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Full text of "Illustrative cases on equity jurisprudence"

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3 1924 052 878 125 



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Cornell University 
Library 



The original of tiiis book is in 
tine Cornell University Library. 

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http://www.archive.org/details/cu31924052878125 



ILLUSTRATIVE CASES 



ON 



EQUITY JURISPRUDENCE 



SELECTED BY 

HARRY B. 0UTCHINS 

Dean of the Department of Law of the University of Michigan 



AND 



ROBERT E. BUNKER 

Professor of Law in the University of Michigan 



ST. PAUL 

WEST PUBLISHING CO. 

1902 



COPTKIQHT, 1902, 
BT 

WEST PUBLISHING COMPANY. 



'•-,?'•' 



TABLE OF CONTENTS. 



MAXIMS OF EQUITY. 

Page 

1. Southern California R. Co. v. Ruther- 

ford 3 

2. Rees v. City of Watertown 5 

3. Dibrell v. Carlisle 9 

4. Speidel v. Henrici 15 

5. Hawker v. Moore 17 

6. Economy Sav. Bank v. Gordon 19 

7. Rice T. Rice 23 

8. Comgtock V. Johnson 26 

9. Brown, Bonnell & Co. v. Lake Superior 

Iron Co 27 

10. Eleakley's Appeal 30 

11. Kahu V. Walton 31 

12. Craig v. Leslie 38 

13. Wyman v. Ft. Dearborn Nat. Bank of 

Chicago 43 

14. Stinchfield v. Milliken 46 

15. McLarren v. Brewer 48 

16. Clements v. Tillman 50 

17. Hart v. Sansom 52 

18. Adams v. Messenger. 54 

PENALTIES AND FORFEITURES. 

1. Bwing V. Litchfield 56 

2. Craig v. Hukill 59 

3. Kunkle v. Wherry 60 

4. Jaquith t. Hudson 61 

5. Keeble v. Keeble 67 



2. 
3. 
4. 
5. 
6. 

7. 

8. 

9. 

10. 



1. 



PRIORITIES AND NOTICE. 

Heyder v. Excelsior Building & Loan 

Phillips V.' Phiilips." .'..'..'.....'...'.... 

Kuapp V. Bailey 

Kirsch v. Tozier 

Knobloch V. Mueler 

Mayor, etc., of City of Baltimore v. 

Whittington 

Williamson v. Brown 

Thomas v. Burnett 

Pringle v. Dunn 

Deason v. Taylor 

LIS PENDENS. 

Houston T. Timmerman 



»7 



EQUITABLE ESTOPPEL. 

Horn V. Cole 

Dickerson v. Colgrove 

Continental Nat. Bank v. National 

Bank of Commonwealth 

Galbraith t. Lunsf ord 

Starry v. Korab 

ELECTION. 



100 
107 

110 
114 
119 



Penn v. Guggenheimer . 
Fitzhugh V. Hubbard . . . 
Wilbanks v. Wilbanks. . 

Rogers t. Jones 

Konvalinka t. Schlegel. 
Reed t. Dickerman. . . . . 



120 
125 
126 
128 
129 
131 



SATISFACTION. 



Strong V. Williams .... 

Deichman v. Amdt 

De Witt V. Yates , 

HUTCH.& BUNK.EQ. 



133 
135 
137 



Page 

4. Edwards v. Rainier's Ex'rs 139 

5. Roquet v. Eldridge 143 

6. Rogers v. French 14o 

7. Clark v. Jetton 148 

CONVERSION AND RECONVERSION. 

1. Craig V. Leslie 38 

2. Keep v. Miller 150 

3. Wheless v. Wheless 153 

4. Prentice v. Janssen 156 

ACCIDENT. 

1. Kopper T. Dyer 159 

2. Patton V. Campbell 164 

3. Brewer v. Herbert 166 

MISTAKE OF LAW^. 

1. Hunt V. Rousmanier's Adm'rs .... 170, 175 

2. Jordan v. Stevens 181 

3. StafCord v. Fetters 184 

4. Green v. Morris & E. R. Co 186 

5. Griswold v. Hazard 190 

6. Marshall v. Westrope 201 

7. Renard v. Clink 205 

8. Titus V. Rochester German Ins. Co. . . 206 

9. Erkens v. Nicolin 209 

MISTAKE OF FACT. 

1. Grymes t. Sanders 210 

2. Riegel v. American Life Ins. Co 214 

3. Newton v. Tolles 218 

4. Dambmann v. Schulting 220 

5. Conner v. Welch 223 

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

Co 227 

MISTAKE— PAROL EVIDENCE TO 
CORRECT. 

1. Walden v. Skinner 231 

2. Metropolitan Lumber Co. v. Lake Supe- 

rior Ship Canal, Railway & Iron Co. 237 

3. Hitchius v. Pettingill 239 

4. Hunter v. Bilyeu 241 

5. Glass V. Hulbert 247 

6. Davis V. Ely 255 

FRAUD — JURISDICTION OF EQUITY. 

1. Miller v. Scammon 258 

2. Buzard v. Houston 261 

3. Teft v. Stewart 264 



1. 
2. 
3. 
4. 

5. 

6. 

7. 

8. 

9. 
10. 
11. 
12. 



ACTUAL FRAUD. 

Hicks V. Stevens 266 

Stimson v. Helps 270 

Mitchell V. McDougall 272 

Southern Development Co. of Nev.gda 

V. Silva -. . . 275 

Prewett v. Trimble i»*0 

Hadcock v. Osmer 282 

Borders v. Kattleman 285 

Dambmann v. Schulting 220 

Neill V. Shamburg 287 

Porter v. WoodrufE 289 

Virginia Land Co. v. Haupt 295 

Zahn V. McMillin 297 



(iii) 



Iv 



TABLE OF CONTENTS. 



CONSTBUCTIVE FRAUD. 

Page 

1. Phillips V. Pulleu 301 

2. Rakestraw v. Lanier 303 

3. Cowee v. Cornell 309 

4. AUore v. Jewell 313 

5. Greene v. Roworth 316 

6. Brown v. Pierce 31W 

7. Francis t. Wilkinson 3^4 

8. Ross V. Oonway 3]^8 

9. Tate v. Williamson 330 

10. Price v. Thompson 338 

11. Elmore v. .Tohnson 336 

12. Solinger v. Earle 344 

13. Hanover Nat. Bank of Oity ol New 

Tork V. Blake 346 

14. Chandler v. HoUingsworth 350 

EXPRESS TRUSTS. 

1. Hutchins v. Van Vechten 357 

2. Urann v. Coates 359 

3. Bates v. Hurd 361 

4. McVay v. Mc Vay 363 

5. Dauser v. Warwick 365 

6. Tobias v. Ketchum 367 

EXPRESS TRUSTS — PRECATORY 
W^ORDS. 

1. Warner v. Bates 370 

2. Hess V. Singler 373 

3. Clay v. Wood 375 

EXPRESS TRUSTS— VOLUNTARY 
TRUSTS. 

1. Richards v. Delbridge 378 

2. Young V. Young 380 

3. Webb's Estate, In re 385 

4. Martin v. B'unk 386 

5. Beaver v. Beaver 389 

6. Bath Sav. Inst. v. Hathorn 393 

TRUSTS— ACTIVE AND PASSIVE. 

1. Kirklaud v. Cox 397 

POVTERS IN TRUST. 

1. Delaney v. McCormack 399 

TRUSTS— PUBIilC OR CHARITABLE. 

1. Jackson v. Phillips 402 

2. Allen v. Stevens 423 

3. Hunt V. Fowler 430 

RESULTING TRUSTS. 

1. Skellenger's Elx'rs v. Skellenger's Ex'r.. 434 

2. Bond V. Moore 436 

3. Gould V. Lynde 438 

4. Botsford v. Burr 439 

5. Dyer v. Dyer 444 

6. Cook V. Patrick 447 

7. Hagan v. Powers 451 

CONSTRUCTIVE TRUSTS. 

1. Ferris v. Van Vechten 453 

2. Little v. Chadwick 457 

8. Slater v. Oriental Mills 458 

4. Nonotuck Silk Co. v. Flanders 460 

5. American Sugar Refining Co. v. Fanch- 

er 463 

6. Oavin v. Gleason • . 467 

7. Newton v. Porter 469 

8. Mitchell v. Read 472 

9. Ryan v. Dox 480 

10. Edwards v. Oulbertson 48o 

11. O'Hara, In re 487 

12. Curdy v. Berton 493 



DUTIES AND LIABILITIES OF TRUS- 
TEES. 

Page 

1. Weall, In re 496 

2. Hun V. Gary 499 

3. King V. Talbot 503 

4. Lamar v. Micou 507 

5. Simmons v. Oliver 516 

6. Harvard College v. Amory 518 

7. Bentley v. Craven 522 

8. Munsou V. Syracuse, G. & C. R. Co. . . . 523 

9. Rich V. Black 527 

10. Bent V. Priest 529 

11. Cook V. Gilmore 534 

12. Schell, In re 535 

13. Van Alen v. American Nat. Bank 537 

14. Waterman v. Alden 541 

15. Barker's Trusts, In re 546 

MORTGAGES. 

1. Chick V. Willetts 547 

2. Barrett v. Hinckley 549 

3. Ladue v. Detroit & M. R. Co 554 

SUBROGATION. 

1. MtnsL Life Ins. Co. of Hartford v. 

Town of Middleport 560 

SPECIFIC PERFORMANCE OF CON- 
TRACTS. 

1. Pusey V. Pusey 565 

2. MoUineux's Case 566 

3. Hall V. Warren 567 

4. Rindge v. Baker 570 

5. Adderly t. Dixon 576 

6. Hodges V. Kowing 577 

7. Porter v. Frenchman's Bay & Mt. D. 

Land & Water Co 579 

8. Bumgardner v. Leavitt 580 

9. Welty V. Jacobs 584 

10. Jones V. Newhall 587 

11. Fothergill v. Rowland 54)0 

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

R. Co 593 

13. Southern Exp. Co. v. Wesitern North 

Carolina R. Co 595 

14. McCauU V. Braham 598 

15. Clarke v. Price 603 

16. Lumley v. Wagner 605 

17. Montague v. Flockton 613 

18. Donnell v. Bennett 618 

19. Wm. Rogers Mfg. Co. v. Rogers 620 

20. Metropolitan Exhibition Co. v. Ewing. . 622 

21. AUegheny Base Ball Club v. Bennett. . 626 

22. McGowin v. Remington 628 

23. Prospect Park & C. I. R. Co. v. Coney 

Island & B. R. Co 632 

24. Willard v. Tayloe 635 

25. Fish v. Leser 641 

26. Stone v. Pratt 643 

27. Thompson v. Winter 645 

28. Falcke v. Gray -. . . 646 

29. Brewer v. Herbert 166 

30. Paine v. Meller 650 

31. Gould V. Murch 652 

32. Marks v. Tichenor 653 

33. Bostwick v. Beach 654 

34. Lewis v. Hawkins 656 

35. Bissell v. Heyward 658 

36. Wetzler v. Duffy 660 

37. Phinizy v. Guernsey 662 

38. Leonard v. Crane 666 

39. Graybill v. Braugh 668 

40. Hall V. Hall 670 

41. Kelsey v. Crowther 672 

42. Combs v. Scott 673 

43. Frame v. Frame 677 

44. Cheney v. Libby 686 

45. Chicago, M. & St. P. R. Co. v. Durant 692 

46. Haffey v. Lynch 684 

47. Gotthelf v. Straaahan 697 

48. Corbin v. Tracy 700 

49. Hicks v. Turck 702 



TABLE OF CONTENTS. 



Page 

50. Gage v. Fisher 704 

51. New England Trust Co. v. Abbott 711 

52. Conger v. New York, W. S. & B. R. 

Co 714 

53. Ross V. Parks 715 

54. Johnston v. Trippe 717 

55. O'Connor v. Tyrrell 721 

56. Grubb v. Starkey 723 

INJUNCTIONS. 

1. Rogers Locomotive & Machine Works 

V. Erie R. Co 725 

2. Whitecar v. Michenor 729 

3. Watson v. Sutherland 732 

4. McHenry v. Jewett 734 

5. Steinau v. Cincinnati Gas-Light & 

Coke Co 735 

6. Manhattan Manufacturing & Fertiliz- 

ing Co. V. New Jersey Stock- Yard & 
Market Co 738 

7. Godfrey v. Black 740 

8. McOlurg, Appeal of , 742 

9. William Rogers Mfg. Co. v. Rogers. . 620 

10. Lumley v. Wagner 605 

11. Grand Rapids School Furniture Co. v. 

Haney School Furniture Co 744 

12. O. & W. Thum Co. v. Tloczynski 746 

13. Buncombe v. Felt 751 

14. Griffith v. Hilliard 753 

15. Wheelock v. Noonan 755 

16. Wilson V. City of Mineral Point 757 

17. Gardner v. Trustees of Village of New- 

burgh 758 

18. Sherry v. Perkins 761 

19. Vegelahn v. Guntner 764 

20. Hamilton Brown Shoe Co. v. Saxey. .. 770 

21. Crawford v. Tyrrell 773 

22. Weinstock, Lubin & Co. v. Marks 774 

REFORMATION. 

1. Purvines v. Harrison 779 

2. Welles v. Yates 781 



CANCIXULTION. 

Page 
Town of Venice v. Woodruff 789 



RECEIVERS. 

1. Booth V. Clark 788 

2. Davis V. Gray 795 

3. Flowers, In re 806 

4. Semple v. Flynn 807 

5. Simmons Hardware Co. v. Waibel 808 

6. Schuyler's Steam Towboat Co., In rt . . 811 

7. St. Louis, K. & S. R. Co. v. Wear. ... 814 

8. Childers v. Neely 824 

9. Fechheimer v. Baum 828 

10. Ogden City v. Bear Lake & River Wa- 

terworks & Irrigation Co 835 

11. Whitney v. Hanover Nat. Bank 836 

12. State of Montana v. Second Judicial 

District Court of Silver Bow County 840 

13. Merchants' & Manufacturers' Nat. 

Bank of Detroit v. Kent Circuit 
Judge 846 

14. Mercantile Trust Co. of New York v. 

Missouri, K. & T. R. Co 849 

15. Belding v. Meloche 853 

16. Marshall & Illsley Bank v. Cady 855 

17. Wiedemann v. Saun 858 

18. Stetson v. Northern Inv. Co 860 

19. First Nat. Bank v. Illinois Steel Co. . . 862 

20. Central Trust Co. v. New York City & 

N. R. Co 867 

21. Farmers' Loan & Trust Co. v. Grape 

Creek Coal Co 870 

22. Hanna v. State Trust Co 872 

23. Howarth v. EUwanger 877 

24. Wyman v. Eaton 879 

25. American Biscuit & Mfg. Go. v. Klotz 882 

26. Haywood v. Lincoln Lumber Co 885 

27. Bank of Florence v. United States Sav- 

ings & Loan Co 888 

28. Oolton V. Drovers' Perpetual Building 

& Loan Ass'n 890 

20. Bailey v. Pittsburg Coal R. Co. 804 



CASES REPORTED. 



