even though he had sworn that he had none. It was so ruled in Chipman v. Sab- baton, 7 Paige, 47, and in Fitzburgh v. Ever- ingham, 6 Paige, 29. There was a want of vigilance In this mat- ter, which does not make any equity which he may have in New York upon Clark's prop- erty, superior to that of Clark's creditors, who are pursuing the funds in this district. Nor, according to the rule prescribed in the United States, that personal property has no locality on account of the domicile of the owner, to transfer it under a foreign assign- ment, can the receiver have In this case any thing in the nature of a lien to bind the property of Clark not within the state of 704 RECEIVERS. New York. When we take Into consideration also the origin of the fund in controversy, the manner of its ultimate recovery from Mexico, the congressional action upon it, in every particular, to secure it, after the awards were made, to those who might be entitled to receive It; the jurisdiction given to the circuit court of this district, with an appeal from its decision to this court, upon the principles which govern courts of equity to adjudge disputes concerning It, and that such cases were to be conducted and govern- ed in all respects as in other cases in equity, we must conclude that the complainant in this case, as receiver, cannot be brought under the rule prescribed for our decision. We concur with the court below in the dismis- sion of the bill. KEOEIVERS. 795 DAVIS V. GRAY. (16 Wall. 203.) Supreme Court of the United States. Dec, 1872. Appeal from the circuit court for the West- ern district of Texas, the case being thus: The state of Texas had at the times here- inafter named, certain public lands. A gen- eral land office was established at the cap- ital of the state for the registration of titles and surveys, and the lands were divided when surveyed into sections of six hundred and forty acres each. One Kuechler was the chief of this office, under the title of the "commissioner of the general land office." All certificates for the public lands were is- sued by this commissioner; and all patents were issued under the seals of the state and the general land office, and were re- quired to be signed by the governor and coun- tersigned by the said commissioner. These certificates were evidences of obligation on the part of the state to grant and give a patent to the holder for a certain amount therein mentioned of the vacant and un- reserved public lands of the state; when the certificates are located and surveyed, and the surveys returned to the commissioner and approved by him, a patent, conveying the fee, is executed as above mentioned. In and about the year 1856, and for many years thereafter the state of Texas, though of great extent, was, as it still Is, sparsely inhabited, while its public domain was far from markets, and without connection with the more settled parts of the country; and It was greatly to the Interest of the state to attract immigration and capital. To pro- duce this result It became the settled policy of the state to make grants and reservations of public lands to corporations, conditioned upon the construction of certain amounts of railroad within certain times. In pursuance of this policy the Memphis, Bl Paso & Pa- cific Railroad Company, was incorporated February 4th, 1856, by the state of Texas, to build a railroad across the state from the eastern boundary to El Paso, with a land grant of 16 sections to the mile; certificates for 8 sections per mile to be issued on the grading of successive lengths of road, and 8 more per mile upon the complete construc- tion of the same; and a reservation was granted of the alternate or odd sections of land for eight miles on each side of the road, within which the company should have an exclusive right to locate its certificates, while it also had the privilege to locate said certificates on any other unappropriated pub- lie lands. This reservation, of course, was of the greatest value, as it enabled the company to reap the advantage of the enhancement ot price which the construction of the road by them would cause in the lands along the line. In the same year of 1856 the company was organized in reliance on the grants, and especially on the reservation, and duly ac- cepted the same. There were certain conditions precedent to the vescing of the charter, land grant, ana reservation; but they were all com- plied with, and at a cost to the company for surveys of over $100,000. These and subsequent surveys resulted, for the com- pany, in the official designation of the road line and the center line of the reservation for some 800 miles, and the "sectionizing" and number- ing of the odd sections of land in said reserva- tion In a belt of country some 250 miles in length and 16 in width; and for the state In the surveying and mapping of the same belt of country and the "sectionizing" and numbering of the alternate or even sections for the benefit of the state. The company also graded some 65 miles of road westerly from Moore's Landing, in Bowie county, and was interrupted in the work of construction by the rebellion and so-called "secession" of Texas; but resumed work after the war, and graded between 20 and 30 miles further, from Jefferson in Marion county, in the di- rection of Moore's Landing. There were certain conditions subsequent annexed to the charter, viz.: That if the company should not have completely graded not less than 50 miles of their road by the 1st of March, 1861, and at least 50 miles additional thereto within two years there- after, then the charter of said company should be null and void. The first 50 miles were graded within the required time; the second 50 miles have never been graded. Within two years after the performance of the ifirst condition, however, the legislature of Texas, by act "for the relief of railroad companies," approved February lith, 1862, enacted, that the failure of any chartered railroad company to complete any section, or fraction or a section, of Its road as re- quired by existing laws, should not operate as a forfeiture of its charter, or of the lands to which the said company would be entitled under the provisions of an act entitled "An act to encourage the construction of railroads in Texas by donation of land," approved January 30th, 1854; provided that the said company should complete such section, or fraction of a section, as would entitle it to donations of land, under existing laws, with- in two years after the close of the war be- tween the Confederate States and the United States of America. Within the two years after the close of the war, the provisional legislature, by act of November 13th, 1866, enacted, "that the grant of 16 sections of land to the mile to railroad companies here- tofore or hereafter constructing railroads in Texas shall be extended, under the same re- strictions and limitations heretofore provided by law, for 10 years after the passage of this act;" and by article 12, section 33, of the present constitution of Texas, while de- claring that the legislatures which sat from 796 RECEIVERS. March ISth, 1861, to August 6th, 1806, were without coustitutional authorltj-, yet enacted that such declaration should not affect, prej- udicially, private rights which had grown up under such acts, and that though the leg- islature of 1800 was only provisional, its acts were to be respected, so far as they were not in violation of the constitution and laws of the United States. By act of July 27th, 1870, the Southern Transcontinental Railroad Company was in- corporated, and it was enacted, in terms, that it might "purchase the rights, fran- chises, and property of the Memphis, El Taso & Pacific Railroad Company, heretofore incorporated by the state." The laud grant was limited to fifteen years from the 4th of February, 1856, but this time had not yet expired, and by an act of November 13th, 1866, for the benefit of rail- road companies, it was enacted, that this grant of 16 sections of land to the mile to railroads theretofore or thereafter construct- ing railroads in Texas, should be extended under the same restrictions and limitations theretofore provided by law, for ten years after the passage of this act. The land reservation was conditioned up- on certain surveys: (1) It was to be surveyed from the eastern boundary of Texas, as far as the Brazos river, within four years from March 1st, 1850. (2) The centre line of the reser\e was to be run and plainly designated from the Brazos to the Colorado within fifteen months from February 10th, 1858. (3) The whole reservation was to be surveyed within ten years from February 10th. 1S,")8. (4) The company was to have a connection with some road leading to the Mississippi river or the Gulf of Mexico, within ten years from February 10th, 1858. The first and second of these conditions were fulfilled with- in the times limited. The legislature, by act approved January 11th, 1862, enacted that '•the time of the continuance of the present war between the Confederate States and the United States of America shall not be com- puted against any Internal improvement com- pany in reckoning the period allowed them in their charters, by any law, general or special, for the completion of any work contracted by them to do." This act the company considered extended the time for the performance of the third and fourth conditions till the 10th of June, 1873. In the years 1807 and 1868 the company executed two series of bonds, known as land grant bonds, amounting in the aggregate to the par value of $10,000,000 in gold, and also executed and delivered to one Forbes and others, trustees as aforesaid, two mort- gages to secure said bonds, by one of which they mortgaged all lands actually acquired or thereafter to be acquired by said com- pany by grading, constructing, and equipping the first 150 miles of the road of said com- pany, from Jefferson in Jlarion county to Paris in Lamar county, and by the other of which they mortgaged the like property for the second 150 miles, from Paris to Palo Pinto in Palo Pinto county. These bonds were put on the bourse in Paris, France, and sold for value to the extent of $5,343,700 of their par value, mostly in small lots, and to persons of limited means. The grants, guar- antees, and assurances by the state of Texas te said company of the said franchises, and especially of said land grant and land reser- vation, were recited in said mortgages, and were also announced and repeated to the purchasers personally, and by advertisement and prospectus, and the purchasers took the bonds relying on said grants, and upon the exclusive right of the company to locate cer- tiflcatea within the territory so reserved. The bonds not being paid the circuit court for the Western district of Texas, on motion of Forbes, trustee under the mortgage, on the 6th of July, 1870, enjoined the railroad company from disposing of any of its effects, and put the road into the hands of one John A. C. Gray, as receiver: "To take posses- sion of the moneys and assets, real and per- sonal; roadbed, road, and all property, what- soever, of the said Memphis, El Paso & Pacific Railroad Company, wheresoever the same may be found, with power under the special order of the court, from time to time to be made, to manage, control, and exercise all the franchises, whatsoever, of said com- pany, and, if need be, under the direction of the court, to sell, transfer, and convey the road, roadbed, and other property of said company, as an entire thing," &c. On the 20th of January, 1871, it was fur- ther ordered by the court: "That the said John A. C. Gray, receiver, as aforesaid, be, and he is hereby, authorized and empowered to defend and continue all suits brought by or against the said Memphis, El Paso & Pa- cific Railroad Company, whether before or after the appointment of said receiver, and whether in the name of said company or otherwise; defend all suits brought against him as such receiver or affecting his receiv- ership, and to bring such suits in the name of said company, or in the name of said re- ceiver, as he may be advised by counsel to be necessary and proper In the discharge of the duties of his office, and for acquiring, securing, and protecting the assets, fran- chises, and rights of the said company and of the said receiver, and for securing and protecting the land grant and land reserva- tion of the said company." In November, 1869, the present constitu- tion of Texas was adopted, and was approved by congress. The fifth and sixth [seventh] sections of this constitution are as follows: "Sec. 5. All public lands heretofore reserv- ed for the benefit of railroads or railway com- panies shall hereafter be subject to location and survey by any genuine land certificates." "Sec. 7. All lands granted to railway com- panies which have not been alienated by said companies in conformity with the terms RECEIVERS. 797 of their charter respectively and the laws of the state under which the grants were made, are hfereby declared forfeited to the state for the benefit of the school fund." The constitutional convention which fram- ed this constitution passed an ordinance to the effect that all heads of families actually settled on vacant lands lying within the Memphis & El Paso Railroad reserve, shall be entitled to and receive from the state of Texas 80 acres of land, including the place occupied, on payment of all expenses of sur- vey and patent; and that all vacant lands lying within said reserve are declared open and subject to sale to heads of families ac- tually settled on or who may actually settle on said reserve, at the price of one dollar per acre; and that said vacant lands within said reserve shall be open to pre-emption set- tlers, and subject to the location of all gen- uine land certificates. There were in 18G9, and were on the 20th of January, 1871, when Gray was ordered by the court to bring such suits in the name of the company as he might be advised by counsel were necessary and proper in the discharge of the duties of his ofilce, a great number of land certificates outstanding and unlocated in Texas. Since the passing of the said ordinance, and the adoption of the said constitution, many hundreds of the hold- ers of certificates other than those issued to the company had located their certificates on the sections reserved to the company, had returned their surveys and locations to the commissioner of the general land office, and had applied for patents on the same. Before the 19th day of September, 1870, Commis- sioner Kuechler and Governor Davis, pro- fessing to act under the said constitutional provisions, issued 2 of such patents. On the lOth of September, 1870, the receiver filed a protest with the commissioner against issu- ing any further patents for lands reserved to the company, but the commissioner and gov- ernor disregarded the protest and issued 32 additional patents within the reserve; the whole of the land thus patented amounting to nearly 20,000 acres. Hereupon on the same 20th of January, 1871, Gray, who was a citizen of New York, filed a bill in the court below against one Davis, governor of the state of Texas, and Kuechler, already mentioned as commission- er of the land office of the state. The bill- averring that "the Memphis, El Paso & Pa- cific Railroad Company" is "a corporation created by and existing under certain statutes of Texas," already referred to, and that it had done "all acts and things necessary to the full and complete vesting, securing, and preserving of the franchises, rights, and priv- ileges granted thereby"— set forth a history much as above given. It averred that the company was insolvent, and could not con- tinue the construction of the road, and that the holders of said bonds would necessarily be remitted to the security of the mortgages; that the said security was worthless unless the receiver, under order of court, should be able to sell the franchises and property of said company to some party or parties who, by constructing the road, should acquire the lands referred to in the mortgages, and hold the same subject to the lien of them. It set forth that the general laws of Texas author- ized to the fullest extent the conveyance of the franchises of a railway company by sale under execution or foreclosure; and that by act of July 27th, 1870, the Southern Trans- continental Railroad Company was created, and, as before mentioned, was expressly au- thorized by its charter to "purchase the rights, franchises, and property of the Mem- phis, El Paso & Pacific Railroad Company, heretofore incorporated by the state;" that the Southern Transcontinental Company stood ready to do this, and to devote the lands to be acquired by the exercise of said Memphis & El Paso franchises to the set- tlement of the land grant mortgage debt, provided the receiver could convey the char- ter, the land grant, and the grant of the land reservation unimpaired and in full force. It set forth further, that the receiver, on negotiating for a transfer of the franchises of the company, found that the market for them was peculiar, in the following respects: It was limited, as the franchises are only of use or value to those who desired and were able to construct the road; it depended in great measure upon the reputation of and confidence in the enterprise, and a belief among capitalists, outside of the state of Texas, that the state could and would have to abide by the grants contained in the char- ter; that it depended peculiarly and essen- tially upon the preservation of the land grant and land reservation, inasmuch as the country through which the road was to be built was sparsely inhabited, without cities or towns to furnish local traffic; that Texas lands at a distance from railroads were of but nominal value compared with lands along the line of the roads, and that the Southern Transcontinental Railroad Compa- ny, to whom the receiver chiefly looked as a purchaser, already had the right of way across the state and parallel with the route of the Memphis & El Paso charter, follow- ing "as near as might be practicable the old survey of the Memphis & El Paso road;" making the mere right of way of the latter of comparatively little value without the lands and the reservation. It asserted that the acts of the governor and commissioner of the land office, in ex- ecuting and causing to issue patents for the reserve, were, and their continuance would be. Irretrievable destruction of that portion of the franchise of the company which con- sisted of the right to have the odd sections of the reservation devoted exclusively to the location and patenting of the company's cer- tificates, would destroy all confidence in the 798 RECEIVERS. other grants of the company, as well as In the grant of the reservation, and render the franchise of the company valueless in the hands of the receiver, doing irreparable in- jury to the interests committed to his charge. It set forth further that the Southern Transcontinental Company asserted and in- sisted to the receiver, that unless the said acts were judicially declared unlavrful, and perpetually restrained, the said franchises would be valueless to them, and that they would not carry out the purchase of the same. [It was an admitted fact in the case, that the Memphis, El Paso & Pacific Railroad Company had never sectionized or numbered the land reservation of the same west of Brazos river, or any portion of said reserva- tion west of said river; and that no work had been done on the road of the said com- pany before or since the year 1861, either by grading or otherwise, except those as al- ready aflirmatively stated and set forth.] The bill further asserted that the charter of the company was a contract between the state and the company, which contract was now in the hands of the complainant as re- ceiver, and under direction of a court of equity, to be used for the benefit of the cred- itors of the company; that the said provi- sions of the constitution of Texas and the said ordinance of convention impaired the ob- ligation and value of the said contract, and also of the said contracts of mortgage, and were in so far contrary to article 1, § 10, of the constitution of the United States, which declares that "no state shall pass any law impairing the obligation of contracts," and were in so far null and void; and that the acts of the governor of the state and commissioner of the land office, in issuing such patents, were without authority of law, and illegal, and that any repetition of the same should be perpetually restrained. The bill prayed an injunction accordingly. As a reason for confining the bill to the two defendants named, an amendment to the bill alleged that the complainant had applied at the general land oflice of Texas, to have the number and names of the par- ties who had located land certificates other than those issued to the Memphis, El Paso & Pacific Railroad Company, on lands with- in and forming a part of the land reserva- tion of the said company, and to obtain a list of the same; that he had been informed, on making such application, and by the de- fendant, Kuechler, the commissioner of the general land office, that the number of the same was very great, to wit, many hvmdreds, and that a list could not be furnished with- out great time and labor. The amendment fm'ther alleged that parties were constantly making locations and surveys of land cer- tificates as aforesaid on the lands of said reservation; and that parties who had made such locations and surveys had months allowed them by law, after making the same, before they were required to make returns thereof to the commissioner of the general land office, and that the complainant was consequently unable, and never would be able, to obtain a correct list of such parties. To this bill the defendants demurred: (1) Because It did not appear from it that the defendants, or either of them, had any direct or personal interest in the lands which were the subject-matters of this suit; but on the contrary that they were sued in their official capacities only; and that the lands were a part of the public domain of the state of Texas, which was not and could not be made a party to this suit. (2) Because it did not appear that while under the amendment 11 to the constitution of the United States [which declares that "the judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of a foreign state"], the court could have no jurisdiction as between the complainant and the state of Texas, jurisdiction existed in a suit against two of the officers of said state in their official capacity alone, to de- cree portions of the constitution of the state, which had been accepted by the congress of the United States, and which the de- fendants were sworn to obey, void. (3) Because it did not appear that the bill was founded on fraud, accident, mistake, trust, specific performance, or any ground of equity jurisdiction; or that the same set out any equity against the defendants what- ever; on the contrary, it appeared that the bill was brought to have sections 5 and 7 of article ten of the constitution of the state of Texas decreed void. (4) Because it did not appear that the complainant, being an officer of the court, had a right to sue the defendants therein, nor that the court could have jurisdiction as between the complainant, though a citi- zen of the state of New York, and the de- fendants, as citizens of the state of Texas, in either their respective official or indi- vidual capacities. (5) Because the "act incorporating the Memphis, El Paso & Pacffic Railroad Com- pany," and the other acts referred to in the bill, did not amount to a contract be- tween the state of Texas and the company. (6) Because it did not appear that any designated third person or persons was or were about to have a patent granted him or them by the defendants, and that such third person or persons was or were sought to be made a party or parties, nor that said bill was not too vague and indefinite. (7) Because it did not appear that the cred- itors not specified of the company were made parties thereto, nor that the persons not spec- ified applying for patents on locations of cer- tificates, within the limits of the lands that were reserved, were made parties thereto; all RECEIVERS. 799 of -whom, according to the bill, had equities that ought to be aetermined in this suit, and hence were necessary and proper parties to this siilt. (8) Because It did not appear that the com- plainant had any equities that he was not bound to have litigated against such third per- sons not specified, and also against those not specified who had located certificates within the Umlts of the lands that were reserved, be- fore he would have a right (which was not conceded) to Invoke any action by means of a bill in a court of equity, In case such a court might have jurisdiction. The demurrer was overruled, and, no answer being filed, a decree pro confesso was taken for the complainant, and on the 16th of Feb- ruary, 1871, a final decree was granted in ac- cordance with the prayer of the bill, to the following effect: "That in July, 1870, and at the time of the appointment of Gray as re- ceiver, and at the date of the decree, the com- pany was duly possessed of the franchise and right of and to the land grant and land res- ervation of the company; that the said right and the franchise of the company were unim- paired, and in full force and virtue; that the provisions of the constitution of Texas, and of said ordinance of convention, so far as they impaired, or purported to Impair the said char- ter, land grant, or land reservation, were con- trary to the provisions of article 1, section 10, of the constitution of the United States, and were in so far, null and void; and that the defendants should be perpetually enjoined from Issuing, or causing or permitting to Is- sue, any patent of the lands of the odd sec- tions of said reservation, except on the certifi- cates granted to the company, or its assigns." From this decree appeal was taken by the defendants to this court. T. J. Durant and G. F. Moore, for appellants. B. R. Curtis, J. A. Davenport, and C. Parker, for appellees. SWAYNE, Justice. This Is an appeal In equity from the decree of the circuit court of the United States for the Western district of Texas. The appellee was the complainant In the court below. The defendants demurred to the bin. The demurrer was overruled. The defendants stood by it. A decree as prayed for was thereupon rendered pro confesso for the complainant. The defendants removed the case to this court by appeal, and it is now be- fore us, as it was before the court below, up- on the demurrer to the bill. This brings the whole case as made by the bill under review. The facts averred, so far as they are material, are to be taken as admitted and true. We shall refer to them accordingly. The question presented for our determination Is, whether the circuit court erred in overruling the demur- rer. The appellants having elected not to an- swer, the decree for the complainant followed as of course. At the outset of our examination of the case, we are met by jurisdictional objections as to the parties— both complainant and de- fendants—which, before proceeding further, must be disposed of. We will consider first, those which relate to the complainant, and then, those with respect to the defendants. The complainant was appointed to his office of receiver, in the suit in equity of Forbes and others against the Memphis, Ea Paso & Pa- cific Railroad Company, a corporation created by the state of Texas. The suit was In the same court whence this appeal was taken. In that case, on the 6th of July, 1870, it was, among other things, ordered and decreed, that the corporation should be enjoined from dis- posing of any of Its effects, and that John A. C. Gray, the complainant in this suit, should be, and he was thereby "appointed receiver; to take possession of the moneys and assets, real and personal; roadbed, road, and all property whatsoever, of the said Memphis, El Paso & Pacific Railroad Company, whereso- ever the same may be found, with power un- der the special order of the court, from time to time to be made, to manage, control, and exercise aU the franchises, whatsoever, of said company, and, if need be, under the direction of the court, to sell, transfer, and convey the road, roadbed, and other property of said com- pany, as an entire thing," &c. On the 20th of January, 1871, it was furth- er ordered by the court "that the said John A. C. Gray, receiver as aforesaid, be, and he is hereby, authorized and empowered to defend and continue all suits brought by or against the said Memphis, El Paso, and Pacific Rail- road Company, whether before or after the ap- pointment of said receiver, and whether In the name of said company or otherwise; de- fend all suits brought against him as such re- ceiver or affecting his receivership, and to bring such suits in the name of said company, or in the name of said receiver, as he may be advised by counsel to be necessary and prop- er in the discharge of the duties of his office, and for acquiring, securing, and protecting the assets, franchises, and rights of the said com- pany and of the said receiver, and for secur- ing and protecting the land grant and land reservation of the said company." It is to be presumed the receiver filed this bill, as it is framed In accordance with the advice of counsel. Bank v. Dandridge, 12 Wheat. 70. The authority given by the decree is am- ple. Still the question arises whether it was competent for him to proceed in his own name Instead of the name of the company whose rights he seeks by this bill to assert. A re- ceiver Is appointed upon a principle of justice for the benefit of all concerned. Every kind of property of such a nature that, if legal, it might be taken in execution, may, if equitable, be put into his possession. Hence the ap- pointment has been said to be an equitable ex- ecution. He is virtually a representative of the court, and of all the parties in interest in the litigation wherein he Is appointed. Jer- 800 RECEIVERS. (Miiy, Bq. 249; Davis v. Duke of Marlborough, 2 Swanst. 12."j; Shakel v. Duke of Marlbor- ough, i Madd. 463. He is required to take possession of property as directed, because it is deemed more fQr the interests of justice that he should do so than that the property should be in the possession of either of the parties in the litigation. Wyatt, Prac. Reg. 355. He is not appointed for the benelit of either of the parties, but of all concerned. Money or property in his hands is in custodia legis. In re Colvin, 3 Md. Ch. Dec. 278; Delany v. Mansfield, 1 Hogan, 234. He has only such power and authority .as are given him by the court, and must not exceed the prescribed lim- its. Bank v. White, 6 Barb. 589; Verplanck V. Insurance Co., 2 Paige, 452. The court wiU not allow him to be sued touching the property in his charge, nor for any malfeas- ance as to the parties, or others, v?ithout its consent; nor will it permit his possession to be disturbed by force, nor violence to be of- fered to his person while in the discharge of his official duties. In such eases the court will vindicate its authority, and, if need be, will punish the offender by fine and imprison- ment for contempt. De Groot v. Jay, 30 Riirb. 483; Angel v. Smith, 9 Ves. 335; Russell v. Railroad Co., 3 JIacn. & G. 104; Parker v. Browning, 8 Paige, 388; Noe v. Gibson, 7 Paige, 513; 2 Story, Eq. Jur. § 833, A. & B. The same rules are applied to the possession of a sequestrator. 2 Daniell, Ch. Prac. 1433. Where property in the hands of the receiver is claimed by another, the right may be tried by proper issues at law, by a reference to a master, or otherwise, as the court in its dis- cretion may see fit to direct. Empringham v. Short, 3 Hare, 470. Where property, in the possession of a third person, is claimed by the receiver, the complainant must make such person a party by amending the bill, or the receiver must proceed against him by suit in the ordinary way. 8 Paige, 388; Xoe v. Gib- son, 7 Paise. 513; 2 Story, Eq. Jur. supra; 2 ,Tac. & W. 170; 2 Daniell, Ch. Prac. 1433. After tenants have attorned to the receiver, he may distrain for rent in arrear in his own name. 2 Daniell, Ch. Prac. 1437. In a suit between partners he may be required to carry on the business, in order to preserve the good- will of the establishment, until a sale can be effected. Marten v. Van Schaick, 4 Paige, 479. Here the property in question is not in the possession of the defendants. The posses- sion of the receiver has not been invaded. He has not been in possession, is not seeking pos- session; and there is no question in the case relating to that subject. But the order of the court expressly requires the receiver to se- cure and protect "the assets, franchises, and rights," and "the land grant and reservation of said company." He is seeking to perform that duty by enjoining the appellants from doing illegal acts, which the bill alleges, if done, would render the rights and title of the company to the immense property last men- tioned, of greatly diminished value. If not wholly worthless. We think it is competent for him to per- form this function in the mode he has adopt- ed. The decree, in the case wherein he was appointed, expressly authorizes him to sue for that purpose in his own name. The order was made by a court of adequate authority in the regular exercise of its jurisdiction. No appeal has been taken, and the order stands unrevers- ed. This bill is auxiliary to the original suit. Freeman v. Howe, 24 How. 451; Jones v. An- drews, 10 Wall. .327. It is analogous to a pe- tition by a receiver to the court to protect his possession from disturbance, or the prop- erty in his charge from threatened injury or destruction. No title in the receiver is neces- sary to warrant such an application, or the administration by the court of the proper remedy. There can be no valid objection to the receiver here, in analogy to that proceed- ing, maintaining this suit. In the progress and growth of equity jurisdiction it has be- come usual to clothe such officers with much larger powers than were formerly conferred. In some of the states they are by statutes charged with the duty of settling the affairs of certain corporations when insolvent, and are authorized expressly to sue in their own names. It is not unusual for courts of equity to put them in charge of the railroads of com- panies which have fallen into financial em- barrassment, and to require them to operate such roads, until the difficulties are removed, or such arrangements are made that the roads can be sold with the least sacrifice of the in- terests of those concerned. In all such cases the receiver is the right arm of the jurisdic- tion invoked. As regards the statutes, we see no reason why a court of equity, in the exer- cise of its undoubted authority, may not ac- complish all the best results intended to be secured by such legislation, without its aid. A few remarks will be sufficient to dispose of the jurisdictional objections as to the ap- pellants. In Osborn v. Bank, 9 Wheat. 738, three things, among others, were decided: (1) A circuit court of the United States, in a proper case in equity, may enjoin a state of- ficer from executing a state law in conflict with the constitution or a statute of the Unit- ed States, when such execution will violate the rights of the complainant. (2) Where the state is concerned, the state should be made a party, if it could be done. That it cannot be done is a sufficient reason for the omission to do it, and the court may proceed to decree against the officers of the state in all respects as if the state were a party to the record. (3) In deciding who are parties to the suit the court will not look beyond the record. Making a state officer a party does not make the state a party, although her law may have prompted his action, and the state may stand RECEIVERS. 801 behind him as the real party in interest. A state can be made a party only by shaping the bill expressly with that view, as where indi- viduals or corporations are intended to be put in that relation to the case. Dodge v. Wool- sey, 18 How. 331; Bank v. Knoop, 16 How. 369; Bank v. Skelly, 1 Black, 436; Trust Co. V. Debolt, 16 How. 432; and Bank v. Debolt, 1,8 How, 380, — proceeded upon the same princi- ples, and were controlled by that authority, with respect to the jurisdictional question aris-, ing in each of those cases as to the defend- ant. In Woodrufe v. Trapnall, 10 How. 190, a writ of mandamus was issued to the proper representative of the state of Arkansas to compel him to receive the paper of the Bank of the State of Arkansas in payment of a judg- ment which the state had recovered against the relator. The bank was wholly owned by the state, and the claim was made under a clause in the charter which had been repeal- ed. Judgment was given against the respond- ent. The question of jurisdiction does not appear to have been raised. In Curran v. Arkansas, 15 How. 304, it appeared that the bank had become insolvent. A creditor's bill was filed to reach its assets. The objection was taken that the state could not be sued. This court answered that the objection involv- ed a question of local law, and that as the state permitted herself to be sued in her own tribunals, that was conclusive upon the sub- ject. According to the jurisprudence of Tex- as, suits like this can be maintained against the public officers who appropriately represent her touching the interests involved in the con- troversy. Ward V. Townsend, 2 Tex. 581; Cohen v. Smith, 3 Tex. 51; Commissioner Gen- eral Land Office v. Smith, 5 Tex. 471; McLel- land V. Shaw, 15 Tex. 319; Stewart v. Cros- by, Id. 547. In the application of this prin- ciple there is no difference between the gov- ernor of a state and officers of a state of lower grades. In this respect they are upon a footing of equality. Whitman v. The Gov- ernor, 5 Ohio St. 528; Houston & G. N. R. Co. V. Kuechler, Sup. Ct. Tex., not yet re- ported. [36 Tex. 3821. A party by going into a national court does not lose any right or appropriate remedy of which he might have availed himself in the state courts of the same locality. The wise policy of the constitution gives him a, choice of tribunals. In the former he may hope to escape the local influences which sometimes disturb the even flow of justice. And in the regular course of procedure, if the amount in- volved be large enough, he may have access to this tribunal as the final arbiter of his rights. Ex parte McNiel, 13 Wall. 236. Up- on the grounds of the jurisprudence of both the United States and of Texas we hold this bill well brought as regards the defendants. It is insisted that the corporation, on be- half of which this suit was instituted, has ceased to exist. The bill avers that "the Memphis, El Paso HUTCH.& BUNK.EQ.— 51 & Pacific Railroad Company" * * * is "a corporation created by and existing under certain statutes of the state of Texas herein- after set forth," and that within the times limited by the charter and extended by other acts the company "did all acts and things necessary to the full and complete vesting, se- curing, and preserving of the franchises, rights, and privileges granted thereby." The demurrer admits the truth of these averments unless they are inconsistent with the statutes which bear upon the subject. The corpora- tion was created by an act of the legislature of Texas, approved February 4th, 1856. By the first section certain parties are named and created a body politic and corporate, and the general powers inherent in all such bodies are formally given. The second gives the right to construct a railway, commencing on the eastern boundary of the state, between Sul- phur Pork and Red River, at the western terminus of the Mississippi. Ouachita & Red River Railroad, or of the Cairo & Fulton Rail- road, and running thence westerly to the Rio Grande, opposite to or near the town of El Paso. The twentieth section declares that no rights shall vest under the charter until a certain amount of stock therein named shall have been subscribed, and the percentage pre- scribed shall have been paid upon it. This requirement is covered by the averment in the bill that the company had done every- thing necessary to secure the vesting of all the franchises given to it. We do not under- stand that there is any controversy on this subject. All the other conditions prescribed, involving the existence of the corporation, are clearly subsequent. They are found in the fourteenth section of the charter, in the first section of the act of February 5th, 1866, and in the third section of the act of Feb- ruary 10th, 1858. To any argument drawn from these provisions there are two conclusive answers: (1) There has been no judgment of ouster and dissolution. Without this they are in- operative. To make them effectual they must be grasped and wielded by the proper judicial action. See Ang. & A. Corp. § 777, and the authorities there cited. (2) The offences and punishment denoun- ced have been condoned and waived by the subsequent action of the legislature. The act of March 20th, 1861: the act for the re- lief of railroad companies, approved January 11th, 1862; the act for the relief of com- panies incorporated for purposes of internal improvement, approved February 18th, 1862; and the third section of the "Act to incor- porate the Transcontinental Railroad Com- pany," of the 27th July, .1870, each and all have that effect. The section last men- tioned authorizes the company therein nam- ed to "purchase the rights, franchises, and property of the Memphis, El Paso & Pacific Railroad Company, heretofore incorporated by this state." This is a clear affirmation, by implication, of the existence of the cor- 802 RECEIVERS. poratlon, and of the possession of the rights, franchises, and property conferred by its charter. What is implied is as effectual as what is expressed. IT. S. v. Babbit, 1 Black, 57. These considerations are so clearly con- clusive, that it is needless to advert more particularly in this connection to the legis- lation in question, or to pursue the subject further. There is no warrant for the propo- sition that the corporation had ceased to exist. The heart of this litigation lies In the im- mense land grant which is In controversy be- tween the parties. The objections we have considered are only outworks thrown up to prevent the conflict from reaching that point. It is Insisted that the rights of the company touching the entire reservation have become forfeited. The fifteenth section of the charter pro- vides as follows: "All the vacant lands with- in eight miles on each side of the extension line of said road, shall be exempt from loca- tion or entry, from and after the time when such line shall be designated by survey, rec- ognition, or otherwise. The lands hereby re- served shall be surveyed by said company at their expense, and the alternate or even sections reserved for the use of the state. And It shall be the duty of said company to furnish the district surveyor of each district through which said roadway runs, with a map of the track of said road, together with such field-notes as may be necessary to the proper understanding and designation of the same." There are other provisions prescribing va- rious details not necessary to be particularly stated or considered. A proviso in the seventeenth section de- clares that no title shall be permanently vested In the company or their assigns for land granted for the grading as contemplated by the act, until twenty-five miles of the road shall have been completed and put in running order. The proviso in the twentieth section of the charter, that no rights shall vest under It until the condition therein pre- scribed is complied with, has already been considered. Conditions of forfeiture of the lands granted are prescribed in this and sub- sequent acts. They are found in the four- teenth section of this act; in the first and fourth sections of the supplemental act of the same date; and in the third and fourth sections of the act of February 10th, 1858. These conditions will be considered here- after. The act for the relief of internal improve- ment companies of February 18th, 1862, de- clared that the time of the continuance of the war between the Confederate States and the United States should not be computed against any internal Improvement company in reckoning the period allowed them for the completion of any work they had contracted to do. The act of January 11th, 1862, for the relief of railroad companies enacted that the fail- ure of any chartered railroad company of the state to complete any part of its road, as required by existing laws, should not op- erate as a forfeiture of its charter or of the lands to which the company would be en- titled, under the provisions of the act enti- tled "An act to encourage the construction of railroads In Texas by donations of land," approved January 30th, 1854, and the several acts supplementary thereto, provided the company should complete such portion of its road as would entitle it to donations of land under existing laws within two years from the close of the war. The act for the benefit of railroad compa- nies of November 13th, 1866, declared that the grant of sixteen sections of land to the mile to railroad companies theretofore, or thereafter, constructing railroads in Texas, should be extended under the same restric- tions and limitations theretofore provided by law, for ten years after the passage of the act. These several acts are valid. See the 33d section of the constitution of Texas of 1809, and Texas v. White, 7 Wall. 700. By an act approved July 27th, 1870, the Southern Transcontinental Railroad Company was Incorporated. It was declared that the object of the company thus created was to construct and establish a railway line and telegraphic com- munication from the eastern boundary of the state of Texas, "and thence as near as prac- ticable to the route of the Memphis, El Paso & Pacific Railroad Company, to, or near, the town of El Paso." It was enacted that "the main line of said road shall follow, as near as may be practicable, the old survey of the Memphis & El Paso road." It was further enacted that "the said company, here- by Incorporated, may purchase the rights, franchises, and property of the Memphis, El Paso & Pacific Railroad Company, hereto- fore Incorporated by this state," as before mentioned. The first section of the ordinance of 1869 declared that all heads of families settled on vacant lands ly. ,' within the Memphis & El Paso railroad reserve, should be en- titled to receive from the state of Texas eighty acres of land. Including the place oc- cupied, upon payment of the expenses of survey and patent. By the second section It was declared that all the vacant land within the reserve was open to sale to settlers and pre-emption set- tlers, and subject to the location of land certificates. The third section declared that the company had forfeited Its right to the land, and that certain certificates having been Issued to the company and patents Issued thereon. It was made the duty of the attorney- general to Institute legal proceedings to have such certificates and patents cancelled. In November, 1869, the present constitu- tion of Texas was adopted. It was subse- quently approved by congress. RECEIVERS. 803 Sections 5 and 7 of tbis constitnition are as follows: "Sec. 5. All public lands heretofore re- served for tiie benefit of railroads or railway companies sball hereafter be subject to lo- catioja and survey by any genuine land cer- tificates/' "See. 7. All lands granted to railway com- panies which have not been alienated by said companies in conformity with the terms of their charter respectively, and the laws of the state under which the grants were made, are hereby declared forfeited to the state for the benefit of the school* fund." This summary gives a view of the statu- tory and constitutional provisions necessary to be considered in disposing of the ques- tiou before us. On the 20th of June, 1857, the company filed in the land office at Austin surveys showing the line of the road from the eastern boundary of the state to El Paso, which line was officially rgcognlzed by the commission- er of the general land office of Texas. By the 1st of March, i860, the company had surveyed, sectionized, and numbered all the sections and fractional sections of the va- cant lands within the reservation, from the eastern boundary of' the state to the crossing of tlie Brazos, of which due returns were made to the commissioner, and by him ac- cepted. By the 10th of May, 1859, the com- pany had marked and designated the central line" of the road from the Brazos to the Colorado, and made proper returns to the office of the commissioner, by whom they were accepted. The lands granted to the company thereby became defined and official- ly recognized as such along the whole extent of their line. In doing this work the company surveyed, numbered, and mapped each alternate or even section of public lands for two hundred and fifty miles in length, and sixteen miles in width, in behalf of the state of Texas. It was of great benefit to her, and is reported to the receiver to have cost the company more than $100,000. By consent of parties the bill was amended nunc pro tunc in three particulars. The com- plainant admitted that no land within the re- serve had been surveyed, sectionized, or num- bered west of the Brazos river, and that no work had been done on the road before or since 1861, except as averred in the bill. He averred that he applied to the general land office for the number and names of those who had located certificates other than such as were issued to the company upon lands within the reservation, and that Kuechler, the de- fendant, answered that the number was very great, amounting to hundreds, and that a list could not be furnished without great time and labor. He averred further that parties were constantly locating certificates and making sur- veys within the reservation, and that they were allowed a specified time to make their returns, so thaf: it was impossible for him to obtain a full list of such parties. The company commenced work within one year from the 1st of March, 1856, and before the 1st of March, 1861, had completely graded more thap fifty miles of its roadway, begin- ning at the eastern boundary line of the state and extending west in the direction of El Paso. See section 3 of the act of February 10th, 1^8. We do not understand that up to that time there was a breach of any condition touching the existence of the corporation or its right to the Jands within the reservation. Before that time the tracts east of the Brazos covered by the grant were definitely fixed by the surveys which the company had rnade. The title of the company to those west of the Brazos, though the sections were not designated, was equally valid. The good will of a lease which the landlord is in the habit of renewing is property, and rights growing out of it, whether by contract or otherwise, will be protected and enforced by a court of equity. Phyfe v. War- deli, 5 taige, 268. See, also. Amour v. Alex- ander, 10 Paige, 571. The rights of the company west of the Bra- zos were of a much more substantial character than those which were the subjects of judicial action in the cases cited. The real estate of a corporation is a dis- tinct thing from its franchises. But the right to acquire and sell real estate is a franchise, and the right to acquire the particular real estate designated in the charter of this com- pany, and here in question, is within that category. It might, therefore, well be doubt- ed whether this right could be taken from the company without an appropriate proceeding instituted for that purpose, and prosecuted to judgment by the state. But the view which we take of the case renders K unnecessary to pursue the subject. We will recur to the conditions of forfeiture touching the land grant, and consider them Ir- respective of that point. The provisions tol that effect, in the fourteenth section of the charter, are expressly superseded by those in the first section of the supplemental act of February 5th, 1856. The fom-th section of that act prescribes a further condition. These provisions again are superseded by the third and fourth sections of the amendatory act of February 10th, 1858. The conditions pre- scribed by the last-named act are: (1) To survey the reserve as far as the Brazos river, within four years from the 1st of March, 1856. (2) To run and designate the centre line of the reservation from the Brazos to the Colo- rado, within fifteen months from the 10th of February, 1858. (3) To survey the whole reserve within ten years from February 10th, 1858. (4) To have a connection with some road leading to the Mississippi or Gulf of Jlexico within ten years from February 10th, 1858. 804 RECEIVERS. (5) That the company shall have finished and in running order at least twenty-five miles of their road within one year after it is con- nected with certain other roads mentioned in the act, and at least fifty miles every two years thereafter until the road is completed. (6) That the right to acquire lands from the state by donation shall cease at the expiration of fifteen years from February 10th, 1858. The two first conditions were performed within the time prescribed. These points are covered by the averments of the bill. The time limited for the performance of the third and fourth is extended from February 10th, 1868, to June 10th, 1873, by addmg the time of the continuance of the war, according to the act of February 18th, 1862, before referred to. ■^'hen the bill was filed there were no such roads as those mentioned in the fifth condition with which a connection could be formed. The fifteen years limited by the sixth condition expired February 10th, 1873. The period that elapsed during the war is to be added. That extends the time so much fur- ther. The title of the company is therefore un- affected by the breach of any condition an- nexed to the grant. But suppose there had been such breaches, as is insisted by the counsel for the appellants, the result must still be the same. Except as to a small portion of the land in question the legal title is yet In the state. Whatever may be the right of the company it is wholly equitable in its character. With a few exceptions, which have no applicability in this case, the same rules apply in equity to equitable estates as are applied at law to legal estates. They are alike descendible, devisa- ble, alienable, and barrable. Jicliling, Estates, 17; Croxall v. Shererd, 5 WaU. 281. There is wide distinction between a condi- tion precedent, where no title has vested and none is to vest until the condition is perform- ed, and a condition subsequent, operating by way of defeasance. In the former case equity can give no relief. The failm'e to perform is an inevitable bar. No right can ever vest. The result is very different wliere the condi- tion is subsequent. There equity will inter- pose and relieve against the forfeiture upon the principle of compensation, where that prin- ciple can be applied, giving damages, if dam- ages should be given, and the proper amount* can be ascertained. Wells v. Smith, 2 Edw. Ch. 78; see, also, as to the principle of compen- sation, Beaty v. Harliey, 2 Smedes & M. 568. By the common law a freehold estate could not be created without livery of seizin, and it could not be determined without some act in pais of equal notoriety. Conditions subsequent are not favored in the law (4 Kent, Comm. 129), and when they are sought to be enforced in an action at law, there must have been a re-entry, or something equivalent to it, or the suit must fail. The right to sue at law for the breach is not alienable. The action must be brought by the grantor or some one in priv- ity of blood with him. Nicoll v. Railroad Co., 12 N. Y. 121; Ludlow v. Raih-oad Co., 12 Barb. 440; Webster v. Cooper, 14 How. 488. In Dumpor's Case, 4 Reports, 119, It was de- cided that a condition not to alien without license Is finally determined by the first license given. Here the controlling consideration is, that the performance of all the conditions not per- formed was prevented by the state herself. By plunging into the war, and prosecuting it, she confessedly rendered it impossible for the company tj fulfil during its continuance. This is alleged in the bill, and admitted by the de- murrer. The rule at law Is, that if a condition sub- sequent be possible at the time of making it, and becomes afterwards impossible to be com- plied with, by the act of God, or the law, or the grantor, the estate having once vested, is not thereby divested, but becomes absolute. Co. Lift. 206a, 208b; 2 Bl. Comm. 156; 4 Kent, Comm. *130. The analogy of that rule applied here would blot out these conditions. But this would be harsh and work injustice. Equity will, therefore, not apply the principle to that extent. It will regard the conditions as if no particular time for performance were specified. In such cases the rule is that the performance must be within a reasonable time. Hayden v. Stoughton, 5 Pick. 528; 4 Kent, Comm. *125, 126; Com. Dig. tit. "Con- dition G, 5." We are clear in our conviction that, under the circumstances, a reasonable time for performance had not elapsed when this bill was filed. As the state, by the act of July 27th, 1870, created the Southern Transcontinental Railroad Company, and au- thorized that company to "purchase the rights, franchises, and property of the Mem- phis, El Paso & Pacific Railroad Company," it will be but right to allow a reasonable time for that purchase to be made, if such an arrangement can be effected, and for the vendee thereafter to perform all that was incumbent upon the Memphis, El Paso & Pacific Railroad Company by its charter and the supplementary and amendatory acts. If that arrangement cannot be made, tne lat- ter company will have the right to provide otherwise for the fulfilment of its obligations to the state within such time, and thus con- summate its inchoate title to the lands with- in the reservation. Either will be in ac- cordance with the principles of reason and justice, and within the spirit of well-consid- ered adjudications. Walker v. Wheeler, 2 Conn. 299; Beaty v. Harkey, 2 Smedes & M. 5U3; Moss v. Matthews, 3 Ves. Jr. 279; 2 Vern. 366; 1 Vern. 83; 3 Brown, Ch. 2.jG; Taylor v. Popham, 1 Brown, Ch. 168; 1 Bac. Abr. 642; 1 Madd. Ch. Prac. 41, 42; Bank v. Smith, 3 Gill & J. 265. Both parties will thus be put in the same situation, as near as may be, as if the breach- es had not occurred. Neither will be sub- jected to any serious hardship. The state, by her own acts, has lost the benefits of an RECEIVBES. 805 earlier completion of the work. The com- pany has lost the income which it might have enjoyed, and has doubtless been thrown into embarrassments it would have escaped. The circumstances do not call for a severe application of the rules of law upon either side. Breaches of such conditions may be waiv- ed by the grantor expressly or in pais. Dumper' s Case, 1 Smith, Lead. Gas. Eq. 85, Am. note. Such waiver is expressed in the statutes relating to the subject, to which we have referred, except the act creating the Transcontinental Company, and there it ex- ists by the clearest implication. That the act of incorporation and the land grant here in question, were contracts, is too well settled in this court to require dis- cussion. Fletcher v. Peck, 6 Cranch, 137; New Jersey v. Wilson, 7 Cranch, 166; Dart- mouth College V. Woodward, 4 Wheat. 518; Bank v. Knoop, 16 How. 369. As such, they were within the protection of that clause of the constitution of the United States which declares that no state shall pass any law im- pairing the obligation of contracts. The or- dinance of 1869, and the constitution adopt- ed in that year, in so far as they concern the question under consideration, are nulli- ties, and may be laid out of view. Von Hoffman v. City of Qulncy, 4 Wall. 535. When a state becomes a party to a contract, as in the case before us, the same rules of law are applied to her as to private persons under like circumstances. When she or her representatives are properly brought into the forum of litigation, neither she nor they can assert any right or immunity as incident to her political sovereignty. Curran v. Arkansas, 15 How. 308. A case more imperatively demanding the exercise of jurisdiction in equity could hard- ly be imagined than that presented in this bill. Should the interposition invoked be refused, doubtless the reservation would speedily be thatched over with adverse claims. A cloud would not only be thrown upon the title of the company, but the time, litigation, labor, and expense involved in the vindication of its rights, would very greatly lessen the value of the grant and materially delay the progress of the work it was in- tended to aid. The injury would be irrepar- able. It is the peculiar function of a court of equity in a case like this to avert such results. it has been insisted that those holding ad- verse claims should have been brought into the case as parties. They are too numer- ous for that to be done. An application was made to one of the defendants for a list of their names, and it was not given. The im- portant questions which have arisen be- tween the appellants and the company can all be properly determined without the pres- ence of other parties than those before us. The parties referred to are sufficiently rep- resented for the purposes of this litigation by the governor and the commissioner of the general land oiBce. We feel no difficulty in disposing of the case as it is presented in the record. There are other points, ably maintained by the learned counsel for the appellants, to which we have not adverted. They are suffi- ciently answered by what has been said. It would extend this opinion unnecessarily, and could serve no useful purpose, specifically to consider them. The circuit court decided correctly. The decree appealed from is affirmed. Mr. Justice HUNT did not hear the ar- gument in this case and did not participate in its decision. Mr. Justice DAVIS, with whom concur- red the CHIEF JUSTICE, dissenting, said: I am constrained to enter my dissent to the opinion and judgment of the court In this case, for the reason that this suit, although in form otherwise, is in effect against the state of Texas. The object which it seeks to obtain shows this to be so, which is to deprive the state of the power to dispose, in its own way, of its public lands, and this object, by the decision just rendered, is ac- complished. In my judgment the bill should have been dismissed, because the state is exempt from suit at the instance of private persons, and on the face of the bill it is apparent that the state is arraigned as a de- fendant. 