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Full text of "Cases on equity jurisprudence ... : printed at the request of Prof. H.B. Hutchins, dean of the Law department of the University of Michigan, for use in connection with his lectures in that law school ... : chiefly selected from Fetter's Cases on equity jurisprudence and Pattee's Cases in equity"

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Cornell University Library 
KF 398.H97 

Cases on equity jurisprudence ... :print 



3 1924 018 814 958 





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/cu31924018814958 



UNIVERSITY OE MICHIGAN 



ILLUSTRATIVE CASES 



EQUITY JURISPRUDENCE, 



selected by 

Professor H B. HUTCHINS, 

Of the Law Department. 



WEST PUBLISHING CO., 

St. Paul, Minn. 



Cornell University Law Library. 



THE aiFT OF 
LILLIAN HUFFCUT 

BINGHAMTON, N. Y. 

NOVEMBER 27, 1915 

^i8i 



CASES 



ON 



EQUITY JURISPRUDENCE 



The following cases have been printed at the request of Prof. H. 
B. Hutchins, Dean of the Law Department of the University of 
Michigan, for use in connection with his lectures in that law school. 
They have been chiefly selected from Fetter's Cases on Equity Juris- 
prudence and Pattee's Cases in Equity. 



ST. PAUL 
WEST PUBLISHING CO. 

1895 



Copyright, 1895, 

BY 

WEBT PUBLISHING COMPANY. 



TABLE OF CONTENTS. 



Principles Limiting Jurisdiction. 



Page 

Teft v. Stewart 3 

'Greeu t. Spring 5 

Frue V Loring 6 

Watson V. Sutherland 8 



Pai^e 

LjDch V. Metropolitan El. Ry. Co 10 

Morss V. Elmendorf 14 

Rees V. City of Watertown 17 



Maxims of Equity. 



Berry v. Mutual Ins. Co 21 

Shiiras v. Caig 23 

•City of St. Louis v. O'Neil Lumber Co 26 

■Comstock V. Johnson 30 

McLaughlin t. McLaughlin 31 

Bleakley's Appeal 34 

Plummer v. Keppler 35 



Ellison V. Moffatt 36 

Russell V. Failor 37 

Craig V. Leslie 38 

Stinchfield v. Milliken 43 

Ames V. Richardson 45 

Haughwout V. Murphy 47 

Clements v. Tillman 50 



Property in Equity — Trusts. 



Tlrann v. Coates 52 

Bates V. Hurd 54 

Patton T. Chamberlain 56 

Crissman t. Oi-issman 57 

Steere v. Steere 60 

Tobias v. Ketchum 67 

Young T. Young 70 

Ellison T. Ellison 75 

Richardson v. Richardson 78 

Morgan v. Malleson 80 

Richards v. Delbridge 81 

Martin v. Funk 83 

Delaney y. MeCormack 86 

..Tackson v. Phillips 89 

Holland v. Alcock 110 



Fisher v. Fobes 119 

Dyer v. Dyer 121 

Ocean Bank of New York v. Olcott 12-i 

Mitchell T. Read 128 

Newton v. Porter 13() 

McLeod V. Evans 139 

Myers v. Board of Education of City of 

Clay Center 14,'l 

Cavin v. G-leason 148 

Ryan v. Doi l.")() 

Hun v. Gary Ifi.T 

King T. Talbot l.iO 

Ogden T. Murray Ifi3 

In re Schell me 



Equitable Bights. 



Patton V. Campbell 168 

Hunt V. Rousmanier 170 

Park Bros. & Oo. v. Blodgett & Clapp Co. . 175 

Renard v. Clink 179 

..Tacobs T. Morange 180 

Peterson t. Grover 182 

Kider v. Powell 184 

Ludington v. Ford 186 

Welles T. Yates 187 

'Glass T. Hulbert 191 



Hunter v. Bilyen 199 

Swimm v. Bush 20."> 

Stimson v. Helps 'JOT 

Mitchell V. McDougall 209 

AUore T. .Jewell 212 

Tate V. Williamson 21.") 

Cowee V. Cornell 218 

Ross V. Conway 222 

Solinger v. Earle 224 



Equitable Remedies. 



Page V. Martin 226 

Blanchard v. Detroit, L. & L. M. R. Co. . . . 228 

Wm. Rogers Manuf'g Co. v. Rogers 234 

Danforth v. Philadelphia & C. M. S. L. Ry. 

Oo 236 

Beck V. Allison 238 

Lear v. Chouteau 241 

..Tones v. Newhall 243 

Margraf v. Muir 24(1 

Bird V. Hall 248 

Merchants' Bank v. Thomson 249 

'.Hubbell V. Von Schoening 253 

HUTCH. BQ.JUR. (iii 



Lamb v. Hinman 25.') 

Steward v. Winters 257 

Manhattan Manufacturing & Fertilizing Co. 

V. New Jersey Stock Yard & Market Co., 259 
Trustees of Columbia College v. Lynch. . . . 261 

Hendrickson v. Hinckley 265 

Griffith V. Hilliard 267 

C'iirlisle v. Cooper 269 

Robinson v. Baugh 277 

Dimcombs v. Felt 280 

Wilson V. CSty of Mineral Point 282 



)* 



CASES REPORTED. 



Pags 

Allore V. Jewell (94 TJ. S. 506) 212 

Ames V. Richardson (13 N. W. 137, 29 
Minn. 330) 45 

■ Bates V. Hurd (65 Sle. 180) 54 

Beck V. Allison (56 N. Y. 366) 23S 

Perry v. Mutual Insurance Co. (2 .Johns. 

Ch. 603) 21 

Bird V. Hall (30 Mich. 374) 248 

Blanchard v. Detroit, L. & L. M. R. Co. 

(31 Mich. 43) 228 

Bleakley's Appeal (66 Pa. St. 187) 34 

Carlisle v. Cooper (21 N. J. Eq. 576) 269 

Cavin v. Gleason (11 N. E. 504, 105 N. Y. 

256) 148 

City of St Louis v. O'Neil Lumber Co. 

(21 S. W. 484, 114 Mo. 74) 26 

Clements v. Tillman (5 S. E. 194, 79 Ga. 

451) 50 

Comstocli V. Johnson (46 N. Y. 615) 30 

Cooper V. Carlisle (21 N. J. Bq. 576) 26!) 

Cowee V. Cornell (75 N. Y. 91) 218 

Craig V. Leslie (3 Wheat. 563-576) 38 

Crlssman v. Crissman (23 Mich. 217) 57 

Danforth v. Philadelphia & Cape May S. 

L. R. Co. (30 N. J. Eq. 12) 2:i(i 

Delaney v. McCormack (88 N. Y. 174). . . 86 
Buncombe v. Felt (45 N. W. 1004, 81 

Mich. 332) 280 

Dyer v. Dyer (2 Cox, Ch. 92) 121 

Ellison V. Ellison (6 Ves. 656) 75 

Ellison V. Moffatt (1 Johns. Ch. 46) 36 

Fisher v. Fobes (22 Mich. 454) 119 

Frue V. Loring (120 Mass. 507) 6 

Glass V. Hulbert (102 Mass. 24) 191 

Green v. Spring (43 III. 280) 5 

Griffith V. Hilliard (2.-5 A. 427, 64 Vt. 643) 267 

Haughwout V. Murphy (22 N. J. Eq. 531) 47 
Hendrickson v. Hinckley (17 How. 443). 265 
Holland v. Alcock (16 N. E. 305, 108 N. Y. 

312) 110 

Hubbell V. Von Schoening (49 N. Y. 326) . 253 

Hun V. Gary (82 N. Y. 65) 155 

Hunt V. Bousmanier's Adm'rs (8 Wheat. 

174) 170 

Hunter v. Bilyeu (30 111. 228) 199 

Jackson v. Phillips (14 Allen, 539) 89 

Jacobs V. Morange (47 N. Y. 57) 180 

Jones V. Newhall (115 Mass. 244) 243 

King V. Talbot (40 N. Y. 76) 159 

HUTCH. EQ.JUR. 



Page 

Lamb v. Hinman (8 N. W. 709, 46 Mich. 

112) 255 

Lear v. Chouteau (23 111. 39) 241 

Ludington v. Ford (33 Mich. 123) 186 

Lynch v. Metropolitan El. Ry. Co. (29 N. 

E. 315, 129 N. Y. 274) 10 

McLaughlin v. McLaughlin (20 N. J. Eq. 

190) 31 

McLeod V. Eyans (28 N. W. 173, 214, 66 

Wis. 401) 139 

Manhattan Manufacturing & Fertilizing 

Co. V. New Jersey Stock-Yard & Market 

Co. (23 N. J. Bq. 161) 259 

Margraf v. Muir (57 N. Y. 155) 246 

Martin v. Funk (75 N. Y. 134) 83 

Merchants' Bank v. Thomson (55 N. Y. 7) 249 

Mitchell V. McDougall (62 111. 498) 209 

Mitchell V. Read (61 N. Y. 123) 128 

Morgan v. Malleson (L. R. 10 Eq. 475). 80 

Morss V. Elmendorf (11 Paige, 277) 14 

Myers v. Board of Education of City of 

Clay Center (32 P. 658, 51 Kan. 87) 143 

Newton v. Porter (69 N. Y. 133) 136 

Ocean Bank of New York v. Olcott (46 N. 

Y. 12) 124 

Ogden V. Jlurray (39 N. Y. 202) 163 

Page V. Martin (20 A. 46, 46 N. J. Eq. 

585) ^26 

Park Bros. & Co. v. Blodgett & Clapp Co. 

(29 A. 133, 64 Conn. 28) 175 

Patton V. Campbell (70 111. 72) 168 

Patton V. Chamberlain (5 N. W. 1037, 44 

Mich. 5) 56 

Peterson v. Grover (20 Me. 363) 182 

Plummer v. Keppler (26 N. J. Eq. 481) . . 35 

Rees V. City of Watertown (19 Wall. 107) 17 
Renard v. Clink (51 N.W.692,91 Micli.l) 179 
Richards v. Delbridge (L, R. 18 Bq. 11). 81 
Richardson v. Richardson (K R. 3 Eq. 

686) 78 

Rider v. Powell (28 N. Y. 310) 184 

Robinson v. Baiuh (31 Mich. 290) 277 

Rogers Manuf'g Co. v. Rogers (20 A. 467. 

58 Conn. 356) 234 

Ross V. Conway (28 P. 785, 92 Cal. (;32) . 222 

Russell V. Failor (1 Ohio St. 327) 37 

Ryan v. Dox (34 N. Y. 307) 150 

Schell, In re (53 N. Y. 20.1) 166 

Shirras v. Caig (7 Cranch, 34) 23 

Solinger v. Earle (82 N. Y. 393) 224 

Steere v. Steere (5 Johns. Ch. 1) 60 

Steward v. Winters (4 Sandf . Ch. 588) . . 257 

(V) 



CASES REPORTED. 



Page 
Stimson v. Helps HO P. 290, 9 Colo. 33). 207 

Stinchfield v. Mllliken (71 Me. 567) 43 

Swimm v. Bush (23 Mich. 99) 205 

Tate V. Williamson (2 Ch. App. 55) 215 

Teft V. Stewart (31 Mich. 367) 3 

Tobias v. Ketchum (32 N. Y. 319) 67 

Trustees of Columbia College v. Lynch 
(70 N. Y. 440) 261 



Page 
Drann v. Coates (109 Mass. 581) 52 

Watson V. Sutherland (5 WaU. 74) 8 

Welles V. Yates (44 N. Y. 525) 187 

Wm. Rogers Manuf'g Co. v. Rogers (20 

A. 467, 58 Conn. 356) 234 

Wilson V. City of Mineral Point (39 Wis. 

160) 282 

Young V. Young (80 N. Y. 422) , 70 



t 



CASES 



ON 



EQUITY JURISPRUDENCE, 



HDTCB.EKl.JDR.— 1. (1)* 



PKINCIPLES LIMITING JURISDICTION. 



y 



TEFT T. 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 doUars, 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 difCer- 
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 bill of sale and order, and 
proceeded to Bangor for the property; that 
complainant and Devoe then called on Carroll 
for 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 himself 
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 CarroU 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 apjjropriated 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 
bill 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 Carroll 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. 



PRINCIPLES LIMITING JUBISDICTION. 



If tbe riglit 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 boots 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- 
ei-y, 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 
lof 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 regard 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 
l)y jury, the point made by appellant must 
be sustained, and in my judgment It should 
be. Story, Eq. Jur. §§ 72-74; 1 Spence, Bq. 
Jur. 691-700; Adams, Eq. Introduction, pp. 
5?, 58; Shepard v. Sanford, 3 Barb. Ch. 127; 
Bradley v. Bosley, 1 Barb. Oh. 125; Monk v. 
Harper, 3 Edw. Ch. 109; Pierpont v. Fowle, 
2 Woodb. & M. 23, Fed. Oas. No. 11,152; Vose 
V. Philbrook, 3 Story, 335, Fed. Cas. 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 R. Co., 7 Oh. App. 562, 3 Eng. 
R. 509; Hoare v. Bremridge, L. B. 14 Eq. 
522, 3 Eng. R. 824, cited by Lord Hatherly 
with approbation in Ochsenbein v. Papelier, 
8 Ch. App. 695, 6 Eng. B. 576; Kemp v. 
Tucker, 8 Ch. App. 369, 5 Eng. R. 596; Warne 
v. Banking Co., 5 N. J. Eq. 410; HaythOrn 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 afCair 
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. 

CAMPBELL and COOLEY, JJ., concurred. 
CHRISTIANCY, J., did not sit in this case. 



PKJNCIPLES LIMITING JURISDICTION. 



GREEX^ et al. v. SPRING. 

(43 111. 280.) 

Supreme Court of Illinois. Jan. Term, 1867. 

Error to Richland county; Aaron Shaw, 
Judge. 

J. G. Bowman, for plaintiffs in error. Hay- 
ward & Kitchen, for defendant in error. 

LAWRENCE, J. This was a bill in chan- 
cery for dower and partition, filed in Octo- 
ber, 186J:, by Henry Green, and Elizabeth 
M. Green, his wife, alleging that, on the 20th 
of August, 1843, one Asahel L. Powers died 
seized in fee simple of two lots in the town 
of Olney, leaving said Elizabeth, his widow, 
and without lineal descendants; that the said 
Elizabeth, in August, 1845, intermarried 
with one Henry Green, and that she is en- 
titled to an undivided half of said real es- 
tate in fee, and a right of dower in the other 
half; and that said lots were held under 
claim of title by one Henry Spring, who was 
made defendant to the bill. Elizabeth M. 
Green died pending the suit, and her heirs 
were made parties, and so much of the bill 
as prayed dower was dismissed by complain- 
ants. 

After the bill, so far as it related to dower, 
was dismissed, there was nothing left upon 
which the jurisdiction of a court of chan- 
cery could be maintained. It became, in 
substance, simply an action of ejectment. 
The defendant Spring was in possession, 
claiming title to the entire lots under a sale 
made in 1845, by the administrator of Pow- 
ers for the payment of debts. 

If this sale, as alleged by the complainant, 
was illegally made, and one undivided half 
of the lots belonged to the heirs of Mrs. 
Green, the other half belonged to the heirs 
of Powers, who are not parties to this pro- 
ceeding, and not to the defendant. If he 



has any interest In the lots, he owns the en- 
tirety. This bill professes to be for dower 
and partition. The claim for dower is aban- 
doned, and the only persons with whom 
partition can be made are not parties. So 
far as Spring is concerned, it stands a naked 
bill to turn him out of possession of land 
adversely claimed by him, and to compel 
an account of rents and profits. If this bill 
can be maintained, we are at a loss to per- 
ceive why a bill in chancery cannot be main- 
tained in eveiT instance to recover posses- 
sion of land adversely held. It is not as if 
the bill were filed to set aside the adminis- 
trator's sale for fraud. No fraud is alleged, 
nor other head of chancery jurisdiction. In- 
deed, in the bill it does not appear that thei'e 
has ever been an administrator's sale. It is 
merely alleged that Spring is in possession 
claiming adversely, and that complainants 
know of no title which Spring has to any 
part of the lots; but that, if he has any, it is 
only to one-half. In the answer. Spring sets 
up the title claimed by him under the ad- 
ministrator's sale, which is attacked in the 
argument, on the ground that there was no 
jurisdiction to make the order, for want of 
notice. But the bill was not filed to set this 
sale aside, and when set up in the pleadings 
and proof of defendant it is insisted that it 
was void. The bill was properly dismissed 
as a bill of partition, for want of proper par- 
ties, and, so far as it sought to evict an ad- 
verse claimant without title, there was noth- 
ing, either in the bill or proofs, to give the 
court jurisdiction. A court of chancery will 
sometimes decree an adverse claimant to de- 
liver possession to the rightful owner, but 
only when such relief is incidental to the 
main object of the bill, and when the power 
of the court has been called into action for 
some purpose that belongs to its legitimate 
jurisdiction. 
Decree affirmed. 



PRINCIPLES LIMITING JURISDICTION. 



FEUB V. LORING. 

(120 Mass. 507.) 

Supreme Judicial Court of Massachusetts. 
Sept. 9, 1876. 

Bill in equity to establish a trust. The de- 
fendant demurred to the Wll for want of eq- 
uity, and on the ground that there was an 
adequate remedy at law. The case was re- 
served by Wells, J., for the consideration of 
the full court. 

B. F. Thomas, for plaintiff. 0. A. Welch, 
for defendant. 



COLT, J. The equity jurisdiction of this 
court, by the terms of the statute, embraces 
suits and proceedings for enforcing and reg- 
ulating the execution of trusts, whether the 
trusts relate to real or personal estate, sub- 
ject to the general provision which excludes 
such jurisdiction where the parties have a 
plain, adequate and complete remedy at com- 
mon law. Gen. St. c. 113, § 2. 

The plaintiff seeks to charge the defendant 
as trustee for the appropriation to his own 
use of certain shares of stociv held in trust. 
The bill alleges an agreement between the 
parties and certain other persons named for 
the purchase of mining lands on Lake Su- 
perior and the formation of mining corpora- 
tions; the subsequent formation of two com- 
panies, and the conveyance to them of the 
land purchased; the allotment of shares 
among the proprietors; and the agreement 
between the plaintiff and the defendant that 
the plaintiff's shares should be issued to the 
defendant as trustee, to be held by him until 
the assessments, to become due from the plain- 
tiff thereon, were paid. It then alleges the 
plaintiff's payment of more than was due 
on his shares, referring to annexed exhibits 
for the state of the account; and charges the 
defendant with the wrongful sale of the 
shares and the appropriation of the proceeds. 
It expressly waives the defendant's oath to 
his answer, and seeks no discovery as inci- 
dental to the relief. The prayer is for an 
account, for payment of the balance due 
over the assessments paid, and payment of 
the highest value of the stock since the plain- 
tiff became entitled to it with all dividends, 
and for general relief. The question is 
whether the bill shows a case in which there 
is not an equally effectual remedy at law. 

It is plain, from the allegations in the bill, 
that the only matter in coutrovei'sy is the 
plaintiif's title to the shares of stock in ques- 
tion, and his right to claim that the defend- 
ant shall make their value good to him. He 
does not seek to obtain the control of trust 
property in the possession of the trustee; but 
he avers that it has been sold, and we as- 
sume that it is now held by the purchaser 
by good title, discharged of the trust. His 
claim is reduced to a claim for compensation 
in damages for the conversion of property of 
which he claims to have been owner. His 



right will be determined by settling his title 
to the property. He seeks no discoveiy, and 
there is nothing in the case to show that his 
right to compensation may not be the same 
in measure, and that his title may not be as 
completely and adequately enforced at law 
as in equity. The jurisdiction in equity ex- 
tends, it is said, equally to express and im- 
plied trusts (Wright v. Dame, 22 Pick. 55); 
and yet it has never been contended that it 
embraced all such, cases of implied trust as 
arise out of the relations created by a pledge 
or mortgage of personal property, or a trans- 
fer of choses in action, or shares in a corpora- 
tion to be held as collateral security for the 
payment of money, or which might arise be- 
tween principal and agent, or between bailor 
and bailee, unless there were facts alleged 
showing either the need of a discovery in 
support of the bill, or relief in some form pe- 
culiar to courts of equity. In none of the 
cases cited by the plaintiff, in which the ob- 
jection has been taken by demurrer, will be 
found a clear departure from this rule. In 
most of them an account of the trust, or a 
discovery, or a delivery of trust property, was 
prayed for. Hobart v. Andrews, 21 Pick. 
526; Raynham Congregational Soc. v. Trus- 
tees of Fund in Raynham, 23 Pick. 148; Bm-- 
lingame v. Hobbs, 12 Gray, 367. 

The rule of damages in equity cannot be 
more favorable than at law to the plaintiff, 
when he asks compensation only for the con- 
version of his property. 

Nor can this bill be maintained under the 
jurisdiction given to this court in suits upon 
accounts, when the nature of the account is 
such that it cannot be conveniently and prop- 
erly adjusted and settled in an action at law. 
It is not shown by sufficiently distinct alle- 
gations that there is any peculiar difficulty 
in ascertaining the true state of the account 
between the parties. It is not charged that 
there has been any refusal to render an ac- 
count; the charge is rather that the defend- 
ant refused to account for the proceeds of the 
stock sold. The elements and means of stat- 
ing the account appear to be accessible to 
the plaintiff, for he annexes to his bill a full 
statement of its items. The real question is 
of the ownership of the stock, and that ques- 
tion does not appear by the bill to depend 
upon "long complicated and cross accounts." 
It is said that courts of equity will decline to 
take jurisdiction under this head where the 
accounts are all on one side; or where there 
is a single mattei- on the side of the plain- 
tiff and mere set-offs on the other side, and 
no discovery is sought. 1 Story, Eq. Jur. 
§ 459, note, and eases cited; Adams, Eq. 222. 
See, also, Locke v. Bennett, 7 Gush 445 449- 
Foley V. Hill, 2 H. L. Cas. 28. 

The construction, which we here give to the 
general clause restricting jurisdiction to cases 
where the remedy is imperfect at law, is that 
which has been in many cases recenUy given 
under other heads of equity jurisdiction 
Thus a bill to redeem a mortgage of per- 



PBINCIPLES LIMITJNG JUllISDiCTION. 



sonaX property was dismissed because it did 
not show that, from the nature of the prop- 
erty, the peculiar relations of the parties, or 
the difficulty of ascertaining the amount to 
be paid or tendered, the mode of redemption 
pointed out by the statute was not sufficient 
to protect the plaintiff's rights (Gordon v. 
Clapp, 111 Mass. 22), although a similar bill, 
containing such averments, was maintained 
in Boston & Fairhaven Iron Works v. Mon- 
tague, 108 Mass. 248. So In Jones v. New- 



hall, 115 Mass. 244, the court refused to enter- 
tain a bill in favor of the vendor for the 
specific performance of a contract, when all 
that remained to be done was the payment of 
money by the defendant; and in Suter v. 
Matthews, 115 Mass. 253, it was declared that 
there was no concurrent jurisdiction in case 
of fraud where there is a plaui and ade- 
quate remedy at law. See, also. Ward v. 
Peck, 114 Mass. 121. 
Demun'er sustained. 



PRINCIPLES LIMITING JURISDICTION. 



WATSON V. SUTHERLAND. 

(5 Wall. 74.) 

Supreme Court of the United States. Dec, 
1866. 

Appeal from circuit court of the United 
States for the district of Maryland. 

Watson & Co., appellants in the suit, hav- 
ing issued writs of fieri facias on certain 
judgments which they had recovered in the 
circuit court for the district of Maryland 
against Wroth & Fullerton, caused them to 
be levied on the entire stock in trade of a 
retail dry goods store in Baltimore, in the 
possession of one Sutherland, the appellee. 
Sutherland, claiming the exclusive owner- 
ship of the property, and insisting that Wroth 
& Fullerton had no interest whatever in It, 
filed a bill in equity, to enjoin the further 
prosecution of these writs of fieri facias, and 
so to prevent, as he alleged, iiTeparable in- 
jury to himself. The grounds on which the 
bill of Sutherland charged that the injury 
would be irreparable, and could not be com- 
pensated in damages, were these: that he 
was the bona fide owner of the stock of 
goods, which were valuable and purchased 
for the business of the current season, and 
not all paid for; that his only means of pay- 
ment were through his sales; that he was 
a young man, recently engaged on his own 
account in merchandising, and had succeed- 
ed in establishing a profitable trade, and if 
his store was closed, or goods taken from 
him, or their sale even long delayed, he 
would not only be rendered insolvent, but 
his credit destroyed, his business wholly 
broken up, and his prospects in life blasted. 

The answer set forth that the goods levied 
on were really the property of Wroth & Ful- 
lerton, who had been partners in business 
in Baltimore, and who, suspending payment 
in March, 1861, greatly in debt to the appel- 
lants and others, had, on the 27th October, 
1862, and under the form of a sale, conveyed 
the goods to Sutherland, the appellee; that 
Sutherland was a young man, who came to 
this country from Ireland a few years ago; 
that when he came he was wholly without 
property; that since he came he had been 
salesman in a retail dry goods store, at a 
small salary, so low as to have rendered it 
impossible for him to have saved from his 
earnings any sum of money sufficient to have 
made any real purchase of this stock of 
goods from Wroth & Fullerton, which the 
answer set up was accordingly a fraudulent 
transfer made to hinder and defeat creditors. 
It further stated that the legislature of 
Maryland had passed acts staying executions 
from the 10th of May, 1861, until the 1st of 
November, 18G2; that previous to the 1st 
November, 1862, Wroth & Fullerton had de- 
termined to pay no part of the judgments 
rendered against them; and that from the 
lOtl^ May, 1861, until the 1st November, 1862, 
judgments, amounting to between $30,000 
and $40,000 had been rendered against them; 



that between the date of the suspension, 
March, 1861, and the 27th October, 1802, they 
had sold the greater portion of their goods, 
and collectsd a great many of the debts due 
them, but had paid only a small portion of 
those which they owed; secreting for their 
own use the greater portion of the money 
collected, and with the residue obtaining the 
goods levied upon. 

It added that there was no reason to sup- 
pose that the levy aforesaid, as made by said 
marshal, would work irreparable injury to 
the appellee, even if the goods so levied on 
were the property of the complainant, as 
property of the same description, quantity, 
and quality, could be easily obtained in mar- 
ket, which would suit the appellee's purpose 
as well as those levied upon, and that a jury 
would have ample power, on a trial at com- 
mon law, in an action against the respond- 
ents, now appellants, or against the marshal 
on his official bond, to give a verdict com- 
mensurate with any damages the said ap- 
pellee could sustain by the levy and sale of 
the goods aforesaid. 

On the filing of the bill a temporary in- 
junction was granted, and when the cause 
was finally heard, after a general replication 
filed and proof taken, it was made perpetual. 

These proofs, as both this court and the 
one below considered, hardly established, as 
respected Sutherland, the alleged fraud on 
creditors. 

The appeal was from the decree of per- 
petual injunction. 

Mason, Campbell & McLaughlin, for de- 
fendants. AVallis & Alexander, conti-a. 

Mr. Justice DAVIS delivered the opinion 
of the court. 

There are, in this record, two questions for 
consideration, '^^'as Sutherland entitled to 
invoke the interposition of a court of equity? 
and, if so, did the evidence warrant the 
court below in perpetuating the injunction? 

It is contended that the injunction should 
have been refused, because there was a com- 
plete remedy at law. If the remedy at law 
is sufficient, equity cannot give relief, '-but 
It is not enough that there is a remedy at 
law; it must be plain and adequate, or in 
other words, as practical and efficient to the 
ends of justice, and its prompt administra- 
tion, as the remedy In equity."i How could 
Sutherland be compensated at law, for the 
injuries he would suffer, should the grievan- 
ces of which he complains be consummated? 

If the appellants made the levy, and pros- 
ecuted it in good faith, without circumstan- 
ces of aggravation, in the honest belief that 
Wroth & Fullerton owned the stock of goods 
(which they swear to in their answer), and 
it should turn out, in an action at law insti- 
tuted by Sutherland for the trespass, that 
the merchandise belonged exclusively to him, 
it is well settled that the measure of dam- 



1 Boyce's Ex'rs v. Grundy, 3 Pet. 210. 



PRINCIPLES LIMITING JURISDICTION. 



9 



ages, if the property were not sold, could not 
extend beyond the Injury done to it, or, if 
sold, to the value of it, when taken, with in- 
terest from the time of the taking down to 
the trial.2 

And this is an equal rule, whether the suit 
is against the marshal or the attaching cred- 
itors, if the proceedings are fairly conduct- 
ed, and there has been no abuse of authority. 
Any hajsher rule would interfere to prevent 
the assertion of rights honestly entertained, 
and which should be judicially investigated 
and settled. "Legal compensation refers 
solely to the injury done to the property tak- 
en, and not to any collateral or consequen- 
tial damages, resulting to the owner, by the 
trespass."3 Loss of trade, destruction of 
credit, and failure of business prospects, are 
collateral or consequential damages, which it 
is claimed would result from the trespass, 
but for which compensation cannot be award- 
ed in a trial at law. 

Commercial ruin to Sutherland might, 
therefore, be the effect of closing his store 
and selling his goods, and yet the common 
law fail to reach the mischief. To prevent 
a consequence like this, a court of equity 
steps in, arrests the proceedings in limine; 
brings the parties before it; hears their al- 
legations and proofs, and decrees, either that 
the proceedings shall be unrestrained, or else 
perpetually enjoined. The absence of a 
plain and adequate remedy at law affords 
the only test of equity jurisdiction, and the 
application of this principle to a particular 
case, must depend altogether upon the char- 
acter of the case, as disclosed in the plead- 
ings. In the case we are considering, it is 
very clear that the remedy in equity could 
alone furnish relief, and that the ends of 
justice required the injimction to be issued. 

The remaining question in this case is 
one of fact. 

The appellants, in their answers, deny that 
the property was Sutherland's, but insist 

2 Conard v. Pacific Ins. Co., 6 Pet. 272, 282. 

3 Pacific Ins. Co. v. Conard, 1 Baldw. 142, 
Fed. Cas. No. 10,647. 



that it was fraudulently purchased by him^ 
of Wroth & FuUerton, and is subject to the 
payment of their debts. It seems that 
Wroth & Fullerton had been partners in 
business in Baltimore, and suspended pay- 
ment in March, 1861, In debt to the appel- 
lants, besides other creditors. Although the- 
appellants did not recover judgments against 
them until after their sale to Sutherland, yet 
other creditors did, who were delayed in con- 
sequence of the then existing laws of Mary- 
land, which provided that executions should 
be stayed until the 1st of November, 1862. 
TaJiing advantage of this provision of lawr 
the answer charges that Wroth & Fullerton, 
after their failure, collected a large portions 
of their assets, but appropriated to the pay- 
ment of their debts only a small portion thus- 
realized, and used the residue to buy the 
very goods in question, which Sutherland 
fraudulently purchased from them on the- 
27th of October, 1862, in execution of a com- 
bination and conspiracy with them to hin- 
der, delay, and defraud their creditors. The- 
answers also deny that the injury to Suther- 
land would be irreparable, even if the stock 
were his, and insist that he could be amply 
compensated by damages at law. After gen- 
eral replication was filed, proofs were taken, 
but, as in aU contests of this kind, there was 
a great deal of irrelevant testimony, and very 
much that had only a remote bearing on the 
question at issue between the parties. It is- 
unnecessai"y to discuss the facts of this case, 
for it would serve no useful purpose to do so. 
We are satisfied, from a consideration of the 
whole evidence, that Wroth & Fullerton act- 
ed badly, but that Sutherland was not a 
party to any fraud which they contemplated 
against their creditors, and that he made the 
purchase in controversy, in good faith, and 
for an honest purpose. 

The evidence also shows conclusively, that 
had not the levy been arrested by injunc- 
tion, damages would have resulted to Suth- 
erland, which could not have been repaired- 
at law. 

The decree of the circuit court is, there- 
fore, aflarmed. 



10 



PKINCIPLES LIMITING JUKISDICTION. 



LYNCH T. METROPOLITAN EL. RT. CO. 
et al. 

(29 N. E. 315, 129 N. Y. 274.) 

Ocurt of Appeals of New York. Dec. 15, 1891. 

Appeal from superior court of New York 
cit.y, general term. 

Action by Lawrence Lynch against the 
Metropolitan Elevated Railway Company 
and others to restrain the maintenance 
and operation of defendants' roads in 
front of plaintiff's premises, and for dam- 
ages. Plaintiff obtained judgment, which 
was affirmed by the general term. De- 
fendants appeal. Affirmed. 

Samuel Blythe Rogers and Jullen T. Da- 
Yies, for appellants. Charles Gibson Ben- 
nett, for respondent. 

GRAY. J. This action was brought to 
restrain the maintenance and operation of 
the defendants' roads in front of the 
plaintiff's premises, and the prayer for 
such a judgment included also a demand 
for the amount of loss and damage which 
might be ascertained to have been already 
sustained by the plaintiff. The complaint 
sets out the title and ownership of the 
plaintiff, and his rights in and to the 
street in front of his premises; the con- 
struction of the elevated railroad, and the 
operation of trains over it, and the an- 
noying results therefrom; the illegal and 
unauthorized nature of the trespass upon 
the plaintiff's premises and easements, 
and the failure of the defendants to ac- 
quire or til make (•omr)ensation for them • 
the injuries sustained, and that they will 
be constant and continuous; and, finally, 
that, to prevent a multiplicitj' of suits, 
to protect against irreparable damages, 
and to afford complete relief, the nlaintitf 
is compelled to seek the equitable inter- 
ference of the court. When the action 
came on for trial the defendants' counsel 
moved for a trial of the plaintiff's claim 
for past damages by jury, and the excep- 
tion to the denial of that motion raises 
the main question presented upon this ap- 
peal. 

The clause of the constitution upon 
which the demand for a jury trial was 
based reads: "The trial by jury, in all 
cases in which it has heretofore been used, 
shall remain inviolate forever." 'The ar- 
gument for the appellants is, in substance, 
that there were two independent causes 
of action stated in thecomplaint,of which 
one was for past damages, which, prior 
to the constitution of 1846, was cognizable 
solely in a court of law, and that, under 
the Code, it comes within the equity juris- 
diction of the court only by reason of the 
permission to join in one complaint legal 
and equitable causes of action. By sec- 
tion 970 of the Code of Civil Procedure, 
which was a now enactment, it is provid- 
ed that "where a party is entitled hy the 
constitution, or by express provision of 
law, to a trial by a jury of one or more 
issues of fact, * » * hemay apply upon 
notice to the court for an order directing 
all the questions arising upon that issue 
to be distinctly and plainly stated for tri- 
al accordingly," whereupon the court 
must so Older, etc. If the defendants be- 
lieved that they had a constitutional right 



to a jury trial of some issue of fact in 
this action, it would have been the natu- 
ral and orderly way for them to make an 
a pplication to the court under this section. 
The complaint appears to be but one con- 
secutive narrative of the grounds upon 
which the equitable interference of the 
court is alleged to be necessary. The pre- 
tense that there is a separate cause of ac- 
tion rests only upon the demand of the 
complainant that, if he is entitled to the 
equitable relief of an injunction, the court 
shall adjudge to him such an amount for 
the loss sustained by the defendants' acts 
as shall be ascertained. Undoubtedly 
the claim for past damages sustained by 
plaintiff in his property rights from the 
defendants' acts could have been made the 
subject of an action at law, but that 
was not the cause of action which the 
plaintiff elected to assert in his complaint, 
and to bring to trial. What he attempt- 
ed by instituting his action was to re- 
strain the continuance of acts, which were 
constantly injuring, and would, to all ap- 
pearances, constantly in the future con- 
tinue to injure, him in ways and in a man- 
ner which he described in his complaint. 
That was a form of relief demandable and 
cognizable only on the equity side of the 
court. Hence, as upon the face of the 
complaint the plaintiff alleged a cause of 
action for equitable relief, if the defend- 
ants conceived that they were entitled to 
a trial by jury of any issue of fact in- 
volved in the statements of the complaint, 
they might have moved the court under 
section 970, and then the question could 
have been opportunely and properly met. 
Appellants cite upon this point the decis- 
ion in Colman v. Dixon, 50 N. Y. 572; but 
that was made in 187-, and section 970 
was a new provision, and was enacted in 
1877. 

But, whatever the effect of the omission 
to take this course of procedure, we need 
not determine it now, inasmuch as the 
conclusion we have reached holds the 
right CO a separate trial by jury, as to the 
amount of past damages, in such an ac- 
tion, not to be within the purvievp oE the 
constitutional guaranty. The action was 
one purely for a court of equity, for thi 
main relief sought was an injunctioi 
against the defendants, restraining them 
from maintaining and operating their ele- 
vated railroad. To the assertion of this 
ground forthe equitable interference of the 
court the facts in the complaint were 
marshaled, and to the necessity for grant- 
ing that species of relief every allegation 
of the complaint was framed and calcu- 
lated to lead. There was but one cause 
of action stated in this complaint, and 
that was the claim for relief against the 
continued trespass upon the complain- 
ant's properties. The demand for past 
damages, included in the prayer for judg- 
ment, does not have the effect to set up 
an independent cause of action. It is 
nothing more than a demand that the 
court, having adjudged the plaintiff enti- 
tled to the equitable relief prayed for, and 
having acquired entire jurisdiction of the 
action, will assess the damages which ap- 
pear to have been sustained down to the 
Trial. It has always been a well-settled 
and familiar rule that when a court of 



PRINCIPLES LIMITING JURISDICTION. 



11 



equity gains jurisdiction of a cause before 
it Jor one purpose it may retain it gener- 
ally. To do complete justice between the 
parties, a court of equity will lurther re- 
tain tbe cause for the purpose of ascer- 
taining and awarding the apparent dam- 
ages, as sometliing which is incidental to 
the main relief sought. While this is done 
on the ground that the remedy for the 
damage done is deemed to be incidental to 
the relief of injunction, the principle is in 
perfect harmony with the theory of the 
jurisdiction of a court of equity. Its 
power is invoked, and it interferes to re- 
strain a trespass which is continuous in 
its nature, in order to prevent a multi- 
plicity of suits; and, talving jurisdiction 
of the cause for such a purpose, it may 
retain it to the end, and close up all mat- 
ters for legal dispute between the parties 
by assessing the loss sustained from the 
acts which it has restrained. The power 
and practice of courts of equity were, as 
it was forcibly remarlied by Judge Earl 
in the case of Madison Avenue Baptist 
Church, 73 N. Y. 82, 95, "when they have 
once obtained jurisdiction of a case, to 
administer all the relief which the nature 
of the case and the facts demand, and to 
bring such relief down to the close of the 
litigation between the parties. " The fact 
that a money judgment is ordered against 
the defendant for the plaintiff's loss 
affords no peculiar ground for attacking 
equity's jurisdiction. That is frequently 
the case in actions of an unquestioned 
equitable nature. Quite recently. Judge 
Finch, in Van Rensselaer v. Van Rens- 
selaer, 113 N. Y. 207, 21 N. E. Rep. 75, ob- 
served, with respect to an objection to 
the jurisdiction of a court of equity that 
the final relief would be a personal judg- 
ment, that it would not in that manner 
lose its jurisdiction of an action of an eq- 
uitable character. The jurisdiction " once 
acquired," he said, "it retains to the end, 
even though it may turn out that ade- 
quate relief is reached by a merely person- 
al judgment. That is not an uncommon 
occurrence. " Instances are frequent in 
which a court of equity decrees the pay 
ment of money as an incident of the grant 
of equitable relief, and that fefiruredoes 
not suffice to qualify the jurisdiction. 
But I think we should consider the ques- 
tion to have been settled, upon the au 
thority of several decisions of this court. 
In the case of Williams v. Railroad Co., 
16 N. y. 97, the opinion was delivered by 
Judge Samuel Seldkn. That was a suit 
in equity, brought to restrain the defend- 
ants from using the street with their rail- 
way, and to recover damages for past use. 
The conclusion arrived at, as expressed in 
the opinion, was that "it follows that the 
defendants, in constructing their road, 
* * • were guilty of an unwarrantable 
intrusion and trespass upon plaintiff's 
property, and that he is entitled to relief. 
Although he had a remedy at law for the 
trespass, yet, as the trespass was of a 
continuous nature, he had a right to 
come into a court of equity, and to invoke 
its restraining power, to prevent a multi- 
plicltv oi suits, and can, oi course, recover 
his damages as incidental to this equita- 
ble relief. There may be doubt as to his 
right to recover in this suit the damages 



upon the lots which have been sold, be- 
cause as to those lots there was no occa- 
sion to ask any equitable relief, and to 
permit the damages to be assessed in this 
suit, in effect, deprives the defendants of 
the right to have them assessed by a jury. 
But, as this question has not been raised, 
it is unnecessary to consider it. " There are 
two things to be noted in that opinion. In 
the first place, the damages already sus- 
tained were deemed within the power of 
a court of equity to award as an incident 
of its jurisdiction over the action. This 
idea is, in fact, emphasized by the sugges- 
tion as to the lots wliioh had been sold, be- 
cause it is clear that the court regarded 
its right to award the damages as a mat- 
ter connected with or dependent upon the 
ground for granting any equitable relief ; 
that is to say, as to the property to be 
protected by the decree of the court 
against the defendants' acts, the damages 
caused to it could be assessed by the 
court; but as to that portion withdrawn 
by the sale it might be doubtful, because 
not the subject of, or entitled to, the equi- 
table relief. It is very obvious that the 
court had in mind the question as to the 
right of trial by jury. In the second place, 
it may be noted that the opinion speaks 
of the assessment of the damages. '1 his 
definition of an assessment of the dam- 
ages seems to me to put the action of the 
court in line with just what courts of 
equity Iiave always done in cases over 
which they have gained jurisdiction ; that 
is to say, they proceed to inquire directly, 
or by reference, or otherwise, as to the 
damages sustained, and assess them ac- 
cordingly. When, later, the same case, 
entitled as Henderson et al., alter a new 
trial, came up again, (78 N. Y. 423,) the 
opinion of the court was delivered by 
Judge Danfoejth, who again upheld the 
plaintiff's right to invoke the equitable 
power of the court, and held that he 
could, "of course, recover his damages as 
incidental to this equitable relief;" and he 
stated it to be "an elementary principle" 
that "when a court assumes jurisdiction 
in order to prevent a multiplicity of suits 
it will proceed to give full relief both for 
tbe tortious act and the resulting dam- 
ages." The opinion was carefully writ- 
ten, and based upon the authority of 
many cases. Recently, again, in the case 
of Shepard v. Railroad Co., 117 N. Y. 442, 
23 N. E.Rep.30, it was said of these actions 
that they were necessarily "on the equity 
side of the court, as the main relief sought 
was the injunction against the defend- 
ants," and that in them the complainante 
could "recover the damages they have sus- 
tained as incidental to the granting of the 
equitable relief." This view, as stated in 
that opinion, was expressly based upon 
the Williams and Henderson Cases, and 
upon the supposed equitable principles 
governing such actions. The Shepard Case 
somewhat conspicuously illustrates the 
powers a court of equity may arrogate to 
itself with the object of completely deter- 
mining and quieting the questions before 
it when it has once acquired jurisdiction 
of the action. It follows, in that re- 
spect, a rule long established by au- 
thority. It is true that in these cases the 
right to demand a jury trial as to past 



12 



PEINCIPLES LIMITmG JUKISDICTION. 



cIumaKes was not precisely or In terms 
stated as the proposition advanced ; but 
that, as it seems to me, would be a very 
narrow evasion of thi^ effect of the opin- 
ions delivered. They did consider the nat- 
ure of such actions, and deliberately de- 
clared the power of the court in equity, as 
an incident of the main relief of injunction, 
to assess the damages sustained. In Car- 
penter V. Osborn, 102 JSi. Y. 552, 7 N. E. 
Eep. 82.3, the court, in an action to set 
aside certain conveyances as fraudulent, 
granted the equitable relief prayed for, 
and. in addition, decreed the judgment a 
lien upon theland for some unpaid install- 
ments of interest, to the payment of 
which the defendant had obligated himself 
in a certain agreement. Chief Judge 
KuGER delivered the opinion of this court 
in affirmance of the judgment, and said: 
"This principle has been applied in many 
eases in awarding judgment for pecuniary 
damages, even when the party had an 
adequate remedy at law, it the damages 
were connected with a transaction over 
which the courts had jurisdiction for any 
purpose; although for the purpose of col- 
lecting damages merely they would not 
have had jurisdiction."' In support of the 
principle declared by him, the learned 
judge cited Pom. Eq. Jur. § 181, and vari- 
ous cases. 

I think some confusion of thonght con- 
cerning the constitutional guaranty of a 
trial by jury may arise in a misapprehen- 
sion as to its proper application. That 
Ijrovision relates to the trial of issues of 
fact in civil and criminal i)roceedings in 
the courts, as it was held by the chancel- 
lor in the case of Beekman v. Railroad, 3 
Paige, 45. Where the trial of a civil pro- 
ceeding presents for determination a ques- 
tion of fact the right of trial by jury is 
proper, and can be invoked. But an ac- 
tion brought to restrain the commission 
of trespasses which are continuous in 
their nature is necessarily in equity, and 
the court interferes to prevent multiplici- 
ty of suits, and grants equitable relief by 
way of an injunction. The question pre- 
sented for determination in such an action 
is one of law, whether, up(m the facts to 
be established upon the tripl, the plaintiff 
is entitled to such relief. Upon the proofs, 
showing the nature of the trespasses, and 
the consequent injury to the complain- 
ant's property, the court decides the ques- 
tion of plaintiff's right to an injunction. 
It does not seem to me that it can be said 
that any issue of fact as to damage re- 
mains. That was necessarily decided in 
the action, and all that remains is to fix 
its amount; and I do not think the con- 
stitutional provision was aimed at such a 
proceeding. As defined by the chancellor 
in the case above referred to, it seems diffi- 
cult to rationally give it an application to 
what is simply an assessment of the dam- 
ages. I may extract, and may appositely 
quote here, a remark of Judge Andrews 
in his opinion in Cogswell v. Railroad 
Co., 105 N. Y. 319, 11 N. E. Rep. 518: 
"We think," he says, "it is a reason- 
able rule, and one in consonance with 
the authorities, that where a plain- 
tiff brings an action for both legal and 
equitable relief, in respect to the same 
cause of action, the case presented is not 



one of right triable by jury under the con- 
stitution." The case was one wherein the 
plaintiff's complaint demanded judgment 
for damages and an abatement of a nui- 
sance, and also for an injunction against 
its continuance. The learned judge's opin- 
ion is upon the question of whether such 
an action was one for a nuisance, under 
section 968 of the Code, which must be 
tried by jury, unless waived or referred, 
and he held that it differed from Hudson 
V. Caryl, 44 N. Y. 553, which was a com- 
mon-law action, in that equitable relief by 
way of injunction was asked, and not 
simply the relief obtainable by writ of 
nuisance for damages and an abatement. 
His remark upon the right to a jury trial 
inequitable actions is not out of place, 
however, here. To carry this discussion 
backwards, and to a time anterior to de- 
cisions of tliis court, we find warrant in 
the opinions then held by our own and 
the English chancery courts for holding 
that a trial by jury was not usual in cases 
where equity had acquired jurisdiction, 
and that the court would administer all 
the relief which the facts warranted, in- 
cluding the assessment and awarding of 
compensation for injury sustained. In 
Watson V. Hunter, 5 Johns. Ch. 169, the 
bill was filed to enjoin the cutting of tim- 
ber and to restrain the removal of that 
which had already been cut. Chancellor 
Kent confined the relief of injunction to 
the timber standing, and refused it as to 
the removal of the cut timber, on the 
ground that it would be an application to 
an "incidental remedy." He said that 
"the practice of granting injunctions in 
cases of waste is to prevent or stay the 
future conimissiou of waste, and the 
remedy for waste already committed is 
merely incidental to the jurisdiction in the 
other case, assumed to prevent multiplici- 
ty of suits, and to save the party the ne- 
cessity of resorting to trover at law."' 
The chancellor's exposition of the princi- 
ple upon which equity acts in cases of 
waste obviously is as applicable to cases 
of trespass. If the action at law in tro- 
ver was deemed unnecessarj' for the per- 
sonal property already converted in that 
case, it seems unnecessary in such an ac- 
tion as this, in order to recover the loss 
sustained from the trespass. The chan- 
cellor in the Watson Case relied upon the 
practice followed by the English chancel- 
lors. LordHAKDwiCKE,in Garth v. Cotton, 
1 "Ves. Sr. 528, had held that the decree for 
the waste already committed was an in- 
cidsnt to the injunction to stay waste. 
Before that, in Jesus College v. Bloom, 3 
Atk. 262, where the bill was filed for an ac- 
count and satisfaction for waste in cut- 
ting ti-ees, and no injunction was prayed 
for, Lord Hardwiokb saidthatthe bill was 
improper, and that an action of trover 
was the remedy. He asserted the rule, 
however, that where the bill was for an 
injunction to prevent waste, and for 
waste already committed, the court, to 
prevent a double suit, would award an 
injunction to prevent future waste, and 
decree an account and satisfaction for 
what was past. He held that to prevent 
multiplicity of suits the court will, on bills 
for injunction, make a complete decree, 
and give the injured party a satisfaction 



PRmCIPLES LIMITING JURISDICTION. 



13 



for wliat had been done, and not oblise 
him to bring another action at law. In 
the subsequent case of Smith v. Cooke, Id. 
i5!sl. the same lord chancellor declared the 
same doctrine, as did also Lord Thurlow 
in Lee v. Alston, 1 Ves. Jr. 78. I quote a 
remark of Lord Nottingham in Parker v. 
Dee, 2Ch. Cas. 201, that -when a court of 
chancery has once grained possession of 
the cause, if it can determine the whole 
matter, it will not be the handmaid of 
other courts, "nor beget a suit to be ended 
elsewhere. " 

In our former court of errors Chancellor 
(then Judge) Kent held, in Armstrong v. 
(lilchrist, 2 Johns. Cas. 424, 431, (decided in 
1800,) that "the court of chancery, having 
acquired cognizance of a suit, for the pur- 
pose of discovery or injunction, will, in 
most cases of account, whenever it is in 
full possession of the merits, and has snffi- 
•cient materials before it, retain the suit in 
order to do complete justice between the 
parties and to prevent useless litigation 
and expense. '" That case was upon a bill 
for specific relief, and to restrain an ac- 
tion at law brought to i-euover the value 
of certain bank-stock, and it set up cer- 
tain equitable considerations as against 
the justice of a recovery in the other ac- 
tion. The chancellor below decided 
against the whole relief sought by the bill, 
and decreed intavorof thedefendants that 
the complainants should pay them the 
value of the stock, and ordered a reference 
to state the account. This procedure the 
court of errors upheld as being right, and 
the duty of the chancellor to follow. I do 
not consider the cases cited by the appel- 
lants to be at all controlling upon the 
question. In Murray v. Hay, 1 Barb. Ch. 
59, the bill was filed by two persons, who 
were owners of different dwelling-houses 
in severalty, having no joint interest in 
either of them, to restrain a nuisance 
which was a common, but not a joint, in- 
jury to both complainants. The objec- 
tion to the prayer for an account and 
compensation for their respective damages 
was upon the ground of multifariousness, 
and so considered. Another case, of Hud- 
son v. Caryl, 44 N. Y. 553, was an action 
to recover damages for the overflowing of 
plaintiff's lands, and to c(jmpel the remov- 
al of the dam ; and the decision turned 
upon the ancient right to a jury trial in 
such an action of nuisance, which the 
€ode had not affected. It was not an ac- 
tion in equity to restrain a nuisance, 
which, according to Judge Andrews' opin- 
ion In the Cogswell Case, supra, would not 
be an action for a nuisance directed by 
the Code to be tried by jury. But the 
judge who delivered the opinion of the ma- 
jority of the commission of appeals in 
Hudson T. Caryl spoke obiter in his re- 
marks upon the general right of trial by 
jury, as his opinion indicates, for he says 
<page555:) " But, whatever maybe said 



or decided in regard to the trial of other 
actions, in which two causes of action — 
one exclusively of legal, and another ex- 
clusively of equitable, cognizance, arising 
out of the same transaction — are united, 
this action should, for an independent rea- 
son, have been tried by jury, and that is 
that the action, when brought for the 
double object of removing the nuisance 
and recovering the damages occasioned 
by it, was always tried by jury ; " and he 
proceeds to refer to Blackstone and to the 
old Revised Statutes. As, therefore, "a 
case is presented in which a trial by jury 
has been heretofore used, "the commis- 
sioner concluded it was error to refuse it. 
It does not seem to me necessary to 
pursue further the contiideration of au- 
thorities. The respondent's counsel has 
cited others in this and the lower courts. 
In a note to Armstrong v. Gilchrist, 
supra, will be found reference to other 
early cases in tuis state and in the United 
States supremo court in support of the 
"settled rule that when the court of chan- 
cery has gained jurisdiction of a cause lor 
one purijose, it may retain it generally for 
relief." Underlying the system upon 
which courts of eijuity have exercised their 
power, as I understand it, is the principle 
that when they have gained jurisdiction 
of a cause by reason of the infirmity of 
the courts of law to entertain it, or to 
give full relief, they will retain their con- 
trol of the cause generally, and settle up 
the whole matter between the parties. I 
have discussed the question here at con- 
siderable length, in order that a rule, long 
settled by careful judicial utterances, and 
in itself reasonable and commendable as 
promoting the public convenience in the 
disposition of litigated cau-ses, might not, 
at this day, be shaken by doubts. The 
conclusion which I think we must reach is 
that, in this complaint, thecause of action 
is single, and constitutes a claim for 
equitable relief, and there is not mixed up 
with it a cause of action for legal relief. 
The facts alleged as a basis for an appeal 
to the court to exart its equitable power 
may well have constituted a claim for 
legal relief, and might have been set up in 
an action at law; but that consideration 
cannot affect nor change the equitable 
nature of the action Itself. It was not 
error, therefore, to deny the motion for a 
trial by jury as to past damages, and the 
court could competently proceed with the 
trial of the cause in equity. The only 
other point presented to us upon this ap- 
peal is that it was error to award dam- 
ages for portions of the property which 
were in the possession of tenants. As to 
this question the case is controlled by the 
decision of the Kernochan Case, 29 N. E. 
Rep. 65, (at this term.) The judgment 
should be affirmed, with costs. All con- 
cur, except EARL and PECKHAM, JJ., 
dissenting. 



14 



PKINCIPLES LIMITING JURISDICTION. 



MOESS V. ELMBNDOKF. 



(11 Paige, 277.) 

Court of Chancery of New York. Dec. 3, 1844. 

This was an appeal from a decree of the 
late assistant vice chancellor of the first cir- 
cuit. The bill was filed for the specific per- 
formance of a contract under the following 
circumstances : The defendant, Lucus Blmen- 
dorf, and Dutcher & Hogeboom, all suppos- 
ing that there was a gore of land, contain- 
ing about 183 acres, between lot No. 11 of 
the subdivisions of great lot No. 49, in the 
Hardenburgh patent, and the south line of 
great lot No. 50, in the same patent, and that 
Elmendorf was the owner thereof, an agree- 
ment was entered into between them, in the 
following words: "I do by these presents, 
agree to and with G. Dutcher and C. Hoge- 
boom, to lease to them the gore lot, of about 
183 acres, situate in the town of Prattsville, 
Greene county, lying between lot No. 11 in 
great lot No. 49, and the south line of great 
lot No. oO, in the Hardenburgh patent; by 
a durable lease to them, either jointly, or to 
each a separate lease, which shall contain a 
reservation on the whole lot of 32 bushels of 
good, merchantable winter wheat, after three 
years rent free; the lease or leases to con- 
tain the usual reservations and covenants of 
my durable leases on my Stratsburgh tract, in 
Schoharie county. They have my permission 
immediately to move on to the same, provid- 
ed they shall take and execute leases within 
three years, rent free, from this date. March 
1, 1839." Shortly afterwards, Dutcher and 
Hogeboom assigned all their interest in the 
contract to G. B. Morss, the complainant, up- 
on condition that they should have all the 
bark upon the land at the market price, to be 
peeled, and drawn and delivered bj"^ them to 
Morss, and to be paid for by him in the man- 
ner in the assignment specified. The instru- 
ment called an assignment then concluded in 
these words: "If this memorandum is not 
sutficiently strong to hold the bark, we are to 
give the said Morss another one as soon as 
requested." Soon afterwards, the complain- 
ant ascertained that it was doubtful whether 
Elmendorf had title to any such land as was 
referred to in the agreement; and neither he, 
nor Dutcher and Hogeboom, ever went Into 
possession of the supposed gore, under the 
contract. In 1840, Elmendorf became satis- 
fied that there was no such gore as the par- 
ties at the time of entering into the agree- 
ment, supposed existed; and he refused to 
execute a lease to Morss, who demanded the 
execution of the same to him, under such 
agreement. The complainant thereupon filed 
his bill in this cause, for a specific perform- 
ance of the contract. The defendant, by his 
answer, stated that there was no such gore 
of land as, by the contract for a lease, was 
supposed to exist, and that there was no 
land between lot No. 11, of the subdivision 
of great lot No. 40 and the line of great lot 
No. 50. The testimony of a surveyor, who 



was well acquainted with the comers and 
locations of the several lots, also showed 
that there was no such gore; but that great 
lot No. 50, and lot No. 11 of the subdivisions 
of great lot No. 49, were bounded upon one 
and the same line, and upon each other. The 
cause was heard upon pleading and proofs, 
and the assistant vice chancellor decreed 
that the complainant was entitled to relief 
against the defendant, in this court. And he 
further decreed that it be referred to a mas- 
ter to ascertain the location and boundaries 
of what was designated as the gore lot, and 
to make a map thereof if he should be able 
to locate the same; and if he could not lo- 
cate the same, or should find that the suppos- 
ed gore was within the bounds of great lot 
No. 50, or of some other lot than great lot 
No. 49, then to ascertain whether the defend- 
ant, at the date of the contract, was the own- 
er of lot No. 11 of the subdivision of great lot 
No. 49, or of any and what part thereof, and 
if so, whether he was still the owner, or 
when he ceased to be such owner; and if the 
defendant was such owner, the master was 
directed to set off a strip of lot No. 11, on 
the westerly side thereof, equal in contents 
and value to the gore of 183 acres, as it was 
at the date of the contract. And the defend- 
ant was directed to execute to the complaiii- 
ant a pei-petual lease hereof, according to the 
terms of the contract. It was fm-ther de- 
creed, in case the master should find that the 
defendant did not then own lot No. 11, or any 
part thereof, and was not the owner thereof 
at the date of the contract, that such master 
proceed to assess the damages which should 
be allowed and paid to the complainant by 
the defendant, for the non-perfoi-mance of 
the contract. Prom this decree the defend- 
ant appealed to the chancellor. 

M. McDonald, for appellant. A. J. Parker, 
for respondent. 

WALWORTH, Ch. There is no principle up- 
on which this decree or any part thereof can 
be sustained. The 'question whether there 
was in fact any gore, between lot No. 20 of 
the subdivisions of great lot No. 49 and the 
line of great lot No. 50, was distinctly put 
in issue by the defendant's answer, and by 
the replication filed to the same; so that 
each pai-ty had a full opportunity to take 
testimony to that point. And the evidence 
of Keirstead, the surveyor, and the map of 
the location of the lots, produced by him, 
show conclusively that no such gore ever 
existed except in the Imaginations of the in- 
habitants of the neighborhood, and In that 
of the defendant who resided at some con- 
siderable distance from the supposed prem- 
ises intended to be leased. It, therefore, was 
useless and improper to direct a reference, 
and subject the parties to further expense, 
when the complainant had not attempted to 
controvert this fact, stated in the defend- 
ant's answer, by any testimony whatever in 



PBINCIPLES LIMITING JUKESDICTION. 



15 



opposition to the positive evidence of Keir- 
stead; who established the fact beyond all 
doubt. Another surveyor who surveyed the 
supposed gore for the complainant, and who 
was examined by him as a witness, does not 
pretend to dispute the fact sworn to by 
lieirstead, that the supposed gore is in fact 
within the bounds of great lot No. 50, as 
actually run out and located upon the land 
by Tappan and Cockburn; the commissioners 
who made the partition of the patent more 
than -fifty years since. It must, therefore, 
be considered as settled, for all the pur- 
poses of this suit, that all the parties to the 
contract of the first of March, 1839, were 
under a mistake in supposing that there was 
any such gore as is described in that con- 
tract. It is true the letters of the defend- 
ant, written soon after the contract was 
made, and when he supposed great lots No. 
20 and No. 49 cornered together, state that 
there was a gore. But the answer and the 
evidence show that the defendant was then 
laboring under a mistake. And as the lease, 
if executed in conformity with that contract, 
and purporting to convey land which has In 
fact no existence, would have been a mere 
nullity, there was nothing of which a specific 
performance could be decreed. I am also sat- 
isfied, from the evidence, that the complain- 
ant must have been aware of the fact that 
there was no such gore of land, at the time 
of filing this bill. 

The assistant vice chancellor has indeed 
attempted to make a new contract for the 
parties, and to decree a specific performance 
thereof, provided the defendant owns any 
land in lot No. 11. That, however, is land 
which neither of the parties supposed was 
to be included in the lease. For by the 
terms of the contract the whole of great lot 
No. 50, and the whole of lot No. 11 of the 
subdivisions of great lot No. 49, are neces- 
sarily excluded from the operation of such 
contract. See Jackson v. Woodruff, 1 Cow. 
276. Where the vendor has contracted to 
convey a tract of land the title to a part of 
which fails, the vendee may claim a specific 
performance of the contract as to the resi- 
due of the land, with a compensation in 
damages in relation to the part as to which 
the vendor is unable to give a good title. At 
least /urts of equity have in some instances 
acte upon that principle. But I am not 
awaio of any case in which the vendor has 
been decreed to convey an entirely differ- 
ent piece of land from that which the par- 
ties had in contemplation at the time of 
making their contract, and which is not in 
fact embraced in such contract. Here It is 
perfectly evident that neither party, at the 
time of making this contract, expected that 
Elmendorf was to lease to Butcher and Hoge- 
boom any part of lot No. 11. That part of 
the decree which directs the master to set 
off to the complainant 183 acres of lot No. 
11, to be leased to him by Elmendorf, pro- 
vided it shall be found by the master that 



the defendant is the owner of lot No. 11, 
is therefore clearly erroneous. 

Nor do I think this is a proper case for 
the court to decree a compensation in dam- 
ages to the complainant; even if this court 
has jurisdiction to entertain a suit for dam- 
ages merely, where the defendant never had 
the title to land which he has positively 
agreed to convey, or where he has parted 
with his title before the commencement of 
the suit, and that fact is known to the com- 
plainant at the time of filing of his bill. 
Here the evidence shows that the parties 
were acting under a mutual mistake, as to 
the actual existence of the gore between lots 
No. 20 and 50, at the time the contract was 
made. If the contract has any legal force 
or effect whatever, which is at least doubt- 
ful, there is no reason why Butcher and 
Hogeboom, or the complainant who claims 
the benefit of the contract under them, 
should not be left to their action at law 
to recover damages for the non-performance 
of the contract, if any damages have in fact 
been sustained. Nothing had been done by 
them, or either of them, under the contract, 
and nothing had been paid. Nor was there 
any mutuality in it. For the defendant could 
not have sustained any suit or action, against 
Dutcher and Hogeboom, If they had refused 
to take a lease of the supposed gore of land; 
which, in fact, had no existence. The most 
that can be said in this case is, that Dutcher 
and Hogeboom have lost the speculation 
which they supposed they were making when 
they entered into the contract of March, 
1839. The means of ascertaining whether 
the supposed gore had any existence was 
equally accessible to both parties, as the 
lines of the lots were run out and marked 
upon the land. And the defendant being 
mLsled by the reports In the neighborhood of 
the existence of a gore, when there was no 
such gore, no fault Is attributable to him. 
In such a case, the proper course is to leave 
the parties to their legal remedies, if they 
have any. 

It is also perfectly evident in this case, 
that the complainant, at the time he filed 
his bill, was aware that the supposed gore 
had no actual existence, and that no specific 
performance of the agreement could be ob- 
tained in this court. And, in a case of that 
kind, Chancellor Kent correctly decided that 
this court ought not to entertain the suit 
merely for the assessment of damages. 
Hatch V. Cobb, 4 Johns. Ch. 559. Kemp- 
shall V. Stone, 5 Johns. Ch. 193. But where 
the defendant deprives himself of the power 
to perform the contract specifically, during 
the pendency of a suit to compel such per- 
formance, this court may very properly re- 
tain the suit, and award to the complainant 
a compensation In damages; to prevent a 
multiplicity of suits. And I am not prepared 
to say that such a decree might not be 
proper, where the defendant had deprived 
himself of the power to perform the con- 



IB 



PBINCIPLES LIMITING JURISDICTION. 



tract prior to the filing of the bill, but with- 
out the knowledge of the complainant; or 
even where he never had the power to per- 
form, if the complainant had filed his bill 
in good faith, supposing at the time he in- 
iStituted his suit here that a specific perform- 
ance of the contract could be obtained under 
the decree of this court. But this court does 
not entertain jurisdiction where the sole ob- 
ject of the bill is to obtain a compensation in 
■damages for the breach of a contract, ex- 
cept where the contract is of equitable cogni- 
zance merely. Nor can the complainant en- 
title himself to the Interference of this court, 
to give him a compensation in damages for 
the non-performance of a contract, by neg- 
lecting to state, in his bill, that the defend- 
ant is unable to perform the contract specifi- 
•cally; where that fact is known to him at 
the time of filing his bill in this court. For 
if the facts which were then known to him 
had been fully stated in his bill, the de- 
fendant might have demurred, upon the 
.ground that the complainant's remedy, if any 
Jie had, was at law and not in equity. Or 



he might have raised that objection in his 
answer. In this case, therefore, the com- 
plainant's bill cannot be retained, for the 
purpose of obtaining a compensation in dam- 
ages merely, when he knew that he could 
expect nothing more than such a compensa- 
tion in damages at the time of filing his bill. 
And the complainant having made a case, by 
his bill, apparently entitling him to a specific 
performance, he cannot now insist that the 
defendant has waived the objection, that the 
remedy of the complainant was at law; be- 
cause he did not demur to the bill, or state 
that objection in his answer. 

The decree appealed from is erroneous, and 
must be reversed. And the complainant's 
bill must be dismissed, with costs in the 
court below; but without prejudice to the 
complainant's remedy at law, upon the con- 
tract, if he has any such remedy there. The 
defendant having died since this cause was 
submitted upon the appeal, the decree to be 
entered upon this decision must be entered 
nunc pro tunc, as of the time of such sub- 
mission. 



PRINCII'LES LIMITING JURISDICTION. 



17 



REES V. CITY OF WATERTOWN. 

(19 Wall. 107.) 

Supreme Court of the United States. 1873. 

Mr. Justice HUNT delivered the opinion 
of the court. 

This case is free from the ohjeclions usual- 
ly made to a recovery upon municipal bonds. 
It is 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 proceei! aie 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 hcmest 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 And no difliculty in overrul- 
ing it. 

There is, however, a grave question of the 
power of the court to grant the relief asked 
for. 

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, fiist, to raise money for public 
purposes only; and, second, by the power of 
legislative authority only. It is a power 
tiiat 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 tlie exercise of this authority at once so 
delicate and so important. The question is 
not entirely new in this court. 

In the case of Supercisors 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 tlie 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 
marshal 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- 

*7 Wallace, 175. 

HUTCH. EQ. JUR. — 2 



taehment, 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 npon the board of supervisors by 
the act of the legislature- tliat authorized 
their issue, and the appointment of the mar- 
shal as a commissioner in pursuance of the 
above section is to provide for the perform- 
ance of this duty where tlie 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 WeMi V. St. &eneBieve* 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 amicus 
curicB 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 course 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 jirobable that the case of Supercisors 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, 



tRiggs 1). Johnson County, 6 Wallace, 193. 
»10 Am. Law Reg. (N. S.) .512, Fed. Cas. No. 1',- 
373. 
**6 Wallace, 166. 

t9 Am. Law Reg. (N. S.) 415, Fed. Cas. No. 16,538. 
§7 Wallace, 175. 



18 



PRINCIPLES LIMITING JURISDICTION. 



and was rightly decided because authorized 
by the express statute of the State of Iowa. 
It offered no precedent for the decision of a 
case arising in a State 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 plainti ff's debt without the in tervention 
of State taxing officers, 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 be 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 I 
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 difficulties to en- 
counter. In seeking to obtain for the plain- 
tiff his just rights we must be careful not to 
invade the rights of others. If an inhab- 
itant of the city of Watertown should own 
a block of buildings of the value of $20,- 
000, upon no principle of law could the 
whole of tlie plaintiff's debt be collected 
from that property. Upon the assumption i 
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 tlie 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 individualorcorporation, 
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 madeknown 
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.J 

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 plaintiff 
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 difficulty 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 obli<;ations 
called imperfect obligations, resting upon 



•Van Hoffman v. City of Quincy, 4 Wallace, 535. 
tCooley, Constitutional Limitations, 835, 337. 
tCooley, Constitutional Limitations, SS3. 



PKINCIPLES LIMITING JURISDICTIOK. 



19 



Bonscience 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 remely 
bounded and ciicumscribed 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 is entitled to the pay- 
ment of his 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, he must 
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 lights "II 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 ^tate3 
is brought In form against the inhabitants 



tl K^uity Jurisprudence, § 61. 

JHeai-d v. Stanford, Cases Tempore Talbot, 174. 

*1 Story's Equity Jurisprudence, § 00. 

*» We.stervelt v. Gregg, 13 New York, 309. 
[lb. 



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 prpvision is 
made for compulsory taxation to satisfy 
judgments against a town or city.g 

The general principle of law to which we 
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 Emerie v. Qilman, 
before cited, it is said: "The inhabitants of 
a county are constantly changing; those who 
contributed to the debt maybe 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 a^jainst 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 be should happen to 
own property within the limits of the cor- 
poration, of sudicient value for that pur- 
pose. 

The difficulty 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 cases coUected in Cooley's Constltn 
tional Limitations, 240-315. 

I Russell V. Men of Devon, 2 Term R. 667. 
1 See Emerio v. Qilman, 10 California, 408, wberi 
all the cases are collected. 

JCooley's Constitutional Limitations, 246. 

tl Story's Equity Jurisprudence, § 470 apd on- 
wards. 



20 



PRINCIPLES LIMITING JURISDICTION. 



We apprehend, also, that there is some 
confusion in the plaintifE's proposition, 
upon which the present jurisdiction is 
claimed. It is conceded, and the authori- 
ties are too abundant to admit a question, 
that there is no chancery jurisdiction where 
there is an adequate remedy at law. The 
writ ofjnandamus is, no doubt, the regular 
remedy in a case like the present, and or- 
dinarily 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 Iiim no remedy. 
The remedy is in law and in theory ade- 
quate 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 j 
the fruits of a judgment for the plaintiff in 
ejectment. It is a full, adequate, and com- ; 
plete remedy. Not many years since there | 
existed in Central New York combinations of I 



settlers and tenants disguised as Indians, 
and calling themselves such, 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- 
voke the extraordinary aid of a court of 
chancery. The enforcement of tlie 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 his legal remedies, we should be quite 
willing to give him the aid requested if the 
law permitted it. We cannot, however, find 
authority for so doing, and we acquiesce in 
the conclusion of the court below that the 
bill must be dismissed. 

Judgment AFriEiiED. 



MAXIMS OF EQUITY. 



21 



BERRY T. MUTUAL INSURANCE CO. 

(2 Johns. Oh. 603.) 

Court of Chancery of New York. 1817. 