Paga 

Adams v. Messenger (17 N. E. 491, 147 

Mass. 185) 54 

Adderley v. Dixon (1 Sim. & S. 607) 576 

JEtna Life Ins. Co. of Hartford v. Town 

of Belmont (8 Sup. Ct. 6^, 124 U. S. 

534) 560 

3i;tna Life Ins. Co. of Hartford v. Town 

of Middleport (8 Sup. Ct. 625, 124 U. 

S. 534) 560 

j50tna Life Ins. Co. of Hartford v. Town 

of Milford (8 Sup. Ct. 625, 124 tJ. S. 534) 560 
Allegheny Base-Ball Club v. Bennett (14 

Fed. 257) 626 

Allen V. Stevens (55 N. B. 568, 161 N. Y. 

122) 423 

AUore v. Jewell (94 U. S. 506) 313 

American Biscuit & Mfg. Co. v. Klotz (44 

Fed. 721) 882 

American Sugar-Refining Co. v. Fancher 

(40 N. B. 206, 145 N. Y. 552) 463 

Andrews v. Weall (42 Oh. Div. 674) 496 

Bailey v. Pittsburgh Coal R. Co. (21 Atl. 

72, 139 Pa. 213) 894 

Bank of Florence v. United States Savings 

& Loan Co. (16 South. 110, 104 Ala. 297) 888 

Barker's Trusts, In re (1 Ch. Div. 43) 546 

Barrett v. Hinckley (14 N. B. 863, 124 111. 

32) 549 

Bates V. Hurd (65 Me. 180) 361 

Bath Sav. Inst. v. Hathorn (33 Atl. 836, 

88 Me. 122) 393 

Beaver v. Beaver (22 N. B. 940, 117 N. Y. 

421) 389 

Belding v. Meloche (71 N. W. 592, 113 

Mich. 223) 853 

Bent V. Priest (86 Mo. 475) 529 

Bentley y. Craven (18 Beav. 75) 522 

Bissell V. Heyward (96 U.S. 580, 24 L. 

Bd. 678) 658 

Bleakley's Appeal (66 Pa. 187) 30 

Bond V. Moore (90 N. C. 239) 436 

Booth V. Clark (17 How. 322, 15 L. Ed. 

164) 788 

Borders v. Kattleman (31 N. B. 19, 142 111. 

96) 285 

Bostwick V. Beach (12 N. B. 32, 105 N. Y. 

661) 654 

Botsford V. Burr (2 Johns. Ch. 405) 439 

Brewer v. Herbert (30 Md. 301, 96 Am. 

Dec. 582) 166 

Brown v. Pierce (7 Wall. 205) 319 

Brown, Bonnell & Co. v. Lake Superior 

Iron Co. (10 Sup. Ct. 604, 134 U. S. 530) 27 
Bumgardner v. Leavitt (13 S. B. 67, 35 W. 

Va. 194) 580 

Buzard v. Houston (7 Sup. Ct. 249, 119 U. 

S. 347) 261 

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

256) 467 

Central Trust Co. v. New York City & N. 

R. Co. (18 N. E. 92, 110 N. Y. 250) 867 

Chandler v. Holliugsworth (3 Del. Ch. 99) 350 
Cheney v. Libby (10 Sup. Ct. 498, 134 U. 

S. 68, 33 L. Bd. 818) 686 

Chicago, M. & St. P. R. Co. v. Durant (46 

N. W. 676, 44 Minn. 361) 692 

Chicago, M. & St. P. K. Co. v. Hospes (46 

N. W. 676, 44 Minn. 361) 692 

Chicago, M. & St. P. R. Co. v. Staples (46 

N. W. 676, 44 Minn. 361) 692 



Page 
Chicago, M. & St. P. E. Co. v. Union De- 
pot St. R. & T. Co. (46 N. W. 676, 44 

Minn. 361) 692 

Chick V. Willetts (2 Kan. 384) 547 

Childers v. Neely (34 S. B. 828, 47 W. Va. 

70) 824 

City of Baltimore v. Whittington (27 Atl. 

984, 78 Md. 231) 83 

Clark V. Jetton (5 Sneed, 229) 148 

Clarke v. Price (2 Wils. Ch. 157) 603 

Clay V. Wood (47 N. B. 274, 153 N. Y. 134) 875 
Clements v. Tillman (5 S. B. 194, 79 Ga. 

451) 50 

Colton V. Dover Perpetual Building & 

Loan Ass'n of Baltimore (45 Atl. 23, 90 

Md. 85) 890 

Combs V. Scott (45 N. W. 532, 76 Wis. 

662) 673 

Comstock V. Johnson (46 N. Y. 615) 26 

Conger v. New York, W. S. & B. R. Co. 

(23 N. B. 983, 120 N. Y. 29) 714 

Conner v. Welch (8 N. W. 260, 51 Wis. 

431) 223 

Continental Nat. Bank v. National Bank 

of Commonwealth (50 N. Y. 575) 110 

Cook V. Gilmore (24 N. B. 524, 133 111. 

139) 534 

Cook V. Patrick (26 N. E. 658, 135 III. 

499) 447 

Corbin v. Tracy (34 Conn. 325) 700 

Cowee V. Cornell (75 N. Y. 91) 309 

Craig V. Hukill (16 S. E. 363, 37 W. Va. 

520) 59 

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

Crawford v. Tyrrell (28 N. E. 514, 128 N. 

Y. 341) 773 

Curdy v. Berton (21 Pac. 858, 79 Cal. 420) 493 

Dambmann v. Schulting (75 N. Y. 55)... 220 
Dauforth v. Philadelphia & 0. M. S. L. R. 

Co. (30 N. J. Eq. 12) 593 

Danser v. Warwick (33 N. J. Bq. 133) ... 365 
Davis V. Ely (10 S. B. 138, 104 N. 0. 16) 255 

Davis V. Gray (16 Wall. 203) 795 

Deason v. Taylor (53 Miss. 697) 96 

Deichman v. Arndt (22 Atl. 799, 49 N. J. 

Eq. 106) 135 

Delaney v. McCormack (88 N. Y. 174) 399 

De Witt V. Yates (10 Johns. 156) 137 

Dibrell v. Carlisle (48 Miss. 691) 9 

Dickerson v. Colgrove (100 U. S. 578) 107 

Donnell v. Bennett (22 Ch. Div. 835) 618 

Duncombe v. Felt (45 N. W. 1004, 81 

Mich. 332) 751 

Dyer v. Dyer (2 Cox, Oh. 92) 444 

Dyer v. Kopper (9 Atl. 4, 59 Vt. 477) 159 

Economy Sav. Bank v. Gordon (45 Atl. 

176, 90 Md. 486) 19 

Edwards v. Culbertson (16 S. E. 233, 111 

N. 0. 342) 485 

Edwards v. Rainier's Bx'rs (17 Ohio St. 

597) 139 

Elmore v. Johnson (32 N. E. 413, 143 111. 

513) 336 

Erkens v. Nicolin (40 N. W. 567, 39 Minn. 

461) 209 

Ewing V. Litchfield (22 S. B. 362, 91 Va. 

575) ; 56 



Falcke v. Gray (4 Drew. 651). 



646 



. HUTCH.& BUNK.BQ. 



(vl) 



CASES REPORTED. 



Til 



Paga 
Farmers' Loan & Trust Co. v. Grape Creek 

Coal Co. (50 Fed. 481) 870 

Fechheimer v. Baum (37 Fed. 167) 828 

Ferris v. Van Vechten (73 N. Y. 113) 458 

First Nat. Banl< of Joliet v. Illinois Steel 

Co. (51 N. B. 200, 174 111. 140) 862 

Fish V. Leser (69 111. 394) 641 

Fitzhugh V. Hubbard (41 Ark. 64) 125 

Flowers, In re (1 Q. B. Div. 14) 806 

Fothergill v. Rowland (L. R. 17 Bq. 132) 590 
Frame v. Frame (9 S. B. 901, 32 W. Va. 

463) 677 

Francis v. Wilkinson (35 N. E. 150, 147 

111. 370) 324 

Gage V. Fisher (65 N. W. 809, 5 N. D. 297) 704 
Galbraith v. Lunsford (9 S. W. 365, 87 

Tenn. 89) 114 

Gardner v. Trustees of Village of New- 
burgh (2 Johns. Ch. 162) 758 

Glass V. Hulbert (102 Mass. 24) 247 

Godfrey v. Black (17 Pac. 849, 39 Kan. 

193) 740 

Gotthelf V. Stranahan (34 N. E. 286, 138 

N. Y. 345) 697 

Gould V. Lynde (114 Mass. 366) 438 

Gould V. Murch (70 Me. 288) 652 

Grand Bapids School Furniture Co. v. 

Haney School Furniture Co. (52 N. W. 

1009, 92 Mich. 558) 744 

Graybill v. Braugh (17 S. E. 558, 89 Va. 

895) 668 

Green v. Morris & E. R. Co. (12 N. J. Eq. 

. 165) 186 

Greene v. Roworth (21 N. E. 165, 113 N. 

Y. 462) 316 

Griffith V. Hilliard (25 Atl. 427, 64 Vt. 

643) 753 

Griswold v. Hazard (11 Sup. Ct. 972, 141 

V. S. 260) 190 

Grubb V. Sharkey (20 S. E. 784, 90 Va. 

831) 723 

Grymes v. Sanders (93 U. S. 55) 210 

Hadcock v. Osmer (47 N. B. 923, 153 N. 

Y. 604) 282 

Haffey v. Lynch (38 N. B. 298, 143 N. Y. 

241) 694 

Hagan v. Powers (72 N. W. 771, 103 

Iowa, 593) 451 

Hall T. Hall (16 N. E. 896, 125 111. 95) 670 

Hall V. Warren (9 Ves. 605) 567 

Hamilton-Brown Shoe Co. v. Saxey (32 S. 

W. 1106, 131 Mo. 212) 770 

Hanna v. State Trust Co. (16 C. C. A. 586, 

70 Fed. 2) 872 

Hanover. Nat. Bank of City of New York 

V. Blake (37 N. B. 519, 142 N. Y. 404) . . 346 
Hart T. Sansom (3 Sup. Ct. 586, 110 U. 

S. 151) 52 

Harvard College v. Amory (9 Pick. 446) . . 518 
Hawker v. Moore (20 S. E. 848, 40 W. 

Va. 49) 17 

Haywood v. Lincoln Lumber Co. (26 N. 

W. 184, 64 Wis. 639) 885 

Hess V. Siugler (114 Mass. 56) 373 

Heyder v. Excelsior Building Loan Ass'n 

No. 2 of City of Newark (8 Atl. 310, 42 

N. J. Eq. 403) 69 

Hicks V. Stevens (11 N. E. 241, 121 111. 

186) 266 

Hicks V. Turck (40 N. W. 339, 72 Mich. 

311) 702 

Hitchins v. Pettingill (58 N. H. 386).... 239 
Hodges V. Kowing (18 Atl. 979, 58 Conn. 

12) 577 

Horn V. Cole (51 N. H. 287) 100 

Houston V. Timmerman (21 Pac. 1037, 17 

Or. 499) 97 

Howarth v. Bllwanger (86 Fed. 54) 877 

Howarth v. Kent (86 Fed. 54) . 877 

Howarth v. Woodworth (86 Fed. 54) 877 

Hun V. Gary (82 N. Y. 65) 499 

Hunt V. Fowler (12 N. E. 331, 17 N. B. 

491, 121 III. 269) 430 

Hunt V. Rousmaniere's Adm'rs (1 Peters, 1) 175 



Paga 
Hunt V. Rousmanier's Adm'rs (8 Wheat. 

174) 170 

Hunter v. Bilyeu (30 111. 228) 241 

Hutchins v. Van Vechten (35 N. B. 44G, 

140 N. Y. 115) 357 

Jackson v. Phillips (14 Allen, 539) 402 

Jaquith v. Hudson (5 Mich. 123) 61 

Johnston v. Trippe (33 Fed. 530) 717 

Jones V. Newhall (115 Mass. 244) 587 

Jordan v. Stevens (51 Me. 78) 181 

Kahn v. Walton (20 N. E. 203, 46 Ohio 

St. 195) 31 

Keeble v. Keeble (5 South. 149, 85 Ala. 

552) 67 

Keep V. Miller (6 Atl. 495, 42 N. J. Bq. 

100) 150 

Kelsey v. Crowther (27 Pac. 695, 7 Utah, 

519) 672 

King V. Talbot (40 N. Y. 76) 503 

Kirkland v. Cox (94 111. 400) 397 

Kirsch V. Tozier (38 N. E. 375, 143 N. Y. 

390) 76 

Knapp V. Bailey (9 Atl. 122, 79 Me. 195) 74 
Knobloch v. Mueler (17 N. E. 696, 123 111. 

554) 79 

Konvalinka v. Schlegel (9 N. E. 868, 104 

N. Y. 125) 129 

Kopper V. Dyer (9 Atl. 4, 59 Vt. 477) 159 

Kunkle v. Wherry (42 Atl. 112, 189 Pa. 

198) 60 

Ladue v. Detroit & M. B. Co. (13 Mich. 

380) 554 

Lamar v. Micou (5 Sup. Ct. 221, 112 U. S. 

452) 507 

Leonard v. Crane (35 N. B. 474, 147 111. 52) 66C 
Lewis V. Hawkins (23 Wall. 119, 23 L. 

Ed. 113) 656 

Little V. Chadwick (23 N. B. 1005, 151 

Mass. 109) 457 

Lumley v. Wagner (1 De Gex, M. & G. 

604) 605 

McCaull v. Braham (16 Fed. 37) 598 

McClurg, Appeal of (58 Pa. 51) 742 

McGowin v. Remington (12 Pa. 56) 628 

McHenry v. Jewett (90 N. Y. 58) 734 

McLarren v. Brewer (51 Me. 402) 48 

McVay v. McVay (10 Atl. 178, 43 N. J. 

Bq. 47) 363 

Manhattan Manufacturing & Fertilizing 

Co. V. New Jersey Stock- Yard & Market 

Co. (23 N. J. Eq. 161) 738 

Marks v. Tichenor (4 S. W. 225, 85 Ky. 

536) 653 

Marshall v. Westrope (67 N. W. 257, 98 

Iowa, 324) 201 

Marshall & Illsley Bank v. Oady (77 N. W. 

831. 75 Minn. 241) 855 

Martin v. Funk (75 N. Y. 134) 386 

Mercantile Trust Co. of New York v. Mis- 
souri, K. & T. R. Co. (36 Fed. 221) 849 

Merchants' & Manufacturers' Nat. Bank 

of Detroit v. Kent Circuit Judge (5 N. 

W. 627, 43 Mich. 292) 846 

Metropolitan Exhibition Co. v. Ewing (42 

Fed. 198) 622 

Metropolitan Lumber Co. v. Lake Superior 

Ship-Canal, Railway & Iron Co. (60 N. 