806 RECEIVERS. In re FLOWERS et al. (1 Q. B. Div. 14.) Court of Appeal. Oct. 30, 1896. Appeal from an order of a registrar in bankruptcy dismissing a petition for a re- ceiving order presented against the debtors. The debtors were a firm consisting of five members, some of whom, being desirous of dissolving partnership, commenced an action in the chancery division, and in that action a receiver and manager was appointed. The members of the firm thereilpon ceased to at- tend at the place of business, and the busi- ness was carried on by the manager. The petitioning creditors, who had previously brought an action against the firm, obtained Judgment and issued a bankruptcy notice, ■^hieh was served on four out of the five partners. The fifth partner could not be found, and the notice was thereupon served on the receiver and manager at the place of business. On objection that no proper serv- ice of the notice had been effected, the regis- trar dismissed the petition. The petitioning creditors appealed. F. Cooper Willis, for petitioning creditors. Muir Mackenzie, for debtors. LORD ESHER, il. R. I am of opinion that this appeal should be dismissed, and I come to that conclusion upon what I consider to be the true construction of rule 260. As to the position of the receiver appointed by the court, he is the officer and servant of the court, and not of the partners. As I pointed out In the case of Burt v. Bull (1895) 1 Q. B. 276, only the court can dismiss him, or give him directions as to the mode of carrying on the business, or interfere with him if he Is not carrying on the bufeiness prbperly, and he is in no sense the servant of the partner- ship. On the true construction of rule 260, I think there is a necessary implication that the person described in the rule as having the control or manageinent of the business must be a person having authority from the partners, and acting as their agent, and that consequently the rule does not apply to a re- ceiver and manager appointed by the court, and deriving his authority from that appoint- ment, and not from the partners. The serv- ice was therefore ineffectual, and the regis- tra;r was right in dismissing the petition. LOPES, L. J. I am of the same opinion. The material words of rule 260 of the Bank- ruptcy Rules, 1890, are, "any person having at the time of service the control or manage- ment of the partnership business there." I agl-ee with the master of the rolls that these words imply a person having the control or mahagement of the business for and on ac- count of the partners, and indicate some one in the position of an agent or servant. Hav- ing regard to the fact that the person served in this case did not stand in any such rela- tionship to the partnel-s, but was a receiver appointed by and responsible to the court, I think the decision of the registrar was right. RIGBY, L. J. A receiver and manager ap- pointed by the court is certainly not the agent of the parties; but, admitting that to the fullest extent, I do not know that, if I had to decide this case sitting alone, I should have arrived at the same conclusion as the other members of the court, from which, however, I do not dissent. Appeal dismissed. EECEIVEKS. 807 SEJIPLE V. PLTNN et al. (10 Atl. 177.) Court of Chancery of New Jersey. June 30, 1887. Bill for relief. Od December 5, 1885, Semple and James D. Flynn entered into an agreement for the purpose of carrying on the saloon and res- tam-ant business at Mount Holly, New Jer- sey. Semple was to furnish the money to buy the necessary fixtures and chattels with which to run the business, while Flynn was to take charge of and conduct the business; it being run in his (Flynn's) name. Out of the proceeds arising from the earnings an equal division was to be made between the two. Semple bought the fixtures for $1,200, pay- ing $850 in cash, and giving a chattel mort- gage of $350 for the balance. Flynn agreed to pay $250 to Semple, and take up the $350 mortgage in the spring of 1886. Flynn paid Semple the $250, and took up the $350 mort- gage, giving a $300 one in place of it, and, according to the charge of the complainant, has refused to cancel or pay off the $300 mortgage. In November last, Flynn refused to further divide the profits. The complain- ant alfeo charges that the defendant fraud- ulently, and without any consideration, in February, 1887, gave a second chattel mort- gage on the fixtures to his brother John J. Flynn for the alleged securing of the pay- ment of $500. The bill asks for an account- ing since last November, the appointment of a receiver to continue the business until the complainant is paid the money he advanced, and the restraining of the selling or transfer- ring of the second mortgage. The defendant denies part of the agreement respecting the payment of the chattel mortgage, and also cl&ims that the $850 advanced by Semple was loaned to him, and that he has since paid Semple the amount in full; that the mortgage wais given to his brother to secure moneys advanced by the said brother. The cause was heard on bill, answer, and proofs, on motion foi' receiver and preliminary in- junction. Alfred Hugg, for complainant. C. E. Hen- drickson, for defendant BIRD, V. C. In this case I am asked to appoint a receiver to take possession of goods and of a business which the complainant claims are held and used in partnership. I cannot advise such appointment. 1. It is not at all established by the proofs, by way of affidavits, that there is or ever was a copartnership. There are many cir- cumstances tending to show that a partner- ship was never intended. 2. If there ever was a copartnership, the presumption, from several circumstances, is that it was broken and abandoned according to its original terms, and such settlement had as to preclude the complainant from any fur- ther claim on the goods or interest in the business as a partner. 3. These things being so, no sufficient cause appears to justify the court in taking the goods, and the business, too, out of the hands of the defendant, to whom it was originally committed, when so to do would totally de- stroy the business, and that necessarily, be- cause such business is carried on under a license, which, of course, is personal to the defendant, and cannot be delegated nor as- signed nor committed to the care of a re- ceiver by any court. Before the court will take a step which will work such results, it must be reasonably certain that the allega- tions upon which relief depends are true. 4. But I will advise an injunction restrain- ing the defendant from selling, assigning, or incumbering any of the goods, chattels, or fixtures now in use in said business, or the said business itself, or the good will thereof, — not, however, to restrain him from manag- ing and carrying on said business in the or- dinary way in which he has heretofore been carrying it on during the continuance of the alleged copartnership. I feel justified, under the proofs. In going thus far in the interests of the complainant, but no further. This will preserve the present status until final hearing. Costs to abide final decree. 808 RECEIVERS. SIMMONS IIARD\YARE CO. v. WAIBEL et al. (47 N. W. 814, 1 S. D. 488.) Supreme Court of South Dakota. Jan. 30,1891. Appeal from district court, Beadle county. Mouser & VoUrath, for appellant. A. B. Melville and E-. H. Aplin, for respondents. CORSON, P. J. On March 1, 1889, the plaintiff filed its verified complaint In the dis- trict court, in which it is alleged, in substance, that it is engaged in the vrholesale and retail hardware business In the city of St. L/ouis; that it has a large amount of capital invested in its said business, several hundred clerks, and about 90 traveling salesmen engaged in selling its wares and merchandise in nearly all the states and territories; that it has prepar- ed and published, at great expense, an illus- trated and printed catalogue containing about 1,500 pages, for distribution among its cus- tomers; that it has invented and prepared, at a cost of many thousand dollars, a secret code or system, represented by letters, figures, and characters, shciwing the cost and seUing price of its many articles of merchandise, which is marked in such of its catalogues as are in- tended for use in its said business by its trav- eling salesmen, and which said secret code or system is not marked in the catalogues dis- tributed to its customers; that in January, 1887, it employed one Frank Jleech as one of its traveling salesmen, and intrusted to him, as such, one of its catalogues containing its said secret code or system of letters, figures, and characters marked therein, with the key thereto; that in his business as such traveling salesman said Meech frequently visited the tity of Huron, in Dakota, and made sales of goods to the defendants, who were customers of plaintiff, and engaged in the hardware busi- ness; that during the year 1888 the defend- ants. In collusion with said Meech, who still continued in the employment of plaintiff as such traveling salesman, wrongfully and fraudulently obtained from said Meech the said privately marked catalogue, containifig its secret code or system of letters, figures, and characters, showing the cost and seUing price of its said wares and merchandise, with the key thereto, and copied the same therefrom into one of plaintiff's catalogues that had been furnished to defendants as customers of plain- tiff, and that defendants thereby wrongfully and fraudulently became possessed of a knowl- edge of plaintiff's said secret code or system, and a copy of the same; that plaintiff, upon ascertaining said fact, demanded of defend- ants the said copy of its secret catalogue so wrongfully and fraudulently made by them, and that on or about February 19, 1889, de- fendants returned to plaintiff said marked copy, but before doing so they fraudulently and wrongfully copied said secret code or sys- tem into one of plaintiff's said catalogues it had furnished to Shefler Bros., also customers of plaintiff, from whom defendants had ob- tained it, and that said defendants now retain said last-mentioned or Shefler copy, refuse to return same to plaintiff, and threaten to make known said secret code or system, with the key thereto, to customers of plaintiff, to the great damage and injury of plaintiff; that to invent and prepare a new code or system will cost the plaintiff several thousand dollars, and require at least six months' time, and that dur- ing such change of system plaintiff will be greatly embarrassed in the transaction of its business. An injunction, receiver, etc., are prayed for. On filing the complaint, and two supporting aflidavits, the court granted ex parte a tem- porary injunction, and appointed a receiver, to whom defendants were required to deliver said (Shefler) copy of the catalogue alleged to have been copied by them from the former copy returned to plaintiff. On April 18th the de- fendants moved the court, upon the affidavit of defendant Donaldson, pleadings, proceed- ings, etc., in the case, to vacate said order made March 1st. The court on the hearing re- fused to vacate said order, but made an order modifying it by directing that receiver to re- turn said (Shefler) copy of catalogue to de- fendants. From so much of said order of April 18th as required the receiver to return said copy of catalogue to defendants, plaintiff appeals to this court, and assigns such modifi- cation of the original order as error. The appointing or refusing a receiver is within the sound judicial discretion of the court to which application is made, and this court will not interfere with the exercise of this discretion by the lower court when the evidence is conflicting, unless this court is satisfied such lower court has abused its dis- cretion. Mays V. Rose, Freem. Ch. 703; Chi- cago & A. O. & M. Co. V. United States P. Co., 57 Pa. 83; Whelpley v. Railroad Co., 6 Blatchf. 271; Story, Eq. Jur. §§ 831, 832; High, Rec. §§ 7-25; Pom. Eq. Jur. § 1331. Was there, then, a substantial conflict in the evidence upon the material facts in this case? and, if there was such conflict, was there an abuse of discretion by the court? The re- spondents contend that the affidavit of Donald- son denies all the equities of the bill relating to the Shefler catalogue, and invoke the rule of courts of equity applicable to injunctions, that, when the equities of the bill are denied by the answer, the injunction will be denied. Anderson v. Reed, 11 Iowa, 177; Stevens v. Myers, Id. 184. But that rule does not apply to this case, for the reason that the receiver was appointed, not upon the complaint alone, but upon the complaint and supporting affi- davits, and upon the hearing additional affi- davits were read on the part of the plaintiff; and the rule itself is subject to many qualifi- cations and exceptions not necessary now to be noticed. This affidavit will therefore be considered as the other affidavits in the case. The only evidence introduced on the part of the defendants on the hearing was the affi- EEOEIVBKS. 809 davit of defendant Donaldson, before referred to. This affidavit, wtiile it denies each and every allegation in the complaint in general terms, ■ does not deny the various allegations of the complaint and supporting affidavits in that clear and specific manner that entitles it to much vreight in a court of equity. It is evasive and unsatisfactory, and leaves upon the mind the impression that, while there is an attempt to deny the allegations of the com- plaint and supporting affidavits, there is a want of good faith on the part of Donaldson, and an effort on his part to conceal the real facts in the case. All the material facts stat- ed in the complaint were fully sustained by affidavits introduced and read in evidence on the part of the plaintiff. That defendant Don- aldson did, in collusion with Meech, plaintiff's traveling salesman, wrongfully and fraudu- lently obtain from said Meech the secret cata- logue intrusted to him by the plaintiff, and make a copy of the same, and that he did in the same manner obtain the key to the same, and did thereby become possessed of a knowl- edge of plaintiff's secret code or system to which he was not entitled, is proved by too clear and satisfactory evidence to admit of any doubt. That he did return to plaintiff the first copy so made is admitted. The only ques- tion remaining is, did Donaldson, before re- turning the said marlced copy, make a second copy therefrom in the Shefier catalogue now in controversy? After a careful examination of the evidence, we think there cannot be much doubt upon this question. It may be true that there were some slight changes made in the letters, figures, and characters used by plaintiff to represent the cost and selling prices of plaintiff in the Shefler copy, but we think it is equally true that in the changes made, if any, defendant Donaldson had so ar- ranged them that he preserved, in substance, the plaintiff's system. H. P. Huckins says in his affidavit that he is one of the traveling salesmen of plaintiff, and is fully acquainted with the private and secret code of plaintiff, represented by letters, figures, and characters showing the cost and selling prices of plain- tiff's goods, and the key thereto, and that he had examined the Shefler catalogue in the hands of the receiver, and that the basis of the prices marked therein is throughout the said cost price to plaintiff, and that it would have been impossible for any one to have marked the said Shefler catalogue with the prices marked, and the, explanatory remarks therein contained, unless the person who so marked the same had access to and copied from one of plaintiff's private catalogues. In connection with this testimony are to be con- sidered the efforts made by Donaldson to ob- tain one of plaintiff's catalogues from some one of plaintiff's customers before he returned to it his own marked copy. After efforts by himself and through his confederate, Meech, he obtained one from George C. Shefler, who says. In his affidavit, that he first loaned to Donaldson his catalogue on February 15, 1889, and that when, soon after, he requested Don- aldson to return it, he replied: "I have mark- ed the price of my goods in the catalogue, but am expecting a catalogue from the Simmons Hardware Company every day, and as quick as it comes I will express it to you." It is true he couples the admission that he had marked the Shefler catalogue with the qualification that he had marked the price of his own goods in it, but this is not inconsistent with the fact that he had marked the prices con- tained in plaintiff's secret catalogue, as he was a customer of plaintiff, and was then in pos- session of a copy made from one of plaintiff's catalogues intrusted to Meech; and he subse- quently took great pains to obtain a bill of sale of this catalogue from Shefler. Why these efforts and this haste to get another catalogue before he returned the flrst copy marked by him, if he did not require it in which to malte another copy? We are of the opinion that there is no substantial conflict in the evidence, and that upon the facts the court below should have retained the catalogue in question in the hands of the receiver. It is contended on the part of respondents that the catalogue in controversy was the ab- solute property of defendants, and that the court, under the established rules of equity, was not authorized to take it from them, and place it in the hands of a receiver. It may be conceded, as claimed, that the Shefler cata- logue in its original condition was the abso- lute property of defendants; but the catalogue in controversy had been changed from its orig- inal condition by the defendants by incorporat- ing therein the private code or system invented and prepared at great expense by the plaintiff. The original catalogue was of itself of but trifling value, but with the private code or system of plaintiff marked therein it was of great value. That such a code or system as was invented and used, by plaintiff in its busi- ness, and described in its complaint, was its property, is well settled, both at common law and under our own Code. Section 2676, Comp. Laws. It was the product of the skill and labors of the plaintiff, and as such is property, and is entitled to the protection of the law; and when the Injury threatened would be ir- reparable, and the remedy at law is inade- quate, a court of equity will interfere to pre- vent a party who has wrongfully obtained possession of the secret from using it or dis- closing it to others. And when, as in this case, a party has not only obtained knowledge of the secret code or -system, but has wrongfully made a copy of the secret system, a court of equity will. In furtherance of justice and to prevent the party" from fraudulently making a disclosure of the secret, not only enjoin him, but will, we apprehend, take into its posses- sion, by means of a receiver, who is an officer of the court, such copy, so wrongfully made, to prevent fraud; and if on the trial the facts alleged are established the court will be au- thorized to place such copy in the hands of the plaintiff, or at least see that plaintiff's secret t^io RECEIVERS. marks therein shall be erased or canceled. This accords with the spirit, if not with the letter, of our Code. See sections 3213-3221, Comp. Laws. These sections embody the rules of the civil law upon the doctrine of accessions to personal property, except perhaps section 3219, which is a rule of the common law. Sils- bury V. McCoon, 3 N. Y. 379. That courts do not hesitate to grant injunctions in such cases, is well settled by the adjudged cases. In Yovatt V. Winyard, 1 Jac. & W. 394, the court granted an injunction against one who had ob- tained a knowledge of a secret by a breach of trust. In Morison v. Jloat, 9 Hare, 241, the lourt restrained the defendants from using a secret in compounding a medicine, surrepti- tiously obtained. In Peabody v. Norfolk, 98 Mass. 452, the court held that an injunction .to restrain a party from communicating a secret imparted to him in the court, of his business, was proper. See 2 Story, Eq. Jur. § 952. The court was therefore clearly right in granting and continuing the temporary injunction, and, this being so, we are unable to see any legal reason why the court should not have retained in the hands of the receiver the marked cata- logue in controversy in this action. The pow- ers of courts of equity over property, the title to which is involved in litigation, is broad and comprehensive, and its power to take into its possession, through its receiver, any property that is the subject of litigation, is ample and unquestioned. The contention of defendants th.it, as they were the owners of the catalogue of trifling value, into which they have copied plaintiff's valuable secret code or system, it cannot be taken into its possession by a court of equity througli its receiver, and held pendente lite, we cannot assent to. One of the grounds upon which a receiver will be appointed is that there is no other adequate remedy. In this case the remedy by Injunction is not adequate to ac- complish the ends of justice. The plaintiff, by its complaint and affidavits, shows that its business extends over a large number of states and territories, in which it has rnany custom- ers. Enjoining a party, therefore, from using or comnmnicating the plaintiff's secret code or system, while effective so long as the defend- ants are within the jurisdiction of the com't, would yet be of little efficacy in case defend- ants should go beyond the jurisdiction of the court, and take with them the copy, where they might use this secret by communicating it to plaintiff's customers, to the irreparable injury of the plaintiff. The flexible nature of the equitable jurisdiction of courts of equity enables that court to so mould and administer its remedies as to prevent such fraudulent and wrongful use of the catalogue in question, by at once placing it within the control of the court, and thus placing it beyond the power of the defendants to make any improper disposi- tion of it pending the suit, by taking it beyond the jurisdiction of the court. We are clearly of the opinion that under the established jui'is- diction of courts of equity the power exists in that court to take into its possession this cat- alogue, and we think under the evidence it was clearly the duty of the court to do so, and that its modification of its order of March 1st was an abuse of its judicial discretion. The modified order, so far as it directed the return of the catalogue to defendants, is re- versed. All the judges concurring. RECEIVERS. 811 In re SCHUYLER'S STEAM TOWBOAT 00. (32 N. E. 623, 136 N. Y. 169.) Court of Appeals of New York. Nov. 29, 1892. Appeal from supreme court, general term, Third department. Proceeding for the dissolution of the Schuy- ler's Steam Towboat Company. From an or- der of the general term (19 N. Y. Supp. 565) atfirming an order granting an injunction re- straining the further prosecution of suits brought In the United States district court, Michael J. Moran and others appeal. Af- firmed. Carpenter & Mosher (Jofeeph F. Mosher, of counsel), for appellants. James W. Eaton, for respondent. PECKHAM, J. A receiver of the property and effects of the above-named corporation was duly appointed by a special term of the supreme court of the state sitting at Albany on the 81st of July, 1891, and the order ap- pointing him was filed and entered in the proper clerk's office August 1, 1801, at 11 a. m. The receiver eiecuied his bond, and it was duly approved Augiist 3, and filed in the clerk's office August 4, 1891. The proceed- ing was one for the voluntary dissolution of a corporation, and the distribution of Its property and assets among those entitled to receive the same. Intermediate the time when the receiver was appointed and the execution and filing of his bond, and in the afternoon of August 1st, a Mr. Moran, in his own behalf and in behalf of other cred- itors of the corporation, libeled several ves- sels which were the property of the corpora- tion, by filing libels in the United States dis- trict coilrt for tlie Eastern district of New York, and upon process issued from that court the mai^shal took possession of such vessels. When iloran instituted his proceed- ings he says he had been informed that ap- plication had already been made for the ap- pointment of a receiver, but he was not In- formed, and did not know, that one had been appointed. Finding the marshal in posses- sion of file vessels, and as he refused to give up such i)'ossessiori, the receiver Instituted these proceedings to restrain fhie libelants from further steps in {he United States dis- trict court. The courts below have granted the order restraining further proceedings, and the other parties have appealed here. The courts below have held that by the proper presentation of a petition to a state court, praying for the dissolution of the corporation, atid by the appointment of a receiver upon due notice of the apjilication to the attorney general, the cour{ acquired jurisdiction of the subject-matter of the proceeding, and took the property of the corporation Into the cus- tody of the law for the purpose of due ad- ministration; and that, having thus acquired jurisdiction of such subject-matter and taken the property into tlie custody of the law, al- though the receiver had not actually arid phj'sically seized and taken It Into his man- ual possession, the state court acquired the exclusive jurisdiction and right to take such possession and make a final decree; and that the libelants acquired no rights under their process, and should not be permitted to fur- ther proceed in the district court. The libel- ants, on the other hand, contend that this is a question of jurisdiction over the particular property, and that court obtains it which through its process and officer first actually seizes and takes possession of the property itself; and that, although the receiver may h^ve had a prior right to take possession, it was not exercised before actual possession v\^as taken under the process from the Uiilted States court, and hence the first manual pos- session must determine the question of juris- diction. We think the contention of the libelants ought not to prevail. The question of the etfect of the appointment of a receiver upon the title to the property of the fierson or corporation for which he was appointed is not a new one. in Mann v. Pentz, 2 Sandf. Ch. 257, it was said that when the appolht- ment of a receiver was completed the title to all property and ettects which were sub- ject to the order vested in him. To the same effect are Porter v. Williams, 9 N. Y. 142- 148, and Van Alstyne v. Cook, 25 N. Y. 489- 496. The appointment of receiver is complet- ed at the furtiiest by the filing and entering of the order appointing him, although before he proceeds to the discharge of his duties he may be directed to execute and file a proper bond. When that is done, he can take ac- tual, manual possession of the property, and his title relates back to the time of his ap- pointment. In re Christian Jensen Co., 128 N. Y. ^50, 28 N. E. 665, and. cases cited by Earl, J. In Storm v. Waddell, 2 Sandf. Ch. 494, it was said that property that was liable to levy under execution at law could not be levied upon subsequent to an order appoint- ing a receiver, as such order was equivalent to an actual levj; upon the property. I think tile proposition Involved in this case has been held adversely to the claini of the llbelarrts by the decision in Re Christian Jensen Co., supra. The receiver was there appointed March 10th, his bond filed March llth, and on March 12th he took possession of some of the property of the corporation. On the llth of March, intermediate the appointment and quaiifieation of the receiver, certain parties colnmehced an action against the corporation, and sued out process in replevin in a New York district court, and under it took posses- sion of certain property, which was then in the possession of the corporation. On the same day an action against the corporation was commenced in the New York common pleas to recover a money judgment, and a warrant of attachment was Issued, and the sheriff on the same day attached some of the property of the corporation. The receiver then asked for an order restraining the fur- 812 EECEIVERS. ther prosecution of these actions, and, after liearing, the order was sranted permanently restraining such proceedings. At the same time the court directed the sheriff, who had seized under his process in replevin certain property in the possession of the corporation, to surrender the same to the receiver. Some question was made as to the right of the cor- poration to the possession of the property tak- en in replevin, hut upon the facts it was held the receiver was entitled to possession, and, if any question arose as to whether the prop- erty seized under the replevin writ actually belonged to the corporation at the time of the appiintment of the receiver, that question might be inquired of by some action or pro- ceeding against the receiver, commenced or taken with leave of the court. What was in- tended to be asserted was that the appoint- ment of the receiver vested the property of the corporation in him, although he was to thereafter qualify by giving a bond; and that, the title being in him, and the property in the custody of the law, no other court could obtain jurisdiction over the property after such appointment, even under process upon which possession was taken prior to the qualifying of the receiver. A diA srent rule does not prevail because one court is a state and the other a United States court. It is a question of jurisdiction in each case, and the same principles apply in both. The same rule obtains whether one court is of common-law or equitable jurisdic- tion and the other is a court of admiralty, al- though the nature of the jurisdiction of these courts is so different. Mr. Chief Justice Taney, in his dissenting opinion in Taylor v. Carryl, 20 How. 583-600, endeavored to es- tablish that such a difference in the nature of tlie jurisdiction of common-law and admiral- ty courts over the vessel which was attached and libeled ought to make a difference in the decision to be made. The jurisdiction of the district court of the United States in that case was invoked for the purpose of collect- ing seamen's wages by the enforcement of the maritime lien upon the vessel given for that class of services, and it was said that such lien is by well-established authorities prior and paramount to all other claims on the vessel, and must be first paid, and that by the constitution and laws of the United States the district courts, acting as courts of admiralty, were the only courts which had jurisdiction over such lien or that were au- thorized to enforce it, and that it was the dutj- of that court to do it. The chief justice then argued that, as the attachment of the vessel under the state laws and by process from the state court only bound the interest of the owner, while the maritime lien upon the vessel bound the res itself, the court which had jurisdiction only of a subordinate and inferior interest should not be able, by virtue of such an attachment, to close all proceedings to enforce the paramount lien for wages for 12 months, as by the laws of the state that period or more might elapse be- tween the seizure of the vessel under the at- tachment and its sale or release from the process. The case was decided upon what a majority of the court held was no new prin- ciple, and It was solved by the application of what was said to be a principle that was comprehensive, and just, and equal, and op- posing no hindrance to the efficient adminis- tration of judicial power. The jurisdiction of the state court was upheld, notwithstanding its limited character, and that of the admiral- ty court was denied, although it was the sole court where the lien of the seaman for his wages could be originally enforced against the vessel itself. The case shows that the fact that the different courts in the Christian Jansen Co. Case, supra, were courts of the same state, and of concurrent jurisdiction, is immaterial, and the same rule would hold it one court were a state and the other a Unit- ed States tribunal. The cases cited by the counsel for these ap- pellants do not involve the question as to the effect of the appointment of a receiver in an action or proceeding where the court has ob- tained jurisdiction by the proper service of papers. This court has held that the effect is, in a case of this kind, to take the prop- erty of the corporation into the custody of the law, and that the court has power to pre- serve and protect it. As was said in Heidrit- ter V. Oil Cloth Co., 112 U. S. 305, 5 Sup. Ct. Rep. 135: "When the object of the action re- quires the control and dominion of the prop- erty involved in the litigation, that court which first acquires possession, or that do- minion which is equivalent, draws to itself the exclusive right to dispose of it." That dominion was acquired by the order appoint- ing the receiver in this proceeding. The same principle was declared in Union Trust Co. V. Rockford, R. I. & St. L. R. Co., 6 Biss. 197; Steele v. Sturges, 5 Abb. Pr. 442: Rail- road Co. V. Lewis, 81 Tex. 1, 16 S. W. 647. Different considerations apply upon a motion to punish as for a contempt an alleged inter- ference of a third person with property in re- gard to which a receiver m.iy have been ap- pointed, but which he has not yet taken ac- tual possession of. In the case of Bank v. Schermerhom, 9 Paige, 372, the chancellor re- versed the decree of the vice chancellor ad- judging the appellants to be in contempt, be- cause the facts were not sufficient to enable the chancellor to judge whether the parties were or were not in contempt. The question was one of procedure,— whether it was prop- er to proceed as for a contempt for the pur- pose of enforcing the actual delivery of prop- erty to the receiver. The court held such proceeding was improper where the receiver had never had actual possession, although his right to possession flowed from the order ap- pointing him. The question now before the court was neither involved, discussed, nor de- cided in the case cited. A party might not be guilty of contempt in taking control of RECEIVERS. 813 property not actually seized by the receiver, and while such party was in ignorance that a receiver had been appointed; and yet the property thus interfered with may notwith- standing have been in the custody of the law, and jurisdiction over it may unquestionably have existed in the court which appointed the receiver. Our decision here does not affect the legal rights of the libelants In the vessels in question. The receiver will be obliged in this proceeding to distribute the proceeds aris- ing from a sale of the property among the creditors of the corporation, as their priority of rights may appear and be held valid. We think the order was right, and it must be affirmed, with costs. All concur. S14 KECEIVKliS. ST. LOUIS. K. & S. B. CO. et al. v. WEAK, Judge. (30 S. W. 357, 185 Mo. 230.) Supreme Court of Jlissouri. June 15, 1896. In banc. Application by the St. Louis, Kennett & Southern Railway Company and others for a writ of prohibition against Judge Wear, judge of the circuit court. Writ granted. The proceeding before Judge Wear was up- on a petition in which Mr. Kerfoot was nam- ed as plaintiff, and the "St. Louis, Kennett & Southern Railroad Company, a corporation, and Louis Houck, E. F. Blomeyer, L. B. Houck, Theophllus Besel, and E. S. McCar- ty, as directors In said railroad company, and the Pemiscot Railroad Company, a cor- poration, and Robert G. Ranney, Leo Doyle, Robert T. Giboney, and John R. Jeannin, di- rectors in said railroad company, and Louis Houcli," defendants. The substance of that petition (according to the statement of the counsel for defendants in the supreme court, which statement is regarded as sufficiently full for the purposes of the prohibition case) is as follows: "On the 17th of March, 1890, there was or- ganized under the laws of this state the St. Louis, Kennett & Southern Railroad Com- pany, with a capital of $180,000, divided into 1,800 shares of the par value of $100 each, de- signed to be constructed and operated from Campbell to Kennett, Dunklin county, Mis- souri, — a distance of 19 miles. Of this stock, A. J. Kerfoot held, and still holds, 108 shares, and B. S. McCarty, Harry H. Ferguson, Melvin L. Gray, and George Denison, respec- tively, held 108 shares. Prior to the day of July, 1891, all the shares of the other stockholders in said company were purchased by said A. J. Kerfoot and E. S. McCarty. On July 8, 1891, said Kerfoot and McCarty en- tered into a contract with relator Louis Houck, by the terms of which said Houck agreed to transfer to said Kerfoot and Mc- Carty ten interest-bearing extension bonds of the Cape Girardeau Southwestern Railway Company, each for $1,(MX), which were repre- sented to be worth si/ioo of their face value, and also to organize a construction company for the purpose of making a connection be- tween the said railroads at the town of Camp- bell, said connection being of the approxi- mated length of 30 miles. Of the stock of said construction company, said Kerfoot and McCarty were to receive 49 per cent., and on the construction of said connection, said Ker- foot and McCarty were to be superintendent and general manager, respectively, at salaries of not less than $175 per month. By the terms of this contract, one-half of the real es- tate belonging to said St. Louis, Kennett & Southern Railway Company at Kennett was to be transferred to said Kerfoot and McCar- ty. In consideration of the foregoing, said Kerfoot and McCarty were to transfer to said Houck 300 shares of their stock In said rail- road company, on the completion of the con- tract aforesaid. After the above terms of said contract had been agreed on and set forth therein, additional stipulations were in- serted by said Houck in sp.id contract, with- out the knowledge and coiisent of said Ker- foot and McCarty, to the effept that In n(j event was said Houck to be personally re- sponsible for the fulfillment of said contiuct, and that, if said contract should not be kept on his part, such failure should not affect in any wise the said contract, and that 1,360 ad- ditional full-paid shares of stock in said com- pany should be issued to said Houck, and that the 240 shares of said Kerfoot and Mc- Carty should be considered full paid. While the bonds above referred to were by said Houck transferred to said Kerfoot and Mc- Carty, not only were they not of the value represented by said Houck, but of no value whatsoever; and while said construction com- pany was organized, and certain certificates of its stock transferred to said Kerfoot and McCarty, the purpose of its organization— the construction of a connection between the aforesaid railroads — was not only never ac- complished, but never attempted to be car- ried out, and said certificates are consequent- ly of absolutely no value. Shortly after the transfer of the 300 shares of the stock of the St. Louis, Kennett & Southern Railroad Com- pany by said Kerfoot and McCarty to said Houck on the faith of the performance of the terms of said contract by said Houck, said Houck held a meeting of the pretended share- holders holding shares in excess of those held by said Kerfoot and McCarty, — to whom no notice of said pretended meeting was ever given, or attempted to be given, and of which they had no knowledge or information, —whereat said pretended shareholders did at- tempt and pretend to issue to said Houck 1,3(30 additional shares of stock of said rail- road company. This action of said pretend- ed shareholders, respondent, Kerfoot, claims to be fraudulent, illegal, and void, against which he has protested, and now protests, and in afilrmance of which he has done and will do nothing. By reason of the aforesaid facts, it is claimed that the consideration for the transfer of said stock to Houck has failed, and was only brought about by the false and fraudulent representations of said Houck, with the intent to cheat and defraud said Kerfoot and McCarty. "It is also charged in said petition: That, having thus fraudulently obtained control of said raih'oad, said Houck and the other re- lators have mismanaged, and been guilty of gross negligence and misconduct in their trust capacity as directors, officers, etc., and fraudulently combined to cheat and defraud respondent, Kerfoot, and to render his shares of stock valueless, etc., together with those of other of the stockholders. That the other relators, as directors of said company, are under tlie influence and control of said relator RECEIVERS. 815 WpucE, ana cpnrprm tneir aptiops to accom- plish his fraudulent and illegal pui-poses, and to carry out his unlawful designs. That said Louis Houek is the principal shareholder in a company organized to construct a rail- road through the counties of St. Genevieve and Perr^, in the state of Missouri, which said road is located many miles from the St. Louis, Kennett & Southern, and that, being entirely without credit, said Houck has used in the construction of said road divers funds belonging to said St. Louis, Kennett & Southern Railroad Company, without any authority so to do from the stockholders and directors of said company, although with the pretended authority of said board of di- rectors. That said Houck is also the: principal stockholder in a certain railroad in process of construction through Scott county, Mis- souri, apd in the construction of this road said Houck hfis illegally and fraudulently, in like mannej- and to like ends, appropri- ated the funds of said St. Louis, Kennett & Southern Railroad Company. Th^t on or about February is, 18^2, the Pemiscot Rail- road Company was organised, — and con- structed during the year 1894, — of which said Houck was the real and substantial owner. That in the construction of this road said Houck wrongfully and fraudulently appro- priated certain of the funds of said St. Louis, Kennett & Southern Railroad Company, in the manner and ^ith the purposes as afore- said. That on the 22d day of April, 1895, said Houck, in furtherance of his said de- signs to destroy the value of said Kerfoot's stock, and of the property of said St. Louis, Kennett & Southern Railroad Company, caused the said pretended stockholders of said company to adopt a contract attempted to be entered into between the directors of said last-named companies, whereby the two said railroads should be consolidated into one foad. Of none of these proceedings was said Kerfoot notified, and of none of which did he have any knowledge or information, nor did he in any manner participate there- in. Under this pretended contract of con- solidation, the stock of the two companies was to be called in, and new stock in the consolidated company issued in lieu thereof. That said contract was submitted to a pre- tended meeting of said shareholders of the St. Louis, Kennett & Southern Railroad Com- pany, and the minutes of said meeting pur- port to show that said contract was adopted by a majority of its stockholders, all of which is false. That a copy of said minutes, and also the minutes of a similar meeting of the shareholders of said Pemiscot Rail- road Company, showing a like pretended ratification of the same contract, have been filed in the qffipe of the secretary of state of the state of Missouri. The said attempted consolidation was fraudulent and void, in that it was not effected in conformity with the laws of the state of Missouri, and with a fraudulent intent and purpose, and because no notice of said meeting was gjven said Kerfoot, who was not present thereat, al- though in the copy of the minutes of said meeting on file with the secretary of state he is falsely represented as voting in favor of said consolidation. That the terms of said contract of consolidation were not carried out by said Houck, or the other relators. That the earnings of said company are not sufflcient to discharge its accruing obligations, and that the salaries and wages of its em- plpyfis have not been paid for the last six months, and that it is now in debt to its said employgs to the extent of many thou- sand dollars. That by reason of the acts aforesaid said company is unable to secure supplies needed in the operation of the road. That the roUing stock and other properties are in need of repair and replenishing, which the relators have failed and refused to have done. That no provision has been or is now being made for the extinguishment of the outstanding debts and bonds hereafter to ac- crue. That said Houck on the 2d day of December, 1895, did remove respondent, Ker- foot, from his position as superintendent of said road, and did appropriate his salary to himself, through one of the relators, his kinsman Louis B. Houck. That the said Pemiscot Railroad Company is, and was at the time of the attempted consolidation aforesaid, hopelessly insolvent. That its debts have not been paid, except such as were paid out of the earnings of the St. Louis, Kennett ^ Southern Railroad Com- pany as aforesaid, and that said attempted consolidation was but a part of the plan of said Houck to secure and absorb both prop- erties. That by reason of all of which the said St. Louis, Kennett & Southern Railroad Company has become greatly embarrassed financially, and that a continuation of such acts of mismanagement will bring about the insolvency and bankruptcy of said cor- poration. "The prayer of the bill is that relators, as officers of said company, be restrained from diverting further amounts of money from the treasury of said company; that they be suspended from office as directors, etc., and that a new election be ordered to be held to supply the vacancy thus to be created; that an accounting be had with respect of the funds diverted as aforesaid; that a decree be rendered annulling said pretended con- solidation, and restoring the funds so divert- ed from the treasury of the St. Louis, Ken- nett & Southern Railroad Company; that said 300 shares of stock, or their proportion- ate interest therein, transferred by said Ker- foot and lyicCarty, be restored to them, and that said contract under which the transfer was made be annulled, for reasons aforesaid; that said issuance of the 1,360 shares of stock be annulled and canceled, for the rea- sons before mentioned; and that said Hou<5k be required to account for the benefits that have accrued to him by reason of the trans- 816 RECEIVERS. fer of said 300 shares of stock, and the issu- ance of said 1,360 shares; and that he be ordered to pay one-half of the same to said Kerfoot. An offer is made to return to said Houck one-half of the shares of stock in the construction company before mentioned, and like offer with respect of said extension bonds. The petition then asks for the ap- pointment of a receiver pending the determi- nation of the issues tendered, in order to prevent the misappropriation, and to insure the preservation of the properties involved." The order of Judge Wear, appointing the receiver, is as follows: "State of Missouri, County of Dunklin— ss.: In the Circuit Court, July term, 1896. A. J. Kerfoot, Plaintiff, v. The St. Louis, Kennett & Southern Railroad Company, a Corpora- tion, and Ivouis Houck, E. F. Blomeyer, L. B. Houck, Theophilus Besel, and E. S. Mc- Carty, as Directors in said RaUroad Compa- ny, and the Pemiscot Railroad Company, a Corporation, and Robert G. Ranney, Leo Doyle, Robt. T. Giboney, Louis Houck, and John R. Jeannin, Directors in Said Railroad Company, and Louis Houck, Defendants. In Vacation. Order of Appointment of Receiv- er. Now, on this 11th day of April, 1896, comes A. J. Kerfoot, and presents to me, John G. Wear, judge of the circuit court of Dunklin county, Missouri, in vacation, at chambers, in the city of Poplar Bluff, in the county of Butler, in the state of Missouri, a certified copy of his petition filed in the office of the clerk of the said circuit court of said Dunklin county, in a certain cause entitled above; and with it he presents his motion, verified by his affidavit, by which he asks the appointment of a receiver of the real and personal property of the said defendant corporations named above, which said mo- tion is hereto attached. And the said John G. Wear, judge as aforesaid, having heard said motion, and having duly considered the same, together with the facts offered in con- nection therewith, does hereby order that Samuel W. Fordyce, of the city of St. Louis, Missouri, be, and he is hereby, appointed as receiver of all and singular the real and per- sonal property, wherever situate, of the said St Louis, Kennett & Southern Railroad Com- pany, and of the said Pemiscot Railroad Company, and that he shall immediately qualify as such, by giving bond for the faith- ful performance of his duties as such receiv- er, in the sum of twenty-five thousand dol- lai-s, and that after his qualification as such receiver, having duly taken the oath pre- scribed, he shall proceed to the county of Dunklin, and to the county of Pemiscot, in the state of Missouri, and shall take charge of the said property of the said railroad com- panies, including the rolling stock, the de- pots, books, and papers of the said compa- nies, and that he shall then take an inven- tory of all of the said property so taken charge of by him; that he shall manage the said railroad properties carefully and discreetly; that he shall continue to fulfill and perform all of the existing contracts of the said railroad companies until the further order of the court in the premises; that lie shall discharge all of the cun'ent expenses of the management as such receiver out of the earnings of the said roads while they are in his hands or custody; that he shall keep an accurate and exact account of the expenses and of the income of the two said railroads, the one extending from Camp- bell, Missouri, fo Kennett, Missouri, and the other extending from Kennett, Missouri, to Caruthersville, Missouri, preserving the said expenses and income separate in all of the transactions of himself as such receiver, and that he shall keep and maintain the said properties in good condition until the further order of the said circuit court of Dunklin county, or the judge thereof in vacation; and that he make a full report of his acts as such receiver to the next term of said court, unless ordered to do so before that date. It Is further ordered that each and every agent and employe of the said defendant railroad companies named above, whether regarded as the employes of the said companies as one corporation, or as two separate corporations, shall, upon the demand of said Samuel W. Ii''ordyce, after his qualification as such re- ceiver, immediately yield to said receiver the possession and control of all the prop- erty, books, and accounts of the said defend- ant railroad companies or company, and the said Louis Houck and the other defendants named as the officers and directors of said defendant companies are hereby ordered to turn over and deliver to the said receiver all of the books and papers of the said com- pany or comi>anies which pertain in any wise to the management and business of the said company or companies. It is further ordered that in the event that any such employ^ of said company or companies shall fail or re- fuse to so deliver to said receiver the proper- ty In his said care and custody, or should said defendants fail or refuse to so deliver to said receiver the books, papers, or other property of the said defendant comjjany or companies, the said receiver shall at once report the person so failing or refusing to the undersigned judge for his further orders in that behalf. The said defendants and their employes are hereby enjoined and for- bidden from in any manner interfering with the said possession of the said receiver aft- er he shall have obtained the possession of the said property hereby ordered into his iiands, until the further orders of the said court, or of the judge thereof in vacation. It is further ordered that this order be filed in the office of the clerk of said court of said DunkUn county, and that a certified copy thereof be furnished the said Samuel W. Fordyce, as such receiver, and that a duly- certified copy thereof be served upon the de- fendants named above. It is further ordered that the said defendants be notified to ap- EEOBIVERS. 817 pear before me, the undersigned judge of the circuit court, at the next term of the cir- cuit court, in the county of Dunltlin, in the state of Missouri, then and there to show cause, If any they can, why the appoint- ment hereby made should not be continued, and the property liept by the said receiver, pending a hearing upon the merits of this controversy, and until the said defendants may be heard upon the merits thereof. And the service of a duly-certified copy hereof shall be deemed sufficient service of the said notice. Done at chambers in the city of Pop- lar Bluff, in the county of Butler and state of Missouri, this 11th day of April, 1896. John G. Wear, Judge." The writ Issued by Judge Wear for the seizure and delivery of the property of the railroad company is as follows: "State of Missouri, County of Dunklin— ss.: In the Circuit Court, to July Term, 1896. A. J. Kerfoot, Plaintiff, v. The St. Louis, Ken- nett & Southern Railroad Company, a Cor- poration, and Louis Houck, B. F. Blomeyer, L. B. Houck, Theophilus Besel, and E. S. McOarty, as Directors in said Railroad Com- pany, and the Pemiscot Railroad Company, a Corporation, and Robert G. Ranney, Leo Doyle, Robt. T. Gibouey, Louis Houck, and John R. Jeannin, Directors in said Railroad Company, and Louis Houck, Defendants. To W. G. Petty, Sheriff of Dunklin County, Missouri: Whereas, It appears to me, John G. Wear, judge of the circuit court of said Dunklin county, Missouri, sitting in chambers, in vacation, by the report of S. W. Fordyce, whom I did on the 11th day of April, 1896, appoint as receiver o£ all of the property of the said St. Louis, Kennett & Southern Railroad Company, and of the said Pemiscot Railroad Company, which report is duly veri- fied, that the said Samuel W. Fordyce did on said 13th day of April, 1896, proceed to the town of Kennett, in said Dunklin coun- ty, Missouri, and did then and there cause to be served upon one Louis B. Houck, whom he found in the charge and management of the said property of the said railroad com- panies or company named above, a duly- certified copy of my order made in the above-entitled cause, appointing him, the said S. W. F'ordyce, as such receiver, and that he did then and there demand of the said Louis B. Houck the possession and custody of the property of the said railroad companies or company, and did demand that the said Louis B. Houck relinquish the pos- session and control thereof to him, the said receiver, and that said Louis B. Houck did then and there fail and refuse so to turn over and deliver, to said receiver the posses- sion and control of the said railroad or rail- roads, and of the said property of the said railroad company or companies, and did then and there fail and refuse to relinquish the said possession and control thereof; and that the said Louis B. Houck did willfully violate the commands of my said order of HUTCH.& BUNK.EQ.— 52 appointment of the said Samuel W. Fordyce as such receiver: This is, therefore, to com- mand you that you do forthwith summon the power of the said county of Dimklin, if necessary, and that you proceed to the prop- erty of the said railroad company or com- panies named above, and to its railroad office or offices, wherever situate or found in your county, and that you put and place the said Samuel W. Fordyce, as such receiver, in charge, custody, and possession thereof, and that you dispossess therefrom, and from every portion or part thereof, the said Louis B. Houck, or any other official or employ^ or agent of the said Louis B. Houck or of the said railroad companies named above, or of any defendants named herein above; tnat you take and deliver to the said receiver all of the engines and cars and other equip- ments of the said railroad or railroads, all of its books and papers, its tickets and other movable property, its depots and ticket offices, and every other property of every description. You are furtlier commanded that you immediately take into your custody the body of the said Louis B. Houck, and him safely keep, so that you have him, the said Louis B. Houck, before me, at cham- bers, in the city of Poplar Bluff, in the coun- ty of Butler and state of Missouri, on Thursday, April 16, 1896, then and there to show cause, if any he can, why he should not be committed to the common jail of said Dunklin county for his disobedience of my said order of appointment of said receiver. And you are further commanded that if any other person shall attempt to obstruct the full and free execution of the above order, or to aid or assist in the attempt to remove any of the said property from the said county of Dunklin, except by orders of the said re- ceiver, you shall, by virtue hereof, arrest each and every such person, and have him or them before me at the time and place designated above, then and there to be further dealt with according to law. In testimony where- of, I have hereunto set my hand, at cham- bers, in the town of Bloomfleld, in the county of Stoddard and state of Missouri, this 14th day of April, 1896. John G. Wear, Judge of the Circuit Court of Dunklin County, Mis- souri." The return of the sheriff upon the above writ follows: "Executed the within writ in the county of Dunklin and state of Missouri on the 14th day of April, 1896, by placing S. W. For- dyce, as receiver, in charge of the depot and all of the property of the above-named company or companies which were at that time at the town of Kennett and in said county, including one engine and two pas- senger coaches, which were afterwards taken away by L. B. Houck, and carried eastward into Pemiscot county, Missouri. I did fur- ther on the 15th day of April, 1896, put the said receiver in charge of all the remainder of the property of the said companies or com- 818 RECEIVERS. pany in my said county. Said Louis B. Houek was not arrested as ordered above, because lie left the said county of Dunklin. W. G. Petty, Sheriff of Dunklin County, Mo." Other necessary facts appear in the opin- ion of the court. M. R. Smith, for plaintiffs. BARCLAY, J. (after stating the facts). This action is original in the supreme court. The plaintiffs are the St. Louis, Kennett «& Southern Railroad Company, Louis Houek, and a number of other shareholders in said company. The defendants are the learned circuit judge of the Twenty-Second circuit, and Messrs. Kerfoot and Fordyce, plaintiff and receiver in the proceeding before the judge. The object of the action is to obtain a writ of prohibition against the enforce- ment of certain orders entered by the judge in vacation of the court. Copies of those or- ders will be printed in the official report. The claim of plaintiffs here is that the orders are void, because made without juris- diction, or, at least, that they are in excess of any jurisdiction which the circuit judge might properly exercise in the proceeding as it then stood. In response to a preliminary rule in prohibition, defendants made separate returns, and plaintiffs replied thereto. It will not be necessary to state the terms of those pleadings at any great length. The facts on which the result of the action in this court depends are few, and need not be obscured by elaboration of the minor fea- tures of the controversy. Those facts are also admitted by the pleadings. The old St Louis, Kennett & Southern Railroad Com- pany (which we shall call the "Old Kennett Road" for a short name) was incorporated in 1890 to operate a railroad, about 19 miles long, between Campbell and Kennett, in Dunklin county. A new company of the same title was formed in 1895 by an alleged consolidation of the old Kennett road and the Pemiscot Railroad Company, which had been organized In 1892 to extend the railroad from Kennett to Caruthersville. The latter place is in Pemiscot county, on the Missis- sippi river. The validity of that consolida- . tlon is attacked in the petition filed in the case on the circuit. The ostensible public evidence of the consolidation is the certifi- cate issued by the secretary of state of Mis- souri, proclaiming a compliance with the statutory requirements in regard to the union of such corporations. Rev. St. 1889, § 25S7. The property formerly owned by the two old companies was in custody of the new Kennett road, which operated a line, about 44 miles in length, from Campbell to Caruthersville (via Kennett), when Kerfoot's petition was filed. For the purpose of the hearing in this court, the version which that petition gives of the dealings between Ker- foot, Houek, and the companies will be ac- cepted as reliable. In detnrmining tlie pro- priety of the proceedings which followed. The statements of that petition need not be repeated. They will be referred to as occa- sion requires. An ex parte application for the appointment of a receiver was made to the circuit judge, in vacation, on representa- tions additional to the petition. The sub- stance of those representations is that if such appointment were not made the prop- erty of said railway companies would "be wasted pending the determination of the said litigation," and the rights of the plain- tiff "suffer irretrievable injury," etc. The application excused the want of notice there- of to defendants on the ground "that the giving of the said notice would tend to de- feat the object sought to be obtained by the said appointment, in this, to wit: that the said Louis Houek is in exclusive charge of all of the books showing the condition of the affairs of the said companies, and has persons in charge of the various oflices and property of the road, who are entirely under his control; that the said Louis Houek would so handle and dispose of the books and prop- erty of the said companies that the order of appointment of a receiver, if made ui^on notice, would not avail, and would not be obeyed; the books and movable property of the said companies would be removed from the said counties in which said property is situate, and would be removed from the state, so that the said processes of the said court would not be effectual to compel the delivery thereof to the receiver which might be appointed"; "that by the removal of the said books of the said companies the object of the appointment of such receiver would be frustrated, and his performance of his said duties would be made difficult, if not impossible; that all of the said defendants, directors in the said corporations, are under the control of the said defendant Louis Houek"; and "that, If the said defendants should have notice of this application for a re- ceiver, they would resort to various tricks and devices to delay this proceeding, and in the meanwhile to further wreck said prop- erty; that the said defendants now are plot- ting to deprive this plaintiff of his property interest in the St. Louis, Kennett & South- em Railroad Company, by means of a fic- titious and fraudulent assessment upon his said stock; and that the giving of the said notice would have the effect to destroy the benefits sought in the appointment of the said receiver." The circuit judge granted the application, without notice to defend- ants, and made a vacation order, at Poplar Bluff, in Butler county, the terms of which are set forth at large In the statement ac- companying this opinion. The main features of the order are that Mr. Fordyce, was ap- pointed receiver of all the real and personal property of defendant companies. He was directed to immediately qualify, by giving bond, etc., and then to take charge of all EECBIVERS. 