_ KENT, Oh. The equitable rights of the par- 
ties, in this case, must have reference to the 
time when the knowledge of their respective 
mortgages was communicated to each other, 
in the winter of 1814, and prior to the registry 
of the elder mortgage. The subsequent reg- 
istry by the plaintiffs was of no avail. The 
rights of the parties had become fixed, by 
means of the notice, previously, mutually and 
concurrently given, and which notice, as to 
them, answered all the purpose and object of 
a registry. Priority of registry never prevails 
over a previous notice of an unregistered 
mortgage. 10 Johns. 461. 462. In consider- 
ing this case, then, I shall place entirely out 
of view the fact of the registry. The real 
point in the case is, which of the unregistered 
mortgages had the preference in equity, when 
the information of their existence was given 
and received. 

If there be several equitable interests affect- 
ing the same estate, they will, if the equities 
are otherwise equal, attach upon it, according 
to the periods at which they commenced; for 
it is a maxim of equity, as well as of law, 
that qui prior est tempore potior est jure. 
This rule has been repeatedly declared; 
(Clarke v. Abbott, 2 Eq. Cas. Abr. 606, pi. 41; 
Bristol V. Hungerford, 2 Vern. 525; Symmes 
V. Symonds, 1 Brown, Pari. Cas. 66; [4 Brown, 
Pari. Cas. (2d Ed.) 328]; Brace v. Marlbor- 
ough, 2 P. Wms. 492, 495,) and we are to see 
if there be any thing in this case to prevent 
the application of it. 

There is no fraud charged or proved upon 
the plaintiffs, and if they are to be postponed, 
notwithstanding they have the elder mort- 
gage, it must be on the ground of culpable 
negligence, either in leaving the lease with 
the mortgagor, when they took the mortgage 
of his term, or in not causing their mortgage 
to be seasonably registered. I feel strongly 
disposed to give to these circumstances all 
the weight to which they can be entitled. 

1. It is understood to have been the old rule 
in the English chancery, that if a person took 
a mortgage, and voluntarily left the title 
deeds with the mortgagor, he was to be post- 
poned to a subsequent mortgagee, without no- 
tice, and who was in possession of the title 
deeds. The reason of the rule was, that, by 
leaving the title deeds, he enabled the mort- 
gagor to impose upon others who have no reg- 
istry to resort to, except In the counties of 
Yorkshire and Middlesex, and who, therefore, 
can only look for their security to the title 
deeds, and the possession of the mortgagor. 
The rule was so understood and declared, by 
Mr. Justice Burnet, in Ryall v. Rolle, 1 Atk. 
168, 172; 1 Ves. Sr. 360, and by Mr. Justice 
Buller, in Goodtitle v. Morgan, 1 Term B. 762, 
and there are decisions which have given 
great weight to the cu-cumstance of the title 



deeds being In possession of the junior mort- 
gagee. Thus, in Head v. Egerton, 3 P. Wms. 
279, the lord chancellor said, it was hard 
enough upon a subsequent mortgagee, that he 
had lent his money upon lands subject to a 
prior mortgage, without notice of it, and, 
therefore, he could not add to his hardship, 
by taking away from him the title deeds, and 
giving them to the elder mortgagee, unless 
the first mortgagee paid him his money; espe- 
cially as the first mortgagee, by leaving the 
title deeds with the mortgagor, had been, in 
some measure, accessory in drawing in the 
defendant to lend him money. This case, 
however, so far from establishing what was 
supposed to be the old rule of equity, evident- 
ly contradicts it, and admits the better title 
in the first mortgagee. So, in the case of 
Stanhope v. Vemey, 2 Eden, 81, before Lord 
Northington, (Butler's note to Co. Litt. 290, 
296, § 13,) the second mortgagee, without no- 
tice, had possession of the title deeds, but the 
chancellor did not give him the preference 
on that single circumstance, but because he 
also had got possession of an outstanding 
term. There does not seem, therefore, to be 
the requisite evidence of the existence of any 
such rule in equity, as has been stated by 
some of the judges; and if there was, a dif- 
ferent rule has been since established. It is 
now the settled EngUsh doctrine, that the 
mere circumstance of leaving the title deeds 
with the mortgagor, is not, of itself, sufflcient 
to postpone the first mortgagee, and to give 
the preference to a second mortgagee, who 
takes the title deeds with his mortgage, and 
without notice of the prior encumbrance. 
There must be fraud, or gross negligence, 
which amounts to it, to defeat the prior mort- 
gage. There must be something like a volun- 
tary, distinct, and unjustifiable concurrence, 
on the part of the first mortgagee, to the 
mortgagor's retaining the title deeds, before 
he shall be postponed. Lord Thurlow, in 
Tourle v. Rand, 2 Brown, 650, said, he did 
not conceive of any other rule by which the 
first mortgagee was to be postponed, but 
fraud or gross negligence, and that the mere 
fact of not taking the title deeds was not suf- 
ficient; and that if there were any cases to 
the contrary, he wished they had been named. 
So the rule was also understood by Chief Bar- 
on Eyre, in Plumb v. Fluitt, 2 Anst. 432, and 
has since been repeatedly recognized. Lord 
Eldon, m 6 Ves. 183, 190. Sir William Grant, 
in 12 Ves. 130. 1 Fonbl. Eq. 153, 155, note. 
It is admitted, by these same high authorities, 
to be just, that the mortgagee, who leaves 
the title deeds with the mortgagor, so as to 
enable him to commit a fraud, by holding 
himself out as absolute owner, should be post- 
poned; but the established doctrine is, that 
nothing but fraud, express or implied, will 
postpone him. . 

2. The hardship and abuse complained of in 
the EngUsh cases, arise from the want of a 
general registry act, under which a second 
mortgagee can always secure himself. I be- 



22 



MAXIMS OP EQUITY. 



lieve there are no registry acts in England, 
except in certain counties, as Yorkshire and 
Middlesex; and the provision in such cases, 
(see Stat. 3 and 4 Anne c. 4,) is similar to that 
In our act concerning mortgages, and gives 
the subsequent purchaser, or mortgagee, the 
preference, if the memorial of his deed be 
first registered. It has been decided, in John- 
son V. Stagg, 2 Johns. 510, that our act con- 
cerning the registry of mortgages extends to 
leases for years, assigned by way of mort- 
gage; and that the leaving of the lease with 
the mortgagor, was no evidence of fraud, be- 
cause the registry of the mortgage was a ben- 
eficial substitute for the deposit of the deed, 
and gave better and more effectual security 
to subsequent mortgagees. The registry of the 
mortgage is notice; and if the first mortgagee 
neither takes the title deeds, nor registers 
his mortgage, he only exposes himself, and 
not the subsequent purchaser, or mortgagee. 
The statute expressly secures the bona fide 
purchaser, and it equally enables the subse- 
quent mortgagee to secure himself, by regis- 
tering his mortgage. 

We have seen that the leaving the title 
deeds with the mortgagor is no prejudice to 
the first mortgage; and there is the less ne- 
cessity for it with us than in England, be- 
cause, with us, the creditor who subsequently, 
and without notice of any prior unregistered 
mortgage, deals with the mortgagor, can al- 
ways protect himself in the easiest and most 
effectual manner; and, supposing he omits to 
do it, by a misplaced confidence in the mort- 
gagor, has he any equitable claim to be pre- 
ferred to a prior mortgagee, who, under the 
same misplaced confidence, has equally omit- 
ted to do It? This is the turning point in the 
present case. 

The first mortgage was valid without regis- 
try. The statute does not render a registry 
indispensable. The omission of the registry 
only exposes the mortgagee to the hazard of 
a loss of his lien by a subsequent bona fide 
purchase, or to the hazard of a postponement 
of his lien to a subsequent registered mort- 
gage. A second mortgage will not, per se, and 
without registry, gain a preference. There 
is no such principle to be deduced from the 
statute, and there is no reason or necessity for 
it in the nature of the case. The reason why 
a bona fide purchaser is expressly excepted 
from the operation of an unregistered mort- 
gage is, that he could not otherwise deal with 
safety, and would be exposed, even with the 
utmost vigilance, to the frauds of the mort- 
gagor. The act does not provide for the reg- 
istry of his deed, but only for the registry of 
mortgages, and gives them a preference ac- 
cording to the priority of the reglsti-y. The 
second mortgagee protects himself by his reg- 
istry, but the purchaser does not, and cannot; 
and, therefore, the statute declares that his 
deed shall absolutely prevail over the unregis- 



tered mortgage. The statute of 3 and 4 Anne, 
relative to the west riding of Yorkshire, pro- 
vides for the registry of deeds and mortgages 
promiscuously, and, therefore, places them 
upon an equal footing. 

Though, in one sense, every mortgage is a 
purchase, yet the mortgage act evidently 
speaks of purchasers, in the popular sense, as 
those who take an absolute estate in fee. 
There is no pretext for considering a mere 
mortgagee as a purchaser, within the mean- 
ing of the second section of the act concern- 
ing mortgages. 

I have not been able to discover any prin- 
ciple of law or equity that will enable me to 
say, that the first mortgage is to be deprived 
of its advantage of priority of time. The 
omission to register the mortgage was not 
capable of producing any mischief to third 
persons, who would use ordinary diligence and 
precaution. The defendants ought not to 
charge a negligence upon the plaintiflis of 
which they have been equally guilty. It was 
their own fault or folly that they were not 
protected. They trusted to the assurances of 
the mortgagor that his land was unencum- 
bered; and the plaintiffs trusted equally in 
the mortgagor, that he would not, afterwards, 
sell or mortgage the land. It is a common 
rule, say the books, that where of two per- 
sons, equally innocent, or equally blamable, 
one must suffer, the loss shall be left with 
him on whom it has fallen; and here comes 
in the other rule, that the equities being oth- 
erwise equal, the priority of time must deter- 
mine the right. 

It is veiy clear that the firr.t mortgagee was 
not bound to register his mortgage, because 
the law makes it valid, as between the par- 
ties, without registry. The registry is only a 
matter of precaution, and the statute has pro- 
vided against all the mischief of the omission. 
If the party will not avail himself of the 
means of safety provided by statute, he can- 
not expect that this court will grant him fur- 
ther aid, and especially against a party whom 
he charges with no fraud. If relief is ever 
given in any case, on the ground of policy, or 
constructive fraud, against the sale or mort- 
gage of property, it is because, from the non- 
delivery of possession, or from other circum- 
stances, imposition had or might have been 
practised, which could not be detected or 
guarded against by the exercise of ordinary 
diligence. No such ground for relief exists in 
this case. 

I am, accordingly, of opinion, that the plain- 
tiffs are entitled to relief, according to the 
prayer of their bill, and that the defendants 
are either to account to them for the amount 
due on their bond and mortgage, or that the 
residue of the term be sold for the satisfac- 
tion of their debt. The costs of suit are to be 
paid out of the property mortgaged. 

Decree accordingly. 



MAXIMS OF EQi ITY. 



23 



SHIRRAS V. CAIG. 

(7 Cranch, 34.) 

Supreme Court of the United States. 1812. 

MARSHALL, C. J., delivered the opinion of 
the couvt as follows: 

This is an appeal from a decree rendered 
by the cii-cuit covirt for the district of Geor- 
gia. 

Shirras and others, the appellants, brought 
their bill to foreclose the equity of redemp- 
tion on two lots lying In the town of Sa- 
vannah, alleged to have been mortgaged to 
them by Edwin Gairdner. The deed of mort- 
gage is dated the fii-st of December, 1801, 
and purports to be a conveyance from Ed- 
win Gairdner and John Caig, by Edwin Gau-d- 
ner his attorney in fact. Edwin Gairdner 
not appearing to have possessed any power 
to act for John Caig, the conveyance as to 
him, Is void, and could only pass that interest 
which was possessed by Gairdner himself. 
The court will proceed to inquire what that 
interest was. 

It appears that, on the 17th May, 1796, the 
premises were conveyed to James Gau-dner, 
Edwin Gairdner and Robert Mitchel, mer- 
chants and co-partners of the city of Sa- 
vannah. 

In 1799, this partnership was dissolved; 
and, in December in the same year, James 
Gairdner made an entry on the books of the 
company charging this property to Edwin 
Gairdner & Co. of Charleston, at the price 
of 20,000 dollars. This firm consisted of Ed- 
win Gairdner alone. James Gairdner also ex- 
ecuted a power of attorney authorizing Ed- 
win Gairdner to sell and convey his interest 
in this and other real property. 

In March, 1801, a partnership was formed 
between Edwin Gairdner and John Caig to 
carry on trade in Savannah, under the firm 
[name] of Edwin Gairdner & Co.; and in the 
same month, Robert Mitchel, conveyed his 
one third of the lots in question to Edwin 
Gairdner and John Caig. 

About the same time it was agreed between 
the house at Charleston and that in Savan- 
nah to transfer the Savannah property to 
the firm trading at that place; and entries 
to that effect were made in the books of 
both companies; and possession was deliv- 
ered to Edwin Gairdner & Co. of Savannah. 
Such was the state of title in December, 
1801, when the deed of mortgage bears date. 
The plaintiffs claim the whole property, 
or, if not the whole, five sixths; because 
they suppose Edwin Gairdner to have been 
equitably entitled to his own third, to that 
of James Gairdner, and to half of the third 
of Robert Mitchel. But for this claim the 
court is of opinion that there can be no just 
pretension, because he did not affect to con- 
vey by virtue of the power from James 
Gairdner— he did not affect to pass the in- 
terest of James Gairdner, but to pass the 
estate of John Caig and himself. Conse- 



quently the power of attorney may be put 
out of tlie case, and the conveyance could 
only operate on his own legal or equitable 
interest. 

In law, he was seized under the original 
deed, and the deed from Robert Jlitchel of 
one undivided moiety of the property. 

Under the various agreements and entries 
on the books of the firms at Charleston and 
Savannah which have been stated, his equi- 
table interest was precisely equal to his legal 
interest. In law and equity he held one 
moiety of the premises in question. The 
other moiety was in John Caig. To one 
sixth Caig was legally entitled by the con- 
veyance from Robert Mitchel, and to two 
sixths he was equitably entitled by the agree- 
ment with Edwin Gairdner and the conse- 
quent entries on the books. 

Of the equitable interest of John Caig 
the mortgagees were bound to take notice, 
because the piu:chaser of an equitable in- 
terest, purchases at his peril, and acquires 
the property burdened with every prior equi- 
ty charged upon it, because the deed itself 
gives notice of Caig's title, and because Caig 
was in possession of the property. 

The mortgage deed of December, 1801, 
could not, then, in law or equity, pass more 
than one moiety of the property it men- 
tions. 

A question arises on the face of the deed 
respecting the extent of the property com- 
prehended in it. The plaintiffs contend that 
both lots are within the description; the 
defendants that only the wharf lot is con- 
veyed. 

The property conveyed is thus described: 
"All that lot of land, houses and wharfs in 
the city of Savannah as is particularly de- 
scribed by the annexed plat, and is general- 
ly known by the name of Gairdner's wharf." 
The plat was not annexed, nor was it re- 
corded with the deed. It is, however, filed 
as an exhibit in the cause, and appears to be 
a plat of a part of the town of Savannah, 
including the lot on which Gairdner's wharf 
was, and also one other lot belonging to the 
same persons, which was designated as No. 
6, and which does not adjoin the property on 
which the wharves are erected. 

The words descriptive of the property in- 
tended to be conveyed do not appear to the 
court to be applicable to more than the wharf 
lot. The word "lot" is in the singular num- 
ber; the term "houses" is satisfied by the 
fact that there are houses on the wharf lot; 
and there is no evidence in the cause, nor 
any reason to believe that lot No. 6 was 
"generally known by the name of Gairdner's 
Wharf." The court, therefore, cannot con- 
sider that lot as corapreliended within the 
conveyance. 

The mortgaged property is in posse.ssinn of 
the defendants Caig and Mitchel, who derive 
their title thereto in the following maniici-. 
On the 7th of January, 1802, a new part 



24 



MAXIMS OF EQUITY. 



nership was formed between Gaiidner, Caig 
and Mitchel, and, by the articles of co-part- 
nery, which are under seal, the Savannah 
property is declared to be stock in -trade, and 
an entry was made on the books of the old 
firm transferring this property to the new 
concern. On the 12th of the same month, 
the co-partnership of Gairdner and Caig was 
dissolved. 

On the 27th of July, 1802, by deeds prop- 
erly executed, one third of the property be- 
came vested In John Caig, and one other 
•third in Robert Mitchel. 

On the 3d of November, 1802, Edwin Gaird- 
ner became a bankrupt; and this bill is 
brought by his mortgagees and assignees. 

The claim to foreclose is resisted by Caig 
and Mitchel, because they say, 

1st. The mortgage was not executed at the 
time it bears date, but long afterwards, and 
on the eve of bankruptcy. 

2d. That the transaction is not bona fide, 
there being no real debt, nor any money ac- 
tually advanced by the mortgagees. 

3d. That the mortgage was kept secret, in- 
stead of being committed to record. 

4th. That the whole transaction is totally 
variant from that stated in the deed. 

They therefore claim the property for the 
creditors of Gairdner, Caig and Mitchel. 

1st. From the testimony in the cause it 
appears that the deed, if not executed on the 
day, was executed about the day of its date; 
and that Gairdner, at the time, was believed 
to be solvent. 

2d. It appears, also, that the mortgage was 
executed, in part, to secure the payment of 
money actually due at the time, and, in part, 
to secure sums to be advanced, and to in- 
demnify sorpe of the mortgagees for liabili- 
ties to be incurred. 

3d. The mortgage is dated the 1st of De- 
cember, 1801, and was recorded in September, 
1802. 

By the laws of Georgia, a deed is valid if 
recorded within twelve months; but any deed 
recorded within ten days after its execution 
takes preference of deeds not recorded within 
that time, or previously on the record. 

It appears to the court, that neither neg- 
ligence, nor that fraud which is inferred from 
the mere fact of omitting to place a deed on 
record, can, with propriety, be imputed to 
the person who has used all the despatch 
which the law requires. If subsequent pui'- 
chasers without notice, sustain an injury 
within the time allowed for recording a deed, 
the injury is to be ascribed to the law, not 
to the individual who has complied with its 
requisition. 

In this case the subsequent purchasers 
might have proceeded to record their deeds 
within ten days, and have thereby obtained 
the preference they claim, but they have 
failed to do so. They are themselves charge- 
able with the very negligence which they as- 
cribe to their adversaries; and, were they 
to be preferred, the court would invert the 



well established rule of law, and postpone, 
under similar circumstances, a prior to a sub- 
sequent deed. 

4th. It is true that the real transaction 
does not appear on the face of the mortgage. 
The deed purports to secure a debt of £30,- 
000 sterling due to all the mortgagees. It 
was really intended to secure different sums, 
due at the time from particular mortgagees, 
advances afterwards to be made, and liabili- 
ties to be incurred to an uncertain amount. 

It is not to be denied, that a deed, which 
misrepresents the transaction it recites, and 
the consideration on which it is executed, 
is liable to suspicion. It must sustain a rig- 
orous examination. It is certainly, always 
advisable fairly and plainly to state the truth. 

But if, upon investigation, the real transac- 
tion shall appear to be fair, though somewhat 
variant from that which is described, it would 
seem to be unjust and unprecedented to de- 
prive the person claiming under the deed, of 
his real equitable rights, unless it be in favor 
of a person who has been, in fact, injured 
and deceived by the misrepresentation. 

That cannot have happened in the present 
case. 

There is the less reason for imputing blame 
to the mortgagees, in this case, because the 
deed was prepared by the mortgagor himself, 
and executed without being inspected by 
them, so far as appears in the case. 

It is then, the opinion of the court that 
the plaintiffs, Shirras and others, have a just 
title, under their mortgage deed, to subject 
one moiety of the lot, or parcel of ground, 
commonly known by the name of Gairdner's 
Wharf, to the payment of the debts still re- 
maining due to them, which were either due 
at the date of the mortgage, or were after- 
wards contracted upon its faith, either by ad- 
vances actually made or incurred prior to the 
receipt of actual notice of the subsequent 
title of the defendants, Caig and Mitchel; 
and that the decree of the circuit court of 
Georgia, so far as it is inconsistent with this 
opinion, ought to be reversed. 

The following is the decree of this court: 

This cause came on to be heard on the 
transcript of the record, and was ai^ued by 
counsel. On consideration whereof it is the 
opinion of this court, that the deed of mort- 
gage in the proceedings mentioned, and dated 
on the 1st of December, 1801, is, in law, a 
valid conveyance of one moiety of that lot 
of land, houses and wharves in the city of 
Savannah, which was generally known by 
the name of Gairdner's Wharf, being the par- 
cel of ground lying between the river and the 
street, and that the mortgagees in the said 
deed mentioned, are entitled to foreclose the 
equity of redemption in the said mortgaged 
property, and to obtain a sale thereof, and to 
apply the proceeds of the said sale to the pay- 
ment of what remains unsatisfied of their re- 
spective debts, which were either due at the 
date of the mortgage, or have been since con- 
tracted, either on account of monies advanced, 



MAXIMS OF EQUITY. 



25- 



or liabilities IncuiTed prior to their receiving 
actual notice of the title of the defendants, 
John Caig, and Robert Mitchel. And the de- 
cree of the circuit court for the district of 
Georgia, so far as it is Inconsistent with this 



opinion, is reversed and annulled, and in all 
other things is aflBrmed; and the cause is re- 
manded to the said circuit court for the dis- 
trict of Georgia, that further proceedings may- 
be had therein according to equity. 



26 



MAXIMS OP EQUITY. 



CITY OF ST. LOtnS v. O'NEIL LUMBER 
CO. et al. 

(21 S. W. 484, 114 Mo. 74.) 

Supreme Court of Missouri. Division No. 1. 
Feb. 6. 1893. 

Appeal from St. Liouis circuit court; 
Jacob Klein, Judge. 

Petition hy the city of St. Louis ttiat 
certain creditors of James McLane, a con- 
tractor, be compelled to interplead for the 
purpose of determining tlieir rights in a 
fund owing by the city to the contractor. 
From a judgment of the circuit court giv- 
ing preference to the O'Noil Lumber Com- 
pany, James M. Doyle and others ap- 
pealed. The court of appeals affirmed the 
judgment, and the case was then certified 
to the supreme court. Reversed. 

J. H. Trembly and Eassieur & Schnur- 
macher, for respondent. 

BRACE, J. This case is certified here 
from the St. Louis court of appeals, under 
section 6 of the amendment of the consti- 
tution adopted in 1884. The statement of 
the case, made by Judge Biggs of that 
court, is as follows : 

"On the I7th day of July, 1888, the mu- 
nicipal assembly of the city of St, Louis 
passed anordinaDceanthorizingthe board 
of public improvements to contract for 
certain alterations and repairs at the 
House of Refuge. Section 2 of the ordi- 
nance is as follows: 'Thecostof the above 
worlj shall be paid by the city of St. Louis, 
and the sum of forty-five hundred dollars 
is hereby appropriated out of funds set 
apart for improvements, altei'ations, and 
repairsof the Uouseof Refuge.' The work 
was let to one James McLane. under three 
separate contracts. Contract No. 2,071 
provided for the erection of two new privy 
buildings at a cost of twenty-eight hun- 
dred dollars. By contract numbered 2,0^3 
McLane agreed to make certain altera- 
tions in the basement and in the dormi- 
tory of the ol<l building, for the sum of 
eight hundred and fifty dollars. The third 
contract, numbered 2,076, provided for 
furnishing lumber and laying the floor in 
the shoe shop of the House of Refuge. The 
foregoing contracts were signed bj' Mc- 
Lane as principal and the interpleaders 
Thomas C. Higgins and John M. Sellers as 
his sureties. Among other things, the con- 
tracts provided that 'in case the con tractor 
shall abandon the vs'ork • » * the com- 
missioner of public buildings shall have 
power, under the direction of the board of 
public improvements, to place such and so 
many persons as he may deem advisable, 
by contract or otherwise, to work and 
complete the work to be done, and to use 
such matei'ials as he may find on the line 
of said work, or to procure other materials 
for the completion of the same, and ti. 
charge the expense of said labor nnd ma- 
teriaistothecontractor; that thisexpense 
shall be deducted and paid out of such 
moneys as may then be due, or may at 
any time thereafter grow due, to hiui un- 
der the contract; and, in case such e.vpense 
Is less than the amount still due under the 
contract, had it been completed by the 
contractor, he shall be entitled to receive 



the difference, and, in case such expense is 
greater, the party of the first part ( which 
includes the contractor and his sureties) 
shall pay the amount of such excess.' The 
contracts also contained the following 
provision: 'And said party of the first 
part (which includes the contractor and 
his sureties) hereby further agrees that he 
Will furnish the said board of public im- 
provements with satisfactory evidence 
that all persons who have done or fur- 
nished materials under this agreement, 
and are entitled to a lien therefor under 
any law of the state of Missouri, have 
been fully paid, are no longer entitled 
to such lien ; and, in case such evidence be 
not furnished, such amount as the board 
may consider necessary to meet the lawful 
claims of the persons aforesaid, provided 
said persons shall notify said board before 
the final estimates be returned, shall be re- 
tained from the moneys due the said party 
of the first part under this agreement, un- 
til the liabilities aforesaid ma.v be fully dis- 
charged.' Under paragraph S of the con- 
tract, an estimate of the amount of the 
work done each month is to be made 
about the first of each succeeding month, 
and a valuation according to the current 
market prices put thereon. From the 
amount of such estimate, ten per cent, is 
to be deducted, and the balance certified 
as due. The obligation of Higgins and 
Sellers binds them, with McLane, to the 
city of St. Louis, and for the faithful per- 
formance of the foregoing contracts in ev- 
ery particular. The foregoing quotations 
from the contracts are believed to be sufii- 
cient for an understanding of the legal 
propositions arising upon this record. 
McLane entered tfpon the work, and con- 
tinued it until the 20th day of November, 
1888, when he absconded from the state, 
leaving the work in an unfinished condi- 
tion. It is conceded that up to the 1st day 
of November the city had paid to McLane 
for work done and materials furnished un- 
der contract No. 2,071 the sum of one 
thousand and threedollars and fiftycents. 
This would leave the sum of one thousand 
and seven hundred and ninety-six dollars 
and fifty cents due from the city if the 
work should be completed. The work un- 
der contract No. 2,083 was also left in an 
unfinished condition. Monthly estimates 
of the work under this contract had also 
been made, and up to the 1st day of No- 
vember McLane had been paid on account 
thereof six hundred and seven dollars and 
fifty cents, leaving a balance due from the 
city, if the work had been completed, of 
two hundred and forty-two dollars and 
fifty cents. The work under the third con- 
tract had been fully completed and paid 
for. It was also admitted that, in addi- 
tion to the amounts earned bv McLane 
under the two contracts betweien the 1st 
anil 20th of November, the city owed him 
the sum of thirty -seven dollars for work 
(lone at the House of Refuge not embraced 
in either contract. When McLane aban- 
doned the contracts, the city made an ur- 
rangemeiit with Higuins and Sellers to 
complete the work. No new contract was 
entered into. The work was to be com- 
pleted under the old contracts. Higgins 
and Sellers fiuirthed the work to the satis- 
faction of the city authorities. Afewdays 



MAXIMS OF EQUITY. 



27 



after this arrangement with Higgins and 
Sellers, the O'Neil TiUmber Company, one 
of the interpleaders, filed a suit in equity 
against McLane and tlie city, in which it 
claimed that McLane was indebted to it 
for Ininher furnished on account of said 
contracts of the value of seven hundred 
and fifty dollars, and it asked that this 
amount be charged against the remainder 
of the money due from the city under the 
contract. Then followed a like suit by 
John M. and Edward Doyle, the appel- 
lants herein, in which theyclaimed to have 
performed w ork and furnished materials 
to McLane, under contract No. 2,071, of 
the value of thirteen hundred and four dol- 
lars. They sought to make their claim u 
charge upon the balance due from the city 
under said contract No. 2,071. Other 
mechanics and material men followed 
with like suits, but, under the view we 
have taken of the case, it will not be nec- 
essary to notice them. When Higglns and 
Hcl'ers completed the work they claimed 
tliat the work done and the materials fur- 
nished by them in the completion of con- 
tract N'ti. 2,071 actually cost them the sura 
of one thousand and fifty-nine dollars and 
eighty-nine cents; that they did work in 
completing contract No. 2,083 of the value 
of forty dollars; and that they did e.xtra 
work under the last-mentioned contract 
amounting to twenty-nine dollars and 
fifty cents,— making a total of eleven huu- 
•dred and twenty-nine dollars and thirty- 
nine cents. Their contention was, and is 
now,that, asthey had earned this amount 
in the completion of the work, they were 
«ntitled to be first paid out of the balance 
of the funds due under the McLane con- 
tracts, in preference to the O'Neil Liuiiber 
•Company and Doyle Bros. When the city 
found itself beset witli these conflicting 
claims, it brought into court the amount 
due from it under the McLane contracts, 
to wit, two thousand one hundred and 
five dollars and fifty cents. The foregoing 
facts were stated in its petition, and the 
court was asked to compel the claimants 
to interplead for the fund, and that they 
be restrained from the further prosecution 
of the suits against the city. The neces- 
«ary orders were made, and thereafter such 
proceedings were had in the case as to re- 
sult in a trial between the several inter- 
pleaders of their respectiveclalms to prior- 
ity. The court held that Higgitis and Sell- 
«rs must be paid tirst. This left a balance 
of nine hundred and seventy-six dollars 
and eleven cpn<s, which the court found 
had been earned by McLane between the 
Ist and 20tb of November. As the O'Neil 
Lumber Company was the first to insti- 
tute suit and have the city served with 
process, the court gave its claim priority 
over those of the other interpleaders, and 
ordered it to be paid in full. The suit of 
the Doyle Bros, being the next in point of 
time, the remainder of the fund, to wit, 
the sum of two hundred and twenty-five 
<iolIars and sixty cents, was ordered paid 
to them. From this ord r of distribution 
Doyle Bros. haveprosfculed their appeal." 
The court of appeals affirmed the judg- 
ment of thecircuitcourt.l42 Mo. App.5h6,) 
all the judges agreeing that out of thn 
funds to be distributed the amount found 
to be du« liiggiUB and Ssllers u-ust be first 



paid. But to the conclusion reached by 
a majority of the court of appeals and 
the circuit court, — that the remainder 
should te distributed among the inter- 
pleaders according to the priority of their 
Kiiits,— Judge Thompson dissented, and 
filed a disspiiting opinion, as follows: 

"The statute relating to mechanics' liens 
eontnina the following section: 'The liens 
for work and labor done or things fur- 
nished, as specified in this article, shall be 
upon an equal footing, without reference 
to the date of filing, the account, or lien; 
and in all cases where a sale shall be or- 
dered, and the property sold, which may 
be described in any account or lien, the 
proceeds arising from such sale, when not 
surticientto discharge in full all the liens 
against the same without reference to the 
date of tiling the account or lien, shall be 
fiaid pro rata on the respective liens: pro- 
vided, such account or liens shall have been 
filed and suit brought as provided by this 
article.' Re v. St. 1SS9, § 6727 ; Rev. St. 1879, 
§8193. With this statute in force, the city 
of St. Louis, in making the contract with 
McLane, inserted the following provision : 
' And said party of the first part (which 
includes the contractor and his sureties) 
hereby further agrees that he will furnish 
the said board of public improvements 
with satisfactory evidence that all persons 
who have done work or furnished mate- 
rials under this agreement, and are enti- 
tled to a lien therefor under any law of the 
state of Missouri, have been fully paid, or 
no longer entitled to such lien; and, in 
case such evidence be not furnished, such 
amount as the board may consfHei" neces- 
sary to meet the lawful claims of the per- 
sons aforesaid, provided said persons 
shall notify said board before the final es- 
timates be returned, shall be retained from 
the moneys due the said party of the first 
part under this agreement until the liabili- 
ties aforesaid ma.v be fully discharged.' 
With this provision in force, indicating the 
policy of the state to be that all mechanics 
and material men entitled to liens shall 
share ratably, the city sees fit to insert 
this clause in its contract with the me- 
chanic, indicating a clear purpose on its 
part to see that the policy of the statute 
is carried out, and that it will withhold 
enough of what is due to the principal 
contractor to nay his subcontractors or 
material men. 'It is true that such per- 
sons are not, under the law as judicially 
construed, entitled to a mechanic's lien 
against any property belonging to the 
city: but that does not seem to afford a 
good reason why no effect whatever 
should he given to this clause of the con- 
tract. The city had no right, under the 
decision of Luthy v. Woods, 6 Nfo. App. 
67, and St. Louis v. Keane, 27 Mo. App. 642, 
to hold enough of what was due McLane 
in the character of trustee for the material 
men who had furnished to him materials 
which he used in the work. But events 
took such a turn that there wasiiotenough 
for all, and the city, finding itself thus em- 
barrassed, instead of executing the trust 
itself, brought the fund into a court of 
equity, and asked that court to adminis- 
ter it; in other words, asked that court to 
require the contending jjarties to inter- 
plead for it, which was done. It is also 



28 



MAXIMS OF EQUITY. 



true that the city has not, under the terms 
of the contract, elected to set this fund 
apart, and to hold it for any particular 
beneficiary; but nevertheless I cannot but 
think that it ouj^ht to be distributed, not 
according to the attachment law, but ac- 
cording to the policy of the mechanics' 
lien law. This clause of the contract has 
no doubt existed in the contract forme on 
which the city lets out contracts for city 
buildings from a time when it was sup- 
posed that the city buildings were liable 
to mechanics' liens. Persons supplying 
materials to city contractors may fairly 
be presumed to know that such a clause 
exists in such contracts. They may, there- 
fore, be fairly presumed to give credit to 
the contractor on the faith of being pro- 
tected by the city. But this faitli is 
broken, and this just expectation disap- 
pointed, when tlie creditor that makes the 
first grab at the fund set apart for all 
gets a preference over the other, albeit in 
a court called a court of equity. 

"The ground on which this result is 
reached, if I understand the reasoning, is 
that this fund has never been impressed 
with the character of a trust, which dis- 
tinguishes the case from the previous deci- 
sions of this court. To my mind, it is a 
conclusive answer to this to say that the 
city has done all that it could safely do to 
impress the fund with the character of a 
trust fund for the equal benefit of tlie ma- 
terial men, and has certainly not indicat- 
ed a contrary purpose by handing it over 
to a court of equity for distribution. But 
it is said that the proceedings in equity, 
which were taken against the city by tlie 
material men before the petition of inter- 
pleader was filed, were 'equitable garnish- 
ments,' and therefore the provision of the 
attachment law is to be imported into a 
court of equity, under which, instead of 
doing equity by making a ratable distri- 
bution among the creditors of equal mer- 
it, the rule of distribution is to be, first 
come, first served. It is true that in judi- 
cial decisions in this state the proceeding 
has been denominated an 'equitable gar- 
nishment.' But that expression was used 
for the mere convenience of having aname 
for an anomalous proceeding. It was not 
used with reference to the question of prior- 
ities, which we are here considering. To 
my mind, there is no such thing as an 'eq- 
uitable garnishment' in the sense in which 
it is lierp sought to employ the term, any 
more than there is an equitable indict- 
ment, or an equitable bill of attainder. 
But if we are to disregard the policy of the 
statute relating to mechanics' liens, and if 
we are also to disregard the contract be- 
tween the city and McLane, which shows 
that botb parties had in mind the idea 
that the material men of McLane should 
share equally, there is another ground 
which is inexorably logical as well as un- 
deniably just, on which the same result 
should be worked out. It is the doctrine 
of our supreme court in Kieper v. Rieper, 
79 Mo. 352, —the same being, so far as 1 can 
see, the last controlling decision of that 
court upon this question,— in which the 
familiar rule of equity is applied that what 
are called 'equitable assets' are to be di- 
vided pari passu among all creditors l)e- 
fore the court. The bauie doctrine was 



stated and applied by this court in Ilei- 
raan v. fisher, 11 Mo. App. 275, and in St. 
Louis V. Keane, 27 Mo. App. 646. What, 
then, are equitable assets'? Judge Bake- 
well, in Heiman v. Fisher, 11 Mo. App. at 
page 2S0, says that 'equitable assets are 
such as can be reached only by the aid of a 
court of equity, and the established rule 
M that assets which can only be reached in 
equity must be distributed pari passu 
among all creditors.' I take theruleto be 
that, where assets are of such a character 
that they are not vendible under an execu- 
tion at law, and that no lien can be mad» 
to attach to them by any proceeding at 
law, but that they can only be reached 
and subjected to the demand of a creditor 
by the aid and the processes of a court of 
equity, they are for that reason, and that 
reason alone, equitable assets. Nor does 
it appear to me to make any difference 
why, or on what theory of law or of pub- 
lic policy, they are lield to be available tcv 
the creditor through the aia of processes- 
of equity alone. To bring them within 
the well-known rule in respect of the dis- 
tribution of equitable assets, it is enoagt* 
that they cannot be touched in any way- 
without aid of a court of equity, and that 
whatever creditor gets satisfaction out of 
them must submit himself to the princi- 
ples of a court whose favorite maxim is 
that equity is equality. But to this view 
there is opposed the argument that in this 
state, in the case of what is called a cred- 
itors' bill in aid of an execution at law to 
reach assets which have been concealed or 
fraudulently conveyed by the debtor, the- 
rule is that the creditor first filing such a 
bill gets a prioritj- over the others. Such 
is, no doubt, the rule in this state, though 
the contrary principle is every day admin- 
istered in the courts of the United States 
here in our midst. But the assets thus 
pursued and made available by the cred- 
itor are not equitable assets within th& 
sense of the rule under consideration, for 
the reason that they are vendible under 
his execution at law. The creditor can 
levy upon his debtor's interest in property 
which the latter has fraudulently con- 
veyed, have it sold atsherii'f's sale, become 
the purchaser, and then bring a suit in eq- 
uity to clear his title; and I understand 
that a third person may become the pur- 
chaser at sheriff's sale, and have the like 
remedy in equity. Rights may thus at- 
tach to such assets in proceedings at law 
which in their very nature givea priority,— 
not merely a priority of lien, but a priori- 
ty of title. But there is another reason 
which distinguishes those cases from this. 
In those cases the moving creditor, even 
where he does not first sell the debtor's in- 
terest under his execution at law, often 
goes to great labor and expense in uncov- 
ering assets of his debtor. It is therefore 
debatable, to say the least, whether he 
ought to be required, after fighting the 
battle, to allow the camp followers who- 
have skulked in the rear to come in and 
divide with him the fruits of the victory. 
But no such condition of things exists in 
respect of the question we are ccjnsidering. 
The debtor has made no fraudulent con- 
veyance, has concealed no assets. He has 
simplj' run away, leaving visible certain 
assets in the hands of a custodian, who is 



li.vxnrs OF equity. 



29 



so privilpged, under the policy of the law, 
tliat that custodian can only be ron.pelled 
to account for them and to distribute 
them by a court ot e<iuity. Shall the prin- 
ciple which rewards the dilisem-e and 
courage of the judgment creditor who sues 
to set aside a fraudulent conveyance be 
applied so as to Rive a priority to the 
•creditor seekins satisfaction out of such 
equitable assets merely because he may 
happen to file his bill a day before the oth- 
ers? Tills is not rewarding diligence, cour- 
age, labor, and the expenditure of money. 
It may result merely in rewarding good 
fortune. The creditor first filing his bill 
may not even be the most diligent; he 
may mercl.v be the most fortunate. A 
day's sickness in the case of his rival cred- 
itor, the accident of employing one law- 
yer instead ol another, may, it this is to be 
the rule, turn the scale, and give him all, 
while the others standing in equal right 
get none. I can see no difference in princi- 
ple between this case and the case of Riep- 
er V. Rieper, 79 Mo. 352, which was, beyond 
■question, correctly decided. In both cases 
the assets are well knovvn, uncovered, un- 
denied, unconcealed, but capable of being 
subjected only by proceedings in equity. 
The moving creditor, who. as in Rieper v. 
Kieper, seeks to subject the separate es- 
tate oJ a married woman, gets no lien by 
the mere filing of his bill, and tor the naked 
reason that the assets are equitable as- 
sets, and that it is the act of the court, 
and not the act ot the creditor, that cre- 
ates the lien. The lien is created by the 
<iecree, and not by the bringing of the suit. 
In all such cases the well-known rule of 



chancery procedure is that all creditors 
who come in before the final decree of dis- 
triouriou share pari iiassn. 

In this conclusion reached by the learned 
dissenting judge we concur. We think he 
might have safely rested it npon the case 
of Rieper v. Rieper, 79 Mo. 352, and the last 
ground so forcibly put in his opinion, to 
which we deem it necessary to add only a 
word in explanation of our position. 
While a court of equity, underthe admira- 
ble doctrine announced in the able opinion 
of Judge Bliss in Pendleton v. Perkins, 4'J 
Mo. 5t).5, can and will give a remedy to 
creditors against assets in its custody, or 
which can be reached only by its strong 
arm, yet such courts cannot create for 
their benefit either the process of garnish- 
ment on the one hand, or the remedies to 
be acquired under the mechanic's lien law 
on the other, and are not constrained to a 
distribution of those assets to creditors 
according to the principles that would ob- 
tain under the law governing either, but 
will make such distribution according to 
right and justice, which in this case would 
be (after paying Higgins and Sellers the 
amount found due them for the finish- 
ing the work out of the fund) to distrib- 
ute the remainder among the interpleaders 
in proportion to the amounts found to be 
severally due them. That this may be 
done, the judgment of the St. Louis court 
ot appeals affirming the judgment ot the 
St. Louis circuit court is reversed, and the 
same remanded to said court of appeals, 
to be proceeded with accordingly. All 
concur, except BARCLAY, J., who dis- 
sents. 



no 



MAXIMS or EQUITY. 



COMSTOCK V. JOHNSON. 

(46 N. Y. 615.) 

Court of Appeals of New York. 1871. 

CHURCH, 0. J. The principal que.stion 
in this ciise, 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. 
iSelden, 3 id... 253.) It was found by the court 
that, at the time tliedefendantshut 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 lie 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 plaintifE 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 puipose 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, sp- 
purtenant to the land conveyed. (2 Kent's 
Com., 467; Blaine's Lessee v. Chambers, 1 
Serg. & liawle, 174.) But this would not au- 
thorize the plaintiff to erect and use ma- 
chinery upon this land not necessary to the 
use of the mill, as it had been used, and would 
not authorize the use of the buzz saw upon 
that land. The objection is not that the 
plaintiff propelled tlie buzz saw with the wa- 
ter from the dam, as he 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 



re.ison 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 bo 
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 is 
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 history, 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. NeiUon. 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 bis 
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 afiSrmed, without costs to 
either patty against the other in this court. 

All concur. 

Judgment accordingly. 



MAXIMS OF EQUITir. 



ai 



McLaughlin v. Mclaughlin et ai. 

(20 N. J. Eq. 190.) 
Court of Chancery of New Jersey. Oct. Term, 
18G9. 
Bill in equity for partition and an account- 
ing. Heard on exceptions to the master's 
reports as to the account and as to the value 
of a dower interest. 

W. A. Lewis, for complainant. Mr. Dixon, 
for one of the defendants. 

ZABRISKIE, Ch. John G. AIcLaughlin 
died intestate, May 2, 1861, seised of a num- 
ber of houses and lots in Jersey City, in one 
of which he resided at his death. He left 
his widow, Abby Ann McLaughlin, and six 
children, his heirs at law. Two of these chil- 
dren were minors at his death. Some of 
these children were children of his widow, 
the others were children of his first wife. 
The widow remained in possession of the 
mansion house until her death, on the 20th 
of August, ISliS. Dower was never formally 
assigned to her. The administration of the 
personal estate of her husband was granted 
to her. By tacit consent of all the heirs who 
were of age, she assumed the management 
of the real estate, collected the rents, paid 
the taxes and repairs, and rented out such 
parts as it was necessary to rent. 

The bill in this case was filed In her life- 
time for a partition, and for an account by 
her of the rents of the estate. 

The master reported that a partition could 
not be made without great injury, and that 
the property should be sold, and that the 
dower of the widow should be sold with the 
lands. The lands were all sold in the life of 
the widow, and all conveyed except one lot 
in Green street, which, upon refusal of the 
purchaser to comply with his contract, was 
ordered to be re-sold, and was re-sold after 
her death. On the 28th of June, 1868, the 
widow filed her petition electing to accept a 
gross sum in lieu of her dower, and an or- 
der was made on July 7, 1868, to refer it to 
the masler to ascertain and compute the 
value of her dower. She had, in compliance 
with the prayer of the bill, rendered her ac- 
count of the rents and profits of the estate, 
in which she charged five per cent, for col- 
lecting them, and claimed one third as due 
to her in her right as dowress, but did not 
charge herself with the rent of the mansion 
house, and the office on the adjoining lot, 
which had been occupied as such by her hus- 
band, in his lifetime. It was also referred 
to the master to examine and state her ac- 
count. 

The master made a separate report upon 
each order of reference to him. In the re- 
port upon the order to state the accounts, 
he charged her with the value of the mansion 
house from the death of her husband, or 
rather from May 1st, the day before his 
death. To this the complainant, as executrix 
of her mother, the widow, excepts, claiming 



that as dower was never assigned, the widow 
was entitled by virtue of the statute, to re- 
main in possession of the mansion house and 
messuage attached, without rent, until dowci- 
was assigned. 

The master admits the right under the stat- 
ute, and bases his action on the ground that 
dower was virtually and equitably assigned 
to the widow in the whole property by her 
taking possession of the whole, with the as- 
sent of the heirs, and appropriating one third 
of the rents of the whole to her own use; 
and that the provision of the statute which 
was intended to protect the widow in her 
estate as dowress, an estate favored at law, 
against the injustice or delay of the heirs, 
was not intended to secure to her more than 
one third of the rents, and more than her due 
in a case like this, where the heirs left in 
her hands the whole estate to retain, by her 
own action, the amount due to her; that as- 
signment of dower requires no particular 
form, and may, in some cases, be of one 
third of the tolls of a mill or of the produce 
of lands, which, if assigned and accepted as 
dower, should be equivalent to an assign- 
ment at law or in equity. To this conclusion 
of the master I assent. And even without 
such equitable assignment, I am of opinion 
that a widow who claims one third of the 
rents of the lands other than the mansion 
house and messuage, must be willing to ac- 
count for the value of the part occupied by 
her. 

Damages for the detention of dower were 
not recovered at common law, but only by 
the statute of Merton; and after that stat- 
ute the rule was settled by the courts of 
common law, that if the widow died before 
the damages for detention were assessed, 
they could not be recovered. 2 Bac. Abr. 
395, tit. "Dower," I; Park, Dower, 309. Nor 
could damages be recovered, if the widow 
died before dower was assigned; nor if she 
accepted the dower assigned by the heir, or 
by proceedings in chancery. Park, Dower, 
310; Co. Lift 33a. But in such cases the 
value of the dower for the time it was 
wrongfully detained may be recovered in 
equity. Curtis v. Curtis, 2 Brown, Ch. 629, 
632; Dormer v. Fortescue, 3 Atk. 130; Park, 
Dower, 332; Johnson v. Thomas, 3 Paige, 
377; 2 Bac. Abx-. 396, "Dower," I; Vin. Abr. 
"Dower," S, a, § 20; Hamilton v. Ld. Mohun, 
1 P. Wms. 118. 

The courts of law in assessing damages for 
the detention, allow, as reprises, for the oc- 
cupation by the widow. In Walker v. Nevil, 
Leon. 56, quoted in 2 Bac. Abr., "Dower," I, 
p. 394, the court reversed the Judgment, be- 
cause tlie damages were for eight years, and 
the widow had occupied for part of the eight 
years. And in Woodruff v. Brown, 17 N. J. 
Law, 216, three of the judges In their opin- 
ions say that what had been received by the 
widow might be deducted from the value. 
This was approved in Keeler v. Tatnell, 2:1 
N. J. Law, 62. And in the case of Hoppei 



MAXIMS OF EQUITY. 



V. Hopper, 22 N. J. Law, 715, although the 
court of errors refused to order the judgment 
of a previous term to be altered, so as to 
allow a plea to be added that the defendant 
had satisfied the demandant for the value of 
her dower, yet at the inquisition which was 
taken under the direction of Chief Justice 
■Green, at the Bergen circuit, the defendant 
was allowed to prove, as part satisfaction of 
the value, or in mitigation of the damages, 
that the demandant had occupied one half 
the mansion bouse from tlie death of her 
husband. And it could never be permitted, 
where the only land out of which dower is 
claimed is the mansion house and messuage, 
that a widow, who had occupied the whole 
as quarantine from the death of her husband, 
should recover in addition one thii'd of the 
value as damages; and yet this would be 
the result, if the value assessed miast be one 
thii-d of the whole value without regard to 
occupation by the widow. 

And a court of equity, in such case, will 
not give damages beyond the amount estab- 
lished by law, especially when such damages 
are inequitable. But, on the other hand, 
where a widow comes into this court to claim 
the value of her dower, in a case where such 
value could not be recovered at law, she will 
be required to do equity, and will be allow- 
ed only to recover the value of the dower de- 
tained, that is the value of one third of the 
whole estate, deducting the value of the part 
occupied by her. This may be done by al- 
lowing her to occupy the mansion house free 
of rent, and by giving her out of the residue 
of the estate so much as will make her pait 
■one third of the value of the whole, if any- 
thing be requii-ed for that end. On both 
grounds the report of the master must be 
sustained, and this exception overruled. The 
claim of the widow is unjust and inequitable. 
The excess of one day's rent charged by the 
jnaster by mere inadvertence, may be cor- 
rected without a re-stating of the account. 

The next exception to the account is that 
of Samuel C. McLaughlin and wife. It is to 
the charge of $150, and interest on it for 
■one year's rent of No. 147, and the upper 
part of No. 149, Green street. The only evi- 
dence as to this is that of Samuel 0. Mc- 
Laughlin himself. He testifies that he had 
rented of his father both premises for the 
year ending May 1st, 1801, at the rent of 
$300; that he continued to occupy them the 
next year without any new bargain. This 
usually would be a continuance of the for- 
mer tenancy at the same rent, and I see 
nothing In this case to prevent the applica- 
tion of this rule. I am of opinion that this 
exception must be sustained. 

The next exception is by the complainant 
as executrix and legatee of the widow, to 
the master's report on the value of her 
dower. 

The report finds that she is not entitled 
to have a gross sum in lieu of her dower in 



the Green street lot, which was not sold un- 
til after her death. The report is founded 
on the decision of Chancellor Green, in Mul- 
ford V. Hiers, 13 N. J. Eq. 13, and is fully 
sustained by that decision; and I concur en- 
tirely with the late chancellor in the prin- 
ciples upon which that conclusion is based. 
Another exception to that report is to the 
principle upon which the master estimated 
the value of the life of the widow, and the 
gross value of her dower. It was held in the 
case of Mulford v. Hiers, above referred to, 
that when a dowress had, in a partition 
case, consented to take a gross sum in lieu 
of her dower, the right to have such sum 
estimated in proportion to the value of her 
life at the time of consent, became a vested 
right, and was not lost by her death before 
the value was ascertained and settled. That 
principle is admitted by the master, and is 
not disputed by the counsel for the heirs. 
But as she died two months after the elec- 
tion, and before the making of the report, 
the master has assumed that the value of 
her life is settled by its actual duration. 
This assumption is strictly, and in fact, cor- 
rect. The actual value of her life was at 
that election only two months. But this is 
not the manner in which the value of such 
a life is, in practice, ascertained in judicial 
proceedings. Where one is in a state of or- 
dinary good health, and has an average ex- 
pectancy of life, the value of the life is as- 
certained by calculation from tables prepar- 
ed for annuities and life insurances, which 
give, with great reliability, the gross value 
of an annuity for a person in ordinary good 
health, at any given age. In such computa- 
tion, death by accident, or by disease sub- 
sequently conti-acted, are, on principle, dis- 
regarded. It is a risk that forms part of the 
basis of the computation. But these tables 
are not a safe guide where a person is not 
in ordinary good health, and more especially 
when afflicted with a disease incurable in 
its nature, and so advanced as to render it 
probable that death will soon ensue from 
it. In such case the rule here applied by 
the master that the actual duration of the 
life is the best measure of its probability, 
is perhaps the correct rule. But this is not 
such a case. Mrs. McLaughlin had some 
time before been afflicted, in a mild form, 
with the disease of which she died, but at 
the time of her election it had left her, and 
she was apparently free from it, and had 
the value of her life been ascertained within 
a month after her election, with all the evi- 
dence that could then have been produced, 
it might have been adjudged of an average 
value at her age. But although the fact of 
her subsequent death, within two months, 
ought not, in this case, to be taken as the 
test of the value of her life, yet the fact of 
a recurrence of the same disease which had 
previously attacked her in a milder form, 
and that from its virulence and rapid prog- 



MAXIMS OF EQUITY. 



33 



ress she soon died, is a most important ele- 
ment in judging of the yalue of the life. It 
may be with probability inferred, that the 
tendency to that disease had not been eradi- 
cated from her system, and that its lurking 
seeds only awaited development to make it 
fatal. Her subsequent fever, and the great 
and almost unnatural appetite to -which the 
complainant testifies, may have been and 
probably were the effect and the indication 
of the continuance of the malady. Its de- 
velopment may have been started and con- 
tinued by accidental causes, and its ter- 
mination caused or hastened by want of 
skill in medical or surgical treatment; and 
therefore, even assuming that she was not 
a healthy person at the time of her election, 
it does not follow that her actual life is the 
true legal measure of its value. I am satis- 
fied, from the evidence, that her health was 
not what may be called ordinary good health, 
and that her life was not of the average 
value, at the time of the election. But it is 
impossible to lay down, with any accuracy, 
or any approach to accuracy, from the testi- 
mony, what ratio her life bore to the aver- 
age value of life at her age; and I do not 
think that the opinions or speculations of 
physicians in this case, would take away 

HTJTCH. BQ. JtTR. — 3 



much from the uncertainty. In such cases, 
the life insurance ofllces generally decline 
to insure at all; but this court cannot de- 
cline to act, and allow only the annual value. 
The statute requires that some estimate 
shall be made. I do not feel willing to ap- 
ply the rule adopted by the master, or to 
estimate her life at the average value at 
her age. In this situation, I must adopt 
some mean. The adoption must be arbi- 
trary, and without any reason that can be 
assigned with certainty why it should not 
be a little greater or a little less. Under 
these circumstances I shall adopt the exact 
mean between the value of her dower as 
calculated by the master, and that calcu- 
lated upon the value of a life of a person at 
her age in ordinary health. 

The eri'ors pointed out in the seventh ex- 
ception of the complainant to the master's 
account being mere mistakes In carrying 
forward figures in the computation, and be- 
ing admitted by the defendants, will of 
course be corrected. 

The matters contained in both reports 
must be referred back to the master to be 
corrected on the principles above stated.^ 

1 Decree reversed, 22 N. J. Eq. 505. 



34 



MAXIMS or EQUITY. 



BLBAKLEY'S APPEAL. 

(66 Pa. St. 187.) 

Supreme Court of Pennsylvania. Oct. 27, 1870. 

AGNEW, J. The facts of this case are 
few. Robert Lamberton was the owner of a 
judgment for $31,000, entered against Sam- 
uel P. Irvln on the 8th day' of June, 1865. 
Irvin had purchased of F. D. Kinnear, Esq., 
lot No. 419 in Franklin at $2600, of which 
$820 only remained unpaid, and would fall 
due on the Gth of August, 3865, with a pro- 
vision for forfeiture of the contract in case 
of non-payment for thirty days after it fell 
due. On the 19th of July, 1865, Irvin as- 
signed his contract to James Bleakley, 
binding him to pay the $820 to save the for- 
feiture, and with the admitted understand- 
ing that Irvin should refund the $820 to 
Bleakley, settle his indebtedness to the bank, 
of which Bleakley was cashier, and that 
then Bleakley should reconvey to Irvin's 
wife. But the assignment was antedated to 
the 1st of May, 1865, thus overreaching Lam- 
berton's judgment. The master finds that 
this was done to defraud the plaintiff. The 
finding is ably vindicated in the opinion of 
Judge Trunkey. The absolute character of 
the paper, though but a security, the agree- 
ment to reconvey to Irvin's wife instead of 
himself, and the attempt of Bleakley to use 
the paper to defeat the sheriff's sale of the 
property by Lamberton on his judgment, 
evince the true motive for antedating the 
paper. 

Bleakley paid the $820 to Kinnear, and 
now claims a decree for this sum, before 
specific performance shall be decreed to Lam- 
berton, who purchased Irvin's title at the 
sheriff's sale. Kinnear does not resist spe- 
cific performance, but stands ready to con- 
vey to Lamberton, whenever the covinous 
assignment to Bleakley is put out of his 
way. It is Bleakley who resists the decree 
until he is refunded the $820, paid upon the 
footing of the fraudulent agreement with Ir- 
vin, to defeat Lamberton's judgment. Bleak- 
ley is made a party to the bill only for the 
purpose of putting aside the covinous as- 
signment to enable Kinnear to convey to 
Lamberton. The question then is whether 
a chancellor would require Lamberton to re- 
fund the $820 to Bleakley, as a condition to 
setting aside the assignment and entitling 
Lamberton to specific performance of Kin- 
near. 

But clearly Bleakley cannot demand repay- 
ment of Lamberton either at law or equity. 
And first he is not entitled to subrogation to 
Kinnear's rights. Subrogation is not a mat- 



ter of contract but of pure equity and benev- 
olence. Kyner v. Kyner, 6 Watts, 221; Wal- 
lace's Appeal, 5 Pa. St. 103. On what pre- 
tence. In foro conscientiae, can a party at- 
tempting to carry out a scheme of fraud 
against another, by a payment, claim com- 
pensation of the party he has attempted to 
defraud? Conscience and benevolence revolt 
at such an iniquity. Again Bleakley did not 
recognise Kinnear's title by the payment. 
He did not profess to bargain for It, and 
Kinnear did not profess to sell it to him. 
His act was simply a payment and no more, 
made by him because of Irvin's duty to pay, 
and accepted by Kinnear because of his 
right to receive from Irvin. Besides the pay- 
ment was accepted by Kinnear in ignorance 
of the attempted fraud. There can be no 
legal intendment therefore of a bargain on 
Kinnear's part to vest his right to receive 
the money in Bleakley. As to Lamberton 
the payment by Bleakley was not only fraud- 
ulent and intended to displace his judgment, 
but it was also voluntary. It was not paid 
at Lamberton's request nor for his use and 
benefit; but on the contrary was intended 
to defeat his right, as a creditor by over- 
lapping his judgment, by means of the cov- 
inous transfer. Bleakley is therefore nei- 
ther a purchaser, nor a creditor of Lamber- 
ton, nor an object of benevolence, but is 
forced upon the record to compel him to put 
out of the way the fraudulent barrier to 
Kinnear's specific performance to Lamber- 
ton. He cannot, thus standing before a chan- 
cellor, ask him to make repayment to him 
a condition to a decree to remove the fraudu- 
lent obstruction he threw in the way. The 
payment is one of the very steps he took to 
consummate the fraud upon Lamberton. If 
he have a legal right of recovery he must 
resort to his action at law, and if he can 
have none, it is a test of his want of equity. 
And in addition to all this, it is a rule that 
a chancellor will not assist a party to obtain 
any benefit arising from a fraud. He must 
come into a court of equity with clean hands. 
It would be a singular exercise of equity, 
which would assist a party, who had paid 
money to enable him to perpetrate a fraud, 
to recover his money, just when the chan- 
cellor was engaged in thrusting out of the 
way of his doing equity to the injured party, 
the very instrument of the fraud. Who does 
iniquity shall not have equity. Hershey v. 
Welting, 50 Pa. St. 2^14, 215. 

We are therefore of opinion the court com- 
mitted no error in refusing compensation, 
and the decree of the court below is con- 
firmed. 



5i 



!Vf 



'1^2' 



MAXIMS OF EQUITY. 



35 



PLiUMMER V. KEPPLBR et al. 

(26 N. J. Eq. 481.) 

Court of Chancery of New Jersey. Oct. Term, 
1875. 

Bill in equity for specific perfoiinaiice of a 
contract to convey lajids. 

P. W. Leonard, for complainant. W. J. 
Magie and Robert B. Chetwood, for defend- 
ants. 

VAN FLEET, V. C. The complainant asks 
the specific performance of a contract where- 
by he agreed to convey to Sir. Keppler a 
house and lot on Grier avenue, in Elizabeth 
City, at a valuation of $15,750, and the de- 
fendant, in payment of that sum, agreed to 
pay $750 in money, to assume the payment 
of a mortgage for $7,500 on the property to 
be conveyed to him, and to convey to the 
complainant a house and lot on Anna street, 
in the same city, valued at $7,500. The cash 
payment was made at the execution of the 
contract. 

Among the defences set up it is alleged the 
complainant procured the contract by fraud- 
ulent representations as to the cost of the 
house which he had recently built, and as to 
the value of the lot whereon it stood. If 
these facts are established, the complainant's 
prayer must be denied. On a bill for specific 
performance the comt will grant or refuse 
its aid according to the justice of the case; 
it wUl never extend its aid to a suitor who 
has practiced a fraud, or procured the con- 
tract by a misrepresentation of a material 
fact. Miller v. Chetwood, 2 N. J. Eq. 208; 
2 Chit. Cont. (11th Am. Ed.) 1473. 

An intentional misreioresentation of a fact 
materially affecting the value or use of the 
property, will deprive the party making it of 
all right to a remedy in equity. WuesthofC v. 
Seymour, 24 N. J. Eq. 69. 

The remedy by specific performance is dis- 
cretionary; the question is not, what must 
the court do, but what, in view of all the cir- 
cumstances of the case in judgment, should 
it do to further justice. When the contract 
has been faii-ly procured and its enforcement 
will work no injustice or hardship, it is en- 
forced almost as a matter of course; but, if 
it has been procured by any sort of fraud or 
falsehood, or its enforcement will be attend- 
ed with great hardship or manifest injustice, 
the court will refuse its aid. Seymour v. 
Delancey, 6 Johns. Ch. 222; King v. Morford, 
1 N. J. Eq. 281; Rodman v. Zilley, Id. 324; 
Conover v. Wai-dell, 20 N. J. Eq. 273; Story, 
Eq. Jur. §§ 750a, 751. 

In view of the evidence there can be no 
doubt that on the evening the conti-act was 
executed, and just before it was signed, the 
complainant represented to the defendant 
that his house had cost from $10,000 to $11,- 
000, besides the outlay for gas fixtures, sum- 
mer pieces, inlaid doors, and the value of his 
services as architect, and that land adjacent 
to his lot had been sold a few days before 
for $100 a foot. Five persons were present,— 



the defendant and his wife; the complain- 
ant; George L. Meyer, the broker negotiat- 
ing the contract, and who has been called as 
a witness for the complainant; and Mr. Wil- 
liam H. Pooler, who had owned the lot on 
which the house was built, having conveyed 
it to the complainant with an understanding 
he should be paid for it on its sale with the 
house, at the rate of $70 a foot, and also that 
he should then be entitled to one-half of the 
profit made on the house. The defendant 
and his wife testify, clearly and positively, 
to the foregoing representations. The com- 
plainant says, generally, he never represent- 
ed to the defendant that the house had cost 
$11,000, but when required to repeat the con- 
versation at the signing of the contract, says 
the defendant and he had the usual con- 
versation occurring between parties dealing, 
but declares he cannot give the particulars. 
Mr. Meyer makes no allusion to the occur- 
rences preceding or attending the signing of 
the conti-act. While Mr. Pooler denies hear- 
ing any representations respecting the value 
of the property made by the complainant, 
he so far corroborates the defendant and his 
wife as to say that just before the execution of 
the conti-act Mr. Meyer stated to the defend- 
ant, with the complainant's knowledge, and 
without eliciting any sign of disapproval, that 
the lot was worth $100 a foot, and that the 
house must have cost from $10,000 to $12,000, 
as it was unusually well built. These rep- 
resentations of cost and value correspond ex- 
actly with the sum fixed as the purchase 
money to be paid to the complainant, — lot, 
fifty feet front, $5,000; house, $10,750; total, 
$15,750. They embraced material facts. That 
pretending to state the cost of the house 
rested exclusively in the knowledge of the 
complainant. It was not open to inspec- 
tion or examination. If he said anything, he 
was bound to speak the truth. It is obvious 
they influenced the action of the defendant. 
When the contract was produced at his resi- 
dence on the evening it was signed, the sum 
named as the purchase money was $15,500. 
Before it was signed, this sum was raised to 
$15,750. Something occurred there before the 
signing, which induced the defendant to con- 
sent to the increase. 

Were these representations true ? The com- 
plainant has not attempted to show their 
truth. No attempt has been made to show 
that any lands on Grier avenue were ever 
sold for $100 a foot. The complaiuant ad- 
mits the contract price for building his house 
was $6,666. The conviction is irresistible that 
these representations were known to be un- 
true at the time they were uttered, and that 
they were made to entrap the defendant into 
a conti-act to take complainant's property at 
a valuation of one-fourth, or at least one-fifth, 
in excess of its fair value. A court whose 
delight it is to do justice, will not give Its 
aid to a suitor whose title to relief rests upon 
an engagement procured by false words. 

Let the bill be dismissed, with costs. I will 
so advise. 



36 



MAXIMS or EQUITY. 



ELLISON V. MOFFATT. 

(1 Johns. Ch. 46.) 

Court of Chancery of New York. 1814. 

THE CHANCELLOB.. The parties lived 
ill the same county, and, without accounting 
for the delay, the plaintiff suffered a period of 
26 years to elapse, from the termination of 
the American war, to the time of filing his 
bill. The offer made by the executors being 
for peace, and without any recognition of 
the Justness of the demand, and being re- 



jected by the plaintiff, cannot affect the ques- 
tion. 

It would not be sound discretion to' over- 
haul accounts, in favor of a party who has 
slept on his rights for such a length of time; 
especially, against the representatives of the 
other party, who have no knowledge of the 
original transactions. It is against the prin- 
ciples of public policy, to require an account, 
after the plaintiff has been guilty of so great 
laches. 

The bill must be dismissed on the ground 
of the staleness of the demand; but without 
costs. 



MAXIMS OF EQUITY. 



37 



RUSSELL V. FAILOR. 

(1 Ohio St. 327.) 

Supreme Court of Ohio. Jan., 1853. 

G-. J. & J. M. Smith, for plaintiff. Mr. Ward, 
for defendant. 

BARTLEY, O. J. The errors assigned in 
this case are substantially the following: 

1st. That the court erred in holding that 
the note was void, and that the payment of 
the same by the plaintiff gave him no right 
of action against the defendant for contribu- 
tion. 

2d. That the court erred in overruling the 
motion for a new trial, &c. 

Two questions are here presented for de- 
tei'mination: 

1st. Was the note void on the ground of 
usury? 

2d. Can a surety on a promissory note 
which is absolutely void, by the voluntary 
payment thereof, entitle himself to contribu- 
tion against the cosurety? 

The first question has been determined in 
the affirmative by adjudications already made 
in this state. See the case of Preble Branch 
of State Bank of Ohio v. Russell, 1 Ohio St. 
313; also, ChiUicothe Bank v. Swayne, 8 Ohio, 
257; Creed v. Commercial Bank, 11 Ohio, 489; 
Miami Exporting Co. v. Clark, 13 Ohio, 1; 
Commercial Bank v. Reed, 11 Ohio, 498; 
Bank of U. S. v. Owens, 2 Pet. 538. 

The second question is one which does not 
appear to have been very frequently present- 
ed for adjudication. 

The right of contribution among sureties 
is founded not in the contract of suretyship, 
but is the result of a general principle of eq- 
uity which equalizes burdens and benefits. 
The common law has adopted and given ef- 
fect to this equitable principle, on which a 
surety is entitled to contribution from his co- 
surety. This equitable obligation to contrib- 
ute, having been established, the law raises 
an Implied assumpsit on the part ol the co- 
surety to pay his share of the loss, resulting 
from a concurrent liability to pay a common 
debt. This jurisdiction, by an action at law, 
is, therefore, resorted to, when the case is 
not complicated; and the more extensive and 
efficient aid of a court of equity is thus ren- 
dered unnecessary. It follows that this ac- 
tion can only be sustained where there exists 
a just and equitable ground for contribution. 
A contract of suretyship is accessory to an 
obligation contracted by another person, ei- 
ther contemporaneously, or previously, or 
subsequently. It is of the essence of the con- 
tract, that there be a subsisting valid obliga- 
tion of a principal debtor. Without a prin- 
cipal, there can be no accessory; and by the 
extinction of the former, the latter becomes 
extinct. This results from the natm-e of the 
obligation of suretyship. Burge, Sur. 3, 6; 
Theo. Prin. & Sur. 2. 

It would seem to follow, from the very na- 
ture of the undertaking, that if the principal 
contract is absolutely void, the obligation of 



the surety would likewise be void. But It is 
said, that where the contract of the principal 
debtor is only voidable on account of incapac- 
ity or otherwise, and the person undertak- 
ing as surety contracted with a knowledge 
of the incapacity or other cause making the 
principal obligation voidable, he must be un- 
derstood as Incurring not merely a collateral, 
but a principal, obligation. How far this 
may extend, as between suretj' and principal, 
it is not necessary here to enquire; but there 
seems to be sound reason in the doctrine, 
that where the surety has knowledge of that 
which amounts to a vaUd defence for him 
against the creditor, he is bound either to 
avail himself of it, or to give notice to the 
principal debtor, so as to enable him to set 
up the defence; and in default of doing either, 
he would be deprived of recourse against the 
principal. Burge, Sur. 367. 

The utmost extent to which a surety, who 
has made payment can claim, is a subroga- 
tion to the rights of the creditor, so that he 
will rank against the debtor in the same De- 
gree as the creditor would have done, if he 
had not been paid. Where, therefore, a sure- 
ty could have no remedy against the princi- 
pal, he clearly could have none against his 
cosurety, against whom he would have less 
equity in his favor. 

Such, then, being the nature of the con- 
tract of suretyship, to what right of contri- 
bution was the plaintiff entitled in this case 
against the defendant? The claim set up by 
the branch bank was absolutely void; and it 
could have acquired no validity from the ex- 
ecution of the mortgage by the plaintiff be- 
fore he had notice of the usury, especially as 
against the defendant. And it appears that 
the plaintiff had knowledge of the usury be- 
fore he paid the debt. With what pretence 
of equity can the plaintiff, who was not 
bound himself, by voluntarily paying a void 
note, claim to impose an obligation upon the 
defendant as his cosurety, who was under no 
obligation before, either legal or equitable? 
Had the creditor instituted a suit on the note 
against the defendant, his remedy was clear 
and complete; and he could not certainly 
have been deprived of his means of defence 
by the voluntary act of the plaintiff. Tliis is 
clearly not a case where an implied assump- 
sit could have been raised against a cosurety 
for contribution. 

The principle laid down in the case of Skil- 
lin V. Merrill, 16 Mass. 40, would seem to be 
in point in this case, and fatal to the plain- 
tiff's cause of action. And it is not shaken by 
the case of Ford v. Keith, 1 Mass. 139, and 
the case decided upon its authority, of Cave 
V. Burns, 6 Ala. 780, to which reference has 
been made. The two last cases are not strict- 
ly analogous to the present one. Upon no 
principle of justice or sound reason can a 
surety, by voluntarily paying money on a 
void note, impose an obligation upon a co- 
surety for contribution. 
Judgment affirmed. 



38 



MAXIMS OF EQUITY 



CRAIG T. LESLIE. 
(3 Wheat. 563-576.) 

Supreme Court of the United States. 1818. 

Robert Craig's will contained the follow- 
ing clause: "I give and bequeath to my 
brother, Thomas Craig, of Baith parish, Ayr- 
shire, Scotland, all the proceeds of my es- 
tate, both real and personal, which I have 
herein directed to be sold, to be remitted to 
him, according as the payments are made." 
Thomas Craig being an alien, the question 
was, could he take the proceeds of this land, 
which had been devised to one Leslie, in 
trust, the proceeds from the sale of which 
were to be paid to him? 