W. 278. 101 Mich. 577) 237 

Miller v. Scammon (52 N. H. 609) 258 

Mitchell V. McDougall (62 111. 498) 272 

Mitchell V. Read (61 N. Y. 123) 472 

Mollineux's Case (Latch, 172) 566 

Montague v. Flockton (L. R. 16 Eq. 189) 613 
Munson v. Syracuse, G. & C. R. Co. (8 N. 

B. 355, 103 N. Y. 58) 523 

Neill V. Shamburg (27 Atl. 992, 158 Pa. 

263) 287 

New England Trust Co. v. Abbott (38 N. 

B. 432, 162 Mass. 148) 711 

Newton v. Porter (69 N. Y. 133) 469 



viu 



CASES REPORTED. 



Pags 
Newton v. Tolles (19 Atl. 1092, 66 N. H. 

136) 218 

Nouotnck Silk Co. v. Flanders (58 N. W. 

383, 87 Wis. 237) 460 

O'Connor v. Tyrrell (30 Atl. 1061, 53 N. J. 
Eq. 15) 721 

Ogden City v. Bear Lake & River Water- 
works & Irrigation Co. (55 Pac. 385, 18 
Utah, 279) 835 

O'Hara, In re (95 N. Y. 403) 487 

O. & W. Thum Co. v. Tloczynski (72 N. 
W. 140, 114 Mich. 149) 746 

Paine v. Meller (6 Ves. 349) 650 

Park Bros. & Co. t. Blodgett & Clapp Co. 

(29 Atl. 133, 64 Conn. 28) 227 

Patton v. Campbell (70 111. 72) 164 

Peun V. Guggenheimer (76 Va. 839) 120 

Phillips V. Phillips (4 De Gex, F. & J. 

208) 71 

Phillips T. PuUen (16 Atl. 9, 45 N. J. 

Eq. 5) 301 

Phinizy V. Guernsey (36 S. E. 796, 111 Ga. 

346) 662 

Porter v. Frenchman's Bay & Mt. D. Land 

& Water Co. (24 Atl. 814, 84 Me. 195). . 579 
Porter v. Woodruff (36 N. J. Eq. 174). ... 289 

Prentice v. Janssen (79 N. Y. 478) 156 

Prewett v. Trimble (17 S. W. 356, 92 Ky. 

176) 280 

Price V. Thompson (1 S. W. 408, 84 Ky. 

219) 333 

Pringle v. Dunn (37 Wis. 449) 91 

Prospect Park & C. I. R. Co. v. Coney 

Island & B. R. Co. (39 N. E. 17, 144 N. 

Y. 152) 632 

Purvines v. Harrison (37 N. E. 705, 151 

111. 219) 779 

Pusey V. Pusey (1 Vern. 273, White & T. 

Lead. Cas. Eq. 1109) 565 

Rakestraw v. Lanier (30 S. E. 735, 104 

Ga. 188) 303 

Reed v. Dickerman (29 Pick. 146) 131 

Rees V. City of Watertown (19 Wall. 107) 5 
Renard v. Clink (51 N. W. 692, 91 Mich. 1) 205 

Rice V. Rice (2 Drew. 73) 23 

Rich V. Black (33 Atl. 880, 173 Pa. 92) . . 527 
Richards v. Delbridge (L. R. 18 Eq. 11) . . 378 
Riegel v. American Life Ins. Co. (25 Atl. 

1070, 153 Pa. 134) 214 

Rindge v. Baker (57 N. Y. 209, 15 Am. 

Rep. 475) 570 

Rogers v. French (19 Ga. 316) 145 

Rogers v. Jones (3 Ch. Div. 688) 128 

Rogers Locomotive & Machine Works v. 

Erie R. Co. (20 N. .1. Eq. 379) 725 

Rogers Mfg. Co. v. Rogers (20 Atl. 467, 58 

Conn. 356) 620 

Roquet v. Eldridge (20 N. E. 733, 118 

Ind. 147) 143 

Ross V. Conway (28 Pac. 785, 92 Oal. 632) 328 
Ross V. Parks (8 South. 368, 93 Ala. 153) 715 
Ryan v. Dox (34 N. Y. 307) 480 

St. Louis, K. & S. R. Co. v. Wear (36 S. 

W. 357, 135 Mo. 230) 814 

Schell, In re (53 N. Y. 263) 535 

Schuyler's Steam Towboat Co., In re (32 

N. E. 623. 136 N. Y. 169) 811 

Semple v. Flynn (10 Atl. 177) 807 

Sherry v. Perkins (17 N. E. 307, 147 Mass. 

212) 761 

Simmems v. Oliver (43 N. W. 561, 74 Wis. 

633) 516 

Simmons Hardware Co. v. Waibel (47 N. 

W. 814, 1 S. D. 488) 808 

Skellenger's Ex'rs v. Skellenger's Ex'r (32 

N. J. Eq. 659) 434 

Slater v. Oriental Mills (27 Atl. 443, 18 

R. L 352) 458 

Solinger v. Earle (82 N. Y. 393) 344 

Southern California R. Co. v. Rutherford 

(62 Fed. 796) 3 



Pag* 
Southern Development Co. of Nevada v. 

Silva (8 Sup. Ct. 881, 125 U. S. 247).. . 275 
Southern Exp. Co. v. Western North Car- 
olina R. Co. (99 U. S. 191) 595 

Speidel v. Henrici (7 Sup. Ct. 610, 120 U. 

S. 377) 15 

Stafford v. Fetters (8 N. W. 322, 55 Iowa, 

484) 184 

Starry v. Korab (21 N. W. 600, 65 Iowa, 

267) 11» 

State V. Second Judicial District Court of 
Silver Bow County (39 Pac. 316, 15 

Mont. 324) 840 

Stelnau v. Cincinnati Gas-Light & Coke 

Co. (27 N. E. 545, 48 Ohio St. 324) 735 

Stetson V. Northern Inv. Co. (70 N. W. 

595, 101 Iowa, 435) 860 

Stimson v. Helps (10 Pac. 290, 9 Colo. 33) 270 

Stinchfield v. Milliken (71 Me. 567) 46 

Stone V. Pratt (25 111. 16) 643 

Strong V. Williams (12 Mass. 391) 133 

Tate V. Williamson (2 Ch. App. 55) 330 

Teft V. Stewart (31 Mich. 367j 264 

Thomas v. Buruett (21 N. E. 352, 128 111. 

37) 89 

Thompson v. Winter (43 N. W. 796, 42 

Minn. 121) 645 

Thum Co. V. Tloczynski (72 N. W. 140, 114 

Mich. 149) 746 

Titus V. Rochester German Ins. Co. (31 S. 

W. 127, 97 Ky. 567) 206 

Tobias v. Ketchum (32 N. Y. 319) 367 

Tolles V. Newton (19 Atl. 1092, 66 N. H. 

136) 218 

Town of Venice v. Woodruff (62 N. Y. 462) 785 

Urann v. Coates (109 Mass. 581) 359 

Van Alen v. American Nat. Bank (52 N. 

Y. 1) 537 

Vegelahn v. Guntner (44 N. E. 1077, 167 

Mass. 92) 764 

Virginia Land Co. v. Haupt (19 S. E. 168, 

90 Va. 533) 295 

Walden v. Skinner (101 U. S. 577) 231 

Warner v. Bates (98 Mass. 274) 370 

Waterman v. Alden (32 N. E. 972, 144 111. 

90) 541 

Watson V. Sutherland (5 Wall. 74) 732 

Weall, In re (42 Ch. Div. 674) 496 

Webb's Estate, In re (49 Cal. 541) 385 

Weinstock, Lubin & Co. v. Marks (42 Pac. 

142, 109 Cal. 529) 774 

Welles V. Yates (44 N. Y. 525) 781 

Welty V. Jacobs (49 N. E. 723, 171 111. 

624) -....584 

Wetzler v. Duffy (47 N. W. 184, 78 Wis. 

170) 660 

Wheelock v. Noonan (15 N. E. 67, 108 N. 

Y. 179) 755 

Wheless v. Wheless (21 S. W. 595, 92 

Tenn. 293) 153 

Whitecar v. Miehenor (37 N. J. Eq, 6) 729 

Whitney v. Bank of Greenville (15 South. 

33, 71 Miss. 1009) 836 

Whitney v. Hanover Nat. Bank, two cases 

(15 South. 33, 71 Miss. 1009) 836 

Wiedemann v. Sann (31 Atl. 211) 858 

Wilbanks v. Wilbanks (18 111. 17) 126 

Willard v. Tayloe (8 Wall. 557) 635 

Wm. Rogers Mfg. Co. v. Rogers (20 Atl. 

467, 58 Conn. 356) 620 

Williamson v. Brown (15 N. Y. 354) 85 

Wilson V. City of Mineral Point (39 Wis. 

160) .' 757 

Wyman v. Eaton (77 N. W. 865, 107 Iowa, 

214) '. .'879 

Wyman v. Ft. Dearborn Nat. Bank (54 

N. E. 946, 181 111. 279) 43 

Young v. Young (80 N. Y. 422) 



.... 380 

Zahn V. McMillin (36 Atl. 188. 179 Pa. 
140) 297 



ILLUSTRATIVE CASES 



ON 



EQUITY JURISPRUDENCE 



HtrrCH.iBimK.BQ. (1)* 



MAXIMS OF EQUITY. 



SOUTHERN OALIPORNIA RY. CO. v. 
RUTHERFORD et al. 

(62 Fed. 796.) 

Circuit Court, S. D. California. June 30, 1894. 

Suit by the Southern California Railway- 
Company, a corporation of the state of Cali- 
fornia, against C. C. Rutherford and others 
for injunction. 

W. J. Hunsaker, for complainant. 

ROSS, District Judge. Time does not ad- 
mit of an extended statement of the facts of 
the case or of the reasons for awarding the 
injunction applied for. The bill shows, 
among other things, that the complainant 
railway company is one link in a through line 
of road extending from National City, San 
Diego county, Cal., to the city of Chicago, in 
the state of Illinois, engaged in the trans- 
portation, among other things, of interstate 
commerce and the mails of the United 
States; its connecting roads being the At- 
lantic & Pacific and the Atchison, Topeka & 
Santa F6 Railroad Companies. That there 
is a valid existing contract between the com- 
plainant company and its connecting com- 
panies and the Pullman Palace Oar Com- 
pany by which all regular passenger trains 
running over the said through line of road, 
including that of the complainant, carrying 
the mail and passengers, shall carry Pullman 
cars. That the defendants are in the em- 
ploy of the complainant company, and were 
employed by it to, among other things, 
handle and operate its trains so engaged in 
carrying the United States mail and passen- 
gers and freight between National City, Cal., 
and Chicago, 111., and to and from interme- 
diate points, and from the time of their em- 
ployment up to the time of the commission 
of the acts complained of by the complain- 
ant were duly accustomed to handle and 
operate such trains, including Pullman cars. 
That subsequently the defendants, although 
remaining in the employment of the com- 
plainant company, refused, and still refuse, 
to handle or operate any train of cars of the 
complainant company to which a Pullman 
car Is attached; and because of the dis- 
charge by the receivers in possession and 
control of the Atchison, Topeka & Santa F6 
Railroad Company of certain employes of 
theirs for refusing to handle or operate any 
train of that road to which a Pullman car 
is attached, the defendants to the present 
bill, while remaining in the employment of 
the complainant company, refused, and still 
refuse, to handle or operate any of the trains 
of the complainant company engaged in car- 
rying the mail of the United States and In 
the aforesaid interstate commerce, which 
their, regular and accustomed duties as such 
emplbygs required, and still require, them to 
operate and handle. Undoubtedly, in the 
absence of a valid existing contract obligat- 
ing the defendants to remain in the employ- 
ment of the complainant company, they 



would ordinarily have the legal right to quit 
the employment and cease work at any time. 
But the bill alleges that the defendants con- 
tinue in the employment of the complainant 
company, and yet refuse lO perform their 
regular and accustomed duties as such em- 
ployes; and it further shows that such re- 
fusal subjects and will continue to subject 
the complainant to a multiplicity of suits 
and to great and irreparable damage, in that 
there is an existing valid contract requiring 
complainant to attach a Pullman car or cars 
on all of its through trains for the carriage 
of passengers and the mail, and also retards 
and interrupts the complainant in the trans- 
mission of the United States mail and the in- 
terstate commerce aforesaid. 

It is manifest that for this state of affairs 
the law — neither civil or criminal — affords an 
adequate remedy. But the proud boast of 
equity is, "Ubi jus, ibi remedium." It is the 
maxim which forms the root of all equitable 
decisions. Why should not men who re- 
main in the employment of another perform 
the duties they contract and engage to per- 
form? It is certainly just and right that 
they should do so, or else quit the employ- 
ment. And where the direct result of such 
refusal works irreparable damage to the em- 
ployer, and at the same time interferes with 
the transmission of the mail and with com- 
merce between the states, equity, I think, 
will compel them to perform the duties per- 
taining to the employment so long as they 
c:ntinue in It. If I unlawfully obstruct by 
a dam a stream of flowing water, equity, at 
the suit of the party injured, will compel me 
by Injunction, mandatory in character, to re- 
move the dam, and, prohibitory in charac- 
ter, from further interfering with the flow 
of the stream; and If I unlawfully erect a 
wall shutting out the light from another, 
equity will compel me to tear it down, and to 
refrain from further interference with the 
other's rights. It is true that such cases are 
not precisely like the present one, yet the 
principle upon which the court proceeds In 
such cases is not substantially different. 
And if it be said that there Is no exact 
precedent for the awarding of an injunction 
in the present case, I respond, In the lan- 
guage of the court in the case of Toledo, 
etc., Ry. Co. v. Pennsylvania Co., 54 Fed. 
751: "Every just order or rule known to 
equity courts was born of some emergency, 
to meet some new conditions, and was there- 
fore, in its time, without precedent. If 
based on sound principles, and beneficent 
results follow their enforcement, afCording 
necessary relief to the one party without im- 
posing illegal burdens on the other, new 
remedies and unprecedented orders are not 
unwelcome aids to the chancellor to meet 
the constant and varying demands for equi- 
table relief." 

Moreover, the rights of the public in a 
case of this sort should be considered. 
"Railroads," said the supreme court in the 



MAXIMS OF EQUITY. 



case of Joy v. St. Louis, 138 U. S. 50, 11 Sup. 
Ct. 243, "are common carriers, and owe du- 
ties to the public. The rights of the public 
in respect to these great highways of com- 
munication should be fostered by the courts; 
and it is one of the most useful functions of 
a court of equity that its methods of pro- 
cedure are capable of being made such as 
to accommodate themselves to the develop- 
ment of the interests of the public, in the 



progress of trade and traffic, by new methods 
of intercourse and transportation." 

For the reasons thus hastily and briefly 
stated, I shall award an injunction requir- 
ing the defendants to perform all of their 
regular and accustomed duties so long as 
they remain in the employment of the com- 
plainant company, which injunction. It may 
be as well to state, will be strictly and rigidly 
enforced. 