819 the real and personal property of said com- panies, "including tlie foiling stock, 'the de- pots, books and papers, of the said com- panies",- to "manage the said railroad prop- erties carefully," and "Continue to fulfill and perform all of the existing contracts of the said railroad companies until the further order of the court in the premises"; to keep accounts, make reports, etc. The order fur- ther directed defendants to deliver all said property to said receiyer, and enjoined them from interfering with the possession of the latter. The defendants were further ordered to appear before the judge "at the next term of the circuit court in the county of Dunk- lin," then and there to show cause why the receivership should not be continued "pend- ing a hearing upon the merits." This order was dated April 11, 1896. The next term of the Dunklin circuit court, as appointed by law, will begin on the second Monday (the 13th) of July; 1896. Sess. Laws 1892, p. 13, ^ 50. An ordinary summons to defendants to appear and answer the petition in the cause at the opening of the July term of the circuit court of Dunklin county was issued on the 10th of April, 1896. Mr. For- dyce, at the time of his appointment as re- ceiver, was president of the St. Louis South- western Railroad Company, popularly known as th« "Cotton Belt" route. It is alleged in the petition for prohibition in this court that the latter is "a competitive railroad com- pany, whose policy has ever been hostile to relator railroad company, for the reason that it occupies the same teiTitory for busi- ness," and that the connection of the Ken- nett road with the Mississippi river secures to the people of Dunklin and Pemiscot coun- ties advantages of competition between that road and the Cotton Belt. There is no de- nial of these allegations in the return of any of the defendants to the preliminary rule in this court, and like statements as to the roads being In competition appear in the replies to the returns. The above recital shows the substance of the charges on that point. When Mr. Pordyce, in obedience to the order for his appointment, demanded possession of the Kennett road, the officers in charge of the property refused to deliver it. That demand was the first actual notifi- cation given to them of the receivership. After the refusal to turn over the property, an application was made to the circuit judge for further action, whereupon he issued the writ or warrant of date April 14, 1896, to the sheriff of Dunklin county, directing him to summon the power of his county to put the receiver in possession of the property of the two railroad companies, and to dispos- sess any oflicial of said companies. The warrant Is recited in full in the statement accompanying the opinion. But it may be properly noted here that the warrant was issued in Stoddard county. It directed the arrest of Louis B. Houck, and that he be produced before the circuit judge, at cham- bers, in the city of Poplar Bluff, Butler County, April 16, 1896; 'to show cause why he should not be committed to jail for dis- obedience of the order appointing the re- ceiver. Under the last-described writ, the Sheriff put Mr. Fordyce,' as receiver, into possession of the property of the Kennett railroad in Dunklin county, and otherwise returned the order unexecuted, for the rea- sons appearing in his return. At that stage of the case the application for a prohibition was presented to the supreme court, and a preliminary rule issued. 1. It is urged by defendants that prohibi- tion is not applicable to the situation exist- ing on the circuit in the receivership case, and that no review can occur at this time as to the propriety of the disputed orders. But, if those orders were beyond the legiti- mate authority of the judge, the enforcement of them may be prohibited. Morris v. Lenox (1843) 8 Mo. 252. The fact that the suit in the circuit court invokes the equity powers thereof does not preclude the use of a pro- hibitory writ to keep the judicial action with- in the limits marked by law. A court of equity, no ■ less than a court of law, may be called back within the boundaries of its rightful jurisdiction by the process of pro- hibition. Where a court or judge assumes to exercise a judicial power not granted by law, it matters not, so fat afa coucerns the right to a prohibition, whether the exhibition of power occurs in a case which the court is not authorized to entertain at all, or is merely an excessive and unauthorized application of judicial force In a cause otherwise properly cognizable by the court or judge in question. State V. Walls (1892) 113>Mo. 42, 20 S. W. 883; In re Holmes (1895) 1 y. B. 174. Pro- hibition, however, will not ordinarily be grant- ed where the usual modes of review by ap- peal or writ of error furnish an adequate and efficient remedy for the correction of an in- jury resulting from the unauthorized exer- cise of judicial power. But where those remedies are inadequate to the exigency of the situation, in a particular case, a super- vising court may properly interfere by the remedy now asked. If the orders in tie K.er- foot suit were in excess of the jurisdiction of the learned judge who entered them, and if they have resulted in the seizure of a large part of a railroad line, and its detention from those entitled to — and whose duty requires them to — operate it for the convenience of the public, the case is one which would per- mit, if not demand, the application of a writ of prohibition to correct the wrong com- plained of. The remedy of prohibition af- fords opportunity for a direct attack upon proceedings questioned upon the point of jurisdiction. If the facts shown by a record reveal an unwarranted application of judicial power, causing an immediate and wrongful invasion of rights of property, the writ of prohibition may go to check the execution of any unfinished part of the extrajurisdictional 820 RECEIVERS. lirogramme that may have been outlined. Sometimes the writ may be so shaped as to undo the steps that have been taken in such a programme. To justify the use of the writ, it is not essential that the proceedings in dis- pute should be so entirely void as to warrant a declaration of nullity upon a collateral In- quiry. The statute governing proceedings in prohibition makes no change In the ancient law on these points. Laws 1895, p. 95. 2. The plaintiffs in this court contend that the learned judge had no jurisdiction to ap- point a receiver for the railroad company upon the showing made by the petition of Kerfoot, and that the order of appointment is there- fore a nullity. It is true that there are prec- edents declaring that, in the absence of statutory authority for so doing, the prop- erty of a solvent and going corpoi'ation cannot rightfully be taiien from the control of its officers at the suit of a mere creditor at large, and be placed in the hands of a re- ceiver, on account of mismanagement mere- ly, or to secure the performance of some engagement of the company, even in regard to its shares. Some decisions have gone so far as to correct, and even to prohibit, such proceedings, as entirely beyond the general jurisdiction of courts of equity. Port Huron & G. R. Co. V. Judge of St. Clair Circuit (1875) 31 Mich. 456; Iron Co. v. Wilder (1892) 88 Ya.. 942, 14 S. B. 806; Mason v. Supreme Court of Baltimore City (1893) 77 Md. 483, 27 Atl. 171; In re Binghamton Gen- eral El. Co. (1894) 143 N. Y 261, 38 N. B. 297; People v. Welgley (1895) 1D.J 111. 491, 40 N. E. 300; State v. Superior Court of Pierce County (1895) 12 Wash. 677, 42 Pac. 123; Fischer v. Superior Court of San Francisco j (1895) 110 Cal. 129, 42 Pac. 561. But in view of the other seriods and sufficiently difficult question involved in the case at bar, and the desirability of prompt announcement of the conclusion that has been reached, we shall not now stop to Investigate the soundness of plaintiffs' contention above stated. 3. A power to appoint receivers is express- ly conferred upon judges of trial courts in vacation by section 2193, Rev. St. 1889, which greatly broadened the terms of the old law (Gen. St. 1865, p. 678, § 52) under which State V. Gambs (1878) 68 Mo. 289, was de- cided. We shall not be obliged to consider whether the judge might not appoint a re- ceiver in vacation by virtue of inherent power in the circuit court to make such an order, for in the instance under review the order was made in another county than that in which the petition for a receiver had been filed. The inherent as well as the ex- press powers of a court must be exercised within the territorial jurisdiction of that court, unless positive law enlarges the field of their use. But, where a judicial power is given by statute to a judge in vacation, he may exert that power (at least within his circuit) out of as well as in the county where the cause is pending, unless there is some- thing in the statutory authority to forbid such action. It may be conceded for the present, without examining the proposition closely, that the power given to the judge to appoint a receiver carries with It, as a necessary in- cident, a power in his court, if not in the judge personally, to enforce obedience to orders made within the ambit of that power, and in accordance with established principles of law governing the exertion of such a power. (As to the mode of applying that power we shall have more to say in the next section of this opinion.) But the judicial authority to deal with prop- erty by means of a receivership is not un- limited or absolute. Harris v. Beauchamp [1894] 1 Q. B. 801. By a very late statute of Missouri an appeal may be taken from any order "refusing to revoke, modify or change an interlocutory order appointing a receiver or receivers." The same statute further provides for a very summary determination of such appeals, and for that reason directs that they shall, on motion, be advanced on the appellate docket. Laws 1895, p. 91, amending Rev. St. 1889, §2246. The pur- pose of this enactment is to moderate the hardships resulting from the long continu- ance of receiverships granted on insufficient grounds, when no review of interlocutory ap- pointments was permissible. The reports of court proceedings in the United States prior to the passage of that act afforded illustra- tions of the injuries possible from erroneous judicial action in the matter of receiverships, —injuries for which the law seemed to afford no adequate redress. The right to a summary review of an interlocutory order maintaining a receivership Is clearly given by the statute cited. It is a valuable and substantial right. The administration of the law must conform to the intent of the legis- lature in regard to it. Andrews v. National Foundry & Pipe Wofks (1894) 18 U. S. App. 4.58, 10 C. C. A. 60, 61 Fed. 782. It is noticeable that a prompt review is allowed by the act of 1895 only where the order con- tinues, not where It dissolves, the receiver- ship. Thus the statute is plainly aimed at the possible abuse of maintaining a receiver- ship (without just grounds) beyond a period required for an Investigation of its correct- ness. If the purpose of the new law Is kept in view and effectuated, the procedure in such cases must be shaped so as to permit a speedy review of Interlocutory orders ap- pointing receivers In vacation as well as in term. Otherwise such orders, in many parts of Missouri, might stand for nearly half a year without the possibility of even a first review, under the existing law In regard to terms of court. Laws 1892, p. 10, §30 and following. In other states where statutes allow appeals from interlocutory injunction orders, appointments of receivers, etc., it has been held that the appeals may be taken in vacation as well as in term. Griffin v. Bank (1846) 9 Ala. 201; Montana, etc., Co. RECEIVERS, 821 T. Helena, etc., Co. (1887) 6 Mont. 416, 12 Pa'c. 916; Railroad Co. v. Dykeman (1892) 133 Ind. 56, 32 N. E. 823. Such rulings ap- pear necessary to conform to the plain design of the legislation on that subject. The new provisions in this state most clearly Import that persons whose possession is to be in- vaded by a receivership shall have at least a prompt and fuU opportunity for a hearing (both preliminary and by appeal) as to the justice and equity of such a drastic remedy. Keeping the purpose of the new statute in mind, how must we regard the orders of the learned circuit judge In the Kerfoot suit? The appointment of the receiver was made without notice to, or any hearing of, the defendants. They had no opportunity to offer the facts which they assert, tending to prove that the demand for any sort of re- ceivership was without foundation. The learned judge's order fixed a time, three months distant, at which they might show cause why the receivership "should not be continued, and the property kept by the said receiver, pending a hearing upon the merits." The details of the order plainly contemplate that meanwhile the railroad was to be oper- ated and managed by the receiver; at least, until the next term of court, then three months off. The receiver was directed, for instance, to perform existing contracts "until the further order of the court." The whole framework of the order suggests that the receiversliip was established for at least a three-months term. The facts which justify the appointment of a receiver, without notice to the party whose possession is disturbed, are exceptional, at best. Nothing but the plainest showing of an imperative necessity for such an order, to prevent a failure of justice, should move a court to grant a mo- tion to that end, though there is no hard and fast rule, that we can give, prescribing when the discretionary power to make such an order may or may not be used. But of this proposition we feel sure: that under our existing law no temporary receivership can rightly be set up, to last three months, without affording first a hearing to the party whose possession of property is determined by such an order. If the court had been in session, so as to permit immediate applica- tion to modify the order, the relief then pos- sible might affect the applicability of a prohibitory writ. But the facts here are different. In vacation, at least, a party should not be obliged to hunt up the judge for a correction of an order made in excess of his power in the premises. The right to appoint a temporary receiver in vacation is limited by the necessity from which alone the right to make such appointment springs. Larsen v. Winder (1896; Wash.) 44 Pac 123. No court in Missouri may, without notice, declare a receivership, pending suit, for a longer time than is fairly and reason- ably requisite to allow the defendant, whose possession is invaded, to show cause against a further continuance of the receivership. What is such reasonable time will depend on the circumstances of each case. But we have no doubt that three months is beyond (and very far beyond) any reasonable day for the showing of cause. The statute al- lowing appeals from interlocutory receiver- ship orders must be given due force. It contemplates that an early opportunity shall be allowed to combat, and, if desired, to review, the appointment. The courts must yield to that obvious purpose, and permit no receivership to stand without a summary opportunity to review the equity of it. When a judge in vacation deems the exi- gency sufficiently great to warrant an ex parte order for a receivership of property, such as that in question here, he should by the same order appoint a very early day for the showing of cause against the order by defendants, so that the latter may then have opportunity for the motion to vacate which the statute permits. Our law confers, in- deed, power to appoint a receiver in vaca- tion, but it also allows an appeal from an order refusing to vacate an interlocutory ap- pointment. A reasonable construction of the latter act would appear to permit in vacation a motion to revoke the appointment in vaca- tion; otherwise one of the chief remedial objects of the appeal statute on this subject would be frustrated. It has been held by some courts that a ix)wer to do a certain judicial act out of term implies a power to undo that act, if justice appears to require that move. Railroad Co. v. Sloan (1877) 31 Ohio St. 1; Walters v. Trust Co. (1892) 50 Fed. 316. We hold that the learned judge's order in the case on the circuit was in excess of the limitations on the power of appoint- ment without notice, which we think the law imposes by the clearest implication. 4. But another patent infirmity is noticea- ble in the proceedings in question. Had the first order fixed a reasonable date to show cause against it, the question of the jurisdic- tional validity of the second order (the order to the sheriff) would demand serious atten- tion. That order was made after the refusal of the superintendent of the new Kennett road to surrender possession to the receiver. The petition itself gave notice that the prop- erty over which the receivership was sought to be established was in possession of the new company by virtue of the alleged con- solidation. The old Kennett Company and its directors were parties defendant in the pe- tition. The new company was not a party to it, for the list of directors shows that only the old company was pointed out as defend- ant. The receivership asked of and granted by the court reached for the property of the old Kennett Company, and of the Pemiscot Railroad Company. The directions to the re- ceiver exhibit that meaning of the order quite clearly. Then it was evidently beyond the iwwer of the learned judge to order a seizure of property in the possession of the new com- S22 RECEIVERS. pany without at least giving the latter an op- portunity to show cause against the proposed order. By that order the learned judge vir- tually decided that the transfer to the new company was invalid, and the union of the two old companies merely nominal. That ruling was made without any but an ex parte hearlDg, as against a stranger to, the case in court. The order to the sheriff was in the nature of a writ of assistance, as known to the chancery practice. Such a writ could not rightly be issued, even on a final decree (and, for stronger reason, not upon an ex parte in- terlocutory order), as against one not a party to the suit, without a chance .t6 the latter to show cauge against the order therefor. Peo- ple V. Rogers (1830) 2 Paige, 103; Howard v. RaUroad Co. (1879) 101 U. S. 848; State v. Ball (1892) 5 Wash. 387, 31 Pac. 975. , The summary writ, issued from another county, to seize the property and deliver it to the re- ceiver, was beyond the jurisdiction of the learned judge, so far as it concerned or af- fected the .rights of the new Kennett Com- pany; and, as to the latter company, the ef- fect of the writ should be checked by the pro- hibition now invoked. 5. The fact that no objection was inade on the circuit to the want of jurisdiction is no barrier to a prohibition, where the order com- plained of was entered in vacation, ex parte, and the defect of jurisdiction appears on the face of the papers. Nor can the want of an exception to the objectionable order have any weight where no opportunity to except was had by reason of the ex parte nature of the order. 6. Assuming that the learned judge was without jurisdiction to require the immediate deliyery of the property of the new Kennett Company to the receiver without a hearing, then the disobedience of the order by Mr. Houck, as superintendent of that company, involves no contempt It is always permissi- ble to show, upon process for contempt, that the order disobeyed was beyond the jurisdic- tion of the authority from which it emanat- ed. If that showing is successfully ma,de, no punishable contempt has been committed. In re Sawyer (1888) 124 U. S. 200, 8 Sup. Ot 482; Smith v. People (1892) 2 Colo. App. 99, 29 Pac. 924; Schwartz v. Barry (1892) 90 Mich. 267, 51 N. W. 279; State v. Winder (1896; Wash.) 44 Pac. 125. 7. It is msisted by the plaintiffs in thjsj court that the action of the learned circuit judge was void because the appointee named as custodian of the pr(q>erty could not law: fully be appointed receiver of their railway line. The ccmstitution declares that: "No railroad or other corporation, or the lessees, purchasers or managers of any railroad, cor? poration, shall * * * in any way control, any railroad corporation owning or having under its control a parallel or competing line; nor shall any officer of such railroad corpora- tion act as an officer of any other railroad cor- IKiration owning or having the control of a parallel or competing line. The question whether railroads are parallel or competing lines shall, when demanded, be decided by a jury, as in other civil issues." Const. 1875, art. 12, § 17. Two jections of the statute law, in furtherance of the purpose of the organic law quoted, are as follows: "It shall be un- lawful for any railroad company, corporation or individual owning, operating or managing any railroad in the state of Jllssouri, to enter Into any contract, combination or association, * ♦ * or, in any way whatever to any de- gree exercise control over, any railroad com- pany, corporation or individual owning or having under his or their control or manage- ment a parallel or competing line in this state, but each and every such railroad, whether owned, operated or managed by a company, corporation or individual, shall be run, operated and managed separately by its own officers and agents, and be dependent for its support on its own earnings from its local and through business in connection with other roads, and the facilities and accommodations it shall afford the public for travel and trans- portation under fair and open competition." Rev. ^t. 1889, § 2569. "It shall be unlawful for any officer of any railroad company or cor- poration, or any individual owning, operating or managing any railroad in this state as a common carrier, to act, as an officer of any other railroad company or corporation owning, operating or managing, or having the control of a parallel or conipeting line, and the question whether railroads are par- aHel or competing lines shall be decided by a jury, when so demanded." Id. § 2570. At various points in the state stat- utes concerning railroads, receivers are men- tioned among other managing , operators of such lines. Rev. St. 1889, §§ 2Q31, 2644, 2645. So that it is obvious that the president of a parallel or competing railroad, however high his, business qualificatjons, is not eligible to appointment as receiver of the competing rail- way line. In Missouri. The fact is alleged in this court that Mr. Fordyce Is the president of the Cotton Belt Route, and that it is a rail- way in competition with the new Kennett road. The fact stands admitted by the plead- ings here, in their present form. But, to make It available as the groundwork of a pro- hibitlMi, the fact should appear In some way in the proceedings on the circuit. It does not appiear in the record of those proceedings. Nor does it appear that the learned circuit judge was aware of the fact when the ap- pointment was made. Hence we are not call- ed upon to say whether or not the fact would furnish of Itself a cause to prohibit the execu- tion of the order of appointment. 8. The summary order for the seizure of the property in possession of the new Kennett road was, we think, in excess of the rightful power of the learned circuit judge In vaca- tion., We hence consider that the rule In prohibition should be made absolute, and di- rect that judgment for a peremptory writ be RBOBIVERS. 823 entered, prohibiting the circuit judge from enforcing ' any order heretofore made in the Kerfoot case, under which said receiver lias taken i)ossession, or is attempting to talie pos- session, of some part of the railway or other property of the St. Louis, Kennett & Southern Railroad Company, or of the Pemiscot Rail- road Compaiy, and prohibiting him frotti making any order (upon the pending petition of said K6rfoot in said cause) directing or permitting any receiver to take possession of any property of said companies wlthotit first allowing the' present St. Louis, Kennett & Southern Railroad CSompany an opportunity to be duly heard; and by the writ the said re- ceiver will tie prohibited from attempting to take or hold possession of any property of said railroad companies by virtue of said or- der, and the receiver will further be ordered to restore forthwith any and all property of the new'Kennett road that may be in his pos- session by reason of his said receivership. BRACE, C. J., and GANTT, MacFAR- LANE, BURGESS, and ROBINSON, JJ., con- cur. SHERWOOD, J., dissents. 824 RECEIVERS. CHILDERS et al. v. NEELT. (34 S. E. 828, 47 W. Va. 70.) Supreme Court of Appeals of West Virginia. Nov. 28, 1899. Appeal from circuit court, Tyler county; R. H. Freer, Judge. Bill by .J. M. Childers and another against S. H. Neely. Judgment for plaintiffs, and de- fendant appeals. Reversed. F. L. Blackmarr, for appellant. Robert Mc- Eldowney and G. M. JlcCoy, for appellees. BRAXNON, J. Childers and Ramey filed a bill in equity in the circuit court of Tyler against Neely, praying that a partnership be- tween them be dissolved, an account taken "of all its accounts, dealings, and transactions whatever," and that a manager be appointed to take charge of the property. The business was oil production. Neely admitted the joint enterprise, but denied the partnership; and he joined in request for account, and did not re- sist a dissolution, if a partnership. The de- crees made a partial account, decreed its bal- ance against Neely, and denied him further participation in the partnership, and he ap- pealed. This case raises an interesting and impor- tant subject In this mining state; that is, whether, and when, joint tenants or tenants In common, jointly operating for oil, are part- ners, or merely co-owners. The bill asserts a partnership, while Neely denies it; asserting that it is a case, not of partnership, but co- ownership. In two leases of town lots for oil and gas purposes, Childers owned a one-fourth inter- est; Ramey, a three-eighths interest; Neely, a three-eighths interest. They were so far joint tenants. They agreed to develop the lots for oil, but made no written articles of partner- ship,— in fact, no oral express formation of a partnership. They simply, by an indefinite understanding, agreed to develop their com- mon property, each giving his skill, paying his share of outlay proportionate to his owner- ship, and getting his share of the product pro- portioned to such ownership. I use the word "product," instead of "profits," because there was no contract explicit on this point to distin- guish product from profit. "Partnership must be distinguished from joint management of property owned in common. Where two part- ners own a chattel, and make a profit by the use of it, they are not partners, without some special agreemeiit which makes them so." T. Pars. Partn. § 76. Two heirs or other co-own- ers of a farm, jointly farming it for profit, are not partners. There is a peculiar partnership, called a "mining partnership," partaking part- ly of the nature of an ordinary trading or gen- eral partnership, on the one hand, and partly of a tenancy in common, on the other. It is an important question to those engaged in the oil and other mining business whether each one is jointly and severally liable' for all the doings of every or any other of the associates in the venture, as in ordinary trading partnerships. What is a mining partnership? 15 Am. & Eng. Enc. Law, p. 609,, says: "When tenants in common of a mine unite and co-operate in ' working it, they constitute a mining partner- ship." Many authorities there cited thus de- fine it. See the California case of Skillman v. Lachman, 83 Am. Dec. 96, and note discuss- I ing it fully; Lamar's Ex'r v. Hale, 79 Va. 147. Mere co-working makes them partners, without special contract. Barring. & A. Mines & M. Courts of equity take jurisdiction of them as if general partnerships. 2 Colly. Partn. c. 35. Of course, owners of mines, oil j leases, or farms can by agreement make an ; ordinary partnership therein; but "where ten- ants in common of mines or oil leases or lands actually engage in working the same, and ! share, according to the interest of each, the profit and loss, the partnership relation sub- sists between them, though there is no express agreement between them to be partners or to share profits and loss." Duryea v. Burt, 28 Cal. 569. The presumption in such case would be that of a mining partnership, rather than an ordinary one, in absence of an express agreement forming an ordinary general part- nership. Perhaps the case of Bank v. Os- borne, 159 Pa. St. 10, 28 Atl. 163, and other cases in that state cited in Bryan, Petroleum & Natural Gas, 283, would justify the infer- ence that the parties operated as tenants in common; but the current of authority else- where recognizes the inference of mining part- nerships. That state does not recognize such a partnership. Justice Field said in Kahn v. Smelting Co., 102 XJ. S. 645, 26 L. Ed. 266; "Mining partnerships, as distinct associations, with different rights and liabilities attaching to their members from those attaching to members of ordinary partnerships, exist In all mining communities. Indeed, without them successful mining would be attended with dif- ficulties and embarrassments much greater than at present." One leading distinction be- tween the mining partnership and the general one is that the general one has, as a material ; element of its membership, the delectus per- sonse (choice of person), while the other has ! not. Those forming an ordinary partnership '■ select the persons to form it, always from { fitness, worthiness of personal confidence; but j we know such is not always or often the case I in oil ventures. It is because of this delectus personse that the law gives such wide author- ity of one member to bind another by con- tracts, by notes, and otherwise. One is the chosen agent of the other. Hence, when one member dies or Is bankrupt, or sells his Inter- est to a stranger, even to an associate, the partnership is closed, one chosen member Is gone, the union broken, because he may have been the chief dependence for success, and the newcomer maybe an unacceptable person, who would entail failure upon the firm. In the mining partnership those occurrences make no dissolution, but the others go on; and, in case a stranger has bought the interest of a mem- RECEIVERS. 825 ter, the stranger takes the place of him who sold his interest, and cannot be excluded. If death, insolvency, or sale were to close up vast mining enterprises, in which many per- sons and large interests participate, it would entail disastrous consequences. From the absence of this delectus personse in mining companies flows another result, distinguish- ing them from the common partnership, and that is a more limited authority in the in- dividual member to bind the others to pecu- niary liability. He cannot borrow money or execute notes or accept bills of exchange binding the partnership or its members, un- less it is shown that he had authority; nor can a general superintendent or manager. They can only bind the partnership for such things as are necessary in the transaction of the particular business, and are usual in such business. Charles v. Eshleman, 5 Colo. 107; Skillman v. Lachman, 88 Am. Dec. 96, and note; JlcConnell v. Denver, 35 Cal- 365; Jones v. Clark, 42 Cal. 181; Manville V. Parks, 7 Colo. 128, 2 Pac. 212; Cong- don V. Olds, 18 Mont. 487, 46 Pac. 261; Judge V. Braswell, 13 Bush, 67; Waldron v. Hughes, 44 W. Va. 126, 29 S. E. 505. In fact, it is a rule that a nontrading partnership, as distin- guished from a trading commercial firm, does not confer the same authority by implication on its members to bind the firm; as, e. g. a partnership to run a theater or other single enterprise only. Pease v. Cole, 53 Conn. 53, 22 Atl. 681; Deardorf's Adm'r v. Thacher, 78 Mo. 128; Smith, Merc. Law, 82; T. Pars. Partn. § 85; Pooley v. Whitmore, 27 Am. Rep. 733. A mining partnership is a nontrading partnership, and its members are limited to expenditures necessary and usual in the par- ticular business. Bates, Partn. § 329. Mem- bers of a mining partnership, holding the ma- jor portion of property, have power to do what may be necessary and proper for carrying on the business, and control the work, in case all cannot agree, provided the exercise of such power is necessary and proper for carrying on the enterprise for the benefit of all concerned. Dougherty v. Creary, 89 Am. Dec. 116. These principles settle much of this case. The demurrer was properly overruled, because there was a partnership, and equity only has jurisdiction to settle partnership accounts. 5 Am. & Eng. Dec. Eq. 74; 17 Am. & Eng. Bnc. Law, 1273. Neely excepted to the commissioner's report of settlement because of the allowance to Ramey of an expenditure advanced by Eamey of $369.75, as excessive, and because for re- pairs on two boilers without his consent. If the parties were mere joint tenants, consent would be necessary. Ward v. Ward's Heirs, 40 W. Va. 611, 21 S. E. 746, 29 L. R. A. 449. But, being partners, as above stated, a part- ner has power to order necessary repairs. Besides, Ramey owned a majority interest. The boilers were burnt badly, and it seems that this outlay, though large, is proven, and was necessary and usual in such a business, and, if unattended with other circumstances, would be clearly allowable under principles above stated. The commissioner reports that the injury to the boilers came from neglect of the pumpers; but much evidence tends to show that Ramey, without consent of Neely, removed the boilers off the ground owned by the firm, upon a lease of Ramey and Childers, in which Neely had no interest, and used them with another boiler in boring and operating wells thereon in connection with these wells of the firm, in Neely's absence, and put too much work upon them, with inadequate sup- ply of water, which, likely, by heavy firing, caused the burning of the boilers. If this is so, how can Ramey expect pay for this out- lay? Would so serious an injury have occur- red to the boilers had this improper use of them not been made? We cannot say so with certainty, but it seems not likely. Ramey has no just claim to be repaid expenditure for re- pairs caused by himself,— the diversion of the firm property to his own work, from the work of the firm. Losses from neglect of duty or bad faith of a partner, or breach of duty, or breach of a partnership agreement, or im- proper diversion of its property to purposes foreign to its business, will be charged to him, in accounting. 17 Am. & Eng. Enc. Law, 1217; 1 Colly. Partn. § 312; Story, Partn. § 169; T. Pars. Partn. § 151. Ramey does not deny such use. The exception for the $239.75 allowed Ramey for three-eighths of expense seems not well taken, and was properly overruled. The commissioner reports that Neely should be al- lowed nothing for such use of the boilers for business of Childers and Ramey outside the legitimate firm business, yet allows him $100 therefor. We are unable to say that such sum Is not correct in amount, and will have to sus- tain the commissioner as to it. Neely excepted because the commissioner reported that he was not entitled to any al- lowance on the claim made by Neely, that by reason of the use of the firm's boilers in bor- ing and operating wells of Childers and Ram- ey on adjoining leases owned by them, in which Neely was not interested, the two wells of the firm, which had been bored before the others were, and were paying wells, were often shut down and unproductive, while those other wells were going on, and that by reason of want of water and steam, and the inade- quacy of the engines to run all the wells, five or six in number, the production of the firm's wells was diminished. The commissioner says that Neely suffered no appreciable injury thereby. If injured at all, it was appreciable, and to be estimated. Ramey states, in short, that Neely was not entitled to a cent on this score. Neely's evidence is distinct that he was there numerous times, and found these two wells still. He swears to a large loss from this cause. He furnishes considerable evi- dence to sustain him in some loss from this score, and it seems that equity should make some compensation for it. There is evidence S26 EECEIVERS. that Ramey, when asked why the wells were shut down, said that he had a larger interest In the other wells. Ramey (having bought out Childers' interest, and Neely being absent al- most all the time of operation) had sole charge. The commissioner bases his opinion of no injury to Neely from pipe-line reports, which are not before us; but it does seem from the evidence that the firm business was neglected, and loss to it accrued therefrom to an appreciable extent, for which some com- pensation should be made. It is difficult to say what should be allowed on this account, it being a thing of only approximate estimate; and still it seems an allowance should be made, as Ramey is claiming for outlay, and himself controlled the business. When this suit was brought, Childers and Ramey obtained In it an injunction enjoining the pipe-line companies transporting the firm's oil from paying Neely for his share of the oil to which he was entitled under his division or- ders, and enjoining Neely from any further participation in the partnership, and from sell- ing his share of the oil; thus taking from him the wells and their proceeds, and leaving Ramey in sole charge of them. Neely conb- plains that the court refused to dissolve this injunction. His counsel says there was no right to it, as the bill charged no insolvency. The bill, however, did charge that Neely had failed to contribute his part of the expense of the business, and that Ramey and Childers had made large outlays therefor, and that Neely had refused to make settlement, and was largely indebted to his associates from the ti'ansactions of the partnership. This jus- tifies the injunction, if the oil of Neely were social assets, as partners, in advancing for expenditures for the partnership, have a lien on partnership property for advances. Skill- man V. Lachman, 83 Am. Dec. 109; Duryea v. Burt, 28 Cal. 570; T. Pars. Partn. § 402, note. But this lien is only on partnership property, while distinctly such; for it is the law that If there is a separation or division of the proper- ty, or part of it, there is no lien. If two part- ners consign goods for sale, and direct the consignee to carry the proceeds to the account of each, and it is done, neither partner has any lien on the share of the other in those proceeds, thougli it would haye been other- wise if they had remained part of the com- mon property. 2 Lindl. Partn. § 683; 1 Colly, Partn. § 108, note! Now, these partners agreed to have division orders when they be- gan business (that is, the pipe lines to give each a certificate of his share of the oil com- mitted to them, which was a product of the wells); and this effected a separation of that product, making each one's share his several property, and severing it from the social prop- erty, if it was such at any moment. 'X'here being no lien, there was no justification for the injunction. It perhaps disabled Neely from paying as the bill demanded of him. There is another error in the proceeding. The bill demanded a dissolution. It showed abundant cause, and the evidence shows abundant cause, of dissolution. The bill char- ges that the plaintiffs and Neely made a set- tlement to a certain date, but that they had been unable to get Neely to make a settle- ment since then; that he was violent and abusive, had threatened them with' violence, and declared he would. have nothing more to do with them; that he would not contribute to expenses; that bills remained unpaid; and that because of the unsatisfactory condition of the business, and the "disagreements, dis- sensions, and disaffections between the part- ners, the property' and business were suffer- ing." The evidence shows these disagree- ments and dissensions. Thus, it was plain that tbe business was hopeless of success and prosperity, and the interests of all parties de- manded absolute dissolution at the hands of the law. Reconciliation, ha!rmony, and suc- cess were utterly beyond hope. 17 Am. & I^ng. Enc. Law, 1104. Therefore the court should have decreed dissolution absolute, and directed an account of the partnership, and wound it up. But it decreed no' dissolution, but, on the contrary, suffered the partnership still to subsist, and, indeed, go on in the sole' hands and management of Ramey, excluding Neely therefrom, and decreed that the settle- ment by the commissioner should only apply to its date, leaving it open to future account. The decree perpetuated the injunction, forever prohibiting Neely frcim participkt'i'on in the business, and provided that when he should pay $487.1.5 found due from him, and costs, the injunction should cease; Thkt excellent, very late work', containing the leading late decisions in equity in America and England, the American and English Decisions in Equity, with elaborate notes collecting decisions (volume 5, p. 52), lays down the rule that equity can only entertain jurisdiction for ati account when it can make a. final decree in the suit: citing Randolph's Adni'x y. Kinney, 3 Rand. 894. That work (page 109) says, "As a general rule, a bill for aecoiinting between partners which does not also seek a dissolu- tion of the partnership will not be rhaintain-' ed;" citing cases^— among them, Coville v. Gilman, 13 W. Va. 314. in which Judge Grre«n fully sustains this position. T. Pal's. Partn. g 206; 2 liindl. Partn. 948. If ever there were cases which, by bill and proof, called for dis- solution and final account, not partial, this is one. And, besides the showing of bill and proof, a petition for , rehearing alleged that Ramey had sold the boilers. The' evidence so shows. This would charge Ramey to credit of Ni'ely. There was partnership property in Ramey's hands. There could only one ade- quate relief be given,— dissolution, sale of the property entire, and full account. But no pro- vision was made for dissolution, sale, or full account,— only a partial settlement and de- cree against Neely for the sum found by it. The bill alleged that the property could not be divided in kind. If the injunction applied to property belonging to the firm, on which a RECEIVERS. 827' lien rested for the otlier partners, it would be proper to continue it until final account and decree. Eobrecht v. Robreclit (this term) 34 S. E. 801. But Neely's share of the oil was his separate property. And I do not see why he should, without cause, be excluded from participation, letting Ramey have sole control. A. receiver, impartial between them, was proper,, under the circumstances. "It no, dissolution is sought, a receiver and man- ager will not be appointed; but, with a view to a dissolution or winding up, a receiver and manager will be appointed, if there are any such grounds for appointment as are proper In other cases, or if the partners cannot agree to working the mines until sold." Colly. Partn. § 881. Therefore we dissolve the ui- iunction, reverse the decree, overrule the de- murrer to the bill, and remand for further propeed^i;igs as herein Indicated, and further according to pri,ncipies governing courts of equity in such cases. S2S RECEIVERS. FECHHBIMER et al. v. BAUM et al. (37 Fed. 167.) Circuit Court, S. D. Georgia, W. D. January 3, 1889. lu equity. Motion for an injunction and appointment of a receiver. Tlie bill before the cbancellor was filed by the plaintiffs, residents and citizens of Ohio, against Baum & Bro., a firm doing business at Toomsboro, Irwinton, and Dublin, in this district, to assert the right to an injunction and the appointment of a receiver given by tlie laAv of Georgia. Code, § 3149a. This section provides: "lu case any corporation, not municipal, or any trader or firm ot trad- ers, shall fail to pay at maturity any one or more matured debts, payment of which has been properly demanded of such debtor and by him refused, and shall be insolvent, it shall be in the power of a court of equity, under a creditors' bill, to which one or more of the creditors who have matured debts un- paid shall be necessary parties, to proceed to collect the assets, real and personal, includ- ing choses in action and money, and appro- priate the same to the creditors of such trad- ers, firm of traders, or corporation." The averments of the bill made and sworn to conform to the requirements of the statute in all respects; and so far as they indicate the existence of matured debts due by the defendants to the plaintiffs, the demand for payment, its refusal, and the insolvency of the defendants, the averments are not de- nied. In addition, the bill alleges other facts not less important to the jurisdiction in eq- uity. They are that on May 21, 1888, the defendants, Baum & Bro., made a statement to Bradstreet's Mercantile Agency, which showed a condition of prosperous solvency upon their part, which statement is append- ed as an exhibit to the bill; that plaintiffs, in the usual course of business, had knowl- edge of that statement, believed It to be true, and knew this before their merchandise was sold to the defendants; that the defendants owe $160,000; have made many fraudulent assignments and preferences; that some of these are given to favored creditors, upon the goods of the plaintiffs not yet paid for; that the plaintiffs' debts were created for a large stock of clothing, part of which is yet in possession of the defendants; that the purchase was made by the defendants with the deliberate intention not to pay therefor, and with no reasonable expectation that the defendants would be able to pay; that the sales are void, and that the title did not pass; that the statement made to the Bradstreet's ^Mercantile Agency as to the standing and 'ondition of the firm was made with intent to deceive the public, and especially the plain- tiffs, and was a part of a scheme to defraud creditors who would extend credit; that the fraudulent preferences amount to $70,000, which is larger than the annual amount han- dled in business by the defendants. The prayer is for an injunction and receiv- er, and that goods purchased by defendants from plaintiffs be kept separate for the bene- fit of plaintiffs, and for a general judgment, and for general relief. The temporary in- junction was granted upon consideration of plaintiffs' bill, and thereupon plaintiffs filed an amendment thereto. This prayed that H. M. Comer & Co., a firm of cotton factors of this district, be made parties; that the pref- erences to Comer & Co. are void, (they consist of certain mortgages to secure an alleged indebtedness of $35,000, given upon stock worth $43,000;) that in addition to these mortgages the defendants have transferred and assigned to H. M. Comer & Co. notes and accounts in a sum largely in excess of Comer's demand; that on August 22d these accounts were worth $50,000, and plaintiffs charge on information and belief that these transferred choses in action have been in- creased by other transfers to $75,000; that since the mortgage and preferences were giv- en, the defendants, Baum & Bro., have paid to Comer & Co. $18,000, which reduces their demand to $17,000, and yet Comer & Co. bold as collateral and otherwise in mortgages on real and personal property the full sum of $100,000 to secure this debt. This was stated on the hearing, without objection, to be $24,- 600, and the chancellor, for the present, as- sumes that to be correct. The bill alleges that the transactions be- tween Comer & Co. and the defendants were the result of a fraudulent confederacy to hinder and delay creditors, and to compel them to accept a small pittance in full sat- isfaction of large debts; that the demands of Comer & Co. should not be paid by the proceeds arising from the sale of the mer- chandise of plaintiffs and other creditors, not yet paid for; that Comer & Co. had actual notice of the defendants' insolvent condition at the time of certain payments made to them from such proceeds. The amendment further alleges that, prior to the insolvency of the defendants, or at some other time. Comer & Co. obtained from the defendants an agreement in writing that when the de- fendants should become weak or insolvent that they would execute and make to Comer & Co. a mortgage covering their entire prop- erty, and should assign to them all of their notes, accounts, and choses in action; that said mortgages and preferences were given in pursuance of said agreement; that Comer & Co. permitted the defendants to retain pos- session of the notes and accounts and choses in action transferred to him; that the large amount of assets in the hands of Comer & Co., over and above their lawful demand, will be sacrificed to the injury of plaintiffs; that the defendants bought a large stock of goods on credit, with the intention not to pay for them, and to defraud creditors. The RECEIVERS 829 pi'ayer is that Comer & Co. be required to produce the said agreement on the hearing, and that they be enjoined from proceeding to foreclose the mortgage or mortgages, and that they be enjoined from collecting the notes and accounts, or from any way inter- fering with the assets of the defendants, and that a receiver be appointed to talie charge of all such assets for the benefit of the cred- itors. The bill expressly waives discovery. In reply to the motion for injunction, etc., the defendants Baum & Bro. deny, in their answers, that plaintiffs' debt was contract- ed after the financial statement was made; that they gave the statement of the 21st of May, yielding to the solicitation of the Brad- street Company; that there were no mort- gages or liens at the time the statement was made; that the statement appended to the bill itself Is erroneous; that their deal- ings have been honorable and successful up to the time of this failure; that their failure is a thoroughly honest failure; that they have not made any preference upon which suspi- cion or doubt can be cast as to its entire good faith; that their creditors have given uniform evidence of their entire and un- abated confidence in the defendants' integ- rity; that they have paid large amounts to their creditors, and have drawn out nothing from their business except for the necessary support of their families; that the mortgages were given to secure bona fide debts; and that, if a receiver is appointed, the loss in winding up the business will be so great that the creditors will get nothing. H. M. Comer makes answer by affidavit. He states that on the 10th day' of March, 1S88, he tooli the agreement to the court shown, which was referred to in the bill. This had been done every year previously. It was talien in entire good faith, to protect the advances that deponent made. He gave the creditors liuowledge of it on the 3d of December, and never attempted to conceal it. He denies utterly fraud and confederacy. That in his preferences defendants reserved no right or benefit to themselves. He never had any reason to suspect fraud on the part of the defendants. That in the spring and summer of 1888, before be liuew defendants were embarrassed, they sent to him notes and accounts of the face value of $43,263.45, as collateral for about $27,000 then due. These notes and accounts he sent to the de- fendants to collect for him. This collateral was more valuable than that obtained in November. Then the debt was increased, and Comer & Co. took by transfer the notes and accounts referred to. Another affidavit was presented by H. M. Comer. It recites that his firm are cottcn factors and commis- sion merchants' in the city of Savannah; that they have been the factors of Baum & Bro. and Baum & Co., the defendants, . for five years; that they would make advance- ments in the spring and summer with the understanding that they were to be paid off in the fall and winter; that the business has been large, and the statement taken from his books is attached. It shows an indebt- edness of $43,078.23, subject to credits from Baum & Bro. ; also amounts due by the con- cerns at Dublin and Irwinton, all subject to a credit of 521 bales of cotton, which, estimated at $38 per bale, leaves Baum & Bro. indebted to H. M. Comer & Co. $24,- 661.07. This indebtedness is secured by a mortgage on real and personal property, dat- ed November 13, 1888, by a mortgage on the personalty, dated November 17, 1888, by cer- tain notes and accounts transferred by the Baums to deponent's firm. This security was given for the sole purpose of securing the debt. He denies that the charges of the bill were true. Upon the hearing, several creditors were made parties plaintifl: by intervention, among them, H. P. Claflin & Co., New York, whose debt is $11,986.16; A. Gibian, about $1,600; S. Waxelbaum; Culver, Moore & Culver and others. On the hearing plaintiffs put in evi- dence this statement of Baum & Bro. to their creditors, made December 3d, which is as follows: STATEMENT. Liabilities. Amount secured claims $69,625 80 Amount unsecured claims 81,277 64 Total liabilities $150,905 44" Assets. Merchandise at Toomsboro $18,095 36 Merchandise at Dublin 17,900 45 Merchandise at Irwinton 6,540 00 Real estate, mules, horses, etc.. 7,165 00 Total notes and ac- counts $105,150 92 Deduct lor worthless and doubtful claims.. 72,310 54 Notes and accounts at actual value 32,8(0 38 Cash on hand 1,385 00 Total available assets 83,926 19 Recapitulation. Total available assets $83,926 19 Deduct tor secured claims 69,625 80 Leaving balance 14,300 39 Amount of unsecured claims 81,277 64 Also the aflidavit of Albert M. Holstein, agent of plaintiffs, which proves the account and demand of the plaintiffs, and states that it was made on the faith of the statement to Bradstreet, made by the defendants. This showed that the defendants were entirely solvent. The statement is as follows: "88 Exhibit A. "[Late Report] "Executive Offices, 270, 281, 283, Broadway, New York. "Bradstreet' s. "No. 82 West Third Street. "Cincinnati, July 19, 1888. "The Bradstreet Company: Give us in confidence, for oui' exclusive use and benefit in our business, under our agreement with you, such information as you may have or may be able to obtain concerning the re 830 KECEIVEKS. sponsibility, character, reputation, credit, etc., of "Xame — N. B. Baum & Bros. "Business— Gen. Store. ) July 20, I "Sti-eet and No. I 1888. J "City (or P. O. Address)— Toomsboro. "County — Wilkinson. "State— Ga. "Signature of M. & L. S. F. & Co., Sub- scriber. "2402— P. O. Address. "13" Information will be furnished upon the proper tilling up of this blank and the signa- ture of the subscriber. "2-13-8-lOm. "Exhibit B. "Baum, N. B. & Brc, Toomsboro, Ga., Wil- kinson county. "A. W. Baum, aged 36 years, and married. "N. B. Baum, aged 39 years, and married. "States: Began business in 1875 in a small way, and have been quite successful. As per inventory taken January 15, 1888, our status is as follows: Stock of merchandise, nineteen thousand dols. ; bonds and stocks, par value, twenty-one thousand dollars; mar- ket value, twelve thousand dollars; notes and accounts, thirty-five thousand dollars; real estate, town property and lands, ten thousand dollars; making total assets of the firm, seventy-six thousand dollars. Liabili- ties: Borrowed money for the year 1888, twenty-four thousand dollars; mercantile and other indebtedness, twelve thousand dollars; total lialiilities, thirty-six thousand dollars. Net: Forty thousand dollars. We have a branch store at Irwinton, Ga. The business there is run under the style of 'Baum & Co.' Stock on hand there, two thousand dollars; notes and accounts, four thousand dollars; cash, five hundred dollars; total, six thousand five hundred dollars; and owe three thousand dollars. After allowing for shrinkages, bad debts, etc., consider ourselves worth fully thirty thousand dollars, over liabilities. There are no mortgages or liens on any of our property, either real or personal. Our stock is insured for thirteen thousand dollars; fix- tures, two thousand dollars. When we bor- row money from banks we deposit our bonds and stocks as security. From our cotton fac- tors we borrow on farmers' notes as collater- al, give no other security. Do an annual business of seventy-five to eighty-five thou- sand dollars. In addition to the above we sell 5 or 6 hundred tons of fertilizers per an- num, which we buy outright. Give notes for the same, payable in fall. To only one com- pany do we give farmers' notes as collateral. At this point we cleared ten thousand dollars on guano alone. "The Mercantile News Agency states: We learn they carry an average stock of about fifteen thousand dollars, and do a large busi- ness, sell largely on credit, and consequently have considerable due them. Said to borrow considerable money to use in their business, and generally put up planters' notes as col- lateral. They are reputed to owri real estate worth five to eight thousand dols. Would be difficult to give correct estimate of their net worth, but it is the general belief that the firm is estimated woiih fully twenty thousand dollars, or more. They are of good character, and steady habits, and of fine busi- ness ability. Appear to do nearly all the business that is done at this point, and are generally prompt in meeting their obligations, and are quoted in good credit. "May 21st, 1888. "[Indorsed:] Bradstreet's. 10-19-1888. To M. & L. S. Fechheimer & Co. The cor- rectness of this report is not guaranteed; but having been obtained by us in good faith— from authorities deemed reliable— it is trans- mitted to you in strict confidence for your exclusive use and benefit, and in accordance with the terms of the contract existing be- tween us. Respectfully, "The Bradstreet Co. "State of Ohio, Hamilton County, ss.: Be- fore me personally appeared Levi C. Goodale, who, being duly sworn, says that he is the superintendent of the Bradstreet Co. Jlercan- tile Agency, office at 82 West Thii'd street, Cincinnati, Ohio. That on July 19, 1888, they received a ticket of inquiry from M. & L. S. Fechheimer & Co., of Cincinnati, Ohio, asking for information concerning the responsibility, character, reputation, credit, etc., of N. B. Baum & Bro., whose post-office address was Toomsboro, Ga. Said ticket of inquiry is attached hereto, made part hereof, marked 'Exhibit A.' That on the 20th day of July, 1888, we made a report in answer to said in- quiry, an exact copy of which answer is at- tached hereto, made part hereof, marked 'Ex- hibit B.' We obtained this information in the regular course of our business, and for our company in that section of Georgia in which the business of N. B. Baum & Bro. is located. Levi C. Goodale. "Sworn to before me, and subscribed in my presence, this 19th day of December, 1888. "William S. Little, "Notary Public, Hamilton County, Ohio." R. W. Patterson, one of the solicitors for the plaintiffs, testifies that he was present at the meeting of defendants' creditors on De- cember 3, 1888. Baum offered to unsecured creditors 12% per cent, of their claims in 30 days' time, and 12% per cent, additional in 12 months, neither secured. Subsequently in- quiry was made by Mr. H. M. Comer if the offer would be accepted if he (Comer) would guaranty the first 12% per cent. Some of the creditors, and among them the plaintiffs, declined to accept. C. H. Cohen, attorney for H. P. Claflin, testified that on Novem- ber 23d he called on the defendants at Tooms- boro; that N. B. Baum told him that he had been under contract to Mr. Comer for some time to give the Comers a mortgage whenever they demanded it, and he felt com- RBC?3IVERS. 