Mr. Justice WASHINGTON delivered the 
opinion of the court. The incapacity of an 
alien to take, and to hold beneficially, a le- 
gal or equitable estate in real property, is 
not disputed by the counsel for the plain- 
tiff; and it is admitted by the counsel for 
the state of Virginia, that this incapacity 
does not extend to personal estate. The on- 
ly inquiry, then, which this court has to 
make is, whether the above clause in the 
will of Robert Craig is to be construed, un- 
der all the circumstances of this case, as a 
bequest to Thomas Craig of personal prop- 
erty, or as a devise of the land itself. 

Were this a new question, it would seem 
extremely difficult to raise a doubt respect- 
ing it. The common sense of mankind would 
determine, that a devise of money, the pro- 
ceeds of land directed to be sold, is a devise 
of money, notwithstanding it is to arise out 
of land; and that a devise of land, which a 
testator by his will directs to be purchased, 
will pass an interest in the land itself, with- 
out regard to the character of the fund out 
of which the purchase is to be made. 

1 The settled doctrine of the courts of equi- 
ty corresponds with this obvious construc- 
tion of wills, as well as of other instruments, 
whereby land is directed to be turned into 
money, or money into land, for the benefit of 
those for whose use the conversion is in- 
tended to be made. In the case of Fletcher 
V. Ashburuer, 1 Brown, Ch. 497, the master 
of the rolls says, that "nothing is better es- 
tablished than this principle, that money 
directed to be employed in the purchase of 
land, and land directed to be sold and turn- 
ed into money, are to be considered as that 
species of property into which they are di- 
rected to be converted, and this, in what- 
ever manner the direction is given." He 
adds, "the owner of the fund, or the con- 
tracting parties, may make land money or 
money land. The cases establish this rule 
universally." This declaration is well war- 
ranted by the cases to which the master of 

1 Equity considers land, directed to be sold 
and converted into money, as money; and mon- 
ey directed to bo employed in the purchase of 
land, as land. 



the rolls refers, as well as by many others. 
See Doughty v. Bull, 2 P. Wms. 320; Yates 
v. Compton, Id. 308; Trelawney v. Booth, 
2 Atk. 307. 

The principle upon which the whole of 
this doctrine is founded is, that a court of 
equity, regarding the substance, and not the 
mere forms and circumstances of agreements 
and other instruments, considers things di- 
rected or agreed to be done, as having been 
actually performed, where nothing has in- 
tervened which ought to prevent a perform- 
ance. This qualification of the more con- 
cise and general rule, that equity considers 
that to be done which is agreed to be done, 
will comprehend the cases which come un- 
der this head of equity. 

2 Thus, where the whole beneficial interest 
in the money in the one case, or in the land 
in the other, belongs to the person for whose 
use it is given, a court of equity will not 
compel the trustee to execute the trust 
against the wishes of the cestui que trust, 
but will permit him to take the money or 
the land, if he elect to do so before the con- 
version has actually been made; and this 
election he may make, as well by acts or 
declarations, clearly indicating a determina- 
tion to that effect, as by application to a 
court of equity. It is this election, and not 
the mere right to make it, which changes 
the character of the estate so as to make it 
real or personal, at the will of the party en- 
titled to the beneficial interest. 

If this election be riot made in time to 
stamp the property with a character dif- 
ferent from that which the will or other in- 
strument gives it, the latter accompanies it, 
with all its legal consequences, into the 
hands of those entitled to it in that char- 
acter. 3 So that in case of the death of the 
cestui que trust, without having determined 
his election, the property will pass to his 
heirs or personal representatives, in the same 
manner as it would have done had the trust 
been executed, and the conversion actually 
made in his lifetime. 

In the case of Kirkman v. Milles, 13 Ves. 
338, which was a devise of real estate to 
trustees upon trust to sell, and the moneys 
arising as well as the rents and profits till 
the sale, to be equally divided between the 
testator's three daughters, A. B. and C. The 
estate was, upon the death of A. B. and C, 
considered and treated as personal property, 
notwithstanding the cestui que trusts, after 
the death of the testator, had entered upon, 

2 Where the whole beneficial interest in the 
land in one case, or in the money in the other, 
belongs to the person for whose use it is given, 
a court of equity will permit the cestui que 
trust to take the money or land at his election, 
if he elect before the conversion is made. 

s But if the cestui que trust die, without hay- 
ing determined his election, the property ' will 
pass to his heirs or personal representatives, in 
the same manner as it would have done if the 
conversion had been made, and the trust exe- 
cuted in his lifetime. 



MAXIM.S OF EQUITY. 



39 



and occupied the land for about two years 
prior to their deaths; but no steps had been 
taken by them, or by the trustees, to sell, 
nor had any requisition to that effect been 
made by the former to the latter. The mas- 
ter of the rolls was of opinion, th:it the oc- 
cupation of the land for two years was too 
short to presume an election. He adds: 
"The opinion of Lord Eosslyn, that proper- 
ty was to be taken as it happened to be at 
the death of the party fi'om whom the rep- 
resentative claims, had been much doubted 
by Ijord Eldon, who held that without some 
act, it must be considered as being in the 
state in which it ought to be; and that Lord 
Rosslyn's rule was new, and not according 
to the prior cases." 

The same doctrine is laid down and main- 
tained in the case of Edwards v. Countess 
of Warwick, 2 P. Wms. 171, which was a 
covenant on marriage to invest £10,000, part 
of the lady's fortune, in the purchase of land 
in fee, to be settled on the husband for life, 
remainder to his first and every other son 
in tail male, remainder to the husband in 
fee. The only son of this marriage having 
died without issue, and intestate, and the 
investment of the money not having been 
made during his life, this chancellor decided 
that the money passed to the heir at law; 
that it was in the election of the son to 
have made this money, or to have disposed 
of it as such, and that, therefore, even his 
parol disposition of it would have been re- 
garded; but that something to determine 
the election must be done. 

* This doctrine, so well established by the 
cases which have been referred to, and by 
many others which it is unnecessary to men- 
tion, seems to be conclusive upon the ques- 
tion which this court is called upon to de- 
cide, and would render any farther investi- 
gation of it useless, were it not for the case 
of Roper v. RadclifCe, which was cited, and 
mainly relied upon, by the counsel for the 
state of Virginia. 

The short statement of that case is as fol- 
lows: John Roper conveyed all his lands to 
trustees and their heirs, in trust, to sell the 
same, and out of the proceeds, and of the 
rents and profits till sale, to pay certain 
debts, and the overplus or the money to be 
paid as he, the said John Roper, by his will 
or otherwise, should appoint, and for want 
of such appointment, for the benefit of the 
said John Roper, and his heirs. By his will 
reciting the said deed, and the power re- 
served to him in the surplus of the said real 
estate, he bequeathed several pecuniary leg- 
acies, and then gave the residue of his 
real and personal estate to William Con- 
stable and Thomas Radcliffe, and two others, 
and to their heirs. By a codicil to this will, 
he bequeathed other pecuniary legacies; and 
the remainder, whether in lands or personal 



4 The case of Roper v. RadclifEe, 9 Mod. 107, 
examined. 



estate, he gave to the said W. 0. and T. R. 

Upon a bill filed by W. C. and T. R. against 
the heir at law of John Roper, and the oth- 
er trustees, praying to have the trust exe- 
cuted, and the residue of the money arising 
from the sale of the lands to be paid over 
to them; the heir at law opposed the execu- 
tion of the trust, and claimed the land as 
n resulting trust, upon the ground of the in- 
capacity of Constable and Radcliffe to take, 
they being papists. The decree of the court 
of chancery, which was in favour of the 
papists, was, upon appeal to the house of 
lords, reversed, and the title of the heir at 
law sustained; six judges against five, be- 
ing in his favour. 

Without stating at large the opinion upon 
which the reversal took place, this court will 
proceed, 1st. To examine the general prin- 
ciples laid down in that opinion; and then, 
2d. The case itself, so far as it has been 
pressed upon us as an authority to rule the 
question before the court. 

In performing the first part of this under- 
taking, it will not be necessary to question 
any one of the premises laid down in that 
opinion. They are, 1. That land devised to 
trustees, to sell for payment of debts and 
legacies, is to be deemed as money. This is 
the general doctrine established by all the 
cases referred to in the preceding part of 
this opinion, s 2. That the heir at law has 
a resulting trust in such land, so far as it is 
of value, after the debts and legacies are 
paid, and that he may come into equity and 
restrain the trustee from selling more than 
is necessary to pay the debt and legacies; or 
he may offer to pay them himself, and pray 
to have a conveyance of the part of the 
land not sold in the first case, and the whole 
in the latter, which property will, in either 
case, be land, and not money. This right 
to call for a conveyance is very correctly 
styled a privilege, and it is one which a 
court of equity will never refuse, unless 
there are strong reasons for refusing it. The 
whole of this doctrine proceeds upon a prin- 
ciple which is incontrovertible, that where 
the testator merely directs the real estate to 
be converted into money, for the purposes 
directed in his will, so much of the estate, 
or the money arising from it, as is not ef- 
fectually disposed of by the will, (whether 
it arise from some omission or defect in the 
will itself, or from any subsequent accident, 
which prevents the devise from taking ef- 
fect,) results to the heir at law, as the old 

5 Land, devised to trustees, to sell for pay- 
ment of debts and legacies, is to be deemed as 
money. 

The heir at law has a resulting trust in such 
lands, after the debts and legacies are paid, and 
may come into equity and restrain the trustee 
from selling more than sufficient to pay them, 
or may offer to pay them himself, and pray a 
conveyance of the part of the land not sold in 
the first case, and the whole in the latter, which 
property in either case will be land, and not 
money. 



40 



MAXIMS OF EQUITY. 



use not disposed of. Such was the case of 
erase V. Barley, 3 P. Wms. 20, where the 
testator having two sons, A. and B., and 
three daughters, devised his lands to be sold 
to pay his debts, &c., and as to the moneys 
arising by the sale, after debts paid, gave 
£200 to A. the eldest son, at the age of 21, 
and the residue to his four younger children. 
A. diea before the age of 21, in consequence 
of which the bequest to him failed to take 
effect. The court decided that the £200 
should be considered as land to descend to 
the heir at law of the testator, because it 
was in effect the same as if so much land 
as was of the value of £200 was not directed 
to be sold, but was suffered to descend. The 
ease of Ackroyd v. Smithson, 1 Brown, Ch. 
503, is one of the same kind, and estab- 
lishes the same principle. So, likewise, a 
money provision under a marriage contract, 
to arise out of land, which did not take ef- 
fect, on account of the death of the party for 
whose benefit it was intended, before the 
time prescribed, resulted as money to the 
grantor, so as to pass under a residuary 
clause in his will. Hewitt v. Wright, 1 
Brown, Ch. Cas. 86. 

6 But even in cases of resulting trusts, 
for the benefit of the heir at law, it is set- 
tled that if the intent of the testator ap- 
pears to have been to stamp upon the pro- 
ceeds of the lan3 described to be sold, the 
quality of personalty, not only to subserve 
the particular purposes of the will, but to 
all intents, the claim of the heir at law to 
a resulting trust is defeated, and the estate 
is considered to be personal. This was de- 
cided in the case of Yates v. Compton, 2 P. 
AVms. 308, in which the chancellor says, that 
the intention of the will was to give away 
all from the heir, and to turn the land Into 
personal estate, and that that was to be 
taken as it was at the testator's death, and 
ought not to be altered by any subsequent 
accident, and decreed the heir to join in the 
sale of the land, and the money arising there- 
from to be paid over as personal estate to 
the representatives of the annuitant, and to 
those of the residuary legatee. In the case 
of Fletcher v. Ashburner, before referred to, 
the suit was brought by the heir at law of 
the testator, against the personal representa- 
tives and the trustees claiming the estate 
upon the ground of a resulting trust. But 
the court decreed the property, as money, to 
the personal representatives of him to whom 
the beneficial interest in the money was be- 
queathed, and the master of the rolls ob- 
serves, that the case of Emblyn v. Freeman, 
and Cruse v. Barley, are those where real 
estate being directed to be sold, some part 

6 But if the intent of the testator appears to 
have been to stamp upon the proceeds of the 
land directed to be sold, the quality of person- 
alty, not only for the particular purposes of the 
will, but to all intents, the claim of the heir at 
law to a resulting trust is defeated, and the es- 
tate is considered to be personal. 



of the disposition has failed, and the thing 
devised has not accrued to the representa- 
tive, or devisee, by which something has re- 
sulted to the heir at law. 

It is evident, therefore, from a view of the 
above cases, that the title of the heir to a 
resulting trust can never arise, except when 
something is left undisposed of, either by 
some defect in the will, or by some subse- 
quent lapse, which prevents the devise from 
taking effect; and not even then, if it ap- 
pears that the intention of the testator was 
to change the nature of the estate from land 
to money, absolutely and entirely, and not 
merely to serve the purposes of the will. 
But the ground upon which the title of the 
heir rests is, that whatever is not disposed 
remains to him, and partakes of the old use, 
as if it had not been directed to be sold. 

The third proposition laid down in the 
ease of Roper v. Radcliffe, 9 Mod. 167, is, 
that equity will extend the same privilege 
to the residuary legatee which is allowed 
to the heir, to pay the debts and legacies, 
and call for a conveyance of the real estate, 
or to restrain the trustees from selling more 
than is necessary to pay the debts and lega- 
cies. 

7 This has, in effect, been admitted in 
the preceding part of this opinion; because, 
if the cestui que trust of the whole benefi- 
cial interest in the money to arise from the 
sale of the land, may claim this privilege, 
it follows, necessarily, that the residuary 
legatee may, because he is, in effect, the 
beneficial owner of the whole, charged with 
the debts and legacies, from which he will 
be permitted to discharge it, by paying the 
debts and legacies, or may claim so much of 
the real estate as may not be necessary for 
that purpose. 

s But the court cannot accede to the con- 
clusion, which, in Roper v. Radcliffe, is de- 
duced from the establishment of the above 
principles. That conclusion is, that in re- 
spect to the residuary legatee, such a devise 
shall be deemed as land in equity, though in 
respect to the creditors and specific legatees 
it Is deemed as money. It is admitted, with 
this qualification, that if the residuary lega- 
tee thinks proper to avail himself of the 
privilege of taking it as land, by making an 
election in his life time, the property will 
then assume the character of land. But if 
he does not make this election, the property 
retains the character of personalty to every 
Intent and purpose. The cases before cited 

7 Equity will extend the same privilege to 
the residuary legatee which is allowed to the 
heir, to pay the debts and legacies, and call for 
a conveyance of the real estate, or to restrain 
the trustees from selling more than is necessary 
to pay the debts and legacies. 

8 The conclusion — which, in Roper v. Rad- 
cliffe, is deduced from the above principles, that 
in respect to the residuary legatee such a devise 
shall be considered as land in equity, though in 
respect to the creditors and specific legatees, it 
is deemed as money — denied. 



MAXIMS OF EQUITY. 



41 



seem to the court to be conclusive upon this 
point; and none were referred to, or have 
come under the view of the court, which 
sanction the conclusion made in the unquali- 
fied terms used in the case of Roper v. Rad- 
clilfe. 

As to the idea that the character of the es- 
tate is affected by this right of election, 
whether the right be claimed or not, it ap- 
pears to be as repugnant to reason, as we 
think it has been shown to be, to principle 
and authorities. Before any thing can be 
made of the proposition. It should be shown 
that this right of privilege of election is so 
indissolubly united with the devise, as to 
constitute a part of it, and that it may be 
exercised in all cases, and under all circum- 
stances. This was, indeed, contended for 
with great Ingenuity and abilities by the 
counsel for the state of Virginia, but it was 
not proved to the satisfaction of the court. 
It certainly is not true, that equity will 
extend this privilege in all cases to the cestui 
(lue trust. It will be refused if he be an in- 
fant. In the case of Seeley v. Jago, 1 P. 
^^'ms. 389, where money was devised to be 
laid out in land in fee, to be settled on A. 
B. and C, and their heirs, equally to be di- 
vided: On the death A., Ms infant heir, 
together with B. and C, filed their bill, 
claiming to have the money, which was de- 
creed accordingly as to B. and C; but the 
share of the infant was ordered to be put 
out for his benefit, and the reason assigned 
was, that he was incapable of making an 
election, and that such election, if pei-mitted, 
would, in case of his death, be prejudicial 
to his heir. 

In the case of Foone v. Blount, Cowp. 
407, Lord Mansfield, who is compelled to 
acknowledge the authority of Roper v. Rad- 
clifCe in parallel cases, combats the reasoning 
of Chief .Tustice Parker upon this doctrine 
of election, with irresistible force. He sug- 
gests, as the true answer to it, that though 
in a variety of cases this rtght exists, yet it 
was inapplicable to the case of a person 
who was disabled by law from taking land, 
and that therefore a court of equity would, 
in such a case, decree that he should take 
the property as money. 

This case of Walker v. Denne, 2 Ves. .Tr 
170, seems to apply with great force to this 
part of our subject. The testator directed 
money to be laid out in lands, tenements, and 
hereditaments, or on long terms, with limita- 
tions applicable to real estate. The money 
not having been laid out, the crown, on fail- 
ure of heirs, claimed the money as land. It 
w:is decided that the crown had no equity 
against the next of kin to have the money 
laid out In real estate in order to claim it by 
escheat. It was added that the devisees, on 
becoming absolutely entitled, have the op- 
tion given by the will; and a deed of ap- 
pointment by one of the cestui que trusts, 
though a feme covert, was held a sufficient in- 
dication of her intention that it should con- 



tinue personal against her heir claiming it as- 
ineffectually disposed of for want of her ex- 
amination. This case is peculiarly strong, 
from the circumstance, that the election is 
embodied in the devise itself; but this was 
not enough, because the crown had no equity 
to force an election to be made for the pur- 
pose of producing an escheat. 

Equity would surely proceed contrary to- 
its regular course, and the principles which, 
universally govern it, to allow the right of 
election wliere it is desired, and can be law- 
fully made, and yet refuse to decree the 
money upon the application of the alien, 
upon no other reason, but because, by law, 
he is incapable to hold the land: In short, to 
consider him in the same situation as if he- 
had made an election, which would have 
been refused had he asked for a conveyance. 
The more just and coixect rule would seem 
to be, that where the cestui que trust is in- 
capable to take or to hold the land beneficial- 
ly, the right of election does not exist, and 
consequently, that the property is to be con- 
sidered as being of that species into whicli 
it is directed to be converted. 

Having made these observations upon the 
principles laid down in the case of Roper v. 
Radcliffe, and upon the arguments urged at 
the bar in support of them, very few words 
will suffice to show that, as an authority, it is 
inapplicable to this case. 

9 The incapacities of a papist under the 
English statute of 11 & 12 Wm. HI., c. 4, and 
of an alien at common law, are extremely 
dissimilar. The former is incapable to take 
by purchase, any lands, or profits out of 
lands; and all estates, terms, and any other 
interests or profits whatsoever out of lands, 
to be made, suffered, or done, to, or for the 
use of such person, or upon any trust for 
him, or to, or for the benefit, or relief of any 
such person, are declared by the statute to 
be utterly void. 

Thus, it appeai-s that he cannot even take. 
His incapacity is not confined to land, but to 
any profit, interest, benefit, or relief, in or 
out of it. He is not only disabled from tak- 
ing or having the benefit of any such inter- 
est, but the will or deed itself, which at- 
tempts to pass it, is void. In Roper v. Rad- 
cliffe, it was strongly insisted, tliat the money 
given to the papist, which was to be the pro- 
ceeds of the laud, was a profit or interest 
out of the land. If this be so, (and it is not 
material in this case to alfirm or deny that 
position,) then the will of John Roper in 
relation to the be'quest to the two papists, 
was void under the statute; and if so, the 
right of the heir at law of the testator, to 
the residue, as a resulting trust, was incon- 
testable. The cases above cited have fully 
established that principle. In that case, too, 
the rents and profits, till the sale, would have 
belonged to the papists, if they were capable 



» The case of Roper v. Radcliffe distinguished 
from the present case. 



42 



MAXIMS OP EQUITY. 



of taking, which brought the case still more 
strongly within the statute; and this was 
much relied on, not only in reasoning upon 
the words, but the policy of the statute. 

10 Now, what is the situation of an alien? 
He cannot only take an interest in land, but 
a freehold interest in the land itself, and 
may liold it against all the world but the 
king, and even against him until office found, 
and he is not accountable for the rents and 
profits previously received, n In this case 
the will being valid, and the alien capable 
of taking under it, there can be no resulting 
trust to the heir, and the claim of the state 
is founded solely upon a supposed equity, to 
have the land by escheat as if the alien had, 
or could upon the principles of a court of 
equity, have elected to take the land instead 
of the money. The points of difference be- 
tween the two cases are so striking that it 
would be a waste of time to notice them in 
detail. 

It may be further observed, that the case 
of Roper v. RadclifCe has never, in England, 
been applied to the case of aliens; that its 
authority has been submitted to with re- 
luctance, and is strictly confined in its ap- 
plication to cases precisely parallel to it. 
Lord Mansfield in the case of Foone v. 
Blount, speaks of it with marked disappro- 
bation; and we know, that had Lord Trevor 

ID An alien may take, by purchase, a freehold, 
or other interest in land, and may hold it 
against all the world except the king; and even 
against him until office found; and is not ac- 
countable for the rents and profits previously 
received. 

11 Vide 3 Wheat. 12. Jackson ex dem. State 
of New York v. Clarke, note c. 



been present, and declared the opinion he 
had before entertained, the judges would 
have been equally divided. 

The case of the Attorney General and Lord 
Weymouth, Amb. 20, was also pressed upon 
the court, as strongly supporting that of 
Koper V. RadclifCe, and as bearing upon the 
present case. 

7'he firet of these propositions might be 
admitted; although it is certain that the 
mortmain act, upon which that case was 
decided, is even stronger in its expression 
than the statute against papists, and the 
chancellor so considers it; for he says, 
whether the sui-plus be considered as money 
or land, it is just the same thing, the statute 
making void all charges and encumbrances 
on land, for the benefit of a charity. 

But if this case were, in all respects, the 
same as Roper v. RadclifCe, the observations 
which have been made upon the latter 
would all apply to it. It may be remarked, 
however, that in this case, the chancellor 
avoids expressing any opinion upon the ques- 
tion, wJiether the money to arise from the 
sale of the land, was to be taken as personal- 
ty or land; and, although he mentions the 
case of Roper v. RadclifCe, he adds, that he 
does not depend upon it, as it is immaterial 
whether the surplus was to be considered as 
land or money under the mortmain act. 

Upon the whole we are unanimously of 
opinion, that the legacy given to Thomas 
Craig, in the will of Robert Craig, is to be 
considered as a bequest of personal estate, 
which he is capable of taking for his own 
benefit. 

Certificate accordingly. 



MAXIMS OF EQUITY. 



43 



STINCHFIELD v. MILLIKBN. 

(71 Me. 567.) 

Supreme Judicial Court of Maiue. December, 
1880. 

PETERS, J. The following facts are de- 
duciblo frono the evidence in this case: The 
complainant purchased of the defendants, 
certain stecim-mill machinery, for removal 
from Hallowell to Danforth, in this State. 
There was at the time a verbal agreement, 
that the complainant should build a mill, and 
put the machinery into it, on a lot of land in 
Danforth, bought by him of one lliissell, who 
was to deed the lot directly to the defendants. 
The complainant was also to procure a deed 
of his home (another) lot to the defendants 
from the heirs of H. E. Prentiss, who held 
an absolute title thereof as security for the 
complainant's indebtedness to tliem, there 
being a small balance only unpaid, which the 
defendants were to pay for him. The de- 
fendants were to give an agreement, to con- 
vey to the complainant if he paid his indebt- 
edness to them according to the tenor of cer- 
tain notes to be given. 

On June 15, 1875, the complainant gave to 
tlie defend ints a mortgage on the machinery 
as personal property to secure the notes here- 
after named, in order to protect a lien there- 
on until the machinery should be put into the 
mill to be built, and become a part of the 
real estate. And there was embodied in this 
mortgage, an agreement of the complainant 
to build the mill and put the machinery into 
it. On June 16, 1875, liussell conveyed the 
mill lot to the defendants. On August 2, 
1875, Prentiss conveyed the home lot to them, 
tliey paying the balance of the Prentiss claim. 
On August 4, 1875, the defendants gave a 
writing to the complainant, agreeing to con- 
vey the property to him upon the condition 
that he would pay to them his notes on one, 
two, three, and five years, respectively, with 
interest. The notes were given for the 
amount payable for the machinery, the sum 
paid to Prentiss, and for other loans and ad- 
vances. The complainant went on and 
erected and completed a mill on the Russell 
lot, and the steam-mill machinery became a 
part of it. 

The complainant seeks to redeem the prop- 
erty, claiming the transaction to be a mort- 
gage. The defendants contend that the 
transaction was not a mortgage, that it was 
a conditional sale. 

It was not a legal mortgage: Because the 
defeasance has no seal. Warren v. Lovis, 
53 Maine, 463. And because the papers 
were not between the same parties. At law, 
the conveyance must be made by the mort- 
gager and the defeasance by the mortgagee. 
Shaw V. Erskine, 43 Maine, 371. 

But the transaction was in equity a mort- 
gage — an equitable mortgage. The criterion 
is the intention of the parties. In equity, 
this intention may be ascertained from all 
pertinent facts either within or without the 



written parts of the transaction. Where the 
intention is clear thac an absolute convey- 
ance is taljen as a security for a debt, it is in 
equity a mortgage. Ko matter how much 
the real transaction may be covered up and 
disguised. The real intention governs. 
"If a transaction resolve itself into a securi- 
ty, whatever may be its form, and whatever 
name the parties may choose to give it, it is 
in equity a mortgage." Flagg v. Mann, 2 
Sumn. 533, Ped. Cas. No. 4,847. 

The existence of a debt is well nigh an in- 
fallible evidence of the intention. The in- 
tention here is transparent. The defendants 
have a debt and held the property as a se- 
curity for its collection. A legal mortgage 
was avoided; an equitable mortgage was 
made. 

! Although difEerent at law, in equity a 
mortgage is not prevented because the con- 

[ veyanee does ndt come from the equitable 
mortgager. It is sufficient that the debtor 
has an interest in the property conveyed, 
either legal or equitable. Having such an 

[interest, if he procures a conveyance to one 

; wlio advances money upon it for him, taking 
tlie property as security for the money ad- 
vanced, he has a riglit to redeem. The 
grantee in such case, acquiring the title by 
his act, holds it as his mortgagee. Jones on 
Mort. 2d ed. § 331. Stoddard v. Whiting, 
46 N. Y. 627; Carr v. Carr, 52 N. Y. 251. 
It is denied that this court has the power 
to declare that an absolute deed shall be 
deemed to be a mortgage, allowing an equi- 
table mortgager the right to redeem. At law, 
it has no such power. Nor, when the court 
had a limited jurisdiction in equity, was the 
doctrine admitted. It was always under- 
stood, however, that, in a case like the pres- 
ent, if, instead of a demurrer, an answer 
was filed admitting the facts alleged, the 
court had the power to apply the remedy. 
Thomaston Bank v. Stimpson, 21 Maine, 
195; Whitney v. BacJielder, 32 Maine, 313; 
Howe V. Russell, 36 Maine, 115; Richardson 
V. Woodbury, 43 Maine, 206. But since the 
act of 1874 conferred general chancery pow- 
ers upon the court, it has full and complete 
jurisdiction in such cases. Rowellv. Jewett, 
69 Maine, 293-303; Jones, Mort. (2d ed.) 
§282. 

Courts of equity generally exercise such 
power. While the grounds upon which the 
doctrine is admitted vary with different 
courts, there is a great concurrence of opin- 
ion as far as the result is concerned. In our 
judgment, it is a sound policy as well as 
principle to declare that, to take an absolute 
conveyance as a mortgage without any de- 
feasance, is in equity a fraud. Experience 
shows tliat endless frauds and oppressions 
would be perpetrated under such modes, if 
equity could not grant relief. It is taking 
an agreement, in one sense, exceeding and 
differing from tlie true agreement. Instead 
of setting it wliolly aside, equity is worked 
out by adapting it to the purpose originally 
intended. Eauity allows recaration to be 



44 



MAXIMS OF EQUITY. 



made by admitting a verbal defeasance to be 
proved. The cases which support this view 
are too numerous to cite. The American 
cases are collected in Jones, Mort. 2d ed. 
§ 241, et seq. See Campbell v. Dearborn, 
109 Mass. 130; and Hassam v. Barrett, 115 
Mass. 256, 

The complainant seeks to separate the arti- 
cles originally mortgaged as personal prop- 
erty, and, being allowed the value of them, 
redeem the balance of the estate only. Tliat 
would not be equitable. The personal be- 
came a part of the real as originally designed 
to be. It was affixed and solidly bolted there- 
to. The mortgage was evidently only to 
serve a temporary purpose. It was not just 
to either party that there should be two mort- 
gages instead of one. It is urged that the 
defendants foreclosed the personal mortgage. 
It could not be done. The personal mort- 
gage was extinguished when attempted to be 
done. That was but a ruse to get the pos- 
session which the defendants were entitled 
to. No severance was ever made or attempt- 
ed to be made. 

It is intimated that the mill has burned 
down, pendente lite, under an insurance ob- 
tained by the defendants, and a question 
may arise, before the master, whether the 
complainant should have a credit of the net 
proceeds. If the insurance was obtained on 
the mortgagees' own account only, they 
should not be allowed. Cushing v. Thomp- 
son, 34 Maine, 496; Pierce v. Faunae, 53 
Maine, 351. The head note in Larrabee v. 
Lumbert, 32 Maine, 97, is erroneous in that 
respect. It was allowed in that case by con- 
sent. Insurance Co, \. Woodbury, 45iS.-dine, 
447. 

But where a mortgagee insures the prop- 
erty by the authority of the mortgager, and 
charges him with the expense, then any in- 
surance recovered shouki be accounted for. 
And if a mortgager covenants to insure, and 
fails to do so, the mortgagee can himself in- 
sure at the mortgager's expense. 
One of the defendants testifies that "Stinch- 



fleld agreed to pay all taxes and insurance."' 
He also says, "We have had the house^ 
stable and mill insured, and have paid 
the insurance, $108." We think this is evi- 
dence of an insurance obtained by the mort- 
gagees at the expense of the mortgager on 
account of his failure to keep his verbal cov- 
enant to insure, and renders it proper that 
the net proceeds of any insurance obtained 
should be allowed in the settlement between 
them. 

But this cannot be, if the insurance was- 
collected under a policy in which it is agreed 
between the insured and insurer that the 
company in case of loss should be subrogated 
to the right of the mortgagee. For in such 
case the insurance is not in fact on the mort- 
gager's account, nor is it such an insurance 
as could be made available to him. Jones, 
Mort. (2d ed.) § 420, and cases in note. 

The complainant may redeem the whole 
property upon payment of whatever may be 
due upon the whole debt. Inasmuch as the 
complainant sets up a claim exceeding the 
equitable right, neither party to recover costs 
up to the entry of this order; and whether 
future costs shall be recovered by either side, 
to be reserved for decision when the proceed- 
ings are to be finally terminated. Another 
reason why complainant should not recover 
costs is, that when his bill was commenced 
the mortgage debt was not due. The mort- 
gage could not be redeemed until 1880. The 
bill was commenced long before that time. 
But as the mortgage is now due, and n» 
point is taken that the proceeding was pre- 
mature, it will probably be for the interest 
of all the parties that their matters may be 
adjusted under this bill. For which purpose 
a master must be appointed, unless the par- 
ties can best determine the accounts between 
themselves. 

Decree accordingly, 

APPLETON, C. J., WALTON, DAN- 
FORTH, VIUGIN, and LIBBEY, JJ., con- 
curred. 



MAXIMS OF EQUITY. 



45 



AMES v. RICHARDSON. 

(13 N. W. Rep. 137, 29 Minn. 330.) 

■Supreme Court of Minnesota. July 25, 1882. 

Plaintiffs brought this action, in the district 
couit for Hennepin county, against the West- 
■ern Manufacturers' Mutual Insurance Com- 
pany, to recover the amount due on a policy 
of insurance for $2,000, issued to one Robert 
Cochran, on a mill and machinery in this 
state. The mill was destroyed by fire, and 
the loss under this policv was adjusted at 
$1,317.70 on July 19, 1880. On the same 
day Cochran assigned all his rights under the 
policy to plaintiffs. Ruth C. Richardson, 
who had a mortgage upon the mill property, 
claiming to be entitled to this sum, was sub- 
stituted as defendant in place of the insur- 
ance company. 

The action was submitted to the court, 
Toung, J., presiding, upon the complaint and 
answer, the allegations of which were ad- 
mitted to be true, and the material portions 
of which are stated in the opinion. The 
court found for the plaintiffs, and ordered 
judgment accordingly. Defendant appeals 
from an order refusing anew trial. 

BERRY, J. On December 16, 1879, Coch- 
ran, being owner of a piece of land in this 
state, insured a mill, machinery and fixtures 
therein against damage by fire, in the West- 
ern Manufacturers' Mutual Insurance Com- 
pany, for $2,000. December 18, 1879, he 
borrowed of defendant $5,200, for which he 
gave his promissory note on five years, se- 
cured by a mortgage of the land mentioned, 
which was duly recorded December 22d. By 
the terms of the mortgage Cochran cove- 
nanted with Richardson that at all times dur- 
ing its continuance he would keep the build- 
ings on the premises "unceasingly insured" 
for at least $5,200, payable in case of loss to 
Richardson, to the amount then secured by 
the mortgage. December 28, 1879, Coch- 
ran insured the mill, machinery, and fixtures 
for $1,500 in one company, and for $2,000 
in another, and, by indorsement upon each 
■of the two policies issued to him, the loss 
was made payable to Richardson, as her in- 
terest might appear. On July 9, 1880, while 
the three insurances were in force, the in- 
sured property was totally destroyed by fire- 
Before this Richardson had no knowledge of 
the first insurance. The loss was adjusted 
by Cochran and the three insurance com- 
panies at $4,298.03, as the true value of the 
property destroyed. The result was that the 
losses payable to Richardson were scaled from 
f3,500 (the face of the last two policies) to 
$2,442.20, and this sum was paid to her and 
applied on the note. The loss under the first 
insurance was scaled and adjusted at $1,317.- 
70, and that sum agreed to be paid Cochran 
accordingly. This was done July 19, 1880, 
and on the same day the certificate which 
had been issued to Cochran by the Western 
Manufacturers' Mutual Insurance Comoanv, 



in lieu of a policy, was for a valuable cnn- 
sideration duly assigned to the plaintiffs. 
They brought this action against the insur- 
ance company to recover the amount of the 
loss as adjusted at $1,317.70. ISlotliing hav- 
ing been paid upon Richardson's note and 
mortgage other than the sum of $2,442.20 
before mentioned, and the whole debt hav- 
ing been declared due under a provision in 
tlie mortgage, there remains due and un- 
paid thereon something over $3,000. Rich- 
ardson laying claim to the money ($1,317.70) 
realized from the first insurance, the com- 
pany paid it into court, and Richardson was 
substituted as defendant in the company's 
place. The question is, who is entitled to 
this money— plaintiffs or Richardson? 

It is well settled that, in the absence of 
an agreement by a mortgagor to insure for 
the benefit of his mortgagee, the latter has no 
right to any advantage whatever from an 
insurance upon the mortgaged property ef- 
fected by the former for his own benefit. 1 
Jones, Mortg. § 401; Nichols v. Baxter, 5 R. 
1.491; Plimpton v. Ins. Co., 43 Vt. 497; 
May, Ins. §§ 449, 456; Carter v. Mookett, etc., 
Ins. Co., 8 Paige, 437. 

It is equally well settled that an agreempnt 
by the mortgagor to insure for the benefit of 
his mortgagee gives the latter an equit;»ble 
lien upon the proceeds of a policy taken out 
by the former and embraced in the agree- 
ment. And when the agreement is that the 
mortgagor shall procure insurance upon the 
mortgaged property, payable in case of loss 
to the mortgagee, and the mortgagor, or some 
one for him, procures insurance in themuit- 
gagor's or a third person's name, without 
making it payable to the mortgagee, though 
this be done without the mortgagee's knowl- 
edge, or without any intent to perform the 
agreement, equity will treat the insurance 
as effected under the agreement, (unless this 
has been fulfilled in some other way,) and 
will give the mortgagee his equitable lien ac- 
cordingly. This is upon the principle by 
which equity treats that as done which ought 
to have been done. That is to say, inasmuch 
as the insurance effected ought to have been 
made payable to the mortgagee, equity will 
give the mortgagee the same benefit from it 
as if it had been. In support of these gen- 
eral propositions we refer to Thomas v. 
Vonkapff, 6 Gill & J. 372; Carter v. Rock- 
ett, etc., Ins. Co., and Nichols v. Baxter, su- 
pra; Wheeler v. Ins. Co., 101 U. S. 439; 
Cromwell v, Brooklyn Fire Ins. Co., 44 N 
Y. 42; Miller v. Aldriah, 31 Mich. 408; 1 
Story, Eq. Jur. § 64(/; 2 Am. Lead. Cas. (5th 
Ed.) 832-4; In re Sands Ale Brewing Co., 3 
Biss. 175, Fed. Cas. xNo. 12,ii07. 

Ir the cases cited (with the exception of 
Nichols V. Baxter) the insurance was effect- 
ed after the agreement to insure. In Nichols 
V. Baster it would seem that the court 
thought this made no difference, though the 
opinion alludes (somewhat as a makeweight, 
as it occurs to us) to the fact, which appeared 
by inference only, that the insurance in that 



46 



MAXIMS OF EQUITY. 



case, though effected hefore tlie agreement 
to insure, wa? understood by the parties to 
be embiiiced in it. We, however, can see no 
reason why the same tule should not be ap- 
plicable to insurance already subsisting when 
the agreement to insure is made, as to that 
subsequently obtained, unless this result ia 
aflirmatively excluded by the facts of the 
case. Such subsisting Insurance can be 
mad'? payable to the mortgagee, or assigned 
to bim, so as to satisfy the agreement. 
Where the agreement is, as in the case at 
bar, "to keep" the premises insured, it is en- 
tirely consistent with its letter as well as its 
spirit to hold that it embraces prior as well 
as subsequent insurance. And where, as in 
the present instance, the value of the insured 
property is such that subsequent insurance, 
sufficient to satisfy the agreement, cannot be 
obtained so long as the prior insurance 
stands, this is an (equitable circumstance en- 
titled to great weight upon the question 
whether the prior insurance ought to be held 
to be covered by the agreement. This equi- 
table circumstance is much enhanced when 
the effect of the prior insurance is, as in 
this case, to scale and reduce the subsequent 
insurance procured and made payable to the 
mortgagee under the agreement. 

In such a state of facts, to permit the 
mortgagor to withhold the prior insurance 
from the mortgagee is to permit him to profit 
by liis own wrong, at the expense of him 
whom he has wronged, and a violation of 
one of the first principles of law as well as 
of equity. The question is not what the 
mortgagor's intention was with reference to 
the prior insurance, but whether it was equi- 
table that, in carrying out any intention, he 
should be permitted to withhold the benefits 
from the mortgagee, especially in view of 
the maxim that equity regards that as done 
which ought to have been done. Cromwell 
V. Brooklyn Fire Ins. Co., Wheeler v. /n«. 
Co., Miller v. Aldriah, and In re Sands Ale 
Brewing Co., supra. 

Applying these considerations to this case, 
we are of opinion that Richardson is clearly 
entitled to an equitable lien upon the pro- 
ceeds of the first insurance, to be applied up- 
on her note and mortgage. Cochran ought 
to have kept his covenant. He could have 
done this by procuring a third new policy, oi 
by assigning the first insurance, or hav- 



ing it made payable to Bichardson. As he 
did not do the former, he should have done 
the latter, and therefore Richardson is in 
equity entitled to stand in the same position 
as if he had done what he ouglit to have 
done. 

Stearns v. Quinoy Ins. Co., 124 Mass. 61, 
relied upon by the plaintiffs, is not a case 
presenting the precise question whether an 
insurance effected before an agreement to 
insure is to be regarded as embraced in such 
agreement, so as to give a mortgagee an 
equitable lien on the proceeds. But. the 
principle there enunciated, and which ap- 
pears to be supported by other decisions of 
that state, is that the mortgagee cannot have 
the lien unless the insurance was obtained 
by the mortgagor as his agent, or with intent 
to perform an agreement to insure. If this 
was to be regarded as the correct rule, it 
would seem to be decisive in the plain- 
tiffs' favor. But it is against the weight 
and current of authority, and, as it seems to 
i us, inequitable, and therefore we do not fol- 
' low it, 

I Another question was discussed upon the 
argument, viz., whether tiie covenant to in- 
sure ran with the land, so that the record of 
the mortgage was constructive notice to the 
plaintiff and to all others of Riciiardson's 
(the mortgagee's) equities. We do not deem 
it at all necessary to consider this question. 
The mortgagor's assignment of his claim 
under the certificate after the loss was an as- 
signment of a debt, — a mere chose in action, 
— wliich the plaintiffs took subject to all de- 
fenses and equities against him. Archer v. 
Merchants' <& M. Ins. Co., 43 Mo. 434; Wil- 
son V. Hill, 3 Met. 66; Brichta v. N. T. La- 
fayette Ins. Co., 2 Hall, (K. Y.) 372; Mel- 
len V. Hamilton Fire Ins. Co., 17 N. Y. 609; 
Greene v. Warnick, 64 N. Y. 220; May, Ins. 
§ 386. From all this it follows that, in our 
opinion, the defendant is entitled to the pro- 
ceeds of the first insurance paid into the 
court, instead of the plaintiffs, as found by 
the court below. 

There being no dispute as to the correct- 
ness of the findings of fact, the case is re- 
manded, with directions to the district court 
to render judgment for the defendant accord- 
ingly. Though there is no formal reversal 
of the order denying a new trial, the defend- 
ant is entitled to costs, as of course. 



MAXIMS or KQUlTr. 



47 



HAUGHWOUT et al. v. MURrHY. 

(22 N. J. Eq. 531.) 

Court of Errors and Appeals of New Jersey. 
18(1. 

Mr. Pitnej' (with nliom was 0. Parker), for 
aiipellants. Mr. Vanatta, for respondent. 

L>BPUE, J. The bill of complaint filed in 
tills cause, after setting out the proceedings 
iu the suit in chancery between Haughwout 
and Boisaubln, charges that the deed of con- 
veyance from Boisaubln to Murphj', though 
bearing date on the 7th of August, lS(;.j, was 
not actuary delivered until the 5th day of 
October of that year, and after the filing of 
the bill of complaint by Haughwout against 
Boisaubln, and after the filing of notice of 
the pendency of that suit in the clerk's office 
of the county of Morris. It further charges 
that the said Murphy had actual knowledge 
of the contract of purchase made by Haugh- 
wout with Boisaubln, and of the Intention of 
Haughwout to commence suit for specific 
performance, long before the delivery of his 
deed and the payment of any part of the con- 
sideration money therefor; and that the de- 
fendant accepted the said conveyance, and 
paid the purchase money therefor, with ac- 
tual knowledge of the existence of the com- 
plainants' contract, and of the pendency of 
the suit for the specific performance thereof. 

The prayer of the bill is that the title of the 
complainants to the said three lots may be 
ratified and established, and declared to be 
good and valid as against the claim of title 
made to the same by said Murphy, and be de- 
clared paramount thereto; and that the claim 
of title to the said lots by the said Murphy, 
under his deed of conveyance from Boisau- 
bln, be declared invalid and of no effect 
against the title of the complainants, and 
that the defendant may be directed to release 
and convey to the complainants; and that 
the complainants may have such other and 
further relief, &c. 

A suit in chancery, duly prosecuted in good 
faith, and followed by a decree, is construct- 
ive notice to eveiy person who acquires from 
a defendant, pendente lite, an interest in the 
subject matter of the litigation, of the legal 
and equitable rights of the complainant as 
charged in the bill and established by the de- 
cree. 

This effect of a successful litigation in sub- 
ordinating the title of a purchaser pending a 
litigation, to the rights of the complainant 
as established in the suit, is not derived fi-om 
legislation. It is a doctrine of courts of eq- 
uity, of ancient origin, and rests not upon 
the principles of the court with regard to 
notice, but on the ground that it is necessary 
to the administration of justice that the de- 
cision of the court in a suit should be bind- 
ing not only on the litigant parties, but also 
upon those who acquire title from them dur- 
ing the pendency of the suit. Bellamy v. 
Sabine, 1 De Gex & J. 566; Metcalfe v. Pul- 



vertoft, 2 Ves. & B. 205; Walden v. Bodleys' 
Heirs, 9 How. 49; Murray v. Lylburn, 2 
Johns. Ch. 441. Such a purchaser need not 
be made a paity, and will be bound by the 
decree which shall be made. 1 Story, Eq. 
Jur. § 406; Story, Eq. PI. §§ 106, 351; Bishop 
of 'Winchester v. Paine, 11 Ves. 196. 

Before any statutory provision was made 
requiring notice of the pendency of the suit 
to be filed in order to charge a subsequent 
purchaser from the defendant with notice 
of the litigation, it became the established 
practice that subpoena served and bill filed 
were necessary before the suit was consid- 
ered as commenced, so as to make its pend- 
ency constructive notice to persons deriving 
title from the parties, and to give the decree 
a conclusive effect against such persons. 1 
Vern. 318; 2 Madd. Ch. Prac. 325; 2 Sugd. 
Vend. 280; Hill, Tnistees, *511; Hayden v. 
Bucklin, 9 Paige, 512; Dunn v. Games, 1 Mc- 
Lean, 321, Fed. Cas. No. 4,176; Id., 14 Pet. 
322, 333. An assignee who takes an assign- 
ment from the defendant after bill filed, but 
before subpoena served, is a necessary party. 
Powell V. Wright, 7 Beav. 444. By the fifty- 
seventh section of the chancery practice act, 
(the provisions of which are similar to the 
New York act of 1834, and to the English 
statute of 2 Vict. c. 11, § 7,) another requisite 
is superadded in order that the proceedings 
in the suit shall aifect a bona fide purchaser 
or mortgagee; a written notice of the pend- 
ency of the suit must be filed in the clerk's 
office of the county in which the lands to be 
affected lie. Nix. Dig. p. 102. i This section 
is expressed in negative terms, and has not 
changed the former practice except in pre- 
scribing that notice of the lis pendens shall 
be filed before a bona fide purchaser or mort- 
gagee shall be chargeable with notice of the 
pendency of the suit, notwithstanding the 
bill has been filed and the subpoena served. 

But the defendant was not a purchaser 
pendente lite. He acquired title by a deed 
which bears date on the 7th day of August, 
1865, and was acknowledged on the next day. 
The defendant testifies that it was delivered 
on the 7th of August. Boisaubin's testimo- 
ny is that it was delivered on the 7th or 8th. 
Prom the date of the acknowledgment of 
the mortgage, it is probable that it was not 
finally delivered before the 19th. The proof, 
however, is full and clear that it was exe- 
cuted and delivered to Murphy before the 
bill was filed in the case of Houghwout v. 
Boisaubln. 2 The commencement of a suit 
in chancery is constructive notice of the pend- 
ency of such suit only as against persons 
who have acquired some title to or interest 
in the property involved in the litigation, un- 
der the defendant, after the suit is com- 
menced. Stuyvesant v. Hall, 2 Barb. Ch. 
151; Hopkins v. McLaren, 4 Cow. 667: 
Parks V. Jackson, 11 AVeud. 442. A person 

1 Revision, p. 114, § 57. 

2 18 N. J. E(i. 3t-j. 



■48 



MAXIiMS OP EQUITY. 



wliose interest existed at the comnienceiiient 
of the suit is a necessity party, and will not 
be bound by the proceediugs unless he be 
made a party to the suit. Ensworth v. Lam- 
bert, 4 Johns. Ch. 605. 

The complainants' right to relief on the 
ground that the defendant was a purchaser 
from Boisaubin pendente lite having failed, 
It must be considered whether, in the other 
aspect of the case, he will be entitled to re- 
lief. In this aspect the bill is to be taken to 
have been tiled for the execution of the trust 
arising from the prior contract between 
Haughwout and Boisaubin for the purchase 
of the lands, by the conveyance to the com- 
plainant, by Murphy, of the legal title which 
he acquired by his deed. In this aspect of 
the case, the bill is a bill for specific perform- 
ance. 

In equity, upon an agreement for the sale 
of lands, the contract is regarded, for most 
puiposes, as if specifically executed. The 
purchaser becomes the equitable owner of 
Che lands, and the vendor of the purchase 
money. After the contract, the vendor is 
the trustee of the legal estate for the vendee. 
Crawford v. Bertholf, 1 N. J. Eq. 460; Hoag- 
Jand V. Latourette, 2 N. J. Eq. 254; Huffman 
V. Hummer, 17 N. T. Eq. 264; King v. Kuck- 
man, 21 N. J. Eq. 599. Before the contract 
Is executed by conveyance, the lands are de- 
visable by the vendee, and descendible to his 
hell's as real estate; and the personal repre- 
sentatives of the vendor are entitled to the 
purchase money. 1 Story, Eq. Jur. § 789; 
2 Story, Eq. Jur. § 1213. If the vendor 
should again sell the estate of which, by rear 
son of the first contract, he is only seized in 
trust, he will be considered as selling it for 
the benefit of the person for whom, by the 
first contract, he became trustee, and there- 
fore liable to account. 2 Spenee, Eq. Jur. 
310. Or the second purchaser, if he have 
notice at the time of the purchase of the pre- 
vious contract, will be compelled to convey 
the property to the first purchaser. Hoag- 
land V. Latourette, 2 N. J. Eq. 254; Down- 
ing V. Uisley, 15 N. J. Eq. 94. A purchaser 
from a trustee, with notice of the trust, 
stands in the place of his vendor, and is as 
much a trustee as he was. 1 Eq. Gas. Abr. 
oS4; Story v. Lord Windsor, 2 Atk. 631. 
The cestui que trust may follow the trust 
property in the hands of the purchaser, or 
may resort to the purchase money as a sub- 
stituted fund. Murray v. Ballou, 1 Johns. 
<>h. 566, 581. It is upon the principle of the 
transmission by the contract of an actual 
equitable estate, and the impressing of a 
trust upon the legal estate for the benefit of 
the vendee, that the doctrine of the specific 
performance of contracts for the sale and 
-conveyance of lands mainly depends. 

The defendant insists that he holds the 
lands discharged of any trust In favor of 
Haughwout or the complainants, by reason 
of his being a bona fide purchaser for a val- 
uable consideration, without notice. 



The proof is, that at the time of the deliv- 
ery of the deed, $400 of the consideration 
money was paid, and the balance secured by 
mortgage. Conceding that the $400 was ac- 
tually paid before Murphy had notice of 
Haughwout's claim, the defence of a bona 
fide purchase is not supported. Before the 
mortgage became due. Murphy had actual 
notice of the existence and nature of Haugh- 
wout's claim. 

The defence of a bona fide purchase may 
be made by plea, in bar of discovery and re- 
lief, or by answer, in bar of relief only. If 
made by plea, the payment of the whole of 
the consideration money must be averred. 
An averment that part was paid and the 
balance secured by mortgage, will not be 
sufficient. Wood v. Mann, 1 Sumn. 506, Fed. 
Cas. No. 17,951. Proof of the payment of the 
whole purchase money is essential to the de- 
fence, whether it be made by plea or answer. 
Jewett V. Palmer, 7 Johns. Ch. 65; Molony v. 
Kernan, 2 Dru. & War. 31; Losey v. Simp- 
son, 11 N. J. Eq. 246. Notice before actual 
payment of all the purchase money, although 
it be secured and the conveyance executed, 
or before the execution of the conveyance, 
notwithstanding the money is paid, is equiv- 
alent to notice before the contract. 2 Sugd. 
Vend. 533 (1037); Hill, Trustees, 165. If the 
defendant has paid part only, he will be pro- 
tected pro tanto only. 1 Story, Eq. Jur. § 
64c; Story, Eq. PI. § 604a. 

What the measure of relief shall be in 
cases where the deed has been executed and 
delivered and part of the purchase money 
paid before notice of the previous contract to 
sell to another, was elaborately discussed by 
the counsel of the appellants. The chancel- 
lor held, upon the authority of Plagg v. 
Mann, 2 Sumn. 487, Fed. Cas.- No. 4,847, that 
a contract of purchase, executed by delivery 
of the deed and payment of part of the pur- 
chase money without notice of the previous 
contract, gave the purchaser a right to hold 
the land, and that the equity of the person 
with whom the previous contract was made, 
was merely to have the unpaid purchase 
money. 

The law of the English courts is, that un- 
til the defence of a bona fide purchase is 
perfected by the delivery of the deed of con- 
veyance, and the payment of the entire con- 
sideration money, such purchaser is without 
any protection as against the estate of the 
equitable owner under a prior contract, even 
though he contracted to purchase, and ac- 
cepted his deed and paid part of the pur- 
chase money in good faith; his only remedy 
being against his vendor to recover back 
what he has paid on a consideration which 
has failed. In some of the American courts 
this doctrine has been qualified to the ex- 
tent of enforcing specific performance of the 
prior contract, on condition that the pur- 
chaser shall be indemnified for the purchase 
money paid, and also for permanent improve- 
ments put upon the property before notice, 



MAXIMS or EQUITY. 



49 



on the principle that lie who asks equity 
must do equity. The cases are collected in 
2 lioad. Gas. Eq. 1; notes to Basset v. Nos- 
worthy. 

The doctrine of the English courts is nec- 
essary to give effect to the principle that In 
equity, immediately on the contract to pur- 
chase, an equitable estate arises in the ven- 
dee, the legal estate remaining in the vendor 
for his benefit. Qualified by the obligation 
to make compensation to any subsequent 
bona fide purchaser, who has paid part only 
of the consideration money, for all disburse- 
ments made before notice, the rule is every 
way consonant with correct principles. Such 
indemnity is protection pro tanto. 

But whatever the nature of the relief may 
be in cases where the naked question of the 
acceptance of a deed and payment of part of 
the consideration before notice is presented, 
the relief indicated by the chancellor is the 
only relief the complainants are entitled to 
under the circumstances of this case. The 
rule of law which deprives a subsequent pur- 
chaser who has contracted for and accepted 
a conveyance, and paid part of the purchase 
money in good faith, of the fruits of his pur- 
chase without Indemnity, is exceedingly 
harsh, and often oppressive in its applica- 
tioiL Mitigated by the obligation to make 
indemnity for payments and expenditures 
before actual notice, its operation is never- 
theless frequently inequitable. A party who 
asks the enforcement of a rule of this nature 
against another who is innocent of actual 
fraud, must seek his remedy promptly. He 
may lose his right to specific relief against 
the lands by laches, and be remitted to the 
unpaid purchase money as the only relief 
which will be equitable. In cases where the 
prayer is for the specific performance of a 
contract between the immediate parties to 
the suit, delay in filing the bill is often of it- 
self a bar to relief. Merritt v. Brown, 21 N. 
J. Eq. 401. 

The agreement between Haughwout and 
Boisaubin was made on the 24th of Septem- 
her, 1863. In Febniary, 1864, Haughwout 
gave Boisaubin notice of his election to take 
the property under the agreement. After 
this notice was given, Boisaubin laid the 
property out in lots and publicly offered them 
for sale. Murphy's deed for the three lots 
of which he became the purchaser, was ex- 
pcuted and delivered in August, 186.5. The 
1)111 in the suit of Haughwout v. Boisaubin, 
was filed the last day in the same month, 
'the solicitor who appeared for Haughwout 
in that suit, had notice of the existence of 
Murphy's deed within a few days after his 
iiill was filed. Boisaubin, in his answer, 

HUTCH. EQ. JUR. — 4 



which was filed on the 3d of November, 1865, 
specifically sets out the fact of the convey- 
ance to Murphy and the circumstances con- 
nected therewith. Murphy was himself ex- 
amined as a witness on the 5th of April, 
1866, and testified in relation to the convey- 
ance to him. Haughwout must be charged 
with notice as early as April, 1866, that 
Murphy intended to assert his right to the 
land. The bill in this case was not filed un- 
til the 4th of April, 1868. After this long 
delay it would be inequitable to enforce 
specific performance against the defendant. 
The fact that there were delays in the ijrose- 
cution of that suit to final decree, which 
were unavoidable, ought not to prejudice 
Murphy. He should have been made a party 
to that suit. 

Besides that, the bond and mortgage which 
were given by Murphy to Boisaubin for the 
unpaid purchase money, were assigned by 
Boisaubin to one Geoffrey, on the 16th of 
April, 1866, and by Geoffrey further assign- 
ed to William Davidson, on the 2d of July of 
the same year, and notice of such assign- 
ment given to Murphy by the solicitor of 
Davidson. The money due on the mortgage 
was paid at its maturity by Murphy to Dav- 
idson's solicitor. That Davidson, in the 
transaction, was acting for Haughwout, and 
that the money wherewith this assignment 
was procured was paid by Haughwout, and 
that the proceeds when collected were real- 
ized by him, are indisputable. 

That the assignment was made by Geof- 
frey to Davidson, as collateral security, will 
not affect the case. When Murphy received 
notice of the prior equitable title of Haugh- 
wout, he was entitled to have the seclirity 
he had given for the unpaid purchase mon- 
ey surrendered. Tourville v. Naish, 3 P. 
Wms. 307. The subsequent assignments 
were taken and the money received, with 
full notice of all the circumstances. The 
money received on the mortgage, Haugh- 
wout still retains. It is no answer to say 
that in decreeing specific performance Mur- 
phy may have the money refunded to him. 
Haughwout might have insisted upon hav- 
ing the land itself, or at his option, pursued 
the proceeds of the sale. He cannot have 
both. By accepting a security given for the 
purchase money, he is deemed to have af- 
firmed the sale so far as respects the pur- 
chaser. Murray v. Lylburn, 2 Johns. Ch. 
441; 2 Story, Eq. Jur. § 1262; Scott v. Gam- 
ble, 9 N. J." Eq. 218. 

The complainants are not entitled to relief. 
The decree of the chancellor is affirmed, 
with costs. 

The whole court concurred. 



50 



MAXJMS or EQUITY. 



CLEMENTS v. TILLMAX et al. 

(5 S. E. 194, 79 Ga. 451.) 

Supreme Court of Geoi-gia. February 13, 1888. 

Error from superior court, Muscogee coun- 
ty; Smith, Judge. 

Suit by Hattie E. Tillman and William L. 
Tillman, plaintiffs and defendants in error, 
against John W. Clements, defendant and 
plaintiff in error, for an account and settle- 
ment of a legacy due said Hattie B. Till- 
man undei' the will of one Jacob A. Clem- 
ents, John W. Clements being an executor 
of the same. 

The following is the official report: 

Hattie E. Tillman, a legatee under the will 
of Jacob A. Clements, deceased, with her 
husband and trustee, William L. Tillman, 
filed their bill for account and settlement 
against John W. Clements, executor, and Sa- 
rah B. Clements, executrix, of said will. 
The bill contained charges of mismanage- 
ment of the estate, violations of the provi- 
sions of said bill, and non-payment by the 
executors of the interest of complainant as 
legatee. The defendants answered the bill; 
but as their answers are not material or nec- 
essary to an understanding of the errors com- 
plained of, they are not set forth. The jury 
returned the following verdict: "We, the 
jury, find that Sarah B. Clements has no 
property or effects of the estate of Jacob A. 
Clements, deceased, in her hands, as execu- 
trix or otherwise. We, the jury, further find 
that John W. Clements, as executor of the 
will of Jacob A. Clements, deceased, has now 
in his hands the sum of eight hundred and ten 
dollars principal and five hundred dollars In- 
terest, belonging to Hattie E. Tillman, as lega- 
tee under the will of .Jacob A. Clements." 
Upon this verdict the following decree was 
rendered by the court: "Whereupon, the 
premises considered, it is ordered, adjudged, 
and decreed by the court that the complainant 
do recover the same sum of eight hundred and 
ten dollars principal and the further sum of 
five hundred dollars interest to this date, 

and the further sum of dollars, costs 

of suit in this behalf laid out and expended, 
for which said several sums let execution is- 
sue, to be levied in the first place of the 
goods and chattels, lands and tenements, of 
said Jacob A. (Elements, deceased, in the 
hands of John W. Clements, executor of the 
will of said Jacob A. Clements, if to be 
found; and if not to be found, then to be 
levied of the personal goods and chattels, 
lands and tenements, of said John W. Clem- 
ents. It is further ordered and decreed by 
said court that the said John W. Clements 
do satisfy and pay the aforesaid amounts, 
principal, interest, and costs, to the said 
complainant, on or before the first day of 
January next; and, in default thereof, that 
he be held and deemed to be in contempt of 
the order and decree of this court." Plaintiff 
in error excepts to the portion of the decree 



embodied by the last sentence, and says the 
court erred in rendering a decree to be en- 
forced by attachment for contempt— "First, 
because the verdict was a money verdict, 
and the same could only be enforced by ex- 
ecution; second, because the verdict of the 
jury was a money verdict, and could not be 
enforced by an attachment for contempt, 
and could only be enforced by execution; 
third, because the verdict of the jury was a 
money verdict, and was a debt, and to en- 
force the decree by an attachment for con- 
tempt would be to imprison the defendant 
for debt, which is prohibited by the constitu- 
tion of the state; fourth, because the decree 
sought and moved for provides both for the 
enforcement of it by execution, and an at- 
tachment for contempt; and the complain- 
ant should be required to elect whether she 
would proceed to enforce it by execution or 
attachment for contempt if the court deter- 
mined that it could be enforced by attach- 
ment for contempt." 

C. J. Thornton, for plaintiff in error. L. 
F. Garrard, for defendants in error. 

KIBBEE, J.i Originally, in the absence 
of statutes providing otherwise, decrees of 
courts of equity, of whatever kind or nature, 
operated strictly and exclusively in per- 
sonam. The only remedy for their enforce- 
ment was by what Is termed "process of 
contempt," under which the party failing 
to obey them was arrested and imprisoned 
until he yielded obedience, or purged the 
contempt by showing that disobedience was 
not wilful, but the result of inability not 
produced by his own fault or contumacy. 
The writ of assistance to deliver possession, 
and even the sequestration to compel the 
performance of a decree, are comparatively 
of recent origin. Our statutes expressly pro- 
vide that "all orders and decrees of the court 
may be enforced by attachment against the 
person; decrees for money may be enforced 
by execution against the property." Code, 
§ 3099. "A decree in favor of any party, for 
a specific sum of money, or for regular in- 
stallments of money, shall be enforced by 
execution against property as at law." Code, 
§ 4215. "Every decree or order of a court of 
equity may be enforced by attachment against 
the person for contempt; and if a decree be 
partly for money and partly for the per- 
formance of a duty, the former may be en- 
forced by execution, and the latter by attach- 
ment or other process." Code, § 4216. The 
clear legislative Intent is manifest to en- 
large and render more eflScacious equitable 
remedies, while presenting the remedies the 
courts had previously employed in the ab- 
sence of statutes providing others. Under 
our statutes, when a party is decreed to per- 
form a duty, or to do any act other than the 



1 Bland ford. J., being disqualified. Judge Kib- 
bee, of the Oconee circuit, was designated to 
preside in his stead. 



MAXIMS OF EQUITY. 



5] 



mere payment of money, which the court 
has jurisdiction to adjudge he shall do, if he 
disobeys, the authority of the court Is defied; 
he is guilty of contempt, and the arrest and 
imprisonment of his person is not imprison- 
ment for debt in any appropriate sense of 
the term. But if a court of equity should 
render a simple decree for money on a 
simple money verdict,— a decree which it 
may now enforce by the ordinary common- 
law process against property,— the failure to 
pay the decree would not be contempt, nor 
could compulsory process against the per- 
son of the party in default be resorted to to 
enforce payment In Coughlin v. Ehlert, 39 
Mo. 285, the court uses the following lan- 
guage: "We do not mean to say that a 
party may not be put in contempt for dis- 
obeying a decree for the performance of acts 
which are within his power, and which the 
court may properly order to be done. If it 
were shown, for instance, that the party 
had in his possession a certain specific sum 
of money or other thing which he refused 
to deliver up, under the order of the court, 
for any purpose, It may very well be that 
his disobedience would be a contempt for 
which he might lawfully be imprisoned." 
In Carlton v. Carlton, 44 Ga. 220, Judge Mc- 
Cay, delivering the opinion, says: "We do 
not intend to say that simply because a debt 
is adjudged by a decree in chancery, in- 
stead of by a judgment at law, it may there- 
fore be enforced by imprisonment. The im- 
prisonment must be clearly for the contempt 
of the process of the court, and be of one 
who is able and unwilling to obey the order 
of the court. * * * It ought never to be 
resorted to except as a penal process, found- 
ed on the unwillingness of the party to obey. 



The moment it appears that there is Inabil- 
ity, it would clearly be the duty of the judge 
to discharge the party," etc. The court fur- 
ther held that, "ordinarily, it would be im- 
proper to include in the order the alternative 
order for imprisonment on failure, since it is 
not to be presumed that a contempt will en- 
sue." The constitutional provision, "there 
shall be no imprisonment for debt," was not 
intended to interfere with the traditional 
power of chancery courts to punish for con- 
tempt all refusals to obey their lawful de- 
crees and orders. This proposition may be 
conceded to be sound without affecting the 
case at bar in any respect. "The power in 
question was never exercised by chancery 
courts except in those cases where a trust in 
the property or fund arose between the par- 
ties litigant, or some specific interest in it 
was claimed, or the chattel had some pe- 
culiar value and importance that a recovery 
of damages at law for its detention or con- 
version was inadequate. Such interference 
was in the nature of a bill quia timet, and 
was asserted only on a proper showing that 
the fund or property was in danger of loss 
or destruction." 1 Story, Eq. Jur. §§ 708- 
710. "No jurisdiction to compel the pay- 
ment of an ordinary money demand uncon- 
nected with such peculiar equities ever ex- 
isted in chancery courts, nor had they the 
power to compel such payment by punishing 
the refusal to pay under the guise of con- 
tempt." 

In the case at bar the decree was right in 
awarding an execution against the executor 
as set forth in said decree, but the facts did 
not authorize an alternative order imprison- 
ing the defendant on failure to pay. Judg- 
ment reversed. 



52 



PROPERTY IN EQUITY— TRUSTS. 



URANN V. COATES et al. 
(109 Mass. 581.) 

Supreme Judicial Court of Massachusetts. 
March, 1872. 

A. conveyed to B. certain land by an abso- 
lute conveyance, B. agreeing orally to hold 
in trust for A. after satisfying claims he held 
against A. At B.'s death the following writ- 
ing was found among his papers. 

"Boston, July 21, 1865. I, Benjamin Rand, 
having purchased the estate of Isaac P. 
Rand, of Roxbury, said estate being situated 
partly in Roxbury and partly in Dorchester, 
in the state of Massachusetts, for his deed de- 
livered to me on July 21, 1865, do hereby 
agree and bind myself and my heirs to pay 
over to the said Isaac P. Rand whatever bal- 
ance shall remain over and above the amount 
necessary to discharge my original claims 
against Isaac P. Rand, and the charges 
against the said estate, which by my pur- 
chase of the same have become vested In me, 
the said payment to be made when all such 
claims and charges shall have been fully 
liquidated and discharged. * * * And also 
in all charges and expenses which have been 
or shall be incun-ed by me or my heirs in dis- 
charging the above claims and charges and 
in carrying on the estate. Benjamin Rand." 

This was followed by the memorandum 
which is given in the opinion. The plaintiff, 
who is the assignee of A., brings this action 
against the heir and administrator of B. to 
recover the balance remaining after the satis- 
faction of the claims of B. 

H, P. French & J. B. Maynadier, for plain- 
tiff. E. D. Sohier & C. A. Welch, for defend- 
ants. 

COLT, J. The bill charges that Benjamin 
Rand held the land conveyed to him by the 
absolute deed of Isaac P. Rand, upon trust to 
apply the avails of it to the payment of cer- 
tain incumbrances and debts due him, and 
to account for any surplus to Isaac P. Rand, 
the grantor, to whose right the plaintiff, as 
assignee, has succeeded. The writings by 
which it is claimed that this trust is de- 
clared are fully set forth, and it is alleged 
that under the trust sales have been made 
of more than enough to pay all demands and 
charges, leaving a surplus, to which the plain- 
tiff is entitled. 

The defendants file a plea denying that 
Benjamin in his lifetime held the land upon 
any such trust, or that any trust was de- 
volved upon them, as his representatives, by 
his death. The purpose, no doubt, is to ob- 
tain first the decision of the court upon the 
question whether, upon the facts disclosed, 
any tmst is raised which can be enforced; 
for, if no trust shall be found to exist, then 
the investigation of long and detailed ac- 
counts will be avoided. This is the point 
which was argued at the bar, and we proceed 
to its consideration without regard to sup- 
posed irregularities in the pleadings. 



The land in question was conveyed by an 
absolute quitclaim deed, dated on the 15th, 
but delivered on the 21st day of July, 1865, 
to Benjamin, who then held large demands 
against Isaac P. Rand, secured by mortgage 
on the same premises. The evidence suffi- 
ciently proves that Benjamin orally agreed, 
at and before the time of the delivery of the 
deed of the equity, and as part of the transac- 
tion, that any surplus over and above his 
claim that might remain of the estate or its 
proceeds should belong to Isaac P. No writ- 
ten memorandum of the agreement was made 
before the delivery of the deed, but it was 
suggested at the time that Benjamin should 
put it in the shape of a memorandum, safely 
deposited, in case anything should happen to 
him. And Benjamin afterwards informed 
Isaac P. that soon after the transaction he 
made a memorandum of the agreement. No 
such paper was ever delivered to, or came 
into the possession of, Isaac P., but after the 
death of Benjamin a writing of that descrip- 
tion was found safely deposited in his bank 
trunk. By the terms of this writing, he 
agreed to pay over any balance of the estate 
remaining, substantially in accordance with 
the oral agreement. It was signed by Benja- 
min, and dated July 21, 1865; and under- 
neath the first signature was an additional 
statement, also signed, in these words: "This 
memorandum is made by me for the use of 
my executor or administrator only. Neither 
Isaac P. Rand, nor those claiming under him, 
have any legal or equitable claim against me 
or my estate; but upon the payment of my 
debt, interest, and all charges, as above men- 
tioned, any balance shall enure to the bene- 
fit of Isaac P. Rand and those claiming un- 
der him." 

We are of opinion that this writing is suf- 
ficient as a declaration of trust, within the 
meaning of our statute. It is much more 
formal and particular in its statement than 
declarations of this description by letter, by 
answer in chancery, affidavit, recital in bond 
or deed, or in pamphlet, which have aU been 
held suflicient, and with reference to which 
it is held to be no objection that they were 
drawn up for another purpose and not ad- 
dressed to, nor intended for the use of, the 
cestui que trust. See cases cited in Browne, 
St. Frauds, §§ 98, 99. 

It is not essential that the memorandum re- 
lied on should have been delivered to any 
one as a declaration of trust. It is a question 
of fact, in all cases, whether the trust had 
been perfectly created; and upon that ques- 
tion the delivery or nondellvei-y of the instru- 
ment is a significant fact, of greater or less 
weight according to the circumstances. If 
the alleged trust ai'ises from mere gift, de- 
livery of the writing by which it is declared 
Is not always required as proof that the gift 
was perfected, for the court will consider all 
the facts bearing upon the question of inten- 
tion, and it has been held that if a party ex- 
ecute a voluntary settlement, and the deed 



PKOPBKTY IN EQUITY— TRUSTS. 



53 



recites that it is sealed and delivered, it will 
be binding on the settlor, even if he never 
parts with it and keeps it in his possession 
until, his death. Bunn v. Winthiop, 1 Johns. 
Oh. 329; Perry, Trusts, § 103, and cases cited. 
It must always, however, appear that the 
fiduciary relation is completely established, 
and not left as a matter of executory agree- 
ment only, regard being had to the situation 
of the property, the relations of the parties, 
and the purposes and objects had in view. 
In this case the verbal agreement in which 
the trust originated was made in considera- 
tion of the conveyance by Isaac P. of his in- 
terest in the real estate, and the trust is 
founded on a good consideration. The fact is 
of weight in aiding the court to carry out the 
intentions of the parties; and the want of a 
delivery of the memorandum becomes of less 
significance. 