MAXIMS OF EQUITY. 



RBES V. OITT OF WATBRTOWN. 

(19 Wall. 107.) 
Supreme Court of the United States. 1873. 

Mr. Justice HUNT delivered the opinion 
of tiie court. 

Tliis case is free from the objections usual- 
ly made to a recovery upon municipal bonds. 
It ia beyond doubt that the bonds were 
Issued by the authority of an act of the legis- 
lature of the State of Wisconsin, and in the 
manner prescribed by the statute. It is not 
denied that the railroad, in aid of the con- 
struction of which they were issued, has 
been built, and was put in operation. 

Upon a class of the defences interposed in 
the answer and in the argument it is not 
necessary to spend much time. The theories 
upon which they proceed are vicious. They 
are based upon the idea that a refusal to pay 
an honest debt is justifiable because it 
would distress the debtor to pay it. A vol- 
untary refusal to pay an honest debt is 
a high offence in a commercial commu- 
nity and is just cause of war between na- 
tions. So far as the defence rests upon these 
principles we find no diflSculty in overrul- 
ing it. 

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

We are of the opinion that this court has 
not the power to direct a tax to be levied 
for the payment of these judgments. This 
power to impose burdens and raise money is 
the highest attribute of sovereignty, and is 
exercised, first, to raise money for public 
purposes only; and, second, by the power of 
legislative authority only. It is a power 
that has not been extended to the judiciary. 
Especially is it beyond the power of the Fed- 
eral judiciary to assume the place of a State 
in the exercise of this authority at once so 
delicate and so important. The question is 
not entirely new in this court. 

In the case of Supervisors v. Rogers,* an 
order was made by this court appointing the 
marshal a commissioner, with power to levy 
a tax upon the taxable property of the 
county, to pay the principal and interest of 
certain bonds issued by the county, the pay- 
ment of which had been refused. That case 
was like the present, except that it occurred 
in the State of Iowa, and the proceeding was 
taken by the express authority of a statute 
of that State. The court say: "The next 
question is as to the appointment of the 
marsl)al as a commissioner to levy the tax 
in satisfaction of the judgment. This de- 
pends upon a provision of the code of the 
State of Iowa. This proceeding is found in 
a chapter regulating proceedings in the writ 
of mandamus, and the power is given to the 
court to appoint a person to discharge the 
duty enjoined by the peremptory writ which 
the defendant had refused to perform, and 
for which refusal he was liable to an at- 



tachment, and is express and unqualified. 
The duty of levying the tax upon the tax- 
able property of the county to pay the princi- 
pal and interest of these bonds was specially 
enjoined upon the board of supervisors by 
the act of the legislature that authorized 
their issue, and the appointment of the mar- 
shal as a commissioner in pursuance of the 
I above section is to provide for the perform- 
ance of this duty where the board has dis- 
obeyed or evaded the law of the State and 
the peremptory mandate of the court." 

The State of Wisconsin, of which the city 
of Watertown is a municipal corporation, has 
passed no such act. The case of Supervisors 
V. Rogers is, therefore, of no authority in 
the case before us. The appropriate remedy 
of the plaintiff was and is a writ of man- 
damus.f This may be repeated as often as 
the occasion requires. It is a judicial writ, 
a part of a recognized course of legal pro- 
ceedings. In the present case it has been 
thus far unavailing, and the prospect of its 
future success is, perhaps, not flattering. 
However this may be, we are aware of no 
authority in this court to appoint its own 
officer to execute the duty thus neglected by 
the city in a case like the present. 

In Welch v. St. Genevieve * at a Circuit Court 
for the district of Missouri, a tax was ordered 
to be levied by the marshal under similar 
circumstances. We are not able to recognize 
the authority of the case. No counsel ap- 
peared for the city (Mr. Reynolds as amiaus 
curice only) ; no authorities are cited which 
sustain the position taken by the court; 
the power of the court to make the order is 
disposed of in a single paragraph, and the 
execution of the order suspended for three 
months to give the corporation an oppor- 
tunity to select officers and itself to levy and 
collect the tax, with the reservation of a 
longer suspension if it should appear advis- 
able. The judge, in delivering the opinion 
of the court, states that the case is without 
precedent, and cites in support of its de- 
cision no other cases than that of Riggs v. 
Johnson County,** and Lansing v. Treas- 
urer-X The first case cited does not touch 
the present point. The question in that 
case was whether a mandamus having been 
issued by a United States court in the regu- 
lar courae of proceedings, its operation could 
be stayed by an injunction from the State 
court, and it was held that it could not be. 
It is probable that the case of Supervisors y. 
Rogers^ was the one intended to be cited. 
This case has already been considered. 

The case of Lansing v. Treasurer (also 
cited), arose within the State of Iowa. It 
fell within the case of Supervisors v. Rogers, 



•7 Wallace, 175. 



tRiggs V. Johnson County, 6 Wallace, 193. 

*10 Am. Law Reg. (N. S.) 512, Fed. Gas. No. 17,- 
372. 

**6 Wallace, 166. 

t9 Am. Law Reg. (N. S.) 415, Fed. Gas. No. 16,588. 

S7 Wallace, 175. 



6 



MAXIMS OF EQTTITY. 



and was rightly decided because authnrized 
by the express statute of the State of Iowa. 
It offered no precedent for the decision of a 
case arising ia a Stale where such a statute 
does not exist. 

These are the only authorities upon the 
power of this court to direct the levy of a tax 
under the circumstances existing.in this case 
to which our attention has been called. 

The plaintiff insists that the court may 
accomplish the same result under a differ- 
ent name, that it has jurisdiction of the per- 
sons and of the property, and may subject 
the property of the citizens to the payment 
of the plaintiff's debt without the intervention 
of State taxing ofiBcers, and without regard 
to tax laws. His theory is that the court 
should make a decree subjecting the indi- 
vidual property of the citizens of Watertown 
to the payment of the plaintiff's judgment; 
direct the marshal to make a list thereof 
from the assessment rolls or from such other 
sources of information as he may obtain; re- 
port the same to the court, where any objec- 
tions should be heard; that the amount of 
the debt should be apportioned upon the sev- 
eral pieces of property owned by individual 
citizens; that the marshal should be directed 
to collect such apportioned amount from 
such persons, or in default thereof to sell 
the property. 

As a" part of this theory, the plaintiff 
argues that the court has authority to direct 
the amount of the judgment to be wholly 
made from the property belonging to any in- 
habitant of the city, leaving the citizens to 
settle the equities between themselves. 

This theory has many difliculties to en- 
counter. In seeking to obtain for the plain- j 
tiff his just rights we must be careful not to j 
invade the rights of others. If an inhab- 
itant of the city of Watertown should own i 
a block of buildings of the value of $20,- 
000, upon no principle of law could the 
whole of the plaintiff's debt be collected | 
from that property. Upon the assumption 
that individual property is liable for the pay- 
ment of the corporate debts of the munici- 
pality, it is only so liable for its proportion 
ate amount. 'The inhabitants are not joint 
and several debtors with the corporation, nor 
does their property stand in that relation to 
the corporation or to the creditor. This is 
not the theory of law, even in regard to tax- 
ation. The block of buildings we have sup- 
posed is liable to taxation only upon its 
value in proportion to the value of the entire 
property, to be ascertained by assessment, 
and when the proportion is ascertained and 
paid, it is no longer or further liable. It 
is discharged. The residue of the tax is to 
be obtained from other sources. There may 
be repeated taxes and assessments to make 
up delinquencies, but the principle and the 
general rule of law are as we have stated. 

In relation to the corporation before us, 
this objection to the liability of individual 
property for the payment of a corporate debt 



is presented in a specific form. It is of a 

statutory character. 

The remedies for the collection of a debt 
are essential parts of the contract of indebt- 
edness, and those in existence at the time 
it is incurred must be substantially pre- 
served to the creditor. Thus a statute pro- 
hibiting the exercise of its taxing power by 
the city to raise money for the payment of 
these bonds would be void.* But it is 
otherwise of statutes which are in existence 
at the time the debt is contracted. Of 
these the creditor must take notice, and if 
all the remedies are preserved to him which 
were in existence when his debt was con- 
tracted he has no cause of complaint.f 

By section nine of the defendant's charter 
it is enacted as follows: "Nor shall any 
real or personal property of any inhabitant 
of said city, or any individual or corporation, 
be levied upon or sold by virtue of any exe- 
cution issued to satisfy or collect any debt, 
obligation, or contract of said city." 

If the power of taxation is conceded not 
to be applicable, and the power of the court 
is invoked to collect the money as upon an 
execution to satisfy a contract or obligation 
of the city, this section is directly applicable 
and forbids the proceeding. The process or 
order asked for is in the nature of an execu- 
tion ; the property proposed to be sold is that 
of an inhabitant; of the city; the purpose to 
which it is to be applied is the satisfaction 
of a debt of the city. The proposed remedy 
is in direct violation of a statute in existence 
when the debt was incurred, and made known 
to the creditor with the same solemnity as 
the statute which gave power to contract 
the debt. All laws in existence when the 
contract is made are necessarily referred to 
in it and form a part of the measure of the 
obligation of the one party, and of the right 
acquired by the other.| 

But independently of this statute, upon 
the general principles of law and of equity 
jurisprudence, we are of opinion that we can- 
not grant the relief asked for. The plaintifE 
invokes the aid of the principle that all legal 
remedies having failed, the court of chancery 
must give him a remedy; that there is a 
wrong which cannot be righted elsewhere, 
and hence the right must be sustained in 
chancery. The diflSeulty arises from too 
broad an application of a general principle. 
The great advantage possessed by the court 
of chancery is not so much in its enlarged 
jurisdiction as in the extent and adaptabil- 
ity of its remedial powers. Generally its 
jurisdiction is as well defined and limited as 
is that of a court of law. It cannot exercise 
jurisdiction when there is an adequate and 
complete remedy at law. It cannot assume 
control over that large class of obligations 
called imperfect obligations, resting upon 



•Van HofEman v. City of Quincy, 4 Wallace, 535. 
tCooley, Constitutional Limitations, 235, 337. 
tCooley, Constitutional Limitations, 285. 



AIAXIMS OF EQUITY. 



conscience and moral duty only, unconnected 
with legal obligations. Judge Story says,f 
"There are cases of fraud, of accident, and 
of trust which neither courts of law nor of 
equity presume to relieve or to mitigate," of 
which he cites many instances. Lord Tal- 
bot says:J "There are cases, indeed, in which 
a court of equity gives remedy where the 
law gives none', but where a particular 
remedy is given by law, and that remedy 
bounded and circumscribed by particular 
rules, it would be very improper for this 
court to take it up where the law leaves it, 
and extend it further than the law allows. " 

Generally its jurisdiction depends upon 
legal obligations, and its decrees can only en- 
force remedies to the extent and in the mode 
by law established. With the subjects of 
fraud, trust, or accident, when properly be- 
fore it, it can deal more completely than can 
a court of law. These subjects, however, 
may arise in courts of law, and there be well 
disposed of.* 

A court of equity cannot, by avowing that 
there is a right but no remedy known to the 
law, create a remedy in violation of law, or 
even without the authority of law. It acts 
upon established principles not only, but 
through established channels. Thus, as- 
sume that the plaintiff ia entitled to the pay- 
ment of bis judgment, and that the defend- 
ant neglects its duly in refusing to raise the 
amount by taxation, it does not follow that 
this court may order the amount to be made 
from the private estate of one of its citizens. 
This summary proceeding would involve a 
violation of the rights of the latter. He has 
never been heard in court. He has had no 
opportunity to establish a defence to the 
debt itself, or if the judgment is valid, to 
show that his property is not liable to its 
payment. It is well settled that legislative 
exemptions from taxation are valid, that 
such exemptions may be perpetual in their 
duration, and that they are in some cases be- 
yond legislative interference. The proceed- 
ing supposed would violate that funda- 
mental principle contained in chapter twen- 
ty-ninth of Magna Charta, and embodied in 
the Constitution of the United States, that 
no man shall be deprived of his property 
without due process of law — that is, hemust 
be served with notice of the proceeding, and 
have a day in court to make his defence.** 

"Due process of law (it is said) undoubt- 
edly means in the due course of legal pro- 
ceedings, according to those rules and forms 
which have been established for the protec- 
tion of private rights. "(| In the New Eng- 
land States it is held that a judgment ob- 
tained against a town may be levied upon 
and made out of the property of any inhab- 
itant of the town. The suit in those States 
is brought in form against the inhabitants 



tl Equity Jurisprudence, S 61. 

tHeard v. Stanford, Cases Tempore Talbot, 174. 

•1 Story's Equity Jurisprudence, $ 60. 

**Wastervelt v. Gregg, 13 New York, 309. 

lib. 



of the town, naming it; the individual Inhab. 
itants, it is said, may and do appear and de- 
fend the suit, and hence it is held that the 
individual inhabitants have their day in 
court, are each bound by the judgment, and 
that it may be collected from the property of 
any one of them.* This is local law pe- 
culiar to New England. It is not the law of 
this country generally, or of England.|| It 
has never been held to be the law in New 
York, in New Jersey, in Pennsylvania, nor, 
as stated by Mr. Cooley, in any of the West- 
ern States.*! So far as it rests upon the rule 
that these municipalities have no common 
fund, and that no other mode exists by 
which demands against them can be enforced, 
he says that it cannot be considered as ap- 
plicable to those States where provision is 
made for compulsory taxation to satisfy 
judgments against a town or city.§ 

The general principle of law to which wo. 
have adverted is not disturbed by these 
references. It is applicable to the case be- 
fore us. Whether, in fact, the individual 
has a defence to the debt, or by way of ex- 
emption, or is without defence, is not im- 
portant. To assume that he has none, and 
therefore, that he is entitled to no day in 
court, is to assume against him the very 
point he may wish to contest. 

Again, in the case of Emerio v. Gilman, 
before cited, it is said: "The inhabitants of 
a county are constantly changing; those who 
contributed to the debt may be non-residents 
upon the recovery of the judgment or the 
levy of the execution. Those who opposed 
the creation of the liability may be sub- 
jected to its payment, while those, by whose 
fault the burden has been imposed, may be 
entirely relieved of responsibility. . . . 
To enforce this right against the inhabitants 
of a county would lead to such a multiplicity 
of suits as to render the right valueless." 
We do not perceive, if the doctrine con- 
tended for is correct, why the money might 
not be entirely made from property owned by 
the creditor himself, if he should happen to 
own property within the limits of the cor- 
poration, of sufficient value for that pur- 
pose. 

The diflBculty and the embarrassment aris- 
ing from an apportionment or contribution 
among those bound to make the payment we 
do not regard as a serious objection. Con- 
tribution and apportionment are recognized 
heads of equity jurisdiction, and if it be as- 
sumed that process could issue directly 
against the citizens to collect the debt of the 
city, a court of equity could make the appor- 
tionment more conveniently than could a 
court of law.f 



•See the oases collected In Cooley's Constitu 
tional Limitations, 340-245. 