831 pelled to,. do as he had previously agreea, which deponent understood was to give the mortgage upon all his assets, including the gqods that deponent's clients had but recept- ly sold him. This witness proves the acc^oijnt of ,H. P. Claflin & Co. in the sum ,o£ $11,- iSSG.lG. R. W. Patterson, J. W. Lindsay, and 0. H. Cohen testify th,at they heard H. M. Comer state before the meeting of creditors that he had, an agreement , with N. B. Baum, ot the defendants, to,, the effect that, Bai^m W9uld execute a mortgage to him upon whatever as- sets he had, and that on this agreement Co- mer had made him advances, and that the agreeraent had been in force for as mu|ch as a, year prior to that time. Deponents fur- ther say that they heard N. B. Baum, at the creditors' meeting, state that he was insol- vent at the time he made his statement to Bradstrqet's figency, in May of the present year, althougla he did not linow it at the time. C. A. Turner testified by affidavit that after the deputy-marshal had closed the store of the defendants at Toomsboro,, he heard N. B. Baum say in a conversation with de- ponent that he had in his possession the notes, accounts, and assets of Baum & Bro. ■ and Baum & Co., which had prior to that time been turned over to H. M. Comer & Co., of Savannah. The bills for most of the plain- tiffs' goods sold to Baum were dated on Au- gust ,6th, August 10th, August 13th, and a renewal note was taken on October &, 1888. It was shown by the evidence that this was the manner in which the goods were sold: The traveling agent of the plaintiff took the order in July, subject to ratification by the house, on inquiry as to solvency. This in- quiry was , made to Bradstreet. The goeds were not shipped unless the reply was satis- factory. The sales were not completed until the goods were sent. For the defendants the following evidence was submitted: The agreement entered into between N. B. Baum & Bro. and Baum & Co. and H. M. Comer & Co., dated March 10, 1888. It recites that for and in consideration of cer- tain advances to the amount of $18,000, as evidenced by five promissory notes for $3,200 each, signed by N. B. Baum & Bro., and in- dorsed by Baum & Co., and payable at the office of Comer & Co., as follows, respective- ly, on September 15th, October 1st, Novem- ber 1st, and November 10th; and one note^ for $2,000, signed by Baum & Co., and indors- ed by Baum & Bro., due October 20th next. "Now, in order to secure these and any other sum that may hereafter be due them, we agree to deposit with them as collateral se- curity, notes and mortgages of good planters and others to whom we sell goods, in amount equal to at least two dollars for every one dollar due by us to the said Comer & Co. We also agree to transfer to them as additional security our insurance policies on our build- ings and stocks of goods; and we further obli- gate and bind ourselves to give said H. M. Co- mpr & Co. a first lien or mortgage _ upon all our stocks of goods and real estate, in case we shall at any time become fanancially embar- rassed while indebted in any way to them, or in case our said notes above descpbed are not paid promptly at maturity. It is also under- stood and agreed that all drafts drawn, or money advanced upon account or otherwise, over and above the eighteen thousand, dollars herein named, sliall be paid out of the pro- ceeds of cotton shipments first and before said proceeds are to be applied to said notes; in other words, only credit balances as may appear from open account are to be paid on said notes unless by consent of said H. M. , Comer &, Co. in writing. It is understood and agreed that 8 per cent, per annum will be charged on all advances, etc. [Signed] N. B. Baum & Bro., and X. B. Baum & Co." The mortgage' dated the 17th day of No- vember, to secure the payment of $38,000, including the five notes before mentioned and , three other notes for $5,000 each, dated Oc- tober 12, 1888, and due at various dates un- til, December 10, 1888, and one note for $5,000, due January 12, 1889, and one note dated March 10, 1888, for $2,000, signed by Baum & Co., indorsed by Baum & Bro., pay- able October 20, 1888, upon 150 half rolls of bagging, 100 bundles cotton ties, 100 sacks salt, all in the planters' warehouse at Dub- lin; and also all goods, merchandise, dry goods, groceries, etc., stored in the store of L, C. , Perry & Co., at Dublin, Ga.; also, a mortgage made 13th of November, 1888, to secure $30,000, being apparently the same notes just mentioned, and given upon certain lots of land situated in Toomsboro, and up- on which is erected store-houses; and also certain stocks of general merchandise in said store, describing them particularly; and also all such articles and things as may be here- after placed in such stock; also the stock in the store at Dublin, more particularly de- scribing it, with the same provision as to future acquisitions; also a lot of land, one- half acre in Irwinton, with store-house thereon, and also the stock of goods there- in contained. The mortgages comprehend all the safes, show-cases, and fixtures of every kind in said three stores. Numerous affida- vits were presented as to the policy or im- policy of granting the prayer of the bill for the appointment of a receiver, and an affi- davit to sustain the good character of H. M. Comer. — in the opinion of the court a dep- osition altogether superfluous. Other por- tions of the testimony are not material or necessary to the proper determination of the cause. After a full hearing and exhaustive argument on Friday last the court took time to consider, and has reached the following conclusions: Patterson & Hodges, for plaintiffs. Hill & Harris and Denmark & Adams, for defendants. 832 RECEIVERS. SPEEE, J. (after stating the facts as above). Baum & Bro. anrl Banm & Co., two firms composed of the same individuals, are traders, In the meaning of the statute of this state quoted above. That they are insolvent it is conceded. The plaintiffs are creditors, whose demands, as the court is at present advised, are within the class provided for in the statute above quoted, (Code Ga. § 3149a,) giving, in certain cases, the equitable right to the extraordinary remedies applied for. This right of the creditor to put the debt- or's assets, when the latter is an insolvent trader, in the hands of a receiver, is peculiar to the law of this state. It has no existence in the general jurisprudence of equity which' obtain in these courts. It is now settled, however, that the courts of the United States may administer an equitable right granted by the law of the state in suits of which, from other reasons, they have jm-isdiction. It was urged in argument for the defendant that the creditors, without a judgment at law, have no right to apply in equity for the appointment of a receiver. That this is a general rule in undeniable, but there are ex- ceptions to it, and one of these exceptions ol apparently clear distinctness is where the law-making power has enacted in terms that the debt need only be mature, with payment demanded and refused, as is the law in (Jeorgia. It is true, also, — as held in this circuit, in Jaffrey v. Brown (C. C.) 29 Fed. 477,— that a party not intending to pay, by inducing one to sell him goods on credit through the fraudulent concealment of his insolvency and of his intent not to pay for them, is guilty of a fraud, which entitles the vendor, if no innocent third party has ac- quired an interest in them, to disaffirm the contract, and recover the goods. See. also, Crittenden v. Coleman, 70 Ga. 295; Donald- son v. Farwell, 93 U. S. 633; note to Jaffrey V. Brown (C. C.) 29 Fed. 48.5, and authorities cited. The remedy at law must be quite as complete as that in equity to defeat the pow- er of equity to proceed. Id. The demurrer filed to the bill, while not Anally overruled, is not deemed sufficient, as the court is at present advised, to defeat the relief sought by the bill, should that relief be granted. The chancellor has given very anxious thought and careful inquiry to the ascertainment of his duty in the premises. It is true that the prayers of the bill seek to obtain perhaps the most vigorous and far- reaching action in the power of the court — action which should not be taken in cases of this character, except in the presence of plain fraud or irreparable injury. On the other hand, the statements of the defendants themselves show the most utter insolvency, and a failure to comply with their duty to their creditors, which evinces either negli- gence of the most flagrant character, or fraud scarcely less marked and decided. Upon the 21st of May, whatever may have been the motive which led to the publication, it is undeniable that the defendants gave to the mercantile community, by means of a usual and widely known commercial news agency, a statement which shows remark- able solvency, and indeed prosperity, for their section of the country. "Our total assets," they said, "are seventy-six thousand dollars; our liabilities, thirty-six thousand dollars, net. After allowing for shrinkages, bad debts, and so forth, we consider our- selves worth fully thirty thousand dollars over liabilities, etc. There are no mortgages or liens on our property, either real or per- sonal. Our stock is insured for thirteen thousand dollars. When we borrow money from banlv we deposit our bonds and stocks as security. When we borrow money from our factors we give farmers' notes as col- lateral; give no other security." In a little more than six months we find this firm in debt $150,903.44, with total assets of $83,- 926.19, leaving debts to the amount $66,- 976.25, altogether hopeless. In other words, in a half year there had been a change for the worse in their condition of nearly $100,- 000,— if their respective statements to Brad- sti'eet's and to their creditors is reliable. For this startling transformation of their condition they offer neither explanation nor excuse. There had been no disaster from flood or fire, no epidemic, none of those ex- traordinary circumstances which at times cause the stoutest business houses to trem- ble. In May there is an indebtedness of thirty-six thousand, in December a debt of one hundred and fifty thousand. In May there are neither liens nor mortgages, in December they approximate seventy thou- sand dollars. In the spring creditors were assured of prompt payment, in the fall they are met by hopeless insolvency; and yet the court is asked to consider this an innocent and unavoidable failure, and this, too, in the absence of a syllable of proof to account for it. What makes it more remarkable is that the business was conducted in quiet villages, and among a rural population, where all legitimate trade was marked by careful pur- chases and conservative transactions; where every purchaser is personally known to the merchant,— his solvency and disposition or ability to pay debts as familiar as house- hold words. But this is not all. In the proclamation of Baum & Bro. to the busi- ness community of the country, they say "there are no mortgages or liens upon our property." At that moment it was all in- cumbered with a secret obligation which a court of equity in a proper case would de- clare to have all the effect of a mortgage. In less than six months every cent's worth of their stock or other assets, whether paid for or not, is shingled with mortgages, made in pursuance of that covert stipulation. In the presence of such facts as these it woiild seem futile to urge upon the court the con- siderations of business capacity and business integrity and mercantile popularity, which EEOEIVBRS. 833 form so large a part oi the defendants' showing. "We give to our factors no secur- ity save farmers' notes." As that public pledge was being made their contract was in existence, not only to give two dollars for one, In notes and choses In action, for everj dollar obtained from their factors, but to give mortgages which are imdeniably other and very different security. "Our stock isi insured for $13,000," said they to Brad- street's,— they did not say the policies had been pledged to H. M. Comer & Co., and out of the reach of other creditors. It would seem superfluous to analyze the widely variant statements of the defendants, and it reqjuires no elaborate inquiry to ascer- tain the law controlling the rights of the par- ties with such facts before the court. The statutes of the state are sufficiently explicit. Suppression of a fact material to be Isnown, and which the party is under an obligation to communicate, constitutes fraud. The obliga- tion to communicate may arise from the confi- dential relations of the parties, or the peculiar circumstances of the case. Code Ga. § 3175. Can it be doubted that the fact that the de- fendants were under a written obligation to execute mortgages upon their entire stock and all their other property, was "material to be known" by those giving them credit? Can It be doubted that when the Baums undertook to give to Bradstreet's, for the information of the business world, a statement of their assets, liabilities, and methods of borrowing money, that the obligation was upon them to com- municate the truth? "Will the most credulous believe for a moment that Fechheimer & Co. would have given them credit for $4,000; that Claflin & Co. would have given them credit for $11,000, — had they known the existence and the nature of their obligation to Comer? We think not. The statements of such mercantile agencies as Bradstreet's are intended to influ- ence the action of merchants and others who give credit. It is well understood that the mercantile community relies largely upon such statements, and the persons giving them are under the weightiest obligation, which will be enforced in foro conscientisi, to speak the truth. If there has been deliberate suppression of a vital fact in a statement of this character, which does mislead, it is a fraud upon the person misled, which a court of equity will redress, if possible. Again, "misrepresentation of a material fact, made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or, if made by mistake, and innocently, and acted on by the opposite party, constitutes legal fraud." Code Ga. § 3174. See, also, section 2634. Now, it appears from the evidence of Messrs. Patterson, Lindsay, and Cohen that N. B. Baum admitted in their presence and hearing that he was Insolvent, at the time the state- ment to Bradstreet was made, although he there asserted a net worth, above all liabilities and doubtful assets, of fully $30,000, but that he did not then know his insolvent condition. HUTCH.& BUNK.EQ.— 53 Conceding, therefore, that this statement was honest, it is none the less fraudulent in con- templation of these provisions of the Code. It follows that, even in the absence of the In- solvent traders' act, before quoted, the plain- tiffs would be entitled to the relief they seek if it can be made to appear that there is a prospect of redressing their wrongs thereby. Much more, then, are they so entitled under the provisions of that act. It is said, how- ever, for the defendants, that the liens created by Baum & Bro. to Comer and others will ex- haust the assets, and that the unsecured cred- itors can get nothing through the action of a receiver, however vigilant he may be. But the defendants themselves admit that the assets amount to about $86,000 more than the pref- erences he has given. It is true that he states that $72,310.54 of notes and accounts are worthless and doubtful, but the court is not inclined to accept this statement as final. It would be very remarkable if his doubtful debts in December should be as much as his total assets in May. A diligent receiver will collect many of those claims, or the court will know the reason why. Besides, by the same statement there is a balance of $14,300.39 to be divided among the unsecured creditors. This is itself no mere bagatelle. We have known original suits to be brought for less. But perhaps more important than either of these is the fact that Comer & Co., who only claim $24,671.07 as the; sum of their demands against the Baums, have now in their pos- session $50,000 worth of good notes and ac- counts, and mortgages on $49,000 worth of property consisting of merchandise and other personalty and certain realty. However valid may be the demand of Comer & Co., when it Is paid they will not be permitted to retain a dollar in excess of their proven claims. It is true that by the law of Georgia, section 1953, "a debtor may prefer one creditor to another, and to that end he may bona fide give a lien by mortgage or other legal means, or he may sell in payment of the debt, or he may trans- fer negotiable papers as collateral security, the surplus in such cases not to be reserved for his own benefit or that of any other favored creditor, to the exclusion of other creditors." The large surplus conveyed to Comer & Co. to secure their debt they hold as trustees for the creditors of the defendants, the Baums. Be- sides, the balance which Comer & Co. present Is ascertained by estimating more than 50O bales of cotton shipped to them at $38 a bale. They have turned over notes and accounts of the insolvent firm to one of its members for collection. This will not be permitted. The insolvent debtor who has failed under such circumstances is not the best custodian for convertible assets of this character. This investigation has satisfied the court that this is a suit where it is manifestly the duty of the chancellor to make the orders prayed for. A receiver will be appointed, and an injunction granted. Comer & Co., who are now formally made parties defendant to the 834 RECEIVERS. bill, will be required to make proof of their account, and If found just and true and a valid lien, as It now appears to be, It will be paid in full if the funds are sufficient. This is true of other debts of superior dignity, and the remainder of the fund in the hands of Comer & Co. and elsewhere within the reach of the court will be apportioned to the creditors. The court will appoint receivers of undoubted qualifications, who will at once take possession of the assets of the insolvent firm, and as fast as collected pay the ftmds into the registry of the court, and the cause will proceed with the utmost expedition. EKCEIVERS. 835 OGDEN CITY v. BEAR LAKE & RIVER WATERWORKS & IRRIGA- TION CO. et al. (55 Pac. 385, 18 Utah, 279.) Supreme Court of Utah. Dec. 5, 1898. Appeal from district court, Salt Lake coun- ty; Ogden Hiles, Judge. Action by Ogden City against the Bear Lake & River Waterworks & Irrigation Com- pany, Bear River Irrigation & Ogden Water- works Company, and others. Judgment for plaintiff, and defendant Bear River Irrigation & Ogden Waterworks Company appeals. Modified. Bennett, Harkness, Howat, Bradley & Richards and Rogers &. Johnson, for appel- lant. E. M. Allison, Jr., C. C. Richards, and J. H. Macmillan, for respondents. ZANE, C. J. This is an appeal by the Bear River Irrigation & Ogden Waterworks Company, a defendant, from the order of the court below approving the report of Thomas D. Dee, receiver, and allowing the various items thereof, and ordering them to be paid out of funds in his hands. As to the motion of plaintiff to dismiss this appeal for the reason, as alleged, the order appealed from was not a final judgment, we are of the opinion the order requiring the compen- sation to the receiver and I. N. Pierce, and the payment to Griffin and the Ogden Stand- ard, out of funds in the receiver's hands, was final, and therefore appealable, and we there- fore overrule it. It appears from the record that Mr. Dee was apiK>inted receiver pendente lite of the waterworks system in Ogden City on Jan- uary 17, 1898, on the application of plaintiff, Ogden City; that he immediately qualified and took possession and charge of the sys- tem and its buildings, and managed and operated it until April 20, 1898; that the or- der appointing him receiver was reversed by this court, with directions to the lower court to order a retura of the property to the ap- pellant, which was done; that on April 27, 1898, Dee filed his report as such receiver, showing a collection of water rents to the amount of $11,247.07, and that he had diSr bursed $1,266.45 for labor, $148.53 for ma- terial, and $90.50 for general expenses, and, in addition, he asked the qourt to allow him $750 out of the funds as compensation as receiver; arid to I. N. Pierce, as inspector, $219.30;. and S. G. Griffin, for a. stamp, $3.25; and the Ogden Standard, for advertising, $14.00. To the allowance of these last four iteriis the appellant objected, and it assigns the order of the court allowing them and or- dering their payment out of the fund as er- ror. That the compensation to the receiver and to Griffin were customary and reasonable for their time and services, and that the charges for the stamp and publication were reason- able, no question is made. The sole question Is, was it error to order their payment out of the fund? It appears the receiver was appointed on the application of the plain- tiff, and over the objections of the appellant, and that it would not have been necessary to incur the items of compensation to the re- ceiver, or to Mr. Pierce, or for the stamp or publication, had the property remained in appellant's hands and the business under its control. The appellant was wrongfully de- prived of the possession of Its property, and of the control of its business without its con- sent, upon the petition of the plaintiff. It would be inequitable to require the appellant to pay the extra expense of conducting its business caused by the erroneous order ob- tained by the plaintiff. We understand the rule supported by the weight of authority is that when a receiver is appointed on the application of one of the parties, and takes possession, and the appointment is after- wards set aside because erroneous, and the property is returned, all expenses incurred in consequence of the appointment, additional to those that would have been necessary had the property remained with such opposite party, ought not to be paid out of the fund, but by the party at whose instance the ap- pointment was made. The expenses incur- red by the receiver that would have been necessary for .the appellant to incur had it remained In the possession of its property, and in the control of its business, were prop- erly paid out of the fund, but such as it would not have been necessary for it to incur should be charged to the party procur- ing the order. Such expenses should be re- garded as incurred in consequence of an er- ror at his instance. Weston v. Watts, 45 Hun, 219; City of St. Louis v. St Louis Gas- light Co., 11 Mo. App. 287; Bank v. Bayne, 140 N. Y. 821, 35 N. E. 630; Moyers v. Coin- er, 22 Fla. 422; French t. Gifford, 31 Iowa, 428. We hold that so much of the order appeal- ed from was erroneous as authorized compen- sation to the receiver and to I. N. Pierce, and the items for a stamp and for the publica- tion of notice, out of the fund. Such ex- penses should have been taxed against the plaintiff. The remainder of the order is af- firmed. The cause is remanded to the court below, with directions to tax the expenses in accordance with this opinion, and to so order them paid; costs of appeal to be taxed against plaintiff. BARTCH and MINER, JJ., concur 836 RECEIVEKS. WHITNEY V. HANOVER NAT. BANK et al. (two cases). SAJIE V. BANK OP GREENVILLE et al. (15 South. 33, 71 Miss. 1009.) Supreme Court of Mississippi. April 9, 1894. Appeal from chancery court, Washington county; W. R. Trigg, Chancellor. Proceedings between George Q. Whitney and the Hanover National Bank and others relative to the funds of the Bank of Green- ville. From three adverse decrees, Whitney appeals. Affirmed. Nugent & McWillie and S. H. King, for ap- pellant. Yerger & Percy, for appellees. CAMPBELL, C. J. These three cases •were argued and submitted together, and will be so considered. Their history is this: The Bank of Greenville was found to be in- solvent, and came to a stop, on the 22d day of December, 1891, when the directors, head- ed by the president, applied, by petition to the chancellor, to take charge of the assets of the bank, by appointing a receiver to col- lect and manage its affairs. The chancellor appointed the president of the bank receiv- er, and, on his application, enjoined all per- sons from proceeding by suit against it. The receiver appointed entered upon his du- ties as designated, and continued until he resigned, on the 6th of July, 1892. On the 11th July, 1892, the Hanover National Bank and other creditors of the Bank of Green- ville exhibited their biU, in the chancery court in which the receiver had been appointed, against the Bank of Greenville, and averred the foregoing facts, and that since the 22d December, 1891, the officers and directors of the bank had ceased to manage it, and that its affairs had been managed wholly by Pollock, as receiver, who had collected a large sum of money due said bank, and that the appointment of another receiver was necessary for the preservation of the assets of the bank and the protection of the rights of its creditors; with other specific allegations, designed to show the necessity for the immediate appointment of a receiv- er. Upon due notice to the defendant a re- ceiver was appointed in this proceeding on the 18th July, 1892, and the former receiver was directed to deliver to him all the assets of the bank in his hands. On July 23, 1892, George Q. Whitney and others, creditors of the Bank of Greenville, rmited in a bill against the bank and 6. D. Thomas, who had qualified and was acting as receiver by virtue of his appointment on July 18th, and against other defendants, in said chancery cotu-t. This bill set forth the suspension of the bank on the 22d December, 1891, and the appointment by the chancellor of Pollock as receiver on the application of the presi- dent and directors of the bank, and that Pol- lock took exclusive control of all the assets of the bank, and acted as receiver, but that defendant Thomas, at the time of exhibiting said bill, claimed to be receiver of said bank by virtue of an appointment by the chan- cellor of said coiu-t; that the application to the chancellor on December 22, 1891, and all the proceedings had, including the pro- curement of the appointment of Thomas as receiver, were devices to hinder, delay, and defraud creditors, and "invalid and void." Discovery was sought by the bill as to all the assets of the bank, of whatever kind, and a lien upon them prayed to be estab- lished from the date of filing the bill, and their appropriation to the demands of the complainants. The Bank of Greenville in- terposed a plea to this bill of the proceed- ing by the Hanover National Bank et al. v. Bank of Greenville, and the appointment in that case of Thomas as receiver, and that he had qualified as such, and was in posses- sion of the assets of the bank under that appointment, and relied on this plea as a bar to the bill filed 23d July, 1892. The plea was set down for hearing upon its suffi- ciency, and was sustained, and the bill dis- missed. Prom that decree an appeal was taken, and case No. 7,460 on the docket of this court is that appeal. On October 4, 1892, George Q. Whitney petitioned the chancery com-t of Washing- ton cotmty, in which these cases were pend- ing, and which had been consolidated, set- ting forth that he was a creditor to a large amount of the Bank of Greenville, and had recovered judgment for a large sum against it in the court of the United States at Vicks- bm-g. Miss., July 28, 1892, which had been duly enrolled, and, he claimed, was a para- mount lien on all the assets of said bank, notwithstanding all the various proceedings in the said chancery court, which are set forth vrith detailed particularity, and de- nounced as void, and no obstacle in law to the application of the assets of the bank to the claim of the petitioner, who prayed to be allowed to be made a party defendant to said cause. At the same time he present- ed a petition and bond for removal of said cause, in which he prayed to be made a de- fendant, to the United States court at Vicks- burg. The complainants in the cause In which Whitney sought to intervene as a de- fendant opposed his application, and it was denied by the court, and from this he ap- pealed, and that appeal is contained In No. 7,459 on the docket of this court. Defeated In his effort to be made a de- fendant as stated, Whitney made an abor- tive effort to have the United States court at Vicksburg take charge of his suit, and enforce his claim to be paid out of the as- sets of the Bank of Greenville In preference to other creditors; but with that we have no concern, and state the fact historically only, being in the record before us. On iFebruary 6, 1893, Whitney, who had been baffled in all his efforts to obtain payment as a cred- itor entitled to precedence out of the assets BECEIVERS. 837 of the Bank of Greenville, exhibited an orig- inal bill in the chancery court of Washington county against the complainants In the bill of the Hanover National Bank and others against the Bank of Greenville, exhibited July 11, 1892, and the Bank of Greenville and W. A. Pollock, receiver, and G. D. Thomas, receiver. In this bill is narrated with detail the history of the dealing by and vyith the bank from the time of its suspen- sion and taking refuge from creditors in the chancery court to the filing of this bill, which also relates the persistent, but ineffectual, ef- forts of the complainant, in state and federal coiu'ts, to secure recognition of his right, as claimed, to be first paid out of the assets of the Bank of Greenville. It assails the ac- tion of the chancery court of Washington county as void for want of jurisdiction over the subject-matter dealt with, and seeks to vacate all orders that stand in his way, and the payment of his as a preferred claim out of the effects of the bank. The bill seeks in- junction, which was obtained. This bill was answered, and most of its allegations admit- ted, but the claim made by It to the right of the complainant to priority of payment out of the assets of the bank was denied. A mo- tion was made to dissolve the injunction, and some affidavits were taken, and some facts were agreed on for the hearing of the motion to dissolve, and it was agreed that the case should be heard on the motion to dissolve, and for final decree on such hearing. The re- spondents gave notice of a claim for damages to be allowed on dissolution of the injunction to amount of $2,500 for attorney's fees in de- fense of the suit. The case was heard in ac- cordance with the agreement, and a decree was made dissolving the injunction, dismiss- ing the bill, and awarding damages against the complainant in the sum of $2,000 as attor- ney's fees, the decree reciting that the court had heard testimony in open court as to the attorney's fees, and taxed the costs against the complainant, who appealed, and this is No. 7,749 of the docket of this court From this complete but succinct history of this litigation, as disclosed in voluminous form in the three cases before us, it is ap- parent that the only question presented for de- cision by the appeal in No. 7,459 is as to the propriety of the action of the com-t in refus- ing to permit Whitney to intervene as a de- fendant in tlie case of Hanover National Bank et al. v. Bank of Greenville, against the objection of the complainants, who protested earnestly against it. The court did right in this refusal. "No such practice is known in equity as making a person a defendant to a suit upon his own application over the objec- tion of the complainant." 1 Daniell, Oh. PI. & Pr. 287, note 2, and cases cited; Stretch V. Stretch, 2 Tenn. Ch. 140,— where the sub- ject is fully treated, and the action of the court in the case before us is fully vindicated on principle and authority. The question presented by cases 7,460 and 7,749 is whether the chancery court of Wash- ington county was so wanting in jurisdiction of the case of Hanover National Bank and others exhibited against the Bank of Green- ville, July 11, 1892, as to render its action in the case void, and liable to be assailed col- laterally, and treated as a nullity, whenever and however called in question; for, if it be conceded that the action of the court was er- roneous, unless it was void, the fact that it had assumed jm-isdiction, and taken control Df the assets of the Bank of Greenville, and appointed a receiver in the case, was an an- swer to the original biU exhibited by Whit- aey and others on the 23d July, 1892, and likewise to Whitney's bill of February 6, 1893. We regard the action of the chancel- lor on the 22d December, 1891, appointing a receiver on the ex parte application of the directors of the bank, and his subsequent ac- tion in pursuance of that appointment, as utterly void, and of no legal effect. It could be assailed collaterally, and disre- garded with impunity, by anybody. The proposition that an insolvent debtor can take refuge in a chancellor's decree on his or its own application, and obtain prot:caon a-ainst pm-suing creditors, who may be enjoined from pursuing their ordinary remedies, is without foundation. We cannot account for the mistake fallen into in the proceeding of December 22, 1891, and all that was done un- der it, except by supposing that what is pro- vided for by statute in other states was con- sidered admissible in the absence of statute in this state. The suit of Hanover Bank et al. V. Bank of Greenville, instituted July 11, 1892, is evidence of the fact that it was con- sidered necessary to strengthen the grasp of the chancery court on the assets of the bank, and that it was a timely proceeding for the purpose of the complainants in that suit, for it results from what we have said that all that went before was of no legal validity; and, but for that suit, there would have been no barrier to his proper proceeding by any creditor, the injunction issued to the con- trary notwithstanding. But, if the court was not wholly without jurisdiction in that suit, it was inadmissible to inject into it other suits, as sought to be done by the bill of July 23, 1892, and that of February 6, 1893. The question, then, is as to the case of Hanover Bank et al. v. Bank of Greenville, begun by original bill July 11, 1892. Was the action of the court as to that case void? It is to be observed that the bill in that case is not one to secure any priority or advan- tage to the complainant in it, to the injury of other creditors, but it is for aU creditors of the Bank of GreenyiUe, as shown by its prayer for the appointment of a receiver to preserve and collect the assets, and distrib- ute the money among all the creditors, ac- cording to their rights as ascertained. There was no time when Whitney could not join in this suit as a complainant, or assert his right of priority as claimed, if he had chosen 838 RECEIVERS. to do so; hut his persistent effort was to ob- tain priority over other creditors and secure full payment, if the assets were sufiScient; and he was unwilling to make common cause with all creditors, but, asserting the voidness of all the proceedings in the chancery court as to these matters, he sought, as he had a right to do, to obtain precedence as a cred- itor by getting judgment against the bank, and enforcing it. He got judgment, and, if that entitled him to be paid out of the bank's assets in the hands of the receiver, he might have propounded his claim of priority in the chancery court, and demanded Its recogni- tion and payment by an order therefor, but he maintained his attitude of asserting the nullity of all the proceedings in this matter of the chancery court, and attacked them as void; and the maintenance of his bill of February 6, 1893, depends on maintaining the legal proposition on which it rests. His learned counsel has been not only persistent, but consistent, in the many methods em- ployed to obtain for his client an advantage over other creditors. It remains to be stated whether or not he shall succeed in secm-ing the reward of his industry in behalf of his client. By his biU of February 6, 1893, he has pursued the proper course to obtain an adjudication of the question on which the claim made by his client depends. This bill attacks the validity of the proceedings in the chancery court in the case of Hanover Bank et al. V. Bank of Greenville, on the ground that it is not the province of a com-t of chan- cery to dissolve a corporation, or interfere with the exercise of its franchise, or displace its officers, or appoint a receiver, or other- wise exercise jurisdiction over it, at the in- stance of creditors who have no judgment against it. In this case there was no inter- ference by the court with the bank or its franchise, and the performance of the ordi- nary functions of its officers. There was no attempt to dissolve or restrain the corpora- tion. Its directors had voluntarily surren- dered its assets to the keeping of the chan- cellor, and ceased to perform their duties as to them. The chancellor had accepted the trust, and designated a receiver to take charge of these assets, and care for them, and had enjoined all creditors of the bank from suing it, and had proceeded in the ad- ministration of the trust he had accepted, as if there had been a creditors' bill; and, al- though this fell little short of being a mere farce, saved from it only by the seriousness of the performance with judicial gravity, in good faith, it was, nevertheless, the condi- tion in which the complaining creditors found the affairs of their debtor on the 11th July, 1892, when they instituted their suit repre- senting the deplorable conditions existing, and prayed the Interference of the chancery court to take charge of the assets of their debtor, the bank, thus abandoned by it, and siU7rendered to the chancellor, who, though without authority to receive them, had yet taken control of them as if he did have the right to receive them, and had been dealia„' with them accordingly. The bill urged the necessity for the immediate appointment of a receiver for the preservation of the assets of the bank, which had suspended, and ceased to care for them since December 22, 1891. It is true that none of the com- plainants was a judgment creditor of the bank, and none had a specific lien on the assets of the bank. Yet these assets con- stituted a trust fund, in a general sense, for the payment of the creditors of thfi bank, and, having been abandoned by the man- agers of that corporation, and transferred to the chancellor, who was dealing with them as of right, when he had no more legal authority over them than a private individ- ual, who might have found them, if it may be said that, under these circumstances, it was erroneous for the chancellor to entertain the suit of general creditors of the bank, and appoint a receiver, it certainly cannot be maintained that this proceeding was wholly unauthorized and void, so as to be subject to collateral attack for want of ju- risdiction to entertain the suit. Vanfleet, Collat. Attack, § 100; Brown v. Iron Co., 134 U. S. 530, 10 Sup. Ct. 604; Mollen v. Iron Works, 131 U. S. 3.52, 9 Sup. Ct. 781; Graham v. Railroad Co., 102 U. S. 148; Goodman v. Winter, 64 Ala. 410; Barbour v. Bank, 45 Ohio St. 133, 12 N. E. 5; Rouse v. Bank, 46 Ohio St. 493, 22 N. E. 293. Many other books might be referred to in support of the proposition asserted, but, if the doctrine announced did not prevail else- where, there can be no doubt as to the law here since the constitution of 1890. By sec- tion 160 of that instrument, "in all cases where said court [chancery] heretofore ex- ercised jurisdiction, auxiliary to courts of common law, it may exercise such jurisdic- tion to grant the relief sought, although the legal remedy may not have been exhausted, or the legal title established by a suit at law." This is in harmony with the scheme of the constitution reversing the former re- lations of the courts, in which the circuit court possessed general jurisdiction, and was the repository of the power to administer legal remedies, and the chancery court had jurisdiction of certain designated matters, and where there was not a full, adequate, and complete remedy at law. Now the cir- cuit court has original jurisdiction "in all matters, civil and criminal, in this state, not vested by this constitution in some other court." Section 156. A residuary grant is thus made to the circuit court. This man- ifests the policy of enlarging the domain of chancery, and limiting that of the court of law. What may be the effect of the provi- sions mentioned in widening the scope of the courts of chancery cannot be determined now, and is not necessary to be decided; but that they will be influential in considering the class of cases in which chancery courts KEOEIVEES. 839; may entertain Jurisdiction is undeniable. When we look to section 147 of the consti- tution, all doubt as to the proper resolution of the question presented by this case van- ishes. Because of that section, error is not predicable of "any error or mistake as to whether the cause in which it was rendered was of equity or common law jurisdiction." "No judgment or decree in any chancery or circuit court, rendered in a civil cause, shall be reversed or annulled on the ground of want of jurisdiction to render said judg- ment or decree, from any error or mistake as to whether the cause in which it was ren- dered was of equity or common law jurisdic- tion," is the mandate of the fundamental law, and sweeps away all distinction be- tween equity and common-law jurisdiction, after it has been entertained, in a civil cause in the chancery or circuit courts. It may be an action of crim. con., or for libel or slander, or trespass, or any other civil cause in the chancery court, or an equity matter In a court of law; if entertained there, error is not predicable, and the decree or judg- ment shall not be annulled for want of ju- risdiction. The chancellor or circuit judge conclusively and finally settles the question of jurisdiction, as between equity or com- mon-law jurisdiction, of the particular case; for it would be the height of absurdity to hold that, while error may not be afi^med of it, such judgment or decree is void. The reason we do not apply the provisions of the constitution mentioned to the matter of De- cember 22, 1891, and uphold it, and What followed, is that it was not a cause. There was no suit or action, and no parties plaintiff and defendant, but a mere ex parte surren- der by the bank to the chancellor of its af- fairs, for which there is no authority in law; and therefore the constitution does not ap- ply, but relates to a civil cause, as properly imderstood, and not to all that a chancellor or judge may do. The case of Hanover Na- tional Bank et al. v. Bank of Greenville is a suit regularly begim by bill against a de- fendant, and regularly proceeded with to a final decree; and, while we will not be un- derstood to hold that there was even error in the action of the chancellor, — which ques- tion is not before us for decision, — we are sure his action cannot be held void or an- nulled, and that disposes of cases Nos. 7,749 and 7,460. The decree allowing $2,000 for damages in the way of attorney's fees is complained of, but, as the evidence on which the chancellor decided this sum to be reasonable was not put in the record, and is not before us, we cannot disturb the decree for this. The re- sult is that the decree in each of the three cases hereinbefore mentioned must be af- firmed. 840 EECEIVERS. STATE ex rel. IXDEPEXDEXT DIST. TEL. CO. ct al. V. SECOND JUDICIAL DIS- TRICT COURT OF SILVER BOW COUN- IX et al. (39 Pac. 316, 15 Mont. 324.) Supreme Court of Montana. Feb. 18, 1S95. Certiorari by the state of Montana ex rel. tlie Independent District Telegrapli Com- pany, tlie Citizens' District Messenger & Burglar-Alarm Telegrapli Company, and G. A. Lauzier against the Second judicial dis- trict court of the state of Montana in and for the county of Silver Bow, and the judges presiding, to review the action of such court in appointing a receiver for the two corpora- tions. Dismissed. This is a writ of certiorari directed to the district court to review its action in appoint- ing a receiver of the properties of two of the relators, viz. the Independent District Tele- graph Company and the Citizens' District Messenger & Burglar-Alarm Telegraph Com- pany, it being claimed by the relators that the district court acted in that matter with- out jurisdiction. The receiver was appoint- ed in an action entitled as follows: "H. L. Haupt and E. A. Nichols, trustee, Plain- tiffs, V. Independent District Telegraph Com- pany, Citizens' District Messenger & Bur- glar-Alarm Telegraph Company, Fred B. Puddington, H. Sommers, John O'Rourke, Thomas D. Butterfield, G. A. Lauzier, Alex. Johnston, and John Doe (whose true name is unknown). Defendants." The appoint- ment was made upon the complaint in that case and upon affidavits filed. The following facts appear from the complaint: Each of the companies defendant in the case in the district court (and who are re- lators here) is a corporation organized un- der the laws of this state. The plaintiff Haupt is owner of 76 shares of the stock of the Independent Company. The plaintiff Nichols, as trustee, is also owner of 76 shares of said company. The Independent Company is the owner of a franchise from the city of Butte permitting it to carry on the district messenger business, and grant- ing to the company the use of the streets and alleys of the city for the purpose of said business. The Citizens' Company owns a similar franchise. On May 1, 1892, the said two companies entered into an agi-ee- ment by which they should put their re- spective stocks, franchises, and property in- to a common business, to be carried on by officers and agents to be appointed by the two corporations jointly. This agreement was to run for 20 years. All moneys earned should go Into a general fund, and be in the hands of a general treasurer. After paying expenses, a reserve fund of $500 was to accumulate in the hands of the treas- urer. After paying expenses and the ac- cumulation of this reserve, the profits were to be paid by the general treasurer to the respective corporation treasurers In the pro- portion of five-ninths to the Independent Company, and four-ninths to the Citizens' Company, to be distributed by the said re- spective companies as dividends on their Btock. Thereupon the general manager and general treasurer were elected to carry on this joint business. The reserve fund of $500 was accumulated. The business was carried on until June 1, 1893. At that date the stockholders Sommers, Lauzier, Butter- field, and O'Rourke united together and ob- tained a majority of the stock of each com- pany. After obtaining this stock, those stockholders united and conspired together to manage and conduct the combined cor- porations for their individual benefit, and to exclude from the management, profits, and benefits the plaintiffs Haupt and Nich- ols. Since that time said plaintiffs Haupt and Nichols have been entirely excluded from the profits, management, and benefits of said corporations and the combination of the corporations. From the time said as- sociation of the two corporations was form- ed until said Sommers, Lauzier, Butterfield, and O'Rourke obtained control of the said combined business, there was paid to the treasurers of the said corporations $500 a month, to be distributed by them as divi- dends on the stock of the corporations. That, when said Sommers and others ob- tained control of the said associated cor- porations, there was in the hands of the gen- eral treasurer said reserve fund of $500, and also cash in the sum of $1,000, and also interest on the reserve fund of $25. That this total sum of $1,525 was turned over to Lauzier, the general treasurer elected by his friends Sommers, Butterfield, and O'Rourke. That the current expenses which then re- mained unpaid did not exceed $300, and that there was therefore $1,225 available as a dividend to be paid to the stockholders. That, ever since said Sommers and others obtained control as aforesaid, they have re- fused to give the plaintiffs any account of the profits of the association, and have re- fused to pay any dividends on the stock. Plaintiffs allege, on Information and belief, that, since the Sommers control obtained, — that is, since June 1, 1893,— the net profits of the associated corporations have been $500 per month, and that said Sommers, O'Rourke, Butterfield, and Lauzier, instead of paying those profits as dividends, have converted the same to their own use. On February 9, 1894, the officers elected under the Sommers management executed to Fred B. Puddington three promissory notes, pay- able each In nine months, for the sums, re- spectively, of $5,000, $2,000, and $2,000, bear- ing interest at the rate of 1% per cent, per month. That said Sommers management, also as security for said notes, executed to said Puddington a chattel mortgage upon the franchises and all the property of said corporations. That said notes purported to RECEIVERS. 841 be given for the purchase price of a certain franchise granted by the city of Butte to said Puddington,— a franchise to erect and maintain a district messenger and burglar- alarm telegraph system in the city of Butte. That said franchise was granted by the city subject to certain conditions precedent. The complaint then sets out those conditions, and then alleges that none of those conditions were fulfilled. The complaint alleges that said Puddington's franchise is forfeited and void, and was forfeited and void at the time of the pretended sale of the same to the two said companies and the execution of said notes and mortgage. The complaint further states that said Sommers and others, at the time of said pretended sale, weU knew that the Puddington franchise was forfeited and void and was of no value whatever. It is further alleged that said Sommers, Lauzier, Butterfield, and O'Rourke conspired togeth- er to defraud the plaintiffs, and to obtain possession of the plaintiffs' stock, and all in- terest in the Independent Company, and of the said combination of the two companies; and that in fact they executed said mortgage and notes without any consideration, and for the purpose of bringing about the sale of said property and franchises of the said companies, and of foreclosing all interest of the plaintiffs therein. The complaint fur- ther alleges that unless the negotiation of the said notes is restrained, and the notes and mortgage declared fraudultent and void, all the property of the Independent Company will be sold under the mortgage, and plain- tiffs will be deprived of their interests in the said corporation. The complaint prays for several items of relief, among them that said Fred B. Puddington, and all persons claim- ing under him, may be enjoined from nego- tiating said notes or mortgage, or from col- lecting or foreclosing the same, or from inter- fering in any manner with the properties or franchises of the said companies, and that said mortgage and notes be adjudged null and void. In addition to the allegations made in the complaint, a number of affidavits were filed and used on the hearing. One Le Clare de- poses that he heard John O'Rourke and G. A. Lauzier, two of the defendants in the dis- trict court, conversing about the business of the said district messenger companies, and that O'Rourke said "that if they [meaning himself, Butterfield, Lauzier, and Sommers] would stand together, they would do that Dutch outfit up [referring to the Shultzes and the other stockholders]." H. A. Nei- denhofer deposes that from December, 1890, to February, 1892, he was manager of the Independent Company, and that all that time monthly dividends were paid to its stockholders amounting to $750 per month, excepting during the time when there was an opposition company, and that those divi- dends were net profits. This affiant also states that after the combination was made between the two companies they paid divi- dends of $500 a month. Seth B. Smith, an- other affiant, stated that, prior to the time when Sommers and his party obtained con- trol of tlie combined corporations, he (affi- ant) was treasurer of the combination. He testifies in his affidavit rather fully about the formation of the combination between the two companies. He testified that the reserve fund above mentioned, of $500, ac- cumulated in the hands of the treasurer; that finally Sommers and his party bought the affiant's stock, and he retired from the management; that he turned over to the new management aU the funds in three dif- ferent checks of $911.80, $107.94, and $14.25; that at that time there were expenses out- standing and unpaid of only $400; that when he retired he was just preparing and ready to declare a dividend of $500, but he was in- structed by the Sommers party not to pay said dividend; that while affiant was treas- urer of the company he paid dividends to the stockholders of about $500 a month. Carl Shultz and his wife, Mary Shultz, each made an affidavit in which they testify as to Lauzier's and Butterfield's negotiations for the purchase of affiants' stock, and threats that if they did not sell that they (Lauzier and Butterfield) would freeze out said affi- ants. Haupt, one of the plaintiffs, also makes an affidavit that for more than a year after the combination of the two com- panies he received monthly dividends on his stock of 50 cents per share. This affiant also alleges, on information and belief, that the combined corporations keep two sets of books, one of which sets of books shows the actual receipts and disbursements and the net profits of the association, and the other set of books does not show the correct ac- counts of the said corporations, but is kept for the purpose of deceiving and misleading stockholders who have been excluded from the management and participation in the management of said business; that, since the Sommers party obtained control of the business, affiant has received no dividends on his stock, although therj; have been large profits. This affiant then sets forth the ex- ecution of the Puddington notes and mort- gage. He also sets forth the facts showing that the Puddington franchise which he (Pud- dington) purported to sell to the companies for $9,000 was absolutely void and worth- less. One of the employes of the combined corporations testifies to hearing Butterfield say that the business was good and paying as well as any business in town. An answer was filed by the defendants, and also some affidavits. It is not neces- sary to recite the contents of these papers, for on the writ of certiorari in this court the question of the discretion of the lower court in appointing a receiver is not under review. After hearing argument in the district court as recited in its order, the court found that the plaintiffs were entitled to the appoint- 842 RECEIVERS. ment of a receiver pendente lite. It was tlierefore ordered that A. H. Barrett be ap- pointed receiver pendente lite of the fran- chises, plants, business, books, and accounts, and of all other property belongii^g to the said two corporations, for the purpose of managing and conducting said business; and he was by the order authorized and di- rected to take possession of the said prem- ises, franchises, plants, and aJl property, books, and accounts, of any nature whatso- ever, belonging to the said corporations, and to manage and control the same during the pendency of this action, and for that pur- pose to take care of and manage and control the said property and business, and to pay all debts and obligations, and collect all moneys due to the said corporations. It was ordered that the receiver give a bond, with sureties, in the sum of $10,000. Upon the appointment of the receiver, the said G. A. Lauzier made an application to this court upon behalf of himself, and purporting to be also on behalf of the two district telegraph companies, asking for a writ of certiorari to review the action of the district court in ap- pointing a receiver. The application, of course, is made upon the ground that the district court had no jurisdiction to make the appointment. That is the point dis- cussed and decided in the opinion below. Robinson & Wapleton and John W. Cot- ter, for relatoss. Geo. Haldorn and Oliver JI. Hall, for respondents. DE WITT, J. (after stating the facts). The question in this case is simply whether under the facts, as recited In the statement above, the district court had jurisdiction to appoint a receiver. State v. Judge of Second Judicial Dist. Ct, 10 Moat. 401, 25 Pac. 1053. See, also, French Bank Case, 53 Cal., at page 550. There is here no question of the court's dis- cretion under consideration. The relators in this application rely very largely upon the decision in the French Bank Case, but we think that the case at bar is distinguishable from that case in many respects, and, in or- der to make the distinction apparent, we quote as follows from the California case: "Irrespective of the efEect of the fifth sub- division of section 564 of the Code of Civil Procedure, which will be presently consid- ered, there is no jurisdiction vested In courts of equity to appoint a receiver of the prop- erty of a corporation In a suit prosecuted by a private party. This Is only to say that there is no jurisdiction vested In these courts in such a case to dissolve a corporation; for the power of a receiver, when put In motion, of necessity supersedes the corporate power, ft necessarily displaces the corporate manage- ment, and substitutes its own, and assumes, In the language of the order imder review, 'to do all and everything necessary (in the judgment of the receiver, under the advice of the court) to protect the rights of the cred- itors and depositors of said corporation.' This precise question was brought directly under consideration here in the case of Neall v. Hill, 16 Cal. 145, where, in a suit brought by a stockholder, a receiver had been appointed by the district court to take possession of the property of the Gold Hill & Bear River Wa- ter Company, a corporation existing under the laws of this state. The opinion in that case, rendered by Mr. Justice Cope, and con- curred in by the whole court, after referring to the adjudicated cases in England and in this country, uses this language: 'This de- cree, if permitted to stand, must necessarily result in the dissolution of the corporation; and in that event the court will have accom- plished, in an indirect mode, that which, in this proceeding, it had no authority to do directly. It is well settled that a court of equity, as such, has no jurisdiction over cor- porate bodies for the purpose of restraining their operations or winding up their con- cerns. We do not find that any such power has ever been exercised in the absence of a statute conferring the jurisdiction.' Of course, it is not to be doubted that the trus- tees of a corporation, the persons who con- stitute its direction, and from time to time exercise the corporate authority in the man- agement of its affairs, are subject to the con- trol of courts of equity; or, as observed by Chancellor Kent, 'that the persons who from time to time exercise the corporate powers may, in their character of trustees, be ac- countable to this court [the court of chancery] for a fraudulent breach of trust; and,' he adds, 'to this plain and ordinary head of equity the jurisdiction of this court over cor- porations ought to be confined.' Attorney General v. Utica Ins. Co., 2 Johns. Ch. 388. And in exercise of these admitted equity powers of the court, referable to the well- known grounds upon which its jurisdiction ordinarily proceeds, embracing the cogni- zance of fraud, accident, trust, and the like, the rights of natural persons, injured or put at hazard through corporate proceedings un- authorized by law, will find ample protec- tion and redress. But, even in such a pro- ceeding as that, the trustees must, of course, be made parties defendant; and it will be observed, upon looking at the complaint of Gallagher in this view, that it is not sub- stantially sufficient in its scope to put the equity powers of the court in motion for any purpose. The corporation Itself being the sole party defendant, the trustees— those persons upon whom the management of its affairs Is devolved— are not parties, nor is any relief sought against them personally. That there is no inherent power In the dis- trict courts, as being courts of equity, to appoint a receiver in such a case as that presented by the complaint of Gallagher, is therefore apparent, both upon principle and authority." In the California case an important ele- ment in the decision, as it appears, was that RECEIVBKS. 