The law as thus laid down is to be found 
mainly in decisions under the words of the 
English statute, which requires that all dec- 
larations and creations of trust shall be man- 
ifested or proved in writing. These were the 
words of our earlier law (St. 1783, c. 37, § 3), 
and they remained until the first general re- 
vision of the statutes; the requirement of the 
present statute being that the trust shall be 
created or declared in writing. Gen. St c. 
100, § 19. The same change has been made 
in other states; and in those in which the 
question has been incidentally before the 
courts the tendency is to rule that this ab- 
breviation in the words does not change the 
law, and that "created or declared" are 
equivalent to "manifested or proved." Trusts 
may be created in the first instance in writ- 
ing. They more commonly originate in the 



oral agreements and transactions of the par- 
ties, and are subsequently declared in writ- 
ing. Our statute embraces both descriptions. 
It had been settled by repeated decisions un- 
der the old statute, when this change was 
made, that an express trust was sufficiently 
declared if shown by any proper written evi- 
dence disclosing facts which created a fidu- 
ciai-y relation. Under this construction, the 
additional words of the old statute seemed 
immaterial, and are omitted. And we are of 
opinion that no change in the meaning or ef- 
fect of it was intended or made. Perry, 
Trusts, § 81, and cases cited. 

In view of the law thus stated, the fact 
that there was no delivery of the memoran- 
dum in this case is not of controlling im- 
portance. It is impossible to account for its 
existence and safe preservation, unless there 
was an intention that it should be used, if 
necessai'y, to prove a trust. The statement 
that it is made for the use of the executor or 
administrator of the trustee implies this. The 
cestui que trust was informed of its existence; 
and by its terms a perfect trust is declared. 
It is, indeed, declared that neither Isaac P., 
nor those claiming under him, have any legal 
or equitable claim against the maker or his 
estate. But this statement, if such was its 
intention, cannot control the effect of the 
memorandum in establishing the trust. That 
results, as matter of law, from the proof. 
We are taclined to think that its intention 
was not to defeat an equitable claim to the 
proceeds of the estate conveyed, but only to 
protect the maker against personal responsi- 
bility beyond the actual receipts in adminis- 
tering the tnists. 

Decree for the plaintiff. 



54 



PROPERTY IN EQUITY— TRUSTS. 



BATES et al. v. HURD. 

(65 Me. 180.) 

Supreme Judicial Court of Maine. Franklin. 
May 2, 1876. 

Bill in equity to declare a trust and for an 
account. 

P. H. Stubbs, for plaintiff. H. L. Whit- 
comb, for defendants. 

BARROWS, J. In 1847 one Kennedy gave 
to Nicholas Bates and his brother Thomas, 
the plaintiff, a bond conditioned for the con- 
veyance of certain parcels of land (estimated 
at about tvFo hundred and fifty acresj upon 
payment of the obligee's notes. In I8.3I, be- 
fore the maturity of all the notes, an adjust- 
ment was made, by which, in satisfactian of 
the bond, he made conveyances of the bonded 
land in two separate parcels, — one to Wm. W. 
Bates, a third brother, and the other to Nich- 
olas, who (with Wm. W. and the plaintiff) 
subscribed and delivered to Kennedy a re- 
ceipt indorsed upon the bond, setting forth 
that he had received the deed of his portion, 
"for himself and in trust for his brother 
Thomas Bates, according to what the said 
Thomas has or may pay towards the same 
real estate, which amounts at present to sev- 
enty-five dollars." The price of the parcel 
thus conveyed to Nicholas was $450, and 
Nicholas seems to have admitted a resulting 
trust in favor of the plaintiff to the amount 
of one-sixth of the purchase, which was bind- 
ing upon him and all claiming under him 
with notice. 

Indeed the writing subscribed by Nicholas 
Bates seems to be tantamount to a declara- 
tion of an express trust, so as to satisfy Rev. 
St. e. 73. § 11. 

The words "created and declared" in that 
statute seem to be construed by the courts 
to be synonymous with "manifested and 
proved" as they stood in the original sev- 
enth section of the statute of frauds,— 29 Car. 
II. c. 3. Forster v. Hale, 3 Ves. 707, 5 Ves. 
308; Unitarian Society v. Woodbury, 14 Me. 
281; Barren v. Joy, 16 Mass. 221; Pinnock 
V. Clough, 17 Vt. 508. 

Prom the cases just cited and numerous 
others we see that a letter, memorandum, or 
recital subscribed by the trustee, whether ad- 
dressed to or deposited with the cestui que 
trust or not, or whether Intended, when made, 
to be evidence of the trust or not, will be suf- 
ficient to establish the trust when the subject, 
object, and nature of the trust, and the par- 
ties and theii- relations to it and each other, 
appear with reasonable certainty. 

The existence of a trust in favor of the 
plaintiff, which he may enforce against Nich- 
olas Bates and his representatives, and all 
claiming under him with notice of the trust, 
may be regarded as established. 

Nicholas Bates mortgaged the property to 
Kennedy to secure a balance of the purchase 



money, and subsequently made two other 
mortgages thereon to Philip M. Stubbs, the 
scrivener who drew the conveyances from 
Kennedy and wrote the indorsement upon the 
bond containing the declaration of the trust. 
Both of these last-named mortgages were 
assigned to Prince Thompson, who had no 
knowledge of the trust, and has given notice 
of foreclosure, but has never been in posses- 
sion of the property. 

Nicholas Bates died in January, 1866, leav- 
ing a widow, Keziah M. Bates, now Keziah 
M. Hurd, who is one of the respondents, and 
who took out letters of administration on his 
estate, inventoried the land as subject to the 
mortgage to Prince Thompson, "and being 
also held as a trust estate for Thomas Bates 
to the amount of about ?140." This sum is 
apparently the amount of the $75 originally 
paid in by the plaintiff towards the purchase 
money, with interest up to the time of the 
making of the inventory. The widow con- 
tinued In possession of the land, receiving 
the rents and profits until November, 1868, 
when she made sale thereof by license from 
the probate court, without making mention 
of the trust, to Daniel Day, who mortgaged 
it back to her for part of the purchase money, 
and took possession. The widow married 
George Hurd, the other respondent, and on 
September 9, 1870, took a quitclaim deed 
from Day, and since then the two defendants 
have occupied or had the exclusive use, in- 
come, and profit of the premises. 

The plaintiff does not claim any rights as 
against the mortgagees. The heirs of Nich- 
olas Bates are no longer interested, as the 
sale by the administratrix devested them of 
all right and title in the premises. 

The administratrix, in her inventory, ad- 
mitted the plaintiff's rights, and is fully 
chargeable with notice of them. The other 
respondent, -her husband, seems to have oc- 
cupied only under her. But a joint reception 
by them of the rents and profits is admitted 
in the agreed statement. He is therefore re- 
sponsible to the plaintiff on this score with 
her. The testimony establishes the fact that 
the plaintiff made a claim upon the adminis- 
tratrix for his Interest, and that there was 
more or less negotiation between them look- 
ing to an adjustment. It is unfortunate for 
both that an equitable adjustment could not 
be reached without litigation. 

In the hands of these respondents it is ob- 
vious that the property is subject to the 
trust which the plaintiff seeks to enforce. 

They object that he might have had an ade- 
quate remedy at law by a suit for his share 
of the income. But cases of trust are, under 
our statute, specially made the subject of 
remedies in equity, and, moreover, it might 
be desirable for him to have the decree to 
which he is entitled in equity as against 
them, in view of the possibility of a redemp- 
tion. 

Unless the parties can agree as to the 



PBOPERTY IN EQUITY— TRUSTS. 



55 



proper sum to be allowed for the past rents 
and profits, a master must be appointed to as- 
certain them. 

Bill sustained. Estate declared subject, in 
the hands of these respondents, to the trust 



asserted. Costs for the complainant. Mas- 
ter to be appointed at nisi prius, if required. 

APPLETON, C. J., and WALTON, DAN- 
PORTH, and PETERS, JJ., concurred. 



ss 



PROPERTY IN EQUITY— TRUSTS. 



PATTON et al. v. CHAMBERLAIN et al. 

(5 N. W. 1037, 44 Mich. 5.) 

Supreme Court of Michigan. Juue llj 1880. 

Appeal from Detroit. 

Joslyn & Freeman, for complainants. At- 
liinsou & Atliinson, for defendants. 

COOLEY, J. We bave not been brought by 
the evidence In this case to the conclusion 
reached by the judge of the superior court. 
We are convinced that the testimony of Fran- 
cis J. Chamberlain is truthful, and that it de- 
feats the complainants' case. From this evi- 
dence it appears that, some twelve years or 
more ago Chamberlain's first -wife caused to 
be conveyed to him an 80-acre lot of land in 
St. Joseph county, which she had purchased 
with money received from her father, on a 
trust, declared orally, that he would hold the 
same for their infant daughter , then six years 
of age or thereabouts. This the wife did in 
expectation of her speedy decease, and she ac- 
tually deceased six months thereafter. In 
Chamberlain's hands this lot was occupied 
and cultivated as part of a farm of 131 acres; 
the remaining 51 acres being owned by him- 
self. It was all mortgaged by him for some 
$2,000. Becoming embarrassed in his circum- 
stances he made an arrangement with his 
brother, A. H. Chamberlain, whereby he ex- 
changed the farm for certain property in De- 
troit, and caused the Detroit property to be 
conveyed to the defendant Jane E. Chamber- 
lain, who is cousin to his daughter, on a 
verbal understanding that it should be held 
In trust for the daughter. 



It Is this Detroit property which complain- 
ants, as judgment creditors of Francis J. 
Chamberlain, seek to reach. If the farm in 
St. Joseph county had been in equity the prop- 
erty of Francis J. Chamberlain, a trust In re- 
spect to the Detroit property would have aris- 
en in favor of his creditors when the ex- 
change was made. Maynard v. Hoskins, 9 
Mich. 485. But he had encumbered the farm 
to an extent that exhausted his interest, and 
In equity the daughter was entitled to the 
avails of the encumbered place when it should 
be disposed of. So far as concerns the contro- 
versy with these complainants, it is immate- 
rial that the trust was a verbal one; it could 
not have been enforced against him, but it 
was nevertheless his duty to recognize and 
execute it; and when he did recognize it, in 
the exchange made for other property, his 
creditors could not complain. The claim of 
his daughter that he should perform the trust 
was quite as strong in equity as any claim of 
creditors can be. 

Jane E. Chamberlain defends this suit in 
the interest of the daughter, and avows the 
trust in her answer. That is a sufficient dec- 
laration of trust in writing to answer the re- 
quirements of the statute of frauds. McLau- 
rie V. Partlow, 53 lU. 340; Whiting v. Gould, 
2 Wis. 552; Woods v. Dille, 11 Ohio, 455; Co- 
zine V. Graham, 2 Paige, 177; Chitwood v. 
Britain, 2 N. J. Eq. 450; Wynn v. Albert, 2 
Md. Ch. 169; Kingsbury v. Burnside, 58 111. 
310. 

The decree must be reversed, and the bill 
dismissed, with the costs of both courts. 

The other justices concurred. 



PHOPERTY 12Sr EQUITY— TRUSTS. 



67 



ORISSMAN V. CRISSMAN et al. 

(23 Mich. 217.) 

Supreme Court of Michigan. July Term, 1871. 

Appeal from circuit court, Macomb coun- 
ty; in chancery. 

Gr. Hubbard and Ashley Pond, for complaiu- 
ant. E. F. Mead and A. B. Maynard, for de- 
fendants. 

COOLBY, J. This is a bill to establish a 
trust in the favor of complainant, in certain 
personal property alleged to have been con- 
veyed by her father, Francis Smith, to the 
defendant, Frederick S. Crissman, who is 
her husband, for her use. 

The averments in the bill are that the said 
Francis Smith, becoming aged and feeble in 
health, was desirous of making a proper dis- 
position of his property, and his wife Dinah 
Smith, the mother of complainant, having be- 
come much weakened in mind and body, so 
as to be unfit to manage or control property 
for her own benefit or for the benefit of oth- 
ers, and being so deranged mentally, and 
childish, and nervous, that it had become im- 
possible to please or satisfy her, the said 
Francis Smith, without consulting with, and 
the knowledge of, his said wife as to the dis- 
position of his personal property, concluded 
to make the disposition of his whole estate as 
follows: 

His lands and tenements were in due form 
of law deeded to complainant (his sole child), 
by deed bearing date December 31, 1863 ; and 
his personal property was transferred to said 
Frederick S. Crissman, in trust, for complain- 
ant, to be by him kept at interest, used and 
preserved as such trustee, for the use and 
benefit of complainant, and in case any of 
such property, or the proceeds thereof, should 
remain after the death of complainant and 
not disposed of dtiring her life, by her or for 
her benefit, then the remainder to go to her 
heirs; that such transfer of personal property 
was not mentioned or disclosed to said Dinah 
Smith, or to complainant, for the reason, as 
alleged by said Francis Smith, that It might 
create a jealousy on the part of said Dinah 
towards complainant; she the said Dinah, 
being then in a feeble and childish state of 
mind, and then being unfit and incapable of 
managing property matters, the said Francis 
Smith then and there declaring and stating 
that the use and proceeds of said farm dur- 
ing the life of the said Dinah Smith (which 
was reserved for her), would be all she would 
need and require for her support and main- 
tenance, and it being his, the said Francis 
Smith's, desire that his estate should be se- 
cured to complainant, her heirs and assigns 
forever. 

This is the whole statement of the trust, 
but the bill proceeds to aver that said Fran- 
cis Smith died intestate. May 31, 1866, and 
on August 11, 186G, said Frederick S. Criss- 



man was appointed by the probate com-t of 
Macomb county, administrator upon his es- 
tate, and took upon himself that tnist; that 
complainant is informed and believes that 
said Frederick S. Crissman, soon after the 
transfer of said personal property to him, in 
trust, without authority of law, returned and 
delivered to said Francis Smith certain por- 
tions thereof, amounting in value to about 
five thousand dollars; that at or about the 
time of the death of said Francis Smith, said 
Frederick S. Crissman, without the consent 
or knowledge of complainant, and without 
authority of law, delivered and entrusted to- 
said Dinah Smith a portion of said personal 
property, for the sole gratification of the said 
Dinah Smith, under the expectation and be- 
lief on the part of said Frederick, that she 
would preserve and take care of the same 
during her life, and at her death the same 
would come to complainant and her heirs , 
that the said Frederick, further to gratify 
said Dinah, and without the knowledge or 
consent of complainant, agreed with said 
Dinah to employ no attorney and take no 
counsel in the settlement of said estate; and 
the said Frederick, being ignorant of his le- 
gal responsibility and duty as such trustee, 
and further expecting to please and gratify 
said Dinah, made an inventory of all the 
trust property and proceeds thereof, as the 
property and effects of the estate of said 
Francis Smith deceased. 

The bill further avers that one Elisha S. 
Day, a nephew of said Dinah (who is made 
a defendant), intermarried with a daughter 
of complainant and afterwards, by undue in- 
fluence, induced said Dinah Smith to make 
her will, by which, -after certain other gifts, 
said Day and his wife were made residuary 
legatees of her property; that this will was 
dated May 4, 1867, and that after making 
it, said Dinah was and continued to be of 
weak and unsound mind and memory, and 
was conti'olled by said Day; that she had, 
at the time of her death, about four thousand 
dollars of said personal property in her 
hands, of which said Day took possession un- 
der the pretense that it had been given to- 
him and his wife, or to one of them. 

The blE after other averments that need 
not be here repeated, prays that the transfer 
of such personal property so made by said 
Francis Smith to said Frederick S. Criss- 
man, may be declared to be a legal, equitable 
and bona fide conveyance to said Freuerick, 
in trust for complainant, without power or 
authority of revocation, and that a re-deliv- 
ery of said property, or the proceeds thereof, 
to the said Francis Smith, was without au- 
thority of law and contrary to equity, and 
that a transfer of any of the said trust prop- 
erty to said Dinah Smith and by her to said 
Day, or to the executors named in her will, 
was a violation of said trust; and that said 
Day and such executors may be enjoined 
from transferring, expending or disposing of 



58 



PKOPEllTY IX EQUITY— TKUSTS. 



any of the money, property or tlie proceeds 
thereof so received by them through, and by, 
said Dinah Smith, or since her death, except 
as they shall return the same to Frederick 
S. Crissman, and that said Frederick may be 
enjoined from in any way, as such adminis- 
trator of the estate of said Francis Smith, 
representing, inventorying or accounting with 
the estate of said Francis for the said prop- 
erty so conveyed to him in trust, as belonging 
to the said estate, and that complainant may 
have other and further relief. 

For the purposes of a preliminary injunc- 
tion, this bill was verified by the oath of the 
defendant, Frederick S. Crissman, who, 
though one of the parties to be enjoined, ap- 
pears to have acted in the whole litigation, 
in concert with complainant, and to have 
been the witness upon whom she principally 
relied to establish the trust The case was 
heard on pleadings and proofs in the court 
below and the bill dismissed. 

In reviewing the testimony as it appears in 
the record, we are strongly impressed that if 
the case were to stand upon the testimony 
introduced by complainant, it would not es- 
tablish such a trust as is alleged. So far 
from there being any reasonable pretense 
that the arrangement — whatever it was — was 
to be kept secret from Dinah Smith, on ac- 
count of her defective understanding, or for 
any other reason, the complainant herself ap- 
pears to have taken testimony to prove that 
Dinah Smith understood and was satisfied 
with the arrangement, and there is other very 
conclusive evidence to the same effect. Nor 
would complainant's testimony convince us 
that the trust, if any was created, was to be 
irrevocable; but, on the contrary, it is clear 
enough that Francis Smith believed he had 
a right to withdraw from the hands of Fred- 
erick S. Crissman any portion of the property 
transferred to him, at any time when he saw 
fit, and that when he did withdraw any, it 
was not in violation of any trust, but of 
right. And perhaps, on the ground that com- 
plainant's testimony tends to support a dif- 
ferent case from that made by the bill, we 
should be justified in afllrming the decree 
of the court below without examining the rec- 
ord further. 

But we are not disposed to place our de- 
cision on any technical ground, inasmuch as 
we think there is no sufficient showing that 
any trust whatever was ever created. Where 
a party undertakes to establish a trust upon 
parol evidence, especially after a considerable 
lapse of time, the evidence ought to be veiy 
<;lear and satisfactory, and it ought to find 
some support in the subsequent conduct of 
the parties and in the surrounding circum- 
stances. In the case before us, the parol evi- 
dence is not clear or satisfactory, and the 
conduct of the parties and the surrounding 
circumstances tend to overthrow rather than 
to support it. It appears that Crissman, be- 
fore this alleged transfer in trust, had been 
acting as the agent of Francis Smith in the 



management of his personal property and the 
collection of his dues, and there was nothing 
in the externals of the new arrangement 
which was inconsistent with a continuance 
of the same relation. It appears also that 
after the transfer was made to Crissman, he 
gave back a receipt in which he undertakes 
to account to said Francis Smith for the 
mortgages assigned, or to his administrator 
or assigns whenever called upon. Crissman 
testifies that this receipt was given in con- 
sequence of the importunities of Mrs. Smith, 
but this is not very material; the important 
fact is that it bears strongly against the 
complainant's case. The justice who drew the 
deed from Francis Smith to complainant, and 
also the papers on the transfer of the per- 
sonal property, was sworn for complainant, 
but could give but a very imperfect account 
of the transaction. He remembers Smith say- 
ing, "He was doing this for the benefit of 
Eliza;" and to the question, "Do you or do 
you not recollect the fact that there was 
something said by Smith in regard to his 
personal property being conveyed in trust?" 
he replies, "There was a little something 
said— a very little— but I cannot now remem- 
ber what it was." Now, Smith at this time 
was conveying the real property to Eliza, 
and it is not clear that what he said about 
"doing this for the benefit of Eliza," did not 
have exclusive reference to that conveyance; 
but, if not, the fact that he regarded the 
agency of Crissman in his affau's as bene- 
ficial to his own interests, might well have 
induced him to speak of the arrangement as 
for the benefit of his only child, to whom, as 
he was already an old man, he would expect 
his property or a portion of it to pass in a 
brief period. And the use of the word 
"trust" in reference to the personal property, 
was not at all unnatural or unlikely if he 
understood it to be held for his own use and 
subject to his orders. 

Crissman testifies more distinctly to a trust 
declared in favor of his wife. If he testifies 
truly, it seems to us matter of astonishment 
that he did not mention it to his wife for 
nearly three years; that he should procure 
himself to be appointed administrator on the 
estate of his father-in-law on the supposition 
that all this property belonged to that estate; 
and that he should inventory it all as pertain- 
ing to the estate. It is incredible that he 
could have understood in 1863 that the prop- 
erty was put into his hands to hold for his 
wife, and, without consulting with any one 
on the subject, could have supposed it his 
duty in 1866 to inventory it as the property 
of her father's estate. We look in vain for 
any satisfactory explanation of this circum- 
stance, though we think we are not without 
the means of some insight into the motives 
which have impelled Crissman and his wife 
to the course they have taken. "I had been 
told," Crissman testifies, "that the old lady 
could not, in any way, dispose of [the prop- 
erty], and I suppose it was the case." It was 



PROPEKTY IN EQUITY— TRUSTS. 



59 



only after it was ascertained tliat Francis 
Smith's widow was entitled of light to a por- 
tion of his property, and might dispose of it 
by will, that Crissman advanced to his wife 
and to the judge of probate this theory of a 
conveyance to him in trust; a theory whol- 
ly inconsistent with all his actions in re- 
spect to the property, both before and since 
the death of Francis Smith, and inconsistent 



also with the only writing which evidenced 
any part of the ti-ansaction. 

This is a most unfortunate family contro- 
versy, and we regret the necessity of having 
to dispose of it; but we are of opinion that 
the circuit court made the only decree war- 
ranted by the law and the evidence, and it 
must be aflBrmed, with costs. 

The other justices concurred. 



60 



PliOPEKTY IN EQUITY— TEUSTS. 



STEERS et al. v. STEERE et al. 

(5 Johns. Ch. 1.) 

Court of Chancery of New York. Oct. 2, 1820. 

The original bill, filed February 21st, 1818, 
stated, among other things, that Stephen 
Steere, father of the plaintifCs, Timothy, 
Smith, and T. Steere, was seized in fee, prior 
to the 18th of October, 1802, of various par- 
cels of land in the county of Chenango, and 
which were particularly described, amounting 
in the whole to 739 acres, and all of which, 
except 47 acres, was situate in the town of 
Norwich. 

That on the 18th of October, 1802, S. Phet- 
tlplace obtained a judgment against Stephen 
Steere, for 1,258 dollars, on which a fi. fa. was 
issued in 1805, and all the lands of Stephen 
Steere, in the county of Chenango, advertised 
for sale. That Richard Steere and Mark 
Steere, defendants, sons of Stephen Steere, in 
August, 1806, bid off all the real estate of 
Stephen Steere, at the sheriff's sale, for 1,600 
dollars, and paid 1,400 dollars, the amount of 
the judgment, interest, and costs, and took a 
deed from the sheriff for "the whole of the 
real estate of Stephen Steere, in the county 
of Chenango, and his right and title thereto:" 
and the levy and advertisement of the lands, 
by the sheriff, were in the same general terms 
of description. The bill alleged that the deed 
was taken in trust, pursuant to a previous 
agreement with Stephen Steere, to loan him 
the amount of the judgment, and to hold the 
land as security, to be reconveyed, on repay- 
ment of the loan, with interest and expenses, 
and of such other sums as might thereafter 
be loaned to Stephen Steere, by Richard and 
Mark Steere. That the Cole lot, containing 
120 acres, belonging to Stephen Steere, was 
sold by the sheriff, under a judgment and exe- 
cution in favour of James Glover, in Decem- 
ber, 1799, to James Glover, for 140 dollars, 
being much less than its value; and that 
James Glover agreed to reconvey the land to 
Stephen Steere, on the payment of the 140 
dollars, and interest. That in August, 1809, 
Mark Steere released to Richard Steere, all 
his interest in the lands under the sheriff's 
deed of August, 1805, and became Insolvent. 
That on the 30th of April, 1808, James Glover 
conveyed to Asel Steere, defendant, another 
son of Stephen Steere, t'jse Cole and Glover 
farms. " That Asel Steere conveyed the same 
farms to Richard and Mark Steere. That the 
purchase was made pursuant to an agreement 
with Stephen Steere, and that Asel Steere 
acted merely as the agent of Richard and 
Mark Steei-e, and the land was to be held in 
trust for Stephen Steere. That on the 14th 
of August, 1809, Asel Steere made a new con- 
veyance to Richard Steere, of the Cole and 
Glover farms. The bill then proceeded to 
state sales and conveyances of various par- 
cels of the lands by Richard Steere, to differ- 
ent persons, and of the sums of money re- 
ceived by him on such sales, and for rents; 
all of which sales and conveyances were al- 



leged to be made by Richard Steere, as trus- 
tee, &c. 

The bill alleged, that the deed of August, 
1805, from the sheriff to Richard and Mark 
Steere, was void at law, as the description of 
the lands sold was too general and undefined. 
That in 1806, Stephen Steere requested Rich- 
ard and Mark Steere to reconvey to him all 
the property, except the Unadilla farm, being 
325 acres, which he agreed that they might 
retain in satisfaction for their advances, &c.; 
and which far exceeded the value of all their 
advances, which they neglected to do. That 
Stephen Steere requested Richard and Mark 
Steere to account to him for all the moneys 
received by them, as trustees, from the sales, 
rents, and profits of the lands, after allowing 
the money advanced by them on the judg- 
ment of Phettiplace, and all their just expense 
and demands; but that Richard and Mark 
Steere presented unjust and false accounts of 
moneys, which they pretended to have ad- 
vanced, the items of which were particularly 
set forth; and insisted on holding the proper- 
ty to cover the same. 

That on the 25th of October, 1815, Stephen 
Steere made his will, reciting the lands of 
which he was seized in Norwich, and partic- 
ularly describing the same, and declaring, that 
"it was his intention to dispose of all his real 
and personal estate wheresoever, to his three 
sons, plaintiffs, viz: the one moiety thereof to 
Timothy, and the other moiety to Smith and 
Thomas. That he appointed James Birdsall 
his executor. That the testator died April 
22d, 1816, without being in debt, and the 
plaintiffs were thus devisees and legatees of 
all his real and personal estate. That Rich- 
ard and Mark Steere refused to account and 
convey to them the property, so held in trust; 
that the trusts had been acknowledged by 
Richard and Mark, in letters and accounts. 
That the plaintiffs were willing to confirm all 
the sales made by Richard and Mark, not con- 
firmed by Stephen Steere, in his life time, but 
that Richard and Mark ought to account for 
the moneys, and assign the securities received 
by them. That Richard Steere had brought 
a suit at law against the plaintiff Timothy 
Steere, on his bond for 540 dollars, given to 
Richard Steere, for a part of the trust prop- 
erty sold and conveyed by him to Timothy 
Steere, but that the plaintiff, Timothy, can- 
not plead at law, the various and complicated 
trusts above mentioned. The bill prayed that 
the defendants, Richard and Mark Steere, 
may be decreed to account to the plaintiffs 
for the rents and profits received by them on 
the lands so held in trust, and for the moneys 
and securities received on sales, &c., making 
to them all just allowances for loans, advan- 
ces, and expenses; and to pay over the bal- 
ance to the plaintiffs, and reconvey to them 
the lands so held in trust and undisposed of, 
and for general relief, and for an injunction 
against the suit at law. By an amendment 
to the original bill, the accounts and letters, 
said to contain an acknowledgment of the 



PROrERTY'IS" EQUITY— TRUSTS. 



61 



tnist, were set forth at large and several spe- 
cial Interrogations added. 

The defendants, Richard and Hark Steere, 
in tlieir answers, the whole of which it is un- 
necessary to state, denied the trusts alleged in 
the bill, or any agreement wliatever, to ad- 
vance money, and to purchase and hold the 
property in trust, or any conversation, before 
or after the sale, with Stephen Steere, relative 
to a purchase in trust. Richard Steere admit- 
ted, that Asel Steere informed him of the ex- 
ecution, and that it was the wish of all the 
brothers that he and Marli Steere should at- 
tend the sale and buy in the property, so as 
to deprive S. Steere of all control over it, as 
he was then much embarrassed. They admit- 
ted that Stephen Steere acquiesced in the sale, 
under the idea that it would be better for the 
defendants, Richard and Mark Steere, to have 
the land than strangers; that it might have 
been the hope and expectation of Stephen 
Steere, and his children, that Richard and 
Mark Steere, would give a share of the prop- 
erty to them. That Richard and Jlark Steere 
had often advanced large sums of money to 
Stephen Steere, to save his stock, &c., and 
permitted him to reside on part of the estate. 
That the defendant, Richard Steere, may have 
promised the plaintiffs to distribute part of 
the real estate among them, and may have 
said and written things for that purpose; and 
had made gifts of land and money with that 
view; but they denied that these acts of kind- 
ness amounted to a trust. That pursuant to 
an agreement between Richard and iXark 
Steere, Timothy and Stephen Steere, jun., of 
January, 1814, by which Richard Steere 
agreed to convey to Mark Steere, and Tim- 
othy Steere, each, land to the value of 1,000 
dollars, he conveyed 43 acres to Stephen 
Steere, jun., 33 acres to Mark Steere, and 38 
acres to Timothy Steere, and that he took the 
bond of Timothy Steere, for 540 dollars, being 
the excess in the value of the land conveyed 
to him, over and above the 1,000 dollars. 
That these deeds were gratuitous. That by 
that agreement he was to convey the residue 
of the land to Timothy Steere and Mark 
Steere, who were to sell the same, and pay 
the defendant his expenses and advances; but 
owing to the failure of Mark Steere, the 
agreement was only in part carried into ef- 
fect. But he denied that any of these gifts 
and conveyances were made with the under- 
standing or belief, that he was bound as trus- 
tee to Stephen Steere. The defendants, Rich- 
ard and ilark, admitted the account of the 
2Sth of January, 1809, but denied that it was 
made up and presented by them as trustees; 
that the account of the estate was on loose 
papers, prior to 1809, and the account was 
made out from those papers, which are now 
mislaid, or in the possession of the plaintiffs. 
That the name of Stephen Steere was used in 
the account to distinguish the estate from the 
other estate of Richard and Mark, and that 
the name of Stephen Steere was used as a 
debtor, because the estate was looked upon as 



a family patrimony, in which, from the gra- 
tuities of Richard Steere, they expected to 
share. That Mark Steere, at that time, pro- 
posed to release his share, on being paid his 
advances, &c., and the account was made up 
to ascertain the consideration to be paid to 
Mark Steere, which was found to amount to 
3,901 dollars and 80 cents, which Richard 
Steere paid to Mark Steere. That Richard 
Steere then made an estimate of what further 
advances he had made, and in the same form, 
using the name of Stephen Steere as a debtor, 
and Richard Steere as creditor, for the sake 
of convenience. That the account was made 
out for the satisfaction of the plaintiffs and 
the family, and to show that any further de- 
mands on him were unreasonable. That the 
account was retained by him as a private 
memorandum, untU February, 1814, and to as- 
sist in the gratuitous disposition of the prop- 
erty among the family. That in January, 
1814, an agreement by parol was entered into 
between Richard Steere, Mark Steere, and 
the plaintiffs, of which a memorandum was 
reduced to writing by James Birdsall, and 
which was acceded to by Richard Steere, on 
the ground that it would be satisfactory; and 
to facilitate it, and not as trustee, he wrote 
the letter mentioned in the amended bill, to 
Mark Steere, dated February 12th, 1814, con- 
taining the account, &c., of January 28th, 
1809, but he denied that the letter was writ- 
ten at the request of Stephen Steere, or as 
trustee. That in 1815 Stephen Steere was 
nearly eighty years old, and was induced by 
the plaintiffs, his younger children, to make 
his wiU in their favour, to the exclusion of 
his eight other children then living. 

One of the accounts of the 28th of January, 
1809, referred to in the bill, made Stephen 
Steere debtor to Mark Steere, for his bond 
dated September 3d, 1803, and the interest 
thereon at 8 per cent, and for various sums 
advanced, and for expenses of two journeys 
to Chenango, the whole amounting to 3,901 
dollars and 80 cents. The other account was 
against Stephen Steere, as debtor to Richard 
Steere, containing different charges for smns 
advanced, among which were the expenses of 
several journeys to Chenango, and at the foot 
were added various charges for advances, un- 
der subsequent dates, among which was one 
of 1,000 dollars, towards a mortgage to Glov- 
er, the whole amount being 3,016 dollars and 
26 cents. In a letter from Richard to Mark 
Steere, dated Smithfield, Februaiy 12th, 1814, 
the former writes, as follows: "I herewith 
present you with the amount of my account 
against the estate of Stephen Steere, as fol- 
lows: Richard and Mark Steere's account 
against Stephen Steere, as appears by the 
original account, and your casting up to 28th 
of May, 1810, amounts to 7,840 dollars and 46 
cents, four years interest, 3,126 dollars 16 
cents, the Glover debt when settled, in March, 
1813, and costs, 2,600 dollars, and interest 
thereon, 286 dollars." Certain credits were 
also stated, among which was 500 dollars, on 



62 



PKOPERTY m EQUITY— TRUSTS. 



a sale of land to Gunn, and for the Unadilla 
farm, 6,000 dollars, leaving a balance of 6,085 
dollars and 62 cents due Richard Steere. A 
note of the sums due for lands sold was sub- 
joined, amounting to 6,720 dollars. The let- 
ter continued as follows: "So that you will 
see by this statement, that you will pay me 
and retain 110 acres on the south side of the 
way, to pay you and Stephen, and the remain- 
der divide. I think you may do as well, or 
nearly as well, as above stated. I send the 
original account, for the satisfaction of Ste- 
phen and Timothy, together with a paper, on 
which you have heretofore cast It, both of 
which papers I wish you to keep, as they may 
hereafter be wanted. The old account had 
been agreed to by father." In a letter, dat- 
ed Smithfleld, October 19th, 1806, Richard 
Steere writes to Asel Steere, as follows: "I 
wish you to assist father in every possible 
way in acquiring a good title to his land from 
Glover, and likewise to get White's lease on 
the Unadilla farm settled, as there is a pros- 
pect of selling that this fall."— "If in case we 
sell it, I don't know but It will be necessary 
for father to come down and take a quit claim 
from us, and give a warrantee deed, but if we 
trade, I will write you further on this sub- 
ject; at any rate, I wish to have it clear of 
"White's lease, but, as it seems some fatality 
attends all father's business, I am not in 
much expectation of its being soon done."— "It 
is particularly necessary for father to attend 
to this business, as we are called upon for 
the money advanced, and shall be under the 
disagreeable necessity of selling other land, in 
order to reimburse ourselves, and which fa- 
ther and the family would choose to keep in 
preference to the Unadilla farm. I am partic- 
ularly unfortunate in all my dealings with fa- 
ther; for at the time we were up last year, 
a little before which I understood by him, 
that his object in redeeming his lana was on 
account of Its going to the family, and not 
to strangers; I inferred from that, if in case 
it came into our hands, he would certainly 
have no objections to our deeding a part to 
his children; under those circumstances, I as- 
sisted in raising the money, with a promise to 
many of the family, that it should not go out 
of my hands without their having a part, 
which I believe you will very well recollect. 
Now, it seems, I must either break my prom- 
ise with my brethren, or incur the heavy dis- 
pleasure of my father. I must confess that 
the situation of the Glover lot, lying so long, 
when the probability of its going to stran- 
gers was so great, with the averseness to 
deeding to his sons, does not, in my opinion, 
square with his conversation last year, above 
written."— "If there is any compromise that 
can take place between father and my broth- 
ers, whether in lands or any otherwise, so 
that I may escape the heavy sin of a breach 
of promise, I shall with all cheerfulness ac- 
quiesce in it; but, by the way, Jane would ex- 
pect to be included." In another letter, dated 
Smithfleld, 9th of July, 1807, Richard writes 



to his brother Asel, as follows: "Father wish- 
es very much for Mark and I to reconvey 
back all the land in your county, in our pur- 
chases, except the Unadilla farm, which we 
cannot at this time comply with. As there 
seems to be a willingness on Mark's pS.rt to 
reconvey, whenever he is paid, it makes it 
hard, on my part, to perform my engage- 
ments with my brethren, and give father sat- 
isfaction. He appears to be willing to give 
Stephen and Timothy a 1,000 dollars each, 
Jane 500 dollars, and defray Simon's expenses 
at Doctor Bellows. Timothy is willing to take 
his, and I wish you to use your influence with 
Stephen to consent to take his, or agree with 
father some other way, for really, I wish the 
matter settled." 

In a letter, dated Smithfleld, 8th of August, 
1809, from Richard Steere, to Stephen, Asel, 
and Timothy Steere, after mentioning the loss 
of a vessel and cargo belonging to Mark, and 
that all his property was attached, and that 
he, Richard, was left bound with him for a 
large amount, without security, unless he 
could be secured in Chenango county, Richard 
adds: "I herewith send a deed from Mark to 
me, last winter, which I hope you will lose no 
time in having acknowledged and recorded. 
You will see the necessity of this; for other- 
wise, Mark holds more than treble the land 
which is justly due to him, which is wholly 
lost to his family, if his creditors here should 
attach it, before my deed should be recorded. 
The deed or deeds made to Mark and I of the 
Cole and Glover lots from Asel, now in the 
hands of Stephen, must be given up or de- 
stroyed, and a deed or deeds made to me, at 
the same prices, which last must be recorded," 
— "I wish his creditors to have all his proper- 
ty, but to have the other property, which he 
holds to a large amount for security, torn 
from the family, would be distressing indeed." 
Several witnesses were examined on both 
sides, the material part of whose testimony is 
stated in the opinion of the court. 

Mr. Henry, for plaintiffs. Mr. Van Buren, 
contra. 



KENT, Ch. The bill charges that the pur- 
chase by the defendants, Richard and Mark 
Steere, at the sheriff's sale, on the 16th of 
August, 1805, was In trust for the plaintiffs' 
testator, and those defendants are called upon 
to account to the plaintiffs, as devisees, for 
the rents and profits, and for the proceeds of 
that part of the lands which have since been 
conveyed to others, and to reconvey to the 
plaintiffs that part of the lands which [they] 
still retain. 

It is intimated in the bill, and it was made 
a point at the hearing by the counsel for the 
plaintiffs, that the sheriff's sale was void, and 
that the deed in pursuance of it was invalid, 
for want of designation and description of the 
lands sold. If this were so, then the plain- 
tiffs, as devisees of Stephen Steere, the orig- 
inal owner, in August, 1805, would have their 



PItOPEliTY IN EQUITY— TRUSTS. 



63 



fit and adequate remedy at law, for the lands 
now sought by the bill. In respect to any 
claim for the proceeds of the estate, I appre- 
hend the executor of Stephen Steere ought 
to have been a party to the bill; for these pro- 
ceeds in the hands of the defendants were 
personal property, and if they were be- 
queathed at all to the plaintiffs by the will, 
(which cannot very readily be admitted,) the 
executor is the proper person to call the de- 
fendants to account, and to disti-ibute the per- 
sonal estate under the directions of the will. 

But I shall not dwell upon this difficulty in 
the case, but proceed at once to the examina- 
tion of the question on which the whole foun- 
dation of the bill rests, viz. is there a trust 
sufficiently manifested in writing, to be rec- 
ognized and enforced in this court? 

To take the case out of the statute of frauds, 
the trust must appear in writing, under the 
hand of the party to be charged, with abso- 
lute certainty as to Its nature and terms, be- 
fore the court can undertake to execute it. 
The words of the statute of frauds are, "That 
all declarations or creations of trusts or con- 
fidences, of any lands, &c. shall be mani- 
fested and proved by some writing, signed by 
the party who is or shall be by la^ enabled 
to declare such trust, or by his last will in 
writing, or else they shall be utterly void, & 
of none effect." A trust need not be created 
by writing, but it must be manifested and 
proved by writing; and the doctrine in Fors- 
ter V. Hale, 3 Ves. 696, is that the nature of 
the trust, and the terms and conditions of it, 
must sufficiently appear, so that the court 
may not be called upon to execute the trust in 
a manner different from that intended. 

In this case, the testator, Stephen Steere, 
at the age of seventy, was much in debt and 
embarrassed; and among other debts there 
was a judgment against him, amounting with 
interest and costs, to 1,400 dollars. He was 
utterly unable to satisfy it, and his lands in 
the county of Chenango were advertised for 
sale on execution. He had eleven children, 
at the time, and the defendants, Richard and 
Mark Steere, (who were two of them,) at- 
tended the sale and purchased the property 
for 1,600 dollars, and advanced the money 
out of their own funds, and took the sheriff's 
deeds in their own names. This was in Aug- 
ust, 1805, and it appears to have been a 
fair purchase at public auction. The natural 
consequence of such a transaction is, that 
these two sons would not be inclined to 
speculate upon their aged father's misfor- 
tunes, and make a profitable bargain to them- 
selves, to the injury of him and his other 
children. Considerations arising from the ties 
of blood and the dictates of family affection, 
would ordinarily lead such a purchaser to 
offer to restore the property, on being re- 
imbursed his advances and indemnified for 
iis trouble, or else to engage that all the prof- 
its of the purchase should be applied justly, 
md equitably, to the common benefit of the 
'ainily. But intentions and intimations of that 



kind cannot well be considered as amount- 
ing to a clear and absolute trust, which a 
court of equity will recognize and enforce, 
unless the declaration of it be quite positive 
and free from all ambiguity. Parents will 
usually make declarations and express inten- 
tions of holding their property for their chil- 
dren, but a technical trust would not easily 
be deduced from them, unless they were con- 
tained In a last will and testament made on 
purpose to dispose of the estate. It would 
be injurious to that freedom of intercourse, 
and to the operation of those kind and gen- 
erous affections, which ought to be cherished 
in the circle of the domestic connexions, to 
make such deductions from loose and general 
expressions, in a confidential correspondence 
between one member of a family and an- 
other, and to give them the force and rigour 
of legal obligations. It ought also to be re- 
membered, in respect to the obligations re- 
sulting from family connexion, and the effect 
to be given to them in courts of justice, that 
the duty of benevolence, to borrow an ex- 
pression of Lord Kames, Is much more lim- 
ited than the virtue. "Sanguinis conjuncti'O' 
benevolentia devincit homines et carltate." 

The fii-st item of testimony from whence 
the plaintiffs undertake to show the trust, ia 
a letter from the defendant, Richard Steere, 
to Asel Steere, dated October 19th, 1806, up- 
wards of one year after the purchase under 
the sheriff's sale. This letter is not addressed 
to the testator, whom the bill alleges to have 
been the cestui que trust, and in that respect 
it differs essentially from the evidence from 
which a trust was deduced, in the cases of 
O'Hare v. O'Neil, 2 Brown, Pari. Cas. 39, 
and Forster v. Hale, 3 Ves. 696. It is ad- 
dressed to a stranger to the alleged trust, 
through a brother of the defendant, and it 
was evidently a letter on private and confiden- 
tial business. The letters in the other cases 
were addressed to the cestui que trust, and 
there was then a reasonable ground of infer- 
ence, (which is wanted in this case,) that the 
writer of the letters [intended] to give a 
manifestation or evidence of the trust. This 
same Asel Steere declai'es, in his answer, 
that the understanding between him and the 
defendants, Richard and Mark Steere, was,, 
that the land was not to be reconveyed to the 
testator after the repayment of the money 
advanced and their expenses and trouble, but 
that the surplus should be held for the testa- 
tor and his wife, and the seven children then 
residing In Chenango county. 

This letter corresponds with the general 
view of the case, as given by Asel Steere, 
In his answer, and shows evidently that Rich- 
ard Steere considered him^olf as holding the 
land In the first place, for his reimbui-sement, 
and then, under some general and vague 
promise, to distribute the surplus among his 
brethren of the family. He says, he infer- 
red that to be his father's wishes, even be- 
fore he purchased, and that the land should 
go "to the family, and not to strangers." He- 



€4. 



PHOPERTY IN EQUITY— TRUSTS. 



says, therefore, lie made "a promise to many 
of the family, that it (the land) should not 
go out of his hands without their having a 
part," and that he was not willing to "break 
his promise with his brethren." 

The next letter addressed to Asel Steere, 
IS dated July 9th, 1807, in which he says, his 
father "wished him and his brother Mark to 
reconvey back all the land except the TJha- 
■dilla purchase. This, he said, he could not 
then do, because he could not "perform his 
engagements with his brethren and give his 
father satisfaction." The third letter of this 
defendant is dated August 8th, 1809, and is 
■addressed to three of his brothers, of whom 
the plaintiff Timothy is one, and is material 
only for the idea which prevails through all 
the letters, that he and his brother JIark held 
the property for their security and for "the 
family." 

There is not, therefore, in either of these 
three letters, any sufficient manifestation and 
■evidence of the specific trust charged in the 
Tsill. The trust charged is in favour of Ste- 
phen Steere, the testator, but the trust vague- 
ly intimated in these letters is one in favour 
of the family at large of Stephen Steere; 
and admitting a trust to have been duly man- 
ifested in favour of the children of Stephen 
Steere, (and this is an admission which the 
evidence does not demand, for the sugges- 
tions and intimations in the letters are too 
indefinite and loose to be the foundation of a 
Ijill for specific execution,) yet the bill calls 
upon the court to support the will of the 
testator, and to "execute the trust in a man- 
ner very different from that intended." This, 
Lord Alvanley admits, cannot be done. 

The strongest evidence in favour of the trust 
■charged. Is contained in the letter from the 
defendant, Richard Steere, to his brother, the 
defendant, Mark Steere, dated February 12th, 
1814, inclosing the account of these two de- 
fendants against Stephen Steere, of the date 
■of January 28th, 1809. 

In that account, Stephen Steere Is charged 
as a debtor, with payments by R. and M. to 
the sheriff, at the time of the purchase by 
them in August, 1805, and with some ex- 
penses in relation to that business, and he is 
likewise credited with the sale part of the 
lands held under the sheriff's deed. He says 
in the letter that the original account was 
sent "for the satisfaction of Stephen and 
Timothy Steere," and that "the old account 
had been agreed to by father." 

The defendants, in their answer, admit, 
that the account of 1809 was once, and only 
once, shown to Stephen Steere, and then cas- 
ually, and that it was made up with the 
intent to show how expensive the estate had 
been to them, and what advances had been 
made, and that it was made up from loose 
papers now mislaid, or in possession of the 
plaintiffs, and that the name of Stephen Steere 
was used as a debtor for convenience, and 
to distinguish the real estate derived from 
the sheriff's deed from the other estate of 



the defendants, and because the estate was 
looked upon as a family patrimony, in which 
the family expected to share. They aver in 
their answer, that the account was made out 
for the satisfaction of the plaintiffs and the 
family, and to show that further demands 
were unreasonable, and that the account of 
1809 was retained by them, as a private 
memorandum, until February, 1814, and that 
additions were made to it from time to time, 
to assist in the gratuitous dispositions of the 
property among the family. 

These explanations were given in answer 
to interrogatories specially pointed to those 
accounts, and by which they were required 
to answer, "whether the said accounts were 
not made out in the usual form of accounts." 

It appears to me that the explanation is 
consistent with the proof applicable to those 
accounts, and with the general complexion 
of the entire transactions of the estate. 

James Birdsall, a witness, states that in 
January, 1814, the defendants, Richard Steere 
and Mark Steere, entered into a parol agree- 
ment In relation to the lands so purchased 
at the sheriff's sale, with their brothers, Ste- 
phen Steere, jun., and the plaintiff, Timothy 
Steere. The substance of the agreement was 
reduced to writing, at the time, by the wit- 
ness, at the request of the parties to it, and 
was approved of by them. That agreement 
was considered as a final settlement of all 
questions and claims in respect to that prop- 
erty, and it provided for a distribution of 
what remained of the estate, among certain 
of the children. The memorandum begins 
with these words: "Richard Steere will state 
his account to Mark, Stephen, and Timothy 
Steere:" and here we have the origin of the 
publication of the account produced by the 
plaintiffs as evidence of the trust. The ac- 
count was sent to Mark Steere, in the letter 
of Richard Steere, of the 12th of February, 
1814, and now we can understand the mean- 
ing of that paragraph in the letter, in which 
he says, "I send the original account for the 
satisfaction of Stephen and Timothy;" and 
also the force of another paragraph in which 
it is said: "So you will see by my statement 
that you will pay me and retain 110 acres 
on the south side of the way, to pay you and 
Stephen, and the remainder to divide." 

This account and letter could not have been 
intended as a manifestation or declaration of 
a trust in favour of the testator. The man- 
ner in which it arose, and was transmitted, 
and the contents of the letter, are pretty sat- 
isfactory proof, that the explanation given 
of the account in the answer is the just and 
true explanation, and the only one of which 
the whole transaction is susceptible. The 
way in which these accounts came to the 
knowledge and possession of the plaintiffs, 
was by taking copies of the originals while . 
in the hands ot the defendant JIark Steere, 
and there v\as never any free and voluntary 
delivery for the pm-pose to which they have 
been applied. The only part of the letter 



PEOPEETT IN EQUITY— TEUSTS. 



65 



which shows that the defendants considered 
themselves as acting In the purchase and 
management of the estate, as trustees for tiieir 
father, the testator, Is the expression that 
"the old account had been agreed to by fa- 
tier." This probably referred to the account 
of 1809; and though a loose paragraph, it 
would be difficult to understand it in any 
other sense than as an admission of the trust 
sought after, if it was not accompanied with 
other paragraphs in the same letter absolutely 
inconsistent with that fact. The account was 
sent only for the satisfaction of the two sons, 
(of whom the plaintiff Timothy was one,) 
and in pursuance of an agreement to dis- 
tribute the surplus property among the chil- 
dren. The letter says, that after Mark's and 
Stephen's debts were satisfied, the remainder 
was to be divided. The whole letter must 
be taken together, and one expression checked 
and balanced by another. And when we take 
into consideration the manner in which that 
real estate had been dealt with by these two 
defendants, for ten years together, under the 
eye, and with the approbation of their father, 
the notion of any other trust than that found- 
ed upon brotherly good will, spontaneous 
promises, and gratuitous acts of benevolence 
to the family at large, including their father 
and all his other children. Is utterly inadmis- 
sible. We have conveyances from the defend- 
ants of parts of the estate between 1809 and 
1815, to strangers, for a valuable considera- 
tion, and to several of the children, as gifts, 
and all these acts confirmed by the testator. 
The agreement of 1811: was partly executed 
by the defendants, and the several voluntary 
transfers to the chlldien, to the amount of 
5,000 dollars in value, are decisive proofs, 
that the defendants have acted according to 
their original suggestions and intentions of 
applying the surplus property, after their in- 
demnity, to tne benefit of the family. The 
idea of a technical trust binding in equity in 
favour of the father, was never heard of in 
the family, or put forward by any branch of 
it, until after the two plaintiffs, Thomas and 
Timothy Steere, had obtained from Mark 
Steere copies of the accounts above referred 
to. I cannot easily reconcile this claim with 
good faith, after the agreement of 1814, and 
the extent to which it had been carried into 
execution by the defendants Richard and 
Mark. It also strikes me, considering the 
manner in which the purchase had been re- 
ceived and treated by the family of the tes- 
tator, from the time it was made, down to 
the testator's death, and the many gifts and 
conveyances which the family have been con- 
tent to receive at the hands of the defendants, 
that to enforce a strict trust with all the 
legal responsibilities attached to it, accord- 
ing to the bill, would be extremely unjust 
and oppressive. 

A question has been raised, whether the 
parol evidence given in the case be admissi- 
ble, to contradict the inference drawn by the 
plaintiffs from the accounts and the letters. 



If the written proof was clear and positive, 
it could not be rebutted by parol proof; but 
considering the loose and ambiguous nature 
of it, I am inclined to think the parol evi- 
dence is competent in support of the sheriff's 
deed, and to explain the obscurity of the 
case, by showing what was the understanding 
of all the parties concerned. In Forster v. 
Hale, parol proof was received, and taken 
into consideration by the master of the rolls, 
in forming his opinion; and in Redington v. 
Redington, 3 Ridg. App. 182, parol evidence 
was held, by Lord Clare, to be admissible to 
support a deed in the name of the son, but 
inadmissible to create a trust against it. The 
cases of Lamplugh v. Lamplugh, 1 P. Wms. 
Ill, and of Taylor v. Taylor, 1 Atk. 386, 
were referred to by the lord chancellor of 
Ireland, in confirmation of this principle. The 
parol proof in this case puts an end to all 
pretension of a trust in favour of the testator, 
and shows that by the acknowledgment of 
the testator and of all the family, the pur- 
chase at the shej'ifC's sale was absolute, with- 
out any trust or qualiflcation whatsoever, and 
that none was ever heard of, or suggested 
in the family, until about the time that the 
testator made the will, giving all the undis- 
posed part of the estate to the plaintiffs. It 
was the uniform and universal understand- 
ing in the family, for ten years, that the 
property was not to be reconveyed to the 
father, but was to be held, in the first place, 
for the indemnity of the two purchasers, and 
then, it was submitted to their discretion and 
justice, in what manner and mode, and to 
what extent, the surplus should be appro- 
priated to the wishes and wants of the fam- 
ily. I am aware, however, of the dangerous 
nature of such proof, and should not will- 
ingly rest upon it, if it did not appear to 
corroborate the reasonable inferences to be 
drawn from the written testimony in the case. 
I do not perceive any ground for a distinct 
tion between the case of the estate generally, 
and the Cole and Glover lots. If any trust 
exists as to them, distinct from what is at- 
tempted to be established as to the rest of 
the estate, it is a trust by implication or oper- 
ation of law, and such a trust cannot be made 
out but by showing the actual payment of the 
money by the cestui que trust, or an actual 
loan by him for that purpose; and in this 
case no such payment or loan is pretended. 
The mere charge of the payment to the third 
person who sets up the trust will not be 
sufficient; and actual payment, or an actual 
loan of the money at the time, and not sub- 
sequent to the purchase, is indispensable. 
Botsford V. Burr, 2 Johns. Ch. 409. "If you 
merely employ a man by parol," says Jlr. 
Sugden, "to buy an estate for you, although 
he buy it accordingly, yet if he hold himself 
out as the real puichaser, and no part of the 
purchase money was paid by you, you can- 
not compel Mm to convey the estate to you, 
because that would be directly in the teeth 
of the statute of frauds." And if the entry 



66 



PROPERTY IN EQUITY— TRUSTS. 



in the account communicated to Mark Steere, 
In 1814, is assented to as evidence in writing 
of a trust, it is no longer the case of a result- 
ing trust, but rests precisely upon the same 
ground with the general trust set up by the 
bill, and must partake of the same fate. 

I am, accordingly, of opinion, that the bill 
cannot be sustained, because, 

1. The plaintiffs, upon their own showing, 
have a remedy at law for the land possessed 
by the defendant Richard Steere, inasmuch 
as neither the sale nor the sheriff's deed con- 



tained any description or location of the land 
sold. 

If, however, the plaintiffs, or the testator 
under whom they hold, may be considered 
(and I think he may justly) as having waived 
that objection, and as having affirmed the 
sale, by repeated acts, then, 

2. The plaintiffs have not made out a trust 
sufficiently clear and certain, to enable this 
court to act upon it, and to take the case 
out of the statute of frauds. 

Bill dismissed, without costs. 



^. 



PROPERTY m EQUITY— TRUSTS. 



67 



TOBIAS V. KETCHUM. 

(32 N. Y. 319.) 

Court of Appeals of New York. March, 1865. 

Action to recover dower and mesne prof- 
its. Defendant pleaded a provision by will 
in lieu of dower, and failure of the widow 
to elect. There was a judgment for plain- 
tiff, from which defendant appealed. 

T. W. Dwight, for appellant. Charles 
Tracy, for respondent. 

DAVIS, J. The testator not having de- 
clared in express terms that the provisions 
made by his will for his widow are given in 
lieu of dower, she is not put to her election 
unless the devises of the will "be so repug- 
nant to the claim of dower, that they cannot 
stand together." Lewis v. Smith, 9 N. Y. 
002; Church v. Bull, 2 Denio, 430; Jackson 
v. Churchill, 7 Cow. 287; Savage v. Burn- 
liam, 17 N. Y. 562. This rule is a familiar 
one, and needs no further citation of author- 
ity. 

In this case the provisions made by the 
will and codicil for the widow are as fol- 
lows: 1. The will gives her all the house- 
hold furniture and jewelry of every kind in 
use by her and the testator, or either of 
them. 2. One-third of the net income of all 
the real estate belonging to the testator, 
after payment of all taxes, assessments and 
interest due thereon, to commence to be paid 
to her six months after the testator's de- 
cease, and to be paid to her every six months 
thereafter, during her life. The codicil adds, 
"a suitable provision in money," "to be paid 
to her during the first six months, till the 
payment of her provisions under the will 
shall commence," and the use during her 
natural life of the apartments in the house 
No. 615 Fourth street. New York, as occu- 
pied by her and her husband, as a residence 
at the date of the codicil, with the election 
to have such other suitable residence in any 
other house belonging to him at the time 
of his decease that she might prefer. 

After making these provisions the will dis- 
poses of all the "rest, residue and remainder 
of the estate," by directing in substance that 
it be divided equally among his surviving 
children and the children of his deceased 
children, if any there should be, six months 
after the death of his widow. 

The will then nominates executors, and 
clothes them "with full power and authority 
to carry out all the provisions of the will," 
and if they deem it necessary or proper to a 
fair division of the property among the par- 
ties entitled thereto, to sell either at public 
or private sale the personal and real estate, 
or any portion thereof, and execute deeds 
thereof, and to divide the proceeds as there- 
inbefore directed; but no sale to be made 
till six months subsequent to the death of 
the testator and his wife. It also clothes 
the executors, "the survivor or survivors of 



them, with full power and authority to rent, 
lease, repair and insure any portion of the 
estate during any period of time the same 
may remain unsold or undivided." 

In Savage v. Burnham, 17 N. Y. 561, the 
testator devised and bequeathed all of his 
estate, real and personal, to trustees; the 
real estate upon trust to sell after the death 
of his wife. The will provided that during 
her life, the widow should "receive and take 
to her own use one-third part of the clear 
yearly rents and profits of the real estate, 
and that the residue of the clear yearly rents 
and profits should be deemed a part of the 
personal estate, and subject to the disposi- 
tions of the will concerning the personal es- 
tate." 

The entire estate, with all its income, ex- 
cept the one-third of the rents and profits 
of the land, was given (through the trusts) 
to the testator's children and the children of 
his daughters. It was held that a claim of 
dower could not stand consistently with 
these provisions, and that the widow was 
put to her election. 

Upon the authority of that case, if the 
will in question creates a trust and vests the 
entire legal estate in the trustees, the pro- 
vision made for the widow is inconsistent 
with the right of dower, and she was bound 
to elect. In that case her claim of dower, 
if allowed, would inevitably defeat the 
scheme of the will, for it would prevent the 
trustees from holding the legal title of the 
whole estate, and receiving the entire rents 
and profits for the purpose of paying taxes, 
assessments, interest, repairs and insurance, 
and ascertaining the net income, of which 
one-third is to be paid to the widow, and the 
residue ultimately to the other beneficiaries. 

The first question then is, are the execu- 
tors, under this will, made trustees of an ex- 
press trust? The word "trust" or "trustee" 
is not used in the will, but that is only a 
circumstance to be noted in considering the 
question. "It is by no means necessary that 
the donee should be expressly directed to 
hold the property to certain uses or in trust, 
or as a trustee. * * * It is one of the fix- 
ed rules of equitable construction, that there 
is no magic in particular words; and any ex- 
pressions that show unequivocally the inten- 
tion of the parties to create a trust will have 
that effect. It was said by Lord Eldon, that 
the word 'trust' not being made use of, Is a 
circumstance to be alluded to, but nothing 
more; and if the whole frame of the will 
creates a trust the law is the same though 
the word 'trust' Is not used." Hill, Trustees 
(3d Am. Ed.) 99; (Orig. Ed. 05) and cases 
there cited. 

We are in this case to determine the ques- 
tion by the authority conferred and the du- 
ties imposed. The executors are clothed 
"with full power and authority to rent, lease, 
repair and insure" the estate "during any 
period of the time it shall remain unsold 
and undivided." That period is, at all 



68 



PKOPEliTY IN EQUITY— TRUSTS. 



events, to last until six months after the 
decease of the widow. They are also in 
general language clothed "with full power 
and authority to carry out all the provisions 
of this wiU." It is apparent that the "net 
income of all the real estate" Is to be ascer- 
tained by some pereon or persons once in six 
months dming the life of the widow, "after 
all taxes, assessments and interest due there- 
on are paid." One-third of this net income 
is to be paid to the widow. By whom is 
this duty to be performed? It is clearly im- 
practicable for the various tenants of the 
estate to perform it; neither collectively nor 
individually have they the means of deter- 
mining the facts upon which the net income 
is ascertained, and it would be extremely 
embarrassing so to frame leases that each 
tenant should be subject to pay to the widow 
an amount of his rent that should discharge 
the proportion his rent bore to the net in- 
come of the whole estate, after payment of 
all taxes, assessments and interest due on the 
whole. Collating the power to rent, lease, 
repair, and insm-e, with the duty that rests 
somewhere to pay aU taxes, assessments and 
interest, and then to pay to the widow one- 
third of the net income after such payment, 
there seems to be no embarrassment in de- 
termining where the duty rests. To my 
mind it is apparent that the scheme of this 
will requires that the whole income, rents 
and profits of the real estate shall be re- 
ceived by the executors until the sale and 
division provided for; and that they are the 
persons on whom the duty to pay one-third 
of the net income to the widow is imposed. 
They are to malie the ultimate division, and 
consequently to retain for that purpose the 
income not paid semi-annually to the widow. 
The rents and profits of all the real estate 
are given to them for several purposes: 1. 
To keep down taxes, assessments and inter- 
est by paying them; 2. To ascertain the "net 
income" by deducting from the gross re- 
ceipts the amount paid for those purposes; 

3. To pay one-third of the net income thus 
ascertained to the widow every six months; 

4. To repair and insure the premises out of 
the residue; and 5. To retain the balance 
for division, and finally divide it among the 
daughters or their children after the decease 
of the widow. The imposition of these vari- 
ous duties by the will make the acting ex- 
ecutors trustees for their performance to the 
same extent as though declared to be so by 
the most explicit language. The authority 
to sell the real estate and execute deeds 
thereof, as given by the will, standing by 
itself, would confer nothing but a power; 
but coupled as it is with the various pro- 
visions for leasing, repairing and insuring, 
with the obligation to give to the widow a 
residence as she may elect in any of the 
houses of the testator, it goes far to show 
that it was the testator's intention to vest 
the fee of the estate in the trustees. But 
however that may be, it is well settled that 



trustees take the legal estate whenever they 
are clothed with the authority which the 
foregoing construction of the will gives to 
the executors in this case. 

"If land be devised to three persons and 
their heirs in trust to permit A. to receive 
the net profits for her hfe for her own use, 
and after her death to permit B. to receive 
the net profits for her life, etc., it has been 
held that the legal estate is in the trustees, 
for that they are to receive the rents and 
thereout pay the land tax and other charges 
on the estate, and hand over the net rents 
only to the tenant for life." Lewin, Trusts, 
2i8; Baker v. Greenwood, 4 Mees. & W. 421; 
White V. Parker, 1 Bing. N. C. 573. 

In White v. Parker, the trustees were to 
permit the testator's wife and daughters to 
receive the clear rents of three parts and his 
son the clear rent of one part — the trustees 
to pay all outgoings, to repair and let the 
premises. It was held that the legal estate 
vested in the trustees. In the note to 2 
Wms. Saund. 11, the rule Is thus laid down: 
"Where something is to be done by the trus- 
tees which makes it necessary for them to 
have the legal estate, such as payment of 
the rents and profits to another's separate 
use, or of the debts of the testator, or to pay 
rates and taxes, and keep the premises ia 
repair, the legal estate is vested in them, 
and the grantee has only a trust estate." 

In Birmingham v. Kerivan, 2 Schoales & 
L. 444, Lord Bedesdale said that a direction 
to keep a house in repair applied to the 
whole house, and could not be considered 
an obligation on a person claiming dower. 
When therefore the testator authorized his 
executors to repair, he did not expect that 
they would control two-thirds of the estate 
and the widow one-third, but that they would 
manage the entire property. 

The authority to rent and lease, to repair 
and to insure, by necessary implication vests 
the trustees with the legal title. They must 
not only execute leases, but enforce them, 
put in tenants and dispossess them, the prop- 
er performance of which requires the title 
of the estate. So to repair there must be 
such a right of entry and conti'ol in the trus- 
tees as gives them complete dominion; and 
to insure involves the necessity of ownership, 
for the policy must be taken in the name of 
the trustees. But to repair and to Insure 
necessarily involve expenses chargeable up- 
on the rents and profits; and an executor 
who is authorized to lease, repair and insure 
by necessary impUcation may so lease that 
rents will come to his hands out of whidi 
to pay repairs and insurance, and if a net 
income Is to be paid out of such rents, the 
executor becomes the party whose duty it is 
to ascertain and pay it In Leggett v. Perldns, 
2 N. Y. 297, the testator constituted his ex- 
ecutors trustees of the estate devised to his 
daughters for life, and authorized them to 
take charge of, manage and improve the 
same, and pay over to them from time to 



PROPEKTr IN EQUITY— TRUSTS. 



6» 



time the rents, interest and income thereof. 
It was held to be "very obvious that the le- 
gal estate in the premises was necessary to 
enable the trustees to discharge their du- 
ties," and that the trust was a valid one 
under the third subdivision of section 55 of 
the statutes of uses and ti'usts (1 Rev. St. 
729), and that by section 60 of the same stat- 
ute, the whole estate in law and equity vest- 
ed in the trustees. 

In Brewster v. Striker, 2 N. Y. 19, the tes- 
tator devised his real estate to his grand- 
children, and then provided that the lands 
should not be sold or alienated, but that his 
executors should lease or rent the same and 
pay the rents, issues and profits to his said 
grandchildren, etc.; it was held that the 
executors were trustees for the purposes of 
the wiU, and took, by implication, the legal 
estate during the lives of the grandchildren. 

These authorities are conceived to be 
abundant to establish the proposition that 
the authority to lease, rent, repair, insure, 
pay taxes, assessments and interest, and pay 
net income to devisees, carried the legal title 
to the executors in this case, and created a 
trust in them valid under the statute. 

It follows therefore from the decision of 
this court in Savage v. Burnham, that a 
claim of dower Is totally inconsistent with 
the provisions of the will, and the plaintifE 
was not at liberty to take both the provi- 
sions of the will and dower. 

In the language of Comstock, J., in the 
case cited: "During her life she was to 
have one-third of the clear rent and profits, 
and the other two-thirds were to go into a 
general fund for distribution. The entire es- 



tate, with all its income, except the one-third,, 
is given in the clearest possible terms, to the 
testator's children and the children of his 
daughters. It is therefore impossible for her 
to receive any part of it, except what is ex- 
pressly given to her, without subverting the 
will to that extent." 

The circuit judge erred In directing a ver- 
dict for plaintiff. 

I have considered the question as to the 
effect of the alleged release of dower. In 
my opinion, the instrument was not designed 
for any such purpose as a release of dower, 
and ought not to be so construed. Its ob- 
jects are apparent on its face; to-wit, to dis- 
pose of the vexed question as to her rights 
under the provision of the will directing 
moneys to be paid to her for her suitable 
support the first six months, and protecting 
the executors on paying her a sUm which 
might prove larger than was designed by the 
surrogate's decree, and the Instrument ought 
to be construed accordingly. 

I am not embarrassed by the question of 
parties, nor the form of the judgment. The 
Code authorizes all persons having conflict- 
ing claims to be made pa '■ties. Code, § 118. 
The defendants who appeared and answered,, 
admitted the receipt of the rents and profits 
as alleged in the complaint, putting nothing 
but the amount in issue. They are the heirs 
at law, and the statute authorizes the ver- 
dict for rents and profits against them. 

The judgment below should be reversed, 
and new trial ordered, costs to abide event. 

All the judges concurring, the judgment 
was reversed and a new trial ordered. 

Judgment reversed. 



70 



PJiOPERTY IN EQUITY— TRUSTS. 



YOUNG V. YOUNG. 

(80 N. Y. 422.) 

Court of Appeals of New York. 1880. 

Appeal from judgment of tbe general term 
of the supreme court, in the Third judicial 
department, reversing a decree of the 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 tovi^n 
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 pacljages inclosed in 
envelopes, upon which were indorsed memo- 
randa signed by him, one dated ilarch 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 resei-ved 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. 

Hezekiah 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, William 
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 if 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 purpose 
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? I 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 boiids 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. Willson, 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 he- 



PROPEKTT m EQUITY— TRUSTS. 



71 



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 m pui-suance 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 keist 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 ofC 
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, altliousli William H. Young and 
his son, James V. YduuK. 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 all 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 effect any sort 
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 respectivelj', 
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- 



72 



PROPERTY m EQUITY— TRUSTS. 



sion 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- 
til 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 i 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 malie. 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 full 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 
delivery 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 Bx'r v. Hallowell, 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 words, 
would be that the donor should hold the 
bonds and their proceeds for his own bene- 
fit during his 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 difliculty 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 chai-ging 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 Yes. 
39, 43; Edwards v. Jones, 1 Mylne & C. 226; 
7 Sim. 325; Price v. Price, 8 Eng. Law & 
Eq. 281; Hughes v. Stubbs, 1 Hare, 476. It 



PKOPEBTY IN EQUITY— THUSTS. 



7S 



established as unquestionable law that a 
ui-t of equity cannot by its authority 
uder that gift perfect which the donor has 
ft imperfect, and cannot convert an imper- 
ct gift into a declaration of trust, merely 
1 account of that imperfection. Heartley v. 
icholson, 44 L. J. Ch. 279. It has in some 
ses been attempted to establish an excep- 
)u in favor of a wife and children on the 
ound that the moral obligation of the donor 
provide for them constituted what was 
.lied a meritorious consideration for the 
ft, but Judge Story (2 Eq. Jur. § 987, and 1 ' 
q. Jur. § 433) says that that doctinne seems 
)w to be overthrown, and that the general 
■inciple Is established that in no case what- 
-er will courts of equity interfere in favor 
' mere volunteers, whether it be upon a 
)luntary contract, or a covenant, or a set- 
ement, however meritorious may be the con- 
deration, and although the beneficiaries 
and in the relation of a wife or child. Hol- 
way V. Headington, 8 Sim. 32.5; Jeffreys v. 
;ffreys, 1 Craig & P. 138, 141. 
These positions are sustained by many au- 
lorities. To create a trust, the acts or words 
!lied upon must be unequivocal, implying 
lat the person holds the property as trustee 
)r another. Martin v. Funk, 75 N. Y. 134, 
3r Church, C. J. Though It is not necessary 
lat the declaration of trust be in terms ex- 
licit, the donor must have evinced by acts 
hich admit of no other interpretation, that 
ich legal right as he retains is held by him 
5 trustee for the donee. Heartley v. Xich- 
son, 44 L. J. Cb. 277, per Bacon, '\'. C. 
he settler must transfer the property to a 
ustee, or declare that he holds it himself in 
■ust Milroy v. Lord, 4 De Gex, F. & J. 264, 
3r Lord Knight Bruce. In cases of volun- 
iry settlements or gifts, the court will not 
apute a trust where a trust was not in fact 
le thing contemplated. The distinction be- 
veen words importing a gift and words cre- 
;ing a trust is pointed out by Sir Geo. Jessel 
I Richards v. Delbridge, L. R. 18 Eq. Cas. 
L, as follows: "The making a man trustee 
ivolves an intention to become a trustee, 
hereas words of gift show an intention to 
ve over property to another, and not to re- 
in it in the donor's hands for any purpose, 
luciary or otherwise." 