I Russell V. Men of Devon, 8 Term R. 667. 

H See Emeric v. Gilman, 10 California, 408, where 
all the cases are collected. 

{Cooley's Constitutional Limitations, 340. 
tl Story's Equity Jurisprudence, § 470 and on- 
wards. 



8 



MAXniS OF EQUITY. 



Wt apprehend, also, that there Is some 
confusion in the plnintiH's proposition, 
upon which the present jurisdiction is 
claimed. It is conceded, and the autliori- 
ties are too abundant to adiriit a question, 
that thero is no chancery jurisdictioa where 
there is an adequate remedy at law. The 
writ of mandamus is, no doubt, the regular 
remedy in a case like the present, and or- 
dinai'iiy it is adequate and its results are 
satisfactory. The plaintiff alleges, however, 
in the present case, tliat he has issued such 
a writ on three different occasions; that, 
by means of the aid afforded by the legisla- 
ture and by the devices and contrivances set 
forth in the bill, the writs have been fruit- 
less ; that, in fact, they afford him no remedy. 
The remedy is in law and in theory ade- 
([uate and perfect. The difficulty is in its 
execution only. The want of a remedy and 
the inability to obtain the fruits of a remedy 
are quite distinct, and yet they are con- 
founded in the present proceeding. To il- 
lustrate: the writ of habere facias posses- 
sionem is the established remedy to obtain 
the fruits of a judgment for the plaintifl in 
ejectment. It is a full, adequate, and com- 
plete remedy. Not many years since there 
existed in Central New Yorlccombinatious of 



settlers and tenants disguised as Indians, 
and calling themselves audi, who resisted 
the execution of this process in their counties, 
and so effectually that for some years no 
landlord could gain possession of his land. 
There was a perfect remedy at law, but 
through fraud, violence, or crime its execu- 
tion was prevented. It will hardly be argued 
that this state of things gave authority to in- 
volie the extraordinary aid of a court of 
chancery. The enforcement of the legal 
remedies was temporarily suspended by 
means of illegal violence, but the remedies 
remained as before. It was the case of a 
miniature revolution. The courts of law 
lost no power, the court of chancery gained 
none. The present case stands upon the 
same principle. The legal remedy is ade- 
quate and complete, and time and the law 
must perfect its execution. 

Entertaining the opinion that the plaintiff 
has been unreasonably obstructed in the pur- 
suit of bis legal remedies, we should be quite 
willing to give him the aid requested if the 
law permitted it. We cannot, however. And 
authority for so doing, and we acquiesce in 
the conclusion of the court below that the 
bill must be dismissed. 

Judgment affirmed. 



MAXIMS OF EQUITY. 



9 



DIBRELL V. CARLISLE et al. 

(48 Miss. e91.) 

Supreme Court of Mississippi. 1873. 

Appeal from) chancery court, Oliickasaw 
county; Bradford, Chancellor. 

The coraplainant in the com-t below, 
Charles C. Dibrell, filed his bill to the April 
term, 1868, alleging that on the 4th Decem- 
ber, 1866, William F. Walker, then largely 
indebted in a sum exceeding $60,000 to his 
wife, Eliza R. Walker, on account of her 
separate estate, executed and delivered a 
deed of conveyance to one Thomas J. Denton, 
a citizen of said county, and his successors 
in office, as trustee for said Eliza, and the 
heirs of her body, by which he granted, bar- 
gained, and sold to said trustee certain real 
and personal property particularly described 
in the bill, and states its value at $29,942, 
and that it was intended to be, and was 
received by the parties as, a payment to that 
extent on the Indebtedness of Walker to his 
wife. The deed is filed as an exhibit to the 
bill. 

It is further stated in the bill that Denton, 
the trustee, accepted the trust, entered im- 
mediately upon the discharge of his duties, 
residing within a few miles of the property 
transferred to him, ready at all times to do 
and perform all acts contemplated in the 
deed, until the 4th March, 1868; that on the 
6th of March, 1868, under the provisions of 
said deed, the complainant was duly and 
legally appointed as successor to said Den- 
ton by the probate judge of said county; 
that on the 20th March, 1867, the said Wil- 
liam F. Walker, confederating with Henry 
G. Humphries and E. K. Carlisle, commis- 
sion merchants and citizens of Mobile, Ala.,, 
to divest the said Eliza of her equitable in- 
terest in said lands, induced her to execute 
jointly, with her husband, a mortgage on 
said lands, to secm-e the payment of an as- 
serted debt of $7,337.64, which the said Wil- 
liam F. had contracted with said Humphries 
& Carlisle, maturing on the 10th December, 
1867; that said deed of mortgage authorized 
Carlisle & Humphries, in default of pay- 
ment of said debt, upon giving 30 days' no- 
tice, to sell said lands at auction and divest 
the title from the trustee and the said Eliza, 
and forever bar her equity of redemption. 
The mortgage is filed as an exhibit to the 
bill. 

It is further charged that said Humphries 
& Carlisle were fully apprised of the true 
condition of the title to the land when they 
affected the negotiation; that they were ex^ 
pressly notified of the deed of trust first 
mentioned, and knew that the property they 
were seeking to Incumber was trust prop- 
erty, settled upon the said Eliza and the 
heirs of her body; that she was ignorant of 
the legal effect to be given to the deed of 
mortgage by the draftsman; that but a small 
portion of the debt daimed was for her 



family supplies and necessaries, wearing ap- 
parel of herself or children, or their educa- 
tion, or household furniture, or carriages and 
horses, buildings on her land and premises, 
or repairs thereof, or materials, work, and 
labor for the benefit and improvement of her 
separate estate. 

The bill "protests against another clause 
of the said deed of mortgage, as being not 
only manifestly against his rights, but in 
direct violation of the deed from said Walk- 
er to complainant's predecessor"; alleges that 
the land in the deed is estimated at $20,750; 
that indebtedness in the mortgage is $7,337.- 
64, far less than the value of the land; 
charges that, since the execution of the 
mortgage, said William F. has i lid $1,800 
or $2,000 to Carlisle & Humphries, which 
should have been credited on said Indebted- 
ness, and that the mortgage provides that 
the surplus from the land sale shall be paid 
to Walker and wife, and not to the trustee, 
the complainant. 

The bill further states that said Humph- 
ries & Carlisle, by their agent and attorney, 
J. N. Carlisle, Esq., have advertised the lands 
for sale under the mortgage, and also about 
6,000 bushels of corn, on the second Monday 
in March, 1868. A copy of the advertise- 
ment is filed as an exhibit. 

II. G. Humphries, E. K. Carlisle, J. N. 
Carlisle, and William F. Walker are made 
defendants, and injimction, etc., prayed for 
to restrain the sale. There is also a prayer 
for discovery, by Humphries & Carlisle, of 
the amount due them, and that on final hear- 
ing the injunction be made perpetual, that 
the mortgage be canceled. 

On the 6th March, 1868, the chancellor In- 
dorsed on the bill his fiat for injunction, up- 
on the complainant entering into bond with 
sureties in the sum of $2,000. The bond was 
given, and writs of injunction and subpoena 
Issued. 

Exhibit No. 1, referred to in the bill, is 
as follows: 

"The State of Mississippi, Chickasaw Coun- 
ty. This indenture, made and entered Into 
this 4th day of December, 1866, between 
William' F. Walker, of the first part, Eliza 
R. Walker, his wife, of the second part, 
each of the county and state aforesaid, and 
Thomas J. Denton, of the same county and 
state, of the third part, witnesseth: That the 
said party of the second part, having been 
the owner In her own right at the time of 
her marriage. In the year of our Lord one 
thousand eight hundred and fifty-three, with 
the said party of the first part, of a large 
personal estate, which was received by, con- 
trolled, possessed, used, and enjoyed by him, 
as hereinafter set forth, that is to say, thirty- 
three negro slaves, which went into his pos- 
session on the first day of January, 18-54, 
and were worked and controlled in raising 
cotton, etc., and whose hire was worth as 
stated," etc. The deed then proceeds to give 
the names and value of the hire of each 



10 



MAXIMS OF EQUITY. 



negro for eleven years, the aggregate hire 
valued at $31,250, and continues: "And the 
said party of the second part having received 
large sums of money from the separate es- 
tate of the said Eliza, as foUovfs: The sum 
of fifteen thousand dollars on the first day 
of January, 1854; seven thousand dollars on 
the 1st July, 1855, and six thousand dollars 
on the 1st July, 1866, amounting to twenty- 
eight thousand dollars; and the said Wil- 
liam F. having assumed the entire manage- 
ment and control of the separate estate of 
the said Eliza, and vi^ith the funds realized 
from the proceeds raised by her negro slaves 
as aforesaid, and with the cash received by 
him as above set forth, he purchased real 
and personal property as hereinafter describ- 
ed and valued, that is to say," etc. The 
deed here describes the tract of land in con- 
troversy, and a number of mules, horses, 
■wagons, carriage and harness, farming uten- 
sils, carpenters' and blacksmiths' tools, house- 
hold and 'kitchen furniture, jewelry, plate, 
stock hogs, etc., valued at $8,192, and pro- 
ceeds: "And the said William F. being 
anxious to secure, so far as he has the abil- 
ity to do so, the payment of this debt he 
owes to his wife, amounting to the sum of 
sixty-two thousand two hundred and fifty 
dollars, takiug the hire of the negro prop- 
erty as the basis of his liability for their 
use and employment. Now, in consideration 
of the premises, and for and in consider- 
ation of the sum of ten dollars, paid by the 
said party of the third part, the receipt of 
which is hereby acknowledged, the said par- 
ty of the first part hath granted, bargained, 
and sold, and by these presents doth grant, 
bargain, and sell, unto the said party of the 
third part, all the real and personal prop- 
erty above described, to wit" (giving de- 
scription of land and personal property be- 
fore referred to) : "In trust, nevertheless, for 
the use, benefit and behoof of the said party 
of the second part and the heirs of her body 
forever, who are to retain the possession, 
management, direction, and control of the 
property conveyed. The said trustee or his 
successor, to be designated by the judge of 
the probate court of the county and state 
aforesaid, in term time or in vacation, to 
take such possession or direction as may 
then be necessary for faithfully carrying out 
this trust according to its true intent and 
meaning, such as bringiag and defending 
suits, executing bonds, signing papers, or ap- 
pointing an attorney in fact to do and per- 
form whatever may be necessary and proper 
to be done in protecting and defending the 
said estate to the party of the second part 
and the heirs of her body." The deed then 
states that the propert.v conveyed, valued at 
$29,942, "is intended to be to that extent in 
part payment of the sum of $62,250, the 
amount admitted to be due," etc., and con- 
cludes with warranty of title, etc. 

Exhibit No. 2 of the bill is in the words 
and figures following: 



"The State of Mississippi, Chickasaw 
Coimty. This deed of mortgage, made the 
this 20th day of March, 18G7, between W. F. 
Walker, with E. R. Walker, his wife, both 
of the county of Chickasaw and state of 
Mississippi, of the first part, and E. K. Oar- 
lisle, with H. G. Humphries, commission 
merchants, of Mobile and state of Alabama, 
of the other, witnesseth: That whereas the 
said W. F. Walker, with B. R. Walker, his 
wife, are indebted to the said E. K. Carlisle 
and H. G. Humphries in the sum of seventy- 
three hundred and thirty-seven dollars and 
sixty-four cents, said sum of money being 
advanced to said W. F. Walker and E. R. 
Walker on their crop of cotton, to be raised 
in and during the year. Anno Domini, 1867, 
on the plantation under tlie superintendence 
of W. F. Walker, Jno. D. Poyner, and Thos. 
McCarthy. Said sum of money is further 
secured by their certain promissory notes, 
bearing date the nineteenth day of January, 
A. D. 1867, for the said sum of seventy- 
three hundred and thirty-seven dollars and 
sixty-four cents, subscribed with their hands 
and delivered to the said E. K. Carlisle and 
H. G. Humphries, whereby the said W. F. 
Walker and E. R. Walker promised to pay the 
said Carlisle & Humphries, or order, seventy- 
three hundred and thirty-seven dollars and 
sixty-four cents, on or before the nineteenth 
day of December, 1867, for value received. 
And whereas, the said W. F. Walker and E. 
R. Walker, his wife, are willing to give this 
deed for satisfaction of what may be due 
and unpaid to the said Carlisle & Humphries 
on the nineteenth day of December, 1867, 
next: Therefore the said W. B\ Walker and 
E. R. Walker bargain, sell, alien, and convey 
to the said Carlisle & Humphries all those 
tracts or parcels of land situated and lying 
in the county of Chickasaw and state of 
Mississippi, known and described as the west 
half of section twelve, in township thirteen, 
range five east, and the west half of section 
thirteen, township thirteen, range five east, 
containing six hundred and seventy acres, 
more or less; also convey all the cotton crop 
that is raised on said lands or plantation un- 
der the direction or superintendence of W. F. 
^Yalker, John D. Poyner, and Thomas Mc- 
Carthy, which said cotton is to be shipped to 
said Carlisle & Humphries aforesaid as soon 
as is practicable after ginning and baling the 
same; to have and to liold the same with all 
the rights and appurtenances to the said Car- 
lisle & Humphries, their heirs, executors, and 
administrators. But this conveyance is upon 
condition, if the said W. P. Walker and E. R. 
Walker shall, on or before the nineteenth 
day of December, 1867, well and fully pay 
the said sum of money, then this deed is to 
cease and to be void; but if after that day 
said sum, with any part thereof, be unpaid, 
then It shall be lawful for the said Carlisle 
& Humphries, or their legal representative, 
after giving thirty days' notice by advertise- 
ment in some newspaper in Chickasaw coun- 



MAXIMS OF EQUITY. 



11 



ty of the cause, day, and place of sale, to 
proceed to sell at puMic auction at Okolona 
the mortgaged property, or a sufflclency 
thereof, for cash to the highest and best bid- 
der, and out of the proceeds, after defraying 
the cost of advertisenient and sale, they may 
retain the full amount of mortgage money 
due, and if there be a surplus they are pres- 
ently to pay it to W. F. Walker and E. K. 
Walker, or their legal representatives, and to 
make to the vendee or vendees a deed of 
conveyance, transmitting the quit of purchase 
of all right, title, or interest of the parties 
and their heirs, or of all claiming under 
them, and thereupon all the right and title 
of the W. F. Walker, -with E. R. Walker, his 
wife, to redeem, shall be as effectually bar- 
red and foreclosed as if upon a decree in 
equity; and the said W. F. Walker, with B. 
R. Walker, his wife, hereto put their names 
and seals, the day and date aforewritten. 

"[Signed] W. F. Walker. [Seal.] 

"E. R. Walker. [Seal.]" 