843 the appointment of the receiver acted as a dissolution of the corporation. In the case at bar no such result is intended by the or- der appointing the receiver, or is accom- plished by that order. It is true that the complaint in the case in the district court asks for a dissolution of the corporation, but whether such relief may be granted in that action is not now before us for review. The complaint also asks another relief, as set forth in the statement, namely, that the negotiation of the notes described be re- strained, that the foreclosure of the mort- gage be prohibited, and that the notes and mortgage be declared null and void. While the determination of these matters is pend- ing in the action, the receiver is to act. His appointment is pendente lite only, and he is authorized to do only those acts which are peculiarly pendente lite. Again, in the French Bank Case, one ground of the deci- sion was that the action was against the corporation only (see page 546 of the deci- sion), and not against the malfeasing trus- tees; that is, the "persons upon whom the management of its affairs is devolved" (at page 551). But in the case at bar the man- aging officers of the corporation are joined as defendants, and their unlawful acts are sought to be set aside, and their future wrongful conduct enjoined. The receiver is not to wind up the corporation under his appointment. He Is simply to manage the affairs of the same while charges of the most outrageous frauds by the managers and controllers of the corporation are being investigated in the trial of the action. We are fully aware of the reluctance of courts of equity to interfere by receivership in the management of corporations, or to take that management from trustees elected by the shareholders. It is said in Morawetz on Private Corporations (section 281) as follows: "A court of equity will grant all relief to a shareholder which the nature of his case may require. But it has always been a set- tled principle that no interference with the management of a corporation can be justi- fied, unless such interference is absolutely necessary to the attainment of justice. The reason of this rule is obvious. The officers of a corporation are generally elected by a vote of the shareholders. Every sharehold- er has a voice in their appointment, and may insist that they shall represent the corpora- tion when duly appointed. If an officer is guilty of a breach of duty, he may in many cases be removed by act of the corporation; but no minority of the shareholders have any authority to restrain his action, or re- move him and appoint another officer in his place. Nor can a court of chancery inter- fere at the suit of a portion of the share- holders, and remove an offending officer, or even enjoin him generally from acting for the corporation, unless this be essential to the protection of the corporate rights; as, for example, where the directors have con- spired to defraud the corporation, or have otherwise shown themselves to be totally unfit to be intrusted any longer with the management of the company's affairs. The court must ordinarily confine its remedy to the redress of the specific wrongs which have been charged." But the case before us is not an ordinary one, and perhaps it may be doubted that many such histories of fraud will be found in the conduct of human affairs. It is difficult to imagine a case more thoroughly saturated with fraud than this which was presented to the district court on the application for the appointment of a receiver. Four share- holders of two small corporations, which were paying handsome dividends, obtained con- trol of the majority of the stock, and elected their own officers. These four conspirators, instead of paying $500 a month dividends which the corporations were earning, pro- ceeded to put that money into their own pock- ets. They kept false books to deceive the shareholders. They pretended to buy for the corporations an absolutely worthless fran- chise, when they already owned two good and valid franchises, which were more than ample for the same purpose. They gave the corporations' notes for this worthless fran- chise, and mortgaged all of the property of the corporations for the purpose of having the mortgage foreclosed, and the property of the corporations wiped out. It is needless to enlarge upon these facts. They are all set forth in the statement preceding this opin- ion. This is a story of wrecking and rob- bing that would make a pirate of the Spanish main exclaim, in the language of Lord Clive, "I am surprised at my own moderation." Is not interference here absolutely necessary, as Morawetz says, to the attainment of jus- tice? Again Morawetz remarks, as quoted above, the court of chancery will not interfere at the suit of the shareholders unless this be essential to the protection of the corporate rights. We can scarcely conceive of a case where it would be more essential than it is here, for the protection of the corporate rights, for, if the interference is not had, the corporate property will be swept away from the corporations into the grasp of the conspii-a- tors; and, while the investigation into the acts of the Sommers-O'Rourke party is be- ing made by the covu't, should the court allow this same band of marauders to remain in possession of the corporations and their prop- erty, and continue to convert the assets to their own use, and exercise their own pleas- ure as to the trusts imposed upon them? To allow such a proceeding, it seems to us, would shock the conscience of the most in- different court. OtLT statute provides that "a receiver may be appointed by the court in which an action is pending, or by the judge thereof: * * * Sixth. In all oth- er cases where receivers have heretofore been appointed \>y the usages i.f courts of equity." Code Civ. Proc. § 229. We are of 844 RECEIVERS. opinion that the decisions of the courts sus- tain the doctrine of the powers and the usages of courts of equity in such a case as that which was made in the showing before the district court. We note the following language from a very recent decision (Janu- ary, 1894) of the Kansas supreme court. Wuile the Kansas statute is broader than ours, and the case of In re Lewis, 52 Kan. 660, 35 Pac. 287, is decided largely upon the statute of that state, still the following re- marks of the Kansas court are valuable, as is also the collection of authorities appended to the decision. We extract from the opinion as follows: "By the averments of the peti- tion, it would appear that all the officers of the corporation have conspired together to divert its business to another company, and to absorb its earnings and assets, and ap- propriate the same to their own uses. Un- der those circumstances, it would be useless to apply to the officers to bring an action against themselves, and in such cases the law permits the appointment of a receiver at the instance of a stockholder. In most cases of this character no other adequate remedy exists. The appointment of a re- ceiver is not necessarily a proceeding to dis- solve a coi-poration, nor will it necessarily result in its extinction. The property and assets of the corporation, which are being dis- sipated and fraudulently absorbed, will be preserved and rightfully applieu under the supervision of the court, and may be restored to the officers of the corporation when there has been a change of officers, or when it is deemed prudent and safe to restore the prop- erty and affairs of the corporations to its duly-constituted officers. See First Nat. Bank v. United States Tile Co., 105 Ind. 227, 4 X. E. S46; Pike Co. v. Hammons, 129 Ind. 368, 27 X. B. 487; Order of Iron Hall v. Baker (Ind. Sup.) 33 N. E. 1128; Haywood V. Lumber Co., 04 Wis. 639, 26 N. W. 184; Consolidated Tank-Line Co. v. Kansas City Varnish Co., 43 Fed. 204; Mor. Priv. Corp. § 281; Pom. Eq. Jur. § 1334; High, Rec. § 313; Spel. Priv. Corp. § 1001; 20 Am. & Eng. Enc. Law, 272." We also find it stated in High on Receivers as follows: "It has ah'eady been shown that in most of the states of this country the general jurisdic- tion of courts of equity over corporations has been enlarged to the extent of authorizing the appointment of receivers in behalf of creditors and shareholders." Section 313. The supreme court of Michigan (October, 1892), in Miner v. Ice Co., 93 Mich. 97, 53 N. W. 218, after reviewing the history of a fraud which perhaps is worthy to be ranked with that of the case at bar, says: "The present case furnishes an instance of gross abuse of trust. Must the cestui que trust be committed to the domination of a trustee who has for seven years continued to violate the trust? The law requires of the majority the utmost good faith in the control and management of the corporation as to the minority. It is of the essence of this trust that It shall be so man- aged as to produce for each stockholder the best possible return for his investment. The trustee has so far attsorbed all returns. What is the outlook for the future? This court, In view of the past, can ^ve no assurances. It can make no order that can prevent some other method of bleeding this corporation, if it is allowed to continue. If Lorman be re- moved, who shall take his place? He has the absolute power to determine. Once de- posed, he may elect a dummy to fill his place. There are practically but thi-ee persons con- cerned. Miner, Lorman, and Lorissa Carpen- ter, and she has for seven years, in fraud of complainant's rights, been paid a dividend to secure her acquiescence. Who has any right to complain if ample and complete jus- tice is awarded to Miner ? Who shall be per- mitted to stand between him and an ade- quate remedy? This corporation has utterly failed of its purpose, not because of matters beyond its control, but because of fraudulent mismanagement and misappropriation of its funds. Complainant has a right to insist that it shall not continue as a cloak for a fraud upon him, and shall not longer retain his capital, to be used for the sole advantage of the owner of the majority of the stock, and a court of equity will not so far tolerate such a manifest violation of the rules of nat- ural justice as to deny him the relief to which his situation entitles him. I think a court of equity, under the circumstances of this case, in the exercise of its general equity jurisdiction, has the power to grant to this i complainant ample relief, even to the disso- ' lution of the trust relations. Complainant is therefore entitled to the relief prayed. A receiver will be appointed, and the affairs of this corporation wound up." In the Michi- gan case the decision went to the winding up of the corporation, but in the case before us the receiver is only to hold until the charges of fraud are investigated. The Michigan de- cision Is an able discussion of the powers of the court of equity in this rospect, and a val- uable review of decisions. It may be said here, as was said in the Michigan case, that the corporations have utterly failed of their purpose, not because of matters beyond their control, but because of the fraudulent mis- management and misappropriation of their funds. An equal if not greater mismanage- ment and misappropriation has been done by the officers of the corporations who are here made defendants, and whose acts are sought to be restrained and set aside and declared null and void. We also find the same general subject mentioned in the fol- lowing language in Waterman on the Law of Corporations (volume 2, § 356) : "The pow- er to appoint a receiver is necessarily in- herent in a court which possesses equitable jurisdiction. It is exercised when an estate or fund is in existence, and there is no com- petent person entitled to hold it; or the per- son so entitled Is in the nature of a trustee, RECEIVERS. 845 and is misusing or misapplying the trust; or the property is about to be removed beyond the reach of the court; and, generally, when it is necessary to secure rights and prevent a failure of justice. The property is thus placed m tne hands of an otiicer of the law 1» oraer that it may be under the protecting care and control of the court, and be delivered unim- paired to the persons to whom it is legally ascertained to belong." See, also, Ganger v. Cotton-Press Co., 52 Fed. 611; Mor. Priv. Corp. § 642. Upon questions of equity jurisdiction, aid is always found in the records of the courts of chancery of New Jersey, and from a decision rendered in May, 1894, by that learned court, we quote as follows: "The power of this court to appoint a receiver of a corporation, either because it has no prop- erly constituted governing body, or because there are such dissensions in its governing body as to make it impossible for the corpo- ration to carry on its business with advan- tage to its stockholders, I think must be re- garded as settled; but I think it is equally well settled that this power is subject to cer- tain limitations, namely, it must always be exercised with great caution, and only for such time and to such an extent as may be necessary to preserve the property of the corporation, and protect the rights and inter- ests of its stockholders. As soon as a law- fully constituted and competent governing body comes into existence, whether it is brought into existence by an adjustment of the dissensions or by the election of a new body, and such body is ready to take posses- sion of the property of the coi-poration, and proceed in the proper discharge of its duties, the coiu*t must lift its hand and retire. This is the doctrine, as I understand it, which was laid down by Vice Chancellor Malins in Featherstone v. Cooke, L. R. 16 Eq. 298, and Auxiliary Co. v. Vickers, Id. 303, and which was approved by Chancellor Runyon in Ein- stein V. Rosenfeld, 38 N. J. Eq. 309, and by Chancellor McGill in Archer v. Waterworks Co., 50 N. J. Eq. 33, 24 AtL 508." Edison v. Phonograph Co., 29 Atl. 197. It is true, of course, that the power must be exercised with great caution, but we are of the opin- ion that the most scrupulous caution would not cause a court to hesitate in the matter which was before the district court. Further- more, the district court did not go any fur- ther in the appointment than was necessary to preserve the property of the corporations, and protect the rights and interests of its stockholders, as was stated in the New Jer- sey case. It does not seem necessary to go further in this discussion. The facts of this case will not afford a precedent in the fu- ture for any imprudent or unauthorized ap- pointment of a receiver for coriporatlons, or the unwise withdrawal of the business of a corporation from the management of its duly- elected and lawfully acting trustees. The case is a precedent only as to its own facts. Here the objects of the existence, and, in- deed, the practical existence itself, of the corporations, are being totally destroyed by the unlawful (not to use a stronger term) acts of its managers; and one object, at least, of the action in the district court, is to set aside and prevent such unlawful acts of such man- agers, and the action itself is against such unlawfully acting persons. If they are al- lowed to go on in their course which they are pursuing, the corporations are to be to- tally wrecked, their funds are to be embez- zled, and their property is to be taken from them by a fraudulent conspiracy of the man- agers, whose position is one of trust towards the plaintiffs in the action in the district court. Under such a vigorous showing of facts, we believe that the decisions of the courts of equity uphold the powers and usages of those courts to interfere by a re- ceivership. See the cases cited in this opin- ion and the cases referred to in those cita- tions. We are therefore of the opinion that the writ of certiorari must be dismissed, and it is so ordered. Dismissed. PEMBERTON, C. J., and HUNT, J., con- cur. 846 RECEIVERS. MERCHAXTS' & MANUFACTURERS' NAT. BANK OP DETROIT v. KENT CIRCUIT JUDGE. (5 N. W. 627, 43 Mich. 292.) Supreme Court of Michigan. April 14, 1880. Mandamus. Morris & Uhl, for the writ. Jacob Ferris and Blair, Kingsley & Kleinhaus, against. COOLEY, J. The application for a man- damus in this case brings under review ques- tions of the validity and propriety of the or- der appointing a receiver. The bill was filed to foreclose a chattel mortgage. The mort- gage was by Hebbard & Graff, merchant millers of Grand Rapids, to PMlip M. Graff, and bore date March 17, 1880. The purpose was to secure the mortgagee for having be- come accommodation indorser for the mortga- gors on a large amount of commercial paper. The mortgage covered "all the flour, wheat, corn, oats, bran and feed owned by the par- ties of the first part, and situated in the city of Grand Rapids, Michigan, whether on the track, or in the mills or warehouses, or In the elevator at Berlin, Ottawa county, Michi- gan; all the barrels, sacks, bags, tools and office furniture and fixtures, including safes, situated in and about and used in connection with their two mills, being three large teams and larries, two pairs of large sleighs and one light delivery wagon, and the blankets used with said teams. Also the engine and boiler used in the Valley City Mills, and put in by Hebbard & Graff since their lease of the same, and the shafting and pulleys used by them in connecting the engine with the mill and machinery. Also all the wheat, corn and oats which may be purchased by the parties of the first part and delivered to them in the city of Grand Rapids, either on the track, in store or in their mills, and all flour, feed and bran manufactured by them while any portion of the debts secured by this mort- gage remains unpaid." The mortgage reserved to the mortgagor the privilege of making sales in the ordinary course of their business, and provided that "in case of the non-payment of the said notes, or any of them, at maturity, by the party of the flrst part, or if the party of the second part shall at any time deem himself insecure, he, * * * whether the party of the second part shall have paid anything on said notes or not, is hereby authorized to enter upon the premises of said party of the first part, or any place or places where the said goods and chat- tels, or any part or portion thereof, may be, and take possession thereof, and sell and dis- pose of the same at private sale or public auction, * * * whether any of such notes have matured or not, and apply the proceeds thereof to the payment of said notes as fast as they mature. " A bill to foreclose this mortgage was filed the day after its date. It was alleged there- in that one of the notes, the payment of which was secured by the mortgage, was long past due, and that another became due March 17, 1880, and another March 18, the day the bill was filed, and both remain unpaid, and that by reason thereof the whole sum secured by the mortgage, amounting to $38,800, has become due and payable immediately; that by reason of disastrous speculations the mort- gagors have become insolvent, and have transferred to complainant the miU property whereon they conducted their business; that the wheat and other unground grain describ- ed in the mortgage cannot be profitably sold and converted into money except after being ground; that to manufacture said grain into flour, and other proper products, will yield larger returns, and be more for the interest of all parties concerned, than to sell or dis- pose of the same in an unmanufactured state; that the total value of all the mortgaged prop- erty will not exceed $40,000, and if disposed of at forced or auction sale will not yield more than $30,000, or thereabouts. The bill prays for the appointment of a receiver, and nominates the law partner of the solicitor for complainant as a suitable person to be ap- pointed. No persons were made parties defendant to this bill except the mortgagors. Late in the evening of March 18th, and before the bill had been filed, it was presented to the cir- cuit judge, at his dweUing-house, and an ap- plication made for the appointment of a re- ceiver as prayed. The mortgagors appeared at the same time, by a solicitor of the court, and consented to the appointment. The cir- cuit judge, apparently looking upon the case as an amicable proceeding. In which all par- ties concerned were working in harmony to preserve and dispose of the property for the benefit of all, made the appointment prayed for. The appointment purports to be one made in open court, but the court was not in session at the time, and the bill not being then filed, there was no cause pending. The order of appointment directed the receiver to proceed to manufacture the grain mortgaged into flour and other proper products, and to sell in the usual course of trade and on credit It soon appeared that the proceeding was far from being an amicable one, except so far as the mortgagors and mortgagee were concerned. At the very time the mortgagee was having his bill for foreclosure prepared and obtaining his order for a receiver, other parties were suing out writs of replevin for some portions of the property. One of these parties was William B. Ledyard, by virtue of whose writ the wheat in the Crescent Mills, previously operated by the mortgagors, was seized an hour or so before the order appointing a receiver was made. Another was by Euphrasia Aldrich, who replevied a quantity of wheat at or about the time when the order was made. Another was by the Merchants' & Manufacturers' Bank of De- RECEIVERS. 847 troit. The circuit court appears to liave come to the conclusion that the writ of this plain- tiff was not served until the receiver had be- come possessed of the property in dispute, which could not have heen earlier than about 10 o'clock on the night of March 18th, that being the hour when his bond as received was filed. On March 19, 1880, the receiver petitioned the circuit court in chancery for an order restraining the several plaintiffs in the re- plevin suits from proceeding further therein. A hearing was had on this petition, and its prayer was granted so far as the suit by the bank was concerned, and denied as to the other suits. The bank, however, was grant- ed leave to bring an action of trover to re- cover the value of the property described in its writs. The receiver was, by the same or- der, required to deposit in bank the net pro- ceeds of sales of the property made by him. Both the receiver and the bank appealed from this order. 1. The appeal of the receiver was from those parts of the order which refused an in- junction against the Ledyard & Aldrich suits. The order in that regard was not a "final or- der," and was therefore not appealable under the statute. Wing v. Warner, 2 Doug. 288; Caswell V. Comstock, 6 Mich. 391; Boing v. Coats, 17 Mich. 411; Spencer v. Steams, 28 Mich. 463. These appeals must therefore be dismissed. 2. The order, in so far as it enjoined the bank from interfering by suit with the pos- session of property to which the bank claim- ed title, inasmuch as it finally took from the bank a legal right, was in the nature of a final order, and was appealable. Lewis v. Campau, 14 Mich. 458; Barry v. Briggs, 22 Mich. 201. 3. The order appointing a receiver was void, for the reason that it was made when there was no suit pending. It is perhaps fortunate for all parties interested that such was the fact, inasmuch as, if it had been legally valid, the appointment, though of a person eminently fit for the position, but for the relations to the litigation through his law partner, must necessarily at some time have been set aside, and the longer it should stand the greater must have been the prob- ability of confusion in the rights of the par- ties growing out of his proceedings, and of unnecessary costs and expenses to be borne by some one or more of the claimants to the property. In Ex parte Pinche, 2 Meriv. 452, the lord chancellor refused to appoint the solicitor to the commission as receiver of a lunatic's estate, though it was stated that no one else would accept the office. The ground of the refusal was that it might be- come the duty of the solicitor himself to call the receiver to account. So in Stone v. Wish- art, 2 Madd. 63, where the parties united in a request that the next friend of infant com- plainants be appointed receiver, the vice chancellor said: "I cannot accede to this mo- tion, although it is consented to. It is the duty of the next friend to these infants to watch the accounts and conduct of the re- ceiver; to be control over him. The two characters cannot be united, they are incon- sistent." AVe cannot shut our eyes to the fact that the law partner of the solicitor is presump- tively as much interested in the proceedings as the solicitor himself, and it would be pe- culiarly objectionable that he should act in a position requiring impartiality in a case like this, where the parties to the suit are manifestly acting in concert, and adversely to the interests of other persons, who cannot watch their proceedings. The practical result would be that the receiver would supervise his own accounts. Garland v. Garland, 2 Ves. 137. The practice in equity does .not even permit the receiver to employ a solicitor in the case as his own counsel, lest it might disarm his vigilance in watching the receiv- er's proceedings. Ryckman v. Parkins, 5 Paige, 548; Adams v. Woods, 8 Cal. 306. This rule may, no doubt, be departed from by consent of all parties concerned, but this must mean by consent of all parties concern- ed in the results of the receivership, and one not a party to the suit may be as much con- cerned in these as the persons who are par- ties. The present suit is an illustration. 4. The order appealed from by the bank was improper, in that it forbade a person not a party to the suit from testing, in the cus- tomary common law method, the title which is asserted to specific property, and in so do- ing stretched unnecessarily, improperly and oppressively the power of the court of equity in abridgment of the jurisdiction of the court of law. There may be cases in which it would be proper for a court of equity, by means of a receivership, to draw to itself the jurisdiction to try disputed titles to prop- erty; but the jurisdiction to do so is excep- tional, and must be supported by circumstan- ces which render the common law remedies inadequate, or for some reason unfit and un- suitable in the particular case. No such cir- cumstances appear or are suggested here. It was proper and just that the bank be allow- ed to go on with the suit in replevin, if that seemed most for its interest, and improper and unjust that it should be restricted to a suit in trover, which would be, in effect, for net proceeds only, after the costs of a receiv- ership, which the bank did not desire or as- sent to, had been deducted. If the property belonged to the bank the injustice of requir- ing the owner to submit to such management, manufacture and sale of it as another person might think expedient, and to recover the net proceeds only after the costs of a receivership in a suit between other parties had been wholly or in part deducted, would be too manifest to require more than mere mention. 5. It cannot escape attention that the whole scheme of giving a chattel mortgage which would be immediately due, filing a bill 848 RECBIVEBS. in equity upon it at once, and obtaining the appointment of a receiver, who should talie possession of the property to the exclusion of other creditors, and go on with the business as the mortgagors themselves might have done, and as the order In this case contem- plated, was an attempt, by means of the ma- chinery of the law, to accomplish indirectly what, without calling in the aid of the court, could not be legally done at all. We do not enlarge upon this aspect of the case, as It is not necessary here; but It must be manifest that the parties were creating a trust by means of the mortgage and of a consent order, which could not stand the test of the law, if made by an assignment. It resembles very closely an attempt, by cir- cuitous methods, to avoid a legal principle. The order which is appealed from by the bank must be reversed, with costs against the complainant in the suit. What has been said will render unnecessary any award of the writ of mandamus. The other justices concurred. RECEIVERS, 849 MERCANTILE TRUST CO. OF NEW YORK V. MISSOURI, K. & T. RY. CO. et al. (36 Fed. 221.) Circuit Court, D. Kansas. Oct. 8, 1888. In equity. Bill for foreclosure and appoint- ment of a receiver. Bill by the Mercantile Trust Company of New York, trustee for certain bondholders se- cured by a mortgage on the property of the Missouri, Kansas & Texas Railway Company, against said company and the Missotu'i Pacific Railway Company, to foreclose the mortgage, and appoint a receiver. Alexander & Green, Thos. H. Hubbard, John J. McCook, and William N. Cromwell, for complainant. Simon Sterne, Charles F. Beach, Jr., James O. Broadhead, and L. B. Wheat, for defendants. BREWER, J. (orally). In this case, I have had no opportunity to write out the conclusions to which I have come, nor, for that matter, to arrange my thoughts in any very orderly and systematic manner. I should have pre- ferred to take a little further time to put in better shape what I have to say; yet, aware of the fact that many of you gentlemen are from a distance, and are anxious to return home, I concluded to waive the matter of form and order, and state, in a crude way, my conclusions. Nor are these conclusions reach- ed simply from Information developed in these few days. This bill was presented to me more than three months ago. I have had a copy of it in my possession since, and have taken fre- quent occasions to examine the stipulations of this mortgage. Further than that, the news- papers have been full of many of the features of this controversy; and the property itself, being a property starting in my own state, and growing up there, is, neither In itself nor its history, a stranger. So that many of the facts which have been presented and discussed are facts which were not new. This bill was filed a few days after default in the payment of interest, Jmie last. And the first question— a vital question— is whether this suit was prematurely brought; for, being a suit to foreclose, and not one for the preser- vation of the property. If prematurely brought, it would finally have to be dismissed, and a receiver ought not to be appointed ad Interim. The ground upon which the claim rests is the fact that this mortgage or deed of trust re- quires a six-months delay after the default be- fore certain proceedings— and foreclosure, it is claimed, is one — are permissible. The second article provides for entry by the trustee, but by its terms such entry cannot be till six months after default and demand of payment. The third article likewise authorizes sale by advertisement, and that is equally limited. At the close of that article follows this paragraph: "This provision is cumulative to the ordinary remedies by foreclosure in the courts; and the trustee herein, or Its successor or success- HUTCH.& BUNK-EQ.— 54 ors in this trust, upon default being made as aforesaid, may, at its discretion, and upon the written request of the bondholders of a ma- jority in value of said bonds then unpaid, shall," etc. Now, the contention is that those words, "upon default being made as aforesaid," being in the last part of this article, by fair con- struction refer back to the entire provision in the first part in respect to default, and include both the happening and continuance of the de- fault. The argument rests merely on the force of the last two words, "as aforesaid," and is forcibly put by counsel. That is the real ques- tion in the case, for, if this last paragraph in article 3 were omitted, the decision of the supreme court in the case of Railroad Co. v. Posdick, 106 U. S. 47, 1 Sup. Ct. 10, would leave no question. In that case, as appears from the statement, there were in the mort- gage stipulations providing for entry and sale by advertisement six months after default. The validity of those provisions was recogniz- ed by the supreme court; but it held that, notwithstanding this, if by other stipulations in the mortgage it was a security for the pay- ment of interest as it semi-annually accrued, as well as of the principal, the trustee, or, on his failure to act, any bondholder, might, on the non-payment of interest, bring suit and foreclose. Turning to this mortgage, I find the same provision. It is given as security for the payment of the interest as well as of the principal. By article 2 possession is se- cured to the railroad company,— the mortgagor, —until default be made in the payment of principal pr interest. Unquestionably the right of action at law on the coupon exists. Unquestionably, if articles 3 and 4 were omit- ted, the mere fact that this property was by the mortgage pledged as security for the pay- ment of coupons would permit the coupon- holder to come into a court of equity and en- force that pledge. It is insisted that these articles, not exclud- ing the Jurisdiction of courts of law, not de- barring a party from his right of action upon the coupons, deprive him of a present right of action upon the mortgage by a suit in equity to enforce that pledge. Language requiring such construction should be clear. If the par- ties—and it is to be assumed that they who drafted this mortgage or deed of trust were competent for that business— contemplated not merely that no entry should be made, no sale under the power until the lapse of six months after default, but also that the coupon-holder, having his right of action at law on the cou- pons, should not have a right of action in equity, such purpose, it seems to me, would naturally have been expressed in clear and un- mistakable language, and not in that of doubt- ful interpretation. In every other place that I have been able to find in this mortgage, where a right rests upon the continuance of the default, and that appears in articles prior and subsequent to this paragraph, the lan- guage is express: "In case default shaU be 850 EECEIVBRS, made in payment of Interest, and shall con- tinue for six months." Now, if it was intend- ed to limit the jurisdiction of a court of equity until after the lapse of six months from the time of the happening of the default, it seems to me that the draughtsman would have pla- cod the stipulation therefor in a separate ar- ticle, and would have made its meaning so plain that there would be no question. We aU know in the preparation of instruments how common the expressions "said" or "as afore- said" are used without any clear or definite intent. They are words which we use, not thoughtlessly, but carelessly; and although they are used here, yet as it is also found that the continuance of the default is not men- tioned, it seems to me it is giving to those words an enlarged and unnecessary force to hold that they broaden the expression "mak- ing default" into "making and continuing de- fault," as expressed in the first part of the article. Nor is this a mere resting upon the language of the paragraph. It opens with the distinct announcement that these special pro- visions in respect to entry and sale under a power are cumulative to the ordinary remedies by foreclosure; contemplating, in its opening words, a proceeding in a court of equity in any case of default. Nor is it strange that there should be special limitations upon the two matters provided in articles 2 and 3, and none about proceedings In a court of equity. An entry is a speedy remedy; It runs to the corpus of the property; it takes instant hold of it, and takes it away from the mortgagor. The parties may well have contemplated that, if there was a temporary default, there should be no such speedy interference and summary seizure by the mortgagee. So a sale by ad- vertisement — in this case an advertisement of eight weeks — is speedy and summary; and if, upon the happening of a temporary default, the trustee at the instance of a single coupon- holder should thus advertise and sell the prop- erty, it is obvious that great wrong might be done; and six months' delay is a very natural provision. But proceedings in a court of eq- uity are not thus hasty. They are not within the control of any coupon-holder or any trustee. They stand advanced or delayed, as in the judgment of the chancellor the best interests of the property require. If it appears in any case that a coupon-holder, from improper mo- tives, or from a simple greed for his money, is willing to wreck a large property, and comes uito a court of equity upon the happen- ing of a temporary default, it goes without saying that the chancellor holds his hands un- til it becomes apparent that the property as a whole cannot be saved to its owners. Inas- much as these proceedings stand upon the dis- cretion of a court of equity, it is not strange that the parties were willing to leave to the bondholders and coupon-holders an open door into such a court. They left an open door into a court at law, and there is at least equal chance, if not greater, that the freer motions of a court of equity will afford as full pro- tection to the mortgagor. These considera- tions, perhaps not very clearly expressed, are the reasons which have led me to hold that this case is within the rule laid down In 106 U. S. 47, 1 Sup. Ct. 10, supra, and that this suit is not prematurely brought. That only passes from one trouble to an- other. The right to foreclose does not cari-y with it the right to a receiver. There are many considerations that bear upon that question. Every ease, of course, stands on its own merits. It is difficult to formulate any rule which, briefly stated, will control in all cases. It should appear that there is some danger to the property; that Its pro- tection. Its preservation, the interests of the various holders, require possession by the com't before a receiver should be appointed. It does not go as a matter of course; and yet it is not a matter that a court can refuse simply because it is an annoyance. If, look- ing at the situation of the litigating parties, and of the property, with the prospects of the future, it should appear to a court that they would be benefited, that their interests would be subserved by the appointment of a receiver, why, no court— although a matter resting, as it is said, in its discretion— could refuse to make the appointment. I shall not go over all the matters that have been discussed. I want to suggest some things that have impressed me. Of course, so far as the adequacy of this security, so far as the solvency of the corporation, is concerned, so far as the question whether this is a temporary embarrassment or per- manent, these facts stand out confessed, in- disputable at least. It has ' ceased to pay interest on its mortgages; one, two, three, and four have defaulted. The amount of that interest runs considerably over a mil- lion; and the payment of interest on the large mortgage comes due in two months. The business of this year from the 1st of June to the 1st of September, as shown by the statistics, is decreasing; from the 1st of September to the 14th there was a slight increase. The road is not along the main highway of travel eastward and westward. It is one running north and south, along which business to-day is, as we all in the west know, comparatively in Its inception. It crosses for two or three hundred miles a territory which is occupied by Indians, and furnishes little business. It hag been for years the only road that traversed that ter- ritory. Within the last year or two, two more roads have crossed, and a third is seeking to cross. Competition between these roads traversing that territory, and bringing Texas and its commerce into relations with Kansas, Missouri, and the north, as a matter of necessity, it seems to me, must tend against the increase of earnings. The report of the committee — ^a committee appointed by the company— tends to shov^ that the payment of interest which has been made prior to this year, has been largely at RECEIVERS. 851 the expense of the proper repairs and im- provement of the road. I do not mean to say that all this is absolutely conclusive on the question, but these are matters which have forced themselves upon my mind. While it is true that— the road paying no in- terest since the 1st of June— the revenues have diminished by four or five hundred thousand, the amount which is due as claim- ed to the Missouri Pacific for advancements, yet the earnings must increase largely be- fore these back interests can be met, to say nothing of future Interests speedily matur- ing. That a road thus situated, some 1,600 miles in length, is burdened with a mort- gage of $28,000 a mile, carries with it, to my mind, very strong evidence that there is no reasonable probability of its ever being kept in proper condition when paying the interest on such a debt. ITie only way in which any mortgagee can get possession of the rents and profits is through a receiver. The law of Kansas forbids any other rem- edy upon a mortgage than a foreclosure in the court. No possession could be had under article 2. No sale could be made under the power attempted to be given in article 3. The sole remedy is by foreclosure. Unless a receiver is appointed, the rents and profits pass into the possession of the mortgagor, to be expended by it according to its best judgment. That is affirmed by the three cases of Railroad Co. v. Cowdrey, 11 Wall. 463; Gilman v. Telegraph Co., 91 U. S. 603; and Dow v. Railway Co., 124 U. S. 652, 8 Sup. Ct. 673. Not merely that; suppose this foreclosure proceeding should pass to a decree, and the defendant appeal, its bond on appeal would be no protection to the mortgagee in respect to the rents and profits. That is settled in the case ot Kountze v. Hotel Co., 107 U. S. 378, 2 Sup. Ct. 911. So that this litigation might pro- ceed and continue for a long time in this and in the supreme court, without ever giv- ing the mortgagee a hold upon the profits, unless a receiver is appointed. This mort- gage is a second mortgage on a large part of the road. As such mortgagee it has, more than any other party, an interest in reaching after and securing those rents and profits. The first mortgagee, having a limited amount upon the part of the road upon which its mortgage rests, may feel safe; for his prin- cipal and interest must be paid before the second mortgagee can come in. So that the complainant has a special interest in reach- ing for, and as soon as possible obtaining jiossession of, the surplus earnings. More than that, it is perfectly obvious that the real owners of this property are not in har- mony. The stock controls the road, but with .1:45,000,000 of bonded indebtedness— $28,000 a mile — on the road, the real owners are the bondholders, and that they are not agreed In respect to what shall be done with this prop- erty is, I think, confessed. For years the property was in the management of a cer- tain interest. That interest was removed last spring from the control. It was not removed so long as the road was apparently prosperous, and paying its coupons. When adversity threatened it, as was natural, those who held interests to the road were not sat~ isfied with the management, and sought con- trol. If these gentlemen now in control could make it a promptly paying road with- in a reasonable time, why, it might be ex- pected, according to the laws of human na- ture, that they would remain in control; but we all know how, when one fails and con- tinues to fail, all who are interested are prone to lay the responsibility upon him, and to seek a change. And there is no cer- tainty that another year different interests might not combine, and so the road be sub- ject to different control. At any rate, it is very evident that there is no harmony— no unity of purpose — between those who are the real owners. Now, if it were a partnership, and it was apparent to a court that the part- ners had got into a quarrel, the very fact of their quarrel would be a strong reason why it should take possession of the prop- erty. Of course that consideration has not so much force in respect to a corporation, but it strengthens other considerations. Those are the principal reasons that have operated on my mind,— the default in inter- est, the fact that the rents and profits can only be appropriated in this way, the de- creasing revenues, the recent construction of parallel roads, the fact that it passes through such a portion of territory so unprofitable, the condition of the road as developed by this report of the committee, and the conflict be- tween various parties having real and sub- stantial interests. Much as I should be glad to be free from the annoyance of a receiver- ship,— and I know something about it,— it seems to me I should be delinquent if I re- fused this application. There are some minor matters that I might refer to, yet, perhaps, they would not strengthen anything I have said. There is one matter, however, I must no- tice, — the suggestion of the Missouri Pacific that it could defeat this application, and that it was here in the attitude of a party to consent upon the condition that the balance due it was properly protected, and that no order should be made in reference to the possession by the receiver of the Interna- tional & Great Northern Railroad or its stock. If I understood the situation to be that this application depended on the con sent of the lessee, the Missouri Pacific, and its consent was tendered upon any such con- dition as that, there would be no receiver appointed. The rights of the lessee, as 1 look upon these two instruments, are sub- ordinate to the rights of the mortgagee, and it is the mortgagee whose application is sus- tained, and all parties having claims of any kind must depend upon the inherent equity of their claims. So far as the stock in the 852 RECEIVERS. International & Great Northern is concerned, as well as some other assets, they are, as stated, now under pledge, and in the posses- sion of this complainant; perhaps, also, at- tached by certain garnishment proceedings. I thinli the interests of the mortgagor require that there should go an order upon the com- plainant not to part with that possession, except in obedience, of course, to the process of the courts in New York, until the ulti- mate rights of the parties are determined. As to the possession of the International . & Great Northern, I doubt whether it is with- in the province of this court to determine that question. It is a separate road, whose stock, I believe, in part has become the property of the Missouri, Kansas & Texas corporation; but it is wholly situated in an- other circuit, and certainly at present I am not prepared to say that this court would have a right to determine whether a receiver of the Missouri, Kansas & Texas should take possession of that separate road. It may be that is a question which will have to be de- termined by the judge of that circuit. At any rate, I should not at present, without further consideration, perhaps consultation with Judge Pardee, feel like making any or- der in respect to it. It is a matter in which I shall be glad to hear counsel hereafter upon, and perhaps try and arrange ^ath Judge Pardee jointly to hear them as soon as practical. That, 1 think, is about all I have to say in reference to this matter, except as to the receiver. If parties agree upon a re- ceiver, of course I shall appoint whoever you agree upon. If not, I will hear any sugges- tions from any of the parties in Interest, and reasons for or against any person to be nam- ed by one side or the other. RECEIVEES. 853 BELDING et al. v. MELOCHE et al. (71 N. W. 592, 113 Mich. 223.) Supreme Court of Michigan. May 2S, 1897. Appeal from circuit court, Ionia county, in chancery; Frank D. M. Davis, Judge. Suit by Alvah N. Balding and another against Albert F. Meloche and others. From a decree for complainants, defendants Meloche appeal. Affirmed. R. A. Hawley, for appellants. McGarry & Nichols, for appellees. HOOKER, J. On May 2, 1892, the com- plainants sold to the Melodies (two of the de- fendants), upon contract, a business block in the village of Belding, at an agreed price of $36,000, to be paid in 120 monthly install- ments of $300, without Interest. The contract does not expressly state that the vendees shall be entitled to possession, but does provide that, in case of default, the vendors may "elect to consider themselves released and discharged of and from any and all liability in any of the covenants specified to be done and performed by tbem, and all improvements made by the said parties of the second part shall be deem- ed forfeited as stipulated damages for the non- fulfillment of this contract; and said parties of the first part, or their authorized agent, may, without notice to quit or demand of pos- session, re-enter into and repossess the said premises, and the said parties of the second part, and each and every occupant hired by, through, or under them, to remove and put out; it being expressly understood that such failure of said second parties shall forfeit all claim, either in law or in equity, whicli might otherwise exist on the provisions of this con- tract in favor of the said parties of the second part." The vendees made default in the pay- ments, and this bill of complaint was filed to foreclose their rights under the contract. At this time portions of the building T^ere rented, and the bill prayed the appointment of a re- ceiver, to receive the rents and profits of said premises, and such receiver was appointed, and has received said rents. A decree of fore- closure and sale was made, and, after the sale occurred, an order of confirmation was entered. No appeal was taken from any of the proceedings thus far. Subsequently, the com- plainants filed their petition, alleging that on March 9, 1896, a decree was entered for the complainants for the sum of $6,172.44 and costs, making a total of $6,648.30; that, at a sale of the interest of the Meloches in said premises, the complainants purchased the same for $3,000, and that there was a de- ficiency of $3,648.30; that the final account of the receiver, duly filed, shows a balance in his hands at the date of the report of $2,349.36, which, after the jdlowance of compensation to and disbursements by the receiver, wouI(} leave $1,856.98, which the petition prays may be applied upon the deficiency, and that it be declared that the remaining deficiency consti- tute a personal judgment, upon which execu- tion may issue against the Meloches. A de- cree was made in accordance with the prayer of the petition, and the defendants Meloche ap- pealed. It is claimed— First, that the court had no authority to appoint a receiver to take the rents during the foreclosure, and that the mon- eys collected should not be turned over to the complainants; second, that there should be no decree for a deficiency against the appellants, because, upon tbe trial of the case, counsel for complainant stated that they did not care to ask a personal decree. Counsel base their first contention upon a class of cases which hold that, under How. Ann. St. § 7847, the mortgagee is not entitled to the profits of land during foreclosure. See Wagar v. Stone, 36 Mich. 366. In that case the court said: "The mortgagor is entitled to the possession during the proceedings taken to foreclose the mortgage, and until a sale has been made and the title of the purchaser has become absolute ; and, until the title has become absolute upon a foreclosure of the mortgage, an action of ejectment cannot be maintained by the mortgagee, his assigns or representa- tives, to recover possession of the mortgaged premises. 2 Comp. Laws, § 6263. Since the passage of this act, which prevents the mort- gagee from obtaining possession until he has acquired an absolute title to the mortgaged premises, the mortgage binds only the lands. The rents and profits of the land do not enter into or form any part of the security. At the time of giving the security, both parties un- derstand that the mortgagor will, and that the mortgagee will not, be entitled to the rents, issues, or profits of the mortgaged premises until the title shall have become absolute up- on a foreclosure of the mortgage. Until the happening of this event, the mortgagor has a clear right to the possession and to the income which he may derive therefrom; and the leg- islature, by the passage of this statute, con- templated that he should have such possession and income to aid him in paying the debt. It would be a novel doctrine to hold that the mortgagee had a right to the profits incident to ownership, and yet that he had neither a legal title, nor right to possession. The legislature, in depriving him of the means of enforcing possession, intended thereby also to cut off and deprive him of all rights which he could have acquired in case he obtained possession before acquiring an absolute title. To deprive him of this particular remedy, and yet allow him in some other proceedings to, in effect, arrive at the same result, would be but a mean- ingless proceeding, and would not be securing to the mortgagor those substantial rights which it was the evident intent he should have. We do not overlook the fact that a contrary doctrine has been held elsewhere un- der a similar statute. We cannot avoid think- ing, however, that for us to so hold would be but a mere evasion of our statute." In Michi- gan Trust Co. V. Lansing Lumber Co., 103 s:)4 RECEIVERS. Mich. 393, 402, 61 N. W. 668, we recognized the validity of a contract whereby possession by the mortgagee may precede foreclosure; and the case of Wagar v. Stone shows that in other states possession may be given to receiv- ers pending foreclosure of mortgages, and the decision in that case is made to rest upon the st.atute. The statute does not in terms apply to equitable mortgages if we should hold this to be one. In the Wagar Case the court said that the object of the legislature was that the mortgagor "should have possession to aid him in paying the debt"; but in this case the ven- dee seeks to avoid the payment of the debt, and to appropriate the fund In the hands of the receiver, to the exclusion of the complainants' just claim. Again, it Is contended that the complainants are not entitled to a personal decree for the deficiency. This claim seems to rest upon an alleged waiver or estoppel, by what occurred upon the hearing of the original case. It does not appear to have been set up In the answer to the petition, and Is said not to have been claimed In the circuit court upon the hearing. We do not discover that this statement Is dis- puted. Under these circumstances, we thinlj the order of the circuit court in chancery should be aflirmed, with costs; and it is so or- dered. The other justices concurred. RECEIVERS. 855 MARSHALL & ILLSLET BANK v. CADY et al. (77 N. W. 831, 75 Minn. 241.) Supreme Court of Minnesota, Jan. 9, 1899. Appeal from district court, Ramsey county; Charles E. Otis, Judge. Action by the Marshall & lUsley Bank against Franls M. Cady and others. Judg- ment for plaintiff. Defendant Cady appeals. Affirmed. Chas. J. Berryhill, for appellant. William G. White, for respondent. PER CURIAM. Assuming, without decid- ing, that an order appointing a receiver in fore- closure during the pendency of the action can be reviewed on appeal from the final judgment or decree, we are of opinion that, while the plaintiff did not present a very strong case, yet we could not hold that the court abused its discretion in appointing a temporary receiver. The affidavits presented would have justified the court in finding that the mortgaged prem- ises were inadequate security; that the mort- gagor was insolvent; that four years' taxes were unpaid and delinquent, for three of which the premises had been sold, and unredeemed; that portions of the building on the premises were somewhat out of repair, and that repairs were necessary for the full preservation of the property; and that the mortgagor was receiv- ing rent for part of the premises, which he was not applying to the payment of taxes or the maliing of repairs. There was some evidence that the mortgagor was using a part of the building as his sleeping apartments, and, hence, that the premises were his homestead. While a court should ordinarily require a somewhat stronger showing for the appointment of a re- ceiver of the mortgagor's homestead than in the case of other property, yet, when a debtor mortgages his homestead, he subjects the prop- erty to all the ordinary legal and equitable rights of a mortgagee, among which is the right to have a receiver appointed when neces- sary to prevent waste or to preserve the prop- erty. The same facts which would justify the court in appointing a receiver during the pend- ency of the action would justify it in providing in the final judgment that the receivership should be continued. As there is neither a "case" nor bill of exceptions, the question whether the evidence justified the findings is not presented. The findings are presumed to have been based upon the evidence introduced on the trial, and not upon the affidavits pre- sented on the motion for the appointment of a receiver during the pendency of the action. The judgment is silent as to the duration of the receivership. No point is made on this by the defendant; but we mention the fact In order that it may not be inferred that we im- pliedly hold that a receivership could be con- tinued after a foreclosure sale, or that the rents and profits of the property could be ap- plied towards paying the mortgage debt, or used for any other purpose than to prevent waste and preserve the property. The judg- ment should be affirmed. So ordered. BUCK, J. I dissent. I think that the evi- dence quite conclusively shows that the prem- ises are Cady's homestead, and this is one of the material facts that lead me to think that the receiver should not. upon the evidence ad- duced, have been appointed. When the trial court appointed the receiver, it was done by the court upon affidavits submitted by the re- spective parties. The application therefor was made in the month of July, 1897, but not granted until October 29, 1897. All of the affidavits upon which the receiver was appoint- ed appear in the record, and the sufficiency of the plaintiff's affidavits are assailed and con- tradicted by the defendants' counter affidavit. Not only was a receiver appointed by order of the court, and therein directed to collect, all and singular, the rents, profits, and income of the premises, but by a subsequent order of the court the defendant Cady was ordered, witliin five days after the service upon him of the order, to quit, surrender, and deliver up to the receiver said premises, and vacate the same. It is true that the judgment appealed from is dated November 12, 1897, and the last order directing the defendant Cady was not made until November 20, 1897, and not appealed from. But, as I regard this case, this is im- material. The gist of the controversy is over the right to appoint a receiver at all. Prob- ably, if there existed a sufficient cause to ap- point a receiver in the first instance, and the case appeared to be one where ordinarily the right of a receiver to act at all was presented, the appointment would carry with it the right to the pcssession of the property. It is the right to invoke the aid of the court in the first instance, upon the case being presented, which in my opinion is one of more than serious doubt. Such a proceeding is an extraordinary remedy, sometimes, and perhaps I might say frequently, operating harshly, and the cir- cumstances of peril which invoke the remedy should be established with reasonable certain- ty. Such appointment is not a matter of right, and should not be used where its exercise will produce injustice, and the fact should be clear- ly proved. Beach, Rec. 65-68. And this rule is strictly applied in mortgage cases, where it must clearly and fairly appear that the secur- ity is inadequate, or there is imminent danger of waste, removal, or destruction of the prop- erty. Id. 574. Mere default in the payment of the debt would not be sufficient ground for the appointment of a receiver. It is true that power to make the appointment of a receiver is generally discretionary, yet "the judicial authority to deal with property by means of a receiver is not unlimited or absolute." Id. 2. "It must be exercised in conformity to the general principles of equity jurisprudence. The petition should, therefore, state clearly the facts upon which the application is made, and also give proof of the same. If this is not done, the relief will be denied, and the burden 856 RECEIVERS. of proof is always upon the petitioner." Id. ."IIT. As I differ from my associates, it Is proper tliat I should fully examine the evidence which formed the basis for such appoint- ment. The only evidence presented was by affidavits. The plaintiff presented three which showed that the property was worth $3,500, and one that the house alone wa» worth $1,500. The defendants presented five affidavits which showed that the value of the property ranged from $5,800 to $4,400, averaging $5,220, and the affidavit of another person states the value of the house to be $2,500 alone. The total average value of the property was $4,360. This is more than $500 over the entire judgment in foreclosure, in- cluding interest and costs up to the time of the judgment. This was all the evidence Introduced upon the question of the value of the premises, and I thinli that the plaintiff's evidence in this respect was clearly refuted by that of the defendants. The only evi- dence of waste or act of omission of duty In this respect on the part of Cady was that of one witness for plaintiff, who gave details tending to show that the dwelling house needed repairs to the amount of $400; but no other one of plaintiff's witnesses testified to any such fact, and this testimony is squarely refuted by five of defendants' wit- nesses. I am not willing to talie his testi- mony alone as outweighing that of all of the others. It certainly does not, in my mind, justify the appointment of a receiver, where the rule is, in such case, that the injury op Impairment of the security must be immi- nent. Union JIut. Life Ins. Co. v. Union Mills Plaster Co., 37 Fed. 286. I now come to the consideration of the question that the premises were the home- stead of the defendant, and which he was occupying as such, and whether a stricter rule should not be applied in the appoint- ment of a receiver to talie possession of such property, and apply the income, rents, and profits thereof towards the payment of the mortgage debt This question is one of great importance, and, if a receiver can thus be appointed, it will greatly disturb, if not sub- stantially destroy, the homesteads of thou- sands of people, especially in our cities and villages, where the use of homesteads, and rental therefrom, often constitute part of the Income, and frequently the only income, for the support of the family itself. As I have stated, the appointment of a receiver is a drastic measure, and to permit it to be used to oust a man and his family from their home, and sequester the income, rental, and profits thereof, is to deprive them of all the benefits of a homestead in a most summary manner. It certainly is a most extraordi- nary proceeding which authorizes such a step. Waples, in his worli on Homestead (page 720), says: "It is questionable whether it is ever proper to take possession of a mort- gagor's homestead while proceedings to fore- close are pending. Certainly It Is not prop- er practice as a general rule. An applica- tion for such appointment should always be refused when the amount of the mortgage debt is a subject of contention in the case." Of course, I do not overlooli the doctrine laid down in this court in the case of Lowell v. Doe, 44 Minn. 144, 46 N. W. 297, where It was held that the homestead rights of the mortgagors are subject to the ordinary legal and equitable rights of the mortgagees in re- spect to the mortgaged premises, which may be enforced by the appropriate remedies; cit- ing Gen. St. 1878, c. 68, § 2 (Gen. St. 1894, S 5522), which provides that the homestead exemption shall not extend to any mortgage thereon lawfully obtained. But the home- stead law loolis with favor upon homesteads, for the good of society and for the protection of family life in all classes, and seeks to save them from the rapacity of creditors, and from destruction, so far as it can without in- justice to others. The reasons for this are many and cogent To this end, I think that all steps to deprive the owner of a homestead of the right of himself and family to occupy and receive the benefits of it during foreclo- sure of a mortgage upon it should not be permitted, or should be resorted to only in extreme cases, and where justice would be defeated by withholding it, and only in cases reasonably clear and free from doubt. This is not such a case. It is a notorious fact that in many instances the receiver, in the performance of what he claims to be his duty, incurs large expenses, greatly lessen- ing the assets which should go to the pay- ment of the debt itself, and this operates to the detriment of both parties to the action. In other words, the benefit to the owner of the homestead and his family, as a home and support, might be appropriated to the sup- port of the receiver, by way of fees and ex- penses, with loss to both parties to the ac- tion. Our statute provides that "a mortgage of real estate is not to be deemed a convey- ance so as to enable the owner of the mort- gage to recover possession of the real estate without a foreclosure." Gen. St. 1894, § 5861. This is an express statutory enact- ment, so far as possession is concerned, and the owner of the mortgage is prohibited from taking possession of the property without foreclosure. Of course, this means that no right of possession arises until the period of redemption expires, viz. one year after fore- closure. If possession of land is wrongfully withheld after foreclosure, and after final decree, the court may then compel delivery of possession to the party entitled thereto, by order directing the sheriff to effect such delivery. Id. § 6073. Thus, by clear and express statutory provisions, means are pro- vided for obtaining possession of lands upon which mortgages are foreclosed. But until such time the mortgagee has no title, and no right of possession. It is trne that, notwith- standing the law expressly exempts a home- RECEIVERS. 857 stead, Gen. St. 18&4, § 5522, provides that "such exemption shall not extend to any mortgage thereon lawfully obtained"; but this provision does not operate to deprive the owner of the right to the possession of the homestead during the period of redemption from foreclosure sale. Now, the appoint- ment of a receiver is one purely of an equita- ble origin; and whether it can, in the case of a homestead, supersede the express statutory enactment which forbids possession by the owner of the mortgage during foreclosure, may well admit of serious doubt. Equity is not Intended to operate harshly, but a doc- trine which permits a receiver, upon the com- mencement of a foreclosure action, to take immediate possession of the homestead, oust the family, and receive the rents and income of the property, seems unjust and a harsh measure. Such a right is denied in In- vestment Oo. V. Farrar (Iowa) 54 N. W. 361, upon the ground that it is a violation of the statutory rights of the mortgagor, even in a case not involving homestead rights. See, also, cases cited in 2 Jones, Mortg. § 1522. But even if the power exists to appoint a re- ceiver to oust the owner of a homestead and his family, and take possession of the prop- erty, and deprive them of the use and bene- fits thereof, and thus cut short the statutory right of redemption, I think the facts in thia case fall far short of making this an extraor- dinary case which justifies such an extraor- dinary remedy, and that the receiver ought not to have been appointed. I think that the judgment should be reversed. 