The words of the donor in the present case 
•e that the bonds are owned by the donees. 
It that the interest to accrue thereon is 
vned and reserved by the donor for so long 
1 he shall live, and at his death they belong 
jsolutely to the donees. No intention Is here 
:pressed to hold any legal title to the bonds 

trust for the donees. Whatever interest 
as intended to be vested in them was trans- 
rred to them directly, subject to the reser- 
ition in favor of the donor during his life, 
id free from that reservation at his death. 
Dthing was reserved to the donor, to be held 

trust or otherwise, except his right to the 
cruing Interest which should become pay- 
tie during his life. It could only be by re- 



forming or supplementing the language used, 
that a ti-ust 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. JIalleson, 
L. R. 10 Eq. Cas. 475, and Richardson v. 
Richardson, L. R. 3 Eq. Cas. 686. In the firat 
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 th& 
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 instniment 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 declaiation of 
trust. Both of the cases cited are now placed 
among overruled cases. Fisher, Ann. Dig. 
(1873 and 1874) 24, 23. 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 ti-ust. Milroy v, Lord, 4 De Gex, P. Si 
J. 204. 

The case of JIartin 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 



74 



PKOPERTY IN EQUITY— TKUSTS. 



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 iu 
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. 



t^ 



I'llOPERTY IN EQUITY— TRUSTS. 



75 



ELLISON r. ELLISON. 

(G Ves. 656.) 

High Court ot Chancery. 1802. 

By indentures, dated the 1st of July, 1791, 
reciting a lease, dated the 6th of Juue pre- 
ceding, of collieries at Hehburn and .Tar- 
rowood in the county of Durham, for thirty- 
one years to Charles Wren, and others; and 
that the name of Wren was used in trust for 
Nathaniel Ellison and Wren in equal shares, 
it was declared, that Wren, his executors and 
administrators would stand possessed of the 
lease in trust as to one moiety for Ellison, 
his executors, &c. 

By another indenture, dated the 18th of 
June, 1796, reciting, that Ellison was interest- 
ed in and entitled to one undivided eighth part 
of certain collieries at Hebburn and Jarro- 
wood, held by two several leases for terms of 
thirty -one years; and that he was desirous of 
settling his interest, he assigned and trans- 
ferred all his interest in the said collieries 
and all the stock, &c. to Wren, his executors, 
administrators, and assigns, in tnist for Na- 
thaniel EUison and his assigns during his 
life; and after his decease in trust to man- 
age and carry on the same in like manner as 
Wren should carry on his own share; and 
upon further trust out of the profits to pay 
to Margaret Clavering during the remainder 
of the term, in case she should so long live, 
the yearly sum of £103. 2s. 8d.; which sum Is 
thereby mentioned to be secured to her by 
an indenture, dated the 14th of Jlay last; and 
subject thereto in trust to pay thereout to 
Jane Ellison, in case she should survive Na- 
thaniel Ellison, during the remainder of the 
term, during the joint lives of Jane Ellison 
and Anne FuiTe, the clear yearly sum of 
£180; and after the decease of Anne Fuiye 
then the yearly sum of £90 during the re- 
mainder of the term, in case Jane Ellison 
should so long live; and subject, as afore- 
said, upon trust to pay thereout to each of 
the children of Nathaniel Ellison, that should 
be living at his decease, during the remainder 
of the term, during the joint lives of Jane El- 
lison, and Anne Furye, and the life of the 
survivor, the yearly sum of £30 a-piece, and 
after the decease of the survivor the yearly 
sum of £15; and upon further trust to 
pay the residue of the profits arising from 
the collieries to the eldest son of Nathaniel 
Ellison, who should attain the age of twen- 
ty-one; and upon the death of Margaret 
Clavering then upon trust to pay to each 
of the children of Nathaniel Ellison the 
further yearly sum of £10; with survivor- 
ship, in case any of the children should die 
before twenty-one, or marriage of daughters, 
provided none except the eldest should be en- 
titled to a greater annuity than $50; and 
upon further trust to pay the residue to the 
eldest son; provided further, in case all the 
children die before twenty-one or the mar- 
riage of daughters, upon trust to pay the 
whole to such only child at twenty one, or 



marriage of a daughter: provided further, in 
case the profits to arise from the colliery 
should not be sufficient to pay all the an- 
nuities, the annuitants except Margaret Clav- 
ering should abate; to be made up, whenever 
the profits should be sufficient; and upon fur- 
ther trust, in case Wren, his executors, or 
administrators, should think it more bene- 
ficial for the family to sell and dispose of 
the collieries, upon trust to sell and dispose 
of the same for the most money, that could 
reasonably be got, and to apply the money 
in the first place in payment of all debts due 
from the colliery in respect of the share of 
Ellison; and subject thereto to place out the 
residue on real securities and apply the inter- 
est in the first place in payment of the an- 
nuity of £103. 2s. 8d. to Margaret Clavering, 
then to the annuities of £180 or £90; then to 
pay all the children of Ellison during the life 
of Margaret Clavering the yearly sum of £22. 
10s. and to pay the residue of the dividends, 
and Interest to the eldest son of Ellison in 
manner aforesaid; and if the dividends, &c. 
should not be sufficient for the annuities, the 
two annuitants except Margaret Clavering to 
abate; and after her death to pay to each 
of the children of Nathaniel Ellison the fur- 
ther yearly sum of £2. 10s. for their lives; 
and after the decease of Margaret Clavering 
and Jane Ellison upon ti'ust to pay to each 
of the children of Nathaniel Ellison the sum 
of £500 in case the money arising from the 
sale should be sufficient; then upon trust to 
divide the same equally among all the chil- 
dren, share and share alike; and subject, as 
aforesaid, to pay over the residue to the eld- 
est son on his attaining twenty-one; and it 
was declared, that the portions of the chil- 
dren should be paid to the sons at twenty- 
one, to the daughters at twenty-one or mar- 
riage; and in case of the death of any before 
such period to pay that share to the eldest 
son at twenty-one; and if only one child 
should survive, to pay the whole to such one 
at twenty-one, or marriage, if a daughter; 
and in case all die before twenty-one, &c. 
then the said Charles Wren, his executors and 
administrators, shall stand possessed of the 
said collieries and the money to arise by sale 
thereof, subject as aforesaid, in trust for Na- 
thaniel Ellison, his executors, administrators, 
and assigns. It was further declared, that 
the annuities should be paid half-yearly; and 
that upon any such sale the receipt of Wren, 
his executors or administrators should be a 
sufficient discharge to the purchasers. Then 
followed this proviso: 

"Provided always and it is hereby further 
declared that it shall and may be lawful for 
the said Nathaniel Ellison by any deed or 
deeds writing or writings to be by him sign- 
ed sealed and delivered in the presence of and 
attested by two or more credible witnesses, 
to revoke determine and make void all and 
every the uses trusts limitations and powers 
hereinbefore limited and created of and con- 
cerning the said collieries and coal mines, 



76 



PROPEHTY IN EQUITY— TUUSTS. 



and by the same deed or deeds or by any 
other deed to be by him executed in like 
manner to limit any new or other uses of 
the said collieries and coal mines as he the 
said Nathaniel Ellison shall think fit." 

By another indenture dated the 3d of July, 
1797, but not attested by two witnesses, re- 
citing the leases of the collieries, and that 
the name of Charles Wren was used in trust 
for Nathaniel Ellison and himself in equal 
shares; and that Ellison had advanced an 
equal share of the monies supplied for carry- 
ing on the collieries, amounting to £9037. 10s. 
it was witnessed, that in consideration of 
£4518. 15s. Wren assigned to Nathaniel El- 
lison one undivided moiety or half part of all 
the said collieries demised to him by the said 
several leases, with a like share of the stock; 
to have and to hold the said collieries to El- 
lison, his executors, administrators, and as- 
signs, for the residue of the said terms, sub- 
ject to the rents, covenants, and agreements, 
in the said leases; and to have and to hold 
the stock unto Ellison, his executors, admin- 
istrators, and assigns, to and for his and 
their own proper use for ever; with the 
usual covenants from Wren as to his title 
to assign, &c. and from Ellison to indemnify 
Wren, his executors, &c. 

Nathaniel Ellison, by his will, dated the 
22d of June, 1796, after several specific and 
pecuniary legacies, gave all the rest and resi- 
due of his personal estate and effects of what 
nature or kind soever not before disposed 
of, to his wife and Wren and the survivor 
and the executors and administrators of such 
survivor; upon trust to call in and place the 
same out in the funds or on real securities; 
and he directed, that all sums of money, 
which should come to the hands of his wife 
and Wren or of the executors, &c. of either 
of them under the said trusts, should be 
equally divided between all his children, sons 
and daughters, born and to be born, share 
and share alike: the shares to become vest- 
ed and be payable upon marriage with con- 
sent of their guardians, and not otherwise 
until the age of twenty-one: such part of the 
interest in the mean time as the guardians 
shall think proper to be applied for main- 
tenance: the residue to accumulate; with 
a direction for payment of part of the prin- 
cipal for advancement; and survivorship up- 
on the death of any, before the respective 
shares should be payable; and in case of the 
death of all under age and unmarried he gave 
the dividends and interest to his wife for 
life; and upon her death he gave the princi- 
pal and a sum of £3000 charged upon her 
estates, to his sister Margaret Claverlng and 
his nephew. Then after some further dispo- 
sitions of stock in favour of his children, he 
gave a legacy of twenty guineas to Wren; 
and appointed his wife and Wren executors 
and guardians. 

The testator died in 1708; leaving his wid- 
ow and ten children sui-viving; one of whom, 
Cliarles Ellison, died in 1799, an Infant, Wren 



also died in that year. The bill was filed by 
the testator's widow and Margaret Claver- 
lng; praying that the trusts of the deed of 
June, 1796, may be established; and that 
new trustees may be appointed. 

The younger children by their answer sub- 
mitted, whether the trusts of that deed were 
not varied or revoked by the deed of July, 
1797. 

Mr. Romilly and Mr. Bell, for plaintiffs. 
Mr. Richards, Mr. Steele, and Mr. W. Agar, 
for defendants. 

LOltD CHANCELLOR. I had no doubt, 
that from the moment of executing the first 
deed, supposing it not to have been for a wife 
and children, but for pure volunteers, those 
volunteers might have filed a bill in equity 
on the ground of their interests in that in- 
strument; making the trustees and the au- 
thor of the deed parties. I take the distlnc-i 
tion to be, that if you want the assistance of 
the court to constitute you cestuy que trust, 
and the instrument is voluntary, you shall 
not have that assistance for the purpose of 
constituting you cestuy que trusty as upon 
a covenant to transfer stock, &c. if it rests 
In covenant, and Is purely voluntary, this 
court will not execute that voluntary cove- 
nant; but If the party has completely trans- 
ferred stock, &c. though It Is voluntary, yet 
the legal conveyance being effectually made, 
the equitable interest will be enforced by 
this court. That distinction was clearly tak- 
en In Coleman v. Sarrel, independent of the 
vicious consideration. I stated the objection 
that the deed was voluntary; and the lord 
chancellor went with me so far as to con- 
sider It a good objection to executing what 
remained in covenant. But if the actual 
transfer is made, that constitutes the relation 
between trustee and cestuy que trust, though 
voluntary, and without good or meritorious 
consideration; and it is clear in that case, 
that If the stock had been actually trans- 
ferred, unless the transaction was affected 
by the turpitude of the consideration, the 
court would have executed it against the 
trustee and the author of the trust. 

In this case, therefore, the person claim- 
ing under the settlement might maintain a 
suit, notwithstanding any objection made to 
It as being voluntary; If that could apply to 
the case of a wife and children: considering 
also, that Mrs. Claverlng was an annuitant, 
and not a mere volunteer. But It was put 
for the defendants thus; that though tlie in- 
strument would have been executed original- 
ly. If the subject got back by accident Into 
the author of the trust, and was vested in 
him, then the objection will lie in the same 
manner, as If the instrument was voluntary. 
I doubt that for many reasons; the trust be- 
ing once well created; and whether it would 
apply at all, where the trust was originally 
well created; and did not rest merely in en- 
gagement to create It. Suppose Wren had 



PEOPEKTY IN EQUITY— TKUSTS. 



77 



■died, and had made Ellison his executor, it 
would be extraordinary to hold, that though 
an execution would be decreed against him 
as executor, yet, happening to be also author 
of the trust, therefore an end was to be put 
to the interest of the cestuy que trust. But 
it does not rest there; for Ellison clothes the 
legal estate remaining in Wren with the equi- 
table interests declared by the first deed; 
making him therefore a trustee for Ellison 
himself first, and after his death for several 
■other persons; and he has said, he puts that 
restraint upon his own power; not only, that 
Tub shall not have a power of revocation, 
whenever he changes his intention, but, that 
he shall not execute that power, nor be sup- 
posed to have that change of intention, un- 
less manifested by an instrument executed 
with certain given ceremonies. My opinion 
is, that, if there is nothing more in this trans- 
action than taking out of Wren the estate' 
clothed with a trust for others, with present 
interests, though future in enjoyment, and 
that was done by an instrument with no wit- 
ness, or only one witness, it is hardly possible 
to contend, that such an instrument would be 
a revocation according to the Intention of 
the party, the evidence of whose intention is 
made subject to restrictions that are not 
complied with. The only difliculty is, that 
the declaration of the trusts in the first in- 
strument could not be executed, the second 
instrument being allowed to have effect. It 
is said, a power was placed in Wren, his ex- 
€cutors and administrators, not his assigns, 
if in sound discretion thought fit, to sell, and 
to give a larger Interest to the younger chil- 
dren than they otherwise would take. If 
Wren had not after the reassignment that 
discretion still vested in him, I think, it 
would not be in the executors of Ellison, and 
it could not be exercised by the court; 
though in general cases trusts will not fail 
■by the failure of the trustee. But though the 
effect would be to destroy the power of 



Wren, which I strongly doubt, attending to 
the requisition of two witnesses, I do not 
know that it would destroy the other inter- 
ests. I think therefore, up"on the whole, this 
trust does remain notwithstanding this reas- 
signment of the legal estate to Ellison. I do 
not think, consistently with the intention ex- 
pressed in the first instrument, and the ne- 
cessity imposed upon himself of declaring a 
different intention under certain restrictions, 
that if a different intention appeared clearly 
upon the face of the instrument, the latter 
would have controlled the former. But I do 
not think his acts do manifest a different in- 
tention. Supposing one witness sufficient, I 
the second deed does not sufficiently mani- I! 
fest an intention to revoke all the benefits l( 
given by the first deed to the children; and/) 
it is not Inconsistent that he might intend to^i 
revoke some and not all. I 

As to the will, it is impossible to main- 
tain, that the will is a writing within the 
meaning of the power: considering how the 
subject is described. The word "residue" 
there means that estate, of which he had the 
power of disposing, not engaged by contracts, 
declarations of tmsts, &c. It was necessary 
for him to describe the subject in such a way, 
that there could be no doubt he meant to em- 
brace that property. 

Upon the whole, therefore, this relief must 
be granted; though I agree, that, if it rested 
in covenant, the personal representative 
might have put them to their legal remedies, 
he cannot where the character of trust at- 
tached upon the estate, while in Wren ; \feich 
character of trust therefore should adhere to 
the estate in Ellison, unless a contrary in- 
tention was declared; and the circumstance 
of one witness only, when the power reserved 
required two witnesses, is also a circum- 
stance of evidence, that he had not the in- 
tention of destroying those trusts which had 
attached, and wMe then vested in the person 
of Wren. 



78 



PllOFKKTY IN EQUJTY— TRUSTS. 



RICHARDSON v. RICHARDSON. 

(L. R. 3 Bq. 686.) 

February 26, 1876. 

Mr. G. M. Giffard and ilr. Kay, Q. C, for 

plaintiff. Jlr. Willeocli, Q. C, and Mr. Faber, 

for defendants. 

WOOD, V. C. The sole question in this 
case is whether a legatee, under the will of 
the testator, Richard Richardson, of a sum of 
£1250, ought or ought not to submit to a 
deduction of £450, in respect of two promis- 
sory notes given by him to his sister, which 
Involves the further question whether the 
testator was or was not the absolute owner 
of the notes. If he was the owner, though 
he demanded no interest upon the notes, 
and made no application for payment of 
them, yet, as is conceded, the statute of 
limitations cannot be set up, and the plain- 
tiff must be considered as having received 
on account of his legacy so much of the as- 
sets of'the testator as his debt amounted to. 

Whether or not the notes were the property 
of the testator depends upon a certain vol- 
untary assignment, whereby the sister, short- 
ly before her death, assigned the whole of 
her personal estate to her brother, the tes- 
tator, and in the same Instrument she gave 
him a power of attorney to ask, sue for, 
and recover the thereby assigned moneys 
and premises, and to do and execute such 
further acts and deeds as should be deemed 
necessary for deriving the full benefit of the 
assignment. 

Now, there is no specific description in the 
deed of the promissory notes, and, if they 
passed at all, they passed under the descrip- 
tion of "all other the personal estate and 
effects, whatsoever and wheresoever," of 
Elizabeth Richardson. She did not Indorse 
the notes, and the defendants, the executors, 
by their answer, say they believe that if 
she had not died so soon the testator would 
have applied to her to indorse the notes, but 
she did not do so. The questions are: First, 
whether they passed by the deed at all; and, 
secondly, if they passed, whether they passed 
to the testator as trustee or in his own 
right. 

After the decision In Kekewich v. Man- 
ning, 1 De Gex, M. &: G. 176, I think it is 
impossible to contend that these notes did 
not pass by this instrument, because the 
rule laid down in that case, the decision in 
which was supported by reference to Ex 
parte Pye, 18 Ves. 140, was not confined 
merely to this: that a person who, being en- 
titled to a reversionary interest, or to stock 
standing in another's name, assigns it by a 
voluntary deed, thereby passes it, notwith- 
standing that he does not in formal terms 
declare himself to be trustee of the property; 
but it amounts to this: that an Instrument 
executed as a present and complete assign- 
ment (not being a mere covenant to assign 



on a future day) is equivalent to a declara- 
tion of trust. 

It is impossible to read the argument in 
that case, and the judgment of Lord Justice 
Knight Bruce, without seeing that his mind 
was directed to Meek v. Kettlewell, 1 Hare, 
464; on appeal, 1 Phil. Ch. 342, and that class 
of cases, where it had been held (such was 
the nicety upon which the decisions turned) 
that an actual assignment is nothing more 
than an agreement to assign in equity, be- 
cause it merely passes such equitable in- 
terest as the assignor may have, and some 
further step must be taken by the assignee 
to acquire the legal interest. That further 
step being necessary, the assignment was 
held to be. In truth, nothing but an agree- 
ment to assign; and, being so, was not en- 
forceable in this court, the court having often 
decided that it will not enforce a mere volun- 
tary agreement. 

The distinction, undoubtedly, was very fine 
between that and a declaration of trust; and 
the good sense of the decision in Kekewich 
V. Manning, 1 De Gex, M. & G. 176, I think, 
lies in this: that the real distinction should 
be made between an agreement to do some- 
thing when called upon, something distinctly 
expressed to be future in the instrument, 
and an instrument which effects to pass ev- 
erything independently of the legal estate. 
It was held In Kekewich v. Manning that 
such an instrument operates as an out and 
out assignment, disposing of the whole of tlie 
assignor's equitable Interest, and that such 
a declaration of trust Is as good a form as 
any that can be devised. The expression 
used by the lords justices is this: "A declara- 
tion of trust is not confined to any express, 
form of words, but may be indicated by the 
character of the instrument." 

In that case reference was made in the 
argument principally to the case of Ex parte 
Pye, 18 Ves. 140, which was a decision of 
Lord Eldon to the same effect. Reliance is 
often placed on the circumstance that the 
assignor has done all he can; 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 effec- 
tual assignment. But that is not the sound 
doctrine on which the case rests; for if 
there be an actual declaration of trust, al- 
though the assignor has not done all that 
he could do,— for example, although he has 
not given notice to the assignee, — yet the in- 
terest is held to have effectually passed as 
between the donor and donee. The difference 
must be rested simply on this: Aye or no, 
has he constituted himself a trustee? 

In Ex parte Pye, 18 Ves. 140, the testator 
had written to one Dubost, authorizing him 
to purchase in France an annuity for the 
benefit of a lady named Garos, for her life, 
with power to draw on him for £1,500 for 
such pui-chase. The agent, finding the lady 
was a married woman, exercised his own dls- 



PROPERTY IN EQUITY— TKUSTS. 



7y 



cretlon, and bought the annuity in the name 
of the testator. Then, shortly before his 
death, the testator sent to Dubost, by his 
desire, a power of attorney, authorizing him 
to transfer the annuity to the lady. The 
testator died before anything more was 
done, and after his death the annuity was 
transfen'ed. There was a question wheth- 
er, by the law of France, the exercise of 
a power of attorney by the person to whom 
it is given, without knowledge of the death 
of his principal, is good. I think the mas- 
ter found that it was so; but Lord El- 
don expressly declined to rely upon that, as 
he says in Ms judgment (Id. 150): "These 
petitions" (the question came on upon peti- 
tion) "call for the decision of points of more 
importance and difficulty than I should wish 
to decide in this way, if the case was not 
pressed upon the court. With regard to the 
French annuity, the master has stated his 
opinion as to the French law, perliaps with- 
out sufficient authority, or sufficient inquiry 
into the effect of it, as applicable to the pre- 
cise circumstances of this case; but it is 
not necessary to pursue that, as upon the 
documents before me it does appear that, 
though in one sense this may be represented 
as the testator's pereonal estate, yet he has 
committed to writing what seems to me a 
sufficient declaration that he held this part 
of the estate in trust for the annuitant." 

Now, the testator had done nothing more 
than execute the power of attorney. It is 
true, he had written a letter directing the 
stock to be purchased in the lady's name; 
but that was not done; it was purchased in 
his name. The decision, therefore, could 
only be rested upon this: that this was not 
an agreement to assign, not an agreement to 
become a trustee at some future pei-iod, but 
an actual constitution by the testator of 
himself as trustee. 

Following, therefore, Kekewich v. Man- 
ning, 1 De Gex, M. & G. 176, I must regard 
this instrument as having effectually assign- 
ed the promissory notes, although they were 
not indorsed. The instrument is an actual 
assignment with a power immediately vest- 
ed in the assignee to make himself master of 
the property; and I do not know in what 
way the assignor could have more efCec- 
tually declared that she was a trustee of that 
property for Richard Richardson. 

The next question is whether the testator 
took these notes upon trust, for, if he did, 
there can be no set-off of the debt due to 
him qua trustee, against the legacy given by 
his will. It appears to me there is nothing 
whatever on the face of the instrument to 
create a trust. The property is given out 
and out, absolutely. Nor do I find anything 
like evidence to authorize me to say that it 
is fixed with a trust. [His honor reviewed 



the evidence, and came to the conclusion that 
a will had been executed in 1855, although 
the Instrument itself had not been produced, 
nor its absence accounted for. His honour 
tliought it very possible that the assignment 
was executed for the purpose of avoiding 
the duty, and disposing of the property 
through the medium of a trust; but he did 
not think the evidence sufficient to fasten 
that trust upon the property, no right hav- 
ing been asserted, during the period from 
1858 to 186-1, as against the testator. His 
honour continued:] 

It was said by Mr. Giffard, in another part 
of his argument, relying on the case of Free- 
man v. Lomas, 9 Hare, 109, that if the testa- 
tor could not take this property, except 
through the executoi-s of Elizabeth Richard- 
sou, if he could not take the notes specifical- 
ly, but could only take their value as an or- 
dinary legacy after a settlement of accounts 
with the executoi-s of Elizabeth Richardson, 
the testator's executors are not in a posi- 
tion to assert a right of set-off as regards 
these specific notes. But I have already 
stated my reasons for considering that there 
Is no evidence to show that the testator did 
not take these notes absolutely by the 
deed; and, as regards the application of the 
moneys secured on the notes to the pay- 
ment of debts, that would only arise in con- 
sequence of the possibility of the statute of 
Elizabeth intervening, which might take out 
for the benefit of the creditors as much of 
the property as might be wanted for tlie 
payment of debts; but, as regards the donee 
and donor, the deed would remain absolute, 
no debt ever having been asserted, and the 
property having been completely and effec- 
tually assigned. 

As regards some faint evidence of the tes- 
tator's wish that this debt might not be en- 
forced, no doubt the testa^tor never received 
interest, and he was in a vacillating frame of 
mind about it; but unfortunately that vacil- 
lation never amounted to anything definite 
or precise, amounting to a gift of the prop- 
erty. 

[His honour went through the evidence on 
this head, and continued:] 

Although I am vei-y reluctant to come to 
this conclusion, I must say the testator does 
not appear to me to have made up his mind; 
and, as he did not do so, I cannot do any- 
thing for the plaintiff. Therefore the legacy 
must be paid, deducting the value of the 
notes; but of course there will be no inter- 
est on them. The order will be to pay the 
plaintiff his legacy of £1,250, less £450, with 
interest at £4 per cent, on the difference, from 
one year after the testator's death. There 
will be no costs on either side, except that 
the defendants will have their costs out of 
the estate. 



80 



PKOFEllTY IJS' -EQUITY— TKUSTS. 



MORGAN V. MALLESON. 

(L. R. 10 Eq. 475.) 

July 28, 1870. 

The following memorandum was given by 
John Saunders, the testator in the cause, to 
his medical attendant. Dr. Morris: "I hereby 
give and make over to Dr. Morris an India 
bond, No. D., 506, value £1000, as some token 
for all his very kind attention to me during 
illness. 

"Witness my hand, this 1st day of August, 
1868. 

"(Signed) John Saunders." 

The signature was attested by two witness- 
es, and the memorandum was handed over to 
Dr. Morris, but the bond, which was trans- 
ferable by delivery, remained in the posses- 
sion of Saunders. There was no considera- 
tion for it. 

Saunders died more than a year afterwards, 
having, by his will, bequeathed the residue 
of his personal estate to charities. A suit 



was instituted for the administration of his 
estate, and a summons was taken out by the 
attorney general on behalf of absent chari- 
ties for the direction of the court on the ques- 
tion whether this memorandum was or was 
not a valid declaration of trust In favor of 
Dr. Morris. 

Mr. Jessel, Q. C, Mr. Speed, and Tucker & 
Lake, for Dr. Morris. Raven & Bradley and 
Mr. Wickens, for the attorney general. 

Lord EOMILLY. M. R. I am of opinion 
that the paper writing signed by Saunders 
is equivalent to a declaration of trust in fa- 
vor of Dr. Morris. If he had said, "I under- 
take to hold the bond for you," or if he had 
said, "I hereby give and make over the bond 
in the hands of A.," that would have been a 
declaration of trust, though there had been 
no delivery. This amciants to the same 
thing; and Dr. Morris is entitled to the bond, 
and to all interest accrued due thereon. 



U' 



.^y 



PROPERTY IK EQUITY— TRUSTS. 



81 



; 



.RICHARDS V. DELBRIDGE. 

(L. E. 18 Bq. 11.) 

Chancery Division. April 16, 1874. 

Demurrer. Tlie bill filed by Edward Ben- 
netto 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 21;th of .Tune, 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 plaintiff 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 memorandum^ delivered the lease on his 
behalf to Elizabeth Ann Richards, the plain- 
tiff's mother, who -n-as 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 plaintiff 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- 
tifC. Gregory, Rowcliffes •& Rawle, for de- 
fendants. 

JESSEL, M. R. This bill is wan'anted by 
the decisions in Richardson v. Richardson, 
L. R. 3 Eq. 686, and Morgan v. Malleson, 
L. R. 10 Bq. 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 Waniner v. 
Rogers, L. R. 16 Eq. 340, 348, in which Vice 
Chancellor Bacon said: "The rule of law 

HUTCH.EQ.JUR. — 6 



upon this subject I take to be very clear, 
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 wliich had been his up to the time 
of the declaration, should have effectvially 
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 
constmction 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 completely 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 constiiie 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 insufiicient to pass a legal interest, 
has said: "I give or grant certain property 
to A. B." Thus, in Morgan v. Malleson, L. 
R. 10 Eq. 47.5, 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 



83 



PEOPEKTY IN EQUITY— TRUSTS. 



declarations of trust. In the former case, 
Lord Romilly considered that tlie 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 tnistee, 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 bauds for any 
purpose, fiduciary or otherwise. 

In Milroy v. Lord, 4 De Gex, F. & 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 expres.sion of a present 
gift would not amount to an effectual dec- 
laration of trusi, which would be candying 
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 
\oluntary 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 cost* 
must follow the result 



PROPERTY IN EQUITY— TRUSTS. 



83 



MARTIN V. FUNK. 

(75 N. ¥. 134.) 

Court of Appeals of New York. Nor. 12, 1878. 

Nehemiah Jlillard, 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 diflacult 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 
II binding force. Kekewich v. Manning, 50 
Eug. 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. 204, 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- 
fen-ing 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 pai-ted 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- 



«4 



PROPERTY IN EQUITY— TRUSTS. 



cause the deposit was made in her uame as 
trustee, and not because she had not given 
the heneficial interest of the deposit to the 
plaintiff," 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 E. 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 differ- 
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 memorandum: "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 
liave 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 
memoi'anda 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 
her 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 aloue, 
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 wiU 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 iu 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 



PROPERTY IN EQUITY— TRUSTS. 



85 



plaintiff and I liold 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 he 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- 
hook 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 trustee? After 
a careful consideration of the case in con- 
nection with the established i-ules 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 JIILLER and EARL, 
JJ., absent at argument. 
Judgment affirmed. 



86 



PliOPERTY IN EQUITY— TRUSTS. 



DELANBY v. McCORMACK 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 
atflrmed 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 marries 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 
i-eal estate, whatsoever and wheresoever, to 
have and to hold, the same to my said son, 
liis heirs and assigns forever. 

"Fourthly. I desire my executors to keep 
the buildings on my real estate insured 
;i gainst loss or damage by fire, and in repair, 
and to pay all taxes, assessments, and other 
charges thereon, and also the interest on in- 
(•umbrances 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 effect until my said 
son James shall have lawful issue; and 1 
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 1830, 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. Goff, 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- 
vlvingj 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 plaintiff. 
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 ot 
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 bruag 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 he 
executed by a court of e<iuity. 

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 



PKOPERTT IN KQUITY— TKU.STS. 



87 



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 statutoi-y 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. 
S, § 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 ixian the 
srantee 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, iu 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 coui-t. 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 Oatton 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 theh' 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- 



88 



PKOPEUTY IN EQUITY— THUSTS. 



lives 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, 
70 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- 



ing had lawful Issue, so that the vesting was 
jilainly 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 "ilstributed 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. Whltgreave, 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 incongruitj' 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. 






PROPERTY IN EQUITY— TRUSTS. 



S9 



JACKSON T. PHILLIPS et al. 

(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 instruc- 
tions as to the validity and effect 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 boaid 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 oflicer 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 revfert 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. 

"Article 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 born 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, 
formefly of Brookfleld, Mass., now the wife 



of Henry Blackwell of New York, and Susan 
B. Anthony of Rochester, N. Y., their suc- 
cessors and assiKus, 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 unmanled, the right to vote; to 
hold office; 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 board 
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 ofBcer 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 sei-vices 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 ah-eady 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 E. Eddy, 
during her natural life;" and at her decease,, 
one-half of such income to be paid semi-an- 
nually "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 



■90 



PKOPEKTY IN EQUITY— TRUSTS. 



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 51. 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 iu 
question to be fuUy 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, -146; Lewin, Trusts, c. 2. 

Each of the bequests in the will of Francis 
Jackson, which the court is asked iu 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- 
it.y 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 pecuUar 
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. 43 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. 



PUOPEKTY IN EQUITY— TRUSTS. 



91 



1 1 The preamble of the statute mentions three 
^J<;lasses of charitable gifts, namely, First: For 
J the relief and assistance of the poor ami 
/ needy, specifying only "sick and maimed sol- 
/ diers and mariners," "educiition and prefer- 
1 ment of orphans," "marriages of poor maids," 
' "supportation, aid and help of yomig 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 appi'o- 
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 naviga- 
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, 4(»i;; Barclay v. 
Maskelyne, 4 Jur. (N. S.) 12!)4; Chambers v. 
St. Louis, 29 llo. 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 
I 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 Ed.) 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 tlie 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 
plautatiou." 1 Mass. Col. Rec, 68, 

No kind of charitable trusts 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." Sue! 
uses had indeed been previously recognize^ 
as charitable, and entitled to peculiar favor, 
by many acts of parliament, as well as in the! 
courts of justice. St. 13 Bdw. I. c. 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. Maltyard, Poph. 6, Moore, j 
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. Do\\Tiing, 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- 



'fU 



.-> 



,- ) 



92 



PllOPEKTY JjST EQUITY— trusts. 



{ ing V. Emery, 16 Pick. 107; Sohier v. St. 
/ Paul's Church, 12 Jletc. (JIass.) 250; Brown 
, T. Kelsey, 2 Gush. 243; Barle v. Wood, 8 
I Cush. 445. It is not necessary in this connec- 
' tion to speculate whether the admission of 
V pious uses into the rank of legal charities in 
/ modern times is to be attributed to the influ- 
' ence of the civil law; to their having been 
J mentioned in the earlier English statutes; to 
a more liberal interpretation, after religion 
had become settled in England, of the words 
} "repair of churches," or, possibly, of the 
I clauses relating to gifts for the benefit of ed- 
\ ucation, in St. 43 Eliz. ; or to the support giv- 
/ en by the court of chancery to public charita- 
( ble trusts, independently of any statute. It 
f is sufficient for our present purpose to observe 
I that pious and religious uses are clearly not 
\ within the strict words of the statute, and can 
f 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. 
e. 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 wouM other- 
wise 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 j 
absolute and inalienable supremacy of the ) 
pope in ecclesiastical matters; or for the sup- j 
port of the Roman Catholic or the Jewisbi ' 
religion, before such gifts were countenanced! ) 
by act of parliament. De Themmines v. De 1 
Bonneval, 5 Russ. 288; Tudor, Char. Trusts, 
21-25, and cases cited. And a bequest "to- ) 
wards the .political restoration of the Jews I 
to Jerusalem and to their own land," has ) 
been held void, as tending to create a politi- I 
eal revolution in a friendly country. Haber- 
shon V. Vardon, 4 De Gex & S. 467. In a free I 
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- I 
formed or altered by the legislatm-e or the | 
people. But it is the duty of the judicial de- I 
partment to expound and administer thfe laws i 
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^Mu, 
charity is hardly to be found in the books!^'^|^ 
ITie one most commonly used in modern >fM^ 
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 Lyudhurst, and by 
the supreme court of the United States— "A 
gift to a general public use, which extends; j 
to the poor as well as the rich." Jones v. i 
Williams, Amb. 652; Coggeshall v. Pelton, T i 
Johns. Ch. 204; Mitford v. Reynolds, 1 Phil- ' 



PROPEUTY IN EQUITY— TRUSTS. 



9J5 






191, 192; Perin v. Carey, 2i 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, 
S Ijy assisting them to establish themselves in 
! life, or by erecting or maintaining public 
S T)uildings or works or otherwise lessening the 
Vbm-dens of government. It is immaterial 
} -whether the purpose is called charitable in 
i the gift itself, if it is so described as to show 
/ that it is charitable in its natm'e. 

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 t(i carry 
the will into efCect, 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 allow of the fund 
Ijelng 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 
Tinder 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, 
lay purchase of lands of inheritance, or other- 
"wise, as they shall be advised, out of my per- 
gonal 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 
l)y 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 
CoU. Jurid. 439. The doctrine of that case has 
■ever since been recognized as sound law. 
Attorney General v. Whitchurch, 3 Yes. 144; 
■Curtis V. Hutton, 14 Ves. 530; 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 
xecently 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. 9 Geo. 
II. Philpott V. St. George's Hospital, 6 H. 
L. Cas. 338. The rule stated in Attorney Gen- 
eral V. AVilliams, 2 Cox, Ch. 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 
afCect 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 wUl 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 piissima — and not only declaretl 
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 pjirpose, 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 quibuscuuque vasis vel 
vestimentis preferri." Code, lib. 1, tit. 2, c. 
22; Id., tit. 3, cc. 28, 49; Id., lib. 8, tit. 54, 
c. 36; Nov. 7. e. 8; Id., p. ll."i, 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 



i 



94 



PROPEKTiT IN EQUITY— TRUSTS. 



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 Turkish 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 sulfering and slavery," was 
gi'anted; "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 ilass. 536. 
Indeed it appears by Sir Francis Moore's 
reading upon the statute, that even in his 
time the word "captives" ipight include cap- 
tive enemies. Duke, Char. Uses, 1.58. 

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 (queen be- 
lieved it would be pious and acceptable to 
God and according to Christian charity— 
"plum fore credimus et Deo acceptabile 
Christianseque charitati consentaneum"— to 
wholly enfranchise the villeins of the crown 
on certain royal manors. 20 Howell, St. Tr. 
1372. 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 ecclesioe gremio ser- 
vis 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 mastei- 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 Fortescue: "Crudelis enim necessario 
judicabitur lex, qure servltutem augmentat et 
minuit libertatem. Nam pro eS. natura sem- 
per Implorat humana. Quia ab homine et 
pro vitio introducta est servitus. Sed liber- 
tas a Deo homlnis est indita naturae. Quare 
ipsa ab homine sublata semper redire gliscit, 
ut facit omne quod libertati natural! pri- 
vatur. Quo ipse et crudelis judicandus est, 
qui libertati non favet. Haec considerantia 
Anglise jui-a in omnl 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 
uses, depends not upon the laws and the pub- 
lic policy of England at the time of the pas- 
sage of the statute, but ujyon 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 tho 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 articlo, 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. 1C60) 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 Lllierties 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 



PROPEliTY IN EQUITY— TRUSTS. 



95 



age of alienation, and descent to all the sons 
together— adopting some and modifying oth- 
ers. Body of Liberties, aits. 10, 11, 53, 81; 2 
Bl. Comm. 84. 

In the laws of Europe, at the time of the 
foundation of tlie 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; Bi-act. 4b; Fleta, lib. 1, c. 3; Bedes 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, c. 5, §§ 27, 29; Id. lib. 3, c. T. In parts of 
England, hereditary villenage would seem to 
have still existed in fact; and it was allowed 
by law until since the American Revolution. 
Pigg V. Caley, Noy, 27; Co. Litt. 116-140; 2 
Inst. 28, 45; 2 Rolle, Abr. 732; Smith v. 
Brown, 2 Salk. 606, Holt, 495; Smith v. 
Gould, 2 Salk. 667, 2 Ld. Raym. 1275; Ti-eble- 
cock's Case, 1 Atk. 633; The King v. Ditton, 
4 Doug. 302. Lord Bacon, in explaining the 
maxim, "Jura sanguinis nulla jm-e civili di- 
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 naturae but as the increase of a flock." 
Bac. Max. reg. 11. 

The Massachusetts Body of Liberties, as 
Govei-nor 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 fii"st 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, 10 JIass. 74; Edgar- 
town V. Tlsbury, 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 be 
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, Lofft, 17; Quincy, 97, noter 
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; Jennison'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, 628. 



•t.6 



PHOPEKIY IN EQUITY— TRUSTS. 



>^( 



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 Jlarshp 1 and Mr. .Justice Story, 
speaking for the supreme court of the United 
States. The Antelope, 10 AA'heat. 120, 121; 
Prigg V. Pennsylvania, 10 Pet. 611. 

The constitution of the United States uni- 
foi-mly 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. <>'i3. 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 heirs 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 coMrt 
as charitable. P.ut such does not appear to 
us to be the necessary or tlie 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 aud 
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- 
lie 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 (jlrant and Lord 
Eldon in Morice v. Bishop of Durham, 9 
Ves. 406, 10 Ves. 534, .530; 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 
liuowledge and promoting religion," and tlie 
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 Jliddlesex 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 influence on all the great 
Interests of mankind, and to devise means 
for insuring universal and permanent peace," 
as in Taijpan 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. 
Drununoud, there cited. See, also, McDon- 
ough v. ilurdoch. 15 How. 405. 414. 

The beques:! itself manifests its immediate 



PROPERTY IN EQUITY— TRUSTS. 



97 



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; also 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 

HUTCH. BQ.JUB. — 7 



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 wiU 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 from 
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 which the court is bound to cany 
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 in 



98 



TROPEBTY IN EQUITY— TRUSTS. 



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 inquiiy 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. Oas. 285, 290; Attorney General v. 
Painterstainers' Co., 2 Cox, Ch. 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 punishmept 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 withia 
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. — w i 

It is hardly necessary to remark that thp Irii 
direction of the testator that his trustees I'm* 
shall not be accountable to any one is simply ''I 



M 



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. 100, 217. 

IV. It is quite clear that the bequest in 
trust to be expended "to secure the parage 
of laws granting women, whether maiWed or 
unmanned, 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 the 



V^'i 



PROPERTY IN EQUITY— TRUSTS. 



99 



^ 



gift to create a public sentiment whlcli 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 ease has 
been under advisement, has deprived us of 
his assistance In determining the other ques- 
tions in controversy. 

i 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, 
withm 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. Gas. 531; Arm- 
strong V. Armstrong, 14 B. Mon. 333; 1 Jarm. 
Wills, 244; Lewis, Perp. 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 may sui-vive her, in 
either of which cases half 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 
efCect 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 cyf 






^ 



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— cy 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- 



lUO 



PROPERTY IN EQUITY— TRUSTS. 






tion of remoteness. It was of this last, and 
not of any doctrine peculiar to charities, 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 Bldon, "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 
\l, J-Jif ; which the disposition of a charity is held to 
I ,• he in the crown by sign manual, are of two 
•' t ';■ classes; the first, of bequests to particular 
,1 , uses charitable in their nature, but Illegal, as 
1 j for a form of religion not tolerated by law; 
- -^ ,1 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. 
Thaekwell, 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 
i a bequest to Mr. Baxter to be distributed by 
I him among sixty pious ejected ministers, (not, 
1 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 
I ground that this was really a legacy to sixty 
i individuals to be named. 1 Vern. 248; 2 
Vern. 105; 1 Eq. Gas. Abr. 96; 7 Ves. 76. 
Such also 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 foundhng hospital. Amb. 228; 2 Swanst. 
489, note; 1 Uickens, 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, a 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- Ik. 
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 II. Moggridge v. j 
Thaekwell, 7 Ves. 69-^1; 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, pomm. 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 chari- 
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 I 
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 i 
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- 



A 



rf- 



C^i 



,U 



PKOPEBTY IN EQUITY— TRUSTS. 



101 



ing to be trustee, to determine how bequests 
for 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 BUz.) Act. Can. 559. A decree in 16 
Eliz., 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 Gal. Pro. Ch. 81, 1 Mylne 
& K. 389, 390; Dwight, 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.) Dwight, 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 Kose 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; Magill 
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, Eq. 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 
ductitius, 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. Prom 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; and 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 Sir Joseph Jekyll in Eyre v. Shafts- 
bury, 2 P. Wms. 119; and of Lord Hard- 
wicke 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 V. Carroll, Act Can. 729; Dwight's Ar- 



102 



PROPERTY IN EQUITY— TRUSTS. 



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 
commonwealth, and is exercised here, as in 
England, through the attorney general. Go- 
ing V. Emery, 16 Pick. 119; County Attor- 
ney V. May, 5 Gush. 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 tlie 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 vs'hich 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 chancei-y without the 
aid of the sign manual, the prerogative of 
the king acting through the chancellor has 
uot 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 he 
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 



PKOPERTY IN EQUITY— TRUSTS. 



103 



Lord Keeper Somers, who, acting upon the 
Uocti-ine 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 sis 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 
CoUy. G70, 671, 1 H. L. Cas. 804, 805, 824. 
In 1744 Lord Htirdwicke, 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 carrying 
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, 
be effected. 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- 
erwards made in chancery as. the revenues 
increased. 2 CoUy. 672-674, 1 H. L. Cas. 
806, 807, 825, 826; 3 Yes. 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 
jEngland, 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, 
Higlmi. Mortm. 336-354, 3 Brown, Ch. 166, 
uote. 

Sir John Romilly, JI. 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 circumstances, 
but will be applied by the court according t« 
a scheme approved by a master to carry out 
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. 
Minshull, 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 



104 



PROPERTY IN EQUITY— TRUSTS. 



case. See Fontain t. 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. Williams, 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, Oh. 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 & 0. 
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 think, 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 ease 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 the 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. 



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 as might be to the 
intentions of the testator; laving regard to 
the bequest touching British captives, and 
also to the other charitable bequests in the 
will; and that the case should be referred 
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 Langdalt, 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 Bloomfield v. Stowe- 
market, above cited. 

But the case most like that now before us 
is that of Lady Mice'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 



PROPERTY IN EQUITY— TRUSTS. 



105. 



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 wMch 
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. 
Girard's Ex'rs, 2 How. 192; Perin 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- 
rise?" 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. Dashiell 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. 
Grilfln 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. AI- 
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 



106 



riiOPEHTY IN EQUITY— TEUSTS. 



judicial doctrine, except in one liind 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 t. 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. 93, 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 receut 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 
pai-ticular mode in which it is to be effectu- 
ated does not destroy the charity; for equity 
■s\'ill substitute another mode, so that the sub- 
stantial intention shall not depend 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 
ihe means of definition are given, may be 
enforced in favor of the general intent, even 
where the mode or means provided for by 
the donor 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. E'q. 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- 
najQced or left an open question in all the 
New England states except Connecticut, 
BiuT 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 li. 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. ZanesviUe, 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 wei'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. Dexter v. Gardner, 7 Allen, 243; Odell 
V. Odell, 10 Allen, 1. Charitable bequests to 
an unincoi-porated society here, to a foreign 
corporation or society, or to a particular re- 
ligious denomination in a certain contty, 
have been carried into effect, even where uo 
trustees iiave been named in the will. Bur- 
bank V. Whitney, 24 Pick. 146; Bartlett v. 
Nye, 4 Mete. (Mass.) 378; Washburn v. Se- 
wall, 9 Mete. (Mass.) 280; Universalist Sec. v. 
Fitch, 8 Gray, 421. See, also. Wells v. Doaue, 
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 chai'- 
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 vai'- 
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 tie court for 
the purpose. Winslow v. Cummings, 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 



rilOPEllTY IN EQUITY— TRUSTS. 



107 



and all matters relating to a certain gift to a 
scientific 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 biU being filed, and 
it appearing that it had become impriicticablo 
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 corpora lion to apply 
the sui-plus income, after paying such pre- 
miums, to purchasing books, papers and pliil- 
osophical apparatus, and making such pub- 
lications or 1 'curing 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 tliat 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 practicable. 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- 
tri£e." "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. Harvard 
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. 204, 
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. Cunimings, 3 Cush. 358, and 
Bliss V. American Bible Soc, 2 Allen, 334. 
So in Easterbrooks v. Tillinghast, 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 oijinion 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. Tlieir 
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 



108 



PROPERTY IN EQUITY— TRUSTS. 



under advisement cannot affect the question. 
Tlie 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 Episcopalianism 
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 tne 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 applied to 
educate them and their children. Bishop of 



Hereford v. Adams, 7 Ves. 324; Wilkinsott 
V. Malin, 2 Cromp. & J. 636, 2 Tyrw. 544; 
Anderson v. Wrights of Glasgow, 12 L. 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, t* 
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 administi-ation. 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 in 
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- 



PROPERTY IN EQUITY— TRUSTS. 



109 



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 he 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 Kew 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- 
«d 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 m-ging 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- 
ance 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 he 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 ot the 
branch commission; and by substituting for 
the words "recently in rebelUon" 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. 



110 



PROPERTY IN EQUITY— TRUSTS. 



HOLLAND et al. v. ALCOCK et al. 

(16 N. E. 305, 108 N. Y. 312.) 

Court of Appeals of New York. February 7, 
1888. 

Appeal from general term, supreme court, 
Second department. 

Action by Mary Holland, Ellen Bagley, 
Catherine Alcock, Ann Bagley, Thomas Bag- 
ley, and Mary Hanley, heirs at law and next 
of kin of Thomas Gunning, deceased, against 
Henry Alcock, impleaded with Frederick 
Smyth, as executors and trustees under the 
will of Thomas Gunning, to declare void the 
residuary clause in such will because of the 
Indefinite designation of the beneficiaries 
therein. Judgment at special term for plain- 
tiffs, and at general term for defendants. 
Plaintiffs appeal. 

E. H. Benn, for appellants. I. Newton 
Williams and David McClure, for respond- 
ents. 

RAPALLO, J. The third clause of the tes- 
tator's will is in the following words: "All 
the rest, residue, and remainder of my es- 
tate I give and bequeath to my said execu- 
tors, to be applied by them for the purpose 
of having prayers offered in a Roman Cath- 
olic Church, to be by them selected, for the 
repose of my soul, and the souls of my fam- 
ily, and also the souls of all others who 
may be in purgatory." The validity of this 
clause is the question now presented for ad- 
judication. The action is brought by five 
nieces and a nephew of the testator, who 
claim to be his next of kin and heirs at law, 
and, as such, entitled to his residuary estate 
in case the disposition thereof attempted to 
be made by the third clause of the will is 
adjudged to be invalid. The estate consists 
wholly of personal property, and amounted 
at the time of the testator's death, in 1882, 
to about the sum of $28,000. By the second 
clause of his will the testator devised and 
bequeathed all his estate, real and personal, 
to his executors, in trust for the uses and 
purposes set forth in the will, which were to 
pay certain legacies, amounting in the aggre- 
gate to about $10,500, and to apply the resi- 
due as directed in the third clause, before 
recited. That clause must therefore be re- 
garded as creating, or attempting to create, 
a trust of personal property for the purpose 
specified. The plaintiffs claim that the trust 
thus attempted to be created is void; that as 
to the residuary estate the testator died in- 
testate; and that distribution thereof should 
be made among the next of kin, etc. The 
defendant Alcock, one of the executors, de- 
murred to the complaint. At special term 
the demurrer was overruled, and the plain- 
tiffs had judgment. On appeal to the gen- 
eral term the judgment was reversed, and 
judgment was rendered in favor of the de- 
fendant Alcock, thus affirming the validity 



of the third clause of the will. The plain- 
tiffs now appeal. 

Some of the points involved in the case 
now before us were passed upon in the late 
case of Gilman v. McArdle, 99 N. Y. 451, 2 
N. B. 464. In that case the deceased had 
in her life-time placed in the hands of the 
defendant a sum of money, on his promise 
to apply it to certain purposes during the 
life-time of the deceased and of her hus- 
band, and after the death of both of them 
to pay their funeral expenses, etc., and to 
expend what should remain in proturing Ro- 
man Catholic masses to be said for the re- 
pose of their souls. This court declined to 
decide whether a valid trust had been cre- 
ated in respect to the surplus, there being 
no ascertained or ascertainable beneficiary 
who could enforce it; and the majority of 
the court expressly reserved its opinion up- 
on that question, disposing of the case up- 
on the ground that a valid contract inter 
vivos, to be performed after the death of 
the promisee, had been established, that 
there was nothing illegal in the purpose for 
which the expenditure was contracted to be 
made, and that there was no want of defl- 
niteness in the duty assumed by the prom- 
isor; and we held that as there had been 
no breach of the contract, but the promisor 
was ready and willing to perform, he was 
entitled, as against the legal representatives 
of the promisee, to retain the consideration. 
The point upon which the majority of the 
court in the case last cited reserved its deci- 
sion is now again presented. There is no 
contract inter vivos, but the will expressly 
bequeaths the fund in question to the exec- 
utors, in trust for the purposes therein spec- 
ified ; one of which is to apply the residuary 
estate to the purpose of having prayers of- 
fered in a Roman Catholic Church for the 
repose of the souls of the testator, of his 
family, and of all others who may be in 
purgatory. It is claimed that this disposi- 
tion contains all the elements of a valid 
trust of personal property, that there are 
definite and competent trustees, that the 
purpose of the trust is lawful, and that it 
is sufficiently definite to be capable of being 
enforced by a court of equity, as the court 
could decree the payment of the fund to a 
Roman Catholic Church or Churches for the 
purpose directed by the will. But, if all 
this should be conceded, there is still one 
important element lacking. There is no 
beneficiary in existence, or to come into ex- 
istence, who is interested in, or can demand 
the execution of, the trust. No defined or 
ascertainable living person has, or ever can 
have, any temporal interest in its perform- 
ance; nor Is any incorporate church desig- 
nated so as to entitle it to claim any portion 
of the fund. The absence of a defined ben- 
eficiary is, as a general rule, a fatal objec- 
tion to any attempt to create a valid trust. 
It Is said by Wright, J., in Levy v. Levy, 33 



PROPERTY IN EQUITY— TRUSTS. 



Ill 



N. Y. 107, that, "if there is a single postu- 
late of the common law established by an 
unbroken line of decision, it is that a trust 
without a certain beneficiary, who can claim 
its enforcement, is void, whether good or 
bad, wise or unwise." It is only in regard 
to the class of trusts known as "charitable" 
that a different rule has ever prevailed in 
equity in England, and still prevails in 
some of our sister states. Whether the 
English doctrine of charitable uses and 
trusts prevails in this state will be consid- 
ered hereafter. In all otlier cases the rule 
as stated by Judge Wright is universally 
recognized, both in law and in equity. 

It is claimed that the trust now under re- 
view is not void according to the general rules 
of law for want of a defined beneficiary, be- 
cause the trust is for the pui-pose of having 
prayers offered in a Roman Catholic Church 
to be selected by the executors. It is con- 
tended that this is in effect a gift to such 
Roman Catholic Church as the executors shall 
select, inasmuch as tlie money to be expended 
for the masses would, according to the usage, 
be payable to the church or cliurches where 
they were to be solemnized, and therefore, 
as soon as the selection is made, the desig- 
nated church or churches will be the bene- 
ficiary or beneficiaries, and entitled to the 
payment; that the trust is therefore, in sub- 
stance, to pay the fund to such Roman Catho- 
lic Church or Churches as the executors may 
select; and that a duly-incorporated church, 
capable of receiving the bequest, must be 
deemed to have been intended. Passing the 
criticisms to which the assumptions contained 
in this proposition are subject, and consider- 
ing the trust as if it had been in form to pay 
over the fund to such Roman Catholic Church 
as the executors might select, to defray the 
expense of offering prayers for the dead, the ob- 
jection of indefiniteness in the beneficiary 
would not be removed. The case of Power v. 
Cassidy, 79 N. Y. 602, is relied upon by the re- 
spondents as supporting their claim. In that 
case the bequest was of a fund to the execu- 
tors in trust, to be divided by them among 
such Roman Catholic charities, institutions, 
schools, or charities in the city of New York 
as a majority of the executors should decide, 
and in such proportions as they might think 
proper. The opinion of the court by Miller, 
J., holds that giving full force and effect to 
the rule that the object of the trust must be 
certain and well defined; that the benefici- 
aries must be either named, or capable of be- 
ing ascertained, within the rules of law ap- 
plicable to such cases; and that the trusts 
must be of such a nature that a court of 
equity can direct their execution, and making 
no exception in favor of charitable uses, — the 
bequest should be upheld, as coming within 
the general rule; that the clause designates 
a certain class of objects of the testator's 
bounty, to which he might have made a valid 
direct bequest, and that by conferring power 



upon his executors to designate the organiza- 
tions which should be entitled to participate, 
and the proportion which each should take, 
he did not impair the legality of the pro- 
vision, so long as the organizations referred to 
had an existence recognized by law, and were 
capable of taking and could be ascertained; 
that the evidence showed that at the time of 
the execution of the will, and of the testator's 
death, there were in the city of New York 
incorporated institutions of the class referred 
to in the will, and that a portion of these had 
been designated by a majority of the execu- 
tors; that none but incorporated institutions 
could lawfully have been selected, and that, 
even if the executors had failed to make a 
selection or apportionment, the court would 
have had power to decree the execution or 
the trust, there being no difficulty in deter- 
mining what institutions came within the 
class described by the testator. It must be 
observed that in the case cited the benefici- 
aries were confined to Roman Catholic insti- 
tutions of a certain class in the city of New 
York. These were necessarily limited in num- 
ber. By 1 Rev. St. p. 734, § 97, it is provided 
that a trust power does not cease to be im- 
perative when the grantee has the right to 
select any, and exclude others, of the persons 
I designated as the objects of the trust; by 
section 99, that, when the terms of the pow- 
er import that the estate or fund is to be 
distributed between the persons designated 
in such manner or proportions as the trus- 
tee of the power may think proper, the 
trustee may allot the whole to any one or 
more of such persons, in exclusion of the 
others; by section 100, that if the trustee of 
a power, with the right of selection, shall die 
leaving the power unexecuted, its execution 
shall be decreed in equity for the benefit 
equally of all the persons designated as ob- 
jects of the trust; and by section 101, that 
where a power in trust is created by will, and 
the testator has omitted to designate by 
whom the power is to be exercised, its execu- 
tion shall devolve on the court of chancery. 
Regarding these provisions as declarations of 
general rules applicable to all trast powers, 
and governing trusts of personal as well as 
real property, the decision in Power v. Cas- 
sidy in no manner infringes upon the rule 
that the designation of a beneficiary, entitled 
to enforce its execution, is essential to the 
validity of a trust; and the only point as to 
which the correctness of that decision is open 
to any doubt is whether, in fact, the benefi- 
ciaries in that case were sufBciently defined 
and capable of ascertainment to enable a 
court of equity to enforce the trust in their 
behalf. The view taken in respect to that 
point was certainly very liberal; but the 
court has in subsequent cases repeatedly an- 
nounced that the decision was not to be ex- 
tended, and it is evident that, without a ma- 
terial extension, it cannot be made to cover 
the present case. Here, if the church or 



112 



PROPERTY IN EQUITY— TRUSTS. 



churches from among which the selection is 
.to be made are to be regarded as the benefi- 
ciaries, they are not limited, as in Power v. 
Cassidy, to a Roman Catholic Church or 
Churches in the city of New York, but in- 
clude all the Roman Catholic Churches in the 
world. No one church, or the churches of 
.any particular locality, can claim the benefit 
of the bequest. In this respect the case at 
bar is analogous to that of Prichard v. 
Thompson, 95 N. Y. 76, where the bequest 
was of a sum of money to the executors, to 
be distributed by them "among such incor- 
porated societies organized under the laws of 
the state of New York or the state of Mary- 
land, having lawful authority to receive and 
hold funds upon permanent trusts for charit- 
able or educational uses," as the executors, 
or the survivors of them, might select, and in 
such sums as they might deto'mine. Th's 
bequest was held void because of the indefi- 
jiiteness of the designation of the benefi- 
ciaries. The opinion was written by the 
same learned judge who delivered the opin- 
ion in Power v. Cassidy, and by him distin- 
guished from that case on the ground that in 
Power V. Cassidy the class of beneficiaries 
was specially designated and confined to the 
limits of a single city, and to a single reli- 
gious denomination, so that each one could 
readily be ascertained, and each had an in- 
herent right to apply to the court to sustain 
And enforce the trust; while in the case at 
bar every charitable and educational institu- 
tion within two states was included. This 
case (Prichard v. Thompson) also establishes 
that the power to the executors to select the 
beneficiary or beneficiaries does not obviate 
the objection of the omission of the testator 
to designate them in the will, unless the per- 
-sons or corporations from among whom the 
selection is to be made are so defined and lim- 
ited that a court of equity would have power 
to enforce the execution of the trust, or, in 
default of a selection by the trustee, to decree 
jin equal distribution among all the benefi- 
ciaries. This discussion has proceeded in 
answer to the claim that the church or 
churches where the masses were to be sol- 
^■mnized were the intended objects of the tes- 
tator's bounty, and the beneficiaries of the 
trust; but the correctness of that position is 
by no means conceded. It is, however, not 
necessary to discuss it. If the bequest had 
tieen of a sum of money to an incorporated 
Roman Catholic Church or Churches, duly 
designated by the testator, and authorized by 
law to receive such bequests, for the purpose 
of the solemnization of masses, a different 
-question would arise. But such is not this 
case. The bequest is to the executors in 
trust, to be by them applied for the purpose 
-of having prayers offered in any Roman Cath- 
•olic Church they may select. 

It has been argued that the absence of a 
beneficiary entitled to enforce the trust is 
not fatal to its existence where the trustee is 
competent and willing to execute it, and the 



purpose is lawful and definite; that It is only 
where the trustee resists the enforcement of 
the trust that the question of the existence 
of a beneficiary entitled to enforce it ariyes. 
I have not found any case in which this ques- 
tion has been adjudicated, or the point has 
been made, and it does not seem to be pre- 
sented on this appeal. The case now before 
us arises on a demurrer by the defendant Al- 
cock, one of the executors, to the complaint, 
on the ground that it shows no right in the 
plaintiffs. The complamt alleges that the 
defendant Alcock, together with Frederick 
Smyth, were named as executors in the will; 
that the defendant Alcock did not qualify, 
and has never acted, as executor or as trus- 
tee of the alleged trust sought to be created 
by the third clause, nor participated in any 
form in carrying out the same; but that his 
co-executor, Frederick Smyth, has taken pos- 
session of the whole estate, as such executor 
and trustee. Smyth is not a party to this 
appeal. It comes up on the demurrer of Al- 
cock alone, and there is nothing in the com- 
plaint to show that he is willing to execute 
the trust; but, on the contrary, it shows that 
he has in no manner acted, or qualified him- 
self to act, therein. But, aside from these 
considerations, I do not think that the validi- 
ty or invalidity of the trust can depend upon 
the will of the trustee. If the trust is valid, 
he can be compelled to execute it; if invalid, 
he stands, as to personal property undisposed 
of by the will, as trustee for the next of kin, 
and the equitable interest is vested in them 
immediately on the death of the testator, sub- 
ject only to the payment of his debts and the 
expenses of administration. When a trust is 
attempted to be created without any benefi- 
ciary entitled to demand its enforcement, the 
trustee would, if the trust property were in 
his possession, have the power to hold it to 
his own use without accountability to any 
one, and contrary to the intention of the 
donor, but for the principle that in such a 
case a resulting trust attaches in favor of 
whoever would, but for the alleged trust, be 
equitably entitled to the property. This eq- 
uitable title cannot on any sound principle be 
made to depend upon the exercise by the trus- 
tee of an election whether he will or will not 
execute the alleged trust. In such a case 
there is no trust, in the sense in which the 
term is used in jurisprudence. There is sim- 
ply an honorary and imperfect obligation to 
carry out the wishes of the donor, which the 
alleged trustee cannot be compelled to per- 
form, and which he has no right to perform 
contrary to the wishes of those legally or eq- 
uitably entitled to the property, or who have 
succeeded to the title of the original donor. 
The existence of a valid trust capable of en- 
forcement is consequently essential to enable 
one claiming to hold as trustee to withhold 
the property from the legal representatives 
of the alleged donor. A merely nominal 
trust, in the performance of which no ascer- 
tainable person has any interest, and which 



PROPERTY IK EQUITY— TRUSTS. 



113, 



is to be performed or not as the person to 
whom the money Is given thinks fit, has nev- 
er been held to be sufficient for that purpose. 
It Is contended, however, that charitable 
uses and trusts are not subject to the gen- 
ei'al rules of law upon this subject, and that 
the bequest now under consideration is of 
that class. The distinguishing features of 
this class of trusts, as administered in Eng- 
land from an early period, were that they 
might be established through trustees, who 
might consist either of individuals or a cor- 
poration; and, in the case of individual 
trustees, they might hold in indefinite suc- 
cession, and be self-perpetuating, and the 
funds might be devoted in perpetuity to the 
charitable purposes indicated by the donor; 
while private trusts were not permitted to 
continue longer than a life or lives in being 
and 21 years and a fraction afterwards. 
The persons to be benefited might consist of 
a class, though the individual members of 
the class might be uncertain. The scheme 
of the charity might be wanting in sufficient 
deflniteness or details to admit of its practical 
administration, and, in such cases, a court 
of equity would order a reference to a master 
in chancery to devise a scheme for its ad- 
ministration, which should as nearly as pos- 
sible conform to the intentions of the found- 
er of the charity; and thus was called into 
operation what was known as the "cy-prgs 
doctrine." These charitable trusts were re- 
garded as matters of public concern, and 
were enforceable by the attorney general, 
although, In many cases, the court would 
compel their performance without his inter- 
vention, at the instance of a town or parish, 
or of Its inhabitants, or of an individual 
of the class Intended to be benefited, such 
as one of the poor or maimed, etc. In a com- 
paratively recent case argued in this court, 
many instances of ancient charities were cit- 
ed which had been enforced by the court of 
chancery in England, such as Cooke's Char- 
ity, decided A. D. 1552, whereby the testator 
ordered the purchase of lands, and the erec- 
tion of a free grammar school; Bond's Char- 
ity, decided A. D. 1553, in which the testa- 
tor's will, dated in 1506, directed that there 
should be established a Bede house at Bab- 
lock, and there should be built a chapel, and 
therein one mass to be said on Sunday, and 
therein to be ten poor men, and a woman to 
dress their meat and drink,— the priest to be 
a brother of Trinity guild and Corpus Christ! 
guild, etc.; Howell's Charity, decided In 
1557, whereby the testator directed his ex- 
ecutors to provide a rent of 400 ducats year- 
ly forever, to be appropriated each year to 
promote the marriage of four orphan maid- 
ens, honest, and of good fame. This trust 
appears to have been enforced In chancery 
upon a bill filed by certain orphan maidens 
In behalf of themselves and others. We 
were also referi'ed to numerous other char- 
ities for the support of the poor, for erec- 
tion of almshouses, hospitals, maintaining 

HUTCH. BQ. JOB. — 8 



school-masters, keeping churches in repair, 
and other similar purposes. In the case of 
Bond's Charity, cited above, a license was 
granted by King Henry VII., in 150S, to the 
testator's son and others to grant lands to 
support a priest to sing mass, and twelve 
poor men and one woman to say prayers and 
obsequies for the king, the brothers and sis- 
ters of the guild, and for their souls, and 
especially for the soul of the testator, Thom- 
as Bond, in the then newly-erected chapel 
at Bablock. It appears that religious or 
pious uses were, when the Roman Catholic 
rehgion prevailed in England, recognized as 
charities. In 1434, Henry Barton devised to 
the rector of St. Mary's, and the church'-war- 
dens, and their successors, certain lands, at 
a perpetual rent, payable to the guild of 
Corpus Christi, etc., so that said rector of 
St. Mary's and his successors, or their par- 
ish priests, when they should say prayers in 
the pulpit of the church, should pray for the 
souls of Richard Barton, the testator's father, 
of Dionesia, his mother, and for the souls 
of their children, and all the faithful de- 
ceased, and, in case they should neglect to 
do so for two days after the proper time, 
tliat the master and wardens of said guilds, 
etc., should levy a distress upon said lands for 
12 pence by way of penalty, and retain such 
distress until such prayers should be said. 
This property appears to have been after- 
wards seized by the crown, under the stat- 
utes of chauntries (1 Edw. VI.), and granted 
by Edward VI. to one Stapleton; but the 
rector, etc., of St. Mary's having re-entered, 
it was made to appear in a litigation between 
them and the successors in interest of Staple- 
ton that no prayer for souls had been made, 
nor had the rents of the premises been de- 
voted to any manner of superstitious use 
within the space of six years and more next 
before the first year of the reign of King 
Edward VI., since which time the rents and 
profits had been employed by the parson and 
church-wardens of the parish in good uses 
and purposes. The case was tried in the 
22d and 23d Eliz., and the parish was allow- 
ed to retain the land for general charitable 
purposes. 

The purposes for which charities were es- 
tablished in England were so numerous and 
varied, and the learning contained in the 
books on that subject is so vast, that It 
would be futile to attempt to go into it In 
detail, or to do more than briefly refer to 
their history, so far as Is necessary to de- 
termine whether the English doctrine of 
charitable uses and trusts, as distinguished 
from private trusts governed by the general 
rules of law, still has any place in the juris- 
prudence of this state. The statute of 1 
Edw. VI., A. D. 1547, known as the "Statute 
of Chauntries," recited that a great part 
of superstition and errors In Christian re- 
ligion had been brought Into the minds of 
men by reason of their ignorance of their 
true and perfect salvation through the death 



114 



PKOPEETY IN EQUITY— TKUSTS. 



of Jesns Christ, and by devising vain opin- 
ions of purgatory, and masses to be done 
for tliose who are departed, which doctrine 
is maintained by nothing more than by the 
abuse of trentalles, chauntries, and other 
provisions for the continuance of such blind- 
ness and ignorance; that the amendment 
of the same, and converting them to good 
and godly uses, such as the erection of gram- 
mar schools, the education of youth, and bet- 
ter provision for the poor, cannot in the pres- 
ent parliament conveniently be done, nor be 
committed to any person than to the king, 
who by the advice of his most prudent coun- 
cil can and will most wisely alter and dis- 
pose of the same. It then recites the act of 
37 Hen. VIII. for the dissolution of colleges, 
chauntries, etc.. and enacts that all colleges, 
free cliapels, and chauntries not in the actual 
possession of the late or present king, (with 
certain specified exceptions,) and all their 
lands and revenues, are declared to be in the 
actual seizure and possession of the present 
king, without oflSce found; and that all sums 
of money, etc., which by any conveyance, wiU, 
devise, etc., have been given or apijointed in 
perpetuity towards the maintenance of priests, 
anniversaries, or obits, be vested in the king. 
Certain colleges, free chapels, and chauntries, 
such as those within the universities of Ox- 
ford and Cambridge, and others specified in 
the statute, were exempted from its provi- 
sions; but the king ivas empowered to alter 
the chauntries in the universities. In this man- 
ner property which had been devoted by the 
donor to uses which had come to be regarded 
as superstitions were, through the king, put 
to charitable uses which were deemed lawful; 
and this policy was carried out by many de- 
crees of the court of chancery. The statute 
of 39 Eliz., A. D. 1597, authorized persons 
owning estates in fee-simple dm'iug 20 years 
next ensuing the passage of the act, by deed 
enrolled in the high court of chancery, to 
found hospitals, houses of correction, alms- 
houses, etc., to have continuance for ever, and 
place therein a head and members, and such 
number of poor as they pleased; and such 
institutions were declared to be corporations, 
with perpetual succession. It will be observ- 
ed that this was but a temporary act, which 
gave power only for 20 years next ensuing its 
passage, to found the chauntries mentioned. 
This statute also contained a provision enti- 
tled "An act to reform deceits and breaches of 
trust touching lands given to charitable uses," 
which recited that divers institutions had been 
founded, some by the queen and her progeni- 
tors, and some by other godly and well-dis- 
posed people, for the charitable relief of poor, 
aged, and impotent people, maimed soldiers, 
schools of learning, orphans, and for other 
good, charitable, and lawful purposes and in- 
tents, and that lands and goods given for such 
purposes had been unlawfully converted to 
the lucre and gain of some few greedy and 
covetous persons; and then proceeds to pro- 
vide for the issue of commissions out of chan- 



cery to inquire into those wrongs, and decree 
the observance of the trusts according to the 
intent of the founders thereof. This statute 
was followed by that of 43 Eliz. c. 4, "To re- 
dress the misemployment of lands, goods, and 
stocks of money heretofore given to charitable 
uses." This act is known as the "Statute of 
Charitable Uses," and was at one time, to- 
gether with that of 39 Eliz., regarded as the 
foundation of the law of charitable uses, and 
of the jiu-isdiction of chancery in cases of 
charities. But the reports of the record com- 
mission established in 1819 have disclosed that 
the jurisdiction had been exercised, and char- 
ity laws administered, by the courts of chan- 
cery from a much earlier period. The act, 
however, throws light upon what were at the 
time considered and recognized as charitable 
uses, for they are enumerated in the pream- 
ble as follows, viz.: The relief of the poor, 
the maintenance of the sick and maimed sol- 
diers and mariners, schools of learning, free 
schools, and schools in universities; the re- 
pair of bridges, ports, havens, causeways, 
churches, sea-banks, and highways; the educa- 
tion and preferment of orphans; the mainte- 
nance of houses of correction; the marriage of 
poor maidens; the aid of young tradesmen, 
handicraftsmen, and persons decayed; the re- 
lief or redemption of prisoners or captives; 
the aid of poor persons in the payment of 
taxes. The act then provides for the issuing 
of commissions by the lord chancellor of Eng- 
land or the chancellor of the duchy of Lan- 
caster, and the redress of breaches of trust, 
as in the statute 39 Eliz. In this enumera- 
tion of charitable uses there is none which 
would cover the present case; and indeed, 
under the statute of chauntries and other stat- 
utes prohibiting superstitious uses, it would 
not have been recognized m England as vaUd 
as a charity or otherwise. But assuming, as 
perhaps we ought to assume, that before gifts 
for the support of priests, chauntries, etc., came 
to be regarded as superstitious uses, they were 
within the principles of charity, and that they 
became illegal only by virtue of the statutes 
against superstitious uses; in this state, 
where all religious beliefs, doctrines, and 
forms of worship are free, so long as the pub- 
lic peace Is not disturbed, the ti-ust in ques- 
tion cannot be impeached on the ground that 
the use to which the fund was attempted to 
be devoted was a superstitious use. The ef- 
ficacy of prayers for the dead is one of the 
doctrines of the Roman Catholic Church, of 
which the testator was a member; and those 
professing that belief are entitled in law to 
the same respect and protection in their re- 
ligious observances thereof as those of aay 
other denomination. These observances can- 
not be condemned by any court, as matter of 
law, as superstitious, and the English statutes 
against superstitious uses can have no effect 
here. Amend. Const. U. S. art. 1; Const. N. 
Y. art. 1, § 3. If, in other respects, the he- 
quest was by the law of England valid as a 
"charitable" use, and the English doctrine of 



PROPERTY IN EQUITY— TRUSTS. 