Carlisle & Humphries filed their answer, 
averring that they knew nothing of the ex- 
istence of the debt alleged to be due Eliza 
R. Walker by W. F. Walker, her husband, 
except what they learn from the said exhibit 
No. 1 in the bill, and that they believe the 
debt fictitious; that there was no valid con- 
.fideration in law or equity passing from said 
Eliza to said W. F. Walker for the convey- 
ance; that said conveyance is fraudulent and 
made with the Intent to defraud the cred- 
itors of said W. F.: that ttie appointment of 
T. J. Denton as trustee was merely nominal, 
and for the better serving to cloak and con- 
ceal the said property and more effectually 
defrauding the creditors of the said W. F.; 
that said Denton, under a provision in the 
deed of trust, appointed the said W. F. his 
attorney in fact, clothing him with full pow- 
er to act in all things pertaining to said 
trusteeship, as if he, the said W. F., had 
been trustee; that the said W. F. executed 
the said mortgage in the bill mentioned as 
such attorney in fact; that the complainant, 
C. 0. Dibrell, ignoring the action of his pre- 
decessor, Denton, filed his bill with the in- 
tent to deprive respondents of their rights 
and powers vested in them as mortgagees; 
that said T. J. Denton, being aware of the 
execution of said attorneyship to W. F. Walk- 
er, refused to join in said bill of complaint, 
but, actuated by the dictates of honor and 
honesty, declined entering into such fraudu- 
lent interference with respondents' rights; 
denies all confederating by Carlisle & 
Humphries to defeat Mrs. Walker's interest 
in said lands; denies inducing her to Join 
her husband in executing the mortgage; al- 
leges that the mortgage was made by W. F. 
Walker, as attorney in fact for the trustee 
and by Mrs. Walker, freely and voluntarily, 
without any persuasion, and by her so ac- 
knowledged In a private examination by an 
officer authorized to take such acknowledg- 
ment; denies all knowledge of the trust un- 



der which Mrs. Walker held the lands, and 
supposed W. F. Walker fully empowered to 
convey or incumber them. 

Respondents assert that the $7,337.64 was 
money actually advanced to the said W. F. 
Walker and his wife during the year 1867, 
for the necessary supplies of the plantation 
of said Walker and wife, and believe that it 
was used for them and their children; denies 
that the property mortgaged is and was 
worth $20,750, but insists that its value at 
the date of the mortgage and now does not 
exceed respondents' debt; denies that the 
execution of the mortgage was against the 
rights of the trustee, Dibrell; alleges that 
W. F. Walker was notoriously acting as the 
agent of his wife, and with the knowledge 
and consent of Denton, trustee; that, if the 
allegations in complainant's bill be true, said 
Walker, under false and fraudulent pre- 
tenses, obtained respondents' money; that 
said Walker and wife have never paid but 
$873.20, and this amount was duly credited 
on the debt. Respondents say that they are 
led to believe that Dibrell, complainant, 
through the solicitation and procurement of 
W. F. Walker, accepted the appointment of 
trustee, and, without a knowledge of what 
his predecessor had done, has filed this bill 
and made the representations and allegations 
therein from false representations of W. F. 
Walker; that Dibrell's action is in direct 
contravention of the action of his pj-edeces- 
sor, Denton; that W. F. Walker's interest is 
not with respondents as defendants in this 
suit, but identified with the complainant; 
and that he cunningly devised his joinder 
with respondents as defendant for fraudu- 
lent purposes. 

Respondents insist that the advances made 
by them were solely on the credit of Mrs. 
Walker and her children, the beneficiaries of 
the pretended deed of trust, and for their 
benefit and use, and not on the credit of W. 
F. Walker; that he was insolvent and unable 
to obtain credit at the time; that the writ 
of injunction was illegally issued because of 
the want of good sureties on the bond; that 
said bond has no date and bears no evidence 
of having been duly executed as the law di- 
rects; that the flat only requires a bond for 
$2,000, whilst the amount of indebtedness 
enjoined is $6,464.36, and the bond is not 
in double the sum so enjoined. 

The mortgage referred to in the bill as 
Exhibit No. 2 is made an exhibit in the an- 
swer also. Another exhibit to the answer 
consists of an account of the debts due by 
W. F. and Eliza Walker to Carlisle & Humph- 
ries, showing balance of $7,337.64. Exhibit 
C is as follows: 

"The State of Mississippi, Chickasaw Coun- 
ty. To whom these presents may come, 
greeting: Know ye that I, Thos. J. Denton, 
reposing entire confidence in the probity and 
integrity of W. F. Walker, a citizen of the 
county of Chickasaw and state of Mississippi, 
do by these presents constitute him my true 



12 



MAXIMS OF EQUITY, 



and lawful attorney in fact for me as trus- 
tee, appointed under a deed executed by the 
said Walker in favor of Eliza R. Walker 
and the heirs of her body as cestui que trust, 
on the 4th day of December, 1866, conveying 
real and personal property valued at $29,- 
942, and in my name to sign all papers, 
bonds, affidavits, contracts, and to make, do, 
and perform all and every act necessary or 
proper to be made, done, or performed for the 
protection of said trust estate, or for carrying 
out the true intent and meaning of said trust 
deed, and to every act in the premises which 
I could do if personally present, and I hereby 
ratify and confirm whatever he may lawfully 
do in the premises. Given under my hand 
and seal this the 4th day of December, 1866. 
"[Signed] T. J. Denton. [Seal.]" 

This power of attorney was acknowledged 
and recorded in Chickasaw county. 

J. A. Orr and Harris & Withers, for appel- 
lant. Gholson & Hooper, James T. Harrison, 
and George L. Potter, for appellees. 

PEYTON, J. This was an injunction bill 
brought by the appellant in the chancery 
court of Chickasaw county to restrain the 
appellees, B. K. Carlisle and H. G. Humph- 
ries, from executing a power of sale contain- 
ed in a mortgage given to them by William 
P. Walker and Eliza R. Walker, his wife. 

The material facts of the case are these: 
William F. Walker, being indebted to his 
wife, Eliza R., in a large amount of money, 
on the 4th day of December, 1806, conveyed 
to one Thomas J. Denton certain real and 
personal estate situated in the said county 
of Chickasaw, in this state, in trust for the 
use of the said Eliza R. Walker and the 
heirs of her body forever, which deed of con- 
veyance was duly acknowledged and record- 
ed. 

That on the 20th day of March, A. D. 
1867, the said William P. Walker and EHiza 
R., his wife, made and executed their deed 
of mortgage of six hundred and seventy acres 
of the land, covered by the said deed of trust, 
to said Carlisle & Humphries, to secure the 
payment of a promissory note for $7,337.64, 
made by said Walker and vs^ife, dated the 
19th day of .January, 1807, and payable to 
said Carlisle & Humphries on the 19th day of 
December, 1807. The said mortgage deed, 
which was duly acknowledged and recorded, 
gives to the mortgagees a power of sale of 
the mortgaged property in default of payment 
of the note at maturity. 

The note not having been paid, the mort- 
gagees were proceeding to sell the property, 
when they were enjoined from so doing by 
the appellee, who was appointed trustee, un- 
der a power in the deed creating the trust 
estate, to succeed the original trustee, who 
had resigned the trust. 

The appellees, Carlisle & Humphries, in 
their answer, admit the conveyance in trust 
as set forth in the bill of complaint, but deny 
that there was any valid consideration there- 



for, and insist that it was made to hinder, 
delay, and defraud creditors. They admit 
the execution of the mortgage stated in the 
bill, and Insist that they had a right to sell 
the mortgaged property to pay the amount 
due on the debt therein specified. They aver 
that the amount specified in the said note 
and mortgage was actually advanced by 
them to the said W. P. and E. R. Walker for 
the necessary supplies of the plantation of 
the said Walker and wife, and that they be- 
lieve that the said money was used by the 
said Walker and wife for the use and benefit 
of the said E. R. Walker and her children, 
and that the advances were made solely on 
the credit of Mrs. E. R. Walker, and not on 
that of her husband, who was insolvent and 
unable to obtain credit at the time the ad- 
vances were made. 

The appellees, Carlisle & Humphries, mov- 
ed the court below to dissolve the injunction 
on bill, answer, exhibits, and proofs. TTie 
motion was sustained and the injunction dis- 
solved. And from this decree the cause Is 
brought to this court by appeal on the part 
of the appellee. 

This record presents three important ques- 
tions for our consideration: 

(1) What interest does Mrs. Walker take 
under the conveyance to a trustee for the 
use of herself and the heirs of her body for- 
ever? 

{2) Where the wife has joined with her 
husband in a mortgage of her separate estate 
to pay the debt of her husband, can the cor- 
pus of that estate, under the existing laws, 
be subjected in a court of equity to the pay- 
ment of such debt? 

(3) Is the separate estate of Mrs. Walker 
liable in equity to the payment of the debt 
specified in the mortgage or any part there- 
of? 

The first question involves the construction 
of the limitations in the deed creating the 
trust estate. It is a common maxim that 
equity follows the law: Bquitas sequitur 
legem. Where a rule of the common or stat- 
ute law is direct and governs the case with 
all its circumstances or the particular point, 
a court of equity is as much bound by it as 
a court of law, and can as little justify a de- 
parture from it. A court of equity cannot 
disregard the canons of descent. In general, 
in courts of equity, the same construction 
and effect are given to perfect trust estates 
as are given by courts of law to legal es- 
tates. The Incidents, properties, and conse- 
quences of the estates are the same. The 
same restrictions are applied as to cresfting 
estates and bounding perpetuities and giving 
absolute dominion over property. The same 
modes of construing the language and limita- 
tions of the trusts are adopted. 1 Story, Eq. 
(Redf. Ed.) pp. 53-55, § 64. 

The words "heirs of the body," in the coni- 
veyance of a legal estate, are words of lim- 
itation of the estate to the donee, and not 
words of purchase for the heirs of the body. 



MAXIMS OF EQUITY. 



13 



Warren v. Haley, Smedes & M. Oh. (U7. 
These words create an estate in fee tail, 
which, by our statute, is converted into an 
estate in fee simple. Rev. Code, p. 307, art. 
3. And, if it be true that the same modes of 
construing the language and limitations of 
trust estates are adopted as apply to legal 
estates, we cannot resist the conclusion that 
Mrs. Walker takes, under the terms of the 
deed, the entire trust estate absolutely. 

With regard to the second question it may 
be remarked that it is a familiar rule of eq- 
uity jurisprudence that general debts or gen- 
eral personal engagements of a married wo- 
man, contracted during coverture, are not 
chargeable upon her separate estate; and, un- 
less a feme covert who contracts a debt or 
enters into an engagement designs that such 
engagement or debt shall constitute a charge 
upon her separate estate, a court of equity 
will not entertain jurisdiction to enforce 
payment thereof out of such separate estate. 

When real property is conveyed absolutely 
to the separate use of a married woman, she 
can dispose of the trust estate only in the 
mode and manner prescribed by the instru- 
ment creating the trust estate, and, if none be 
prescribed and limited therein, then in ac- 
cordance 'With the provisions of the statute. 

Prior to the adoption of our present Code, 
in 1857, it has been repeatedly decided by 
this court that the wife may bind the corpus 
of her separate estate, by deed in trust or 
mortgage, as a security for the debts of her 
husband. James v. Fisk, 9 Smedes & M. 
144; Sessions v. Bacon, 23 Miss. 272; Arm- 
strong V. Stovall, 26 Miss. 280; Kuss v. Win- 
gate, 30 Miss. 445; Stone v. Montgomery, 35 
Miss. 83-105; Prewett v. Land, 36 Miss. 
495. 

Since the adoption of the Code, a married 
woman has no power to incumber the corpus 
of her separate estate by deed of trust, mort- 
gage, or otherwise, for the debt of her hus- 
band, but only the Income thereof. The stat- 
ute expressly provides that no conveyance or 
incumbrance for the separate debts of the 
husband shall be binding on the wife beyond 
the amount of her income. Rev. Code, p. 
336, art. 23. This is a wise provision intend- 
ed to secure to the wife the enjoyment of 
her separate estate against any possible con- 
tingency of loss through the fraud, force, or 
undue influence of her husband. 

The solution of the third question depends 
upon the facts of the case as they may be 
developed and established by the evidence. 
With a view to the more beneficial enjoy- 
ment and productiveness of the separate es- 
tate of a married woman, the law has pro- 
vided that all contracts made by the husba.nd 
and wife, or by either of them, for supplies 
for the plantation of the wife, or for the 
employment of an agent to superintend the 
planting operations, may be enforced, and 
satisfaction had out of her separate estate. 
And all contracts made by the wife, or by 
the husband with her consent, for family 



supplies or necessaries, wearing apparel of 
herself and children, or for their education, 
or for household furniture, or for carriage 
and horses, or for buildings on her land or 
premises, and the materials therefor, or for 
work and labor done for the nse, benefit, or 
improvement of her separate estate, shall be 
binding on her, and satisfaction may be had 
out of her separate property. Rev. Code, p. 
336, art. 25. And it has been decided that a 
married woman is liable on a promissory 
note given by her for a horse purchased by 
her for the supply and use of her plantation. 
Robertson v. Ward, 12 Smedes & M. 490. 
This adjudication was made under the act 
of 1846, which made the income only of her 
separate estate liable to the payment of the 
debt. And, under the act of 1857, this court 
has decided that the wife is liable out of the 
corpus of her separate estate to the payment 
of a note given by herself and husband for 
money advanced for the purpose of purchas- 
ing supplies for her plantation, and which 
was actually applied to that purpose. Bow- 
man V. Thomas E. Helm. These cases are 
regarded as coming within the equity of the 
respective statutes under which the debts 
were contracted. 

It results, therefore, from this view of the 
law, that Mrs. Walker is liable to payment 
out of her separate estate for the amount of 
supplies furnished by Carlisle & Humphries 
for her plantation, and for the amount of 
the money advanced by them to Walker, or 
Walker and wife, for the purchase of sup- 
plies for her plantation, or the improvement 
of her separate estate, and which were ac- 
tually applied to that use and purpose. And 
for that portion of the debt secured by the 
mortgage, which was not applied to these 
purposes, she is liable to payment out of the 
income only of her separate estate. The 
record contains no evidence as to what por- 
tion of the debt secured by the mortgage 
was for supplies actually furnished by Car- 
lisle & Humphries for the plantation of Mrs. 
Walker, or which was applied to the pur- 
chase of such supplies. Nor is there any 
proof as to what amount of the money ad- 
vanced by Carlisle & Humphries was applied 
by Walker to his own use. 

The most appropriate remedy of Carlisle 
& Humphries will be found in a court of 
equity, in which an account can be taken of 
what portion of the note secured by the 
mortgage was for supplies for Mrs. Walk- 
er's plantation, and what part of the money 
was advanced by them for the purchase of 
such suppUes, and which was actually so 
applied, and what part of the same was used 
by Walker for his own pui-poses. When 
these facts are ascertained, the court will 
made a decree in accordance with the prin- 
ciples above laid down, subjecting the sep- 
arate estate of Mrs. Walker to sale to pay 
for the supplies for her plantation, and de- 
creeing that the trustee of the estate and 
Mrs. Walker pay to Carlisle & Humphries 



14 



MAXIMS OF EQUITY. 



the amount of the debt, secured by the mort- 
gage, found due them by "V^'illiam F. Walk- 
er, out of the income of her separate estate. 