858 RECEIVERS. WIEDEMANN V. SANN et al. (31 Atl. 211.) Court of Chancery of New Jersey. Feb. 26, 189.5 Bill by Frank W. Wiedemann aginst An- nie Sann and others to foreclose a mortgage, and for an injunction, and for appointment of a receiver. Receiver appointed. Gilbert & Atkinson, for complainant H. Budd, for defendants. BIRD, V. C. The bill In this case is filed to foreclose a mortgage of chattels given by Annie Sann, asking for an injunction against an attaching creditor, whose attach- ment issued against Charles Sann, and also asking for a receiver. The chattel mort- gage bears date January 11, 1895, and was duly recorded on the same day. It was given to secure the payment of $550, money loaned to the mortgagor. The whole of the said loan, together with interest, is claimed to be due to the complainant. The biU states that on the 9th day of January, being two days before the execution and delivery of the chattel mortgage aforesaid, one Sarah M. Hall procured to be issued a writ of at- tachment out of the circuit court of the county of Burlington against one Charles Sann on the demand for $650, under which writ of attachment an auditor has been ap- pointed, and that the said auditor has been ordered by the said circuit court to sell all of the said goods and chattels as perishable property, and that the said auditor has ad- vertised all of the said goods and chattels for sale, in his advertisement or notice of sale giving assurance to bidders that he will sell the said goods and chattels free from all liens or incumbrances. The complain- ant, having obtained an injunction restrain- ing the auditor from selling, now asks for the appointment of a receiver with au- thority to sell the said personal property. This is resisted by the plaintiff in the at- tachment. It wiU be perceived that the complainant claims that these goods and chattels were the goods and chattels of An- nie Sann, and that the plaintiff in the at- tachment claims them as the goods and chattels of Charles Sann. Charles Sann is the husband of Annie Sann. The complain- ant rests his case upon the rule laid down by Chancellor Green in Smithurst v. Ed- munds, 14 Nj. J. Eq. 408. The case m hand is not like that. In that case the property which execution creditors offered for sale was not claimed by such creditors as the property of another person than the mort- gagor of the same goods. As to that there was no dispute. Hence the question now before me is, can this court appoint a re- ceiver in a foreclosure case to take charge of and sell personal property for the pur- pose of preserving it, covered by the mort- gage sought to be foreclosed, when that same property has been attached by the creditor of another person, as the property of that other person, and has been adver- tised to be offered for sale by an auditor ap- pointed in said attachment proceedings? In Moore v. Diament, 41 N. J. Eq. 612, 7 Atl. 509, in the court of errors and appeals, a question somewhat like the present was be- fore the court. In that case Hammell con- fessed judgment to his creditors, who levied upon certain goods and chattels. Moore filed a bill in this court, alleging that he had been in partnership with Hammell, and that 'Hammell became indebted to him as part- ner, and that, to satisfy such indebtedness, Hammell had made to him a bill of sale of all his Interest in these goods and chattels, and asked for and obtained an injunction restraining the execution creditors of Ham- mell from proceeding to a sale. A receiver was appointed in that case, and, upon Moore's offering to give a bond to take care of the property, and to return it or to pay the value thereof, except in case of unavoid- able accident, such bond was accepted. From this brief statement it will appear that execution creditors claimed a lien upon the property as the property of one man, — HammeU, their debtor,— while Moore claim- ed it as his own individual property aoso- lutely, by virtue of a bill of sale made to him by Hammell, and that a receiver was appointed. The question involved In that case was one of title to personal property; Moore, the complainant, claiming the title was in himself, while the creditors of Ham- mell claimed that the title was in Hammell, and that they, as his creditors, by virtue of their judgments and executions, had a right to sell the same. It is claimed in this case that the question involved is purely a ques- tion of title to personal property, strictly legal in its nature, and can be determined by an action of replevin, and that conse- quently a court of equity has no jurisdic- tion. The case cited seems to present the same characteristics. Moore filed his bill, and claimed the property levied upon by virtue of a bill of sale, praying an injunc- tion against such sale under the executions at law. Clearly, in such case, the principal question to be decided was whether the title was in Moore or Hammell. In the case now under consideration the question to be determined is whether the title to the prop- erty named in the chattel mortgage was in Annie Sann or in her husband, Charles Sann. If that were all, it might well be said that in neither case would this court be justified in assuming jurisdiction. But in the case cited, if the property which Moore claimed were to be sold by the execution creditors, with the conflicting claims of title thereto, he might, in a variety of ways, suffer great loss; which view is, in every sense, appli- cable to the case before me. In that case It was distinctly held in the court of errors and appeals that this court had the right to pro- RECEIVERS. 859 ceed to settle the rights of the parties by virtue of the bond given, notwithstanding a decree dismissing the bill of complaint In this case the complainant claims a lien upon the goods and chattels by virtue of her mortgage. She undoubtedly has a right to file her bill to foreclose such mortgage, which beyond question gives the court juris- diction. But still the further question arises, can this court, because it is the only tribunal authorized to foreclose a mortgage upon goods and chattels, appoint a receiver to take charge of and sell such goods and chat- tels, when they are claimed by and under attachment by the creditors of another per- son than the mortgagor, and ofCered for sale by an auditor appointed in such attach- ment proceedings? There is a well-settled rule that courts of equity have the right and power to take possession of property about which are conflicting claims, for the purpose of preserving it until the rights of the re- spective parties thiereto have been settled. May this rule be applied to the present case? It is evident, if the auditor makes sale of the goods and chattels because they are per- ishable, they will be likely to sell for a nom- inal price only, and wiU also be likely to go into the possession of many different per- sons. The fact that the complainant makes claim in the manner in which he does will cast such a shadow upon the title as to de- ter prudent men from bidding. The fact that they will in all probability go into the hands of many different persons would make it obligatory upon the complainant, if it should turn out that the title thereto be in him, to bring as many actions at law as there are purchasers. High, Rec. § 192. "A court of equity, appointing a receiver to take possession of property pending a liti- gation concerning the rights of the parties thereto. Is vested with the power to sell the property in the receiver's hands, when- ever such course becomes necessary to pre- serve the Interest of all the parties." Id.; Crane v. Ford, Hopk. Ch. 114. When a court of equity properly acquires jurisdic- tion of the parties and of the subject-matter in a cause, and appoints a receiver therein, and orders him to sell the property in con- troversy, such order, although irregular and improvident, cannot be assailed or ques- tioned in a collateral action, and such action will not lie to set aside the order of sale and proceedings thereunder. High, Rec. § 196; Libby v. Rosekrans, 55 Barb. 219; Brande v. Bond, 63 Wis. 140, 23 N. W. 101. It being evident that the auditor cannot make sale of these goods except under great disadvantage, and that, if it should ulti- mately appear that the title is in the chattel mortgagor, and it also appearing that since the mortgagee was justified in filing his bill in this court, thereby acquiring jurisdiction of the subject-matter, and the court un- questionably having the authority to appoint a receiver, and it being the constant prac- tice, when a receiver is appointed, to take possession of the perishable goods and chat- tels which are the subject of litigation, to make sale thereof for the purpose of pre- serving the value of them for the parties who may ultimately appear to be entitled thereto, I conclude that it is my duty to advise the appointment of a receiver in this case, with authority to make sale of the goods and chattels in question. The de- fendant, the attaching creditor, offered to give bonds for the value of the goods. A bond was ofCered and accepted in the case of Moore v. Diament, supra, but in that case the person who gave the bond did not pro- pose to sell them, as in this case the auditor proposes to do. I will advise accordingly. soo RECEIVERS. STETSON V. NORTHERN INV. CO. et al. (70 N. W. 595, 101 Iowa, 435.) Supreme Court of Iowa. April 7, 1897. Appeal from district court, Woodbury coun- ty; George W. Wakefield, Judge. This appeal is by the plaintiff from an or- der and decree entered upon a motion to dis- charge the garnishees. The issues and facts appear in the opinion. Affirmed. ShuU & Parnsworth, for appellant. Joy, Call & Joy and William Milchrlst, for appel- lees. GIVEN, J. 1. Appellees moved to strike the appellant's abstract, which motion was overruled, and therefore we are to take the facts to be as shown in the abstract, the ma- terial parts of which are as follows: On April 11, 1895, this plaintiff commenced three separate actions to foreclose three mortgages executed by the defendant company to him to secure certain debts. These mortgages covered all of lots 4, 5, and 6, block 26, Mid- dle Sioux City. Attachments were sued out in each ease, and A. C. Baker and 16 others were served as garnishees. The answers of these garnishees showed that they are ten- ants of the defendant company, occupying premises other than that covered by plain- tiff's mortgages, and that some of them oc- cupied under verbal leases, and some under written leases, extending to different periods of the future. Their answers also showed that some of them were indebted for rents due, and that all would become indebted in the future under said leases. Plaintiffs three actions were consolidated, and formed the present action. On the 9th day of Jlay, 1895, T. A. Black, though not a party to this action, filed his motion herein, supported by his affidavit, for the discharge of all of said garnishees except W. Chaffee, and showing as grounds therefor, in substance, as fol- lows: That on the 11th day of April, 1895, in the case of Charles C. Harrison v. The Northern Investment Co. et al., then pending in said court for the foreclosure of a mort- gage upon the real estate occupied by said garnishees, he was appointed and qualified as receiver of all the property of said com- pany involved in said action; also, that he was appointed and qualified prior to the time said garnishees were served with notice of garnishment. Charles C. Harrison, though not a party to this action, did on the 18th day of May, 1895, file his motion joining with said Black in asking the discharge of said garnishees. By the record in the Case of Harrison, as It appears in the abstract, it was alleged In the petition that the Northern Investment Company was insolvent; that the property covered was insufficient to pay the mortgages and taxes thereon. It was asked, for these and other reasons stated, that a receiver be appointed; and Mr. Baker was appointed and qualified as receiver for all the property of the company described In the mortgage to Mr. Harrison, and ordered to collect all rentals, income, and profits therefrom. It does not appear that any ob- jections were made to the right of these per- sons to make such motions In this action. The motions having been submitted, the court says in the order complained of that "the court is of opinion, and doth adjudge, order, and decree, that as to all rentals pay- able or accruing on or before the 11th day of April, 1895, the said motion be, and is hereby, overruled, and as to all rentals ac- cruing and payable after the 11th day of April, 1895, the said motion of T. A. Black, receiver, and C. C. Harrison is sustained." Following this. It was ordered that the amounts found to be due from the several garnishees up to April 11, 1895, be paid to the clerk of the court, and that upon pay- ment the garnishees be discharged. It was further ordered as follows: "And upon the motion of T. A. Black, receiver as aforesaid, time is given him until the 20th day of Au- gust, 1895, to file his petition of intervention, claiming the funds so ordered to be paid to the clerk aforesaid." 2. Appellant presents In argument three contentions, namely, that the court had no authority to appoint a receiver under the allegations of Harrison's petition; that Har- rison and Black could not give the court jurisdiction to discharge garnishees by sim- ply filing motions in this cause; they not being parties thereto and not filing petitions of intervention; that the garnishment of the tenants made them liable to appellant, in case he Is successful in this case against the company, for all rent accrued and to accrue. That part of Harrison's petition asking a receiver states numerous grounds, and at such length as that we should not take space to set them out. It is sufficient to say that the petition shows that the rents of the mortgaged premises are pledged for ihe pay- ment of the debt, that they are not being ap- plied, that the company is a foreign corpo- ration; that it is insolvent, that the property is Insufficient to paj the mortgages and over- due taxes, and other facts showing that the rents were in danger of being lost to the mortgagees. Conceding that the sufficiency of that petition in this respect may be ques- tioned in this case, we think it was sufficient to warrant the appointment of a receiver. 3. Appellant does not question the right of Mr. Black, as receiver, if duly appointed, to intervene in this action to claim said rents, but denies his right to do so by mo- tion. The record fails to disclose, except in- ferentially, that any such objection was made in the lower court. The abstract was prepared by other than the counsel now ap- pearing, and with the view, no doubt, of not incumbering the abstract with more than was actually necessary to an understanding of the questions to be presented. Questiona- ble as the record is as to this contention, we will consider it. It will be observed that RECEIVERS. 861 the order of the court Is not final, as be- tween these parties, as to the rents due up to April 11, 1895. The court, having full jurisdiction over that fund, ordered It to be paid into court, to be held until the rights of these parties thereto are determined. There has been no final order or judgment against appellant as to that fund, and he has nothing of which to complain. The question as to which of these parties is entitled to that money is not before us, and we express no opinion thereon. 4. If nothing further appeared than the pendency of this action and the service and answers of the garnishees, it might be said that they are liable to appellant, in case he is successful in this action against the com- pany, for rents accrued and to accrue under their leases. The mortgage from the North- ern Investment Company to Charles C. Har- rison contains the following: "And it is fur- ther agreed that if default shall be made in any of the conditions of this mortgage, or in the bond which It is made and given to se- cure, that the right of possession of the mort- gaged premises, with all the appurtenances thereunto belonging, shall Immediately vest In the party of the second part, his heirs or assigns, and he may immediately take pos- session of the same, and collect all rents, profits, and incomes therefrom, or, at his option, may proceed by foreclosure, and shall then be entitled to have a receiver appointed Immediately, and in vacation, for all of the property herein described and embraced, to take charge of the said property, and collect rents, incomes, and profits of the same, to be applied upon the said mortgage debt." It seems to us entirely clear that under this provision the rents accruing from said mort- gaged property after the appointment of the receiver are assets In his hands, and not subject to garnishment by other creditors. We do not think the court erred in either of the respects claimed, and the order and judgment are therefore affirmed. 862 RECEIVERS. FIRST NAT. BANK OF JOLIET v. ILLINOIS STEEL CO. (51 N. E. 200, 174 111. 140.) Supreme Court of Illinois. June 18, 1898. Appeal from appellate court, Second dis- trict. Creditors' bill by the First National Bank of Joliet against the Ashley Wire Company and others for the appointment of a receiver, with which was consolidated a petition by the Illinois Steel Company, also for the ap- pointment of a receiver. From a decree of the appellate court (72 111. App. 640) affirm- ing a decree In favor of the Illinois Steel Company, the First National Bank of Joliet appeals. Affirmed. This was a bill In the nature of a credit- ors' bill, filed December 26, 1893, by the First National Bank of Joliet, the appellant, against the Ashley Wire Company, a cor- poration in Joliet, Will county, lU., which for many years had been engaged in the manufacture of barbed fence wire, wire nails, etc. The bill alleged the recovery of a judgment by said First National Bank of Joliet on the 14th day of December, 1893, for $12,657.77, against said Ashley Wire Company; that execution was issued and delivered to the sheriff the same day, which execution was returned, after demand made, "No property found." Alleged the recovery of a Judgment on the 8th day of December, 1893, by John Y. Brooks against said Ash- ley Wire Company for $11,090, upon which execution had been issued and levied upon all the tangible personal property of said Ashley Wire Company, and that the value of such property so levied upon would ilot exceed ?5,000; that the sheriff had not sold said property so levied upon, and It was not sufficient to satisfy the said Brooks execu- tion. Alleged the execution by said Ashley Wire Company on the 19th day of July, 1893, to the Illinois Steel Company, of a note for $67,246.24, payable on or before two years after date, with interest at 5% per cent, per annum, payable semiannually, and secured by a mortgage on its manufacturing plant; that said Ashley Wire Company is insolvent, and for many months has suspended Its bus- iness, and its plant has remained Idle; that It has not been able for the last year to meet its trade obligations, and has been seriously embarrassed in its financial affairs; that said wire corporation is and remains in the possession of its real estate and manu- facturing plant, and, while it is not worth said mortgage indebtedness, is a valuable property, and ought not to be allowed to de- teriorate in value or be greatly hazarded by neglect or want of care; that watchmen should be in charge, insurance should be kept up, and taxes paid; that all this should be done in the interest of said corporation. Its stockholders and creditors generally; that said corporation is without means to protect and preserve said property, and keep up Its Insurance or taxes; that the tangible prop- erty levied upon is of a kind and character so peculiar in its nature that it could not be sold at ordinary execution sale, except at a grievous sacrifice. Avers that the interests of defendant and all its creditors demand that a receiver should be appointed of Its as- sets, both equitable and tangible; that said receiver should be directed to take posses- sion of said manufacturing plant, its books of account, and its equitable assets and property. The Ashl«y Wire Company, John Y. Brooks, and Thomas Hennebry, as sheriff, were made parties defendant. Although the bill showed that the Illinois Steel Company, of Chicago, held a first mortgage on the Ash- ley Wire Company plant, machinery, etc., and was the principal creditor, yet it was not made a defendant to the bill. The ap- pearance of the defendants was entered, and on the 26th day of December, 1893, the de- fendants not objecting, the court appointed George W. Bush receiver. The order invests him with all the authority and power usually granted receivers of courts of chancery, and directs that he at once take possession of the real estate and manufacturing plant of said Ashley Wire Company, together with all the machinery, tools, implements, and appliances connected therewith, and constituting real estate, as part and parcel of said plant; that he care for all such property, that it may not be wasted or deteriorate for want of proper care; that he keep the buildings in- sured in responsible insurance companies in a reasonable amount; and that he pay all taxes legally levied upon such real estate. It was further ordered that the said sheriff turn over to the receiver all the personal property levied upon by him under the ex- ecution in favor of John Y. Brooks, such sheriff to retain the execution, and the lien of such execution is preserved upon all such property levied upon, and the proceeds there- of levied upon by said sheriff, and turned over to said receiver. The receiver present- ed a petition on February 19, 1894, as to the payment of taxes, which states that there was duly assessed against and levied upon the personal property of the Ashley Wire Company for the year 1893 $799.10 taxes, and that he has no mongy with which to pay said taxes, or the real estate taxes then due, and prays that an ordej be entered authoriz- ing him to pay such taxes, and that he may be permitted to borrow money therefor. On the 26th of February, 1894, an order was en- tered authorizing the receiver to pay the taxes assessed upon the real estate, and au- thorizing the receiver to borrow money for that purpose at such legal rate of interest as he may be able, and to issue therefor his receiver's certificate, which was by the or- der of the court declared to be a first and prior lien upon the real estate of sajd Ash- ley Wire Company. The court denied the prayer of the petition as to the payment of RECEIVERS. 863 the personal property tax. On March 5, 1894, the Illinois Steel Company asked leave of the court to make George W. Bush, re- ceiver, a party defendant to a chancery pro- ceeding, which the court granted; and on the 7th day of March, 1894, the steel com- pany filed a hill to foreclose its mortgage against the Ashley Wire Company plant, making said Ashley Wire Company, the First National Bank of Joliet, John Y. Brooks, and George W. Bush, the receiver, defendants. On the 12th day of July, 1894, after the commencement of the foreclosure proceedings, the receiver horrowed of the Illinois Steel Company $2,037.82, in pursu- ance of the court's order, for the purpose of paying taxes, and Issued a receiver's cer- tificate therefor. The mortgage upon vs^hich the foreclosure proceedings were based, against the Ashley Wire Company, was to secure the note for $67,246.24, payable on or before two years after date, with Interest at 5% per cent, per annum; and the mort- gagor expressly covenanted to keep the build- ings insured for $50,000, for the benefit of the Illinois Steel Company, mortgagee. It also contained a clause authorizing the ap- pointment of a receiver, with power to col- lect the rents, issues, and profits during the period of redemption, in case of a foreclo- sure of the mortgage, and that such rents and profits should be applied towards the payment of the indebtedness. Answers were filed by the Ashley Wire Company and the First National Bank, defendants. A final decree of foreclosure was awarded the Illinois Steel Company January 14, 1895, and the property was sold to the said steel com- pany for $70,000. The master reported an unpaid balance, and a deficiency decree or judgment under the statute was entered for the deficit of $5,316.50, with interest from March, 1895, and execution was awarded thereon. On the 10th of April, 1895, the Illi- nois Steel Company filed Its petition in the foreclosure case, setting up the decree of foreclosure and the sale, the deficiency de- cree for $5,316.50, and the foregoing provi- sion in regard to the appointment of a re- ceiver by the court to collect rents until the time of redemption, and asking for the ap- pointment of a receiver. A hearing was had June 20, 1895, and the court refused to ap- point a new receiver, but extended the re- ceivership of George M. Bush existing over the property of the Ashley Wire Company by virtue of an order in the case of the First National Bank of Joliet, so that said re- ceiver should stand as a receiver appointed in the case of the Illinois Steel Company against the Ashley Wire Company, and that the receivership be extended to include the property and effects of the Ashley Wire Company; and the receiver was directed to .receive the rents, and hold the same for all persons who should be found entitled there- to. The receiver had previously, under the order of the court, leased the Ashley wire plant for one year from December 1, 1894, for $6,000, with the privilege of another year, at the option of the lessee, on the same terms. The receiver collected in all for rents $12,000, and after paying the taxes and ex- penses there was left In his hands $4,373.48. On March 3, 1897, the petition of the Illinois Steel Company was, by agreement of par- ties, consolidated with the cause of the First National Bank of Joliet against the Ashley Wire Co. et al., and was to be heard and dis- posed of as one case by decree to be entered in the case of the First National Bank of Joliet against Ashley Wire Co. et al. The principal contention is over the distribution of the balance of $4,373.48; the trial court decree- ing this amount to be paid the Illinois Steel Company out of the moneys in the receiver's hands derived from rents, to be indorsed on the deficiency decree. From this decree of the circuit appellant appealed to the ap- pellate court for the Second district, which affirmed the decree of the circuit court; and from the judgment of the appellate court appellant has appealed to this court, and asks for the reversal of the judgment of the (appellate court. George S. House, for appellant. Garnsey & Knox (Elbert H. Gary, of counsel), for ap- pellee. CEAIG, J. (after stating the facts). It Is first contended by appellant that the Illinois Steel Company, the mortgagee, having obtain- ed its decree of foreclosure and sale, and ap- plied the proceeds, the mortgage has accom- plished Its purpose, and Is functus ofilcio; that no further rights or equities can be enforced by the Illinois Steel Company. The claim of appellee is that the provision in the mortgage authorized the appointment of a receiver by the court to collect the rents and profits during the period of redemption, and, as the sale un- der the foreclosure decree did not pay the debt, to apply them in payment of the deficiency. The agreement in the mortgage is as follows: "Upon the filing of any bill to foreclose this mortgage, in any court having jurisdiction thereof, such court may appoint A. F. Knox, or any proper person, receiver, with power to collect the rents, issues, and profits arising out of said premises during the pendency of such foreclosure suit, and until the time to redeem the same from any sale that may be made under any decree foreclosing this mort. gage shall expire; and such rents, issues, and profits, when collected, may be applied to- wards the payment of the indebtedness and costs herein mentioned and described." Un- der this clause In the mortgage a lien is given, by express words, upon the rents and profits, and such an equitable lien a court of equity will enforce. Rents and profits are the sub- ject of mortgage. Jones, in his work on Mort- gages (volume 1, § 140), says; "A mortgage may be made of rents under a lease, and, al- though a right of entry be given the mort- gagee, the mortgage Is a mere security, like 864 RECEIVERS. any other mortgage of real estate, and the mortgagor remains the real owner until fore- closure and sale." In section 771 he says: "A mortgagee has no specific lien upon the rents and profits of the mortgaged land, unless he has, in his mortgage, stipulated for a specific pledge of them as part of his security." This was expressly stipulated in this mortgage giv- en by the Ashley Wire Company to appellee. Had there been no deficiency after the fore- closure sale of the Ashley Wire Company prop- erty and plant, the rents would have belonged to the owner of the equity of redemption. Un- der the express agreement in the mortgage, there being a deficiency of $5,316.50 after the sale, the Illinois Steel Company had an equi- table right to have the rents and profits ap- plied towards the payment of the deficiency decree, from the time of the foreclosure sala until the expiration of the time of redemption, and this right might properly be enforced on an application to the court to appoint a re- ceiver. The contention by appellant in this case that the enforcement of this provision rests entirely in the sound discretion of the chancellor is not tenable. The chancellor was authorized to act under this clause in the mortgage, and appoint a receiver for the col- lection of the rents and profits during the pe- riod of redemption, to be applied on the defi- ciency decree. In the case of Oaliford v. Robinson, 48 111. App. 270, which is similar to the one at bar, the mortgage contained a clause authorizing the appointment of a re- ceiver, with power to talie possession of the premises and collect the rents due and to be- come due thereon during the period allowed for redemption, and to apply the same in pay- ment of any deficit, should the premises prove InsuflBcient to pay the amount secured by the mortgage. In the decision of the case the court said: "The rents and profits of the land, as well as the land, were pledged by the mort- gage for the security and payment of the amount due the appellee. This authorized the appointment of a receiver, in the discretion of the court, without regard to the solvency of the mortgagor. 2 Jones, Mortg. § 1516; 8 Am. & Eng. Enc. Law, p. 234. And such ap- pointment was lawfully made, though by a decree subsequent to the original decree. Id., p. 239. By the appointment of the receiver the appellants obtained an equitable lien on the rents and profits of the land during the statutory period allowed for redemption, it necessary for the full payment of any defi- ciency in the security. In support of this view, see 1 Jones, Mortg. §§ 773-775; 2 Jones, Mortg. § 1536; High, Rec. §^ 643, 644; Beach, Rec. § 532." That a court of equity has pow- er to appoint a receiver and grant equitable relief where there are no express words In the mortgage giving a lien upon rents and profits derived from the property is conceded. In such a case, whether relief will be granted is dependent upon the facts and circumstances at the time the application is made. This court said in Haas v. Society, 89 111. 498, at page 502: "We find the decided weight of American authority to be in favor of the prop- osition that the court may, even when the mortgage does not by express words give a lien upon the income derived from such prop- erty, appoint a receiver to take charge of it and collect the rents, issues, and profits arising therefrom. Such action will not be taken, however, unless it be made to appear the mort- gaged premises are an insuflicient security for the debt, and the person liable personally for the debt Is insolvent, or at least of very questionable responsibility. A combination of these two things seems to be required in all the cases we have examined, and in one or more of the states it Is held necessary still other elements should be conjoined to these ■before such procedure is justified." Tested even by this requirement, if the mortgage did not give a lien by express words, or authorize the appointment of a receiver, the facts in the case at bar show that the court committed no error. The deficiency decree itself evidences the fact that the Ashley Wire Company's prop- erty was insufficient security for the mortgage debt, and the facts established the allegation In the petition that the Ashley Wire Company, the mortgagor, was insolvent. Undoubtedly, a court of equity exercises a certain discretion, even where express words are used for the purpose of giving a lien on the income of the mortgaged property. The court must deter- mine whether the language used in the mort- gage is Buflicient to give a lien on the income. In the one case the authority arises from the contract, the express words giving a lien on the rents and profits; in the other, the court exercises its equitable powers under the facts and circumstances presented at the time the appUcation to appoint a receiver is made. Appellant also contends that the final de- cree foreclosing the mortgage ought to have provided for a receiver to take possession of the rents and profits of the Ashley Wire Com- pany pending the redemption; that a decree of foreclosure and sale, as to all questions that might have been adjudicated between the parties. Is final. It could not be ascertained until after the sale whether there would be a deficit requiring the appointment of a re- ceiver to collect the rents and profits during the time of redemption. Under the decree of foreclosure the property described in the mortgage was sold. The rents and profits to accrue during the period of redemption were not sold, and no order could be entered until It was ascertained at the foreclosure sale that the mortgaged premises were insufficient to pay the indebtedness evidenced by the mort;- gage. In Haas v. Society, supra, it was said (page 506) : "The necessity for the appropria- tion of the rents to the payment of the mort- gage debt may frequently not api)ear until after both decree and sale. The a;mount due is often matter of dispute, and can only be determined by the decree, and what the prop- erty will sell for can only be ascertained with certainty from the result of the judicial sale. RECEIVERS. 865 If an appropriation of the rents on the in- debtedness is justified by the surrounding facts before sale, we see no good reason why the same and more weighty facts existing after sale may not warrant a similar proce- dure. The security, plainly, is not exhausted by the sale, for there is a fund included in it which is secondarily liable. It is true, the mortgagee has elected to foreclose and sell; but then he has pursued that remedy to the end, and without getting satisfaction of his debt, and he may avail himself of any just and equitable means of collecting the residue, —not that he may have such extraordinary remedy in all cases of a deficit in the pro- ceeds, but only where it is indispensably nec- essary for his protection, and just and equi- table. We hold, then, both upon the prin- ciples of equity that lie at the foundation of the chancery court, and upon authority, a re- ceiver may sometimes be allowed after decree and sale, and that a mortgagee does not in all cases exhaust his security by a foreclo- sure and sale. It is, however, a power that the chancellor will be slow to exercise, except in an extreme case, and to prevent palpable wrong and injustice." The cases of Seligman V. Laubheimer, 58 111. 124, Ogle v. Koemer, 140 111. 170, 29 N. E. 563, and Davis v. Dale, 150 111. 239, 37 N. E. 215, cited by appellant in support of its contention that a decree of foreclosure and sale extinguishes the mort- gage and renders the mortgage functus officio, are decided on a state of facts entirely differ- ent from the facts in this case. In Seligman V. Laubheimer, after a sale for less than the debt a junior mortgagee redeemed, and a pe- tition was filed to order a resale to pay the balance due the first mortgagee. It was held that as to the property sold the mortgage was not operative, and a resale could not be had. No question of a mortgage of rents accruing during the statutory period of re- demption was involved. In Ogle v. Koemer the facts were the same as to the mortgage, the sale, and redemption by an assignee of a second mortgage, who was a party, as in the Seligman Case. The tenor of the case, as to its application here, may be seen by the fol- lowing quotation from the court's opinion (page 179, 140 111., and page 565, 29 N. E.): "A mortgage, or, as in this case, a deed of trust in the nature of a mortgage, vests in the party secured a hen upon the mortgaged premises. By virtue of that lien the mort- gagee is entitled to have the mortgaged prop- erty sold under a decree of foreclosure, and the proceeds of the sale applied to the pay- ment of the debt secured. This is the mode provided by law for the enforcement of the lien, and when the lien has been once en- forced by the sale of the property It has, as to such property, expended its force and ac- complished its purpose, and the property is no longer subject to it." In Davis v. Dale a mortgage was foreclosed. Pending foreclo- sure a receiver was appointed. The property was sold for the full amount of the debt, in- HUTCH.& BUNK.EQ.— 55 terest, and costs; but the receiver was con- tinued, as appears, unnecessarily. The court said (page 243, 150 lU., and page 216, 37 N. E.): "The only purpose of appointing a re- ceiver at the instance of the mortgagee or cestui que trust under or trustee in the trust deed is to preserve the security of the mort- gage or trust deed, and apply the rents, is- sues, and profits, when necessary, in dis- charge of the indebtedness; and it follows, necessarily, that where the property is tnd off at the foreclosure sale for the full amount of the decree, interest, and costs, as was here done, the necessity for continuing the receiv- er ceases, and he should be discharged, and the possession restored to the owner of the equity of redemption. In any event, the pos- session of the receiver, and his receipt of the rents and profits arising from the property, would be for the benefit of the person enti- tled to the same, so that the parties acquired no additional right because the fund is in the hands of the receiver." The question involv- ed in this case, to wit, where the property sold does not pay the mortgage debt, and where the mortgage has a provision that the rents and profits may be applied towards the payment of the indebtedness and costs, was not before the court in either of the cases cited by appellant. Here the receiver was properly appointed after the foreclosure de- cree and sale, as the security of the steel company was not exhausted by the sale. Moreover, the necessity for the appointment of a receiver, and the collection of the rents and profits, and their application to the pay- ment of the deficiency, did not appear until after the foreclosure decree and sale. Appellant also contends that the court erred In directing the receiver, in its several orders, to pay the taxes on the property of the Ash- ley Wire Company out of the funds in his hands derived from rents of the real estate. Appellant filed its bill to have the equitable assets of the Ashley Wire Company applied to the satisfaction of its judgment, and also to have these taxes paid by the receiver out of moneys collected by him. The bill alleges that said corporation defendant is and re- mains in the possession of its real estate and manufacturing plant, and, while not worth the said mortgage indebtedness, is a valuable property, and ought not to be allowed to de- teriorate in valne or be greatly hazarded by neglect or want of care; that watchmen should be in charge, insurance should be kept up, and taxes paid; that all this should be done in the interest of said corporation, its stockholders and creditors generally; that said corporation is without means to protect and preserve said property, keep up Its insurance, or pay the tax- es, and Is without means to preserve, care for, and collect its equitable assets. The receiver was appointed on appellant's motion, and its own solicitor's name is recited in the order of the court December 26, 1893, inter alia: "That upon obtaining possession he properly care for all such property, to the end that 866 RECEIVERS. It may not be wasted or deteriorate for want of proper care, that lie keep the buildings and all improvements insured In responsible In- surance companies in a reasonable amount, and that he pay all taxes and assessments legally levied upon snch real estate." This order of the court has never been rescinded, so far as the record shows. The order of March 11, 1895, authorizing the receiver to pay the taxes of 18SM, recites: "It is there- fore ordered, adjudged, and decreed by the court that the said George W. Bush, as re- ceiver, out of the moneys in his hands pay to the said township collector the personal prop- erty taxes assessed against the said Ashley Wire Company for the year 1894, being the sum of $669.12, taking proper receipt there- for, and that said receiver in the making of said payment, all parties in interest in open court consenting thereto," etc. On June 20, 1895, the receiver, by apjwllant's counsel, pre- sented his petition, and in the order of the court directing him to pay the taxes on the real estate the same order of consent ap- pears. In Armstrong v. Cooper, 11 111. 540, this court said: "A decree made by consent cannot be appealed from, nor can error prop- erly be assigned upon it Even a rehearing cannot be allowed In the suit, nor can the decree be set aside by a bill of review. 1 Barb. Ch. Prac. 373." Smith v. Kimball, 128 111. 583, 21 N. E. 503; Roby v. Trust Co., 166 111. 33G, 46 N. B. 1110. These orders being made at the request of appellant, and by con- sent. It cannot question their validity. Objection is also made to the order of courS directing the payment of the real and per- sonal taxes for the year 1895 by the receiver. The amount paid was $1,874.41. The order extending the receiver on the petition of the Illinois Steel Company was made June 20, 1895, authorizing him to receive the rents and profits, to be held by him subject to the order of court. The redemption from the sale un- der the mortgage foreclosure of the Illinois Steel Company against the Ashley Wire Com- pany expired June 9, 1896. This money de- rived from rents belonged to the Illinois Steel Company by virtue of the specific lien In the mortgage, and, the receiver having paid these taxes from funds belonging to ap- pellee, appellant cannot complain. Finding no reversible error in the record, and the decree of the court appearing to be equitable, the judgment of the appellate court is affirm- ed. Judgment affirmed. REOEIVBES. 867 CENTRATj trust 00. V. NEW YORK CITY & N. R. CO. (ATTORNEY GENERAL, Intervener). (18 N. E. 92, 110 N. Y. 250.) Court of Appeals of New York. Oct. 2, 1888. Appeal from supreme court, general term, First department. On the petition of the attorney general tha supreme court, at special term, in New York county, made an order directing Joel B. Er- hardt, the receiver appointed In the action of the Central Trust Company against the New York City & Northern Railroad Company, to make provision for the payment of the taxes levied on the corporate franchise of the rail- road company. From this order the receiver appealed, and the general term (Daniels, J., delivering the opinion, Van Brunt, P. J., and Brady, J., concurring) reversed the order. i''rom the order of reversal the attorney gen- eral takes this appeal. Charles F. Tahor, Atty. Gen., for appellant. Artemas H. Holmes, for respondents. PECKHAM, J. The railroad company above named was incorporated under the laws of this state, and had its principal business office in the city of New York. In May, 1882, a receiver thereof was appointed in pro- ceedings taken to sequestrate its property by a judgment creditor whose execution had been returned unsatisfied. Such receiver op- erated the road from the time of his appoint- ment to February 3, 1885, when another re- ceiver was appointed in the action above en- titled, which is brought to foreclose certain mortgages executed by the company upon its property. The first receiver turned over the property and the possession of the road to the receiver appointed in the foreclosure proceed- ings, and from the time of the appointment of the latter up to a time subsequent to the year ending June 30, 1886, he has operated the road by virtue of such appointment. Taxes became due and payable under the cor- poration tax act of 1880, as amended by chap- ter 361 of the Laws of 1881, which amounted at the time of the filing of his petition by the attorney general, in February, 1887, to about the sum of $8,000; being for taxes on the gross earnings of the road as thus operated for the years ending June 30, 1883, 1884, 1885, and 1886, respectively. No question is made as to the amount of the tax in each year, or that there is a sum in the hands of the receiver which may be applicable to their payment; but the counsel for the receiver in- sists that the corporation is alone answera- ble for the taxes, and that recourse must be had to it for the payment of the same, or to such funds as may remain in the receiver's hands after the claims of the mortgagees have been satisfied; which in this case is but another manner of stating that there is no way of collecting these taxes, for, if their pajTnent Is to be postponed to the payment of the whole amount of the mortgage debt of the company, all of Its property will have been wholly exhausted long before payment in full of its mortgage indebtedness could be made. Various other objections were taken to the granting of the petition of the attorney general. The taxes in question, having been levied by virtue of the above-mentioned corporation tax law, were taxes upon the franchise, as dis- tinguished from the property, of the corpora- tion. People V. Insurance Co., 92 N. Y. 328. Upon this assumption the counsel for the re- ceiver claims that the taxes are not made a lien upon property by the act creating them, and cannot, therefore, be held to be a prior or paramount charge upon the funds in the receiver's hands, on the ground that they are debts due to the state, or on the ground of public policy. The manner of proceeding to collect these taxes has been designated in the act which imposes them, and is to be found in sections 7 and 9 of such act. By section 7 the tax "shall be collected for the use of the state as other taxes are recoverable by law from such corporation," etc.; and by section 9 the taxes "may be sued for in the name of the people of the state, and recovered in any court of competent jurisdiction in an action to be brought by the attorney general at the instance of the comptroller." Under section 7, the proceedings to collect the taxes being the same as other taxes are recovered by law, (not relating to those imposed on real estate,) those proceedings would be regulated by the Revised Statutes, as amended by chapter 456 of the Laws of 1857. It is argued that, as proceedings to enforce the collection of taxes thus imposed are provided for in the very act which imposes them, such proceedings must in all cases be taken, and that all other reme- dies are absolutely excluded. It is upon this ground that the learned judge who wrote the opinion at the general term proceeded, the result of which was to reverse these proceed- ings, because not undertaken pursuant to the provision of the statute in question. General- ly speaking, the rule as thus laid down Is to be followed, and the remedy is confined in the manner stated. But in such a case as this we think the rule is not to be applied. When the property of a corporation is already sequestrated, and a receiver appointed, and where in addition thereto foreclosure proceed- ings are pending against It to foreclose mort- gages to an amount in excess of all its prop- erty, and a receiver has also been appointed under such proceedings, and where the cor- poration is largely and hopelessly insolvent, and all of its property in the hands of the receiver appointed by the court, and where the money to pay the taxes has arisen from the gross earnings, and an amount suflicient to pay them is in the hands of the receiver, we are of opinion that the proceedings to ob- tain payment of those taxes thus In the re- ceiver's hands are not confined to those pro- vided for by the act cited, but that a direct application for an order on the receiver for 8G8 RECEIVERS. their payment may be made to the court by petition, as in this case, having made the corporation and the receiver a party tnereto. If there are any disputed questions of fact to be determined, the court may direct an action to be brought, or may determine it in some other and more summary way. We feel more certain in regard to this question by looking at the proceedings which are provided to be taken under the general laws. They are to be instituted by petition upon which the court may sequestrate such part of the property of the company as shall be necessary for the purpose of satisfying the taxes in aiTear with the costs, etc.; and In its discretion the court may proceed fur- ther, and enjoin the company and its officers from any further proceedings under the char- ter, in order to enforce the payment of the taxes. But, in a case where the whole of the property has already been sequestrated under other proceedings, the sequestration provided for would not be very efficient. Nei- ther would an injunction which simply en- joined the company and its officers from fur- ther proceedings under the charter be in and of itself very efficient as against a receiver who was operating the railroad under the order of the court. In such case, if the in- junction were granted, it would only become effective because the court would then order its officer, the receiver, to pay the tax, and go on with the operation of the road. But it would be a farce for the court to first is- sue the injunction against the receiver, re- straining him from operating the road until he paid the tax, and then ordering him to pay it for the purpose of continuing its proper operation. The result would be that the re- ceiver in the end would pay the tax, be- cause he was ordered to do so by the court. The order might just as well be issued in the first instance, without this circuitous method. The privilege granted by the other section of tlie act of 1881, to sue for the taxes in the name of the people, in an action brought by the attorney general at the instance of the comptroller, would also result in the court ordering the receiver to pay the tax, for in no other way could the judgment for tne re- covery of the tax become effectual. In all cases, therefore, the payment by the receiver would be made by order of the court, and in all cases the order might just as well be made in the first instance. We do not think that these provisions of the statute should, under such circumstances, be held to restrict the general power of the court to direct its officer to pay those claims which exist in favor of the state for taxes Imposed upon the corporation, where tha claim of the state for the payment of such taxes is, as we think, a paramount one. An insolvent corporation in the hands of and op- erated by a receiver was not in the minds of the framers of the statute when providing for the enforcement of payment of taxes from what may be termed a "going corporation." It may be admitted that in a strict and tech- nical sense these taxes, when first imposed, are not a lien upon any specffic property of the corporation. But we are of the opinion that the railroad, when in the receiver's hands and operated by him. Is operated under and by virtue of the franchise which has been conferred upon the corporation by the state; and that when he receives the gross earnings arising from its operation, and has in his hands money enough to pay these tax- es, the state has a paramount right to collect them before the moneys applicable to such payment shall be paid away by the receiver. Having such paramount right, the court may in its discretion listen to the petition of the state through its attorney general, and direct its officer to make the payment asked for. It is claimed, however, that when a re- ceiver is appointed by the court, if he oper- ates the railroad under its order, he does so by virtue of the equity powers of the court conferred by the constitution; and hence that the receiver Is not bound to pay the taxes, although he receives all the earnings of the company. But what does the receiver oper- ate? Under this order of the court he takes possession of all the property of the corpora- tion, and proceeds to operate, that is, to run, its trains, and to do all that was formerly done under the direction of the board of di- rectors. In this way he uses the franchise which has been conferred by the state upon the company, and he uses It as an officer of the court which is administering the affairs of the company, and through the court he acts as the company to the same extent, pro hac vice, as If the board of directors were op- erating the railroad. It is the franchise which is being used in both cases, only in one case It is used for the company, and sub- stantially by it, by means of its board of di- rectors; while in the other case the same franchise Is being used, and the road Is oper- ated under it, by an officer of the court, until, by virtue of the legal proceedings connected with the receivership, the receiver is dischar- ged, and the road returned to Its former pos- sessors, or other proceedings taken under a reorganization, as provided by law. The learned counsel for the receiver has cit- ed the case of Com. v. Bank, 123 Mass. 493, as authority for the proposition that after a corporation Is placed In the hands of a re- ceiver no tax of this nature can be levied up- on or collected from It. But the case Is not in the least analogous to the one under dis- cussion. In the case In Massachusetts the tax was laid upon the amount of the average of deposits in the bank for the preceding six months, which was held to be a tax on the value of the franchise thus ascertained; and it was further held that if on the day when the tax was to be laid the bank was In the hands of a receiver It was not liable to pay any part of the tax, although it transacted business during a part of the preceding six months. It will be seen, however, that the EtECBIVERS. 869 receiver was appointed under a decree of the court perpetually enjoining the bank from do- ing any further business, and the receiver ■was appointed to wind up its affairs, and the bank was at once and forever deprived of the exBrclse or use of its franchise. The court held that as the tax was upon the franchise, the value of which was to be ascertained on the day the tax was imposed, by reference to the amount of the average of deposits for the past six months, if on that day the franchise had ceased to exist, no tax could for that reason be imposed; and it was wholly imina- terlal that for a portion of the preceding six months the franchise had been in existence and was actually used. It thus appears that the appointment of the receiver was one of the steps to wind up a corporation which was, on the day set for the imposition of the tax, to all intents and purposes dissolved, and was no longer In existence, and hence the deci- sion of the court was entirely unassailable. No such fact exists in the case before us. The corporation was not dissolved in form nor in substance, so far as this question is concerned. The franchise was in existence and was actually used, and no decree of dis- solution had ever been pronounced. The agent who used the franchise was an officer of the court, acting under its authority, in- stead of the board of directors; but it was the franchise of the company which was in use at all times. In Trust Co. v. Railroad Co., 117 U. S. 434, 6 Sup. Ct. 809, the supreme court of the United States, while declining to give preference to receiver's certificates over mortgage bondholders under the facts in that case, did grant preference to the claims of the state for taxes. The taxes were, it is true, upon property; but the case is not au- thority for the proposition that if the tax is not a technical Hen on specific property when Imposed, then no preference can be granted in a case like this. We reiterate the state- ment of Porter, J., in Re Columbian Ins. Co., 3 Abb. Dee. 239, that there is great force in the claim that "the state has succeeded to all the prerogatives of the British crown, so far as they are essential to the efficient exer- cise of powers inherent in the nature of civil government, and that there is the same prior- ity of right here, in respect to the payment of taxes, which existed at common law in fa- vor of the public treasury." We certaiuly have no doubt that, in a case like this, the court can make the order, (slight- ly modified as mentioned below,) which was made herein at special term, and that the statutory remedies for the collection of taxes of the nature herein specified are not con- trolling In the case of an insolvent corpora- tion and upon such facts as are herein prov- ed. The parties hereto both agree that, as there is a fund applicable to the payment of these taxes, there is no necessity for the in- sertion in the special term order of the provi- sion for issuing certificates by the receiver to raise money to pay the taxes. Without dis- cussing or deciding the question, therefore, whether, in case the receiver had not the money on hand with which to pay these tax- es, the court would order him to issue and sell receiver's certificates, and with the pro- ceeds pay them, we shall modify the special term order by striking out such a provision. As thus modified, we think that order was correct. For these reasons the order of the general term of the supreme court should be revers- ed, and that of the special term be modified, as already stated, and as modified affirmed, without costs. All concur. 870 RECEIVERS. FARMERS' LOAN & TRUST CO. v. GRAPE CREEK COAL CO. (50 Fed. 481.) Circuit Court, S. D. Illinois. May 7, 1892. lu Equity. Bill by the Farmers' Loan & Trust Company against tbe Grape Creek Goal Company to foreclose a mortgage. A receiver was appointed, and he now asks leave to is- sue receiver's certificates. Runnells & Burry, for Farmers' Loan & Trust Co. AA'. J. Calhoun, for J. G. English, receiver. Hess & Johnson, for Travellers' Ins. Co. and other objecting bondholders. GRESHAM, Circuit Judge. The defendant, a private corporation, whose chief business Is mining and selling coal, conveyed to the com- plainant, in trust, lands and two coal mines in Vermilion county. 111., to secure an issue of bonds amounting to $500,000. An install- ment of Interest was allowed to remain due for more than six months, and this bill was filed to foreclose the trust deed. Joseph G. English, who was appointed receiver, asks for an order authorizing him to issue receiver's certificates not exceeding in all $24,000, which shall be a first lien upon the trust property, to enable him to pay taxes now due, amounting to $3,428.04, take up outstanding certificates amounting to $6,400, which were issued under an order of the Vermilion circuit court, in a suit to foreclose the same trust deed, and to continue the operation of the mines. The receiver represents that, with additional working capital, he could operate the mines profitably, and better protect them. The holders of 75 per cent, of the bonds and the corporation Join in the receiver's request. The holders of the remaining 25 per cent, re- sist the application. The corporation is in- solvent. It is not claimed that the receiver is without means to pay taxes, and it is chief- ly to enable him to continue the operation of the mines for anticipated profits that he de- sires authority to issue certificates. When it becomes necessary for a court of chancery to take possession of property which is the subject of litigation, by placing it in the hands of a receiver, all expenses incident to its safe-keeping and preservation are prop- erly chargeable against it; and, if there be no income, such expenses will be paid out of the proceeds of the corpus before distribution to lien or other creditors. It does not follow, however, that because property of a private corporation or a natural person may be thus protected and preserved before sale, that, in order to raise money to operate it for profit, a court may place a charge upon it in ad- vance of existing liens. Pending a suit to foreclose a mortgage executed by a railroad corporation, the road may be operated by a receiver, and debts contracted for labor, sup- plies, and other necessary purposes before as well as after the appointment of a receiver, may be made a first lien upon income, and, if that is not adequate, upon the corpus of the property. In the exercise of this exceptional and extraordinary Jurisdiction, which Is of comparatively recent origin, courts have en- tered orders making receiver's certificates first liens on the mortgaged property. This has been done, however, on grounds not applica- ble to mortgages executed by private corpora- tions. A railroad corporation Is a quasi pub- lic institution, charged with the duty of op- erating Its road as a public highway. If the company becomes embarrassed and unable to perform that duty, the courts pending pro- ceedings for the sale of the road will operate it by a receiver, and make the expense in- cident thereto a first lien. This is done on account of the peculiar character of the prop- erty. It Is generally mortgaged to secure bonds, and persons who invest in such securi- ties know that the mortgage rests upon prop- erty previously impressed with a public duty. Private corporations owe no duty to the pub- lic, and their continued operation is not a matter of public concern. It is only against railroad mortgages that the supreme court of the United States has sustained orders giving priority to receiver's certificates representing particular indebtedness, and, as already stat- ed, then only on principles having no applica- tion to a mortgage executed by a private cor- poration owing no duty to the public. Fos- dlck V. Schall, 99 U. S. 235; Barton v. Bar- bour, 104 U. S. 126; Miltenberger v. Railroad Co., 106 U. S. 286, 1 Sup. Ct. 140; Union Trust Co. V. tllinois M. E. Co., 117 U. S. 434, 6 Sup. Ct. 800; Wood v. Trust Co., 128 U. S. 421, 9 Sup. Ct. 131; Kneeland v. Trust Co., 136 U. S. 89, 10 Sup. Ct. 950; Morgan's L. & T. R. & S. S. Co. V. Texas Cent. Ry. Go., 187 U. S. 171, 11 Sup. Ct. 61. In Wood V. Trust Co. the court said: i'The doctrine of Fosdick v. Schall has never yet been applied in any case except that of a railroad. The case lays great emphasis on the consideration that a railroad is a peculiar property, of a public nature, and discharging a great public work. There is a broad dis- tinction between such a case and that of a purely private concern. We do not undertake to decide the question here, but only point it out." In Kneeland v. Trust Co., supra, in discuss- ing the Jurisdiction of the chancellor to dis- place the lien of a railroad mortgage, the court said: "Upon these facts we remark, first, that the appointment of a receiver vests in the court no absolute control over the prop- erty, and no general authority to displace vested contract liens. Because, in a few spec- ified and limited cases, this court has declar- ed that unsecured claims were entitled to priority over mortgage debts, an idea seems to have obtained that a court appointing a re- ceiver acquires power to give such preference to any general and unsecured claims. It has been assumed that a court appointing a re- ceiver could rightfully burden the mortgaged RECEIVERS. 