115 



charitable uses prevails In this state, the ob- 
jections to its validity on the ground of in- 
definiteness of the trust, perpetuity, and the 
absence of an ascertainable beneficiary can be 
overcome; otherwise, they must prevail, at 
least so far as relates to the absence of a ben- 
eficiary, which is sufficient to dispose of the 
case without refennce to the other points. 
We will therefore treat the bequest as a char- 
itable use. 

The principal cases in this state in which 
the doctrine of charitable uses has been dis- 
cussed are Williams v. Williams, 8 N. Y. 
527; Owens v. Missionary Soc, 14 N. Y. 
380; Beeliman v. Bonsor, 23 N. Y. 298; 
Downing v. Marshall, Id. 366; Levy v. Levy, 
33 N. Y. 97; Rose v. Rose (1863) 4 Abb. Dec. 
108; Bascom v. Albertson, 34 N. Y. 584; 
Burrlll V. Boardman, 43 N. Y. 254. These 
cases were argued by counsel of eminent 
ability, and in the arguments and opinions 
display a depth of learning and thorough- 
ness of research which render it useless to 
attempt a discussion of the question here as 
an original question, or to do more than 
summarize the main points upon which the 
arguments turned, and ascertain how the 
case stands upon those authorities. So late- 
ly as the case of Burrill v. Boardman, 43 N. 
T. 254, the question was argued as still an 
open one; and that case was decided on the 
ground that the trust was valid without re- 
sorting to the doctrine of charitable uses. 
Comstock, J., in a note to the eleventh edi- 
tion of Kent's Commentaries (volume 4, p. 
305, note 2), states that the essential requi- 
sites of a valid trust are (1) a sufficient ex- 
pression of an intention to create a trust; 
(2) a beneficiary who is ascertained, or ca- 
pable of being ascertained; that the appoint- 
ment or non-appointment of a trustee of the 
legal estate is not material; that if the 
trust or beneficial purpose be well declared, 
and if the beneficiary is a definite person or 
corporation capable of taking, the law Itself 
will fasten the trust upon him who has the 
legal estate, whether the grantor, testator, 
heir, or next of kin, as the case may be; 
and that, outside of the domain of char- 
itable uses, no definiteness of purpose will 
sustain a trust if there be no ascertained 
beneficiary who has a right to enforce it. 
And in delivering the opinion of this court 
in Beekman v. Bonsor, 23 N. Y. 310, the 
same learned judge says that the joint au- 
thority of the cases of Williams v. Wil- 
liams, 8 N. Y. 527, and Owens v. Missionary 
Soc, 14 N. Y. 308, establishes the proposi- 
tions (1) that a gift to charity is maintain- 
able in this state if made to a competent 
trustee, and If so defined that it can be exe- 
cuted, as made by the donor, by a judicial 
decree, although it may be void, according 
to general rules of law, for want of an as- 
certained beneficiary; (2) that in other re- 
spects the rules of law applicable to char- 
itable uses are within those which apper- 
tain to trusts in general; (3) that the cy-pr6s 



power which constitutes the peculiar feature 
of the English system, and Is exercised In 
determining gifts to charity where the do- 
nor has failed to define them, and In fram- 
ing schemes of approximation near to or 
from the donor's true design, Is unsuited to 
our institutions, and has no existence in the 
jurisprudence of this state on this subject. 
But he declined to re-examine these cases, 
as he concludes that the law of charities 
could not be invoked in the case then under 
consideration. The same learned judge, 
however. In the subsequent case of Bascom 
V. Albertson, 34 N. Y. 584, in which he act- 
ed as counsel, reviewed at length the ques- 
tion whether the English law of charitable 
uses prevailed to any extent whatever in 
this state. His argument was preserved in 
print, and was used in Burrill v. Boardman, 
43 N. Y. 254, and In that argument, refer- 
ring to what he had said In his opinion in 
Beekman v. Bonsor as to the proposition 
that a gift to charities, if well defined, and 
made to a competent trustee, was main- 
tainable In this state, although it might be 
void, according to general rules of law, for 
want of an ascertained beneficiary, and to 
the similar remark in his opinion in Down- 
ing V. Marshall, 23 N. Y. 382, characterizes 
his own remarks in those two cases as a 
most inconsiderate repetition, as a dictum, 
of a proposition laid down by another judge; 
calling attention to the fact that the repe- 
tition was a mere dictum, because In the 
two cases in which it was made the trusts 
were held void. 

The case of Williams v. Williams, 8 N. Y. 
524, Is the leading case In the court of last 
resort of this state in support of the doc- 
trine that the English law of charitable 
uses Is In force in this state, and it fully 
supports the proposition that it is. In that 
case the testator after making a bequest to 
an Incorporated church, bequeathed the sum 
of $6,000 to Zophar B. Oakley and other In- 
dividual trustees, with power to perpetuate 
their successors, as a perpetual fund for the 
education of the children of the poor who 
should be educated in the academy of the 
village of Huntington, with directions to ac- 
cumulate the fund up to a certain point, 
and apply the income in perpetuity to the 
education of the children whose parents' 
names were not upon the tax-lists. The 
opinion was delivered by Denio, J., and con- 
curred In by four of the other judges, three 
judges dissenting. The opinion held that 
this bequest, by the general rules of law, 
would be defective and void, as a convey- 
ance in trust for the want of a cestui que 
trust in whom the equitable title could vest, 
and could be sustained only by force of that 
peculiar system of law known in England 
under the name of the "Law of Charitable 
Uses;" that the objection that the bequest 
assumed to create a perpetuity would also be 
fatal If the Revised Statutes applied to gifts 
for charitable purposes. But the learned 



116 



PROPERTY IN EQUITY— TRUSTS. 



judge held that according to the laws of 
England as understood at the time of the 
American Revolution, and as it still existed, 
devises and bequests for the support of 
charity or religion, though defective for 
want of such a grantee or donee as the rules 
of law required in other cases, would, when 
not within the purview of the mortmain act, 
be supported in the court of chancery; that 
the law of charitable uses did not originate 
in, and was not created by, the statute 43 
Bliz. c. 4, but had been known and recog- 
nized and enforced before that statute, and 
was ingrafted upon the common law, and 
consequently was not abrogated by the re- 
peal in this state of the statute 43 Eliz. in 
1788 (Laws 1788, c. 46, § 37) ; that the provi- 
sions of the Revised Statutes did not affect 
property given in perpetuity for religious or 
charitable purposes; and that consequently 
the bequest to Zophar B. Oakley and others, 
in trust for the children of the poor, was 
valid. 

In Owens v. Missionary Soc, 14 N. T. 380, 
the testator bequeathed the residue of his 
estate to the "Methodist General Missionary 
Society," an unincorporated association ex- 
isting when the will was made, and when it 
took effect, in 1834, but which, subsequent 
to the testator's death, became incorporated. 
In a suit between the incorporated society 
and the next of kin of the testator, the be- 
quest was held void, and that the next of 
kin were entitled to the residue. Opinions 
were delivered by Selden, 0., and Denio, J. 
Judges A. S. Johnson, T. A. Johnson, Hub- 
bard, and Wright concurred in the opinion 
of Selden, J., which held that the bequest 
was not valid as one made to the associa- 
tion for its own benefit, because of its inca- 
pacity to take; nor could it be sustained as 
a charitable or religious use, as it was not 
accompanied by any trust as to the applica- 
tion of the fund. Also that, where there 
was no trustee competent to take, our court 
of chancery had no jurisdiction to uphold a 
trust for a charitable or religious purpose; 
and it distinguished the case from Williams 
V. Williams on the ground that there the be- 
quest was to trustees competent to take. Al- 
though the tenor of the opinion is against 
following the example of the English chan- 
cellors in applying a peculiar and partial 
system of rules to the support of charitable 
gifts. Judge Selden disavows the intention 
of denying the power of courts of equity in 
this state to enforce the execution of trusts 
created for public and charitable purposes in 
cases where the fund is given to a trustee 
competent to take, and where the charitable 
use is so far defined as to be capable of be- 
ing specifically executed by the authority of 
the court, even although no certain benefi- 
ciary other than the public at large may be 
designated. Denio, J., while reaffirming the 
decision in Williams v. Williams, placed his 
vote upon the ground that the trust was not 
one which could be executed by the court 



as a charitable use, the purposes of the so- 
ciety being "to diffuse more generally the 
blessings of education, civilization, and 
Christianity throughout the United States 
and elsewhere;" that although trusts in fa- 
vor of education and religion had always 
been considered charitable uges, and were 
recognized as such in the statute of Eliza- 
beth, the advancement of civilization gener- 
ally was not classed among charities, and 
the whole fund might be disposed of for pur- 
poses promotive of universal civilization, 
which still would not be charitable objects 
in the understanding of the law. Six of the 
judges were of opinion that the charity was 
not suflBciently defined by the terms of the 
will, and that the judgment in favor of the 
next of kin should be affirmed on that 
ground. 

The next case in order Is Beekman v. Bon- 
sor, 23 N. Y. 298. In that case the^mount 
to be given to the charitable purpose, as 
well as the manner in which the fund was 
to be applied, was left to the discretion of 
the executors. They renounced, and it was 
held that the trust was incapable of execu- 
tion, that the cy-prSs power, as exercised in 
England In cases of charity, had no exist- 
ence in this state, and that the next of kin 
were entitled to the fund. Numerous points 
were discussed in the opinion, which was by 
Comstock, J., and he there made the dictum, 
which he afterwards recalled, that a gift of 
charity which would be void, by the general 
rules of law, for the want of an ascertained 
beneficiary, will be upheld by the courts of 
this state if the thing given was certain, if 
there was a competent trustee to administer 
the fund as directed, and if the charity itself 
was precise and definite. 

Downing v. Marshall, 23 N. Y. 366, held 
that a devise and bequest to an unincorpo- 
rated missionary society was void, on the 
same grounds as In the case of Owens v. 
Missionary Soc, supra. 

Up to this time the doctrine of the case of 
Williams v. Williams as to the validity of 
trusts for charities, even in the absence of a 
definite beneficiary, had been acquiesced in. 
But in Levy v. Levy, 33 N. Y. 97, it was 
vigorously assailed by Wright, J., who dis- 
cussed the question anew whether the Eng- 
lish doctrines of trust for charitable uses 
were law in this state. That learned judge 
expressed a decided opinion that they were 
not (page 105 et seq.); that that peculiar 
system of jurisprudence proceeded in disre- 
gard of rules deemed elementary and funda- 
mental in other limitations of property, in 
upholding indefinite charitable gifts, by the 
exercise of chancery powers and the royal 
prerogative; that it was not the exercise of 
the ordinary jurisdiction of chancery over 
trusts, but a jurisdiction extended and 
strengthened by the prerogative of the 
crown and the statute of 43 Eliz. over pub- 
lic and indefinite uses defined In that statute 
as "charities;" that even In England It liad 



PROPERTY IN EQUITY— TRUSTS. 



117 



been deemed necessary to restrain and regu- 
late by act of parliament the creation of 
these Indefinite charitable trusts, by the stat- 
utes of mortmain and other restrictions, and 
it cannot be supposed that the system was 
deliberately retained in this state freed from 
all legislative restriction. He calls attention 
to the fact that in 1788 the legislature of 
this state repealed the statute of 43 Eliz., 
the statute against superstitious uses, and 
the mortmain acts. That at that time it 
■was supposed that the law for the enforce- 
ment of charitable trusts had its origin only 
in the statute of Elizabeth; and argues that 
the legislature of 1788, in thus sweeping 
away all the great and distinctive land- 
marks of the English system, must have in- 
tended that the effect of the repeal should 
be to abrogate the entire system of indeti- 
nite trusts, which were understood to be 
supported by that statute alone; and that 
the whole course of legislation in this state 
indicates a policy not to introduce any sys- 
tem of public charities except through the 
medium of corporate bodies. That in 1784 
the general law for the incorporation of re- 
ligious societies had been enacted, and that 
before, and contemporaneously with, the re- 
peal of the statute of Elizabeth and the stat- 
utes of mortmain, special acts incorporating 
such societies were passed, and other acts 
have been passed creating or authorizing 
corporations for various religious and chari- 
table purposes, in all of which are to be 
found limitations upon the amount of prop- 
erty to be held by such societies; thus in- 
dicating a policy to confine within certain 
limits the accumulation of property perpetu- 
ally appropriated, even to charitable and re- 
ligious objects. That the absolute repeal of 
the statute of Elizabeth and of the mort- 
main acts was wholly inconsistent with the 
policy thus indicated, unless it was intended 
to abrogate the whole law of charitable 
uses as understood and enforced in England. 
The opinion then refers to the course of leg- 
islation in this state following the repeal of 
the English statutes authorizing corporations 
for charitable, religious, literary, scientific, 
and benevolent purposes, and in all cases 
limiting the amount of property to be en- 
joyed by them. This legislation is claimed 
to disclose a policy differing from the Brit- 
ish system, and absolutely inconsistent with 
the supposition that uses for public or in- 
definite objects, and of unlimited duration, 
can be created and sustained without legis- 
lative sanction. Since the case of Williams 
V. Williams, decided 35 years ago, there has 
been no adjudged case in this court which 
supports a charitable gift on the principles 
enunciated by Judge Denio in pronouncing 
that decision. Of course, this observation 
applies only to the indefinite charity which 
the case included, and not to the gift in 
favor of a religious corporation. 

After the decision of that case the struggle 
in this court for the overthrow of charitable 



uses began in the case of Owens v. Mission- 
ary Soc, 14 N. Y. 380. The opponents of 
such trusts had for their justification the 
repeal in 1788 in this state of all the BrAtish 
statutes which upheld such trusts in Eng- 
land, and the substitution of a charity sys- 
tem maintained by our statute laws in the 
form of corporate charters containing, by 
legislative enactment, power to receive, hold, 
and administer charitable gifts of every va- 
riety known in the practice of civilized com- 
munities and our statute of uses and trusts, 
defining the trusts which may lawfully be 
created. This statute has been held binding 
on the courts, although, of course, it ceases 
to operate when the legislature charters a 
corporation for a charitable purpose, with 
power to take and hold property in perpe- 
tuity for such purpose. From the case of 
Owens V. Jlissionary Soc, 14 N. Y. 380, 
through the cases of Downing v. Marshall, 
23 N. Y. 366; Levy v. Levy, 33 N. Y. 97; 
Bascom v. Albertson, 34 N. Y. 584; Burrill 
V. Boardman, 43 N. Y. 254; and Holmes v. 
Mead, 52 N. Y. 332 (decided in 1873),— the 
struggle was continued, and the announce- 
ment definitely made, in the latest of those 
cases, that the controversy was closed by 
the adoption of the principles enunciated in 
the said last-mentioned case. In Williams 
V. Williams, Judge Denio, whose great learn- 
ing and ability are universally acknowl- 
edged, maintained, as the basis of his con- 
clusion in favor of charitable trusts as the 
law of this state, that they came to us by 
inheritance from our British ancestors, and 
as part of our common law. That iparticular 
postulate being finally overthrown, and the 
British statutes having been repealed at the 
very origin of our state government, we 
should be a civilized state without provision 
for charity if we had not enacted other laws 
for ourselves. But charity, as a great in- 
terest 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. Instead of the 
huge and complex system of England, for 
many generations the fruitful source of liti- 
gation, we have substituted a policy which 
offers the widest field for enlightened benev- 
olence. The proof of this is in the great 
number of charitable institutions scattered 
throughout the state. It is not certain that 
any political state or society in the world of- 
fers a better system of law for the encour- 
agement of property limitations in favor of 
religion and learning, for the relief of the 
poor, the care of the insane, of the sick and 
the maimed, and the relief of the destitute, 
than our system of creating organized bodies 
by the legislative power, and endowing them 
with the legal capacity to hold property 
which a private person or a private corpora- 
tion has to receive and hold transfers of 
property. Under this system, many doubt- 
ful and obscure questions disappear, and 
give place to the more simple inquiry wheth- 



'l-f 



118 



PEOPERTY IN EQUITY— TRUSTS. 



er the grantor or devisor of a fund designed 
for charity Is competent to give; and wheth- 
er the organized body is endowed by law 
with capacity to receive, and to hold and 
administer, the gift. In Williams v. Wil- 
liams, supra, in maintaining a gift for pious 
uses to an incorporated religious society, 
Judge Denio assigned the reasons which 
have been universally approved since that 
tiLdie; and they are summed up by saying 
that charitable limitations of property in 
favor of corporations competent, by statute 
law, to hold them, are valid or invalid on 
the same grounds as other limitations of 
property between natural persons, and are 
referable to the general system of law which 
governs in the ordinary transactions of man- 



kind. From his reasoning in the other 
branch of the case before him, it appears 
that he had not reached the conclusion es- 
tablished in the later cases, namely, that 
with us charity is found in our corporation 
laws, general and special, which have been 
extended so as to embrace the purposes here- 
tofore known and recognized as charitable, 
and which are continually extending and 
improving, so as to meet the new wants 
which society in its progress may develop. 

As the result of the foregoing views, the 
judgment of the supreme court at general 
term should be reversed, and that of the 
special term affirmed. 

All concur, except EARL, J., not voting. 

Judgment accordingly. 



PKOPERTY IN EQUITY— TRUSTS. 



119 



FISHEE T. FOBES. 

(22 Mich. 454.) 

Supreme Court of Michigan. April Term, 1871. 

Bill in equity to establish a resulting trust. 
There was a decree for complainant, from 
which defendant appealed. 

A. C. Baldwin, for complainant. Crofoot 
& Brewer, for defendant. 

COOLEY, J. The facts in this case are 
few and simple, and in regard to most of 
them there is no dispute. In the fall of 
1854, complainant resided in Bennington, 
New York, upon a parcel of land which he 
had purchased of the Holland Land Com- 
pany, and upon which he was then owing 
about thirteen hundred dollars, which he 
was unable to pay. The company were de- 
manding payment, and had sent an officer, 
whether with legal process or simply as their 
agent, we are not informed, to remove him 
from the premises, when one Stillman Good- 
enough, complainant's brother-in-law, inter- 
vened, and succeeded in obtaining two weeks' 
time, in which to make some arrangement 
if possible. Complainant seems to have been 
quite discouraged, and put himself entirely 
into the hands of Goodenough, telling him to 
go on and make a saving for the family if 
he could do so. Goodenough did go on as 
agent for complainant, and succeeded in 
making an arrangement with one Patchin, 
then residing in Steuben county. New York, 
to exchange the interest of complainant in 
the Bennington land for an eighty-acre lot 
owned by Patchin in Milford, Oakland coun- 
ty, Michigan. Complainant signed some 
writing expressing his satisfaction with this 
arrangement, and it would seem to have been 
closed up at once, so far as complainant was 
concerned, but the deed from Patchin was 
executed at his home, and was not sent on 
until some weeks afterwards. It does not 
distinctly appear that there was any under- 
standing between complainant and Good- 
enough, as to who should be named as gran- 
tee in the deed from Patchin, but the deed, 
when received, named Goodenough as gran- 
tee, and complainant does not appear to have 
expressed any dissatisfaction with it. He, 
however, took possession of the Milford land, 
claiming it as his own, and has ever since 
been in possession under the like claim, and 
made valuable Improvements. 

Stillman Goodenough, it appears, conveyed 
the Milford land to his brother, John R. 
Goodenough, in 1855, on an understanding, 
as he claims, that the title should still be 
held for complainant, and there have been 
several subsequent conveyances, until the le- 
gal title has become vested in the defendant, 
who claims to be a grantee In good faith, 
and for value. It is not claimed, however, 
that defendant or any of the intermediate 
grantees has or had any greater equities than 
were possessed by Stillman Goodenough, and 



as the complainant's continuous possession 
must be regarded as notice of his actual 
rights (McKee v. Wilcox, 11 Mich. 358), we 
need not consider the merits of any of the 
alleged subsequent purchases. 

The bill in this case avers that Stillman 
Goodenough took the title to the Milford 
land in his own name without the consent of 
complainant, and in fraud of his rights; and 
its purpose is to compel the defendant to re- 
lease to the complainant the title which, it 
is claimed, is held for him under an implied 
or constructive trust. The defendant insists 
that the conveyance to Stillman Goodenough 
was made with the full approval of com- 
plainant, and that consequently under our 
statute he is entitled to no relief. 

As the consideration for the conveyance 
to Stillman Goodenough was furnished by 
complainant, there can be no doubt that at 
the common law there would have been a re- 
sulting trust in complainant's favor. But 
our statute provides that, "when a grant for 
a valuable consideration shall be made to one 
person, and the consideration therefor shall 
be paid by another, no use or trust shall re- 
sult in favor of the person by whom such 
payment shall be made; but the title shall 
vest in the person named as the alienee in 
such conveyance, subject only" to a trust in 
favor of creditors, when the effect would 
otherwise be to defraud them: Comp. Laws, 
§§ 2637, 2638. 

This provision, however, must be under- 
stood as applicable only to those cases in 
which the deed has assumed the form it has 
by consent of the party furnishing the con- 
sideration. It has no application to a case 
where one has taken a deed in his own name 
in fraud of the rights of another, nor to a 
case where, though no fraud was designed, 
the conveyance has been made to some per- 
son other than the purchaser without his 
consent. The purpose is to preclude parties 
from asserting equitable interests in land 
where they must rest upon parol evidence, 
in opposition to the written instruments of 
title, which have been made with their con- 
sent and approval. If, therefore, it shall ap- 
pear that complainant assented to the con- 
veyance to Stillman Goodenough, without de- 
manding or receiving any written declaration 
or other evidence of a trust in his own favor, 
no such trust can be declared, however clear- 
ly It may appear from the parol evidence 
that the transaction was entered into for 
his benefit, and that, between the parties, 
it was understood that the title was to be 
held in trust for him. If he has trusted 
himself entirely to the good faith of Good- 
enough, and suffered an arrangement to rest 
in parol which the statute declares shall be 
evidenced by writing only, it will not be in 
our power to relieve him even if we were 
disposed so to do. 

It has already been seen that there is no 
direct evidence of any understanding be- 
tween complainant and Goodenough as to 



120 



PliOPERTY IN EQUITY— TEUSTS; 



■n-lio was to be made the grantee in Patchin's 
deed, and we must therefore see wbat legal 
luferences are deducible from the situation of 
the parties, or may fairly be drawn from the 
facts whicli appear. The following facts, as 
we have before said, are unquestioned: 1, 
That in the arrangement Goodenough acted 
as agent for complainant; 2, that he was in- 
trusted with the whole management of the 
negotiation with Patchin; and, 3, that it was 
distinctly understood between him and com- 
plainant that the conveyance made by Pat- 
chin was to be for the benefit of complainant. 
Supposing this to be the whole of their un- 
derstanding, the duty of Goodenough was 
plain. It was to have the conveyance made 
directly to complainant, or, if made to him- 
self for any other person, then to have a 
trust in favor of complainant distinctly de- 
clared in the conveyance, so that it might be 
legally enforced; and if he failed to have 
conveyance made in proper form for the pro- 
tection of complainant's interests, he would 
have been chargeable with constructive 
fraud, and a court of equity would have 
given complainant the proper relief. 

We cannot infer, in the absence of evi- 
dence to that effect, that complainant un- 
derstood Goodenough was to take the deed 
to himself and without expressing therein 
any trust in favor of complainant. The con- 
trary is the only reasonable inference. When 
it distinctly appeare that the conveyance was 
to be for his benefit, we must suppose that 
he expected it to be in such form that the 
law would protect his enjoyment of the 
premises under it. We cannot assume that 
his agent, into whose hands he placed him- 
self, was understood to be empowered to take 
conveyance in a form which would defeat 
the very purpose of the arrangement, or that 
complainant, without any occasion whatever, 
so far as the evidence shows, was to trust 
his interests for an indefinite period solely 
to the continued good will, good faith, and 
sense of honor and justice of the agent who 
was negotiating for him. 

Goodenough testifies that after the arrange- 
ment with Patchin was agreed upon, com- 
plainant was informed of it, and expressed 
his satisfaction. But he does not state that 



complainant was then told to whom the deed 
was to be made, and we have no reason to 
infer that the information went any further 
than that an even exchange was to be made 
of the Bennington interest for the MUford 
land; but after the deed was made by Pat- 
chin, it was shown to complainant, and he 
read it and made no objection, and this is 
claimed to be very conclusive evidence that it 
was in accordance with his expectation and 
desire. Of this evidence it is to be observed, 
that if complainant had not previously as- 
sented, this failure to object to the deed 
after it had been made, could not operate as 
a waiver of his rights. If a constructive 
trust existed in his favor when the deed was 
first taken, by reason of its being taken in 
Goodenough's name, without his consent, he 
was under no such obligation to assert his 
rights immediately on learning the facts, as 
to be baiTed of his equities by failure to do 
so. An inference of assent may be drawn 
from his silence, but there is nothing in the 
case in the nature of an estoppel. 

And we think any such inference of assent 
is not very conclusive. Goodenough had 
been giving his services to complainant, and 
though he had taken the deed in his own 
name, he had evinced no disposition to ap- 
propriate the property. He allowed complain- 
ant to take possession and appropriate the 
profits without account. His possession 
would preclude any bona fide purchase by 
strangers, and if we suppose complainant to 
be fully aware of his legal rights, we must 
assume that he Icnew he had nothing to 
gain or lose by demanding or failing to de- 
mand an immediate conveyance. His si- 
lence, consequently, after the transaction 
was completed does not seem to us such evi- 
dence of previous assent as to warrant our 
finding that an understanding Is proved that 
the arrangement Goodenough was engaged 
to make for the benefit of complainant, 
might be put in such form as to Inure ex- 
clusively to the benefit of Goodenough him- 
self. 

After careful consideration of this record, 
we are of opinion that the decree was cor- 
rect, and that it should be affirmed. 

The other justices concurred. 



PROPERTY IN EQUITY— TRUSTS. 



121 



DYER V. DYER. 

2 Oox, Ch. 92. 

Court of Chancery. Nov. 27, 1788. 

In 1737 certain copylaold premises Lolden 
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 plaintiff, his younger son. The present 
bill stated tliese 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 trestees for the father, and the bill 
therefore prayed that the plaintiff, as devisee 
of tbe father, might be quieted in the pos- 
session of the premises during the life of the 
defendant. 

The defendant insisted that the insertion 
of bis 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; 
Jlumma v. JIunlma, 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; Bedwell v. Froome, before Sir T. 
Sewell, on the 10th May, 1T7S; Bow 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. 
2G; Kingdon v. Bridges, 2 Vern. 67; Back 
V. Andrew, Id. 120; liundle v. Bundle, Id. 
264; Lamplugh v. Lamplugh, 1 P. Wms. Ill; 
Stileman v. Ashdown, 2 Atk. 480; Pole v. 
Pole, 1 Ves. Sr. 76. 

LOBD CHIEF BABON, after directing the 
cause to stand over for a few days, delivered 
the judgment of the court. 

Tlie 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 1 



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. BumboU, 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. 
Tills 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 feoft'er. 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 int» 
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- 



122 



PROPEKTY IN EQUiTY— TRUSTS. 



tingham 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 fpr 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 
ilevised 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 lea- 
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. Rumboll, 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 
Smythei 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 
their taking as relations, but on the result 
of much parol evidence, which was admit- 
ted on both sides, and the equity on the 



PROPEUTY IN EQUrrY— TRUSTS. 



123 



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 suiTender, it was a strong case 
In favom* 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 (Bedwell 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 lor 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 chUd 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 child; 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. 264s 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 
b'iiug 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 weU 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 om- present opinion, 
it certainly will be proper to dismiss it with- 
out costs. 



124 



PROPERTY IN EQUITY— TEUSTS. 



OCEAN BANK OF NEW YORK v. OL- 
COTT. 

(46 N. Y. 12.) 

Court of Appeals of New York. Sept. 2, 1871. 

Appeal from judgment of the general term 
of the First department, reversing an order 
of the special term overruling demurrer to 
plaintiff's reply and sustaining demurrer to 
the fourth and fifth counts of defendant's an- 
swer. 

This action is in the nature of a creditors' 
bill on a judgment recovered by the plaintiff 
against the defendant, Cornelius Olcott, on 
the 15th of April, 1861. And the allegations 
in the complaint are that since the judgment 
said defendant has paid, of his own moneys, 
for certain real estate, the conveyance of 
which was taken by and in the name of the 
defendant, Kate G. Olcott, the wife of the 
other defendant, in fraud of his creditors. 
The answer denies all these allegations of 
fraud, and sets up the defence that since the 
judgment, and before this action was com- 
menced, the defendant, Cornelius Olcott, ob- 
tained a discharge in bankruptcy, under the 
act of congress of 1867, and was thereby fully 
discharged from all his debts, the aforesaid 
judgment included. 

The plaintiff replied to the defence of the 
discharge in bankruptcy, alleging that said 
discharge was fraudulently obtained, and set- 
ting forth the frauds complained of. 

The defendant demurred to the reply that 
it does not state facts sufficient to constitute 
a reply. 

P. J. Gage, for appellant. Richard H. Hunt- 
ley, for respondent. 

CHURCH, C. J. The two principal ques- 
tions in this case are: 1. Whether a cer- 
tificate of discharge in bankruptcy, issued 
under the bankrupt act of 1867, can be im- 
peached in a state court, on the ground that 
it was improperly granted? and, 2. Whether 
the plaintiff can enforce the judgment, against 
the property conveyed to the defendant, Kate 
G. Olcott, wife of the other defendant, Cor- 
nelius Olcott, notwithstanding his discharge 
in bankruptcy? 

The constitution of the United States con- 
fers upon congress power to establish uni- 
form laws on the subject of bankruptcies 
throughout the United States. This, like all 
other powers, is exclusive when exercised by 
congress. By the thirty-fourth section of the 
bankrupt act of 1867, a mode of attacking 
the discharge is prescribed in the court wiiich 
issued it, on the ground that it was fraud- 
ulently obtained. A creditor therefore seek- 
ing to invalidate the discharge for that rea- 
son, must pursue the remedy prescribed in 
the act. Otherwise the certificate is declared 
to be "conclusive evidence" in favor of such 
bankrupt of the fact, and the regularity of 
the discharge. It follows that neither in any 
other mode, nor in any other court can the 



discharge be questioned, on the ground that 
it was improperly granted. Besides the plain- 
tiffs have alleged in the reply, that they have 
made application to the United States court 
to set aside the discharge for the frauds al- 
leged to invalldiate it in this case, and if the 
state court should entertain concurrent juris- 
diction to try the' same questions, a conflict 
of judgment and authority might result in a 
case clearly vyithin the cognizance of the fed- 
eral courts. In this respect the act of 1867 
is unlike the act of 1841, which contained no 
provision for setting aside the discharge, but 
permitted its impeachment whenever it was 
interposed as a defense. We must therefore 
regard the discharge as valid for the purposes 
of this action. 

The second point represents the important 
question in the case. It comes up on de- 
murrer to the reply, and the plaintiff seeks 
to attack the answer, setting up the discharge, 
on the ground that it constitutes no defense 
to the action. In determining this question, 
we must take the allegations in the compa nt 
as true. It is alleged in substance that after 
the plaintiff's debt was contracted, the de- 
fendant, Cornelius Olcott, purchased and paid 
the consideration for a large quantity of real 
estate, which was conveyed to his wife, and 
which by this action, the plaintiffs seek to 
reach, for the purpose of satisfying their de- 
mand. Judgment was obtained against Ol- 
cott before the bankrupt discharge was ob- 
tained, but this action was not commenced 
until after that time. A discharge in bank- 
ruptcy extinguishes the debt against the 
bankrupt. The judgment becomes extinguish- 
ed, and the demands upon which it was ren- 
dered. Ruckman v. Cowell, 1 N. Y. 505; De- 
puy V. Swart, 3 Wend. l.>j; Baker v. Wheat- 
on, 5 Mass. 509. In the language of the act, 
the discharge releases "the bankrupt from 
all debts, claims, liabilities and demands 
which were or might have been proved against 
his estate in bankruptcy, and may be pleaded 
■* * * as a full and complete bar to all suits 
brought on any such debts, claims, liabilities 
or demands." 

It is claimed by the plaintiffs, that as cred- 
itors they had, by virtue of the fifty-first and 
fifty-second sections of the statute of uses 
and trusts, a lien upon the property held by 
the wife, the consideration for which was 
paid by the debtor, and that such lien exist- 
ed at the time the discharge was granted and 
was not affected by it. 

Prior to the Revised Statutes, where the 
consideration for land was paid by one per- 
son, and the land was conveyed to another, 
a trust resulted to the person paying the con- 
sideration, and the interest of such person 
might be taken and sold on execution, and 
the legal title thereby transferred to the pur- 
chaser. 1 Rev. St 74; Guthrie v. Gardner, 
19 Wend. 414; Jackson v. Walker, 4 Wend. 
462. The Revised Statutes changed this rule, 
by providing in the fifty-first section that no 



PHOPEKTY IN EQUITY— TRUSTS. 



125 



use or trust shall result in favor of the person 
by whom the payment is made, but that the 
title shall vest in the person named as alienee 
in such conveyance, subject only to the pro- 
visions of section 52, which declares that 
every such conveyance "shall be presumed 
fraudulent as against the creditors, at the 
time, of the person paying the consideration, 
and that when a fraudulent intent is not dis- 
proved, a trust shall result in favor of such 
creditors to the extent that may be necessary 
to satisfy their just demands." This change 
was probably made to prevent an evasion of 
the general policy of the statute prohibiting 
trusts, except for a few specified purposes. 
It is obvious that the interest or right, or 
whatever it may be termed, secured to cred- 
itors by this statute, is an equitable interest, 
enforceable only in equity. A trust results, 
not of the whole property, but suflBcient only 
to satisfy the just claims of creditors; not of 
one creditor only, but of all creditors. Ex- 
cept as against creditors, the title is perfect 
in the grantee, and as against them it is per- 
fect, if the grantee can disprove a fraudulent 
intent. The rights of both creditors and gran- 
tee can only be properly adjusted and en- 
forced, in a proceeding in equity, where all 
interested persons can be made parties, and 
a sale and proper distribution of the proceeds 
can be made. That this is an equitable and 
not a legal interest, to be enforced in a court 
of equity, was decided in this court in Gar- 
field V. Hatmaker, 15 N. Y. 475. 

The bankrupt act preserves the rights of 
creditors by mortgage, pledge or other lien 
upon the property of the bankrupt, and the 
assignee takes the property subject to it (sec- 
tions 14, 20), and of course a valid lien against 
the property of a third person would not be 
affected by the discharge. 

Although there may be some apparent con- 
fusion from the use of terms, I do not think 
the interest of the creditors constitutes a 
lien, within the meaning of the bankrupt 
act; nor in any such legal sense as to give 
creditors a priority, except by means of the 
usual equitable remedies. A lien is not a 
property in the thing itself, nor does it con- 
stitute a mere right of action for the thing. 
It more properly constitutes a charge upon 
the thing. 1 Story, Eq. Jur. § 506; 1 Burrill, 
Law Diet. tit. "Lien." In some general sense 
creditors have an equitable lien upon the 
property thus situated. So they would have, 
if a general liability instead of a resulting 
trust had been declared. So debts are an eq- 
uitable lien upon property fraudulently trans- 
ferred by a debtor; and it may be said that 
every debtor is a trustee for his creditors and 
bound to use his property for their benefit, 
and that creditors have an equitable lien upon 
the property of the debtor. But in all these 
cases the usual remedies are to be pursued 
to create and enforce the lien before a specif- 
ic charge constituting an incumbrance is cre- 
ated. There is no mystery in the term "re- 



sulting trust." After adopting the fifty-first 
section, It was indispensable to make some 
provision to preserve the rights of creditors, 
otherwise the grantee w6uld have held the 
title absolutely against creditors and all oth- 
ers. Hence the fifty-second section was adopt- 
ed, which placed the property in the same 
relation to creditors as it would have been 
if the debtor himself had fraudulently ti'ans- 
ferred it, and the words used were appro- 
priate for that purpose. The object of the 
statute was to cut off all interest in the pei-- 
son paying the consideration, and then to de- 
clare property liable for his debts; but this 
liability can only be enforced in the usual 
mode. A creditor at large cannot enforce the 
liability without a preliminary judgment and 
execution. When the legislature transformed 
this from a legal into an equitable interest, 
we must presume that they intended to apply 
equitable rules and principles existing at the 
time for its enforcement. One of them is 
that before the equitable interests of a debtor 
can be reached in equity all available legal 
remedies must be exhausted. It is not nec- 
essary to hold that such an action is in 
strictness a creditor's bill, and that jurisdic- 
tion depends upon a technical compliance 
with the statute. The general powers of a 
court of equity over trusts and frauds may 
be conceded as sufficient to confer jurisdic- 
tion, but this concession does not dispense 
with the rule of equity which existed prior 
to and independently of the statute, that 
creditors must exhaust available, legal reme- 
dies before resorting to courts of e(juity to 
reach equitable interests. In Beck v. Bur- 
dett, 1 Paige, 305, the chancellor laid down 
the rule of equity established before the Re- 
vised Statutes, as follows: "There are two 
classes of cases where a plaintiff is per- 
mitted to come into this court for relief after 
he has proceeded to judgment and execution 
at law, without obtaining satisfaction of his 
debt. In one case the issuing of an execu- 
tion gives to the plaintife a lien upon the 
property; but he is compelled to come here 
for the purpose of removing some obstruc- 
tion, fraudulently or inequitably interposed, 
to prevent a sale on the execution. In the 
other, .the plaintiff comes here to obtain, sat- 
isfaction of his debt, out of property which 
cannot be reached by execution at law. In the 
latter case, his right to relief here depends 
upon the fact of his having exhausted his 
legal remedies without being able to obtain 
satisfaction of his judgment." Wiggins v. 
Armstrong, 2 Johns. Ch. 144, 283; Brinker- 
hofC V. Brown, 4 Johns. Ch. 671, and cases 
there cited. 

The foundation of courts of equity is to 
exercise jurisdiction "in cases of rights rec- 
ognized and protected by municipal jurispru- 
dence, where a plain, adequate and complete 
remedy cannot be had in courts of law." 1 
Story, Eq. Jur. § 33. Legal remedies are the 
cheapest and most expeditious for creditors, 



126 



rHOPEUTY JN EQUITY— TRUSTS. 



and in this class of cases they protect both 
creditor and the person holding the title. 

As between the grantor and debtor, the lat- 
ter is bound, both in law and equity, to pay 
his debts from other property if he has it; 
and the dictates of propriety, as well as the 
established rules of equity, require that re- 
sort should in the first instance be had to 
such other property, if it can be reached by 
the ordinary process of law. This question 
is only pertinent in this case, as an argument 
to elucidate the nature of the interest of 
creditors under this statute. Although the 
indorsement of the execution "nulla bona" 
was not filed, it was actually made, which, 
with the other facts alleged, may be regarded 
a substantial compliance with the equity rule 
referred to. But neither the judgment nor 
execution constituted a lien upon equitable 
Interests. The commencement of the equi- 
table action and the filing of the lis pendens 
was necessary for that purpose. This is well 
settled in analogous cases. In Edgell v. Hay- 
wood, 3 Atk. 357, Lord Chancellor Hardwicke 
held that a bona fide assignment of such 
property after Judgment and execution would 
be valid, and added: "But after a bill 
brought, and a lis pendens created, as to this 
thing, such assignment could not prevaU." 
Weed V. Pierce, 9 Cow. 722; Coming v. 
White, 2 Paige, 567; Spader v. Davis, 5 Johns. 
Ch. 280; Edmeston v. Lyde, 1 Paige, 687. 
Judge Story lays down the general rule that 
"courts will also enforce the security of a 
judgment creditor against the equitable in- 
terest in the freehold estate of his debtor, 
treating the judgment as in the nature of a 
lien upon such equitable interest. But in all 
cases of this sort, the judgment creditor 
must have pursued the same steps as he 
would have been obliged to do to perfect his 
lien, if the estate had been legal." Story, Eq. 
Jur. § 1216; Neate v. Duke of Marlborough, 
3 Mylne & C. 407, 415. 

The nature of the interest of creditors un- 
der this statute, and the remedy to enforce 
such interest, have not been definitely set- 
tled by the courts of this state. Brewster v. 
Power, 10 Paige, 562, was a case where the 
only point involved, and the only one de- 
cided, was whether the plaintiff was and 
must be a creditor at the time of the convey- 
ance, in order to avail himself of the interest 
secured to creditors under the statute. The 
chancellor dismissed the bill, but in the 
course of his opinion, made the following re- 
mark: "I am not prepared to say that a 
judgment for such a debt would not create 
a preferable lien in equity upon such real 
property, except as against a purchaser for a 
valuable consideration." 

In McCartney v. Bostwick, 32 N. Y. 53, the 
plaintiff had prosecuted the defendant to 
judgment and execution in Minnesota, where 
he resided, and then commenced an action 
In this state, to reach property which had 
been paid for by the debtor and transferred 
to his wife. 



I infer from the opinions that the court de- 
clined to decide whether in such a case it 
was necessary to exhaust the legal remedies. 
At all events, such is the most favorable con- 
struction of the case for the plaintiffs. 

Porter, J., who delivered one of the opinions, 
said: "The case presented being one of pure 
trust, we are not prepared to say that the 
action might not have been maintained with- 
out recourse in the first instance to all attain- 
able legal remedies against the principal 
debtor; but it is unnecessary to determine 
this question, as the fact is admitted that all 
remedies at law were exhausted against the 
debtor in the state in which he resided, and 
that in this state no legal remedy was avail- 
able." Davis, J., who also delivered an opin- 
ion, said: "The case is an anomalous one. 
There exists concededly in the farm held by 
the respondent a pure trust in favor of the 
appellants. But to reach and apply this 
trust estate a general rule of equity requires 
that they should have exhausted their legal 
remedy." The case was decided upon the 
ground that the plaintiffs had exhausted all 
available legal remedies, and that the court 
would entertain jurisdiction by virtue of its 
inherent equitable powers. 

The opinions of the learned judges in the 
two cases referred to, although not at all de- 
cisive, and not very explicit upon the main 
point, are not antagonistic to the views 
above expressed. The most that can be said 
is that one or two of them entertained an 
undefined impression that the words "result- 
ing trust," as used in this statute, meant 
something more than a declaration that the 
property was liable for existing debts to be 
enforced in the mode prescribed for reaching 
other equitable interests. 

The learned chancellor was not prepared to 
say but a judgment might constitute a "pref- 
erable lien;" but as it was unnecessary to de- 
cide it, he refrained from expressing an opin- 
ion, and Porter, J., was not prepared to say 
but the claim might be enforced without re- 
sort to any legal remedies, but he expressly 
declined on behalf of the court any intention 
to determine the question, while Davis, J., 
held that although the court could exercise 
jurisdiction independently of the statute, the 
general rules of equity required that the legal 
remedies should be exhausted. The decision 
in both cases was undoubtedly right, and it 
is quite unnecessary in this case to criticise 
any of the intimations. The question of a 
lien was not involved in either case. If it 
should be conceded that it was not indis- 
I)ensable to exhaust the legal remedies, and 
that an action would lie by a creditor at 
large, no lien would exist until an action was 
actually commenced for that purpose. The 
statute does not restrict the creditor to this 
property. It gives him a right to pursue the 
property in the hands of the fraudulent gran- 
tee, but he is not obliged to do so; and until 
he takes some decisive legal step evincing his 
purpose to do so no lien is created any more 



PROPERTY IN EQUITY— TRUSTS. 



127 



than would have been upon property fraudu- 
lently transferred by the debtor himself. 

The harmony and analogies of the law are 
better preserved by requiring all available 
legal remedies to be resorted to as a prelimi- 
nary requisite to an action for the applica- 
tion of the trust property. It is difficult to 
perceive any distinction, or any reason for it, 
between the rights of creditors as to proper- 
ty fraudulently transferred by the debtor 
himself, and property paid for by him and 
transferred to a third person. Why should 
creditors have difEerent and superior rights 
to enforce their debts in the latter case to 
those enjoyed in the former? I can see no 
reason for any distinction, and I do not be- 
lieve the statute has created any. But in 
either case the commencement of an equi- 



table action is necessary to constitute a lien 
or charge, in any legal sense, upon the land. 

These views dispose of the plaintiffs' case. 
The judgment or debt is the foundation of 
this action. Both were extinguished before 
the action was commenced. The plaintiffs 
sought to enforce and secure a lien against 
this property by virtue of their rights as- 
creditors. The debt having been discharged, 
they were not creditors, and could not avail 
themselves of the resulting trust, which was 
secured to creditors only. The relation must 
exist at the time of the conveyance, and at 
the time when the action is commenced, tO' 
establish the lien. 

The judgment must be affirmed. 

All concur, except GROVER, J., dissenting. 

Judgment affirmed. 



.128 



PKOi'EUTY IN EQUITY— TRUSTS. 



MITCHELL T. 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 uetenuant held them as trustee for the 
partnership. The facts found were substan- 
tially as follows: 

The plaintiffs veere 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 tha1i 
they coiild be beneficially used in connection, 
and also in fixtures and furnishing, and by 
their joint efforts had built up a profitable 
business, and largely enhanced the rental val- 
us of the premises. In 1S69 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- 
tei'est 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. E. 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. 
Bach 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 leased 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 effi- 
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 



PROPERTY IN EQUITY— TRUSTS. 



129 



fixtures and furniture were worth vastly 
more to be kept and used In the hotel than 
to be removed elsewhere. Upon these facts 
I 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 plaintifC 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 benefit 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 fii'm, 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 

HUTCH. EQ. JUB. — 9 



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, 8 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 



130 



PEOPERTY IN EQUITY— 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 malie 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 malse 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 
talje 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 thinli 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 
universal 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 6ex 
& 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 partners 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. Gas. 
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 tlie partnership, secretly to obtain the 
new leases. He must hold them for the firm. 



PROPERTY IN EQUITY— TRUSTS. 



131 



I am therefore of opinion tliat 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 talse 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 tha 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 time, 
is not an estate, but a right. Still it is the 
subject of grant before ontry. 1 Steph. 
Comm. 268; Burt. Real Prop. 18, pi. 61; 2 
Crabb, Real Prop. 22T. If the partnership 
had acquired this interesse termini, it might, 
as the facts of the case show, have been dis- 
posed of for a largo 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 Su- Francis Har- 
grave in Lee v. Yernon, 5 Brown, Pari. Cas. 
(10th Eng. Ed.) 1803. Although the passage is 
somewhat long, it is quoted aS 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, theie being no means of 
compelling a renewal, yet is so adverted to in 
all transactions relative to leasehold proper- 
ty, that it influences tbe 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. Thee 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- 



132 



PKOPEETY IN EQUITY— TRUSTS. 



gagees and mortgagors, and in cases of both 
descriptions tliose 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 authorities, 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, 268; 
Bennett v. Van Syckel, 4 Duer, 162; Gibbes 
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 
certainly cannot be on principle. 

The whole doctrine is extended to the case 
of partners in Featherstonhaugh v. Fenwick, 
17 Ves. 298; Clegg v. Edmondson, 8 De 
Gex, M. & G. 787; Clements v. Hall, 2 De 
Gex & J. 173; Clegg v. Fish wick, 1 Macn. 
& G. 294; Struthers v. Peai-ce, 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, 
and 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 would 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 soon 
as he has made his agreement for it. This 
is an immediate subject of sale, and if the 
trustee can hold it he wiU 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 the 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, ajid obtained it before giving notice of 
the dissolution of the partnei-ship. 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 aU 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 he 
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- 



PROPERTY IN EQUITY— TRUSTS. 



133 



ceeding 11th of December a new lease was 
executed for twenty-one years to the man- 
aging paitners, to taJie effect from Septem- 
ber 29, 1846. The defendants endeavored to 
distinguish this case from that of Feather- 
stonhaugh v. Fenwlck, 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 sufllcient 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 & .T. 1T3; Van Home v. 
Fonda, 5 Johns. Gh. 388; Baiier v. Whiting, 
3 Sumn. 475, Fed. Gas. No. 787. The case of 
Clegg V. Fishwlck 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 plaintifC 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 coilti-act 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 made 
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 cases 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 partnership 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 Dm. & War. 512, 
the point 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. 



134 



PROPERTY IN EQUITY— TRUSTS. 



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 
contrivance 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 engrafted." 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 chai'acter, 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 lands 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 will 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 us€, 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 general 
doctrine, but considers It not applicable to 
the case where one of the partners 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 in 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 ti'ansactions 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 witli 
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 tlie 
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 



PROPERTY IN EQUITY— TRUSTS. 



135 



were obtained by Read without notice to the 
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, and 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 SMise of that term. On the con- 
trarj', 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. 



133 



PROPEBTY IN EQUITY— TRUSTS. 



NEWTON V. PORTER et al. 
(69 N. Y. 133.) 

Court of Appeals of New York. March 27, 

1877. 

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 plaintiff 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 his 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 prmciple 
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 different 
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 
iu 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 



PROPERTY IN EQUITY— TRUSTS. 



137 



her roach. 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- 
volved 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 fide 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 
leceived and misapplied the money. Lord 
Ellenborough. in pronouncing the opinion in 
that case, said: "It 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 purchasei-s 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. 40f); Mansell v. Mansell, 2 
P. AVms. 670; Lench v. Lench, 10 Ves. 511; 
Lewis V. Madocks, 17 Ves. 56; Perry, Trusts,. 
§ 821); 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 subjectiuir 
the avails of tlie stolen property to the claimi 
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 
ground 9f 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- 



138 



PROPERTY IN EQUITY— TRUSTS. 



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. Ch. 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. Ballou, 1 Johns. Ch. 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 e.xecuted 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 send 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 sutficient 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. Poster, 2 
Wall. 33; Sheldon v. Wood, 2 Bosw. 267; 
Zellweger v. Caft'e, 5 Duer, 100. 

The judgment should be aflflrmed. 

All concur. 

Judgment affirmed. 



PROPERTY IN EQUITY— TRUSTS. 



139 



; McLEOD V. EVANS, Assignee, etc. 
(28 N. W. 173, 214, 66 Wis. 401.) 
Supreme Court of Wisconsin. May 15, 1886. 
Appeal from circuit court, Grant county. 
A. W. & W. B. Bell, Bushnell & Watkins, 
and J. W. Murphy, for appellant, Robert E. 
McLeod. Carter & Cleary, for respondent, 
Jonathan H. Evans, assignee, etc. 

COLE, G. J. This is a suit in equity to re- 
cover in full from the defendant, who is an 
assignee of one Hodges, the proceeds of a 
draft of $1,500. The nret most serious ques- 
tion of law we have to consider arises upon 
these facts found by the leai-ned circuit court: 
The plaintifC had a draft for $1,500, drawn on 
the Ninth National Bank of New York City. 
Desiring to cash this draft, he went to the 
bank of Mr. Hodges, in the city of Platteville, 
on the thirtieth of January, 1884, to get the 
money upon it. Hodges told him that he was 
not in funds at the time so as to cash the 
draft, but said he would collect it for him. 
Thereupon the plaintiff left with Hodges the 
draft for collection, and took a receipt, which 
reads as follows: "Platteville, Wis. 1-30-84. 
By Robert E. McLeod, for collection. Cur- 
rency, ; coin, ; checks, . 

Ninth National, New York. $1,500. O. F. 
Griswold, Cashier." Mr. Hodges told the 
plaintiff to return in a week, when he ex- 
pected the money would be there for him; 
that at the end of the week the plaintiff came 
to the bank, but was informed by Hodges 
that the money had not yet come from the 
Ninth National Bank of New York; that it 
took some time to make collections of this 
kind; whereujKm the plaintiff went away, 
and did not again return until after Hodges 
had suspended banking business, which was 
on the evening of the eighth of February, 
1884; that as a matter of fact the draft was 
not sent by Hodges to the Ninth National 
Bank of New York for collection, but was 
sent to the National Bank of America, Chi- 
cago, with which bank Hodges did his busi- 
ness in that city. The Chicago bank did not, 
for such draft, send the cash to Mr. Hodges, 
but gave him credit for the amount on its 
books, and Mr. Hodges drew on that bank, 
after this, drafts, which were cashed by the 
bank; and that at the time Hodges suspend- 
ed banking business there was nothing due 
him from the Chicago bank. It is admitted 
that on the eleventh of February, 1884, 
Hodges assigned to the defendant all his 
property for the benefit of his creditoi-s. 
Among the assets, thei-e was $500 cash in 
Hodges' bank which came to the hands of 
the defendant, but it does not appear that 
this sum was a part of the proceeds of the 
$1,500 draft. 

Now, the first question upon this state of 
facts is, does the plaintiff stand upon the 
same ground as the other creditors of Hodges 
in respect to the estate in the hands of the 
assignee, or has he a paramount right to be 



paid first out of such assets? The argument 
of the plaintiff's counsel in support of his 
superior right in equity is briefly this: That 
the collection of the draft was a trust assum- 
ed by Hodges; that neither the draft nor its 
proceeds belonged to him; that it was his 
plain duty to collect it, and keep its proceeds 
separately, and deliver them to the plaintiff 
when demanded; that it was a gross fraud 
on his part not to do so; that he knew when 
he received the draft for collection he was in 
failing circumstances, and largely insolvent; 
that the testimony indisputably shows that 
it was a mere pretense that he had sent the 
draft to New York for collection; that he 
really had the avails of it when the plaintiff 
called for his money at the end of the week 
as he was directed to do, and was told that 
it had not come. It is said the relation be- 
tween Hodges and the plaintiff was not that 
of debtor and creditor, but that a fiduciary 
relation existed between them; that the pro- 
ceeds of the draft was a trust fund in his 
hands which did not belong to him, and 
which the assignee could not take as a part 
of his estate. Coimsel says that "the gener- 
al proposition which is maintained, both at 
law and in equity, upon this subject is that 
if any property, in its original state and form, 
is covered with a trust in favor of the princi- 
pal, no change of that state and form can 
divest it of such trust, or give the agent or 
trustee converting it, or those who represent 
him in any right, (not being bona fide pur- 
chasers for a valuable consideration, without 
notice,) any more valid claim in respect to 
it than they respectively had before such 
change. An abuse of a trust can confer no 
rights on the party abusing it, or those who 
claim in privity with him." 2 Story, Bq. 
Jur. § 1258; Snell, Eq. Prac. 155. 

The counsel on the other side does not chal- 
lenge the correctness of this argjment, or the 
soundness of the principle of law relied on, 
but he says they have no just application to 
the facts here, because the proceeds of the 
draft cannot be traced to, or identified in re- 
spect to, any property which has come to the 
hands of the assignee. Consequently, he 
says the plaintiff's claim is simply this: be- 
cause he left his draft for collection with the 
assignor, which the latter wrongfully convert- 
ed, that this gives him a lien in equity upon 
the general property of the wrong-doer for 
its value. The able counsel frankly admits 
if the proceeds of the draft had been found 
in the safe of Sir. Hodges when the assign- 
ment was made, with marks to identify the 
fund, that then such proceeds would not have 
passed to the defendant. He also concedes 
if the proceeds could be traced into any 
other property into which they had been con- 
verted, or had been mixed by Hodges with 
his own funds, that then the plaintiff could 
claim such property, or follow and reclaim 
the proper amount of money, as against the 
world. This would be so, because he was 
the real owner; Hodges holding the proceeds 



140 



PEOPERTY IN EQUITY— TRUSTS. 



only as his agent, as trust funds; or tlie 
property into which the proceeds had been 
converted would be impressed with the trust. 
But it is said none of the proceeds of that 
draft are in the hands of the assignee, nor is 
there any security bought or obtained by the 
draft in his possession. Still, these facts 
are indisputable: The Chicago bank to which 
Hodgas sent the $1,500 draft gave him cred- 
it for the amount on its books. Hodges 
drew against that credit in the regular course 
of his business as a banker, and his drafts 
were honored by the drawee. Presumably, 
Hodges obtained money for his drafts which 
he used in the transaction of his business, 
or applied to the payment of his debts. So, 
these funds which he obtained by his own 
drafts against the $1,500 credit were substi- 
tuted for the proceeds of the $1,500 draft, 
and went into his estate. The conclusion is ir- 
resistible, from the facts, that the proceeds of 
the trust property found its way into Hodges' 
hands, and were used by him either to pay 
off his debts or to increase his assets. In ei- 
ther case, it would go to the benefit of his 
estate. It is not to be supposed the trust 
fund was dissipated and lost altogether, and 
did not fall into the mass of the assignor's 
property; and the rule in equity is well es- 
tablished that so long as the trust property 
can be traced and followed into other prop- 
erty into which it has been converted, that 
remains subject to the trust. 

The authorities cited by plaintiff's counsel 
fully sustain this proposition. We do not 
understand that it is necessary to trace the 
trust fund into some specific property in or- 
der to enforce the trust If it can be traced 
• into the estate of the defaulting agent or 
trustee, this is sufficient. The decisions in 
Frith V. Cartland, 2 Hem. & M. 417; Pennell 
V. Deffell, 4 De Gex, M. & G. 372; Knatch- 
buU V. Hallett, 13 Ch. Div. 696; National 
Bank v. Insurance Co., 104 U. S. 54; Van 
Alen V. American Nat. Bank, 52 N. Y. 1; 
People V. City Bank of Rochester, 96 N. Y. 
32; Farmers' & M. Nat. Bank v. King, 57 
Pa. St. 202; Peak v. EUicott, 30 Kan. 156, 
1 Pac. 499, — in principle sustain this conclu- 
sion. The cases in 96 N. Y., 30 Kan., and 
1 Pac, are directly in point. In People v. 
Bank of Rochester the head-note states the 
decision as follows: "The Bank of R. hav- 
ing discounted certain notes for the firm of 
S., H. & F., a depositor with it, and that 
firm wishing to anticipate payment, gave to 
the bank its checks for the amount of the 
notes, less rebate of interest, which checks 
the bank received and charged in the firm ac- 
count, and entries were made in the bank- 
books to the effect that the notes were paid. 
The firm at the time supposed that the bank 
held the notes, but they had in fact been 
previously sold by it. Before the notes be- 
came due the bank failed, and, in an action 
brought by the attorney general in the name 
of the people, a receiver was appointed of its 
property and effects. Held, that an order re- 



quiring the receiver to pay the notes out of 
the funds in his hands was properly granted; 
that the transaction between the bank and 
said firm was not in their relation of debtor 
and creditor, nor in that of bank and depos- 
itor, but by it a trust was created, the viola- 
tion of which constituted a fraud by which 
the bank could not profit, and to the benefit 
of which the receiver was not entitled." The 
ruling in the Kansas case was to the same 
effect, upon a similar state of facts. The 
court say in the opinion, by Horton, C. J., 
that "the defendant, as assignee of the bank, 
succeeds to all the rights of the bank, but as 
such assignee he has no lawful authority to 
retain a trust fund in his hands belonging to 
the plaintiff, and which the bank at the time 
of receiving the same promised and agreed 
to apply in payment of plaintiff's note. As 
the money was a trust fund, and never be- 
longed to the bank, its creditors will not be 
injured if it is turned over by the assignee 
to its owner." 

The case of People v. Merchants' & M. 
Bank, 78 N. Y. 269, to which we were re- 
ferred by defendant's counsel, as we under- 
stand it, contains nothing in conflict with 
the Rochester Bank Case, supra. In the 
former case the Chemical Bank of New York 
received a check on the M. & M. Bank of 
Troy, drawn by the T. & B. R. R. This 
check the Chemical Bank sent by mail to the 
M. & M. Bank for the purpose of being paid. 
The latter bank debited the railroad company 
in its account, which was good, with the 
amount of the check, and returned it to that 
company as paid. It also sent to the Chem- 
ical Bank a draft on a New York bank for 
the amount of the check. Two days after 
the M. & M. Bank closed its doors, and a re- 
ceiver of its assets was appointed. The 
draft on the New York bank was not paid. 
The Chemical Bank applied for an order di- 
recting the receiver to pay the amount of the 
cheek on the ground that the assets came to 
his hands impressed with a trust in its favor. 
On these facts the court held that "to au- 
thorize the relief prayed for it was necessary 
to trace into the hands of the receiver mon- 
ey or property belonging to the Chemical 
Bank, or which had before the receivership 
been set apart and appropriated to the pay- 
ment of the check; that charging said check, 
and returning it to the drawer, did not 
amount to a payment, and setting apart of 
sufficient of the drawer's deposit to cover it; 
nor did it impress a special trust on any part 
of the drawer's assets; but by the transac- 
tion the drawee simply reduced its indebted- 
ness to its depositor to the amount of the 
check, and constituted itself a debtor to the 
holder to a corresponding amount" The case 
is clearly distinguishable from the one we 
have before us. 

The same counsel has referred us to nu- 
merous cases where the simple relation of 
creditor and debtor or bank and depositor 
existed, and where all preference of one cred- 



PKOPERTY IN EQUITY— TRUSTS. 



141 



Itor over another for payment out of assets 
has been denied. But this case stands on 
entirely different grounds. The evidence is 
entirely conclusive that the plaintiff left his 
draft -with Hodges for collection, and for no 
■other purpose. Hodges veas merely his agent 
to perform that specific duty. He had no 
more right to use the proceeds of the draft 
in his business than a merchant or lawyer 
would have who had been intrusted with 
it for a like purpose. Beyond all controversy 
the proceeds of the draft in Hodges' hands 
were a trust fund. He having used them in 
his business,— having benefited his estate by 
such use,— as we must assume, a trust at- 
taches to that estate which came to the de- 
fendant under the assignment. 

It appears that the plaintifC learned of the 
assignment which was made by Hodges, and 
in due time filed his claim as a creditor of 
the assignor to the amount of $1,500; that at 
the time he filed his claim he believed from 
reports that the bank of Hodges would pay 
dollar for dollar to its creditors; that subse- 
-quently, when a 6 per cent, dividend was de- 
clared, he, as a creditor, took the 6 per cent, 
upon his claim allowed, and at that time had 
learned that the bank could not pay in full, 
but that there would be a large deficiency. 
The question is, has the plaintiff, by proving 
his claim as an ordinary creditor, waived or 
lost his light to insist upon his equitable 
lien? We think not. The plaintiff, doubt- 
less, acted not only in ignorance of his legal 
rights, but also under a mistake as to the 
solvency of Hodges' bank. He had a right to 
suppose from the schedule of its assets and 
liabilities that all debts would be paid in 
full. It is said he knew to the contrary 
when he received the dividend, which he re- 
tains. But he has only received a portion 
that was due him. The rights of no one 
iave been prejudiced by this. No one has 
changed his position, or lost any advantage 
which the law gave him, in consequence of 
what the plaintiff did in the matter; and 
there are no facts upon which a waiver or 
equitable estoppel can be fairly predicated. 

There is no defect of parties. 

It follows from the views that we have ex- 
pressed that the judgment of the circuit court 
must be reversed and the cause remanded, 
with directions to grant the relief asked. 

GASSODAY, J. (dissenting). I fully indorse 
what is termed the "progressive" or "modern 
rule" of equity, as stated by Jessel, the late 
learned master of the rolls, in Re Hallett's 
Estate, 13 Ch. Div. G96, to the effect that if 
a person holding money as a trustee, or in a 
fiduciary character, pays it to his account 
at his banker's, where it is mixed with his 
own money, and thereafter draws out sums 
by checks in the ordinary manner, he must be 
taken to have (}rawn out his own money in 
preference to the trust money. In that case 
the trustee, Hallett, died, and the action was 
for the administration of bis estate. The 



question arose upon claims by several persons 
against moneys in the hands of Hallett's 
bankers. There was no question as to the 
solvency of the estate. There was no dispute 
that the money received by Hallett for the 
bonds he improperly sold was deposited with 
his bankers to the credit of his account, and 
"that the money remained at his banker's 
mixed with his own money at the time of his 
death." It was simply held that the cestui 
que trust could take the proceeds of the sale 
if they could be identified, and, if not iden- 
tified, but traceable into other property, or 
a mixed fund, then she could have a charge 
or equitable lien upon such other property 
or fund for the payment of the amount which 
her money had increased the fund. Such 
seems to be the well-established rule. Here 
the draft did not go into the assets of Hodges' 
bank. He sent it to the Chicago bank, where 
it was credited to his general account. Wheth- 
er his account with the Chicago bank was 
then overdrawn or not does not appear, but 
when he failed, a few days later, it was 
overdrawn $1,200. At that time there was 
only $600 in the bank. The assets which 
went into the hands of the assignee included 
nothing dated within a month. 

It conclusively appears from the undisput- 
ed evidence, and is, in effect, found by the 
court, that the assets which came into the 
hands of the assignee neither include the 
draft nor the proceeds arising therefrom, 
nor anything taken in exchange for it, or 
any part of it, unless it was the $000. Of 
course, the plaintiff has no right of action 
against the assignee personally. He seeks 
to charge the assets in the hands of the 
assignee only by reason of a supposed equi- 
table lien. Upon what theoiy was he enti- 
tled to it? If so, for what amount? The 
mere wrongful conversion of the draft by 
Hodges certainly gave the plaintiff no equi- 
table lien upon property belonging to him 
prior to such conversion, nor upon assets 
subsequently acquired from sources entirely 
outside and independent of, and wholly for- 
eign to, the draft, or the proceeds of it. To 
say that it does, is to hold that such wrong- 
ful conversion of itself gave the plaintiff a 
preference over aU other creditors, regard- 
less of what became of the draft, or the pro- 
ceeds of it. I am not aware of any adjudi- 
cated case sanctioning such a preference. 
An equitable lien exists only when the trust 
money is directly or indirectly traceable to 
the fund sought to be charged. Such, as I 
understand, are the cases cited in the opin- 
ion of the chief justice. 

It is probable, as claimed, that the draft, 
or the proceeds of it, were used by Hodges 
prior to the assignment in payment of some 
of his debts. But this would in no way 
swell the volume or value of his assets which 
went into the hands of the assignee. It 
would merely diminish the amount of his 
indebtedness to the extent of such payment. 
That would, in a general way, benefit the 



142 



PKOPERTY JN EQUITY— TEUSTS. 



estate to the extent that it increased the 
per cent, that the other creditors would in 
consequence receive. But as this estate is 
badly insolvent, the aggregate amount of 
such increase would necessarily be very 
much less than the amount of the draft. The 
amount of the equitable charge upon the 
assets ought not, upon any principle of equi- 
ty, to exceed the amount of benefit to the es- 
tate derived from the draft or its proceeds. 
None of the authorities cited, as it seems to 
me, go any further, and some of them not 
as far. In so far as the assets of the es- 
tate in the hands of the assignee are held 
chargeable beyond the amount of benefit 
which the estate derived from the draft or 



its proceeds, the equitable doctrine of the 
eases cited, and many others which might 
be cited, has, as it seems to me, been mis- 
applied. I cannot join in sanctioning such 
a departure from a rule so well established 
and so thoroughly equitable. 

TAYLOR, J. I concur in the opinion of 
Justice CASSODAY. 

BY THE COURT. The judgment of the 
circuit court is reversed, and the cause is re- 
manded, with directions to grant the relief 
asked. 

A motion for a rehearing was denied Septem- 
ber 21, 1886. 






^ 1<1 



,y 



PROPERTY IN EQUITY— TRUSTS. 



143 



MYERS V. BOARD OF EDUCATION OF 
CITY OF CLAY CENTER. 

(32 Pac. 658, 51 Kan. 87.) 

Supreme Court of Kansas. March 11, 1893. 

Error from district court, Clay county; R. 
B. Spilman, Judge. 

Action by the board of education of the city 
of Clay Center against D. H. Myers, assignee 
of the estate of John Higlnbotham, to recov- 
er the amount of a trust fund belonging to 
plaintiff. There was judgment for plaintiff, 
and defendant brings error. Affirmed. 