It is insisted by some of the counsel of the 
appellees that the mortgage was void because 
the trustee did not join in the mortgage deed. 
This was not necessary. In a case free from 
fraud or undue influence, a married woman 
can bind her separate property without the 
trustees, imless their assent be made neces- 
sary by the instrument which gave that 
property. And in the case at bar the charge 
made upon the separate estate by the wife 
is totally unrestrained by the deed creating 
the trust estate, and is valid and binding, 
and a court of equity is bound to enforce it, 
so far as to subject the separate estate to 
the payment for supplies for carrying on the 
wife's plantation, and so far as she was 
surety for her husband, and had mortgaged 
her property to pay his debt, to subject the 
rents, issues, and profits of her separate es- 
tate to the payment of that debt. 

With respect to the duty of trustees in 
relation to real property, it is still held, in 
conformity to the old law of uses, that per- 
nancy of the profits, execution of estates, and 
defense of the land, are the three great prop- 
erties of the trust. Therefore a court of 
chancery will compel trustees (1) to permit 
the cestui que trust to receive the rents and 
profits of the land; (2) to execute such con- 
veyances as the cestui que trust shall direct; 
(3) to defend the title of the land in any 
court of law or equity. Tiff. & B. Trusts, 
815. 

A cestui que trust may lawfully dispose of 
his trust estate, notwithstanding his title is 
contested by the trustee, for the latter can 
never disseize the former of the trust estate; 
but, so long as it continues, the possession of 
the trustee is treated, at least in a court of 
equity, as the possession of the cestui que 
trust. Balser v. Whiting, 3 Sumn. 475, Fed. 
Cas. No. 787. 

It is insisted that the power of sale con- 
tained in a mortgage deprives the mortgagor 
of his equity of redemption, and therefore 
cannot rightfully be exercised. The principle 
seems to be now well established, though 



after great doubt and discussion, that a 
clause may legally he inserted in the mort- 
gage deed empowering the mortgagee, upon 
breach of condition, to make sale of the 
mortgaged premises, to pay his debt from the 
proceeds, and account with the mortgagor 
for the balance. The power of sale is to 
apply solely to the remedy, and not to Impair 
any right of the mortgagor. The power of 
sale does not bar the mortgagee's right to 
foreclose by judicial proceedings. The rem- 
edy is cumulative merely, and in no respects 
affects the jurisdiction or proceedings of a 
court of chancery. 1 Hil. Mortg. 128, 129. 
And such sale, made after the law day or 
breach of condition, and in pursuance of the 
terms of the mortgage, vests in the pur- 
chaser all the title conveyed by the mort- 
gage, free from the right of redemption. 

There Is nothing in the record tending in 
any way to impeach the validity of the 
mortgage. There Is no evidence of any un- 
due influence or improper conduct or con- 
trol on the part of the husband to obtain 
the wife's assent and signature to the mort- 
gage deed. And the debt in question was 
not incurred for the husband alone, or for 
unworthy purposes. It was for money ad- 
vanced and articles supplied, partly for the 
family, partly for the use of Mrs. Walker, 
and partly for the beneflt of the trust es- 
tate. We can, therefore, perceive no good 
reason why the mortgage should not be en- 
forced against the separate estate or its in- 
come, according to the nature, extent, and 
character of the liability, when ascertained 
by proof. 

It is objected that the mortgagees had no 
right to sell the corn advertised, under the 
power of sale contained in the mortgage 
deed, for the reason that there was no corn 
mortgaged. This objection is well taken, for 
it is very clear that the mortgagees can sell 
under the power only the property covered 
by the mortgage. 

For the reasons set forth in this opinion, 
we think the court below erred in dissolving 
the injunction. 

The decree must therefore be reversed and 
cause remanded. 



MAXIMS OF EQUITY. 



15 



SPEIDBL et al. v. HBNRTOI. 
(7 Sup. Ct. 610, 120 U. S. 377.) 

Supreme Court of the United States. March 

7, 1887. 

Appeal from the Circuit Court of the 
United States for the Western District of 
Pennsylvania. 

Wm. Keinecke, Geo. Hoadly, E. M. John- 
son, and Edwd. Colston, for appellants. 
George Shiras, Jr., for appellees. 

GRAY, J. This bill was filed against the 
trustees of the Harmony Society, an unin- 
corporated association of persons living to- 
gether as a community, by a former member 
of the society, claiming a share in property 
in the hands of the trustees. The bill is 
sought to be maintained on the ground that 
the trust vs^as not a charity. In the legal 
sense, and the members of the society were 
equitable tenants in common of the property 
held In trust. The learned counsel for the 
appellants differ in their views of the trust; 
the one insisting that It was unlawful, be- 
cause founded in fraud and against public 
policy, and should therefore be dissolved; 
and the other contending that It was a law- 
ful and continuing trust. We have not 
found it necessary to consider which of 
these is the sound view, because we are of 
opinion that the plaintiff did not show him- 
self to be entitled to invoke the interposi- 
tion of a court of equity. 

As a general rule, doubtless, length of 
time is no bar to a trust clearly established, 
and express trusts are not within the stat- 
ute of limitations, because the possession of 
the trustee is presumed to be the possession 
of his cestui que trust. Prevost v. Gratz, 6 
Wheat. 481, 497; Lewis v. Hawkins, 23 
Wall. 119, 126; Railroad Co. v. Durant, 95 
U. S. 576. Bnt this rule is. In accordance 
with the reason on which It is founded, and 
as has been clearly pointed out by Chan- 
cellor Kent and Mr. Justice Story, subject 
to this qualification: that time begins to run 
against a trust as soon as it is openly dis- 
avowed by the trustee Insisting upon an ad- 
verse right and interest which is clearly and 
unequivocally made known to the cestui que 
trust; as when, for instance, such transac- 
tions take place between the trustee and the 
cestui que trust as would, in case of tenants 
in common, amount to an ouster of one of 
them by the other. Kane v. Bloodgood, 7 
Johns. Ch. 90, 124; Robinson v. Hook, 4 
Mason, 139, 152, Fed. Cas. No. 11,956; Baker 
V. Whiting, 3 Sum. 475, 486; Oliver v. Piatt, 
3 How. 333, 411. This qualification has been 
often recognized In the opinions of this court, 
and distinctly aflBrmed by its latest judg- 
ment upon the subject. Willlson v. Wat- 
kins, 3 Pet. 43, 52; Boone v. Chiles, 10 Pet. 
177, 223; Seymour v. Freer, 8 Wall. 202, 218; 
Bacon v. Rives, 106 U. S. 99, 107, 1 Sup. Ct. 
3; Phllippi v. Philippe, 115 U. S. 151, 5 Sup. 
Ct. 1181. In the case of an implied or con- 



structive trust, unless there has been a 
fraudulent concealment of the cause of ac- 
tion, lapse of time is as complete a bar in 
equity as at law. Hovenden v. Annesley, 
2 Schoales & L. 607, 634; Beckford v. Wade, 
17 Ves. 87. In such a case. Chief Justice 
Marshall repeated and approved the state- 
ment of Sir Thomas Plumer, M. R., In a 
most Important case In which his decision 
was affirmed by the house of lords, that, 
"both on principle and authority, the laches 
and non-claim of the rightful owner of an 
equitable estate, for a period of 20 years, 
(supposing It the case of one who must with- 
in that period have made his claim in a court 
; of law, had It been a legal estate,) under no 
disability, and where there has been no 
fraud, will constitute a bar to equitable re- 
lief, by analogy to the statute of limitations, 
if, during all that period, the possession lias 
been under a claim unequivocally adverse, 
and without anything having been done or 
said, directly or Indirectly, to recognize the 
title of such rightful owner by the adverse 
possessor." Elmendorf v. Taylor, 10 Wheat. 
152, 174; Cholmondeley v. Clinton, 2 Jac. & 
W. 1, 175, and 4 Bligh, 1. Independently of 
any statute of limitations, courts of equity 
uniformly decline to assist a person who has 
slept upon his rights, and shows no excuse 
for his laches in asserting them. "A court 
of equity," said Lord Camden, "has always 
refused Its aid to stale demands, where the 
party slept upon his rights, and acquiesced 
for a great length of time. Nothing can call 
forth this court into activity but conscience, 
good faith, and reasonable diligence; where 
these are wanting, the court is passive, and 
does nothing. Laches and neglect are al- 
ways discountenanced, and therefore, from 
the beginning of this jurisdiction, there was 
always a limitation to suits In this court." 
Smith V. Clay, 2 Amb. 645, 3 Brown, Ch. 
640, note. This doctrine has been repeated- 
ly recognized and acted on here. Piatt v. 
Vattier, 9 Pet. 405; McKnight v. Taylor, 1 
How. 161; Bowman v. Wathen, 1 How. 
189; Wagner v. Baird, 7 How. 234; Badger 
V. Badger, 2 Wall. 87; Hume v. Beale, 17 
Wall. 336; Marsh v. Whitmore, 21 Wall. 178; 
Sullivan v. Railroad, 94 U. S. 806; Godden v. 
Klmmell, 99 U. S. 201. In Hume v. Beale, 
the court, in dismissing, because of unex- 
plained delay in suing, a bill by cestuls que 
trust against a trustee under a deed, ob- 
served that It was not important to deter- 
mine whether he was the trustee of a mere 
dry legal estate, or whether his duties and 
responsibilities extended further. 17 Wall. 
348. See, also. Bright v. Legerton, 29 Beav. 
60, and 2 De Gex, F. & J. 606. When the 
bill shows ui>on its face that the plaintiff, 
by reason of lapse of time and of his own 
laches, is not entitled to relief, the objec- 
tion may be taken by demurrer. Maxwell 
V. Kennedy, 8 How. 210; National Bank v. 
Carpenter, 101 U. S. 567; Lansdale v. Smith, 
106 U. S. 391, 1 Sup. Ct. 350. 



16 



MAXIMS OF EQUITY. 



The allegations of this bill, so far as they 
are material to the defense of laches, are in 
substance as follows: The Harmony So- 
ciety is a voluntary association, formed in 
1805 by the plaintiff's parents and other 
heads of families, who had emigrated from 
Germany under the leadership of one Rapp, 
and become subject to his control in both 
spiritual and temporal affairs. In that year, 
Rapp, for the purpose of acquiring absolute 
dominion over their means and mode of liv- 
ing, falsely and fraudulently represented to 
them that they could not be saved from 
eternal damnation except by renouncing the 
plan of a separate home for each family, 
j'ielding up all their possessions, as had been 
done by the early Ohristians, and laying 
them at the feet of Rapp as their apostle, to 
be put into a common fund of the society, and 
thenceforth living as a community under his 
control, receiving in return only the neces- 
saries of life; and they. Induced by and re- 
lying on his false and fraudulent representa- 
tions, immediately yielded up all their pos- 
sessions to the common fund of the society, 
and placed the fund in his lieeping as their 
trustee, and thenceforth lived as a commu- 
nity or common household, submitted them- 
selves and their families to do for the com- 
munity such worli as he directed, allowed 
the avails thereof to form part of the com- 
mon fund, and relinquished to him and his 
successors in the leadership of the commu- 
nity the management of the trust fund and 
the control of their own persons and those 
of their wives and children, and received 
only the necessaries of life in return. Rapp 
received and accepted the trust fund, and all 
the accretions to it by the work of the in- 
habitants of the community or otherwise, 
not as his own, but in trust for the members 
of those families and the contributors to the 
fund, and for their common benefit; and al- 
ways, up to his death in 1847, recognized 
and aclinowledged said trust, and disclaimed 
any greater interest in the fund than that of 
any other contributor, and any other right 
to its management and control than by vir- 
tue of his leadership of the community. In 
1807 Rapp obliged his followers to abjure 
matrimony, and thenceforth did not permit 
them to marry in the community, and com- 
pelled any one about to marry to leave it. 
The plaintiff was born in the community in 
1S07, and was reared in and as a part of it, 
xmder Eapp's teachings and control, and 
faithfully worked for it from the age of 12 
to the age of 24 years, and allowed the avails 
of his work to become part of the common 
fund, and received in return nothing but the 
necessaries of life, which were of far less 
value than the avails of his work; and in 
1831, being about to marry, had to leave and 
did leave the community. The trust fund 
so received and accepted by Rapp, with its 
profits, interest, and accretions, now amounts 
to $8,000,000, and yields an annual income 
of $200,000, and is held by the defendants 
on the same trust on which Rapp held it in 



his life-time; and neither Rapp nor the de- 
fendants ever rendered any account to the 
plaintiff or to the beneficiaries of the fund, 
although the plaintiff, before bringing this 
suit in May, 1882, demanded of the defend- 
ants an account and a settlement of his 
share. The trust on which Rapp, and the 
defendants as his successors, held the com- 
mon fund of the Harmony Society, is de- 
scribed in one place in the bill as "for the 
members of said families and the contribu- 
tors of said fund, and for their common ben- 
efit;" that is to say, as is clearly explained 
by what goes before, in trust for their com- 
mon benefit as a community, living together 
in the community, working for the com- 
munity, subject to the regulations of the 
community, and supported by the cpmmu- 
nity. This was the "said trust," which, as 
the bill afterwards alleges, Rapp, up to his 
death, and his successors, until the bringing 
of this suit, "always recognized and ac- 
linowledged." The constant avowal of the 
trustees that they held the trust fund upon 
such a trust is wholly inconsistent with and 
adverse to the claim of the plaintiff that 
they held the fund in trust for the benefit 
of the same persons as individuals, though 
withdrawn from the community, living by 
themselves, and taking no part in its work. 
The plaintiff, upon his own showing, with- 
drew from the community in 1831, and 
never returned to it, and, for more than 50 
years, took no step to demand an account 
of the trustees, or to follow up the rights 
which he claimed in this bill. If he ever 
had any rights, he could not assert them 
after such a delay,— not on the ground of 
an express and lawful trust, because the ex- 
press trust stated in the bill, and constantly 
avowed by the trustees during this long pe- 
riod, was wholly inconsistent with any trust 
which would sustain his claim; not on the 
ground that the express tx'ust stated in the 
bin was unlawful and void, and therefore 
the trustees held the trust fund for the ben- 
efit of all the contributors in proportion to 
the amounts of their contributions, because 
that would be an implied or resulting trust, 
and barred by lapse of time. In any as- 
pect of the case, therefore, if it was not 
strictly within the statute of limitations, 
yet the plaintiff showed so little vigilance 
and so great laches, that the circuit court 
rightly held that he was not entitled to re- 
lief in equity. 

It is proper to add that this decision does 
not rest in any degree upon the judgments 
of the supreme court of Pennsylvania and 
of this court, in the cases cited at the bar, 
in favor of the trustees of the Harmony 
Society in suits brought against them by 
other members, because each of those cases 
differed in its facts, and especially in show- 
ing that the society had written articles of 
association, which are not disclosed by this 
bill. Schriber v. Rapp, 5 Watts, 361; Baker 
v. Nachtrieb, 19 How. 126. 