871 property for the payment of any unsecured indebtedness. Indeed, we are advised that some courts have made the appointment of a receiver conditional upon the payment of all unsecured indebtedness In preference to the mortgage liens sought to be enforced. Can anything be conceived which more thoroughly destroys the sacredness of contract obliga- tions? One holding a mortgage debt upon a railroad has the same right to demand and expect of the court respect for his vested and contracted priority as the holder of a mort- gage on a farm or lot. So, when a court ap- points a receiver of railroad property, It has no right to make that receivership condition- al on the payment of other than those few unsecured claims which, by the rulings of this court, have been declared to have an equitable priority. No one is bound to seU to a railroad company, or to work for it; and whoever has dealings with a company whose property Is mortgaged must be assum- ed to have dealt with it on the faith of its personal responsibility, and not in expecta- tion of subsequently displacing the priority of the mortgage liens. It is the exception, and not the rule, that such priority of liens can be displaced. We emphasize this fact of the sacredness of contract liens for the reason that there seems to be growing an idea that the chancellor, in the exercise of his equitable powers, has unlimited discretion In this mat- ter of the displacement of vested liens." And further on In the same opinion the court said: "If, at the instance of any party right- fully entitled thereto, a court should appoint a receiver of property, the same being rail- road property, and therefore under an obliga- tion to the public of continued operation, it, in the administration of such receivership, might rightfully contract debts necessary for the operation of the road, either for labor, supplies, or rentals, and make such expenses a prior lien on the property itself." In the language above quoted, there is a plain implication that the limited power which courts may exercise in displacing the liens of railroad mortgages should not and cannot be extended to mortgages executed by private corporations. The court is not asked to subvert the lien of the mortgage on the ground that the trustee or bondholders have got possession of anything which, in equity, belongs to general creditors. It is to enable him to operate the mines for the benefit of bondholders, against the wish of part of them, that the receiver desires to be invested with authority to issue certificates which shall be a prior lien upon the property embraced in the trust deed. Extensive as are the powers of courts of equity, they do not authorize a chancellor to thus impair the force of solemn obligations and destroy vested rights. In- stead of displacing mortgages and other liens upon the property of private corporations and natural persons, it is the duty of courts to uphold and enforce them against all subse- quent incumbrances. It would be dangerous to extend the power which has been recently exercised over railroad mortgages, (sometimes with unwarranted freedom,) on aocount of their peculiar nature, to all mortgages. The power does not exist, and the application is denied. 872 RECEIVERS. HANNA et al. v. STATE TRUST CO. et al. (70 Fed. 2, 16 C. C. A. 586.) Circuit Court of Appeals, Eighth Circuit. Sept 23, 1895. No. 593. Appeal from the circuit court of the United States for the district of Colorado. On the 1st day of Isovember, 1889, the Deuver-Arapahoe Land Company, a Colorado corporation, executed to the appellant John R. Hanna its trust deed on 11,320 acres of land in Arapahoe and Douglas counties, Colo., to secure to the appellant Rufus Clark the payment of its promissory notes aggregat- ing the sum of $97,000. On the same day the same corporation executed to the Mer- cantile Trust Company of New York, as trustee, a deed of trust on 4,480 acres of land in Arapahoe county, Colo., to secure an issue of Its first mortgage bonds amounting to $140,000. On the 1st day of March, 1890, the Denver Water-Storage Company, a Colo- rado corporation, executed to the State Trust Company of New York, as trustee, a deed of trust on about 1,100 acres of land in Douglas county, Colo., together with the Castlewood dam and reservoir, irrigating canals, ditches, etc., to secure the payment of its first mort- gage bonds amounting to the sum of $300,- 000. Bach of these deeds of trust covers different properties, and is the first and valid lieu upon the property covered by it. On or about the 1st day of May, 1891, the Denver Land & Water-Storage Company rvas organ- ized, pursuant to the laws of Colorado, by the consolidation of the Denver-Arapahoe Land Company and the Denver Water-Stor- age Company, and by virtue of such consoli- dation acquired, subject to the deeds of trust above described, all of the property covered by or embraced therein. Immediately after its organization the Denver Land & Water- Storage Company executed a deed of trust upon the entire property acquired by the con- solidation mentioned, subject to the several deeds of trust executed by the constituent companies, and above set forth, to the State Trust Company of New York, as trustee, to secure an issue of its general or consolidated mortgage bonds to' the amoimt of $800,000. On the 4th day of June, 1894, the State Trust Company of New York, as trustee in the consolidated mortgage last above men- tioned, filed its bill of complaint in the cir- cuit court of the United States for the dis- trict of Colorado against the Denver Land & Water-Storage Company, alleging that it had made default, and failed to pay the taxes on its lands or interest upon its bonds, and that it was insolvent, and prayed for the fore- closure of its mortgage and the appointment of a receiver. This bill admitted the priority of the underlying deeds of trust executed by the constituent companies, and that any re- lief granted In the suit, by foreclosure or otherwise, must be subject to the rights and equities existing under the prior mortgages. On the day the bill was filed the Denver Land & Water-Storage Company appeared and answered; admitting its insolvency, and confessing all the allegations to the bill. The court thereupon appointed a receiver. On the 24th of July, 1894, the State Trust Company filed its amended and supplemen- tal bill of complaint, to which the Mercantile Trust Company of New York, and the appel- lants, John R. Hanna and Rufus Clark, were made defendants. This amended bill prayed relief as follows: That the said Mercantile Trust Company, John R. Hanna, and Rufus Clark might be brought in as defendants in the action, and required to set up their re spective rights upon the real estate covered by the deeds of trust executed by the Den- ver-Arapahoe Land Company; that the re- spective rights of the trustees under the sev- eral mortgages or deeds of trust might be judicially ascertained and determined by the court; that the properties covered by the respective deeds of trust might be marshal- ed, and judicially ascertained and adjusted; that the amounts due upon tne notes and bonds issued under the several deeds of trust might be adjudicated and determined; that the said deeds of trust might be foreclosed; that the receiver theretofore appointed in the action might be continued as receiver of all the property covered by each and all of said deeds of trust; that the said John R. Hanna, Rufus Clark, and the Mercantile Trust Com- pany, and the holders of any of the notes, bonds, or securities issued under said deeds of trust, might be enjoined and restrained from commencing any action or proceeding in the circuit court of the United States for Colorado, or any other court, for the fore- closure of the said deeds of trust, and from enforcing their said notes and bonds, or for the collection thereof, against the Denver Land & Water-Storage Company, or its prop- erty and effects, except in this action. On the 16th day of August, 1894, a special master appointed in the cause made a report, from which It appears that the company was endeavoring to carry on a colonization business, and was engaged in selling small tracts of land, for fruit raising and garden purposes, to settlers, or those who proposed to become settlers, or coloni,sts; that in many cases the company sold these tracts of land (usually 10 acres), under executory contracts, for small amounts of cash dovra, and defer- red payments extending over a period of five years, when the various purchasers were to receive the deeds. The company agreed to plant these tracts with fruit trees, and cul- tivate and care for them during the five years. On the 16th of August the receiver filed his petition, stating, substantially, that the property of the Denver Land & Water- Storage Company consists of 17,000 acres of land in the counties of Arapahoe and Doug- las, Colo., and an extensive dam or reservoir, known as the "Castlewood Dam," and a sys- tem of canals and Irrigating ditches connect- RECEIVERS. 873 ed therewith, and a large number of land- purchase contracts and land-purchase notes, referred to in the report of the special mas- ter; that the original plan of the Denver Land & Water-Storage Company contemplat- ed the colonization of these lands; the amount of the land-purchase contracts and notes, as shown by the report of the special master; the agreements made by the Denver liand & Water-Storage Company to plant and cultivate the lands, already referred to, and that in consideration tliereof the various purchasers have- made large payments, and have a right, in justice and equity, to de- maud performance of the contracts of the Denver Land & Water-Storage Company, and that otherwise the fruit trees upon the tracts sold under the planting and cultivation contracts will die, and the payments made by the purchasers will be absolutely lost; and that, moreover, it is of vital importance to the company that it should collect the balance due upon the land-sale notes and contracts mentioned, which collection is en- tirely dependent upon the keeping up of the tracts of land, and the performance by the company of the contracts with the pm-chas- ers aforesaid. The petition then presents a number of reasons and arguments why, in the judgment of the receiver, certificates should be issued, and calls attention to the default in taxes upon the company's lands, alleged to amount to about $4,000. The par- ticulars of the three underlying mortgages and the consolidated mortgage are then giv- en, and the receiver calls the court's atten- tion to the opportunity which presents itself for engaging in the colonization of the com- pany's barren lands, if he is authorized to issue certificates of indebtedness to raise funds with which to properly present the merits' and advantages of the Denver Land & Water-Storage Company's property. On the 15th day of September, 1894, the court made an order, upon the receiver's petition, which authorized the issue of receiver's cer- tificates to pay taxes due upon the lands, and to redeem the same from tax sales, and mak- ing such certificates a first and paramount lien upon the property upon which the taxes were paid. The order also contained this provision: "(5) It is further ordered, ad- judged, and decreed that in addition to the amounts which may be necessary to pay the taxes now in arrears upon the property set forth and described in paragraphs 2, 3, and 4 of this order, the receiver shall have, and is hereby granted, authority to borrow such additional sum of money as shall, together with said amounts for taxes, amount in the aggregate to a sum not exceeding $10,000, and to issue therefor his certificates of in- debtedness, which said certificates of indebt- edness shall be first and paramount liens upon all the property, rights, and franchises now owned or controlled by the said the Denver Land & Water-Storage Company, de- fendant herein, wheresoever situated, and subject . to the jurisdiction of this court And said additional sums of money shall be used and applied by said receiver for the pui-pose of preserving the property of the Denver Land & Water-Storage Company in his possession and custody, and carrying out and maintaining the contracts of the com- pany now in existence, under and by which the company has heretofore sold tracts of land to various parties, which said contracts are referred to in the report of said receiver, and for such other purposes as are set out in said petition, with reference to the main- tenance, preservation, and protection of the property of the company, or as the court may from time to time direct" From this order, John K. Hanna, trustee in the deed of trust dated November 1, 1889, and Rufus Clark, the beneficiary named therein, and the holder of a large amount of the bonds secured by the mortgage to the Mercantile Trust .Company, appealed to this court. John S. Macbeth (Enos Miles, on the brief), for appellants. A. C. Campbell (A. E. Pattison and Henry W. Hobson, on the brief), for appellees. Before CALDWELL, SANBORN, and THAYER, Circuit Judges. CALDWELL, Circuit Judge, after stating the case as above, delivered the opinion of the court. The precise question in this case is wheth- er a court of chancery which has appointed a receiver for an insolvent private corpora- tion in a foreclosure suit brought by a sec- ond mortgagee may, against the objection of the first mortgagee, authorize its receiver to issue receiver's certificates to raise money to carry on the business of the insolvent corpo- ration and to improve its lands, and make such certificates a first and paramount lien upon the lands covered by the first mortgage. So far as we are advised, the power to do this has been denied in every case in which the question has arisen. One of the first cases in which the question arose was' Raht v. At- trill, 106 X. Y. 423, 13 N. E. 282. In that case a hotel company mortgaged its proper- ty to raise funds to build a hotel. Before the completion of the hotel the corporation became insolvent, and upon the application of its principal stockholder a receiver was ap- pointed; and upon an application and shovr- ing that the wages of the men who worked on the hotel building were unpaid, and that they threatened, unless paid, to burn the building, the court made an order authorizing the receiver to issue certificates, which were declared to be a lien prior to the trust mort- gage, to raise funds to pay the wages due the laborers. A referee reported that, if the money had not been raised to pay the wages due the men, the hotel and other property of the corporation "would, in all probability, have been destroyed or seriously injured." 874 RECEIVERS. In tlie progress of the case the mortgagee de- nied tliat the court had authority or power to set aside the prior lien of the mortgage and make the receiver's certificates, issued under the circumstances mentioned, a first and prior lien upon the property. The court delivered an exhaustive opinion, covering every aspect of the question. We quote some of its utter- ances. The court said: "The lien of the mortgage attaches, not only to the land in the condition in which it was at the time of the execution of the mortgage, but as chan- ged or improved by accretions or by labor expended upon it while the mortgage Is in existence. Creditors having debts created for money, labor, or materials used in im- proving the mortgaged property acquire on that account ncf legal or equitable claim to displace or subordinate the lien of the mort- gage, for their protection. * * • The act of the court in taliing charge of property through a receiver is attended with certain necessary expenses of its care and custody; and it has become the settled rule that ex- penses of realization, and also certain expens- es which are called 'expenses of preservation,' may be incurred, under the order of the court, on the credit of the property; and it follows, from necessity, in order to the effectual ad- ministration of the trust assumed by the court, that these expenses should be paid out of the income, or, when necessary, out of the corpus, of the property, before distribution, or before the court passes over the property to those adjudged to be entitled. * * * It would be difficult to define, by a rule applica- ble in every case, what are expenses of pres- ervation which may be incurred by a receiver by authority of the court. It was said by James, L. J., in Re Regent's Canal Iron- Works Co., 3 Ch. Div. 411, 427, that 'the only costs for the preservation of the property would be such things as the repairing of the property, paying rates and taxes which would be necessary to prevent any forfeiture, or putting a person in to take care of the property.' Wherever the true limit is, we think it does not include the expenditure au- thorized by the order of August 17th, and that such an expenditure is, and ought to be, excluded from the definition. There must be something approaching a demonstrable neces- sity, to justify such an infringement of the rights of the mortgagees as was attempted in this case." After referring to the cases in which the receivers of insolvent railroad cor- porations have been authorized to issue cer- tificates which were declared to be a first lien on the property of the corporations, the court said: "It cannot be successfully denied that the decisions In these cases vest in the courts a very broad and comprehensive jurisdiction over insolvent railroad corporations and their property. It will be found, on examining these cases, that the jurisdiction asserted by the court therein is largely based upon the public character of railroad corporations, the public interest in their continued and suc- cessful operation, the peculiar character and terms of railroad mortgages, and upon other special grovmds, not applicable to ordinary private corporations. * * * These cases furnish, we think, no authority for upholding the order of August 17 th, or for subverting the priority of lien which, according to the general rules of law, the bondholders acquir- ed through the trust mortgage on the proper- ty of the company. It would be unwise, we think, to extend the power of the court in dealing with property in the hands of receiv- ers to the practical subversion or destruction of vested interests, as would be the case in this instance if the order of August 17th should be sustained. It is best for all that the integrity of contracts should be strictly guarded and maintained, and that a rigid, rather than a liberal, construction of the power of the court to subject property in the hands of receivers to charges, to the preju- dice of creditors, should be adopted." We concur in the doctrine expressed in this case. See, to the same effect, Farmers' Loan & Trust Co. V. Grape Creek Coal Co. (C. 0.) 50 Fed. 481; Laughlin v. RoUing^tock Co. (C. C.) 64 Fed. 25; Fidelity Insurance Ti-ust & Safe-Deposit Co. v. Roanoke Iron Co. (C. C.) 68 Fed. 623; Snively v. Coal Co. (C. C.) 69 Fed. 204; and Hooper v. Trust Co. (Md.) 32 Atl. 505, 513. The contention of the appellees is that the order made by the circuit court finds sanc- tion in the cases of Wallace v. Loomis, 97 U. S. 146; Fosdick v. Schall, 99 V. S. 235; Bar- ton V. Barbour, 104 U. S. 126; Miltenberger V. Railroad Co., 106 U. S. 286, 1 Sup. Ot. 140; Ti-ust Co. V. Souther, 107 U. S. 591, 2 Sup. Ct. 295,— and other later cases of like char- acter, in which receivers of insolvent railroad corporations were authorized to issue receiv- ers' certificates for various purposes, which were made a first and paramount lien on the property of the insolvent railroad company. But the doctrine of these cases has no appli- cation to this case. They rest on the pecul- iar character of railroad property and of a railroad corporation. The distinction between railroad corporations, which are of a quasi public character, and purely private corpora- tions, has been often pointed out, and need not be repeated here. It is enough to say that the supreme court itself has said that the doctrine of the cases cited has only been applied in railroad cases. In Wood v. Safe- Deposit Co., 128 U. S. 416, 9 Sup. Ct. 131, the court said: "The doctrine of Fosdick v. Schall has never yet been applied in any case ex- cept that of a railroad. The case lays great emphasis upon the consideration that a rail- road is a peculiar property, of a public nature, and discharging a great public work. There is a broad distinction between such a case and that of a purely private concern. We do not undertake to decide the question here, but only point It out." The bill In this case is one to foreclose a second mortgage. To such a bill the prior RECEIVERS. 875 mortgagees are not even necessary parties. Jerome v. McCarter, 94 U. S. 734. The va- lidity and priority of the liens of the mort- gages under which the appellants claimed is distinctly admitted in the original and amend- ed bills. The pm-pose of filing the amended bill making the prior mortgagees defendants seems to have been to enjoin them from fore- closing then: mortgages, and subject the lands covered by their mortgages to a prior lien for money borrowed to carry on the business of the corporation and improve its lands. It prays that the receiver may be empowered to manage and operate the property of the in- solvent corporation, which consists In irrigat- ing, improving, and colonizing, or settling, arid lands; and, to the end that the receiver may not be interfered with in the conduct of the business, it prays that the holders of all mortgages prior to the complainants' may be enjoined from foreclosing the same. The amended bill would seem to be founded on the theory that a private corporation conducting any kind of business may, when it becomes insolvent, obtain immunity from the compul- sory payment of its debts by procuring a junior mortgagee, or some other creditor, to file a bill alleging the Insolvency of the cor- poration, and praying for the appointment of a receiver with authority to manage and conduct its business. Upon the filing of such a bill, it is supposed to be competent for the court, in addition to appointing a receiver to carry on the business of the corporation, to enjoin its creditors, including the holders of the prior liens on its property, from collecting their debts by due course of law, and to continue such injunction in force so long as the court, in its discretion, sees fit to carry on the busi- ness of the insolvent corporation. When a re- ceiver is appointed under such a bill, he usu- ally makes haste, as the receiver did in this case, to assure the court that, if he only had some capital to start on, he could greatly bene- fit the estate by carrying on the business that bankrupted the corporation. In this case, the company being insolvent, and Its property mortgaged for more than It was worth, there was no way of raising money to set the re- ceiver up in business, except by the court giv- ing its obligations, in the form of receiver's certificates, and making them a paramount lien on all the property of the corporation, by displacing the appellants' prior liens thereon. As commonly happens in cases of this char- acter, the receiver, the insolvent corporation, and the junior mortgagee united in urging the court to arm its receiver with the desired pow- ers. They ran no risk in so doing. The cor- poration was insolvent, and a foreclosure of the prior mortgage would leave the junior mortgagee without any security; so that it had nothing to lose, and everything to gain. In experiments to enhance the value of the mortgaged property, so long as the cost of those experiments was made a prior lien there- on. The effect of the proceeding was to bur- den the prior mortgagee with the whole cost of the expenditures and experiments made for the betterment of the property on the petition, and for the benefit of the insolvent corporation and the junior mortgagee. The representation is always made. In such cases, that the re- ceiver can carry on the business much more successfully than was done by the Insolvent corporation. This commonly proves to be an error. Kaht v. Attrill, 106 N. Y. 430, 13 N. E. 282. But, If it were true, it would afford no ground of equitable jurisdiction, for it is not a function of a court of equity to carry on the business of private corporations, whether solvent or Insolvent. It is obvious that it the holders of the first mortgages and the other creditors of the insolvent corporation were al- lowed to proceed, in the customary and lawful mode, to collect their debts, it would put an end to the business of the receiver, and they are therefore enjoined from foreclosing their mortgages or collecting their debts. The chan- cery court thus assumes, in effect, all the pow- ers and jurisdiction of a court of bankruptcy or Insolvency, but without any bankrupt or insolvent law to guide or direct it in the admin- istration of the estate. Its only guide is that varying and unknown quantity called "judicial discretion." The powers claimed for a court of equity in such cases are, indeed, much greater than a court of bankruptcy can exer- cise. There never was a bankrupt court, un- der any bankrupt act, authorized, at its dis- cretion, to displace or nullify valid liens on the bankrupt's property, or itself to create liens paramount thereto. The rights of the citizen, lawfully acquired by contract, are un- der the protection of the constitution of the United States, and, like the absolute rights of the citizen, are not dependent for their exist- ence or continuance upon the discretion of any court whatever. Constitutional rights and obligations are no more dependent on the dis- cretion of the chancellor than they are on the discretion of the legislatm'e. "Rights," says the supreme court of the United States, "un- der our system of law and procedure, do not rest in the discretionary authority of any ofli- cer, judicial or otherwise." In re Parker, 131 U. S. 221, 9 Sup. Ct. 708. If junior lien cred- itors of an insolvent private corporation could do what has been attempted in this case, every private corporation operating a sawmill, grist- mill, mine, factory, hotel, elevator, irrigating ditches, or carrying on any other business pur- suit, would speedily seek the protection of a chancery court, and those courts would soon be conducting the business of all the insolvent private corporations in the country. If it were once settled that a chancery court, through a receiver appointed on the petition of a junior mortgagee, could carry on the business of such Insolvent corporations at the risk and expense of those holding the first or prior liens on the property of the corporation, such liens would have little or no value. It is no part of the duty of a court of equity to conduct the busi- ness of Insolvent private corporations, any more than it is to carry on the business of S76 RECEIVERS. insolvent natiiral persons. If it may take un- der its control the property of an Insolvent private corporation, and authorize a receiver to carry on its business, and malie the debts incurred by the receiver in so doing paramount liens on all the property of the corporation, and enjoin its creditors in the meantime from collecting their debts, it is not perceived why it may not proceed in the same way with the estate of an insolvent natural person. Without pursuing the subject further, we re- fer to what is said, and to the cases cited, in Scott V. Trust Co., 16 C. C. A. 358, 69 Fed. 17. The order appealed from is void, whether the suit in which it was made is treated as one to foreclose a second mortgage, or as a bill in equity to administer the estate of an insolvent corporation. It was open to the com- plainant to talce and execute a decree foreclos- ing its second mortgage, and it is good prac- tice in such cases to require this to be done, on pain of dismissing the bill. And if the complainant desired that money be spent, be- yond the income of the property, in carrying on the business of the corporation or improv- ing the mortgaged property, it was at lib- erty to furnish the means for that purpose; but it had no equity to ask that the expense and the hazards of doing so should be saddled on the first mortgagee, and the court had no jurisdiction or power to place it there. Taxes are the first and paramount lien on all property, and must be paid. When taxes are due on property in the hands of a receiver, and he has no funds to pay them, the court will authorize him to borrow money for that purpose, and make the obligation given for the money so borrowed a prior lien on the proper- ty on which the taxes were due. This is not fixing a new or additional lien on the prop- erty, or displacing any prior lien. It is sim- ply changing the form of the lien from one for taxes to one for money borrowed to pay the taxes. The order and decree of the circuit court appealed from, which authorizes the receiver to borrow money to "be used and applied by said receiver for the purpose of preserving the property of the Denver Land & Water-Stor- age Company in his possession and custody, and carrying out and maintaining the con- tracts of the company, now in existence, un- der and by which the company has heretofore sold tracts of land to various parties, which said contracts are referred to in the report of said receiver, and for such other purposes as are set out in said petition with reference to the maintenance, preservation, and protection of the property of the company," and which authorizes the receiver to issue his certificates of indebtedness for the money borrowed for these purposes, and makes such certificates of indebtedness the first and paramount lien "up- on all the property, rights, and franchises now owned or controlled by the said the Denver Land & Water-Storage Company," Is void. In so far as it makes the certificates issued by the receiver a first and paramount lien on the lands embraced in the mortgages of the ap- pellants, and is therefore reversed. RECEIVERS. 877 HOWARTH V. ELLWANGER. SAME v. KENT. SAME V. WOODWORTH. (86 Fed. 54.) Circuit Court, N. D. New York. March 31, 1898. Nos. 3,211-3,213. At Law. Tried by the court. These actions are brought against the de- fendants who were stocltholders of the Trad- ers' Bank of Tacoma, Wash., to enforce a lia- bility created by the law of that state mak- ing them individually responsible equally and ratably to the extent of their stock for all debts of the bank while they remained stock- holders. The plaintiff is a citizen of Wash- ington residing at Tacoma. The defendants are citizens of New York residing at Roches- ter. On the 19th day of May, 1894, the plain- tiff was appointed receiver of the Traders' Bank by an order of the superior court of Washington made in an action commenced against said bank by Henry Hewett, Jr., and George Browne in which it was adjudged that the bank had suspended business and was insolvent. The plaintiff duly qualified as receiver and has since acted as such. On the 12th of September, 1894, the court made an order in said action permitting certain stock- holders to intervene for the benefit of them- selves and all other stockholders of the bank. On the 20th of October all the defendants, ex- cept Chauncey B. Woodworth, were by order of the court upon their own petition made parties to the said action. After applying all the property of the bank to the payment of its debts there remained a deficiency, which, on March 17, 1897, was adjusted and ad- judged by the court to be the sum of $131,670. The plaintiff was thereupon directed by the court to levy upon the stockholders an assess- ment of 26.34 per cent, and bring suit against those stockholders who, after demand, refus- ed to pay. The amounts assessed against the defendants respectively were duly demanded and payment thereof refused. P. M. French, for plaintiff. Charles M. Williams, for defendant Ell- wanger. M. H. McMath, for defendant Kent. William F. Cogswell, for defendant Wood- worth. COXE, District Judge. It is not disputed that the defendants were stockholders of the Traders' Bank, that the bank became insol- vent, that the plaintiff was appointed receiv- er, that a large deficiency was ascertained, that an assessment was levied by the receiv- er upon the defendants and that all this was done under and pursuant to the constitution and laws of Washington and in conformity to the orders and decrees of the superior court of that state. The first proposition argued by the defend- ants is that the plaintiff, as receiver. Is not entitled to maintain the action. The consti- tution and statutes of Washington (Const, art. 12, § 11) provide: "That each stockholder of any banking * * * association shall be invidually and personally liable, equally and ratably, and not one for another, for all the contracts, debts and engagements of such corporation or association accruing while they remain stoeliholders to the extent of the amount of their stock therein, at the par val- ue thereof, in addition to the amount invested in such shares." The courts of Washington have decided that this liability can only be enforced by a receiver under the direction of the court. Cole V. Railroad Co., 9 Wash. 487, 37 Pac. 700; Wilson v. Book, 13 Wash. 676, 43 Pac. 939; Hardin v. Sweeney, 14 Wash. 129, 44 Pac. 138; Watterson v. Masterson, 15 Wash. 511, 40 Pac. 1041. The practical effect of a ruling that a receiver cannot maintain the suit would be to render the law nugatory as to all but resident stocuholders. The Wash- ington courts having ruled that a receiver only can bring the suit, it is manifest, should the federal courts and other state courts hold that he cannot maintain the action, that the defendants not only but all stockholders be- yond the jurisdiction of the Washington courts will escape a liability intended to be uniform and for the benefit of all the cred- itors. The precise question was involved in Sheafe v. Larimer (0. C.) 79 Fed. 921, and was answered adversely to the defendants' contention. The case arose under the same law, and, upon the facts, was almost identical with the case in hand. See, also, Schultz v. Insurance Co. (C. C.) 77 Fed. 375, 387; Av- ery V. Trust Co. (C. C.) 72 Fed. 700; Failey v. Talbee (C. C.) 55 Fed. 892. Again it is argued that the orders and de- crees of the Washington court were not bind- ing upon the defendants, and in support of this view various alleged defects in the pro- ceedings are pointed out. The defendants Kent and Ellwanger were parties to the Washington action and are therefore in no position to attack the judgment of the court in a collateral proceeding. The defendant Woodworth was not a party. But whether parties or not the law seems clear that the stockholders are bound by the order making the assessment. Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739. In Sheafe v. Larimer, supra, the court says: "In this case it must be held that it is not open to the defendant to question the validity of the assessment or- der, on the ground that the stockholders were not personally notified of the application for the order, or for the reason that the stock- holders should not have been assessed until the other assets of the corporation had been wholly exhausted." The actions are not barred by the statute of limitations for the reason that the cause of action did not accrue to the receiver prior to 878 RECEIVERS. the assessment and that was not made until March 17, 1897. The actions were commen- ced two months thereafter. It follows that the plaintiff is entitled to judgment as demanded In the complaints, re- spectively, with interest at the rate of 6 per cent, per annum from May 18, 1897, and costs. RECEIVERS. 879 WYMAN V. EATON et al. (77 N. W. 865, 107 Iowa, 214.) Supreme Court of Iowa. Jan. 20, 1899. Appeal from district court, Pottawattamie county; Walter I. Smith, Judge. As a statement of facts, we have taken the following substantially from those made by counsel: This was an action brought by Al- bert U. Wyman, the receiver of the Nebraslia Fire Insurance Company, to enforce against the several defendants their constitutional lia- bility under the Nebraska statute for their unpaid subscriptions to the capital stock of the company. This company was incorporat- ed on March 13, 1883, in conformity with the laws of the state of Nebraska, under the name of the Nebraska & Iowa Insurance Company, its name being subsequently, on February 28, 1890, changed to the Nebraska Fire Insurance Company, under which name it transacted business until its insolvency, in 1891, when an application for its dissolution by W. G. Madden, one of its stockholders, re- sulted in the appointment of the plaintiff, first, as temporary, and then as permanent, receiver of the corporation, and a decree ad- judging the dissolution thereof. The testimo- ny shows that one J. T. Hart, of Council Bluffs, was largely Instrumental in the organ- ization of the company; that the subscribers to its stock and the original stockholders were citizens pronunent in Omaha and in Council Bluffs; and that when this company, the Ne- braska & Iowa Insurance Company, was or- ganized, there was organized at the same time, mainly through the instrumentality of Mr. Hart, another insurance company, called the Iowa & Nebraska Insurance Company, and having its principal place of business at Coun- cil Bluffs, Iowa. The original intention oJ the organizers, as gathered from the testimo- ny of Mr. Hart, and the contract of subscrip- tion, was to consolidate the two companies after their organization. This, however, was never done, the two corporations being oper- ated separately In each state, although the stockholders were at first the same. The Iowa corporation did business until about May 29, 1885, when it was merged into a company known as the Western Home of Sioux City, and went into the hands of a receiver. The capital of each company was $100,000, and the certificates of stock contemplated sub- scriptions to both companies, and were sign- ed, as appears, by officers of each company. The stock was originally issued in this dupli- cate or combined form. These combined cer- tificates were subsequently canceled, and were separately rewritten and issued. The con- tract of subscriptions of the several defend- ants to the stock of the two companies, and upon which it is claimed that the defendants herein are answerable for the unpaid 50 per :ent. thereof, is as follows: "We, the under- signed subscribers hereto, In consideration of 3ach other's subscription to the capital stock for an insurance company in the state of Iowa and the state of Nebraska, to be organized in both states separately, and after the organ- ization to be consolidated, to be known as the Iowa and Nebraska State Insurance Company, for the purpose of carrying fire and lightning, windstorm and tornado, insurance, business to be done under the laws of both states, do hereby subscribe and agree to pay and secure as provided by the laws of said states the several sums set opposite our respective names, if such an insurance organization is perfected, and on demand, to the secretary thereof, on or before the 12th day of March, 1883." Under this subscription, shares of stock of $100 each were issued to the sub- scribing stockholders, one-half of such shares being issued to them in the Iowa company, and one-half in the Nebraska company. The defendants paid 50 per cent, of their several subscriptions upon the stock of the Nebraska & Iowa Insurance Company at the time of its organization, as required by the laws of the state of Nebraska. Nothing more was ever paid upon the stock except in the manner in- dicated hereafter. The defendants in this ac- tion, who had been subscribers to the capital stock of the consolidated company, and to whom had been issued the joint certificates of stock in the Iowa and Nebraska companies, had surrendered their stock, and new stock had been issued to the parties purchasing from them. These purchasers, as the record shows, were in large part the original pro- moters of the company. Upon the organiza- tion of the company, one-half of the capital stock subscribed being paid in cash, the prom- issory notes of the subscribers, payable on de- mand and secured, were given in payment of the other one-half of the stock of the corpo- ration. Prior to 1887, these defendants had transferred the stock Issued to them, by a sur- render of their stock, and reissuance of other certificates to the purchasers; the company accepting the surrender, and recognizing the transfer, returning the stock notes of the de- fendants, and accepting the stock notes of the transferee in lieu thereof. This was done, as shown by the record, at a time when the cor- poration was solvent, and the transfers were made and new stock issued to solvent pur- chasers; all being done in good faith on the part of the corporation, the transferror, and the transferees. Practically, the entire stock passed into the hands of a syndicate compos- ed in large part of original promoters of the consolidated corporation, but not including any of these defendants. From the date of these transfers, these defendants ceased to have any connection with or control over the corporation. The district court entered judg- ment for the defendants, and the plaintiff ap- pealed. Affirmed. B. & A. C. Wakley and Flickinger Bros., for appellant Harl & McCabe, Finley Burke, Wright & Baldwin, Sanders & Stuart, John T. Stone, and C. R. Marks, for appellees. 8S0 RECEIVERS. GRANGER, J. It will be well to repeat that this action is by a receiver appointed to wind up the afifairs of the Nebraska Fire In- surance Company, on the application of one of its stockholders, to recover from the de- fendants on their subscriptions to the original enterprise, wherein was contemplated the or- ganization of two companies, — one in Nebras- ka, to be known as the Nebraska & Iowa In- surance Company, and one in Iowa, to be known as the Iowa & Nebraska Insurance Company; the two companies to be thereaf- ter consolidated. The first-named company was orgaaized under the laws of Nebraska, and located at the city of Omaha, in that state; and the latter under the laws of Iowa, and located at the city of Council Bluffs, in Iowa. The consolidation was never made, and the latter company was changed to that of the Western Home of Sioux City, and its place of business changed to Sioux City, Iowa, about May, 1885. The Nebraska & Iowa Company was changed to the Nebraska Fire Insurance Company, and continued to operate until 1891, when the Insurance de- partment of Nebraska withdrew its certifi- cates authorizing the company to do business, and, on the application of one of its stock- holders, its insolvency was decreed; and the plaintiff Is now engaged in winding up its affairs, and this action is in aid of that purpose. The action has for a legal basis a provision or the constitution of Nebraska, as follows (section 4, art. 11): "Liabilities of Subscribers to Stock. In all cases of claims against cor- porations and joint-stock associations, the ex- act amount due shall be first ascertained, and after the corporate property shall have been exhausted, the original subscribers thereof shall be individually liable to the ex- tent of their unpaid subscriptions, and the liability for unpaid subscriptions shall follow the stock." Dismissing for the moment the effect of an arbitrary legal liability, which must be respected and enforced when known, there Is not, in view of the entire record in this case, an equitable consideration favorable to a recovery against these defendants. The present liabilities of the Nebraska corporation cannot truthfully be said to have accrued in consequence of, or with reliance upon, the former connection of these defendants with the enterprise from which sprang the present company. These facts are Important as aid- ing in the solution of a legal proposition, urg- ed by appellees, to the effect that this action cannot be maintained in Iowa, because it is brought by a receiver of a Nebraska corpo- ration to enforce a provision of the law of that state; the claim being that such a proceeding can only be had as a result of comity be- tween the states, and that the basis of such an exercise is that the citizens of the state granting it shall not be thereby prejudiced or injured. Admitting, for the sake of argu- ment, the rule that comity controls as to the authority of plaintiff to sue in this state, and, as we have in effect said, the record leaves us without doubt that Its exercise should be de- nied, because It would be in contravention of the rights of our citizens, and operate to their injury. Upon the question of the absolute right of plaintiff to sue in this state, we are not with- out precedent in our own decisions; and while, In announcing a rule, we have recognized the fact of a conflict of authority, we are not per- suaded by the argument In this case that a change should be made, or the rule modified. Stress is given in argument to the fact that the order of appointment in Nebraska gives to the receiver authority to bring suits in other states. That authority is valuable as an aid to secure the right to do so in the state where the privilege is sought, and is judicious- ly granted; but it is without efficiency to create such a right independent of sanction within the state. The case of Booth v. Clark, 17 How. 321, contains a somewhat exhaustive consideration of the question of the right of a receiver appointed In one state to bring a suit for the possession of property in another state, and it is there said: "He has no extra- territorial power of official action; none which the court appointing him can confer, with authority to enable him to go into a for- eign jurisdiction to take possession of the debtor's property; none which can give, upon the principle of comity, a privilege to sue In a foreign court or another jurisdiction, as the judgment creditor himself might have done, where his debtor may be amenable to the tribunal which the creditor may seek." An underlying thought of the rule seems to be that, within the jurisdiction of one's appoint- ment as receiver, he is amenable in his official capacity to the courts, and he may exercise his authority under the law of the jurisdic- tion; while, in a foreign jurisdiction, the law does no more than to make the person enter- ing it amenable to its laws, and in no way recognizee the official capacity. As a citizen in a jurisdiction foreign to his residence, he has a legal status, and is amenable to, and may invoke the protection of, the law. As an officer of a court from a foreign jurisdiction. Be has, and is entitled to, no legal recognition, except as the courts may, in their discretion, grant it, because he is without the official ob- ligation that he assumed in his own juris- diction, and which is essential to a proper and safe exercise of such power. In Ayres v. Siebel, 82 Iowa, 347, 47 N. W. 989, we denied the right of a trustee, appointed by the court in Indiana, to sue and recover on a contract in this state; and in Parker v. Lamb & Sons, 99 Iowa, 265, 68 N. W. 686, we denied such a right to a receiver, and cited the Ayres-Siebel Case. In Parker v. Lamb & Sons, we quoted approvingly from High, Rec. § 289, as fol- lows: "Upon the question of the territorial extent of a receiver's jurisdiction and power for the purpose of instituting actions connect- ed with his receivership, the prevailing doc- trine established by the supreme court of the EEOEIVERS. 881 TJnitea States, and sustained by the weight of authority in various states, is that the re- ceiver has no extraterritorial jurisdiction or power of ofQcial action, and cannot go into a foreign state or jurisdiction, and there insti- tute a suit for the recovery of demands due the person or estate subject to his receiver- ship. His functions and powers, for the pur- pose of litigation, are held to be limited to the courts of the state in which he was appointed; and the principles of comity between states and nations which recognize the judicial de- cisions of one tribunal as conclusive on an- other do not apply to such a case, and will not warrant a receiver in bringing an action In a foreign court or jurisdiction." These authorities are broad and conclusive, and, un- less we are to se them aside, are conclusive of this ease. CoUi-sel have shown gpreat zeal HUTCH.& BUNK.EQ.— 56 and tact in presenting authorities more or less In point, and' we aclsnowledge somewhat of a conflict, as we have done in other eases ; but the weight of authority we regard as in line with our holdings, and we are not disposed to disturb them. Beach on Receivers (section 680) states the same rule, and cites Booth v. Claris, supra, from which we have quoted, and then says: "The rule thus laid down by the supreme court of the United States has been followed by other courts with essential unanimity, and can hardly be said to be seri- ously questioned." In Fitzgerald v. Construc- tion Co. (Neb.) 59 N. W. 838, these authori- ties are approvingly cited and applied. It re- mains for us to state as a conclusion that the plaintiff is not entitled to recover In the courts of Iowa, and the judgment of the district court will be affirmed. 882 RECEIVERS. AMEUICAN BISCUIT & MFG. CO. v. KLOTZ et al. (44 Fed. 721.) Circuit Court, E. D. Louisiana. January 8, 1891. In Equity. T. J. Semmes and. Bayne, Denegre & Bayne, for complainant. W. S. Benedict and Rouse & Grant, for defendants. Before PARDEE, Circuit Judge, and BIL- IJXGS, District Judge. PER CURIAM. This cause is submitted upon au application for a receiver. Some time In May last, the defendant Klotz, and Fitzpatrick, his partner, composing the firm of B. Klotz & Co., sold to the complainant their biscuit and confectionery manufactory for the price of $259,000, and an assumption of the debts of B. Klotz & Co., amounting to $42,000, which it was understood and agreed should be paid out of the income from the future business. The visible property was estimated to be of the value of $101,000, and the good-will of the business to be of the value of $200,000. The price was paid in stock of the complainant's corporation, es- timated to be of value at par; that is, to be worth 100 cents on the face value. The pur- chase was completed, price paid, property de- livered, the factory and good-will transferred by Klotz & Co. to the complainant. Klotz leased his bakery premises to complainant for the term of years, and contracted in writ- ing to become, and did become, the agent of the complainant, at a salary of $ per year. Klotz continued to carry on the busi- ness as agent for the complainant down to some time in November, when he repudiated the sale and the lease, erased the name of complainant from the bakery, as agent, transferred the policies of insurance from the complainant to himself, as an individual, then to B. Klotz & Co., and, for and in the name of the late firm, resumed the possession of all the property he had sold to the com- plainant, and the conduct of the business of the bakery and the confectionery establish- ment. He did this without resort to any legal proceedings. He thereafter held pos- session adversely to the complainant, and ex- cluded it from the bakery. In this state of things, the complainant filed its bill for an injunction, and for an account and for a re- ceiver, against Klotz and W. A. Schall, who was alleged to be co-operating with him in the possession adverse to the complainant. Klotz has filed an answer, and he, together with his former partner, Fitzpatrick, who intervened by petition pro mteresse suo, have filed a cross-bill asking a rescission of the entire transaction, i. e., the sale and the lease, and tendering the stock which had been received by them as the consideration of the sale. Numerous exhibits and affida- vits have been adduced by each party upon this hearing. The recital thus given shows that, in sin order inverted from what would be expected, we have before us a cause in which a party who has sold and delivered a business to another, and become his agent, and, as such agent, was in possession of the property sold, sets up a possession adverse to his principal, asks for a cancellation of the sale, and the purchaser and principal asks that the agent shall account, shall be en- joined from asserting any claim hostile to his principal,— in a word, for a confirmation of its rights under the purchase. The immediate question before us is, what disposition shall be made of the res, the business of the bakery and manufactory, pending this contest? The vendor and agent asks that he be allowed to remain in ad- verse possession. The purchaser and prin- cipal asks for a receiver. It is clear that, as to this provisional disposition of the res, the defendant Klotz cannot be allowed to gain anything by his ouster of his vendee and principal. He must stand with those equities, and none other, which existed be- fore the ouster. The case as to the appoint- ment of a receiver must be reviewed and determined as if he (Klotz) had filed hia bill averring possession as agent, which he ask- ed to have changed by a decree into a pos- session as owner, through the cancellation of the sale and the lease; that is, he must aver a legal title in the American Biscuit iV: Manufacturing Company, which he seeks to have avoided and annulled. If, as in this case, he seeks to do all this by reason of fraud, and he establishes the fraud, a court of equity wUl not refuse to hear him. He would not be estopped, for fraud vitiates and sets aside even estoppels. Herm. Estop, par. 22, p. 244; Pendleton v. Richey, 32 Pa. 58, 63. But, while he is not estopped from pro- ceeding to set aside the sale and the lease by reason of his agency and his obligations as trustee, he comes into court assailing and seeking to cancel a legal title; for until that is done his possession is that of the com- plainant. Under these circumstances, until the hearing, the practice in the courts of chancery is not to disturb the possession un- der the legal title prior to the final decree, unless a case of monstrous wrong is estab- lished. Stllwell V. Wilkins, Jac. 280, report- ed in full in Edwards on Receivers, p. 28, Lord Eldon, when a similar question was presented, observed: "The point that struck me was whether, on a bill to impeach a sale for fraud, the court interposes so strongly before the hearing as to take away the pos- session from persons holding it under the effect of deeds not yet set aside by decree," —and he holds that "it was not the general habit of the court" There the case was so monstrous, and the proof was so strong, that "it was hardly possible that the transaction could stand," and the legal title was inter- fered with. This is a leading case, and gives what we RECEIVERS. 883 find is the rule. The possession under the title is not disturbed unless the proof of fraud is so strong as to lead the court to the clear conviction that it will, on the final hearing, he established. The fraud set up and relied upon by the defendant and in- tervenor is false and fraudulent representa- tions by the agents of the complainant in this: that they represented that the stock was fully paid-up stock, whereas, in truth and fact, it was none of it paid up in money, and only paid up in part, and, to the extent of that part, by transfer of plants or bakeries and manufactories at an estimated value as capital. The stock delivered to the defend- ant and Intervenor was not paid up until it was issued to them, and was paid for by a transfer of the bakery and good-will; and then it became paid up, and they were dis- charged from all liability to be made to con- tribute as shareholders therefor. The tes- timony as to what was represented by com- plainant's agents about the stock being paid up is conflicting; but, when viewed in con- nection with the circumstances under which the stock was received, fails to satisfy us, upon this preliminary hearing, that any false representations are proved to have been made. The case of the defendant and in- tervenor, set up in their cross-bill, whereby they oppose the appointment of a receiver, is that of parties who seek to rescind a deed on the ground of fraud, which upon this hearing they fail to establish. So far we have considered the question of appointing a receiver of the property in con- troversy inter partes, and mainly from the stand-point presented by the defendant's showing, and thereon such appointment seems proper, and we should accord it, but for an aspect of the case originally suggested by the defendant, when the case was pending in the state court, apparently abandoned here, but sufficiently brought to our notice by the exhibits of both parties. We are not satisfied that the complainant's business is legitimate. While the nominal purpose of the complain- ant's corporation, as stated in its charter, is the manufacture and sale of biscuit and con- fectionery, its real scope and purpose seems to be to combine and pool the large compet- ing bakeries throughout the country into practically what is known and called a "trust," the effect of which is to partially, if not wholly, prevent competition, and enhance prices of necessary articles of food, and se- cure, if not a monopoly, a large control, of the supply and prices in leading articles of bread- stuffs. The case shows that an insignificant number of shares of complainant's stock was unconditionally subscribed for, apparently enough to qualify directors; but the great mass was taken and held by irresponsible parties, to be used in parceling out as full- paid stock to such leading and successful bakeries throughout the country as could be induced to come in on an agreed value of the property and a large estimate of good-will. Each bakery when secured to be carried on by its former managers, subject, however, as to control of funds, ten'itory, prices, and competition, to the central management; all profits pooled, and of course division thereof to be made on the basis of the stock assign- ed to each bakery. Under this arrangement complainant has already secured the control, and pooled the business, of 36 of the leading bakeries in 12 different states of the West and South, and is evidently seeking more con- stituents. The act of congress approved July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," expressly prohibits, under se- vere penalties, "every contract, combination, in the form of trust or otherwise, or conspir- acy, in restraint of trade or commerce among Ihe several states," and declares punishable "every person who shall monopolize, or at- tempt to monopolize, or combine or conspire with any other person or persons to monopo- lize, any part of the common trade or com- merce among the several states." The en- forcement of this act is, by the statute, de- volved upon the circuit courts of the United States. The first and third sections of an act of the legislature of Louisiana, approved July 5, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies, and to provide penalties for the violation of this act," declare: "Section 1. That every contract, combina- tion in the form of trust, or conspiracy in re- straint of trade or commerce, or to fix or lim- it the amount or quantity of any article, commodity, or merchandise to be manufactur- ed, mined, produced, or sold in this state, is hereby declared illegal." "Sec. 3. That every person who shall mo- nopolize, or attempt to monopolize, or com- bine or conspire with any other person or persons to monopolize, any part of the trade or commerce within the limits of this state, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding five thousand dol- lars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court." In construing the federal and state stat- utes, we exclude from consideration all mo- nopolies which exist by legislative grant; for we think the word "monopolize" cannot be intended to be used with reference to the acquisition of exclusive rights under govern- ment concession, but that the law-maker has used the word to mean "to aggregate" or "concentrate" in the hands of few, practical- ly, and, as a matter of fact, and according to the known results of human action, to the exclusion of others; to accomplish this end by what, in popular language, is expressed in the word "pooling," which may be defined to be an aggregation of property or capital belonging to different persons, with a view to common liabilities and profits. The expres- sion in each law "combination in the form 884 RECEIVERS. of trust" would seem to point to just what, in popular language, is meant by pooling. Now it is to be observed that these stat- utes outline an offense, but require for its complete commission no ulterior motive, such as to defraud, etc.; and, further, that the language is altogether silent as to what means must be used to constitute the offense. The offense is defined to "combine in the form of trust, or otherwise, in restraint of trade or commerce," and "to monopolize, or attempt to monopolize, any of the trade or commerce." To compass either of these things, with no other motive than to compass them, and by any means, constitutes the of- fense. One just and decisive test of the meaning of the expression "to monopolize" is obtained by getting at the evil which the law-malier has endeavored to abolish and re- strict. The statutes show that the evil was the hindrance and oppression in trade and commerce wrought by its absorption in the hands of the few, so that the prices would be in danger of being arbitrarily and exorbitant- ly fixed, because all competition would be swallowed up, so that the man of small means would find himself excluded from the restrained or monopolized trade or commerce as absolutely as if kept out by law or force. If this is the meaning of the defining words, does not this corporation, thus glutted with the 35 industries of 12 states, disclose an "attempt to monopolize?" So far, therefore, as the complainant's business is a combina- tion in restraint of trade, or is an "attempt to monopolize, or combine, in the form of a trust, or otherwise, any part of trade or com- merce," as these words are properly defined, the law stamps it as unlawful, and the courts should not encourage it. Aside from tnis, the complainant's business, even if lawful, being of the kind shown above, is not of that mer- itorious kind that it should be encouraged by a court of equity. The appointment of a re- ceiver by a court of equity is not a matter of strict right, but of judicial discretion. Fos- dick V. Schall, 99 U. S. 235. It falls within that class of interlocutory remedies whicli courts must grant or withhold, according to a discretion conscientiously exercised, upon a consideration of all the facts which a cause presents, involving the rights of the parties and the interests of the public. The attempt to accumulate in the hands of a single or- ganization the business of supplying bread itself to so large a portion of the poor, as well as the rich, people of the United States should not be favored by a court of equity. It carries with it too much of danger of ex- cluding healthy competition, thereby increas- ing the diflSculty to the general public of participating in a most useful business, as well as adding to the possibility of multi- tudes of citizens being temporarily, at least, compelled to pay an arbitrary and high price for daily food. Whatever we may feel compelled to do, on the final hearing of this cause, towards rec- ognizing the complainant's legal rights, and compelling a faithless trustee to account, we are clear tliat at this preliminary stage, with our present impressions of the character and general scope of complainant's business, the court ought not, by the appointment of a re- ceiver, to aid complainant to perfect, and perhaps to enlarge, his combination or trust; and the refusal to appoint a receiver can re- sult in no serious and lasting injury to com- plainant, because the shares of stock of com- plainant company, forming the entire consid- eration of complainant's purchase, have been tendered In court, and may be impounded, to be held as security for any damages sus- ceptible of proof resulting from defendant's mismanagement of the property pending the suit. The motion for a receiver is denied. RECEIVERS. 