The other facts fully appear in the follow- 
ing statement by JOHNSTON, J.: 

Action brought by the board of education 
of the city of Clay Center against D. H. 
Myers, as the assignee of the estate of John 
Higinbotham, to recover $3,265.71, alleged 
to be a trust fund in the hands of the as- 
signee, to which it was entitled. Upon the 
evidence submitted, the district court made 
the following findings of fact and conclusions 
of law: 

Findings of fact: "(1) For several years 
prior to the 8th day of June, 1889, John Hig- 
lnbotham was doing business as a private 
banker at Clay Center, Kansas, and carrying 
on a private bank under the name of the Clay 
County Bank, and H. G. Higlnbotham, was 
cashier of said bank and manager of said 
John Higinbotham's banking business, hav- 
ing full supervision and control of the same. 
(2) On the 8th day of June, 1889, and for ten 
years prior thereto, said H. G. Higinbotham 
had been treasurer of the board of education 
of the city of Clay Center, the plaintiff here- 
in, and, as such treasurer, had received and 
disbursed large sums of money belonging to 
said board of education, and during all the 
time he was such treasurer he was also 
cashier and manager of said private bank 
of John Higinbotham. (3) During all the time 
said H. G. Higinbotham was acting as such 
treasm-er he had an account on the books 
of said Clay County Bank as 'H. G. Higln- 
botham, Treasurer,' and all moneys which 
came into his hands as treasurer of the board 
of education of the city of Clay Center were 
deposited by him in said bank, and credited 
to said account, and mingled with the general 
funds of the bank, and orders drawn on him 
as such treasurer were paid out of the gen- 
eral funds of the bank, and charged to said 
account. No other money except such as 
came into his hands as such treasurer was 
credited to said account, nor were any pay- 
ments, except such as were made on orders 
drawn on him as such treasurer, charged to 
said account. (4) During the time he was 
treasurer of the board of education of the 
city of Clay Center, and prior to the 8th day 
of June, 1889, the said H. G. Higinbotham, 
as such treasurer, had deposited in said 
bank, to the credit of said account, $3,265.71 
more than had been paid out and charged to 
said account, which said sum $3,265.71 had 
been mingled with the general funds of 



said bank, and used in the ordinary course 
of the private banking business of said John 
Higinbotham, in the payment of the debts of 
the bank. (5) The last money coming into 
the hands of said H. G. Higinbotham, as 
such treasurer, which was so deposited in 
said bank and credited to said account, was 
deposited on the 3d day of April, 1889. On 
the 8tli day of May, 1889, the total amount of 
cash in said bank was $544.15 and no more. 
After said 8th day of May, 1889, there was 
paid out of the funds of said bank, on orders 
di-awn on said H. G. Higinbotham and 
charged to said account, $1,236.02; and on 
the 8th day of June, 1889, when the business 
was closed, the total amount of cash in said 
bank was $1,535.57. (6) Said John Higin- 
botham knew that said H. G. Higinbotham 
was depositing the money coming into his 
hands as such treasurer in said bank, and 
that such money was being used in the same 
manner as other funds of said bank, in the 
ordinary course of its business. (7) The 
board of education of the city of Clay Center 
never authorized said H. G. Higinbotham 
to deposit the funds coming into his hands 
as its treasurer in the Clay County Bank, 
and never consented thereto, but some of the 
members of said board of education had actu- 
al knowledge that said funds were so depos- 
ited for some time before the 8th day of 
June, 1889. (8) On the 8th day of June, 
1889, said John Higinbotham made an as- 
signment of all his property and assets of ev- 
ery kind, including said banking business, 
to D. H. Myers, for the benefit of his cred- 
itors, and on that day said Clay County Bank 
was closed, and thereafter no further busi- 
ness was done therein. (9) Said D. H. My- 
ers, who is the defendant in this action, took 
possession, as temporary assignee, of all 
the property and assets of every kind belong- 
ing to said John Higinbotham; and being 
afterwards duly elected permanent assignee 
of said John Higinbotham, and duly qualified 
as such assignee, he retained possession of 
said property and assets, and still has the 
same in his possession, or so much thereof 
as have not been paid out in the due 
course of the administration of said estate; 
and there was at the time this suit was com- 
menced in his hands, as such assignee, be- 
longing to said estate so assigned to him, 
real estate of the value of $7,000 or more. 
(10) At the time said assignment was made, 
there was in said bank cash to the amount 
of $1,535.57, and no more; and said assignee 
has never received from the assets of said 
estate so assigned to him any cash other than 
said sum, except such as was derived from 
the sale of some of the assets of said estate; 
and all the cash so coming into his hands, 
Including said sum of $1,535.57, had, prior to 
the commencement of this action, been used 
In paying a dividend on claims allowed 
against said estate, and other legitimate char- 
ges against the same. (11) On the 12th day 
of June, 1889, said H. G. Higinbotham re- 



144 



PEOPERTY IN EQUITY— TEUSTS. 



signed the ofBee of treasurer of the board of 
education of the city of Clay Center, and at 
the time there was in his hands as such 
treasurer the sum of $3,265.71, which said 
sum had been by him deposited in the Clay 
•County Bank, as heretofore stated in the 
fourth finding of fact, and which said sum 
he then, and has ever since, failed to pay 
over to his successor in office, or to any one 
authorized by said board to receive the same, 
except $210 thereof, and of said sum there is 
still unpaid $3,055.71. (12) At the time said 
H. G. Higinbotham resigned said office of 
treasurer there was not, and for a long time 
prior thereto there had not been, in existence, 
any valid bond executed by him for the faith- 
ful performance of his duties as such treas- 
urer. (13) On the 14th day of June, 1889, 
said H. 6. Higinbotham, in order to secure 
to said board of education payment of said 
sum of $3,265.71, executed to said board, pur- 
suant to a demand made by it upon said H. 
G. Higinbotham to secure the same, a chat- 
tel mortgage on certain personal property, 
and also a mortgage on his homestead, con- 
sisting of certain lots in the city of Clay Cen- 
ter, which lots were subject to two prior 
mortgages of $1,200 and $120. Afterwards 
said personal property so mortgaged was sold 
under said mortgage, and the proceeds aris- 
ing therefrom, amounting to $210, were ap- 
plied by said board in part payment of said 
sum of $3,265.71, and said real-estate mort- 
gage is still in full force, and no action has 
been taken by said board to realize anything 
thereon. (14) In said real-estate mortgage H. 
G. Higinbotham and Lillie G. Higinbotham, 
his wife, were the parties of the first part, 
and the board of education of the city of 
Clay Center was the party of the second part, 
and in said mortgage the following condi- 
tions were written, to wit: 'Provided, never- 
theless, and these presents are upon the fol- 
lowing conditions expressly made, to wit: 
that whereas, the said H. G. Higinbotham is 
justly indebted to the said party of the sec- 
ond part in the sum of thirty-two hundred 
and sixty-five and seventy-one one hun- 
dredths dollars, ($3,265.71), the same being 
the balance of the funds and moneys of the 
said party of the second part now remaining 
in the hands of said H. G. Higinbotham, de- 
posited with him as treasurer of the said par- 
ty of the second part; and whereas, said H. 
G. Higinbotham has resigned said office, and, 
upon legal demand made upon him for said 
funds and moneys by his duly-qualified suc- 
cessor in said office, said H. G. Higinbotham 
has failed and refused to pay over and de- 
liver said funds and moneys to his successor 
in office; and whereas, a claim for said funds 
and moneys, made In behalf of the treasurer 
•of the said party of the second part, against 
the estate of John Higinbotham and D. H. 
Myers, assignee thereof, is pending, and may 
l5e paid in whole or in part by said assignee: 
Now, if the said first parties shall, on or be- 
fore the 14th day of June, 1890, pay or cause 



to be paid to the qualified treasurer of said 
party of the second part the funds and sums 
of moneys aforesaid, with interest thereon 
from the date hereof, at ten per cent, per 
annum, or such part thereof as shall not pre- 
vious to said 14th day of June, 1890, be 
paid by the assignee of John Higinbotham's 
estate, in that case this deed shall become 
void, and the premises hereby conveyed shall 
be released at the proper cost of the said par- 
ties of the first part or their legal representa- 
tives; and it is hereby agreed and under- 
stood that the execution and delivery of this 
instrument by said parties of the first part 
to said party of the second part does not and 
shall not in any way lessen the obligation of 
said H. G. Higinbotham respecting the funds 
and moneys of said second party heretofore 
delivered to him as treasurer as aforesaid, 
and this instrument is intended as security 
for the payment of said funds and moneys 
as aforesaid, in addition, and in no way 
affecting the rights of the said second par- 
ty under any bond or bonds which may 
have been heretofore given to said party of 
the second part or under any of the laws of 
the state of Kansas on and after June 14, 
1890.' The conditions above recited are fol- 
lowed by a provision that, in case the parties 
of the first part shall fail to pay said funds 
and sums of money or the interest thereon 
or the taxes or insurance on the mortgaged 
premises, then the party of the second part 
might proceed to foreclose and mortgage and 
sell the mortgaged premises, and apply the 
proceeds of such sale to the payment of said 
sums of money. (15) Said D. H. Myers, as 
assignee of said John Higinbotham, gave no- 
tice by advertisement, published as required 
by law, of the time and place when he would 
hear and allow claims against said estate, 
and also notified by mail H. G. Higinbotham, 
treasurer of the board of education of Clay 
Center, as one of the creditors of said John 
Higinbotham, of the time and place when he 
would hear and allow claims, but no notice 
of said time and place of hearing and allow- 
ing claims was given to the board of educa- 
tion of the city of Clay Center or any offi- 
cer or member thereof except as above stated, 
and, at the time said notice by mail was giv- 
en to H. G. Higinbotham, he was not treas- 
urer of said board of education. (16) Neither 
said H. G. Higinbotham nor any one for him, 
nor any one acting for the board of educa- 
tion of the city of Clay Center, presented any 
claim or demand for said sum of $3,265.71 
to said assignee at the time and place fixed 
by him in said notices for hearing and al- 
lowing by said assignee as a claim by said 
estate, and said sum of $3,265.71 was not 
allowed by said assignee as a claim against 
said estate. (17) On the 15th day of May, 
1891, and before the commencement of this 
action, demand was made by the plaintiff up- 
on said D. H. Myers, as assignee of John Hig- 
inbotham, for the payment of said sum of 
$3,265.71, as a trust fund in his hands as 



PROPERTY IN EQUITY— TRUSTS. 



145 



such assignee belonging to tlie plaintifC, and 
payment tliereof was refused; and no other 
demand was ever made by plaintiff or in its 
behalf on said D. H. Myers, as such assignee, 
for the payment of said money as a trust 
fund or otherwise. (18) When said demand 
was made by plaintiff on the loth day of 
May, 1891, said D. H. Myers did not have in 
his hands, as such assignee, any of the 
money which was in the Clay County Bank 
on the Sth day of June, 1889, when said as- 
signment was made, and which he then re- 
ceived as such assignee." 

Conclusions of law: "(1) That money of 
the boai-d of education of the city of Clay 
Center deposited by H. G. Hig'inbotham, 
while ti-easurer of said board, in the private 
bank of John Higintiotkam, was impressed 
with the character of trust funds, and was 
held as a trust fund by said John Hlgin- 
botham; (2) that the ajssets of John Higin- 
1 I botham in the hands of D. H. Myers, as his 
assignee, are subject to a charge of $3,055.71, 
as a trust in favor of the board of educa- 
tion of the city of Clay Center; (3) that the 
plaintiff is entitled to a decree for the pay- 
ment to it by D. H. Myers, assignee of John 
Higinbotham, of the sum of $3,055.71 out of 
the assets of said John Higinbotham, in his 
hands as such assignee." 

Judgment was accordingly given, and to 
reverse the same the assignee brings this 
proceeding in error. 

Harkness & Godard, for plaintiff in error. 
C. C. Coleman, P. L. Williams, and B. B. 
Tuttle, for defendant in error. 

JOHNSTON, J. (after stating the facts). 
There is no doubt or question about the char- 
acter of the moneys, amounting to $3,055.71, 
sought to be recovered in this action. They 
were school funds, collected and held for 
specific public pxuTposes, and the bank, its 
•owners and manager, all knew of the trust 
character of the funds, and hence there is 
no excuse for their misappropriation. The 
treasurer of the board of education, who 
placed these trust funds in the bank, was its 
manager; and, without authority from the 
Tjoard of education, he mingled them with 
the funds of the bank, and used them In 
paying the creditors of that institution. At 
one time, subsequent to the last deposit of 
school money, the total amount of cash on 
Tiand In the bank was $544.15, and subse- 
quent to that time $1,236.08 was drawn from 
the funds of the bank upon the order of the 
t)oard of education. When the bank closed, 
the whole amount of cash on hand was $1,- 
535.57. It is said that no portion of this sum 
was the identical money received from the 
board of education, and that neither the mon- 
ey nor any specific property into which it 
had been converted can be clearly traced to 
the hands of the assignee. Under these cir- 
cumstances, has the board of education a 
preferred right over general creditors to the 

HUTCn.EQ.JUK. — 10 



assets in the hands of the assignee? It is not 
denied that the school funds were impressed 
with a trust, and, if susceptible of identity, 
could be followed and reclaimed from the 
assignee. It is also admitted that, if they 
could be traced into any other specific prop- 
erty, the cestui que trust might claim such 
property or a lien upon it; but it is insisted 
that, unless the ti-ust funds can be traced and 
identified, the cestui que trust is to be treated 
as a simple creditor, and not entitled to an 
equitable preference in the distribution of the 
assets of the estate. The view of the plaintiff 
in error Is not without support, and many of 
the older cases, while holding that a trust 
fund wrongfully converted into another spe- 
cies of property, of whatever form, will be 
held liable to the rights of the beneficial own- 
er in its new form if its iden tity can possibly 
be traced, still adopt the old doctrine stated 
by Judge Story as follows: "The right to fol- 
low a trust fund ceases when the means of 
ascertainment fail, which, of course, is the 
case when the subject-matter is turned into 
money, and mixed and confounded in a gen- 
eral mass of property of the same descrip- 
tion." Story, Eq. Jur. § 1259. The modern 
doctrine of equity, and the one more in con- 
sonance with justice, is that the confusion of 
trust property so wrongfully converted does 
not destroy the equity entirely, but that, 
when the funds are traced into tlie assets of 
the unfaithful trustee or one who has knowl- 
edge of the character of the funds, they be- 
come a charge upon the entire assets with 
which they are mingled. This principle was 
fully recognized, and the question in the pres- 
ent case was substantially decided, in Peak 
V. EUicott, 30 Kan. 156, 1 Pac. 499. In that 
case it was said: "As the money was a trust 
fund, and never belonged to the bank, its 
creditors will not be injured if it is turned 
over by the assignee to its owner. Even if 
the trust fund has been mixed with other 
funds of the bank, this cannot prevent the 
plaintiff from following and reclaiming the 
fund; because, if a trust fund is mixed with 
other funds, the person equitably entitled 
thereto may follow it, and has a charge on 
the whole fund for the amount due." It 
would seem to be immaterial whether the 
property with which the trust funds were 
mingled was moneys, or whether it was bills, 
notes, securities, lands, or other assets. The 
bank which assigned in this case appears to 
have been engaged in a general business, and 
its assets consisted of moneys, securities, and 
lands; and, as the estate was augmented by 
the conversion of the trust funds, no reason is 
seen under the equitable principle which has 
been mentioned why they should not become 
a charge upon the entire estate. In McLeod 
V. Evans, 66 Wis. 410, 28 N. W. 173, 214, an 
unfaithful trustee made an assignment, and 
among the assets there was a small amount 
of cash, and it was not shown that it was a 
part of the proceeds of the draft or trust fund. 
The question was whether the owner of the 



146 



PROPERTY IN EQUITY— TRUSTS. 



trust fund stood upon the same ground as 
the general creditors of the trustee, or wheth- 
er he had a paramount right to be first paid 
out of the assets of the estate. It was found 
that the proceeds of the trust property were 
used by the trustee either to pay off his debts 
or to increase his assets, and it was held to 
be unnecessary to trace the trust fund into 
any specific property in order to enforce the 
trust; and that, if it could be traced into the 
estate of the defaulting agent or trustee, that 
was sufficient. It was further decided that, 
whether the trust funds were used to increase 
the assets or to pay off the debts, in either 
case it would be for the benefit of the estate ; 
and, having been so used, it was held that a 
trust attached to the entire estate which came 
into the hands of the assignee. The court in 
that case cites Peak v. EUicott, supra, and 
expressly approves the dlctrine of that case. 
In Independent Dist. v. King, 80 Iowa, 497, 
45 N. W. 908, the treasurer of a school dis- 
trict, as in this case, wrongfully deposited the 
funds of the district in a bank which knew 
the character of the funds. Subsequently the 
bank failed, and made an assignment for the 
benefit of its creditors. It was there insisted 
that, as none of the Identical money deposited 
went into the possession of the assignee, no 
trust could be enforced against the estate of 
the assignor to the prejudice of other general 
creditors. Speaking of the bankers, the court 
said that they "were fully advised as to the 
material facts, and therefore could acquire 
no title to the deposit adverse to the plain- 
tiff. As to them, the money constituted a 
trust fund, which they had no right to con- 
vert to their own use; and the fact that they 
mingled it with other money, so that the 
identity of that deposited was lost, would not 
destroy the trust character of the deposits, 
nor prevent the enforcement of the trust 
against property to which they had contribu- 
ted. To hold otherwise would be to ratify a 
willful violation of law, at the expense of an 
innocent party, and thus perpetrate a wrong. 
The defendant [who was the assignee] ac- 
quired no property rights, as against plain- 
tiff, which the Cadwells [the bankers] could 
not have enforced, and he had no special in- 
terest which requires protection. The same 
Is true of the general creditors. They are en- 
titled to only so much of the estate of the 
insolvents as remains after liens paramount 
to their claims and other preferred charges 
are satisfied." In Plow Co. v. Lamp, 80 Iowa, 
722, 45 N. W. 1049, the supreme court of Iowa 
considered the same question in a case where 
the trust funds had been used, as in the pres- 
ent case, by the trustee for the payment of 
debts. The trustee having become insolvent, 
and made an assignment, the assignee con- 
tended that the estate in his hands was not 
chargeable with the trust funds, but that the 
owner of the funds should be placed on an 
equal footing with general creditors, and only 
receive a pro rata payment out of the estate. 
The court said: "The money was used by the 



Globe Company in its business, and in pay- 
ment of its debts. It became liable to the 
plaintiff to replace the trust funds with other 
money in its possession or with money re- 
alized out of other property. Of course the 
Globe Company and its stockholders can urge 
no equity nor reason against the enforcement 
of these rules. Can its creditors? We think 
not, for these reasons: The money was 
wrongfully mingled, as it were, with the as- 
sets of the company. The money did not be- 
long to the Globe Company. The creditors, 
if permitted to enforce their claims as against 
the trust, would secure the payment of their 
claims out of trust moneys. If they are not 
permitted to do this, they are simply denied 
the remedy of enforcing their claims against 
property acquired by the use of trust money. 
They are deprived of no right, for the prop- 
erty acquired by the trust money became sub- 
ject to the trust, and therefore could not have 
been subject to the claims." In Harrison v. 
Smith, 83 Mo. 210, where trust money was 
wrongfully mingled with the funds of a bank 
which became insolvent, and subsequently 
made an assignment, it was held that, al- 
though the trust money was not clearly trace- 
able to any particular asset of the bank, the 
fact that it went into and swelled the volume 
of its assets, gave the beneficial owner an 
equitable right to have his demand first paid 
out of the assets of the estate, and before dis- 
tribution Was made to the general creditors. 
The same court, in a later case, held that, 
while it might "be impossible to follow the 
fund in its diverted uses, it is always possible 
to make it a charge upon the estate or assets 
to the increase or benefit of which it has been 
appropriated. The general assets of the bank 
having received the benefit of the unlawful 
conversion, there is nothing inequitable in 
charging them with the amount of the con- 
verted fund, as a preferred demand." StoUer 
v. Coates, 88 Mo. 514. This principle of equity 
was approved by the supreme court of the 
United States in National Bank v. Insurance 
Co., 104 U. S. 54, where it was held that, "if 
a man mixes trust funds with his, the whole 
will be treated as trust property, except so 
far as he may be able to distinguish what is 
his. This doctrine applies in every case of a 
trust relation, and as well to moneys de- 
posited in bank, and to the debt thereby cre- 
ated, as to every other description of prop- 
erty." See, also, KnatchbuU v. Hallett, 13 
Ch. Div. 696; People v. Bank, 96 N. X. 32; 
Bank v. Hummel, 14 Colo. 259, 23 Pac. 986; 
Smith V. Combs (N. J. Ch.) 24 Atl. 9; San 
Diego Co. V. California Nat. Bank, 52 Fed. 59. 
These authorities are in line with Peak v. 
Ellicott, supra, and fully sustain the ruling 
of the district court in this case, making the 
trust fund a charge on the assets In the hands 
of the assignee. 

The court below held that the fact that the 
board of education sought and obtained some 
security from H. G. Higinbotham who had 
been the treasurer of the board, for the pay- 



PROPERTY IN EQUITY— TRUSTS. 



147 



ment of the money which he had misappropri- 
ated, did not prevent the hoard from follow- 
ing and recovering the trust fund. In this 
we see no error. As treasurer of the board, 
he was personally liable for the wrongful con- 
version of the money intrusted to him. The 
collateral security for the payment of the 
money was taken soon after the assignment 
was made, and before it was known whether 
the trust money could be reclaimed; and 
probably it was not then known whether 
there were sufficient assets against which the 
trust might be enforced. The taking of col- 
lateral security for the whole of the trust 
fund which the board was seeking to find, or 
for that part which they might ultimately fail 
to recover, does not appear to us to be incon- 
sistent with the remedy sought in this action, 
and should not prevent it from insisting upon 
its equitable lien against the assets of the 
estate. The rights of no creditor of the bank 
have been prejudiced by the taking of the 
security, and It does not appear that any pro- 
ceeding to enforce the same has been begun. 
Another point made by plaintiff in error is 
that the board, having failed to present its 
claim to the assignee for special allowance, 
is precluded from availing itself of its equi- 
table lien against the assets of the estate. 
This contention is based on the provisions of 
section 21 of the assignment act. It provides 
that the assignee shall give certain notice to 
the creditors of the estate of the time for the 



presentation and allowance of demands; and, 
further, that all creditors who, after being 
notified, fail to attend and present the nature 
and amount of their demands, shall be pre- 
cluded from any benefit in the estate. This 
point cannot be sustained. Under the view 
which we have taken, the board of education 
can hardly be regarded as a "creditor," with- 
in the meaning of the statute. The funds 
sought to be recovered were never the prop- 
erty of the bank. The title and beneficiary 
interest in the same remained in the board of 
education, so that the relation of debtor and 
creditor never in fact existed between the 
bank and the board. Bank v. Hummel, supra. 
But, even if the board was to be treated as 
a creditor under this statute (which we need 
not decide now), it is not concluded by its fail- 
ure to present a claim for the trust money to 
the assignee. No written notice, as required 
by section 21, was given to the board of edu- 
cation or any officer or member thereof of 
the time when claims would be heard and al- 
lowed by the assignee. A notice was sent to 
H. G. Higinbotham, but at that time he was 
not the treasurer of the board. If the board 
of education is to be regarded as an ordinary 
creditor, it should have been notified; and, 
as the notice was not given, there can be 
no claim that it is estopped to avail itself of 
the remedy which it is now seeking. The 
judgment of the district court will be affirmed. 
All the justices concurring. 



14 J 



PROPERTY m EQUITY— TRUSTS. 



GAVIN f. GLEASON.i 
(11 N. E. 504, 105 N. Y. 256.) 
Court of Appeals of New York. April 19, 1887. 
J. B. Gleason, for appellant. W. H. Jolm- 
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 moi;;y 
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 whi^ch 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 
eash 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- 
euring 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 aflirmed 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. Deffell, 
4 De Gex, JI. & 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, has 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 product is still a chat- 
tel, and is composed of the original materials. 
Silsbury v. McCoon, 3 N. Y. 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 



PROPEUTY IN EQUITY— TRUSTS. 



149 



powerless to give relief, except by action for 
damages against the 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 
banliruptcy 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 specificall/ 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 well 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. DefCell, 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. 



150 



PKOPERTY IN EQUITY— TRUSTS. 



EYAN 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. 

DAVIES, 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 
Qo 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 1889, 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 S'.ich 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- 



PUOPEUTY IN EQUITY— TKUSTS. 



151 



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 
abstained from bidding on said premises, 
and the same was struck off 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, 
arid 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 
no 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 affirmed. 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, 



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." Ponbl. bk. 
1, p. 181, c. 338. And the universal rule is 
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 



152 



PllOrEllTY IN EQUITY— TEUSTS. 



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, Cas. 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 thinii 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 reaflirmed 
in Parkhurst v. Van Cortlandt, 14 Johns. 15, 
35, 3G. 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 sufiicient 
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 invahd, 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. Ch. 131; Mur- 
ray V. Jayne, 8 Barb. 612. 

In Hodges v. Tennessee Marine & Fire Ins. 
Co., 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 secm-ing a 
debt, and that such debt had been fully paid; 
and that under the Code 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 to 
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 account 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. Emott, vice 
chancellor, decreed for the plaintiffs, holding 
the defendant had committed a fraud upon 
the plaintiffs by agreeing to pmxhase 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 shaU 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 talie 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 ofE 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 agi-eement, 
he held it in tnist for them, and had no 



PHOPEETY JN EQUITY— TRUSTS. 



15a 



other Interest in it tlian that of a mort- 
gagee, to secure the repayment of the pur- 
chase-money and the $60 agreed to be paid 
him for his ti'ouble. 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 fraiid 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 tnistee 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 
com-t 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 
disti-ict 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 arrangement with the defendant, 
Norris, by which he agreed to attend the 
sale and bid them off in his name for the 
plaintifC, 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; off 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 boimd 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 
affirmiug 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 pai'ol. 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 com-t 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 t» 
aU the three pieces of property made out 
to him together in his own name. All 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 plaintiCf,. 
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 n* 
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. 36o, the owner 
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 Oh. 565,. 



154 



rKOPEKTY IN EQUITY— TRUSTS. 



Lord Thurlow says, if you interpose the 
medium of fraud, by which the agreement 
Is prevented from being put in writing, 1 
agi-ee 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 comt 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? 
Sm'ely 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, property of the value of $5,000 was, 
by agi-eemeut 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 agi'eement. "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 courts 
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 aU 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 instrumentahties through which the 
fraud was effected. Ormond v. Anderson, 2 
Ball & B. 309. 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. Litchford, Id. 284; Dev- 
enish v. Baines, Finch, Prec. 3; Thynn v. 
Thynn, 1 Vern. 296; Reech v. Kennegal, 1 
Ves. Sr. 12.j; 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 ti-ial ordered. 



PKOPEKTY IN JiQUlxr— TRUSTS. 



155 



r^i- HUN V. GARY, 

'' (82 N. Y. 65.) 

Court of Appeals of New York. -1880. 

B. Ellery Anderson, for appellants. Fran- 
cis O. Barlow, for respondent. 

EARL, J. TUis action was brought by the 
receiver of the Central Savings Bank of the 
<:ity of New York against the defendants, 
who were trustees of the bank, to recover 
damages which, it is alleged, they caused the 
bank by their misconduct as such trustees. 

The first question to be considered is the 
measure of fidelity, care and diligence which 
such trustees owe to such a bank and its de- 
positors. The relation existing between the 
corporation and its trustees is mainly that of 
principal and agent, and the relation between 
the trustees and the depositors is similar to 
that of trustee and cestui que trust. The 
trustees are bound to observe the limits placed 
upon their powers in the charter, and if they 
ti-anscend such limits and cause damage, they 
incur liability. If they act fraudulently or 
do a willful wrong, it is not doubted that 
they may be held for all the damage they 
cause to the bank or its depositors. But if 
they act in good faith within the limits of 
powers conferred, using proper prudence and 
diligence, they are not responsible for mere 
mistakes or errors of judgment. That the 
trustees of such corporations are bound to 
use some diligence in the discharge of their 
duties cannot be disputed. All the authori- 
ties hold so. What degree of care and dili- 
gence are they bound to exercise? Not the 
highest degree, not such as a very vigilant 
or extremely careful person would exercise. 
If such were required, it would be difficult 
to find trustees who would incur the respon- 
sibility of such trust positions. It would not 
be proper to answer the question by saying 
the lowest degree. Few persons would be 
willing to deposit money in savings banks, 
or to take stock in corporations, with the un- 
derstanding that the trustees or directors 
were bound only to exercise slight care, such 
as inattentive persons would give to their 
own business, in the management of the large 
and important interests committed to their 
hands. When one deposits money in a sav- 
ings bank, or takes stock in a corporation, 
thus divesting himself of the immediate con- 
trol of his property, he expects and has the 
right to expect that the trustees or directors 
who are chosen to take his place in the man- 
agement and control of his property, will ex- 
ercise ordinary care and prudence in the trusts 
committed to them— the same degree of care 
and prudence that men prompted by self-in- 
terest generally exercise in their own affairs. 
When one voluntarily takes the position of 
trustee or director of a corporation, good faith, 
exact justice, and public policy unite in re- 
<iuiring of him such a degree of care and pru- 
dence, and it is a gross breach of duty — crassa 
negligentia— not to bestow them. 



It is impossible to give the measure of cul- 
pable negligence for all cases, as the degree 
of care required depends upon the subjects to 
which it is to be applied. First Nat. Bank v. 
Ocean Nat. Bank, 60 N. Y. 278. What would be 
slight neglect in the care of a quantity of iron 
might be gross neglect in the care of a jewel. 
What would be slight neglect in the care ex- 
ercised in the affairs of a turnpike corpora- 
tion or even of a manufacturing corporation, 
might be gross neglect in the care exercised 
in the management of a savings bank intrust- 
ed with the savings of a multitude of poor 
people, depending for its life upon credit and 
liable to be wrecked by the breath of suspi- 
cion. There is a classification of negligence 
to be found in the books, not always of prac- 
tical value and yet sometimes serviceable, in- 
to slight negligence, gross negligence, and 
that degree of negligence intermediate the 
two, attributed to the absence of ordinary 
care; and the claim on behalf of these trus- 
tees is that they can only be held responsible 
in this action in consequence of gross neg- 
ligence, according to this classification. If 
gross negligence be taken according to its or- 
dinary meaning— as something nearly ap- 
proaching fraud or bad faith— I cannot yield 
to this claim; and if there are any authori- 
ties upholding the claim, I emphatically dis- 
sent from them. 

It seems to me that it would be a mon- 
strous proposition to hold that trustees, in- 
trusted with the management of the property, 
interests and business of other people who di- 
vest themselves of the management and con- 
fide in tliem, are bound to give only slight 
care to the duties of their trust, and are lia- 
ble only in case of gross inattention and neg- 
ligence; and I have found no authority fully 
upholding such a proposition. It is true that 
authorities are found which hold that trus- 
tees are liable only for crassa negligentia, 
which literally means gross negligence; but 
that phrase has been defined to mean the ab- 
sence of ordinary care and diligence adequate 
to the particular case. In Scott v. De Pey- 
ster, 1 Edw. 513, 543— a case much cited— 
the learned vice-chancellor said: "I think the 
question in all such cases should and must 
necessarily be, whether they (directors) have 
omitted that care which men of common pru- 
dence take of their own concerns. To re- 
quire more, would be adopting too rigid a 
rule and rendering them liable for slight neg- 
lect; while to require less, would be relaxing 
too much the obligation which binds them to 
vigilance and attention in regard to the inter- 
ests of those confided to their care, and ex- 
pose them to liability for gross neglect only— 
which is very little short of fraud itself." In 
Spering's Appeal, 71 Pa. St. 11, Judge Shars- 
wood said: "They [directors] can only be re- 
garded as mandataries— persons who have 
gratuitously undertaken to perform certain 
duties, and who are therefore bound to apply 
ordinary skill and diligence, but no more." 
In Hodges v. New England Screw Co., 1 R. 



156 



PBOrEKTY IN EQUITY— TKUSTS. 



I. 312, Jenckes, J., said: "The sole question 
is, whether the directors have or have not be- 
stowed proper diligence. They are liable on- 
ly for ordinary care; such care as prudent 
men take in their own affairs." And in the 
same case, Ames, J., said: "They should not 
therefore be liable for innocent mistakes, un- 
intentional neghgence, honest errors of judg- 
ment, but only for willful fraud or neglect, 
and want of ordinary knowledge and care." 
The same case came again under considera- 
tion in 3 R. I. 9, and Green, G. J., said: "We 
think a board of directors, acting in good 
faith and with reasonable care and diligence, 
who nevertheless fall into a mistake, either 
as to law or fact, are not liable for the conse- 
quences of such mistake." In the case of 
Liquidators of Western Bank v. Douglas, 11 
Sess. Cas. (Scot.) 112, it is said: "Whatever 
the duties (of directors) are, they must be dis- 
charged with fidelity and conscience, and 
with ordinary and reasonable care. It is not 
necessary that I should attempt to define 
where excusable remissness ends and gross 
negligence begins. That must depend to a 
large extent on the circumstances. It is 
enough to say that gross negligence in the 
performance of such a duty, the want of rea- 
sonable and ordinary fidelity and care, will 
impose liability for loss thereby occasioned." 
In Charitable Corp. v. Sutton, 2 Atk. 405, 
Lord Chancellor Hardwicke said, that a per- 
son who accepted the office of director of a 
corporation "is obliged to execute it with 
fidelity and reasonable diligence," although 
he acts without compensation. In Litchfield 
V. White, 3 Sandf. 545, Sandford, J., said: 
"In general a trustee is bound to manage 
and employ the trust property for the benefit 
of the cestui que trust with the care and dili- 
gence of a provident owner. Consequently 
he is liable for every loss sustained by reason 
of his negligence, want of caution or mistake, 
as well as positive misconduct." 

In Spering's Appeal, Judge Sharswood said 
that directors "are not liable for mistakes of 
judgment, even though they may be so gross 
as to appear to us absurd and ridiculous, pro- 
vided they were honest, and provided they are 
fairly within the scope of the powers and dis- 
cretion confided to the managing body." As 
I understand this language, I cannot assent 
to it as properly defining to any extent the 
nature of a director's responsibility. Like a 
mandatary, to whom he has been likened, he 
Is bound not only to exercise proper care and 
diligence, but ordinary skill and judgment. 
As he is bound to exercise ordinary skill and 
judgment, he cannot set up that he did not 
possess them. When damage is caused by 
his want of judgment, he cannot excuse him- 
self by alleging his gross ignorance. One 
who voluntarily takes the position of director, 
and invites confidence In that relation, under- 
takes, like a mandatary, with those whom he 
represents or for whom he acts, that he pos- 
sesses at least ordinary knowledge and skill, 
and that he will bring them to bear in the 



discharge of his duties. Story, Bailm. § 182. 
Such is the rule applicable to public ofiicers, 
to professional men and to mechanics, and 
such is the rule which must be applicable to 
every person who undertakes to act for an- 
other in a situation or employment requiring 
skill and knowledge; and it matters not that 
the service is to be rendered gratuitously. 
These defendants voluntarily took the posi- 
tion of trustees of the bank. They invited 
depositors to confide to them their savrngs, 
and to intrust the safe-keeping and manage- 
ment of them to their skill and prudence. 
They undertook not only that they would dis- 
charge their duties with proper care, but that 
they would exercise the ordinary skill and 
judgment requisite for the discharge of their 
delicate trust. 

Enough has now been said to show what 
measure of diligence, skill, and prudence the 
law exacts from managers and directors of 
corporations; and we are now prepared to 
examine the facts of this case, for the pur- 
pose of seeing if these trustees fell short of 
this measure in the matters alleged In the 
complaint. 

This bank was incorporated by the act 
chapter 467 of the Laws of 1867, and it com- 
menced business in the spring of that year, 
in a hired building on the east side of Third 
avenue, in the city of New York. It remain- 
ed there for several years, and then re- 
moved to the west side of the avenue, be- 
tween Forty-Fifth and Forty-Sixth streets, 
where it occupied hired rooms until near the 
time of its failure in the fall of 1875. Dur- 
ing the whole time the deposits averaged on- 
ly about $70,000. In 1867, the income of the 
bank was $942.12, and the expenses, includ- 
ing amounts paid for safe, fixtures, charter, 
current expenses and interest to depositors, 
were $5,571.34. In 1868, the income was 
$5,471.43, and the expenses including interest 
to depositors, $5,719.43. In 1869, the income 
was $3,918.27, and the expenses and interest 
paid, $5,346.05. In 1870 the income was $5,- 
784.09, and expenses and interest, $7,040.22. 
In 1871 the income was $13,551.14; which in- 
cluded a bonus of $4,000, or $6,000 obtained 
upon the purchase of a mortgage of $40,000, 
which mortgage was again sold In 1874 at a 
discount of $2,000, and the expenses, includ- 
ing interest paid, were $9,124.05. In 1872 
the income was $5,100.51, and the expenses, 
including interest paid, were .$7,212.49. Down 
to the 1st day of January, 1873, therefore, the 
total expenses, including interest paid, were 
$5,046 more than the income. To this sum 
should be added $2,000, deducted on the sale 
of the large mortgage in 1S74, which was 
purchased at the large discount in 1871, as^ 
above mentioned, and yet entered in the as- 
sets at its face. From this apparent deficien- 
cy should be deducted the value of the safe 
and furniture of the bank, from which the re- 
ceiver subsequently realized $500. At the 
same date the amount due to over one thou- 
sand depositors was about $70,000, and the 



lEOPEllTY IN EQUITY— TRUSTS. 



157 



assets of the bank consisted of about $13,000 
in cash and the balance mostly of mortgages 
upon real estate. 

While the bank was in this condition, with 
a lease of the rooms then occupied by it ex- 
piring May 1, 1S74, the project of purchasing 
a lot and erecting a banking-house thereon 
began to be talked of among the trustees. 
The only reason put on record in the minutes 
of the meetings held by the trustees for pro- 
curing a new banking-house was to better 
the financial condition of the bank. In Feb- 
ruary, 1873, at a meeting of the trustees a 
committee was appointed "on site for new 
■building;" and in March the committee en- 
tered into contract for the purchase of a 
plot of land, consisting of four lots, on the 
comer of Forty-Eighth street and Third ave- 
nue, for the sum of $74,500; of which $1,000 
was to be paid down, !p9,000 on the 1st day 
of May then next, and $64,000 to be secured 
by a mortgage, payable on or before May 1, 
1875, with interest from May 1, 1873, at sev- 
en per cent.; and there was an agreement 
that payment of the principal sum secured 
ty the mortgage might be extended to May 
1, 1877, provided a building should, without 
unavoidable delay, be erected upon the cor- 
ner lot, worth not less than $25,000. This 
contract was reported by the committee to 
the trustees, at a meeting held April 7. On 
the 1st day of May, 1873, the real estate was 
conveyed and the cash payment was made, 
and four separate mortgages were executed 
to secure the balance, one upon each lot. 
The mortgage upon the lot upon which the 
bank building was afterward erected was 
for $30,500. At the same time the bank be- 
came obligated to build upon that lot a build- 
ing covering its whole front, twenty-five feet, 
and sixty feet deep, and not less than five 
stories high, and have the same inclosed by 
the 1st day of November then next. Upon 
that lot the bank proceeded, in the spring of 
1875, to erect a building covering the whole 
front, and seventy-six feet deep, and five 
stories high, at an expense of about $27,000. 
And the buiding was nearly completed when 
the receiver of the bank was appointed in 
November of that year. The three lots not 
needed for the building were disposed of, 
as we may assume, without any loss, leav- 
ing the corner lot used for the building to cost 
the bank $29,250; and we may assume that 
that was then the fair value of the lot. This 
case may then be treated as if the trustees 
had purchased the comer lot at $29,250, and 
bound themselves to erect thereon a building 
costing $27,000. When the receiver was ap- 
pointed that lot and building, and other as- 
sets which produced less than $1,000, con- 
stituted the whole property of the bank; and 
subsequently the lot and building were swept 
a,way by a mortgage foreclosure, and this ac- 
tion was brought to recover the damages 
caused to the bank by the alleged improper 
investment of its funds, as above stated, in 
the lot upon which the building was erected. 



At the time of the purchase of the lot the 
bank was substantially insolvent. If it had 
gone into liquidation, its assets would have 
fallen several thousand dollars short of dis- 
charging its liabilities, and this state of 
things was known to the trustees. It had 
been in existence about six years, doing a 
losing business. The amount of its deposits, 
which its managers had not been able to 
increase, shows that the enterprise was an 
abortion from the beginning, either because 
it lacked public confidence, or was not need- 
ed in the place where it was located. It 
had changed its location once without any 
benefit. It had on hand but about $13,000 
in cash, of which $10,000 were taken to make 
the first payments. The balance of its assets 
was mostly in mortgages not readily convert- 
ible. One was a mortgage for $40,000, 
which had been purchased at a large dis- 
count, and we may infer that it was not very 
salable, as the trustees resolved to sell it as 
early as May, 1873, and in August, 1S73, au- 
thorized it to be sold at a discount of not 
more than $2,500, and yet it was not sold 
until 1874. In this condition of things the 
trustees made the purchase complained of, 
under an obligation to place on the lot an 
expensive banking-house. Whether under 
the circumstances the purchase was such as 
the trustees, in the exercise of ordinary pru- 
dence, skill and care, could make; or wheth- 
er the act of purchase was reckless, rash, 
extravagant, showing a want of ordinary pru- 
dence, skill and care, were questions for the 
jury. It is not disputed that, under the 
charter of this bank, as amended in 1868 
{Chapter 294), it had the power to purchase a 
lot for a banking-house "requisite for the 
transaction of its business." That was a 
power, like every other possessed by the 
bank, to be exercised with prudence and 
care. Situated as this moribund institution 
was, was it a prudent and reasonable thing 
to do, to invest nearly half of all the tmst 
funds in this expensive lot, with an obliga- 
tion to take most of the balance to erect 
thereon an extravagant building? The trus- 
tees were urged on by no real necessity. 
They had hired rooms where they could have 
remained; or if those rooms were not ade- 
quate for their small business, we may as- 
sume that others could have been hired. 
They put forward the claim upon the trial 
that the rooms they then occupied were not 
safe. That may have been a good reason 
for making them more secure, or for get- 
ting other rooms, but not for the extrava- 
gance in which tliey indulged. It is infer- 
able however that the principal motive which 
influenced the trustees to make the change 
of location was to improve the financial con- 
dition of the bank by increasing its depos- 
its. Their project was to buy this corner 
lot and erect thereon an imposing edifice, to 
inspire confidence, attract attention, and thus 
draw deposits. It was intended as a sort ol 
advertisement of the bank, a very expensive 



158 



PKOPEKTY IN EQUITY— TBUSTS. 



one Indeed. Savings banks are not organ- 
ized as business enterprises. Tliey have no 
stockholders, and are not to engage in specu- 
lations or money-making in a business sense. 
They are simply to take the deposits, usu- 
ally small, which are offered, aggregate them, 
and keep and invest them safely, paying 
such interest to the depositors as is thus 
made, after deducting expenses, and paying 
the principal upon demand. It is not legiti- 
mate for the trustees of such a bank to seek 
deposits at the expense of present deposit- 
ors. It is their business to take deposits 
v^hen offered. It was not proper for these 
trustees— or at least the jury may have 
found that it was not— to take the money 
then on deposit and invest in a banking- 
house, merely for the purpose of drawing 
other deposits. In making this investment 
the interests of the depositors whose money 
was taken, can scarcely be said to have been 
consulted. 

It matters not that the trustees purchased 
this lot for no more than a fair value, and 
that the loss was occasioned by the subse- 
quent general decline In the value of real 
estate. They had no right to expose their 
bank to the hazard of such a decline. If the 
purchase was an improper one when made, 
it matters not that the loss came from the 
unavoidable fall In the value of the real es- 
tate purchased. The jury may have found 
that it was grossly careless for the trustees 
to lock up the funds In their charge in such 
an investment, where they could not be 
reached in any emergency which was likely 
to arise in the affairs of the crippled bank. 

We conclude therefore that the evidence 
justified a finding by the jury that this was 
not a case of mere error or mistake of judg- 
ment on the part of the trustees, but that it 
was a case of Improvidence, of reckless, un- 
reasonable extravagance, in which the trus- 
tees failed in that measure of reasonable pru- 
dence, care and skill which the law requires. 

This case was moved for trial at a circuit 
court, and before the jury was impaneled the 
defendants claimed that the case was im- 
properly in the circuit, and that it should be 
tried at special term; and the court ordered 
that' the trial proceed, and at the close of 
the evidence the defendants moved that the 
complaint be dismissed, on the ground that 
the action was not a proper one to be tried 
before a jury, and should be tried before the 
equity branch of the court The motion was 
denied, and these rulings are now alleged for 
error. The receiver in this case represents 



the bank, and may maintain any action the 
bank could have maintained. The trustees 
may be treated as agents of the bank. In 
re German Min. Co., 27 Eng. Law & Eq. 158; 
Belknap v. Davis, 19 Me. 455; Bedford R. 
Co. V. Bowser, 48 Pa. St. 29; Butts v. 
Wood, 38 Barb. 181; Austen v. Daniels, 4 
Denio, 299; Ohio & M. R. Co. v. McPherson, 
35 Mo. 13. And for any misfeasance or non- 
feasance, causing damage to the bank, they 
were responsible to it, upon the same prin- 
ciple that any agent Is for like cause re- 
sponsible to his principal. It has never been 
doubted that a principal may sue his agent 
in an action at law for any damages caused 
by culpable misfeasance or non-feasance in 
the business of the agency. The only relief 
claimed in this complaint was a money judg- 
ment, and we think it was properly tried as 
an action at law. No equitable rights were 
to be adjusted, and there was no occasion to 
appeal to an equitable forum. 

Treating this therefore as an action at 
law, it follows also that the objection taken 
that other trustees should have been joined 
as defendants cannot prevail. In actions ex 
delicto the plaintiff may sue one, some or all 
of the wrong-doers. Liquidators of Western 
Bank v. Douglas, 22 Sess. Cas. (Scot.) 475; 
Barb. Parties, 203. 

The defendants Hoffman and Gearty filed 
petitions for their discharge In bankruptcy 
after the commencement of this action, and 
were discharged before judgment, and they 
alleged such discharge as a defense to the 
action. The trial judge and the general term 
held that the discharge furnished no defense, 
and we are of the same opinion. This claim 
was purely for unliquidated damages occa- 
sioned by a tort. Such a claim was not prov- 
able in banliruptcy, and therefore was not 
discharged. Rev. St. U. S. (2d Ed.) §§ 5115, 
5119, 5067-5071; Zinn v. Ritterman, 2 Abb. 
Prac. (N. S.) 261; Kellogg v. Schuyler, 2 De- 
nio, 73; Crouch v. Gridley. G Hill, 250; In 
re Wiggers, 2 Biss. 71, Fed. Cas. No. 17,623; 
In re Clough, 2 Ben. 508, Fed. Cas. No. 2,- 
905; In re Sidle, 2 N. B. R. 77, Fed. Cas. No. 
12,844. 

I conclude therefore that the judgment ap- 
pealed from should be affirmed. 

The appeal by the plaintiff from the order 
of the general term, granting a new trial as 
to defendant Smith, must, for reasons stated 
on the argument, be dismissed, with costs. 

All concur. 

Judgment affirmed, and appeal from order 
dismissed. 



V 



PROPEHTY IN EQUITY— TRUSTS. 



159 



KING V. TALBOT. 
(40 N. Y. 76.) 1 
Court of Appeals of New York. 1869. 
This was an action for an accounting 
against the defendants, as the surviving ex- 
ecutors of the will of the father of the plain- 
tiffs. By the will the executors were di- 
rected to invest $15,000 for each of the plain- 
tiffs, and the executors made these invest- 
ments in certain railroad bonds and stock, 
and in some bank stock. The value of these 
securities having depreciated, the invest- 
ment was repudiated by the plaintiffs, and 
this action brought. The further facts ap- 
pear in the opinion of the court. 

Stephen P. Nash, for appellants. George 
M. Titus, for respondents. 

WOODRUFF, J. It is conceded that in 
England the rule is, and has long been set- 
tled, that a trustee, holding funds to invest 
for the benefit of his cestui que trust, is 
bound to make such investment in the pub- 
lic debt, for the safety whereof the faith of 
their government is pledged; or in loaus, for 
which real estate is pledged as security. 
And that although the terms of the trust 
commit the investment, in general terms, to 
the discretion of the trustee, that discretion 
is controlled by the above rule, and is to be 
exercised within the very narrow limits, 
which It prescribes. 

As a purely arbitrary rule, resting upon 
any special policy of that country, or on any 
peculiarity in its condition, it has no appli- 
cation to this country. It is not of the com- 
mon law. It had no applicability to the con- 
dition of this country, while a colony of 
Great Britain, and cannot be said to have 
been incorporated in our law. 

So far, and so far only, as it can be said to 
rest upon fundamental principles of equity, 
commending themselves to the conscience, 
and suited to the condition of our affairs, 
so far it is true, that it has appropriate ap- 
plication and force, as a guide to the admin- 
istration of a trust here, as well as in Eng- 
land. 

I do not therefore deem it material to in- 
quire through the multitude of English 
cases, and the abundant texts of the law- 
writers, into the origin of the rule in Eng- 
land, or the date of its early promulgation. 
Nor in this particular case do I deem it nec- 
essary to determine whether it should, by 
precise analogy, be deemed to prohibit here 
investments In any other public debt than 
that of the state of New York. 

Neither, in my judgment, are we at lib- 
erty, in the decision of this case, to pro- 
pound any new rule of conduct, by which 
to judge of the liability of trustees, now sub- 
jected to examination. Under trusts here- 
tofore created, the managers thereof per- 



1 Irrelevant parts omitted. 



forined their duty with the aid of rules for 
the exercise of their discretion, which were 
the utterance of equity and good conscience, 
intelligible to their understanding, and 
available for their information; otherwise, 
trusts heretofore existing have been traps 
and pitfalls to catch the faithful, prudent 
and diligent trustee, without the power ta 
avoid them. 

But it is not true that there is no under- 
lying principle or rule of conduct in the ad- 
ministration of a trust, which calls for obe- 
dience. Whether it has been declared by 
the courts or not, whether it has been en- 
acted in statutes or not, whether it is in 
familiar recognition in the affairs of life,, 
there appertains to the relation of trustee 
and cestui que trust, a duty to be faithful,^ 
to be diligent, to be prudent in an adminis- 
tration intrusted to the former, in confi- 
dence in his fidelity, diligence and prudence. 

To this general statement of the duty of 
trustees, there is no want of promulgation 
or sanction, nor want of sources of informa- 
tion for their guidance. In the whole his- 
tory of trusts, in decisions of courts for a 
century in England, in all the utterances of 
the courts of this and the other states of 
this country, and not less in the conscious 
good sense of all intelligent minds, its recog- 
nition is uniform. 

The real inquiry therefore is, in my judg- 
ment, in the case before us, and in all like 
cases: Has the administration of the trust, 
created by the will of Charles W. King, for 
the benefit of the plaintiff, been governed 
by fidelity, diligence and prudence? If it 
has, the defendants are not liable for losses 
which nevertheless have happened. 

This however aids but little in the exam- 
ination of the defendants' conduct, unless 
the terms of definition are made more pre- 
cise. What are fidelity, diligence and dis- 
cretion? and what is the measure thereof, 
which trustees are bound to possess and ex- 
ercise ? 

It is hardly necessary to say that fidelity 
imports sincere and single intention to ad- 
minister the trust for the best interest of the 
parties beneficially interested, and according 
to the duty which the trust imposes. And 
this is but a paraphrase of "good faith." 

The meaning and measure of the required 
prudence and diligence has been repeatedly 
discussed, and with a difference of opinion. 
In extreme rigor, it has sometimes been 
said that they must be such and as great as 
that possessed and exercised by the court 
of chancery itself. And again, it has been 
said that ttiey are to be such as the trustee 
exercises in the conduct of his own affairs, 
of like nature, and between these is the dec- 
lai-ation that they are to be the highest pru- 
dence and vigilance, or they will not exon- 
erate. 

My own judgment, after an examination 
of the subject, and bearing in mind the na- 
ture of the office, its importance and the 



160 



PKOPEETY IN EQUITY— TRUSTS. 



•considerations which alone induce men of 
suitable experience, capacity and responsi- 
bility to accept its usually thankless burden, 
is that the just and true rule is that the 
trustee is bound to employ such diligence 
and such prudence in the care and manage- 
ment as In general prudent men of discre- 
tion and intelligence in such matters employ 
in their own like affairs. 

This necessarily excludes all speculation, 
^11 inyestments for an uncertain and doubt- 
ful rise in the market, and of course every 
thing that does not take into view the na- 
ture and object of the trust, and the conse- 
quences of a mistake in the selection of the 
investment to be made. 

It therefore does not follow that because 
prudent men may, and often do, conduci 
their own affairs with the hope of growing 
rich, and therein take the hazard of adven- 
tures which they deem hopeful, trustees 
may do the same; the preservation of the 
fund and the procurement of a just income 
therefrom are primary objects of the crea- 
tion of the trust itself, and are to be pri- 
marily regarded. 

If it be said that trustees are selected by 
the testator or donor of the trust, from his 
■own knowledge of their capacity, and with- 
out any expectation that they will do more 
than, in good faith, exercise the discretion 
and judgment they possess, the answer is: 
First, the rule properly assumes the capac- 
ity of trustees to exercise the prudence and 
•diligence of prudent men in general; and 
second, it imposes the duty to observe and 
know or learn what such prudence dictates 
In the matter in hand. 

And once more the terms of the trust, and 
its particular object and purpose, are In no 
case to be lost sight of in its administration. 

Lewin, in his treatise on the law of Trusts, 
■etc., (page 332), states, as the result of the 
several eases, and as the true rule, that "a 
trustee is bound to exert precisely the same 
care and solicitude in behalf of his cestui 
que trust as he would do for himself; but 
greater measure than this a court of equity 
will not exact." In general this is true; but 
if it imports that if he do what men of ordi- 
nary prudence would not do, in their own 
affairs, of a like nature, he will be excused, 
on showing that he dealt with his own prop- 
erty with like want of discretion, it cannot be 
sustained as a safe or just rule toward ces- 
tuis que trust; nor is it required by reason- 
able indulgence to the trustee; it would be 
laying the duty to be prudent out of view 
entirely, and I cannot think the writer in- 
tended it should be so understood. 

The Massachusetts cases (Harvard College 
V. Amory, 9 Pick. 446; Lovell v. Minot, 20 
Pick. 116) cited by the counsel for the de- 
fendants, are in better conformity with the 
rule as I have stated it. 

To apply these general views to the case 
before us, and with the deductions which 
necessarily flow from their recognition: The 



testator gave to each of his children $15,000, 
the interest on the same, so far as required, 
to be applied to their maintenance and edu- 
cation, and the principal, with any accumu- 
lations thereon, to be paid to them severally 
on their majority; appointed the defendant, 
Talbot, and his partner, Mr. Olyphant, ex- 
ecutors, "intrusting to their discretion the 
settlement of my affairs and the investment 
of my estate for the benefit of my heirs." 

If I am correct in my views of the duty 
of trustees, this last clause neither added to, 
nor in any wise affected the duty or respon- 
sibility of these executors; without it they 
were clothed with discretion; with it their 
discretion was to be exercised with all the 
care and prudence belonging to their trust 
relation to the beneficiaries. Such Is the 
distinct doctrine of the cases very largely 
cited by the counsel for the parties, and is, 
I think, the necessary conclusion from the 
just rule of duty I have stated. 

What then was the office of the trustees, 
as indicated by the terms and nature of the 
trust? If its literal reading be followed, it 
directed that "$15,000" in money be placed 
at "interest." The nature of the trust, ac- 
cording to the manifest intent of the testa- 
tor, required that in order to the mainte- 
nance and support of Infant children, whose 
need, in that regard, would be constant and 
unremitting, that interest should flow in 
with regularity and without exposure to the 
uncertainties or fluctuations of adventures 
of any kind. And then the fund should con- 
tinue, with any excess of such interest ac- 
cumulated for their benefit, so as to be deliv- 
ered at the expiration of their minority. 

Palpably then the first and obvious duty 
was to place that $15,000 in a state of se- 
curity; second, to see to it that it was pro- 
ductive of interest; and third, so to keep the 
fund that it should always be subject to 
future recall for the benefit of the cestui que 
trust. 

I do not attach controlling importance to 
the word "interest" used by the testator, but 
I do regard it as some guide to the trustees, 
as an expression of the testator, that he 
did not contemplate any adventure with the 
fund, with a view to profits as such. 

But apart from the inference from the use 
of that word, I think it should be said, that 
whenever money is held upon a tnist of this 
description, it is not according to its nature, 
nor within any just idea of prudence to place 
the principal of the fund in a condition in 
which it is necessarily exposed to the hazard 
of loss or gain, according to the success or 
failure of the enterprise in which it is em- 
barked, and in which by the very terms of 
the Investment, the principal is not to be 
returned at all. 

It is not denied that the employment of 
the fund, as capital In trade, would be a 
clear departure from the duty of trustees. 
If it cannot be so employed under the man- 
agement of a copartnership, I see no reason 



PROPERTY IN EQUITY— TRUSTS. 



161 



for saying that the incorporation of the part- 
ners tends, in any degree, to justify it. 

The moment the fund is invested in bank, 
or insurance, or railroad stocli, it has left 
the control of the trustees; its safety and 
the hazard, or risk of loss, is no longer de- 
pendent upon their skill, care or discretion 
in its custody or management, and the terms 
of the investment do not contemplate that 
it ever will be returned to the trustees. 

If it be said that at any time the trustees 
may sell the stock (which is but another 
name for their interest in the property and 
business of the corporation), and so re-pos- 
sess themselves of the original capital, I 
reply that is necessarily contingent and un- 
certain; and so the fund has been volunta- 
rily placed in a condition of uncertainty, de- 
pendent upon two contingencies: First, the 
practicability of making the business profit- 
able; and, second, the judgment, skill and 
fidelity of those who have the management 
of it for that purpose. 

If it be said that men of the highest pru- 
dence do in fact invest their funds in such 
stocks, becoming subscribei-s and contribu- 
tors thereto in the very formation thereof, 
and before the business is developed, and 
in the exercise of their judgment on the 
probability of its safety and productiveness, 
the answer is, so do just such men, looking 
to the hope of profitable returns, invest 
money in trade and adventures of various 
kinds. In their private aifEairs they do, and 
they lawfully may put their principal funds 
at hazard; in the affairs of a trust they may 
not. The very nature of their relation to it 
forbids it. 

If it be said that this reasoning assumes 
that it is certainly practicable so to keep the 
fund that it shall be productive, and yet safe 
against any contingency of loss; whereas 
in fact if loaned upon bond and mortgage, or 
upon securities of any description, losses 
from Insolvency and depreciation may and 
often do happen, nothwithstanding due and 
proper care and caution is observed in their 
selection. Not at all. It assumes and in- 
sists that the trustees shall not place the 
fund where its safety and due return to their 
hands will depend upon the success of the 
business in which it is adventured, or the 
skill and honesty of other parties Intrusted 
with its conduct; and it is in the selection 
of the securities for its safety and actual re- 
turn that there is scope for discretion and 
prudence, which if exercised in good faith, 
constitute due performance of the duty of 
the trustees. 

My conclusion is therefore that the defend- 
ants wei-e not at liberty to invest the fund 
bequeathed to the plaintiff in stock of the 
Delaware and Hudson Canal Company; of 
the New York and Harlem Railroad Com- 
pany; of the New York and New Haven 
Railroad Company; of the Bank of Com- 
merce; or of the Saratoga and Washington 
Railroad Company; and that the plaintiff 

HUTCn. EQ. JUB.— 11 



was not bound to accept these stocks as and 
for his legacy, or the investment thereof. 

In regard to the bonds of the Hudson 
River Railroad Company and of the Dela- 
ware and Hudson Canal Company, it ap- 
pears by schedule B, given in evidence, that 
the former were mortgage bonds; but what 
was the extent or sufficiency of the security 
afforded by such mortgage, or what prop- 
erty was embraced in it does not appear, 
nor does it appear whether there was any 
security whatever for the payment of the 
canal company's bond. 

It is not necessary for the decision of this 
case; and I am not prepared to say that an 
investment in the bonds of a railroad or 
other corporation, the payment whereof is 
secured by a mortgage upon real estate, is 
not suitable and proper under any circum- 
stances. 

If the real estate is ample to insure the 
payment of the bonds, I do not at present 
perceive that it is necessarily to be regarded 
as inferior to the bond of an individual se- 
cured by mortgage; it would of course be 
open to all the inquiries which, prudence 
would suggest if the bond and mortgage 
were that of an individual. The nature, 
the location and the sufficiency of the se- 
curity and the terms of the mortgage, and 
its availability for the protection and ulti- 
mate realization of the fund, must of course 
enter into the consideration. 

But it is not necessary to pursue that sub- 
ject. The plaintiff in his complaint rejects 
the entire investment. The court below 
held that it was equitable that the plaintiff 
should be held to receive the whole or none 
of the stocks and bonds, and to that ruling 
neither the plaintiff nor the defendant have 
excepted; and therefore the question wheth- 
er the judgment below was correct in that 
respect is not before us. 

It is proper however to say that I do not 
clearly apprehend the propriety of that rul- 
ing, unless it be on the ground that the 
plaintiff in his complaint did so elect. 

The rule is perfectly well settled that a 
cestui que trust is at liberty to elect to ap- 
prove an unauthorized investment and en- 
joy its profits, or to reject it at his option; 
and I perceive no reason for saying that 
where the trustee has divided the fund into 
parts and made separate investments, the 
cestui que trust is not at liberty, on equita- 
ble as well as legal grounds, to approve and 
adopt such as he thinks it for his interest 
to approve. The money invested is his 
money; and in respect to each and every 
dollar, it seems to me he has an unqualified 
right to follow it, and claim the fruits of its 
investment, and that the trustee cannot deny 
it. The fact that the trustee has made 
other investments of other parts of the fund, 
which the cestui que trust is not bound to 
approve, and disaffirms, cannot, I think, 
affect the power. For example, suppose in 
the present case the cestui que trust, on de- 



162 



PEOPERTY m EQUITY— TRUSTS. 



livery to him of all the securities and bonds 
In which his legacy had appeared invested, 
had declared: Although these investments 
are improperly made, not in accordance vs^ith 
the intent of the testator, nor in the due per- 
formance of your duty, I veaive all objection 
on that account, except as to the stock of the 



Saratoga and Washington Railroad Com- 
pany. That I reject and return to you. Is 
it doubtful that his position must be sus- 
tained? 

The result is, that the main features of the 
judgment herein must be affirmed. 






PKOPERTY IN EQUITY— TRUSTS. 



163 



OGDEN T. MURRAY. 

(39 N. Y. 202.) 

Court of Appeals of New York. March, 1868. 

M. S. Bidwell, for appellant. M. Sher- 
wood, for respondent. 

GROVBR, J. It is settled by repeated ad- 
judication in this state, aeauieseed in for 
many years, although the question does not 
appear to have been passed upon in the court 
of last resort^ that where an active ti-ust for 
the care, management, conveyance and ap- 
propriation of personal property has been 
created, and the instrument creating the 
trust makes no provision for the compensa- 
tion of the ti-ustees, they are prima facie en- 
titled to the same commissions as are by 
statute allowed to guardians, executors and 
administrators. 

The terms of the instrument may be such 
as to negative the idea that any compensa- 
tion to the trustees was contemplated; the 
relationship of the parties or other extrinsic 
facts may clearly indicate that the labor and 
responsibility of the trust were voluntarily 
assumed, and were intended by all parties 
to be gratuitously performed. Mason v. 
Koosevelt, 5 Johns. Ch. 534; Mumford v. 
Murray. 6 Johns. Ch. 452. 

The subject is discussed by Chancellor 
Walworth in Meacham v. Sternes, 9 Paige, 
398. The doctrine of that case is strongly 
reasserted in Matter of De Peyster, 4 Sandf. 
Ch. 511, by Vice-Chancellor Sandford, and 
held not to require, that the property held 
should be converted by the trustee into mon- 
ey; that though delivered in specie and 
in the very form in which it came to his 
hands, commissions should be allowed there- 
on. And the supreme court, in WagstafC v. 
Lowerre, 23 Barb. 209, held the same rule, 
in favor of a trustee appointed by will. That 
the JKngllsh rule and the law of this state 
was otherwise, prior to the statute of 1818, 
fixing the compensation of executors and ad- 
ministrators, appears in these cases, and in 
Manning v. Manning, 1 Johns. Ch. 534. See 
2 Story, Eq. Jur. § 1268, and notes; Robinson 
V. Fitt, White & T. Lead. Cas. Eq. (Am. 
Notes) 70; Law Lib. p. 353 et seq. 

Without affirming that the rale is so un- 
qualified that the rate of compensation al- 
lowed by statute to executors, administra- 
tors and guardians must, in all cases where 
compensation is allowed to trustees, be the 
exact measure, without any consideration of 
the nature and extent of the duties and re- 
sponsibilities imposed by the trust, or that in 
no case the court will inquire what less 
amount would be a reasonable compensa- 
tion, I think the rule above stated should in 
general be regarded as reasonable and just, 
and therefore to be adopted, unless there are 
controlling considerations which forbid the 
allowance. 
There is nothing in the language of the in- I 



struments by which the trust in this case 
was created and declared, indicating any 
agreement on the subject of commissions, 
nor manifesting any intent that the service 
with its responsibilities should be assumed 
or borne gratuitously. 

The property in question consisted of seven 
steamships, transferred to the appellants and 
their associate. Snow (now deceased), to hold 
for the use and benefit of the Accessory 
Transit Company, and in trust and confi- 
dence that the trustees wUl account for and 
pay over to the company, or to whomsoever 
the company may appoint, all earnings, re- 
ceipts and profits from or on account thereof, 
or of any or either of them, which they may 
receive, and any and all insurance moneys 
which may be received, on account of the 
ships, or either of them; and will assign, 
transfer and convey the said ships and any 
of them, on request of the company, to the 
said company or such appointee. 

It is true that the trustees permitted the 
ships to be employed and run by other agents 
of the company, and the company received 
the earnings directly. But although this 
may be a reason for denying to them com- 
missions on such receipts and earnings, it 
would not deprive them of their just claim to 
compensation for the discharge of the trust, 
in holding the property subject to a liability 
to account therefor, and to convey the same, 
and a further responsibility to third parties, 
who would have a right to look to the legal 
title to the ships, and charge the trustees as 
such. 

I think therefore that there is nothing in 
the nature and terms of the trust which pre- 
cludes the allowance of commissions to the 
trustees under the general rule above stated. 

But the trustees were themselves directors 
of the company, and as such were already 
trustees bound to manage the affairs and 
property of the company for the interest of 
its stockholders, and by familiar and well- 
settled principles of law, as well as the most 
obvious rules of justice, forbidden to admin- 
ister its affairs for their private emolument. 

There were seven directors. The creation 
of the trust and the designation of the trus- 
tees was authorized by a resolution passed 
at a meeting of the directors, at which they 
were present and voted; and although they 
did not constitute a majority, their voice 
and influence was cast in favor of the ar- 
rangement by which property, to the amount 
of $1,350,000, purchased and paid for by the 
company, was placed in their hands. Prima 
facie, this act was itself a breach of trust. 
The directors had prima facie no right to 
place the property in the hands of third per- 
sons, and thus put the title beyond the prop- 
er control of the board of directors, who were 
by law trustees for the control, employment 
and management of the property of the com- 
pany, for the benefit of its stockholders. 
True, they declared a trust to hold for the 
use of the company, but it is no part of the 



164 



PROPERTY IN EQUITY— TRUSTS. 



proper duty and power of the directors of the 
company to divest the company itself of the 
title to its property, and subject it to 'the 
hazard of the fidelity of trustees, or make the 
actual benefits to be derived by the stockhold- 
ers depend upon the efficiency of proceedings 
in court to compel the perfoimance of such a 
trust. 

It is however not necessary to say that 
there may not be circumstances in the condi- 
tion of an incorporated company, which will 
warrant the transfer of its property, or por- 
tions of it, to trustees, for purposes which 
are lawful and consistent with the duty owed 
to the company. I do say however that the 
creation of such a trust requires some legal 
and sufficient purpose to excuse it. 

I find no facts stated in the ease agreed 
upon here, as the reasons for creating the 
trust in question. The company was incor- 
porated by the "state or republic of Nicara- 
gua." Its "corporate object and business was 
the transportation of passengers and freight 
from the city of New York to certain ports 
on the Pacific, and it was necessary, in order 
to carry out the objects of its incorporation, 
that the said company should own or have 
the control of several steamships running on 
either side of the Isthmus of Nicaragua." 

Nothing in the case agreed upon indicates 
that the company could not own, hold and 
run steamships agreed to be "necessary to 
carry out the object of its corporation," to- 
wit, "the transportation of passengers and 
freight." 

What was then the impediment? It is sug- 
gested, in argument, that the laws of the 
United States prevented the company, a for- 
eign corporation, from taking and holding 
the title to these ships. The case states, that 
in July, 1854, an act of congress was passed 
authorizing this company to hold steamships 
in their own name. 

And the argument is therefore this: At the 
time this trust was created, the company 
could not, by law, take the legal title to itself. 
The conveyance to the trustees was therefore 
necessary; and if necessary, then as between 
the trustees and the company, was proper, 
in order to carry out the objects of the in- 
corporation, and secure to the stockholders 
the means of carrying on the business for 
which it was created, and the profits and 
emoluments derivable therefrom. 

It is doubtless true that a foreign corpora- 
tion cannot take title to a vessel, and retain 
her registration as a vessel of the United 
States, entitled to the privileges and protec- 
tion of a national as distinguished from a 
foreign ship. But I find no warrant for say- 
ing that the Accessory Transit Company had 
no legal capacity to take the title to these 
steamships, and hold and employ them for all 
purposes for which citizens of Nicaragua 
may hold and employ vessels, and among 
other purposes, the running them between 
their own ports, and the ports of the United 
States, subject to all the disadvantages, of 



course, of being treated as foreign vessels, 
and restricted in their trade, by all the dis- 
abilities to which foreign ships are subject. 
The objects of their incorporation declared 
in their charter import the power to hold and 
employ such ships. 

The question thereupon arises, may a for- 
eign corporation, in order to obtain and keep 
all the advantages derivable from a trade 
which can only be advantageously carried on 
in American vessels, registered as such, un- 
der a system which makes a fraudulent reg- 
istry a forfeiture of the ship, and which re- 
quires the oath, that no foreigner has any 
interest in the ship,— purchase and employ 
ships for the sole use and benefit of the cor- 
poration, and with expressed authority to di- 
rect and control their use and disposition, 
and cover the ownership under a trust in 
American citizens, they taking the title for 
that purpose. 

I cannot resist the conclusion that this is 
not only an evasion, but a fraud upon the 
laws of the United States, which ought not 
to be sustained or sanctioned, directly or in- 
directly, and that no court should hold that 
a trust for such a purpose should be upheld 
either to give compensation to the trustees 
or for any other object. 

If there was any other purpose, or any oth- 
er ground upon which the propriety of the 
trust may be vindicated (and for the pur- 
poses of this case it is not necessary to say 
that there may not have been), it is at least 
true that there was legal capacity in the com- 
pany to take the steamships; and the ex- 
pediency and propriety of doing so was a 
proper subject of consideration by the board 
of directors. Whether it was for the inter- 
est of the stockholders to pay the purchase- 
price, and leave the title in third persons, 
subject to a charge by way of compensation 
therefor, and subject to any of the hazards 
consequent thereupon, was a subject of grave 
consideration, in reference to which the di- 
rectors, as trustees, were not at liberty to 
act under the influence of self-interest. 

In this aspect of their relation to the sub- 
ject, the appellants and their associates were 
not in a situation permitting them to secure 
to themselves a personal advantage in the 
matter. The stockholders and creditors were 
entitled, not only to their vote in the board, 
but to their influence and argument in the 
discussion which led to the passage of the 
resolution in pursuance of which they took 
title as trustees. 

This brings the case within the rule, which 
rests in the soundest wisdom, and is sus- 
tained by the best consideration of the in- 
firmities of our human nature, and called for 
by the only safe protection of the interests 
of cestuls que trust, or beneficiaries, viz.: 

That trustees and persons standing in sim- 
ilar fiduciary relations, shall not be per- 
mitted to exercise their powers, and manage 
or appropriate the property of which they 
have control, for their own profit or emolu- 



PROPERTY IN EQUITY— TRUSTS. 



165 



ment, oi" as it lias been expressed, "shall not 
take advantage of their situation to obtain 
any personal benefit to themselves at the ex- 
pense of their cestuis que trust." Story, Eq. 
Jur. § 466a; Hill, Trustees, 535. 

This by ho means assumes that the trus- 
tees were not, in this case, in the actual exer- 
cise of the highest Integrity. I cannot for 
a moment doubt that in reference to the par- 
ticular case before us; but the principle is 
one of great importance, and it forbids any 
inquiry into the honesty of a particular caae. 
If it would have been competent to select 
their trustees disconnected from the com- 
pany, still it was not competent for the di- 
rectors themselves to create a trust of this 
description, consider and determine its ex- 
pediency, and thereby create a claim to com- 
pensation in their own favor for the perform- 
ance of its duties. 

For these reasons I thinli the judgment 
should be affirmed. 

OLERKB, J. The defendant is the receiv- 
er of the Accessory Transit Company, now 
insolvent. It was a corporation created by 
the republic of Nicaragua; and it carried on 
business in the city of New York. A pur- 
chase was made, on its behalf. In December, 
1852, of seven steamships from Mr. Corne- 
lius Vanderbilt, for the purpose of running 
them on their line between New York and 
San Francisco, via Nicaragua. Being a for- 
eign corporation, the company could not then 
take the title, and have the ships registered 
in its ovsTi name; and on the 30th of Decem- 
ber, 1852, the board of directors, seven in 
number, passed a resolution that the vice- 
president of the company and two of the di- 
rectors be appointed trustees to receive a 
transfer of the ships, and hold them sub- 
ject to the control and disposition of the 
company. These were the two plaintiffs, Mr. 
Ogden, the vice-president, and Mr. Wright; 
and the third was Mr. Snow, since deceased. 
Mr. Ogden received as vice-president, a sal- 
ary of $4,000 a year. They were all present 
at the meeting, and voted for the resolution. 
They received bills of sale of the ships in 
their names, and signed an instrument de- 
claring that they had received the bills of 
sale, and held the ships for the company. 
On the 27th of July, 1854, the company in- 
demnified each of the trustees by a bond in 
a penalty of $100,000, against any claims and 
demands on account of the ships; soon aft- 
er, an act of congress was passed, authoriz- 
ing the company to hold steamships in its 
own name; and thereupon Messrs. Ogden, 
Wright and Snow transferred the title in 



them to the company by bills of sale. After 
this transfer they addressed a letter to the 
president and directors, claiming compensa- 
tion as trustees, which the company refused 
to pay. In 1858, the company became in- 
solvent; and soon afterward the defendant 
was appointed receiver. 