885 HAYWOOD et al. v. lilNCODN LUMBER, CO. et al. (26 N. W. 184, 64 Wis. 639.) Supreme Court of Wisconsin. Dec. 23, 1885. Appeal from circuit court, Lincoln county. PuUings, Hoyt & Holway and D. S. Ord- way, for appellants Murray Haywood and another. SllYerthorn, Hurley & Ryan, for respondents Lincoln Lumber Co. and others. ORTON, J. This is an action brought by the appellants to foreclose a mortgage given by the defendant lumber company, by its president and secretary, to the said appel- lants and the defendant T. P. Matthews and one George O. Smith, on the fourth day of February, 1884, on all of the real property of said corporation, to secure a bond in the penal sum of $100,000, given at the same time by said company, to said mortgagees, condition- ed to pay them certain indebtedness of the company past due them, respectively, in the aggregate of over $50,000. The interest in said mortgage of said George C. Smith was assigned to said plaintiffs. The defendant Robert O. Parcher was appointed receiver in April, 1884, in a suit of one .T. C. Clark against said company; and said Parcher, as such receiver, in June, 1884, loaned of the" de- fendant the First National Bank of the City of Wausau the sum of $10,000, to be used in the management of the business and property of said lumber company; and, by the order and leave of the court, executed, as such re- ceiver, a mortgage upon the real property of said company to said bank to secure the same. The said defendant Parcher and the defendant the Lincoln Lumber Company an- swered the complaint, .alleging, substantially, that the said mortgage sought to be foreclosed was executed by the president and secretary of said company, without authority; and that, at the time, said corporation was insol- vent, to the Icnowledge of said mortgagees, and owed large indebtedness to others; and that said mortgage was given by said offi- cers, and authorized, if at all, by the directors of said company to be given to themselves, to secure their own claims against the com- pany, as an unlawful and fraudulent prefer- ence of themselves as the creditors of the company, in fraud and with Intent to de- fraud the other creditors and the company, and that said bond and mortgage were there- fore void. The said defendant the National Bank answered, setting up its mortgage by the receiver, and alleging its priority to the mortgage in suit by the agreement of the mortgagees in said mortgage, and prays a foreclosure thereof. The circuit court sub- stantially held that said mortgage was given without authority, because the majority of the quorum of the directors voting that said bond and mortgage be given were interested in the same, and that said company was then insolvent; and that the directors held the property in trust for the creditors, and the execution of said mortgage by the officers and by the authority of the directors to them- selves to secure their antecedent claims against the company was an unlawful prefer- ence, and was fraudulent and void; and that the said mortgage to the bank has priority, and was lawfully executed by said receiver. The special findings are numerous, and the case voluminous; but the above are believed to be substantially the findings, and upon th3 substantial issues in the case. The principles involved In this suit are really very simple, and almost elementary, and not at all complicated; and we cannot but think they have been greatly magnified and more earnestly contested on account of the amount in controversy. The plaintiffs contest the power of the receiver, Parcher, to give the mortgage to the bank on the ground of the want of jurisdiction of the court to ap- point him or any one receiver in the case of Clark against the company. These plaintiffs were directors of the company, and one of them the secretary, and both mortgagees, when the said Parcher was appointed such receiver, and as directors and as mortgagees counseled and advised his appointment, and consented thereto, and the directors over and over again recognized and confirmed it by dealing with him as such, and placing the property of the company in his hands; and, after his appoint- ment, the plaintiffs, together with the defend- ant Matthews, as said mortgagees, by writ- ing under seal, authorized the said receiver to borrow not exceeding $15,000, and give a mortgage on the property of the company in his hands to secure it, for the purpose of car- rying on the business in running the mills and sawing up the logs, and released their said mortgage so far as it would have prefer- ence of the mortgage so given by the receiv- er, and so as to give the same priority to their said mortgage. There is abundant evi- dence of the plaintiffs' estoppel to dispute the authority of said receiver, both in pais and by deed. But accepting the allegations of the coinplaint in that case as true, the court not- only had I the power, but it was its duty, to appoint a receiver. The directors and officers had given the mortgage in suit alleged to be in fraud of the creditors of the company, nearly or quite insolvent af the time, and threatened afterwards to sell out in gross all the property of the company without notice, and to bid the same off in their own names and for their own benefit, in fraud of many other creditors of the company, and in this way to close up the business of the company. These are some of the substantial allegations . of the complaint of Clark, the plaintiff, who was himself one of the stockholders of the company. Within the general powers of a court of chancery, which are preserved in the fifth subdivision of section 2787, Rev. St., this was a proper case for an injunction and receiver both. The property of the company was being mismanaged, and was ia danger 886 RECEIVERS. of being lost to the stockholders and creditors tbiough the collusion and fraud of its officers and directors. The only place ot safety for the business and property of the company was in the "hand" of the court through a re- ceiver iiendente lite. A stronger case for a receiver could scarcely be made, and the nu- merous authorities cited in the able brief of the learned counsel of the respondents, and the facts stated in the complaint, abundantly authorize and justify his appointment In that case. We think the circuit court properly held that the court had jurisdiction to appoint Parcher a receiver; and, upon the evidence, properly found that the mortgage to the bank ■was not only valid, but has priority over the mortgage in suit. Under repeated decisions of this court, the exceptions of the respond- ent cannot he considered, except to support the judgment rendered, unless the respondent also appeal. Therefore this court cannot go further than the circuit court in ordering a foreclosure of the bank mortgage in this ac- tion. But the matter of this bank mortgage is of only incidental importance in this case. The main question is of the validity of the mort- gage in suit. There veas abundant evidence to justify the finding of the circuit court that at the time it was given the company was in- solvent. In such case, the authorities seem to be uniform that the directors and officers of the corporation are trustees of the creditors, and must manage Its property and assets with strict regard to their interests; and. if they are themselves creditors while the In- solvent corporation is under their manage- ment, they cannot secure to themselves any preference or advantage over other creditors. The directors are, then, trustees of all the property of the corporation, for all of its cred- itors, and an equal distribution must be made, and no preference to any one of the creditors, and much less to the directors or trustees, as such. I have carefully examined all the au- thorities cited on both sides touching this principle, and find it recognized in every case. Many of the authorities cited by the learned counsel of the appellants as holding a con- trary doctrine state this doctrine as fully es- tabUshed, and cite many of the authorities in its favor cited here by the learned counsel of the respondents, and cases are made an ex- ception only because, in their facts, this prin- ciple has no application. It is reiterated in the text of elementary works, and numerous cases are cited to sustain it. Mor. Priv. Corp. 579-581. A few only of the cases holding this principle will be cited here, but many others may be found in the brief of counsel and elsewhere too numerous for citation. Marr v. Bank, 4 Cold. 471, 484; Koehler v. Iron Co., 2 Black, 715; Curran v. ji.rkansas, 15 How. 306; Richards v. Insurance Co., 43 N. H. 263; Bradley v. Farwell, Holmes, 433; Drury v. Cross, 7 Wall. 299; Paine v. Rail- road Co., 31 Ind. 353; Gaa-light Co. v. Ter- rell, L. R. 10 Eq. 168. I have been unable to find a single case, which in Its facts is like this, in which this doctrine is even questioned and was not strictly applied. But there is another principle equally un- questionable which renders the mortgage in suit void. The directors and officers made the mortgage, or directly caused it to be made, to themselves. They occupied a fiduciary rela- tion to the corporation, its stockholders, and its creditors, and they had no right to use such relation and their official position for their own benefit, to the injury of others in equal right. This principle was applied to the taking of a mortgage by the directors on the property of the corporation to secure their liability as sureties, upon a note of the cor- poration, in Corbett v. Woodward, 5 Sawy. 403, Fed. Cas. No. 3,223, which is a strong case, and very similar is the case of Koehler V. Iron Co., supra. See, also, Mor. Priv. Corp. 243; Hoyle v. Railroad Co., 54 N. Y. 314; Railway Co. v. Poor, 59 Me. 277; Butts v. Wood, 38 Barb. 188; Railway Co. v. Huxon, 19 Eng. Law & Eq. 365; Scott v. Depeyster, 1 Edw. Ch. 513; and Verplanck v. Insurance Co., Id. 85; Railway Co. v. Magnay, 25 Beav. 586; 1 Perry, Trusts, § 194, and cases cited. But it is really unnecessary to cite cases from abroad when the same principles have been established in our own cases, as in Cook v. Berlin Woolen Mills, 43 Wis. 434, and Pickett V. School-district, 25 Wis. 553. Directors, officers, and agents, and other like trustees, cannot mortgage or convey to themselves any more than one can contract with himself. The idea that the same per- sons constitute different identities of them- selves by being called directors or officers of a corporation, so that, as directors or officers, they can convey or mortgage to or contract with themselves as private persons, is in vio- lation of common sense. In re Taylor Or- phan Asylum, 36 Wis. 552, and cases above cited. See 1 Perry, Trusts, § 207, and Mor. Priv. Corp. § 245; Walworth County Bank v. Farmers' Loan & Trust Co., 16 Wis. 629; Coal Co. V. Sherman, 30 Barb. 553. It is unnecessary to decide the question whether there was a quorum of disinterested directors that directed the mortgage to be given. The mortgage is an entirety, and it makes no difference how many persons are severally interested in it as mortgagees. If such mortgagees, as directors, authorized it, they authorized an act in which they were all jointly interested. They may not have been joint creditors, but they are joint mort- gagees, because the mortgage as a security is an entirety. Whether, in this view, the mortgage was never authorized to be given by the president and secretary of the company, by the company through its directors, it may not be necessary to decide; but it seems to me rather illogical to say that, because there is a quorum of directors who are creditors severally, a majority of them may authorize their claims to be secured by one mortgage, and do not act on their own claims, but each RECEIVERS. 887 one acts In respect to the claims of the other. If A., B., and C. are several creditors and a quorum of directors, and A. and B. vote to give C. an interest in the mortgage to secure his claim, A. and 0. so vote as to the claim of B., and B. and 0. as to the claim of A.,— do they not vote for themselves in respect to one mortgage? This would be an ingenious and convenient collusion to vote to themselves all the property of the corporation at almost any time, on the ground that the majority so voting is disinterested and impartial. But it is very clear to us that the mort- gage is void in view of the above principles, and that disposes of the action of foreclosure. Beyond that, the findings of the court are not very important as to the rights of the defend- ants. The judgment of the circuit court is af- firmed. 888 RECEIVERS. BANK OV FLORENCE et al. v. UNITED STATES SAVINGS & LOAN CO. (16 South. 110, 104 Ala. 297.) Supreme Court of Alabama, Aug. 9, 1894. Appeal from district court, Lauderdale county; W. P. Chitwood, Judge. Suit by the United States Savings & Loan Company against the Bank of Florence and others. Prom a decree appointing a receiv- er, defendants appeal. Reversed. In addition to the allegations of the bill, which are stated in the opinion, and upon which is predicated the right to have the re- ceiver appointed, the bill also averred that the ofllcers of the bank had, wrongfully and without authority of Its stockholders, turned over the assets of the bank to one S. S. Broadus, who had assumed complete control of the same, and that he was pursuing reck- less methods in disposing of the assets of said bank. Roulhac & N.athan and Emmet O'Neal, for appellants. Paul Hodges, for appellee. BRICKELL, C. J. The material allega- tions of the original bill, on which is predi- cated the right to the appointment of a re- ceiver, and the right to the ultimate equitable relief which is prayed, are capable of being reduced to a narrow compass. The com- plainant is a corporation organized and ex- isting under the laws of the state of Minne- sota, having a place of business rn the city of Florence, in this state. The Bank of Florence was engaged in a general banking business at Florence, and became the agent of complainant for the collection of moneys | there due and owing, and which were to ' become due, and was charged with the duty of remitting such moneys to the complainant as collected. Neglecting the duty of remit- tance of these moneys, the bank suffered the sum of $538.80 to accumulate in its hands, and suspended payments. Though insolvent, the bank made no transfer or assignment of Its property and assets, but proceeded in winding up its affairs, with the acquiescence of its creditors. Judgments were being ren- dered against it, and it was making prefer- ences In payment of its creditors. These are the material allegations of the bill, upon which is founded the right to the appointment of a receiver; and the specific relief prayed Is that, for the payment of the sum due, the complainant be decreed a lien on all the assets of the bank, in priority of all general liens, by which we supijose is Intended in priority of all creditors not having a specific lien. When an application is made for the appointment of a receiver, the primary in- quiry is whether there is shown a reasonable probability that the plaintiff asking the ap- pointment win ultimately succeed in obtain- ing the general relief sought by the suit. If ultimate success is a matter of grave doubt, or if, as in the present case, it be clear that the general relief sought cannot be obtained, the appoifitment ought not to be made. S Pom. Eq. Jut. (2d Ed.) § 1331; High, Rec. (2d Ed.) § 8; Randle v. Carter, 62 Ala. 95. It Is true, as a general rule, that, in making or refusing the appointment of a receiver, the court will not forestall or anticipate the decision which may be made on final hear- ing. This is true when a case is presented upon which there is a reasonable proba- bility the plaintiff may ultimately obtain relief. In such cases the pleadings . may not be drawn with technical accuracy. The bill may be subject to demurrer for the want of proper parties, or because of defects of form or the absence of substantial allega- tions, — insufficiencies curable by amendment. These Insufficiencies, of themselves, do not form an impediment to the appointment of a receiver, if a case be made by a party hav- ing interests to be protected and preserved entitling him to the general relief which Is prayed. Ex parte Walker, 25 Ala. 81. The relation between the complainant and the Bank of Florence was that of principal and agent, created by their agreement,— a legal relation sti-ictly, though, to attain the ends of justice, and preserve the confidence it involves, courts of equity, under some cir- cumstances, deal with it as a fiduciary rela- tion. The debt ci-eated by the breach of duty of the agent is a mere simple contract debt, for the recovery of which legal reme- dies are adequate. Crothei-s v. Lee, 29 Ala. 337; Knotts v. Tarver, 8 Ala. 743. The de- mand being a simple contract debt, purely of a legal character, the complainant, in the ab- sence of some peculiar equity, is not entitled to the intervention of a court of equity to en- force its payment. Reese v. Bradford, 13 Ala. 888; Sanders v. Watson, 14 Ala. 198. These well-recognized principles are not con- troverted. The insistence is that as the agent converted to his own use the money of the principal, commingling it with his own mon- ey, or in some form with his other assets, so that it cannot be identified or the specific uses to which it was applied traced, it Is suf- ficient to trace it into the general assets of the agent to impress them with a trust for the payment of the money,— a trust which is peculiarly of equitable cognizance. It is true that a trustee or an agent or other per- son standing in a fiduciary relation cannot derive benefit from commingling with his own the moneys of his cestui que trust or principal; and it is equally true that, if he makes an investment of such moneys, a court of equity, so long as the moneys may be distinctly traced, will follow them, and impress upon the investment the trust to which the moneys were subject. The con- version of the trust moneys, as distinguished from other moneys of the trustee or agent, must be clearly shown. It is not sufflciept to show that there has been a conversion of trust funds, and the acquisition or posses- sion by the trustee or agent of property or RECEIVERS. 889 assets, which may be supposed a substitute for such funds. As is said by the supreme court of Massachusetts: "The court will go as far as it can in tracing and following trust money; but when, as a matter of fact, it cannot be traced, the equitable right of the cestui aue trust to follow it fails. Under such circumstances, if the trustee has be- come bankrupt, the court cannot say that the trust money is to be found somewhere in the general estate of the trustee that still re- mained. He may have lost it with property ®f his own, and in such case the cestui que trust can only come in and share with the general creditors." Little v. Chadwick, 151 Mass. 109, 23 N. E. 1005. There is no ques- tion of tracing or identifying the moneys of the principal. The naked averment of the bill is that, in violation of duty, the agent converted to his own use the moneys of the principal, creating a mere simple contract debt. There is no averment that the assets upon which it is sought to fasten the trust had not been acquired by the agent before the conversion; no averment that in any form the moneys of the principal entered in- to their acquisition. All that can be said is that which may be said of any delinquent trustee or agent,— that he had converted the moneys of his cestui que trust or principal; and from the business in which the agent was engaged it may be presumed that,' in the course of the business, they were com- mingled and used with the moneys of the agent. If a trust were raised to charge the assets of the agent, a like trust would arise and be fastened on the general assets of every delinquent agent or trustee, — a trust which would prevail against all others than bona fide purchasers. The moneys of the principal are incapable of being identified and traced into any of the assets of the bank, and, this being true, the principal, we re- peat, is a mere simple contract creditor of the agent, not entitled to any preference or priority of payment over other creditors. Ellison V. Moses, 95 Ala. 223, 11 South. 347; Association v. Austin (Ala.) 13 South. 908. It is quite an error to suppose that the two cases chiefly relied on by counsel for the ap- pellee (National Bank v. Insurance Co., 104 U. S. 54; In re Hallett's Estate, 13 Ch. Div. 696) support a contrary doctrine. It is ap- parent the original bill is without equity, the complainant is not entitled to the general re- lief sought, and the appointment of the re- ceiver was erroneous. If the case was of equitable cognizance, en- titling the complainant to relief, a fatal ob- jection to the regularity of the order ap- pointing the receiver Is that it was made without notice to the defendants. A receiv- er may be appointed without notice to the defendant who is to be dispossessed of his property or assets, but the cases in which no- tice may be dispensed with are exceptional. There must be shown a strong case of press- ing emergency, rendering immediate inter- ference necessary before there is time to give notice; or it must be shown that notice would jeopardize the delivery of the proper- ty over which the receivership is to be ex- tended. Moritz V. Miller, 87 Ala. 331, 6 South. 269; Dollins v. Lindsey, 89 Ala. 217, 7 South. 234. The averment of the bill on which the court below proceeded to the ap- pointment without notice is expressed in these words: "And complainant alleges the necessity exists for the appointment of a re- ceiver, to prevent the fui'ther unauthorized and illegal action by the said Eroadus, and to prevent irreparable injury and total de- struction of the assets of the said bank." It is not on such vague and indefinite allega- tions, the opinions or conclusions of the pleader, not accompanied by a statement of the facts on which they are founded, that no- tice of a judicial proceeding can be dis- pensed with, and parties deprived of the pos- session or control of property. The particu- lar facts and circumstances supposed to create the necessity for the immediate ap- pointment should have been stated, submit- ting to the judgment of the court whether they created the necessity— the pressing emergency — for judicial interference. Ver- plank V. Insurance Co., 2 Paige, 438. Upon the bin alone, without affidavits or other evi- dence, the appointment was made. The or- der appointing the receiver must be vacated and annulled, and the cause remanded. Re- versed, rendered, and remanded. 890 RECEIVERS. OOLTON et «1. v. DOVER PERPETUAL BUILDING & LOAN ASS'N OF BALTIMORE. (45 Atl. 23, 90 Md. 85.) Court of Aw)eal9 of Maryland. Nov. 24, 1S99. Appeal from circuit court of Baltimore city; Henry Stockbridge, Judge. Exceptions by the Dover Perpetual Build- ing & Loan Association of Baltimore to the auditor's account distributing the assets of the South Baltimore Banli, refusing to allow said building association to set off a deposit against a note executed by it, and held by the bank. From an order sustaining the ex- ceptions, William Colton and Simon P. Schott, receivers of the bank, appeal. Affirmed. Argued before McSHERRY, C. J., and PAGE, PBARCE, FOWLER, BOYD, and SCHMUCKER, JJ. Wm. S. Bryan, Jr., and Martin Lehmayer, for appellants. L. P. Henninghausen and P. 0. Henninghausen, for appellee. BOYD, J. A bill was filed In the court be; low against the South Baltimore Bank, a cor- poration of this state, on the 24th day of February, 1898, asking for the appointment of a receiver, and that the bank be declared insolvent. An answer was filed the same day, admitting that the bank was insolvent, and consenting to the appointment of a re- ceiver. One of the appellants was appointed on that day, and afterwards the other was appointed co-receiver. On the 1st day of June, 1898, a decree was passed adjudicat- ing the bank insolvent, and determining it was so when this bill was filed. The re- ceivers proceeded with the discharge of their duties, and in due course the case was re- ferred to the auditor to state an account dis- tributing the assets of the bank. When the bill was filed, the bank held a promissory note of the appellee for $1,000, which be- came due on March 2, 1896, and the appellee had a deposit with the bank of $3S7.25. At the maturity of the note the appellee ten- dered the receiver then in office the sum of $642.75 In payment of said note, claiming the amount of the deposit as a set-off, and demanded the note, but the receiver refused to accept that amount. Subsequently that sum was accepted, under an agi'eement that it should be credited on the note, without prejudice to the receiver's claim for the bal- ance, and that no suit should be instituted until it was determined whether the appellee was entitled to set off the deposit against the balance due on the note. The auditor refused to allow the set-off, but distributed to the appellee its proportion dividend as a creditor. Exceptions were filed to the audit, which were sustained, and a decretal order was passed directing the receivers to allow the association the deposit as a set-ofC against the balance due on the note. B^-om that order this appeal was taken by the re- ceivers, with the permission of the court; it Delng represented that there were a number of other claims that would be afifected by the decision. The question, therefore, to be determined by us, is whether the appellee is entitled to set off the amount of its deposit with the bank at the time of Its failure against the balance due on the note, under the circumstances we have stated. Several reasons have been assigned by the appellants in support of the position that the appellee is only entitled to receive a distribution on the amount of the deposit, as other cred- itors are. 1. One ground relied on i^t the argument was that a depositor in a banlv cannot main- tain a suit for his deposit unless he has pre- viously made a demand for it, and that no lemand was made in this case. "It Is now perfectly well settled that the relation be- tween banker and customer, who pays money into the bank, or to whose credit money is received there on deposit, is the ordinary relation of debtor and creditor." Hardy v. Bank, 51 Md. 585. And it is equally well settled that a depositor cannot, as a general rule, maintain an action to recover his de- posit until he has first made a demand for its payment. 3 Am. & Eng. Enc. Law (2d Ed.) 838. But, while that is true, there may be circumstances under which no demand is necessary prior to bringing suit; and, on page 839 of the volume of the Encyclopedia of Law above referred to, it is said that "where the bank has suspended, or where for any other reason it would be manifestly futile to make demand, none need be made." In the case of Planters' Bank v. Farmers' & Mechanics' Bank, 8 Gill. & J. 449, it was held that the necessity for a demand would ^-o dispensed with by the suspension of spe- cie payments and discontinuance of banking operations by the bank, provided those acts were known to the plaintiff, and from the time of such knowledge the statute of limita- tions would begin to run. It would have been "manifestly futile to make demand" on the bank or the receiver for the amount of deposit; and, if the appellee had sued, the fact that a demand was not previously made would not have defeated the action. If the bank had not failed, and had sued the appel- lee for the amount of the note, it would not have been necessary for the latter to have proven a demand for the deposit prior to the time suit was instituted by the bank. A defendant can set off against a plaintiff's demand a note of the plaintiff which ma- tured after the commencement of the ac- tion. Clarke v. Magruder, 2 Har. & J. 77. As early as Whittlngton v. Bank, 5 Har. & J. 489, our predecessors held that the defend- ant in an action by a bank on a promissory note against him may set off against the claim of the bank any money he has in bank, and it is not intimated that a previous de- mand was necessary in order to enable him to do so. The bank being a debtor to the depositor, the right to set off such deposit is RECEIVERS. 891 within the very terms of our statute; and hence in a suit by the bank the claim for the deposit can be set off, although no pre^ vious demand for it has been made. That being so, it would seem to be clear that no demand would be necessary in order to en- able the defendant to set oft the amount of the deposit against a claim made by the re- ceiver of the banli, if there be no other rea- son for not allowing it. In Morse, Banks, § 338, it is said: "Where the bank itself stops payment and becomes insolvent, the customer may avail himself, in set-off against his indebtedness to the bank, of any indebtedness of the bank to himself, — as, for example, the balance due him on his deposit account. So, also, even though the debt to him has not matured at the time of the in- solvency." This may be done whether a demand had or had not been previously made. Fort v. McaUly, 59 Barb. 87; Sey- mour V. Dunham, 24 Hun, 98. 2. We come then to the main question in the case. It is argued that to allow the set-off would be, in effect, to give the appellee a preference over the other creditors of the bank, and that it is the duty of the receivers to distribute the assets pro rata, and hot to pay in full any one creditor. If the appellee was merely a creditor, that argument might prevail, but that was not the relation that ex- isted between the two. The appellee was not only a creditor to the amount of its deposit, but it was a debtor to the amount of the note held by the bank. Its debit was larger than its credit, and, if the bank had not failed, it could only have recovered the difference be- tween the two. Do the receivers occupy any better position? The general rule undoubtedly is that a receiver takes subject to set-offs which the defendant might have set up against the original owner. See 22 Am. & Eng. Enc. Law, 308, and Merrill v. Granite Oo. (Mass.) 36 N. B. 797, 23 L. R. A. 313, note, where many authorities are collected. There are some exceptions to the rule, one of which may be mentioned, although not directly involved in the case, as some of the authorities cited by the appellants are to that point; and that is that a claim obtained after the commencement of the proceedings which resulted in the ap- pointment of a receiver should not be allowed as a set-off unless there be some statute au- thorizing it to be done. In this case, however, the debt was due by the bank to the appellee before the proceedings under which the ap- pellants were appointed were Instituted. As we have seen, the relation of debtor and creditor existed; and the question discussed above, as to whether demand must be made before suit can be brought, does not in any wise reflect upon the question of indebtedness, but only on the right to sue for the indebted- ness before demand is made. But it is said on behalf of the appellants that, inasmuch as the note fell due after the appointment of the first receiver, he took it free from all equities, just as a bona fide purchaser for value would have done, and that a claim in favor of the bank which did not mature until in the hands of the receiver is not subject to a set-off by a claim which existed against the bank before the receiver's rights accrued; in short, that in one case the debt is due by the bank to the customer, and In the other by the custom- er to the receiver. If that were strictly cor- rect there would be some ground for the con- tention; for if, for example, the appellee had purchased some property from the receiver, it would not be permitted to set off its claim against such indebtedness to the receiver, for it would thereby not only obtain an unwar- ranted preference over other creditors, but it would prevent a proper settlement of the in- solvent estate, and, moreover, they would not be mutual claims. But when the receiver was appointed he took the assets of the bank, and among those assets was this note. It was a debt already incurred by the appellee, and payable to the bank when due. By reason of the fact that it was payable to and held by the bank, it was an asset that became vested in the receiver, and he took it subject to the equities existing between the appellee and the bank. Although there are some authori- ties to the contrary, the great weight of au- thority is to the effect that the fact that the claim thus held by the receiver does not ma- ture until after his appointment does not pre- vent a defendant from using his claim as a set-off. Among other decisions are Berry v. Brett, 6 Bosw. 627; Scott v. Armstrong, 14G U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059; Piatt V. Bentley, 11 Am. Law Reg. (N. S.) 171; In re Hatch, 155 N. Y. 401, 50 N. E. 49, 40 L. R. A. 664; Bank v. Balliet, 8 Watts & S. 311; Aldrich v. Campbell, 4 Gray, 284;' Smith V. Spengler, 83 Mo. 408; McCagg v. Woodman, 28 111. 84; Armstrong v. Warner. 49 Ohio St. 376, 31 N. E. 877, 17 L. R. A. 466; Yardley v. Caothier, 2 O. C. A. 349, 51 Fed. 506, 17 L. R. A. 462; Skiles v. Houston, 110 Pa. St. 254, 2 Atl. 30. See, also, Fera v. Wick- ham (N. Y. App.) 31 N. E. 1028, 17 L. R. A. 456, note. Some of these cases make a distinction between a technical set-off in suits at law, and cross demands allowed by courts of equity, but, as we are now considering a distribution in a court of equity, all of the cases can prop- erly be referred to here. 3. But it is contended by the appellants that if it be conceded that the general rule is as we have stated, about the rights of the receiv- ers, they occupy a different position, by reason of our statute. Section 264a of article 23, c. 349, Acts 1896, provides that when a coroora- tion has been determined or proven to be in- solvent and dissolved, in accordance with sec- tion 264, "all of its property and assets of ev- ery description shall be distributed to the creditors of said corporation in the s^me man- ner that the property and assets of an in- solvent debtor are distributed under the provi- sions of article 47 of the Code. * * * And the date of the filing of the bill against such corporation, upon which it may be dissolved, 892 RECEIVERS. shall be taken and treated for the purpose of determining the validity of preferences and for all other purposes as the date of the filing of the petition in Insolvency by or against ar natural person." In short, receivers of cor- porations that are dissolved under that stat- ute are placed on the same basis as trustees in insolvency of natural persons, and the date of filing the bill is the time fixed to determine the status of the parties affected by it. But section 11 of article 47 of the Code provides that "the estates of the insolvent shall be distributed under the order of the court ac- cording to the principles of equity." While set-cfif in eoiiity is generally governed by the same principles as at law, courts of equity sometimes allow a set-ofC where for some tech- nical reason it could not be allowed .it law. The insolvency of the party against whom it is claimed frequently affords equitable ground for allowing it. A technical set-off is wholly of statutory origin, but courts of equity exer- cise an original jurisdiction over the subject, and will, when reason and justice require it, enforce a counterclaim, though not within the letter of the statute. Smith v. Donnell, 9 Gill, 84, and Manning v. Thruston, 59 Md. 218, are instances of such equitable relief. It would sometimes work great injustice to customers of banks if they should be required to pay in full their indebtedness to the bank, and only receive a dividend on their deposits. A cus- tomer might from time to time make deposits in bank with a view to meet his note held by it, and it would manifestly be a great hard- ship, if, under those circumstances, he could not apply his deposit towards the payment of the note, because the bank had failed and a receiver had been appointed. A court of equi- ty would certainly not permit such unjust re- sults in the distiibution of funds before it, if such facts were proven; and, although in this case there is no evidence that the deposit was made with special reference to the ma- turity of the note, yet, as it became due a few days after the receiver was appointed, it might well be inferred that the appellee had that fact in view in making the deposits. If the bank had not faUed, it could have applied the deposit of the appellee towards the payment of the note. 3 Am. & Eng. Enc. Law (2d Ed.) 828, 835; Miller v. Bank, 30 Md. 392. And it would be unreasonable to permit a receiver of an insolvent bank to collect the note in full, without allowing the set-off, particularly as the bank had a lien on the deposits. "The bank holds a lien upon the deposits in its hands to secure the repayment of the depos- itor's indebtedness, and may enforce that lieu as the debts mature, by applying the debtor's deposits upon them, thus setting the two off against each other." 3 Am. & Eng. Enc. Law (2d Ed.) 835; MiUer v. Bank, supra. If the appellee was not financially responsible, and had attempted to assign its claim for deposits against the bank to a third person, could there have been any question about the right of the receiver to insist upon the application of the deposit to the payment of the note? Clearly not, as the assignee of the claim would have taken it subject to equities existing between the appellee and the bank, and a court of equity would have protected the bank or Its representatives, the receivers. Marshall v. Cooper, 43 Md. 46. It would seem clear,- then, that at least in equity the deposit should be allowed as a counterclaim or set-ofC. But even at law it should be allowed against the receiv- ers. It is true that a trustee appointed under our insolvent laws does not occupy precisely the same position that an ordinary trustee un- der a conventional deed of trust does, as he has greater powers, and represents the cred- itors. He can, for example, ijavp a deed made by the insolvent in fraud of his creditors set aside, which an assignee under a voluntary deed of trust cannot do, because the latter can only do what his assignor could. But the in- solvent law does not vest him with such pow- ers as would enable him to collect more than Is actually due the Insolvent, and there was only actually due the balance between the two accounts. "All the property of every descrip- tion, rights and claims of the insolvent," vest in the trustee; and, if the insolvent has dis- posed of any of his property in violation of the insolvent law, it is void, and the trustee can recover it. It could not be successfully contended that the creditors of an insolvent could deprive one who owes the insolvent of the right of set-off, and how can the trusrtee who r^resents them do so? Nor can he avoir! the right of setoff on the theory that he oc- cupies the position of a bona fide purchaser for value. Haxtun v. Bishop, 3 Wend. 13, re- ferred to by the appellants, tends to sustain that position, but that case has not met with approval. See (N. Y. App.) 31 N. B. 1028, 17 L. R. A. 458, note. In Dowler v. Cushwa, 27 Md. 354, this court quoted with approval from Van Wagoner v. Gaslight Co., 23 N. J. Law, 291, that: "The rule pervades both bankrupt and insolvent laws, founded on general prin- ciples of equity, that all Cross demands, wheth- er connected or independent, provided they be mutual, as between the bankrupt or the insol- vent and the creditor, shall be set off, and the balance only shall be deemed the indebtedness on one side or the other. The assignees take a bankrupt's property in the same condition, and subject to the same burthens, as the bankrupt himself held it, on the principle that they are not purchasers for a valuable con- sideration, but as voluntary assignees and i)er- sonal representatives, and are therefore dis- tinguished from particular assignees." Al- though fully recognizing the distinction be- tween the trustee of an insolvent and one ap- pointed by the debtor in a deed of trust, as made by this court in previous cases, we can- not adopt the view urged upon us, that the fwmer is to be regarded as a bona flde pur- chaser for value of the assets that come into his hands, and thereby permit him to deprive a debtor of such a right as that to set off a debt due by the insolvent prior to the institu- RECEIVERS, 893 tioB o( the Insolvent proceedings; and we find nothing in our statute, or in the authorities we feel called upon to follow, to cause us to reach a conclusion that in our opinion would work such manifest injustice. It is not claim- ed that a receiver appointed under the stat- ute referred to can occupy any better posi- tion than an insolvent trustee, and, for the reasons we have given, we will affirm the or- der of the court appealed from. Order af- firmed; the costs to be paid out of the insol- vent estate. 894 RECEIVERS. I'.AILEY V. PITTSBURGH COAL R. CO. et al. (21 Atl. 72, 139 Pa. 213.) Supreme Court of Pennsylvania. Jan. 6, 1891. Appeal from court of common pleas, Al- legheny county. Bill in equity for the appointment of a re- ceiver to collect unpaid stock subscriptions from the stockholders of a company, for the payment of a judgment creditor of said com- pany. J. N. McCreery, an employ^ of the Pittsburgh Coal Railroad Company, obtained a judgment against it. The plaintiff, hia as- signee, filed a bill against said company and seven of the stockholders, for the appoint- ment of a receiver to collect sufficient unpaid stock subscriptions to pay him his claim. The said stockholders joined with said com- pany aa defendants, and filed demurrers to the bill, which were all overruled. Defend- ants were ordered to plead in 15 days. Said stockholders then filed a plea and answer, but the company filed no plea or answer at any time, and no decree was ever taken against it. A general replication was filed, and a master was appointed. Subsequently, pending the hearing before him, Keams, Risher, and McClure, other creditors of said company, presented petitions for leave to intervene, and were allowed to become plain- tiffs. On the same day R. B. Brown, one of the seven stockholders, on behalf of himself and his co-defendants, presented a petition, setting forth the names of the other stock- holders than those made defendants original- ly, and the amount of stock held by each, and prayed that the petitions of Keams, Risher, and McClure be granted only upon condition that the said stockholders named by him be made defendants. Keams, Risher, and McClure were joined as plaintiffs, and the stockholders named by Brown were made defendants. The pleadings remained as they were at the appointment of the master, who proceeded to hear the case. He recommend- ed a decree in favor of plaintiffs, in accord- ance with the prayer in the bill. The report was referred back to him, for a supplemental [■eport of the several sums due the respective plaintiffs, the amount of the subscriptions of each of said defendants, and in pro rata share which each should be decreed to pay said plaintiffs, respectively. Pending the hearing upon this second reference to the master William Vankirk, one of the original defendants, petitioned the court to grant leave to said defendants to pay Bailey's claim, and the costs of the proceeding, and to vacate the appointment of the master, alleging the want of an issue as to the cred- itors who had been permitted to become plaintiffs with Bailey. This was refused. The master, under the court's order, filed his supplemental report recommending a decree against 14 of the 22 defendants, which was made in accordance with the recommenda- tion, whereupon 4 of them, to-wit, William Vankirk, R. B. Brown, John F. Dravo, and W. H. Aldred, appealed, assigning for error (1) the decree of the court; (2) the appoint- ment of the master, and the confirmation of his report, "where said case was not at issue as against the Pittsburgh Coal Railroad Company, defendant;" (3) the confirmation of the report, and the making of the decree as to the claims of Keams, Risher, and Mc- Clure, when "no issue was ever made up as between them or any of them, and the said defendants, or any of them." John S. Ferguson, for appellants. 0. S. Fetterman, for appellees. PER CURIAM. This appeal is entitled as though it had been taken by the Pittsburgh Coal Railroad Company. Such is not the fact, however. The appeal was entered by William Vankirk, R. B. Brown, John F. Dravo, and W. H. Aldred, four of the de- fendants below. Lane's Appeal, 105 Pa. 49, and Bell's Appeal, 115 Pa. 88, 8 Atl. 177, are authority that such a bill can be maintained. The record ia voluminous, and consists prin- cipally of questions of fact. We must as- sume that the learned master has decided these correctly, inasmuch as he is sustained by the court below, and no clear error has been pointed out. The matters referred to in the second and third assignments are purely technical, and do not affect the merits. We find nothing in the record to justify us in reversing the decree. Decree aSirmed, and the appeal dismissed, at the costs of the ap- pellants. INDEX. ACCIDENT, redemption from a decree of mortgage fore- closure prevented by accident, 159. loss of sealed instrument as ground for eq- uity jurisdiction, 164. breach of contract for sale of house and lot ■when destroyed by fire, 16G. ACTUAL FRAUD, ignorance or mistake of fact not essential to contract, 220. right of purchaser of patent to rely upon representation of inventor, 266. false representation made in ignorance of facts, 270. fraudulent representations as to value of land, 272. reliance by purchaser on fraudulent repre- sentations, 275. false representations, 280. statements made without knowledge, 282. exchange of property brought about by fraudulent representations, 285. evidence of adequacy of consideration, 287. deed executed to trustee, 289. subscription to capital stock on representa- tion of party interested, 295. fraudulent representation by partners, 297. CANCELLATION, bonds issued by railroad in violation of stat- utes, 785. CONSTEUCTIVE FRAUD, gross inadequacy of price, 301. contract by medical partner to refrain from practice, 303. inequality of parties by reason of age, 309. disability of party from infirmity or mental weakness, 313. deed from parent to child. 316. actual or constructive possession of land aft- er conveyance, 319. evidence of undue influence of child over parent, 324. deed made to party In trust by dying per- son, 328. concealment of value by party in fiduciary relation, 330. purchase of property by commissioner hold- ing sale, 333. contract between attorney and client, 336. transaction between debtor and third per- son exacted by creditor, 344. composition with creditors by secret agree- ment, 346. transaction between husband and wife, 350. CONSTRUCTIVE TRUSTS, money so mingled as to be indistinguisha- ble, 453. HUTCH.& BUNIC.EQ. CONSTRUCTIVE TRUSTS— Cont'd. executor liable for money intermingled and not traceable, 457. misappropriation of trust funds by trustee, 458. failure of bank after collection, 460. funds followed into hands of third parties. 463. preferences in case of conversion of trust property, 467. securities stolen and afterwards sold follow- ed into hands of purchasers, 469. partners secretly taking a lease of prem- ises, 472. purchaser under foreclosure sale for benefit of mortgagor, 480. money obtained and invested under a prom- ise to marry, 485. beneficiary refusing to perform intention of testator, 487. property devised with instructions to dis- tribute, 493. CONVERSION AND RECONVERSION, bequests of personal estate, 38. contract of sale of land enforceable in eq- uity, 150. what constitutes equitable conversion, 153. election to prevent conversion of realty into personal property, 156. DUTIES AND LIABILITIES OP TRUS- TEES, liability for costs properly incurred, 496. trustees of a savings bank bound by its charter, 499. investment of trust funds by trustee for benefit of minor children, 503. guardian responsible for investment of ward's funds, 507. loans on mere personal security without di- rections as to mode of investment, 516. Investment in stocks of incorporated com- pany, 518. partner accountable to firm for all profits, 522. contract between bondholders of insolvent corporation and new company, 522. right of agent intrusted with sale of real estate to purchase for himself, 527. profits made in business of principal, 529. compensation of trustee for services, 534. adjustment of compensation of trustee upon judicial investigation, 535. deposit by agent of proceeds of property sold by him for principal, 537. negligence of trustees and liability therefor, 541. bankrupt trustee dealing with convertible trust funds, 546. 896 INDEX. ELECTIOX. doctrine of election under deed or ■will, 120. what is election in equity, 125. right of heir concluded by election, 126. compensation for loss sustained by virtue of widow's election, 128. provisions in lieu of dower, 129. time within which election, should be made, 131. EQUITABLE ESTOPPEL, right of party to prove his own representa- tions false, 100. promise not to assert claim to property, 107. bank bound by voluntary certification of forged cheek, 110. effect of acquiescence under a bona flde mis- take, 114. garnishee's right to deny indebtedness after voluntary declaration, 119. EXPRESS TRUSTS, writing subscribed by party declaring trust, 357. conveyance of property in discharge of debt reserving any surplus of proceeds, 359. written statement of a trust in lands sub- scribed by the party to be charged there- with, 361. express trust of land created by parol, 363. trust of mortgage debt created by parol, 865. declaration In will giving full power and authority to executors, 367. EXPRESS TRUSTS — PRECATORY WORDS, protection, comfort, and support of children, .S70. devise subject to charge for support of wife and sister, 373. a desire and request by testator for provi- sion for certain relatives, 375. EXPRESS TRUSTS — VOLUNTARY TRUSTS. interest in property must be absolutely dis- posed of, 378. unequivocal words must be used to create trust, 380. executory contract to create trust, 385. deposits in savings bank in trust for rel- atives, 386. intent as distinguishing gift from trust, 389. creation of voluntary trust, 393. FRAUD— JURISDICTION OF EQUITY, adequate and complete remedy at law, 258. cancellation of agreement and reinstatement of contract, 261. deed executed upon faith of fraudulent agreement, 264. INJUNCTIONS, railway company agreeing not to transport goods at rates fixed by law, 725. trustees of church closing building against duly appointed preacher, 729. unlawful execution ground for injunction, 732. INJUNOTIONS-Confd. vote by stockholder of shares at corporate election, 734. introduction of electric lights in breach of illuminating contract, 735. breach of contract under a lease, 738. landlord's right to prevent unauthorized use of premises, 740. agreement by physician to refrain from practice, 742. right to restrain reliable company from se- curing services of employ^, 620. violation of negative stipulation in contract, 605. threatening purchaser of goods witu suits for infringements of patents, 744. disclosure by servant of trade secrets, 746. waste by life tenant, 751. cutting and drawing" timber from land, 753. continuing trespasses ground for injunction, 755. destruction of fruit and ornamental trees by city, 757. diversion and obstruction of water course by city, 758. carrying and displaying banner for purpose of boycotting, 761. conspiracy to injure business, 764. attempt to enforce employes to join strike, ■ 770. maintenance of house of III fame, 773. adoption of trade-name, 774. LIS PENDENS, doctrine founded on notice, 97. MAXIMS OF EQUITY, no wrong without a remedy, 3. equity follows the law, 5, 9. equity aids the vigilant, 15. equality is equity, 17. he who seeks equity must do equity, 19, 27. equal equities, the first in time prevails, 23. equal equities, the law must prevail, 26. he who comes into equity must come with clean hands, 30, 31. equity regards substance, rather than form, 38, 54. equity looks on that as done which ought to be done, 4S. equity acts specifically and not by way of compensation, 46. equity imputes an intent to fulfill an obliga- tion, 48. . equity acts in personam, 50, 52. MISTAKE OF FACT, materiality of mistake to warrant rescission of contract, 210. reinstatement of insurance policy, 214. mutual mistake, 218. ignorance or mistake of fact extrinsic, and not essential to contract, 220. gross negligence as relief against party's own acts, 223. reformation of contract on parol evidence of mutual mistake, 227. MISTAKE OF LAW, letter of attorney revoked on death of donor, acts thereafter void, 170. INDEX. 897 MISTAKE OF LAW— Cont'd, mistake arising from ignorance of law not ground for reformation of written instru- ment, 175. deeds In futuro given by mistake, 181. contract corrected so as to express Intention of parties, 184. mutual mistake of parties to contract, 186. bond from judgment executed under mutual mistake, 190. mistake as to words expressing intent of parties to contract, 201. discliarge of lien by refusal of tender, 205. fraudulent representations to party ignorant of law, 206. voluntary payment of money unaffected by fraud, 209. MISTAKE— PAROL EVIDENCE TO COR- RECT, failure to have trust properly declared In deed, 231. intention of parties to contract, 237. deed conveying less land than orally bought or paid for, 239. discretion of court to correct mistake, 241. reformation involving specific enforcement of oral agreement within statute of frauds, 247. reformation of contract by including more land than therein specified, 255. MORTGAGES, right of mortgagor to have rents and profits applied to cancellation of debt, 547. proof of loss of assignment of mortgage, 549. interest of mortgagee, 554. PENALTIES AND FORFEITURES, agreement for liquidated damages, 56. equity jurisdiction of enforcement of for- feiture, 59. penalty or liquidated damages, 60, penalty or liquidated damages, 61. penalty or liquidated damages, 67. POWERS IN TRUST, general power created by will, 399. PRIORITIES AND NOTICE, priority of mortgage lien not lost by can- cellation, 69. insolvency proceedings set aside without no- tice, 71. definition of active and constructive notice, 74. notice to purchaser of satisfaction of mort- gage, 76. priority of right of bona fide purchaser, 79. actual, constructive, and implied notice con- strued, 83. constructive notice as affecting priority of right, 85. unrecorded deed as constructive notice, 89. record as notice to subsequent purchaser, 91. notice to agent as notice to principal, 91. notice to purchaser by recital in deed, 96. HUTCH.& BUNK.EQ.— 57 RECEIVERS, authority of receiver against foreign gov- ernment, 788. right to enjoin officers of state, 795. service of notice on receiver, 806. appointment of receiver resulting in destruc- tion of business, 807. protection of secret code, 808. time when title vests in receiver, 811. power of judges of trial courts to appoint, 814. dissolution of mining partnership, 824. right of creditor to ask for appointment of, 828. revocation of appointment on payment of expenses, 835. ex parte application by creditor of bank, 836. misconduct of shareholders of corporation as ground for appointment, 840. proper parties to be appointed, 846. excessive mortgage and decrease of business of railroad, 849. disposition of rents collected, 853. appointment during pendency of action of foreclosure, 855. attaching creditor interfering with mortgage foreclosure, 858. collection of rents on property insufficient to secure mortgage, 860. validity of acts of receiver, 862. funds in hand of receiver liable for taxa- tion, 867. right of receiver to issue certificates of in- debtedness, 870. right to issue certificates to pay taxes, 872. action by receiver to enforce liability of stockholders, 877. suits in foreign jurisdiction, 879. combinations in restraint of trade, 882. mismanagement of property of insolvent corporation, 885. injury and destruction of insolvents' assets, 888. set-off by insolvent bank against note of de- positor, 890. enforcement of liability of corporate stock- holder, 894. REFORMATION, deed executed by party mentally weak, 779. contract procured by fraud and mistake, 781. RESULTING TRUSTS, next of kin to take surplus of trust for his own benefit, 434. life estate of wife resulting to husband, 436. deed from husband to wife, 438. A. purchases estate with his money and takes deed In name of B., a trust results to A., 439. legal estate taken jointly results to party advancing purchase money, 444. delivery of deed as affecting trust, 447. evidence of intention of establishing trust, 451. 8;»8 INDEX. SATISFACTION, legacy as satisfaction of bond debt, 133. devise to satisfy debt, 135. two bequests of the same sum of money to tlie same legatee construed, 137. intention of testator, 139. ademption of legacies, 143. ademption of legacies determined by parol evidence, 145. foundation of rule of ademption of legacies, 148. SPECIFIC PERFORMANCE OF CON- TRACT, heir entitled to land held by tenure of horn, oijT). enforcement of promise for conveyance of land, 566. competency of party to contract, 567. adjoining proprietor's right to compel build- ing of party wall, 570. sale of debts proved under commission of bankrupt, 576. sufficiency of description a defense to a con- tract for a conveyance of land, 577. jurisdiction of decree for conveyance of land, 579. delivery of shares of stock loss of which cannot be compensated, 580. agreement between theater and stock com- pany, 584. tender of performance in enforcement of contract of sale, 587. refusal to deliver coal on account of advance in price, 590. forfeiture of charter of railroad company for failure to build and equip road, 593. parties to action for enforcement of railroad building contract, 595. penalty or liquidated damages for breach of contract, 598. agreement to write and report cases deter- mined, not mutual, 603. affirmative stipulation not enforceable, 605. actor to perform at certain theater, 613. negative stipulation in contract for sale of chat.tels, 618. Injunction against rival manufacturers for use of stamp on goods, 620. right to reserve ball player for subsequent season, 622. agreement to execute formal contract, 626. return of personal chattels where detention cannot be compensated, 628. use of same tracks by street railway com- panies, 632. covenant giving right to purchase premises leased a continuing offer to sell, 635. discretion of court governed by merits of the case, 641. stipulated damages for a refusal of per- formance, 643. insolvency as a defense to conveyance of real estate, 645. lease with option to purchase chattels, 646. effect of destruction by Are of property to be conveyed, 166. SPECIFIC PERFORMANCE OF CON- TRACT— Cont'd. time of acceptance or acquiescence of pro- posal, 650. destruction of property by Are as a defense to contract, 652. agreement to repair as defense to contract, 653. deterioration of land caused by mismanage- ment, 654. execution of contract for sale of real estate with part paynitot equivalent to transfer, 658. vendee taking possession of property liable for its destruction, 660. right of vendee to compel conveyance of property destroyed, 662. release of homestead affecting the right to compel conveyance, 666. refusal of a wife to join in conveyance, 668. parol variation of contract as affecting con- veyance, 670. refusal of a wife to relinquish right of dow- er, 672. uncertainty of description in contract, 673. laches as a defense in action for perform- ance of contract, 677. payment and legal tender as ground for for- feiture, 686. right of way granted to railroad in consid- eration of construction of road, 692. removal of incumbrance pending suit, 694. incumbrances as defense to contract for con- veyance, 697. omission to affix stamp by United States collector, 700. jurisdiction to enforce agreement to give note for purchase price and secure it by mortgage, 702. public policy as defense to enforcement of agreement, 704. stockholder's agreement to transfer shares to company, 711. construction of railroad stations in discretion of court, 714. mutuality as ground for specific perform- ance, 715. acceptance of optional contract, 717. liquidated damages agreed upon by breach of contract, 721. damages awarded for breach of contract, 723. SUBROGATION, right of purchaser of void municipal aid bonds to recover value, 560. TRUSTS— ACTIVE AND PASSIVE, estate consistent with contention of party creating trust, 397. TRUSTS— PUBLIC OR CHARITABLE, construction of charitable trusts, 402. intention of testator in a will creating trusts, 423. uncertainty of beneficiaries as ground for invalidating charitable trust, 430. WEST PUBLLSaiNQ CO., PRINTERS AND BTEBEOTYPERS, ST. PACL. UXNN.