After the ti-ansf er to the trustees, they had 
no more to do with the control and manage- 
ment of the ships than any other members of 
the board; and the ships were actually run 
under the supervision of the whole board, by 
Mr. Vanderbilt, as the agent of the company. 

The plaintiffs now claim, by way of com- 
pensation, the same commissions as are al- 
lowed %o executors and administrators. They 
claim $3,950, being the amount of commis- 
sion upon the sum of $1,350,000, the amount 
paid by the company to Vanderbilt, as the 
purchase-money. They also claim interest on 
this sum of $3,950, from the 27th of Janu- 
ary, 1854, making in the whole $7,900. 

It does not appear that the purchase- 
money, or any portion of it, passed through 
the hands of the trustees, or that they per- 
formed any seiTices, or incurred any risks 
or responsibilities, beyond taking the bills 
of sale in their names, and holding them, 
and executing bills of sale to the company. 
So that no active duties devolved upon them; 
and for any responsibilities which they in- 
curred, they were fully indemnified by hav- 
ing the legal title to the ships, and by the 
bond of indemnity which they subsequently 
received. They did not, like executors, ad- 
ministrators, guardians and other trustees, 
become the custodians of the funds of the 
company, receiving its earnings or paying 
them out. They demand this sum of $3,- 
950, merely for allowing their names to be 
inserted in the bills of sale. In my opinion 
they are not entitled to compensation on any 
equitable grounds. In all probability, at the 
time of the passage of the resolution appoint- 
ing them trustees, neither they, nor any oth- 
er member of the board, had any idea that 
compensation would be required, or was nec- 
essary. Not a word was said on the subject 
at the time the resolution was passed, nor 
was any intimation given by them of a claim 
for services at any time, until they presented 
their demand, more than two years and six 
months afterwards; when they had trans- 
ferred the ships to the company. 

The judgment should be affirmed, with 
costs. 

All concur, except HUNT, 0. J., and 
DWIGHT, J. 
Judgment affirmed. 



166 



PROPERTY IN EQUITY— TRUSTS. 



In re SCHELL. 

(53 N. Y. 263.) 

Court of Appeals of New York. Sept. 23, 1873. 

Appeal from order on settlement of ac- 
counts of Edward. Schell, trustee, etc., of the 
estate of Jacob Appley, which disallowed an 
item of $2,500 charged for his services as 
sucli trustee. 

Jacob Appley died seized of a large real 
and personal estate. By his last will and 
testament he devised and bequeathed all his 
property, with certain exceptions, to his ex- 
ecutors and the survivor of them, upon cer- 
tain trusts therein named. The will, after 
reciting the trusts, contained this clause: 
"And also that my said executors retain and 
pay unto themselves out of said rents and 
incomes all costs, charges and expenses that 
they shall have to pay or be put imto in the 
fulfillment of this my will, and a reasonable 
compensation for their services." 

By an order of the supreme court, Schell 
was appointed trustee in place of those nam- 
ed in the will. In his accounts he made a 
charge in gross of $2,500 for his services. 
The referee reported in favor of its allow- 
ance. 

Amasa J. Parker, for appellant. Samuel 
Hand, for respondent. 

RAPALLO, J. The order appealed from 
shows upon its face that it was made upon 
the ground that the compensation of the 
trustee for his services should be limited to 
commissions, at the rate allowed by statute 
to executors and administrators, for receiv- 
ing and paying out moneys. 

This is the settled rule in cases where the 
creator of the trust has made no provision 
for compensation to the tnistee. Under such 
circumstances the courts have by analogy 
allowed the same commissions which are by 
statute allowable to executors and adminis- 
trators, and have restricted the allowances 
to those rates. 

But where the instrument creating the 
trust provides that the trustee shall have a 
compensation for his services in executing 
the trust, such provision will be enforced. 
If the instrument declares the rate of com- 
pensation, it must be followed. If it estab- 
lishes no rate, the value of the services 
should be ascertained by judicial investiga- 
tion. Meacham v. Stemes, 9 Paige, 398. 

The provision of the will in question is 
that the trustees (of whom the applicant is 
the successor) shall retain and pay unto 
themselves, out of the rents and income of 
the testator's estate, all costs, charges and 
expenses that they shall have to pay or be 
put unto in the fulfillment of his will, and 
a reasonable compensation for their services. 

It would seem a sufficiently simple propo- 
sition that the question, what is a reasona- 
ble sum to be allowed to the trastee over 
and above his proper disbursements for his 



services, is a question of fact determinable 
upon the same principles which would regu- 
late such an inquiry were the controversy 
one arising upon an employment inter vivos. 

But it is claimed on the part of the re- 
spondent that the statute which regulates 
the commissions of executors, administrators 
and guardians determines that the rate there- 
by allowed is a reasonable compensation, 
and that the subject of the amount of com- 
pensation is closed to further inquiry. The 
learned court at special teimi seems to have 
adopted this view, and Its decision has been 
affirmed at general term. We cannot concur 
in the soundness of these conclusions. In 
the first place, the provisions of the statute 
do not in terms apply to trustees. The orig- 
inal trustees in this case were the same per- 
sons who were named in the will as execu- 
tors, but their offices as trustees were addi- 
tional to and distinct from their legal duties 
as executors. The applicant succeeds to the 
office of trustee and not of executor. The de- 
cisions which apply to trustees the same 
rules as to compensation which the statute 
applies to executors, etc., rest upon the prin- 
ciple of analogy and not upon the command 
of the statute. They are confined to cases 
where no provision is made by the creator of 
the trust for the compensation of the trus- 
tees. In such cases, there being no express 
declaration of the creator of the trust that 
his appointees should be compensated, yet it 
being unreasonable under ordinary circum- 
stances to require them to perform their re- 
sponsible duties gratuitously, it is a fair pre- 
sumption that the testator assumed that they 
would be entitled to the commissions estab- 
lished by law for similar services when ren- 
dered by executors, etc. Where however he 
expressly provides that they shall have a rea- 
sonable compensation for their services, he 
must be supposed to have intended that the 
compensation should be reasonable with ref- 
erence to the special circumstances of his es- 
tate and the services which he has required 
them to perform. 

The object of the statute is to furnish a 
general and arbitrary rule for cases not oth- 
erwise provided for; but it should not gov- 
ern where the testator has, by reason of pe- 
culiar circumstances existing in reference to 
his estate, required extraordinai-y services 
on the part of those to whose care he has 
confided it, and has specially provided that 
their compensation shall be reasonable, which 
is equivalent to declaring that it shall be pro- 
portioned to the value of the services they 
may render. By such a direction the testa- 
tor necessarily confides to the tribimals un- 
der whose jurisdiction the administration of 
his estate may come, the adjustment of the 
compensation of his trustees, and this is a 
duty which those tribunals must perform 
conscientiously upon the evidence before 
them. It was therefore the duty of the court 
below in the case to determine whether the 
sum claimed by the trustee was or was not 



PROPERTY IN EQUITY— TRUSTS. 



167 



reasonable under the circumstances, and to 
allow or reduce it according to their judg- 
ment, without being controlled by the stat- 
ute. The case shows that the duties of the 
trustee were onerous, and involved more 
than the mere receipt and disbursement of 
money. He was Intrusted with the manage- 
ment of forty houses and lots, the buildings 
being old and requiring frequent repairs, 
and the trustee swears that he has given 
them his personal care and attention, besides 
attending to the receipt and application of 
the funds. 

Whether the sum of $2,500 allowed by the 
referee is a reasonable amount Is a question 
for the court below. The report of the ref- 
eree is not conclusive, but merely for the in- 



formation of the court. The court, at special 
term, should exercise its discretion whether 
to confirm or modify it, and if the amount is 
in its judgment excessive. It should be re- 
duced, but the amount should be determined 
with reference to the facts of the case and 
not by the statute. 

The orders of the special and general 
terms should be reversed, and the proceed- 
ings remitted to the court below to rehear 
at special term the motion to confirm the re- 
port of the referee. 

The costs of the appellant should be al- 
lowed to him out of the fund. 

All concur, except GEOVEE, J., not voting. 
Ordered accordiugly. 



168 



EQUITABLE RIGHTS. 



PATTON et al. v. CAMPBELL, 

(70 111. 72.) 

Supreme Court of Illinois. Sept. Term, 187!?. 

Bentley, Swett & Quigg, for appellants. 
iWaite & 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 20tii of October, 1870, Patton & Co., of 
New York, sold Durham & 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 la 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 Durham & 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 wiU be considered in the 
order in which they are raised. 

The bill in this case is filed to recover upon 
an instrument under seal, which had been 
destroyed. 

The jurisdiction of a court 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 win justify the interposition of a 
court of equity. The jurisdiction wUl be 
maintained only when a court of law can not 
grant suitable 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, until 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- 
put which the declaration would be defect- 



ive. The jurisdiction having been assumed 
and exercised on this ground, it is still re- 
tained and upheld. 1 Story, Eq. Jur., § 81; 
Walmsley v. Child, 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 tliis statement. Hart sold the 
goods on four months' time. 

It turned out, on investigation, that Dur- 
ham & Wood had only bought two bills 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 sell 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 within 
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 representations from Dm'ham, as to the 
standing or responsibility of the firm, to in- 
duce him to sell 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 contiacts. 

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, 



EQUITABLE RIGHTS. 



169- 



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 th» 
purchase of the goods, the parties went into- 
banliruptcy, but this was involuntary, andl 
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. 



170 



EQUITABLE EIGHTS. 



HUNT v. ROUSMANIER'S ADM'ES. 

(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, ofCering 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. This 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 plaintifE 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, taking 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 Gth of May, 1820, the said Rousmanier 
died insolvent, having paid only $200 on the 
said notes. The plaintifC 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 
plaintifC leave to amend his bill. Hunt v. 
Bnnis, 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 pa)pers 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 tboy 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, C. 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 plaintifE, 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 will, 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 
makes it; and is revoked by his death. But 
this 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 Esp. 565. Al- 
though a letter of attorney depends, from its 
nature, on the will 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 will 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 (lO.-), 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; 



EQUITABLE RIGHTS. 



171 



and on the manner in which he 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 Rousmanier. Now, as an 
authority must be pursued, in order to make 
the act of the substitute the act of the prin- 
cipal, it is necessai-y, 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 
the 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 subj ect 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 person. 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 own 
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 lie 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 e.>:ecuted 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, tiough 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 eveiy 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 sell for the benefit 
of B., engrafted on an estate conveyed to 



172 



EQUITABLE EIGHTS. 



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 will 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 Kousmanier 
in the Nereus and Industry to the payment 
of the money advanced by the plaintiff, on 
the credit of those vessels, the 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 floubt. 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, ajid giv- 
en as that security. TVe 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 constitTites the agreement itself, 
but is that for which the agreement stipulat- 
ed. The agi-eement 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 



EQUITABLE BIGHTS. 



173 



notes were given, and this letter of attorney 
was, on advice of counsel, executed and re- 
■ceived as the collateral security whieli 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, during 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 court 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 eifected 
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 courts of law. In such cases, a court of 
equity may carry the intention of the parties 
into execution, where the vsritten agreement 
fails to express that intention. In this case, 
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 will 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 sti-ong bearing 
on tlie case at bar. But the judges in the 
coui'ts 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 Underhill v. Hoi-wood, 10 Ves. 209, 22T, 
Lord Bldon, 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 la 
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 court 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 no 
equity existed antecedent to the obligation, 



174 



EQUITABLE RIGHTS. 



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- 
take 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. 
3(34, if it be law, has no inconsiderable bear- 
ing on this cause. The right of the heir- 
at-law was contested by a younger 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 I'elieved 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 liOrd 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 they were, and with the 
intention that they should create, a specifio 
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 plaintifC, 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. 



/■^ 



EQUITABLE RIGHTS. 



lib 



PARK BROS. & CO., Limited, v. BLOD- 
GBTT & 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; Tain tor. 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 plaintiff 
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 
paragi-aph 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 com-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 dm-ing 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 ..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 com-t 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 circumstan- 
ces disclosed by the record, a court of equity 
will correct. The finding of the court be- 
low is as follows: "The actual agreement 
between the defendant and the plaintiff was 
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 to 



176 



EQUITABLE RIGHTS. 



iiave the said written contract express tlie 
actual agreement made by tliem, and at the 
time of its execution believed that it did." 
No fraud is properly charged, and certainly 
none is found, 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 court 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 268 
and 269), well 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 efCeot 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 afford 
little or no aid in determining the question 
under consideration. Under certain circum- 
stances a court of equity will, and under 
others it wiU not, reform a writing founded 
on a mistake of fact; under certain circum- 
stances it will, and imder others it wiU 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 wiU 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, the 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 agreement 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 coiu"t 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 com-t of 
equity will correct In a proper case. Sibert 
V. McAvoy, 15 lU. 106. If, then, the oral 
agreement in the case at bar had been for 
the sale and pm-chase 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 com-t 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 materially 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 aU 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 .'a.y that, in cases like the one at 
bar, courts of equity ought to move with 



EQUITABLE BIGHTS. 



177 



great caution. Before an instrument is re- 
formed, under such circumstances, the proof 
of tlie 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 spolien agreement is almost 
resistless; and the court has veearied itself 
in declaring that such prayers (for relief of 
this kind) must be supported by overwhelm- 
ing evidence, or be denied." Palmer v. In- 
sui-ance Co., 54 Conn. 501, 9 Atl. 248. We 
are not concerned here, however, with the 
amount or sufficiency of the proofs vipon 
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 higliest standard reqiiirements in sucli 
oases. Upon principle, then, we think a com't 
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 modern 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 oc- 
casion to consider that question in the case 
at bar. The authorities in favor of the con- 
clusion that a com-t of equity in such cases 
will 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 cany 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 tho 
agreement, equity will 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 court 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 cited, 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 

HUTCH. EQ. JUK. — 13 



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 all concerned supposed those 
words would carry ovit 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," — citing 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, G5 
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 com't says: 
"Both parties intended to make the benefit 
payable to Cigar's administrator. That it wao 
not made payable to him was due to thei? 
mutual misapprehension of the legal effect of 
the language used in the certificate. * * * 
Equity requires an amendment of the writing 
that will make the coatract what the parties 
supposed it was, and intended it should be, 
although their mistake is one of law, and not 
of fact." In Trusdell y. Lehman, 47 N. 
J. Eq. 218, 20 Atl. 301, the marginal note is 
as follows: "Where it clearly appears that 
a deed drawn professedly to carry out the 



178 



EQUITABLE RIGHTS. 



agreement of the parties, previously entered 
into, is executed imder the misapprehension 
that it really embodies the agreement, where- 
as, by mistake of the draughtsman either as 
to fact or law, it falls to fulfill that purpose, 
eqtuity will correct the mistalie 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 
ffifictness 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. 166; May v. Adams, 58 Vt. 74, 3 Atl. 
187; Grifiith 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. E. 2 H. L. 170. See, also, 2 Pom. Eq. 
Jur. § 845, and Bisp. Eq. §§ 184-191. And, 
whatever the law may be elsewliere, this is 
certainly the law of our 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. Insui'ance Co., 54 Conn. 
488, 9 Atl. 248; and Haussman v. Bm-n- 
ham, 59 Conn. 117, 22 Atl. 1065. Indeed, 
since 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 entitled to the parol evidence 
which the plaintiff 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 Atl. 228; Reyn. 
Theory Ev. § 09; 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 his 
brief, he cites five from Illinois, two froL" 
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 plaintiff'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 faUs, 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." From 
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 correctly 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 mistake^ 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 sufilcient to say that it is 
not a correct statement of our law, at least 
since the decision of Northrop v. Gi'aves, 
supra. On tlie 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. 



EQUITABLE KIGIITS. 



179 



RENARD T. CLINK et al. 

(51 N. W. C02. 91 Mich. 1.) 

Supreme Court of ilichigim. jSIarch 18, 1892. 

Appeal from circuit court, Cliarlevoix coun- 
ty, in chancery; Jonatlian G. Ramsdell, 
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 
iittempted 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 
<!omplainant, 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. Mitdiell, 
26 Mich. 500; Sager v. Tupper, 35 Mich. 131; 
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. 
JIartin 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 pi-ivate 
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 afiirmative, 
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 Gal. 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. 



180 



EQUITABLE RIGHTS. 



JACOBS V. MORANGB. 

(47 N. Y. 57.) 

Court of Appeals of New York. Dec, 1871. 

Appeal from judgment of tlie New York 
common pleas, afflrming judgment for plain- 
tiff. 

Samuel Hand, for appellant. M. A. Kur- 
shedt, for respondent. 

PECKHAM, J. The defendant in this suit 
is a lawyer. The plaintiff some years since 
brought an action against the defendant in 
the marine coiu-t, in the city of New York. 
The defendant recovered a verdict in that 
suit, of $86 against the plaintiff. Without 
taking the case to the general term of that 
court, the plaintiff carried it for review to 
the court of common pleas of that city, and 
after argument there that court reversed the 
judgment, with costs. The defendant paid 
these costs voluntarily without the entry of 
any judgment. Within a year thereafter 
the com't of appeals decided that the court 
of common pleas had no jurisdiction of a 
case from the marine court, until it had 
been first heard and decided by the general 
term of that com-t. The common pleas had 
previously held the other way, viz., that 
it had jm-isdiction in such case. Some nine 
years after this reversal in the common 
pleas the defendant issued an execution in 
the marine court, and then the plaintiff in- 
stituted this suit in equity to stay his pro- 
ceedings, and a judgment is obtained for a 
perpetual stay on the gi-ound that the judg- 
ment in the marine court was erroneous, 
and that both parties in the review in the 
common pleas had acted under a mutual mis- 
take of law. 

This presents the question, can a court of 
equity grant relief in a case of this charac- 
ter upon the sole ground of a mistalce of law? 
There is no circumstance of any descrijition 
that adds anything to this ground of relief. 
Ignorantia legis neminem excusat and kin- 
dred maxims are old in the law. If they 
are true, this judgment is erroneous. 

In early times the jurisdiction of tlie court 
of chancery in the hands of chancellors un- 
skilled in the law was almost without limit; 
but for very many years that court has been 
guided by rules and precedents, by the sci- 
ence of the law as much as courts of com- 
mon law. Their jurisdiction and modes of 
relief are well settled. The statutes and 
laws of the land are as much the law there 
as in any other court. 1 Story Eq., § 10; Id., 
§§ 17, 18. 

The whole basis for this relief is founded 
upon the fact tliat an inferior court made an 
erroneous decision upon a question, of law; 
that the plaintiff was misled thereby and 
suffered this loss. This is the best position 
the plaintiff can take. This must be the 
"surprise" sometimes spoken of in the books. 
Jeremy Eq. Jur. 360. 

What a flood of litigation would such a 



rule open? If this can be regarded as the 
"surprise" that requires or Justifies equita- 
ble relief, how broad is the principle, how 
extensive its ramifications? Almost every 
case reversed by this court would form a 
basis for such "surprise," especially where 
courts of last resort reverse or modify their 
own decisions. How many cases are lost at 
the trial or upon review by the ignorance of 
counsel in failing to perceive the point, or 
in failing to present it properly for review.. 
How easy to get up cases, in the ordinary 
affairs of life, of a misunderstanding of the 
law. Thus the same principle would extend 
to courts of equity for errors committed or 
assumed to be committed there. Under such 
a system of jurisprudence it would be difii- 
cult to reach the end of a lawsuit. 

In this case the statute of tliis state pro- 
vided a mode of review of judgments ren- 
dered in the marine court. The time and 
the manner were prescribed. This statute 
was well known to these parties, or should 
have been but for their negligence. Yet the 
plaintiff, with the statute before him, passed 
for the sole purpose of enabling the party 
aggrieved to review a judgment in the ma- 
rine court, comes to a court of equity for 
relief against his ignorance of the manner of 
obtaining such review. 

We are referred to no principle or author- 
ity to sustain such an action, and I think 
none can be found. 

On this point Chancellor Kent observed: 
"A subsequent decision of a higher com't in 
a different case, giving a different exposition 
of a point of law from the one declared and 
known when a settlement between parties 
takes place, cannot have a retrospective ef- 
fect and overtm-n such settlement. Every 
man is to be cliarged at his peril with a 
liuowledge of the law." Lyon v. Richmond, 
2 Johns. Ch. 51, 60. 

Thougli the decree in that ease was re- 
versed by the court of errors (14 Johns. 501), 
it was entirely upon other grounds. 

In Storrs v. Barker, 6 Johns. Ch. 166; 10 
Am. Dec. 316, where ignorance of the law 
was set up as a gi-ound of defense, the court 
affirmed the rule that ignorance of the law 
with a knowledge of the facts was no ground 
of defense. See 1 Story Eq., § 120, to the 
same effect. 

Suppose the plaintiff had misunderstood 
the statute as to the time of appeal, could a 
coiu't of equity extend the time prescribed 
by the statute? Many such cases have oc- 
curred from a misappreliension of the law 
as to when a judgment is perfected. Com'ts 
of law could grant no relief, and I am not 
aware that any lawyer has supposed that a 
court of equity had any more power to ex- 
tend the statute. 

In Champlin v. Laytin, 18 Wend. 407; 
31 Am. Dec. 382, in the court of errors on 
appeal from chancery, Bronson, J., review- 
ed the authorities in a sound opinion, show- 
ing as he claimed that there was really no 



EQUITABLE RIGHTS. 



181 



Authority against the rule that ignorance of 
the law simply was no ground for relief. 

The opinion of Paige, Senator, the other 
way, does not seem to me to be well gi'ound- 
ed. He was of opinion that the judgment 
in that case could be affirmed upon otlier 
grounds. But the principle laid down by 
him denies relief to the plaintiff in this case. 
He recognized a difference between igno- 
rance of the law and a mistake of the law. 
Adopting the langviage of .Johnson, ,T., in 
Lawrence v. Beaubien, 2 Bailey, 623; 23 Am. 
Dec. 155, who says: "The former is pas- 
sive, and does not presume the reason. The 
latter presumes to know when it does not, 



and supplies palpable evidence of its ex- 
istence." He would grant relief in the for- 
mer not in the latter. 

The difficulty of proving the one or the 
other seems to constitute all the difference 
in the cases. 

Without any special review of authorities 
on this question which we have particularly 
examined, it is enoiigh to say that it is con- 
ceded that no case has been found warrant- 
ing the interference of a court of equity up- 
on facts like these, and no sound principle 
will authorize it. 

The decree must be reversed, without costs. 

All concur. 



182 



EQUITABLE RIGHTS. 



PETERSON V. GROVBR et al. 

(20 Me. 363.) 

Supreme Judicial Court of Maine. July Term, 
1841. 

Bill in equity, lieard on bill, answer, and 
proof. Tlie facts are stated in substance in 
tlie opinion of the court. 

Mr. Timelier, for plaintift. 
Mr. Hobbs. for defendants. 

SHEPLEY, J. Tlie bill alleges, in sub- 
stance, that in the year 1S21, the complainant 
made a mistake in writing a deed of release 
of a lot of land in the township now called 
Cutler, by writing the word "south-east" in- 
stead of "south-west," in stating the first 
bound of the lot. That the effect of this mis- 
take was to describe the lot immediately east- 
erly and adjoining, which was owned by the 
complainant in fee, instead of the one in- 
tended to be conveyed, in which he owned 
only the improvements. That the lot intend- 
ed to be conveyed, or part of it, is now num- 
bered twenty-one, and that conveyed is num- 
bered twenty. That one of the grantees en- 
tered upon and has continued to possess the 
lot intended to be conveyed, while the com- 
plainant and his grantees have continued in 
the possession of the one conveyed. The mis- 
take is clearly proved by the testimony, and 
is admitted by the answers. The rule, that 
parol testimony is not to be admitted to vary 
an instrument In writing, prevails as well in 
equity as at law. Courts of equity admit an 
exception to it, where a mistake is alleged; 
and if it be clearly proved or admitted, they 
give relief. This is a case in which, accord- 
ing to the rules of equity, the deed should be 
reformed by correcting the mistake, unless 
the matters set forth in the answers vary the 
rights of the parties. The grievances alleg- 
ed by the respondents, and for which one of 
them claims to have compensation made be- 
fore the error is corrected, so far as they are 
proved by their own testimony, are in sub- 
stance these. That the complainant was em- 
Ijloyed by Jones and others, the oAvners in 
fee of the lot intended to be conveyed, to sur- 
vey it, when, in the same year, 1821, one 
of the respondents purchased it of them. 
That he was Instructed to run out one hun- 
dred acres of good land exclusive of the 
heath, and that he did so run it out. That 
there were about fifty acres of heath found 
In the lot, not computed as part of it. That 
eight or nine years ago the complainant was 
again employed to run out the land lying 
northerly of the lot, and that he ran the 
southerly line of the lot, now partially des- 
ignated as lot numbered seven, so as to 
take ofC a large number of acres belonging 
to lot 21, as it was originally surveyed. 
That there was a large quantity of timber 
on the part so taken off, constituting the prin- 
cipal value of the whole lot. That when the 
fee of the lot was purchased of Jones and 



others, the deed was made by copying the 
boundaries of the lot described in the deed 
from the complainant. That Jones and oth- 
ers, in the year 1832, conveyed lot numbered 
seven to Marston and others, who prosecuted 
one of the respondents for cutting, where he- 
alleges it should have been in his own lot^ 
and that he was obliged to pay damages for 
it. 

The argument for the respondents is, that 
if the deed from the complainant had de- 
scribed and conveyed lot 21, they should have- 
acquired by that deed and by the deed of thfr 
fee of the same, a good title as far northerly 
as the spotted tree, named in the deed as the- 
north-east comer, although it might have- 
stood more than two hundred and seventy- 
one rods from the first bound. That in con- 
sequence of the deed from Jones and others 
to Marston and -others^ they cannot, if the 
mistake in their deed be now corrected, hold 
the title to that extent against them; and 
must lose the most valuable portion of their 
land, through an error originating with the 
complainant. The allegations and proofs,^ 
out of which this argument arises, are many 
of them strongly controverted: but let them 
for this purpose be regarded as proved. The- 
inquiry will then arise, how far the com- 
plainant is responsible for such a result It 
does not appear, that he made or had any 
connexion with the deed from Jones and oth- 
ers to one of the respondents. If the mis- 
take in his deed to them be corrected, it will 
still convey, whatever change may have tak- 
en place since, all that it was intended to 
convey, the improvements on the lot. If the 
respondent who received the deed from 
Jones and others with warranty, obtained no 
title, it is to be presumed he will obtain 
a full indemnity for the loss of it. Or If by 
any process the error in that should also be 
attempted to be corrected, and it should be 
found, that by reason of subsequent grants 
made by them, it could not be so corrected 
as to operate as it would have done, had 
it been correctly made, it is to be presumed^ 
that the court would give relief only upon 
the principle of making one who seeks equi- 
ty, do equity. It would be a hard rule to 
hold, that one \A'ho had committed an error, 
was responsible for all the remote and possi- 
ble consequences, which might arise out of 
its leading others to commit errors by placing 
confidence in its accuracy, instead of examin- 
ing for themselves. This would make him 
responsible not only for the consequences of 
his own errors, but for the negligence of oth- 
ers. There is little occasion for it here,, 
where there is apparently a sufficient remedy 
for all losses against the parties, who con- 
veyed the fee, and who are responsible for 
their own errors on their covenants. The- 
complainant does not appear to have commit- 
ted any fraud in the original survey of the 
lot, for the proof is, that it was run out ac- 
cording to his instructions. The surveys. 



EQUITABLE KIGHTS. 



183 



which he has since made, cannot affect the 
title, and cannot therefore have occasioned 
any essential injury. The complainant is en- 
tled to have the mistake corrected by a re- 
form of the deed so as to malse it read as it 
should have done, and to a decree, that will 
secure the rights of the parties accordingly. 



As he made the mistake, which has brought 
difficulties upon the other parties as well as 
upon himself, he is not entitled to costs. 
Nor are either of the respondents, for they 
had an oppoi-tunity of relieving themselves 
from expense and trouble by a voluntary cor- 
rection of an admitted error. 



18i 



EQUITABLE KIGHTS. 



RIDER V. POWELL. 
(28 X. Y. 310.) 
Court of Appeals of ISew York. Sept., 18G3. 
Action to reform a bond and mortgage so 
as to conform to a previous oral agreement. 
There was a judgment for plaintiff, from 
which defendant appealed. 

A. J. Parker, for appellant. James B. 01- 
ney, for respondents. 

BALCOM, J. Rider and wife conveyed 
the farm to the defendant, and he took pos- 
session of it and also of the personal prop- 
erty he purchased with it. He paid Rider 
$1,100 in ca.sh, and gave him an indorsed 
note for $.500 in part payment of the pur- 
chase-money. The oral contract therefore 
was so far' performed as to relieve it from 
the operation of the statute of frauds; and 
the defendant could not retain the farm and 
personal projDerty without giving Rider such 
a bond and mortgage as tlieir oral contract 
called for, unless the fact that there was no 
fraud or mistake on the part of the defend- 
ant, as to the terms of the bond and mort- 
gage he gave to Rider, justified him in so 
doing. 

Parsons says: "The question has often 
come before our courts, whether oral evi- 
dence can be received to show the mistake 
(in ii written contract), and thereby make it 
in fact a new contract, when an oral contract 
would be void or not enforceable by the stat- 
ute of frauds. The course of adjudication is 
not uniform on this point. But while it can- 
not be denied that numerous authorities sup- 
port a disregard of the statute in such cases, 
others maintain its authority." 1 Pars. Cont. 
(3d Ed.) 555. Justice Story puts the case, 
"where the party plaintiff seeks, not to set 
aside the agreement, but to enforce it, when 
it is reformed and varied by the parol evi- 
dence;" and then says: "A very strong in- 
clination of opinion has been repeatedly ex- 
pressed by the English courts, not to decree 
a specific performance in this latter class of 
cases; that is to say, not to admit parol evi- 
dence to establish a mistake in a written 
agreement, and then to enforce it, as varied 
and established by that evidence. On vari- 
ous occasions such relief has, under such cir- 
cumstances, been denied. But it is extreme- 
ly difficult to perceive the principle upon 
which such decisions can be supported, con- 
sistently Willi the acknowledged exercise of 
jurisdiction in the court to reform written 
contracts, and to decree relief thereon. In 
Americii, Chancellor Kent, after a most elab- 
orate consideration of the subject, has not 
hesitated to reject the distinction as unfound- 
ed in justice, and has decreed relief to a 
plaintiff, standing in the precise predica- 
ment." 1 Stoi;y, Eq. Jur. (7th Ed.) § 161. 
Archer, J., in delivering the opinion of the 
court in Moale v. Buchanan, 11 Gill & J. 325, 
said: "Had tl;e agreement been entirely by 
parol, and a part performance, the complain- 



ant would have been entitled to relief. Shall 
he be in a worse situation by having attempt- 
ed to reduce the whole agreement into the 
form of a conveyance, if he shall make an 
omission in the conveyance, by mistake of 
an essential part of the agreement?" He 
then answers this interrogatory in the nega- 
tive, and refers to the opinions of Chancellor 
Kent, in Gillespie v. Moon, 2 Johns. Ch. 585, 
and Keisselbrack v. Livingston, 4 Johns. Ch. 
144. 

A judgment was given by this court in De 
Peyster v. Hasbrouck, 11 N. Y. 582, reform- 
ing a mortgage and enforcing it against 
premises not originally embraced therein. 

The supreme court was therefore justified 
by authority as well as principle in reform- 
ing the bond and mortgage in this case, un- 
less the fact that there was no fraud or mis- 
take on the part of the defendant In fixing 
their terms, or respecting their terms, ren- 
ders such decision erroneous. The decisions 
in JIatthews v. Terwilliger, 3 Barb. 50, and 
Quick V. .Stuyvesant, 2 Paige, Ch. &4, sup- 
port this conclusion instead of militating 
against it. 

I am not aware of any adjudged case, in 
which it has been held that there must be a 
mutual mistake of fact by the parties to a 
written contract or some fraud on the part 
of the party not mistaken, to entitle the 
party who made the mistake and who suf- 
fers by it, to have such contract reformed 
so that it will truly express the oral agree- 
ment of the parties which was to be carried 
into effect by the written contract; and such 
a doctrine would be contrary to good sense 
and sound principle. In Matthews v. Terwil- 
liger, supra, Gridley, J., said: "Now if by 
the actual agreement of the parties, Mat- 
thews was to pay interest on the purchase- 
price of the farm, how did it happen that 
the written contract which should have truly 
expressed the agreement of the parties, whol- 
ly omitted all mention of interest? Was it 
by the fraudulent design of the complainant, 
or by the mistake and inadvertence of the 
defendant? If it was owing to either of 
these causes, then the complainant is not en- 
titled to have the written contract, on which 
he has founded his bill, performed; but the 
defendant is entitled to have it reformed, 
and the mistake corrected." In that case 
the complainant endeavored to compel the 
defendant to specifically perform a conti'act 
for the sale of his farm, and the latter set 
up a mistirke in the contract by the omission 
of an undertaking on the part of the com- 
plainant to pay interest on the portion of 
the purchase-money which was not to be 
paid down; and there was no mistake on 
the part of the complainant ils to the terms 
of the contract as written and signed by the 
parties, and it was framed precisely as he 
intended it should be. See Haire v. Baker, 
5 N. Y. 3.17. Also, see Waite v. Leggett, 8 
Cow. 105; JMowatt v. Wright, 1 Wend. 355. 

It seems to me to be entirely clear, upon 



EQUITABLE RIGHTS. 



185 



principle, tliat Rider was entitled to liave 
the bond and mortgage reformed so tliat they 
would conform to the oral agreement of the 
parties for the sale of the farm, although the 
■defendant may have known, at the time they 
were executed, that they varied from such 
oml agreement, and did not say or do any 
thing to induce the scrivener to draw them 
differently from what they should have been 
drawn. And as there is no controlling au- 
thority to the contrary, I am of the opinion 
that this court should so hold, and affirm the 
judgment in the case, with costs. 

DAVIES, ROSEKRANS, 5IAKYIN, and 
SELDEN, JJ., concurred for affirmance. 

WRIGHT, J. (dissenting). The action was 
to have the defendant's bond and mortgage 
reformed so as to conform to a parol con- 
tract between the parties, in pursuance of 
which it was alleged they were given. The 
bond and mortgage were to secure the pay- 
ment of $3,000 (a part of the purchase-money 
■of the plaintiff's farm), in ten annual install- 
ments of $300 each. As drawn, interest was 
to be paid annually on the different install- 
ments; but there was no provision for the 
^payment of the interest on the whole princi- 
pal remaining unpaid, at the time of the pay- 
ment of such annual installments. In the 
latter pai-ticular the reformation or correc- 
tion of the bond and mortgage was asked 
for. The pleadings admitted a parol contract 
between the plaintiff and defendant, for the 
sale of the farm of tlie plaintiff, for the price 
of $4,600, of which sum $3,000 was to be paid 
in ten annual installments of $300 each; the 
first payment to be made on the 1st of De- 
cember, 1859, and the remaining payments 
•on the 1st of December of each year there- 
after; and which sum of $3,000 was to be 
:secured by the defendant's bond and mort- 
gage on the premises. Tlie complaint al- 
leged the contract to have been that the 
plaintiff was to have Interest annually on 
the whole sum of $3,000; whereas the de- 
fendant. In his answer, averred that that 
sum was made payable in ten annual pay- 
ments of $300 each, with interest on such 
annual payments. The judge who tried the 
cause found only the single fact, viz., that 
tliere was a mistake on the part of the plain- 
tiff as to the interest he was to receive by 
the bond and mortgage; and decided that as 
-matter of law he was entitled to have his 
mistake corrected, and the bond and mort- 
gage amended or modified, so that he should 
recover annual interest on the whole sum 
unpaid, and directed a judgment accordingly. 

We can only review the case upon the 
pleadings and facts found by the judge; 
and the question is, whether in a case where 
.a contract between parties provides for the 



performance of a particular act by them, 
such contract is entitled to be reformed, in 
equity, because there has been a mistake 
on the part of one of the contracting parties, 
as to its terms, when such mistake is not 
occasioned by any fraud practiced by the 
other party. 

I suppose the rule to be lliat when there 
is a mistake on one side (and not a mutual 
mistake), it may be a ground for rescinding 
a contract, or for refusing to enforce its 
specific performance, but not a ground for 
altering its terms. Adams, Eq. 171. A mis- 
take by the plaintiff when he made the con- 
tract, as to the interest he was to receive 
on the bond and mortgage, would not en- 
title him to have the contract so modified 
as to conform to his mistaken impression, 
though it might be a reason for rescinding 
the contract on the ground that the minds 
of the parties never met in making it. In 
Lyman v. United Ins. Co., 17 Johns. 375, 
Chief Justice Spencer lays down the true 
rule of law to govern the case (whether the 
mistake found relates to the bargain or to 
the taking of the bond and mortgage) that 
"before a written contract can be amended 
or altered on the pretense of mistake, the 
proof must be entirely clear that tliat mis- 
take has occurred; and secondly, that the 
amendment sought would conform the con- 
tract to the intention of both parties." 

If we were to look, however, in this case, 
beyond the findings of fact by the com-t, it 
is clear that the deed, bond and mortgage 
constituted the true contract, and that all 
previous negotiations were merged in them. 
It would be a violation of the plainest ele- 
mentary principles to permit a party who has 
entered into a written contract to have the 
written contract altered so as to confoi-m to 
his understanding of a previous negotiation, 
when the opposite party understood it dif- 
ferently, and as it was set forth in the writ- 
ten contract. The parol bargain was void by 
the statute of frauds; neither possession be- 
ing taken under it or consideration paid. It 
was after the deed, bond and mortgage were 
executed and delivered, and under them the 
money was paid and possession taken. The 
court was asked in the case not only to 
enforce an agreement void by the statute, 
but one that the parties did not understand 
alike. 

The judgment of the supreme court should 
be reversed and a new trial ordered, with 
costs to abide the event. 

DEXIO, C. J., and EMOTT, J., concurred. 
Judgment affirmed on the ground that the 
judge's finding of facts must be construed 
as a finding of fraud or a mistake of fact on 
the part of the defendant. 

Judgment affirmed. 



186 



/ 
EQUITABLE BIGHTS. 



LUDINGTON et al. v. FORD et al. 
(33 Mich. 123.) 
Supreme Court of Michigan. Jan. Term, 1876. 
Appeal froin circuit court, Mason county; 
in chancery. 

Shubael F. White and Mariner, Smith & 
Ordway, for complainants. E. N. Fitch, Wil- 
liam L. Mitchell, and Robert Rae, for defend- 
ants. 

MARSTON, J. The bill in this case was 
filed to correct a mistake. It is claimed that 
at the time of the agreement of April 5, 1859, 
referred to in the case of Ford v. Loomis, 33 
Mich. 121, a certain description of land which 
was not embraced in the tax deeds to Du- 
rand, but which was embraced in the deeds 
from Ford to Durand of November 16, 1858, 
was by mistake omitted from the deed made 
by Durand to complainants. 



In order for the complainants to obtain' 
the relief sought, it must appear not only 
that there was an error on both sides, but 
the mistake must be admitted or distinctly 
proved. Tripp v. Hasceig, 20 Mich. 254; Case- 
V. Peters, Id. 298. 

The complainants have wholly failed in. 
establishing either of these propositions. 
We are rather of opinion, on the contrary, 
that the only lands contracted to be conveyed 
by Durand to the complainants were those- 
described in the tax deeds. None others are 
embraced in the deed from Durand, and it 
refers to the tax deeds "for a more full and 
perfect description of the lands and premises- 
herein and hereby conveyed." 

The decree of the court below must be re- 
versed, and the bUl be dismissed, with costs- 
of both courts to defendants. 

The other justices concurred. 



^ — [ 



EQUITABLE KIGHTS. 



187 



WELLES v. YATES. 

(44 N. Y. 525.) 

Commission of Appeals of New York. Jlay, 
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 taken from the premises conveyed. 

An account 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, C. 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, 184(5, 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- 
ei-vation of the timber, made by the plaintiff 
to the defendant. 

That the defendant well knew all of the 
facts in the complaint recited. The plamtift' 
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, 
1.j2, 153, 167, 168, 191, 214-217; Waldron v. 
Stevens, 12 Wend. 100; Wiswall v. Hall, 3 
Paige, 313; Hill v. Gray, 1 Starkie, 434; 2 
B. 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. 670; 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 
will be found to have in them the element of 
the honesty on the part of the one correctly 
understanding the contract. AVhere two par- 
ties enter into a contract, and an error is 



188 



EQUITABLE IIIGHTS. 



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. Hasbroucli, 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 supplemi^ntai'y points the appellant ex- 
Ijressly 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 ])erformance. If the judgment of 
the court below is carried out, he will 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. AMien 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 fravid, he is compelled to enter 
into a new contract. Nor is he to be relieved 
by the nile 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, G9; Beers v. Hen- 



drickson, 6 Rob. (N. Y.) 54; Tomlinson 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 perfoi-med. In such case the nile is that 
the party must show himself ready and eager 
for its performance. 1 Story, Eq. 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. 203. 

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; Rundle 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 iilaintiff 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 Boret 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 si^ 
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 what action 
can be sustained after the deed is reformed, 



EQUITABLE RIGHTS. 



189 



but what action could have been sustained be- 
fore its reformation? The reformation had 
not occurred wlien the suit was commenced, 
and the right of the parties was determined 
by the nnreformed deed. That deed conveyed 
to the defendant without reservation, the one 
hundred and forty-one acres in question. It 
carried witli 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 tlie 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 recoveiy against the defendant is 
sustained upon the ground 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 
And any evidence that the plaiutiffi 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 plaintiff'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 plaintiff 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. 



\¥hen the cause of action accrued in this 
case is a question of law. It was either 
when the transaction occuiTed 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 yeare 
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 tidying 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 i-aised by the appellant. 
There are several other objections stated in 
the points, which I have also examined. 
They fm-nish 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 sis 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, sei-ve on the defendant's attorney a 
stipulation, deducting from the judgment of 
April 6, 1863, the sum of $2,107.45 as of that 
date. If such stipulation be not seiTed, 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, C. (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 alignment 
before us, the deed was given in pursuance 



190 



JiQUITABLE KIGIITS. 



and in fulfillment of tlie 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 vpas a 
binding contract and, if performed as the 
parties contemplated, it would be fully per- 
formed before the deed was required to be 
^iven; 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 given 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 make, 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 reseiTation 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 perfoi-m- 
ance, he could have been compelled to take 
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 th.it the de- 
fendant could have taken issue «.ipon 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 his finding as to the statute of limita- 
tions, as follows: "That within a month 
after the execution of said deed, the plain- 
tiff discovered said mistake, and shoi-tly 
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 perpetiated 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 saj-ing 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 tlie 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, CC. 
For reversal: EARL and GRAY. GC. 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 i-educing 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. 



u ^ i 



EQUITABLE KIGHTS. 



191 



GLASS V. HULBERT. 

(102 Mass. 24.) 

Supreme Judicial Court of Jrassacbusetts. 
Sept. Term, 1809. 

Bill in equity for the reformation of a con- 
veyance of lands, and for further relief. The 
«ase was reserved by the chief justice "for 
tlie consideration and decision of the full 
court upon the question whether, upon the 
xiUegations of the bill, the plaintiff is entitled 
to relief in equity, and whether the plaintiff 
has not a full, adequate, and complete rem- 
edy at law; the defendant also relying in 
his answer upon the statute of frauds." 

W. H. Swift and S. W. Bowerman, for 
plaintiff. M. Wilcox and W. T. Filley, for 
defendant. 

W'LLLS, J. The plaintiff jmrchased cer- 
tain lots of land of the defendant, received a 
deed, and paid the whole amount of the pur- 
chase money. This suit is brought for relief 
or redress in several particulars, dissimilar 
in character, but all connected with the al- 
leged oral contract of purchase. He com- 
plains: First. That a proviso was inserted 
in his deed, imposing upon him the burden of 
supporting the whole fence upon the south 
line of the land conveyed; and that he was 
induced to assent to its insertion upon the 
consideration, and false representation of the 
defendant, that the whole fence upon the east 
side of said laud was to be maintained by 
the adjoining proprietor, I'atrlcK JIcDaniels, 
by virtue of a written obligation to that ef- 
fect, and- that the plaintiff would be relieved 
from all liability to maintain any fence upon 
that side; as well as by certain other false 
representations of the defendant in relation 
thereto. Second. That he delivered to the 
<Jefendant, in part payment of said purchase 
money, three bonds of the United States of 
■!|>1,000 each, upon the agreement of the de- 
fendant that he would allow the full market 
value of the same, including premium and ac- 
•crued interest at the time of the transfer 
thereof; and that the defendant refuses to 
■allow and pay him the value of such pre- 
mium and interest, amounting together to 
the sum of $315; that sum being in excess 
«f the whole purchase money due to the de- 
fendant. Third. That during the negotiations 
for the sale and purchase of said lands the 
•defendant pointed out the southeast corner 
of the premises proposed for sale, and repre- 
sented that the land of the adjoining propri- 
etor, McDaniels, extended to that point, and 
that the southerly line of the land sold would 
extend from the same corner to a point on 
the highway near a bridge; that the deed 
was accordingly written and accepted, de- 
scribing the land as bounded on the south by 
a line running from the southwest corner of 
land of said McDaniels, at right angles to 
the westerly line of said McDaniels, to the 
highway, the defendant representing said line 



to be the same line previously pointed out by 
him to the plaintiff, and that it would strike 
the highway within one rod of said bridge; 
whereas in fact the land of said McDaniels 
did not extend so far as to the southeast cor- 
ner of the defendant's land as pointed out 
by him, and the south line, running at right 
angles therefrom to the highway, did not 
strike the same witliin one rod of said bridge: 
and the deed so written and accepted did not 
include a considerable part of the land so 
offered and represented to be sold, and in- 
tended and understood by the plaintiff to 
have been purchased by him; the pait so 
excluded consisting of about 17 acres of 
land, comprising the greater part of the 
meadow land in the tract as pointed out by 
the defendant. 

The plaintiff, by his bill, does not seek to 
rescind the contract and conveyance, and 
does not offer to reconvey or release to the 
defendant the land conveyed, nor pray that 
he may be allowed to do so, and recover back 
the purchase money paid and bonds delivered 
in payment. The relief prayed for is that 
the defendant may be required to convey to 
the plaintiff the portion of the tract which 
was so by fraud or mistake omitted from the 
conveyance already made to release the plain- 
tiff from the proviso in his deed in regard to 
the fence, and to pay to the plaintiff the 
aforesaid amount of premium and interest 
upon said bonds. 

The argument of the plaintiff is addressed 
mainly to the question of the equity jurisdic- 
tion of this court in cases of fraud or mistake 
hke that alleged in the present suit. There 
can be no doubt upon that point. There is 
no ground upon which jurisdiction in equity 
is so readily entertained and freely exercised, 
It is given to this court without restriction, 
if the parties have not a plain, adequate, 
and complete remedy at law. Gen. St. c. 113, 
§ 2. Having jurisdiction, the question is as 
to the appropriate remedy. Jurisdiction in 
equity is often maintained, even when there 
is a remedy at law, for the sake of the great- 
er facility it aft'ords for adapting the proper 
relief to the peculiar necessities of each case. 
If the party suing is entitled to no relief oth- 
er than that which may be had in an action 
at law, he is remitted to his remedy in that 
form. Even in a proper case for an appeal 
to equity the remedy must be sought in ref- 
erence to certain recognized rules and princi- 
ples of chancery jurisprudence, and is often 
restricted by provisions of positive law. It 
is not administered arbitrarily. It must flow 
out of and accord with the agreements and 
obligations of the parties, and be adapted to 
the condition of facts to which it is to be 
applied. 

In the present case, the principal ground of 
action is the fraud or mistake by which an 
important part of the subject-matter of the 
alleged contract of sale and purchase was 
omitted from the deed of conveyance. If the 
allegations of the bill should be sustained by 



192 



EQUITABLE RIGHTS. 



tlie proofs, they Avould show a clear right to 
have a rescission of the contract; and, upon 
reconveyance of the land covered by the deed, 
to have restoration of the bonds and money 
tliat were delivered in payment. But this re- 
lief the plaintiff does not seek; and his bill 
contains no offer to reconvey, without which 
he cannot have such relief. The prayer of 
the bill, and its sole purpose in this particu- 
lar, is that the defendant may be compelled 
to convey to the plaintiff the 17 acres of land 
which he alleges were included in the oral 
contract of sale, or represented by the defend- 
ant to be so included, but omitted from the 
deed. 

If the case stood merely upon the oral con- 
tract of sale, with a conveyance of part and 
a neglect of refusal to convey another part of 
the land which was the subject of the al- 
leged contract, we do not think it would be 
contended that the plaintiff could compel a 
conveyance of the other land, against a party 
denying the contract and setting up the stat- 
ute of frauds. Courts are bound to regard 
that statute in equity as well as at law. The 
only remedy in equity, in such case, would 
be by a rescission of the entire contract, in 
which the aid of the court could be obtained, 
if necessary, upon projfer grounds. 

There has been no part performance here, 
such as, according to the general practice in 
courts of equity, would be held to take the 
case out of the statute of frauds. 

1. Payment of the whole consideration Is 
not sufficient for that purpose. Hughes v. Mor- 
ris, 2 De Gex, .M. & G. ooO; Thompson v. 
Gould, 20 Pick. 184, 138; Browne, St. Frauds, 
§ 4G1; Fry, Spec. Pert. § 403; Dale v. Hamil- 
ton, 5 Hare, :i(>!J ; Clinan v. Cooke, 1 Schoales 
& L. 22, 41; Allen's Estate, 1 "Watts & S. 
3S3; Purcell v. Jliner, 4 Wall. .")i;!. 

2. Possession by the purchaser, under such 
a deed as was given to the plaintiff, is pos- 
session according to the title thereby con- 
veyed; and Is not such a possession as to 
afford ground for enforcing an alleged oral 
agreement to convey other land, claimed to 
have been embraced in the same oral agree- 
ment with that conveyed. Moale v. Buchan- 
an, 11 Gill & J. 314. The plalntifC does not 
appear to have been let into actual posses- 
sion of the 17 acres, nor to have been in- 
duced to do any acts thereon, as owner, un- 
der his supposed rights as purchaser. 

3. The conveyance of a portion of the land 
is neither a part performance, nor is it a 
recognition of the alleged oral contract, so far 
as it relates to the remaining land not In- 
cluded in the deed. On the contrary, it is in 
distinct disregard and Implied disavowal of 
such a contract. The deed was given and ac- 
cepted in execution of the entire contract of 
sale. Its terms are In literal conformity with 
the agreement as made. The plaintiff con- 
cedes that the southern boundary was stipu- 
lated to be described as it is written In the 
deed, to wit, running from the southwesterly 
corner of land of McDaniels, and at right 



angles with his westerly line, to the high- 
way. 

But the plaintiff claims that he In fact pur- 
chased the whole of a certain tract of land 
which Included the 17 acres now In dispute;, 
that the description of the boundaries, as. 
agreed upon and Inserted in the deed, was so 
agreed on and inserted upon the representa- 
'tion of the defendant and the belief of the- 
plaintiff that It did include said 17 acres; 
and that the failure of the deed to embrace- 
and convey that part of the land was oc- 
casioned either by the mutual mistake of the 
parties as to the position of the southwest 
corner of land of McDaniels, or else by the 
misrepresentation, deceit, and fraud of the 
defendant in relation thereto. In either al- 
ternative, the plaintiff contends that he is 
entitled to a reformation of the deed, to- 
make it conform to the sale actually con- 
tracted by the paitles. 

Such a reformation not only requires a de- 
scription of the subject-matter of the sale,, 
different from the express terms of the oral 
contract, but would enlarge the effect and 
operation of the deed as a conveyance. It 
involves the transfer of the legal title to land 
not covered by the deed already given. It 
requires a new deed to be executed and de- 
livered by the defendant to the plaintiff. 
Whether that deed shall embrace the entire 
subject of the alleged contract of purchase, 
with a corrected description to make it con- 
form to facts and abuttals as they were rep- 
resented to be, or merely convey the 17 acres 
omitted from the deed already given, the or- 
der for its execution will enforce the specific 
performance of a contract for the sale of 
lands, for which there exists no memoran- 
dum, note, or other evidence in writing sign- 
ed by the party to be charged therewith. 
As to the 17 acres in dispute, the obligation 
to convey them rests solely in the oral con- 
tract. The defendant denies any contract 
which Includes them. The plaintiff seeks to 
establish such a contract by parol evidence, 
and enforce it. The deed itself furnishes no 
means of making the correction sought for, 
and no evidence of the contract relied on for 
this purpose; nor Is it in any sense an ac- 
knowledgment of the substance of the al- 
leged oral agreement. 

The power to rectify deeds and other writ- 
ten instruments undoubtedly exists in this 
court, under the clauses of the statute giving 
equity jurisdiction in cases of fiaud, acci- 
dent, and mistake, or the clause giving It gen- 
erally where there is no adequate remedy at 
law. It has been exercised in several cases. 
Canedy v. Marcy, 13 Gray. 373; Metcalf v. 
Putman, 9 Allen, 07. But the power will be 
exercised in subordination to other fixed prin- 
ciples of law, and especially to statute pro- 
visions. If the rules, restricting the admin- 
istration of judicial remedies, which are pre- 
scribed by the statute of frauds, were to be 
disregarded in this branch of equity pro- 
cedure, It would open the door to all the 



EQUITABLE RIGHTS. 



193 



forms of fraud -wMoh that statute was In- 
tended to prevent. The statute Is not a mere 
rule of evidence, but a limitation of judicial 
authority to afCord a remedy. It requires 
that contracts for the sale of lands. In order 
to be enforced by judicial proceedings, must 
be substantiated by some writing. This pro- 
vision of law cannot be dispensed with mere- 
ly for the reason that the want of such 
writing was occasioned by accident, mistake, 
or fraudulent representations, unless some 
other ingredient enters into the case to give 
rise to equities stronger than those which 
stand upon the oral conti-act alone, which 
estop the other party from setting up the 
statute. 

It makes no difCerence whether the want 
of a writing was accidental or intentional, by 
way of refusal or by reason of mutual mis- 
take; nor that there were false representa- 
tions, and a pretence of conveying the land, 
but a fraudulent evasion, by means whereof 
there was no conveyance in fact, and no 
proper written evidence of the agreement to 
convey. From the oral agreement there can 
be derived no legal right, either to have per- 
formance of its stipulations or written evi- 
dence of its terms. So long, therefore, as the 
effect of the fraud or mistake extends no fur- 
ther than to prevent the execution, or with- 
hold from the other party written evidence 
of the agreement, it does not furnish suffi- 
cient ground for the court to disregard the 
statute of frauds, and enter into the investi- 
gation of the oral agreement for the pur- 
pose of enforcing it. And we do not see that 
the present case stands otherwise in this re- 
spect than it would if there had been no con- 
veyance of any part of the land. As al- 
ready shown, that conveyance was not in ex- 
ecution or recognition of the contract which 
the plaintiff seeks, by this bill, to enforce; 
and does not furnish any reason for taking 
the case out of the statute, on the ground of 
part performance. Indeed, the rule seems to 
be that no part performance by the party 
sought to be charged will take an agreement 
out of the statute of frauds, except in those 
cases where the statute itself provides for 
such effect. It is part performance by the 
party seeking to enforce, and not by the oth- 
er party, to which courts of equity look, in 
giving relief from the statute. Caton v. 
Cs^on, 1 Ch. App. 137, L. R. 2 H. L. 127; 
Mundy v. Jollifee, 5 Mylne & C. 167; Buck- 
master V. Harrop, 7 Ves. 369; Browne, St. 
Frauds. § 453. 

When the proposed reformation of an in- 
strument involves the specific enforcement of 
an oral agreement within the statute of 
frauds, or when the term sought to be added 
would so modify the Instrument as to make 
it operate to convey an interest or secure a 
right which can only be conveyed or secured 
through an instrument in writing, and for 
which no writing has ever existed, the stat- 
ute of frauds is a sufficient answer to such a 
proceeding, unless the plea of the statute can 

HUTCH. EQ. JUB. — 13 



be met by some ground of estoppel to de- 
prive the party of the right to set up that 
defence. Jordan v. Sawkins, 1 Ves. Jr. 402; 
Osbom V. Phelps, 19 Conn. 63; Olinan v. 
Cooke, 1 Schoales & L. 22. 

The fact that the omission or defect in the 
writing, by reason of which it failed to con- 
vey 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 es- 
toppel. Thei'e must concur, also, some 
change in the condition or position of the 
party seeking relief, by reason of being in- 
duced to enter upon the execution of the 
agreement, or to do acts upon the faith of 
it as if it were executed, with the knowledge 
and acquiescence of the other party, either 
express or implied, for which he wduld be 
left without redress if the agreement were 
to be defeated. 

Upon a somewhat extended examination 
of the decisions in regard to the effect of the 
statute of frauds upon the right to have eq- 
uitable relief where the writing Is defective, 
although many of them, where relief has 
been granted, hardly come within this defi- 
nition in the apparent character of the par- 
ticular facts upon which they were decided, 
yet we are satisfied that this principle of dis- 
crimination is the only one which can give 
consistency to the great mass of authorities 
upon this subject 

The case of Smith v. Underdunck, 1 Sandf. 
Ch. 579, is nearly like the present in its facts; 
and the opinion of the assistant vice-chan- 
cellor would seem to sustain the right of the 
plaintiff here. There was no fraud in the 
preparation of the deed. The judgment was 
based mainly upon the ground of part per- 
formance. It was held to be suflicient to 
take the case out of the statute that the 
plaintiff had been let into possession as pur- 
chaser; and the opinion indicates that pos- 
session under and in accordance with a deed 
of part would be a sufficient possession of 
the whole for the purpose of requiring a deed 
of the remainder. But the decision rests up- 
on the fact of possession by the plaintiff of 
the entire premises, including the part for 
which the bill was brought. The case arose 
upon demurrer to the bill, which of course 
admitted the contract, and the alleged pos- 
session of the whole tract. The question of 
the statute of frauds did not arise therefore. 

That the purchaser has been let into pos- 
session in pursuance of a parol agreement 
has been very generally recognized as suffi- 
cient to take it out of the statute. The rea- 
soning by which this result was reached is 
far from satisfactory; and even where the 
rule prevails there are frequent intimations 
that it is regarded as trenching too closely 
upon the spirit as well as the letter of the 
statute. If it were now open to settle the 
rule anew, we cannot doubt that it would 
be limited to possession accompanied with 
or followed by such change of position of the 



194 



EQUITABLE RIGHTS. 



purchaser as would subject him to loss for 
which he could not otherwise have adequate 
compensation or other redress; and that 
mere change of possession would not be held 
to take a case out of the statute. However 
it may be elsewhere, we are disposed to hold 
the rule to be so in Massachusetts. 

Previously to the Statutes of 1855, c. 194, 
and 1856, c. 38 (Gen. St. c. 113, § 2), the 
power of the court to direct specific per- 
formance was confined to written contracts. 
Rev. St. c. 74, § 8. That power was held to 
be strictly limited to contracts in which the 
'whole obligation to be enforced was ex- 
pressed In the writing. Dwight v. Pomeroy, 
17 Mass. 303; Brooks v. Wheelock, 11 Pick. 
439; Leach v. Leach, 18 Pick. 68; Buck v. 
Dowley, 16 Gray, 555; Park v. Johnson, 4 
Allen, 259. The provision conferring that 
power specifically in case of written con- 
tracts is still retained in the Gen. St. c. 113, 
§ 2. If the subsequent clauses, conferring 
jurisdiction generally, are to be construed, 
as we think they are, to extend the power 
of the court, so as to give relief by way of 
specific performance, either of contracts 
wholly unwritten, or of stipulations proved 
by parol and incorporated into a contract by 
judicial rectification of a written instrument, 
as in Metcalf v. Putman, 9 Allen, 97, still 
that power ought to be exercised with con- 
stant reference and in subordination to the 
condition that "the party asking relief has 
not a plain, adequate, and complete remedy 
at common law," which accompanied each 
enlargement of the equity power of the 
court, and which prefaces and closes the 
enumeration of those powers in the General 
Statutes. The force of this consideration is 
not lessened when applied to agreements 
within the statute of frauds. 

Mere possession of land does not expose 
the party to loss or danger of loss without 
redress at law. The parol agreement of sale 
and purchase, with permission to enter, 
though not to be enforced as a valid contract 
of sale, will constitute such a license as will 
protect the party from liability for acts done 
before the license is revoked, and for all acts 
necessary to enable him to remove himself 
and his property from the premises after 
such revocation. If possession be taken 
without such permission, express or implied, 
it is no foundation for relief in equity, ac- 
cording to any of the authorities. The argu- 
ment, for the admission of parol evidence to 
prove an agreement within the statute of 
frauds in order to enforce it in equity, drawn 
from the admissibility of such evidence to 
maintain a defence, either at law or in eq- 
uity, seems to be based upon a misconcep- 
tion of the purport and force of the statute, 
which reaches no farther than to deny the 
right of action to enforce such agreements. 

In this commonwealth, the possession of 
land by a purchaser is not even notice to a 
third party of an unrecorded deed. The 
1^ hole spirit of our laws in respect to real es- 



tate is against the policy of enabling parties 
to acquire or confer title, either legal or eq- 
uitable, by mere parol and delivery of pos- 
session. The possession of the plaintiff, 
therefore, even if it extended to the tract in 
dispute, Is not sufllclent to entitle him to re 
lief against the statute. 

The principle, on which courts of equity 
rectify an Instrument, so as to enlarge its 
operation, or to convey or enforce rights not 
found in the writing itself, and make it con- 
form to the agreement as proved by parol 
evidence, on the ground of an omission, by 
mutual mistake, in the reduction of the 
agreement to writing. Is, as we understand 
it, that In equity the previous oral agree- 
ment Is held to subsist as a binding contract, 
notwithstanding the attempt to put it in 
writing; and upon clear proof of Its terms 
the courts compel the incorporation of the 
omitted clause, or the modification of that 
which Is inserted, so that the whole agree- 
ment, as actually intended to be made, shall 
be truly expressed and executed. Hunt v. 
Rousmaniere, 1 Pet. 1; Oliver v. Mutual 
Commercial Marine Ins. Co., 2 Curt. 277, 
Fed. Cas. No. 10,498. But when the omitted 
term or obligation is within the statute of 
frauds, there Is no valid agreement which 
the court Is authorized to enforce, outside of 
the writing. In such case, relief may be had 
against the enforcement of the contract as 
written, or the assertion of rights acquired 
under It contrary to the terms and intent of 
the real agreement of the parties. Such re- 
lief may be given as well ujwn the suit of a 
plaintiff seeking to have a written contract, 
or some of its terms, set aside, annulled, or 
restricted, as to a defendant resisting Its 
specific performance. Canedy v. Marcy, 13 
Gray, 373; Gillespie v. Moon, 2 Johns. Ch. 
585; Keisselbrack v. Livingston, 4 Johns. Ch. 
148. 

Relief In this form, although procured by 
parol evidence of an agreement dififerlng 
from the written contract, with proof that 
the difference was the result of accident or 
mistake, does not conflict with the provi- 
sions of the statute of frauds. That statute 
forbids the enforcement of certain Idnds of 
agreement without writing; but it does not 
forbid the defeat or restriction of written 
contracts; nor the use of parol evidence for 
the purpose of establishing the equita\ile 
grounds therefor. The parol evidence is in- 
troduced, not to establish an oral agreement 
independently of the writing, but to show 
that the written instrument contained some- 
thing contrary to or in excess of the real 
agreement of the parties, or does not prop- 
erly express that agreement. Higglnson v. 
Clowes, 15 Ves. 516; Clowes v. Higglnson, 1 
Ves. & B. 524; Squler v. Campbell, 1 Mylne 
& C. 459, 480. 

But rectification by making the contract 
include obligations or subject-matter to 
which its written terms will not apply is a 
direct enforcement of the oral agreement, as 



EQUITABLE KiGHTS. 



195 



much in conflict with tlie statute of frauds 
as if there were no writing at all. Moale v. 
Buchanan, H Gill & J. 314; Osborn v. Phelps, 
19 Conn. 63; Elder v. Elder, 10 Me. 80. In 
Parkhurst v. Van Cortland, 14 Johns. 15, 32, 
it is said that, "where it is necessary to 
make out a contract in writing, no parol evi- 
dence can be admitted to supply any defects 
in the writing." Per Thompson, C. J. Such 
rectification, when the enlarged operation in- 
cludes that which is within the statute of 
frauds, must be accomplished, if at all, under 
the other head of equity jurisdiction, namely, 
fraud. Irnham v. Child, 1 Brown, Ch. 92; 

1 Story, Eq. Jur. § 770a; Da vies v. H'itton, 

2 Dru. & War. 225; Wilson v. Wilson, 5 H. 
Ii. Cas. 40, 65; Manser v. Back, 6 Hare, 443; 
Clarke v. Grant, 14 Ves. 519; Clinan v. Cook, 
1 Schoales & L. 22. 

The fraud most commonly treated as tak- 
ing an agxeement out of the statute of frauds 
is that which consists in setting up the stat- 
ute against its performance, after the other 
party has been induced to make expendi- 
tm'es, or a change of situation in regard to 
the subject-matter of the agreement, or up- 
on the supposition that it was to be carried 
into execution, and the assumption of rights 
thereby to be acquired; so that the refusal 
to complete the execution of the agreement 
is not merely a denial of rights which it 
was intended to confer, but the infliction of 
an unjust and unconscientious injury and 
loss. In such case, the party is held, by 
force of his acts or silent acquiescence, 
which have misled the other to his harm, to 
be estopped from setting up the statute of 
frauds. Hawkins v. Holmes, 1 P. Wms. 770; 
Parkhurst v. Van Cortlandt, 1 Johns. Ch. 274, 
14 Johns. 15; Browne, St. Frauds, § 437 et 
seq.; Fry, Spec. Perf. §§ 384^388; Caton y. 
Caton, 1 Ch. App. 137, 147, L. R. 2 H. L. 127. 
In the last named case it is said that "the 
right to relief in such cases rests not mer'e- 
ly on the contract, but on what has been 
done in pursuance of the contract." Per 
Lord Chancellor Cranworth. See, also, 1 
Story, Eq. Jur. § 759. But the present case, 
as we have already seen, does not come 
within the principle of this ground of equi- 
table relief. 

Fraud, which relates only to the prepara- 
tion, form, and execution of the writing, is 
sufficient to vitiate the instniment so made. 
It may be set aside either in equity or at 
law. If it is made to include land not the 
subject of the actual sale, it is inoperative 
as to such land; and the fraud may be 
shown, for the purpose of defeating its re- 
covery, in an action at law. Walker v. 
Swasey, 2 AUen, 312, 4 AUen, 527; Bartlett 
V. Drake, 100 Mass. 174. It has been ques- 
tioned whether any other effect can be given 
to such fraud than to defeat the operation of 
the instrument altogether; and whether a 
court of equity can reform by giving it a 
narrower operation, as modified by parol 
proof, in a case within the statute of frauds. 



Attorney General v. Sitwell, 1 Younge & C. 
Exch. 559. The difficulty is that, if the 
fraud vitiates and defeats the instrument, 
then the modified agreement to be enforced 
must be that which is proved by parol evi- 
dence; and this seems to violate the stat- 
ute. But the instrument, in such case, is 
not void. It is voidable only; and that not 
at the election of the party who committed 
the fraud. He is not entitled to control the 
extent of the effect that shall be given to 
his fraudulent conduct; and it is not for 
him to object that the fraud is availed of 
only to defeat the rights, which he has se- 
cm-ed by fraud, beyond what he is fairly en- 
titled to by the terms of the real agreement 
between the parties. When those are sep- 
arable, and the natui'e of the case will ad- 
mit of it, the court may enforce the written 
contract in accordance with its terms, giving 
relief against the fraudulent excess, or the 
clause improperly inserted. Parol testimony, 
used to defeat a title or limit an interest ac- 
quired under a written instrument, or to con- 
vert it into a trust, does not necessarily con- 
flict with the statute of frauds. It has been 
held that an absolute deed may, in this 
moue, be converted, in equity, into a mort- 
gage. Washbm-n v. Merrill, 1 Day, 140; 
Taylor v. Luther, 2 Sumn. 228, Fed. Cas. 
No. 13,796; Jenkins v. Eldredge, 3 Stoiy, 
181, 293, Fed Cas. No. 7,266; Morris v. Nix- 
on, 1 How. 118; 4 Kent, Comm. (6th Ed.) 
143. ivhemer this can be done in Massachu- 
setts has not yet been decided. Newton v. 
Fay, 10 Allen, 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 grormd tiat such an agreement, to- 
gether with proof that the deed was given 
and accepted only as secm-ity 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 I'elation to which there is no agreement 
in writing, the case stands differently. 
Fraud may vitiate the vmting which is 
tainted by it, but it does not supply that 
which the statute requires. 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- 



196 



EQUITABLE EIGHTS. 



force. But such evidence win not create a 
trust in lands already held by an absolute 
title. 

A fraudulent misrepresentation, altbough 
sufficient to sustain an action for damages, 
cannot be converted into a contract to be 
enforced as such. Neither wUl it furnish the 
measure by which a written contract 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. 

It has been of ten asserted that where one 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 permitted to set up the statute 
of fraud against the proof and enforcement 
of the parol agreement, or of the parol 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 full redress to the party upon 
whom it has been practiced. Mundy v. Jol- 
Uffe, 5 Mylne & C. 107; 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 ease 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 aU 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 talien 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, §§ 441^45. 

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, 1 
Paige, 147; Thynn v. Thynn, 1 Vern. 296; 
Oldham v. Litchfield, 2 Vern. 506; Devenish 
V. Baines, 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 the 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. Ch. 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 



EQUITABLE BIGHTS. 



197 



have undertaken to define has not heen uni- 
formly observed or recognized. 

In Wiswall 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- 
f oi'ding 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 sufl[icient to take 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. BufCerlow, 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 



198 



EQUITABLE RIGHTS. 



arlDitrators named, and tlie only question was 
as to tlie 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. Oarrington, 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 
frauds, 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. 
Bevis, 2 Brown, Oh. 559; Woollam v. Hearn, 
7 Ves. 211; 2 Lead. Gas. 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. Stolley, 3 McLean, 523, Fed. 
Cas. No. 1,902. 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 ovei-payment 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, bill dismissed. 



EQUITABLE EIGHTS. 



199 



HUNTER T. BILYEU et al. 
(30 HI. 228.) 
Supreme Court of Illinoia. Jan. Term, 1S63. 
W. H. Herndon, and S. P. Moore, for ap- 
pellant J. & D. Gillespie, for appellees. 

BRBESE, J. John B. Hunter, as admin- 
istrator of Samuel W. Hunter, deceased, 
brought his action in the circuit court of 
Bond county, against Wesley A. and Finis 
Bilyeu, on a note executed by them to the 
intestate, dated March 30, 1850, and due 
March 30, 1855. Pending the action the de- 
fendants obtained an injunction on their 
bill of complaint, to which the administra- 
tor, and the heirs-at-law of the intestate, 
who were minors, and their guardian, to- 
gether with Joseph Smith, were made de- 
fendants. 

The bill alleges, that the note sued upon, to- 
gether with others which were paid, was 
one and the last of a number of notes they 
had executed to the intestate, for certain 
lands lying in Bond county, for which a 
bond for a deed was executed and delivered 
t