Decree affirmed. 



MAXIMS OF EQUITY. 



17 



HAWKER V. MOORE et al. 

(20 S. E. 848, 40 W. Va. 40.) 

Supreme Court of Appeals of West Virginia. 
Bee. 8, 1894. 

Appeal from circuit court, Harrison county. 

Bill by Owen Hawker against Wilson 
Moore and others. From a decree for plain- 
tiff, defendant Moore appeals. Affirmed. 

J. Philip Clifford, for appellant John Bas- 
sel, for appellee. 



HOLT, J. In this case the circuit court of 
Harrison county, by decree entered on the 
27th day of January, 1893, set aside as fraud- 
ulent the deed made by appellant, Wilson 
Moore, on the 1st day of September, 1880, 
to Elam F. Piggatt, for the 2.5 acres of land 
mentioned, and decreed the sale thereof to 
pay plaintiff's judgment, from which defend- 
ant Moore obtained this appeal. 

The facts are as follows: On the 15th day 
of October, 1880, the Merchants' National 
Bank of West Virginia, at Clai-ksburg, was 
the holder of a promissory note given to the 
bank by James Hawker, the principal there- 
in, and the defendant Wilson Moore, and 
plaintiff, Owen Hawker, as his sureties, and 
the bank on that day obtained a judgment 
thereon against the three parties named. 
James Hawker, the principal, was insolvent, 
and plaintiff, Owen Hawker, was compelled 
to satisfy and pay the judgment. Therefore 
plaintiff was entitled to contribution from his 
cosurety, defendant Moore, of one-half tha 
amount of the judgment thus paid, and to 
that extent to be substituted to the judgment 
lien of the bank against his real estate. 
Where one has been compelled to pay the 
debt of another, equity, as far as it can be 
done without just ground of complaint on 
the part of others, substitutes him to all the 
rights and remedies of the creditor against 
such debtor. This doctrine of subrogation 
has been applied freely in this state, and to 
its full extent, upon the general principles of 
equity, without the aid of any statute; and, 
having taken this correct view in the begin- 
ning, there has so far never been any need of 
any statute to correct any misstep in improp- 
er restraint of its application upon the sup- 
position that a debt once paid must there- 
after be treated as nonexistent under all cir. 
cnmstances, and to all Intents and for all 
purposes. The doctrine, as it has been ex- 
pounded and applied in our courts, has noth- 
ing of form, nothing of technicality, about 
it; and he who, in administering it, would 
stick in the letter, forgets the end of Its cre- 
ation, and perverts the spirit which gave it 
birth. It is the creature of equity, and real 
essential justice is its object. Enders v. 
Brune (1826) 4 Rand. (Va.) 438, 447; McNiel 
V. Miller (1887) 29 W. Va. 480, 2 S. B. 335; 
Robinson v. Sherman (1845) 2 Grat. 178; 2 
Bart. Suit in Eq. 1051. The doctrine is em- 
HUTCII.& BUNK.BQ.— 2 



Inently calculated to do exact Justice between 
persons who are bound for the performance 
of the same duty or obligation, and is one, 
therefore, which is much encouraged and 
protected. "Equality is equity" is on this 
branch its maxim. It springs naturally out 
of the two equities of contribution and exon- 
eration, and is in fact one of the means by 
which those equities are enforced. Bisp. Pr. 
Eq. (4th Ed.) § 335; Dering v. Earl of Win- 
ch elsea, 1 Cox, 318; Pendlebury v. Walker, 
4 Younge & C. Exch. 441; Steel v. Dixon, 17 
Ch. Div. 825; Brett, Lead. Cas. in Mod. Eq. 
(2d Ed.) 285, notes. See Ferguson v. Gibson, 
L. R. 14 Eq. 379; Forbes v. Jackson, 19 Ch. 
Div. 615, under the mercantile law amend- 
ment, Act 19 & 20 Vict. c. 97, § 5; 2 Beach, 
Mod. Eq. Jur. § 809. Here the plaintiff has 
paid off the judgment, and asks the court to 
give him the benefit of the creditor's lien. 
Who can object to this? Who is injured by 
it? Not the bank, for they have received 
their debt from the plaintiff, and justice 
binds them to give the plaintiff their vantage 
ground. Not the principal debtor, for he is 
insolvent, and has no interest in the matter. 
Not the cosurety, for it is by his fault that 
plaintiff had to bear, in the first instance, the 
whole burden. If he had paid his half, and 
equality is equity, there would have been no 
occasion to ask the court to compel him to 
pay; and it does not lie with him to say that 
plaintiff shall not occupy a vantage ground 
that enables him, by process of law, to en- 
force the performance of this duty. The oth- 
er creditors cannot complain, for the debt has 
in truth not been paid, because not paid by 
the one ultimately bound, but by others, who 
became his unwilling creditors in due course 
of law. But if there should be any one who, 
by any rule of strict law, or in equity and 
good conscience, stands on higher ground, or 
for any reason has a better right, he will not 
be displaced, or his right disturbed; for that 
is' the essence of the doctrine. See Pott v. Na- 
thans (1841) 1 Watts & S. 155; Eddy v. Trav- 
er (1837) 6 Paige, 521; Gross v. Davis, 87 
Tenn. 226, 11 S. W. 92, and 10 Am. St. R. 
635, notes; Sheld. Subr. (2d Ed.) § 137; Id., 
p. 209, § 140; 24 Am. & Eng. Enc. Law, p. 
189; Thomas v. Stewart (1888) 117 Ind. 50, 
18 N. E. 505; Crumllsh's Adm'r v. Improve- 
ment Co., 38 W. Va. 390, 18 S. B. 456, and 23 
L. R. A. 120, note 7; Dugger y. Wright 
(1888) 51 Ark. 232, 11 S. W. 213. 

It would answer no useful purpose to take 
up the testimony and show that it justifies 
the decree complained of. The fair conclu- 
sion to be drawn is that the deed of Sep- 
tember 1, 1880, from defendant Moore to E. 
P. Piggatt, conveying the tract of land of 
25 acres in the bill and proceedings mention- 
ed, was made by Moore to hinder and delay 
his creditors; and that Piggatt took it, was 
holding it for him, on some sort of secret 
trust, the full terms of which do not appear. 
But Moore continued to occupy and use the 



18 



MAXIMS OF EQUITY, 



land as his own, as he had always done, 
without the payment of any rent; and after 
B. F. Piggatt's death this tract of 25 acres 
was, by reason thereof, treated as not be. 



longing to his estate, and was omitted when 
partition came to be made of his lands among 
his heirs. Therefore the decree complained 
of is affirmed. 



MAXIMS OF EQUITY. 



19 



ECONOMY SAV. BANK v. GORDON et al. 

(45 Atl. 176, 90 Md, 486.) 
Court of Appeals of Maryland. Jan. 10, 1900. 

Appeal from circuit court of Baltimore 
city; Henry Stockbridge, Judge. 

Suit by Douglas H. Gordon and others 
against the Economy Savings Bank and oth- 
ers. Decree for complainants. Defendant 
bank appeals. Reversed. 

Argued before McSHERRY, C. J., and 
PAGE, FOWLER, BOYD, SCHMUCKER, 
and BRISCOE, JJ. 

Daniel L. Brinton, for appellant. Arch. 
H. Taylor, E. P. Keech, Jr., and Foster & 
Foster, for appellees. 

SCHMUCKER, J. On July 30, 1897, Cecil 
R. Atkinson executed a mortgage upon a 
warehouse owned by him, on South Howard 
street, in Baltimore city, to Alonzo J. Steers, 
which recited that he was indebted to Steers 
"in the full sum of fifteen thousand dollars, 
payable February 10th, 1898," and that it 
was executed to secure the; payment of this 
debt, with interest thereon. The mortgage 
was in due form, was regularly acknowledg- 
ed, and had attached to it a proper affidavit 
as to the bona fides of the consideration 
therein stated, and it was recorded on the 
day after its date. No note accompanied 
the mortgage, but it contained a covenant 
to pay the mortgage debt and interest. 
About the same time Steers, the mortgagee, 
applied to the American National Bank to 
lend him $6,000, offering to assign the mort- 
gage as security for the loan. Schott, the 
cashier of the bank, explained to him that 
a national bank could not lend money upon 
real-estate security, but informed him that 
the appellant savings bank, of which he 
(Schott) was treasurer, had some money on 
hand, and would lend him $5,000 upon the 
mortgage, if the security proved to be am- 
ple, but the matter must first be referred 
by the appellant to a committee, who would 
investigate and report upon the security. 
Steers assented to the terms suggested by 
Schott, and a committee from the appellant 
went upon the mortgaged premises and ex- 
amined them, and reported favorably upon 
the loan, provided there were no incum- 
brances upon the property prior to the mort- 
gage. The matter was then referred by the 
appellant to its attorney to examine the ti- 
tle. Steers placing the mortgage in Its hands 
for that purpose. The attorney examined 
the title, and reported favorably upon it, 
whereupon the appellant, on August 6, 1897, 
lent the $5,000 to Steers, and at the same 
time took from him an assignment of the 
mortgage as security for the loan. The $5,- 
000 so loaned was given to Steers in the 
check of the appellant to his order upon the 
American National Bank, in which the appel- 
lant had on deposit at that time more than 



the. amount of the check. Steers indorsed 
the check to the Eastern Electric Company, 
which at once deposited it to its own credit 
In the bank upon which it was drawn, and 
the $5,000 was passed to the credit of the 
electric company, and charged to the appel- 
lant upon the books of the bank. The money 
was then used by the electric company, to 
the extent of $2,000, in the payment of a 
loan which had been made by one Myerdlck 
upon a previous unrecorded assignment of 
the Atkinson mortgage, and the remaining 
$3,000 was almost entirely paid to the Amer- 
ican National Bank in satisfaction of obliga- 
tions due to it by the Eastern Electric Compa- 
ny or by George H. Atkinson, a brother of Cecil 
R. Atkinson, the mortgagor. Steers subse- 
quently assigned his equity in the $15,000 mort- 
gage to one C. S. Hlnchman as collateral se- 
curity for a loan of $2,000. It appears from 
the record that Cecil R. Atkinson, the mort- 
gagor, and his four brothers, William J., 
George H., Harry, and Richard P., were pro- 
moters by profession, and together operated 
and controlled the Eastern Electric Company 
and other kindred corporations, all of which 
proved to be speculative enterprises, and 
soon became insolvent and passed into the 
hands of receivers. Steers, who was put upon 
the stand by the appellees, testified that the 
consideration for the $15,000 mortgage from 
Atkinson to him consisted of $10,000 of Best 
Telephone Company bonds and $5,000 of 
Best Telephone Company stock, which he had 
let Atkinson have prior to the execution of 
the mortgage; but his testimony was so in- 
consistent and contradictory in its different 
portions that It cannot be accepted as re- 
liable. The whole testimony touching the 
consideration for the mortgage leads to the 
conclusion that there was no substantial con- 
sideration for It, but that it was executed to 
provide a means of raising money to assist 
the Atkinson brothers in staving off the im- 
pending insolvency of the Eastern Electric 
and Best Telephone Companies, and the oth- 
er enterprises which they were then attempt- 
ing to keep afioat. On December 29, 1897, 
nearly five months after the loan of the $5,- 
OOO to Steers by the appellant, and the as- 
signment to the latter of the mortgage, 
Douglas H. Gordon, one of the appellees, ob- 
tained a judgment for $5,442.30 against the 
mortgagor, Cecil R. Atkinson, and his broth- 
er William J. Atkinson, on a note given by 
them to him on November 13, 1896, for a 
loan which he then made to them upon Best 
Telephone Company bonds and stock as col- 
lateral. Gordon testified that at the time he 
made this loan William J. Atkinson stated 
that his brother Cecil R. owned the Howard 
street warehouse, and he (Gordon) suggested 
that he be given a mortgage on the ware- 
house as security for the loan about to be 
made by him. W. J. Atkinson declined to 
procure the mortgage, saying that it would 
injure his brother's credit, but stated that 
Gordon would have the benefit of the proper- 



20 



MAXIMS OF EQUITY. 



ty by having its owner, Oecil R. Atliinspn, 
upon the note. Gordon testified that he re- 
lied on this statement of William J. Atlvinson 
in making the loan. Harry W. Boureau, the 
other appellee, obtained a judgment for $503.- 
80 against William J. Atliinson and Cecil R. 
Atlsinson on September 29, 1897. On Decem- 
ber 18, 1897, after Boureau had obtained his 
judgment, and after Gordon had sued the At- 
kinsons, but before he had gotten his judg- 
ment, the appellees instituted the present 
case, which is a creditors' suit in eqaity 
against the appellant, Cecil R. Atkinson, 
Steers, and Hinchman. The bill of complaint 
alleged that the mortgage from Atkinson to 
Steers, and the successive assignments of it 
by him to the appellant and Hinchman, were 
all without consideration and fraudulent, and 
prayed to have them declared void. The ap- 
pellant answered the bill, denying its mate- 
rial allegations, and setting up its title to the 
mortgage to the extent of the $5,000 loaned 
on it, and interest, as a bona fide purchaser 
for value, without notice of any infirmity in 
it. Neither Hinchman nor Steers answered, 
and a decree pro confesso was entered against 
them. The case against the appellant camt 
regularly to a hearing, and the court below 
at first filed an opinion sustaining the appel- 
lant's claim; but upon a rehearing of the 
case the learned judge changed his views of 
the case, and filed another opinion, of a con- 
trary tenor, and signed the decree appealed 
from, denying the appellant's claim to a lien 
on the property, and directed it to be sold for 
the benefit of the creditors of the mortgagor. 
In his second opinion the learned judge held, 
upon the authority of the Cumberland Coal & 
Iron Co. Case, 42 Md. 598, that tlie appel- 
lant, although he found it to be a bona fide 
purchaser for value of the mortgage, without 
notice, was not entitled to a lien for its loan 
to Steers, and interest, made upon the faith 
of the mortgage, because the latter, not being 
accompanied by a negotiable obligation, was 
a mere chose in action, which the appellant 
must be treated as having taken subject to all 
equities that might have been urged against 
it in the hands of Steers, the mortgagee. 

Under the facts of the case, the appellant 
must be regarded as a bona fide purchaser for 
value of the mortgage, without notice. It ad- 
vanced its $5,000 upon the mortgage in the 
ordinary course of business, after a careful 
inquiry into the value of the property, and an 
investigation of the title upon the public rec- 
ords. It was not concerned in the disposition 
made by Steers of the borrowed money, not 
one dollar of which went baclf into its hands, 
or was expended for its benefit. It was not 
put upon inquiry as to the bona fides of the 
mortgage by the fact that Schott, its treasur- 
er, was also cashier of the American National 
Bank, where Steers and the Eastern Electric 
Company and one or more of the Atkinson 
brothers kept their accounts, and that he~ 
might have seen by an examination of the 
books of the bank what disposition was made 



of the borrowed money. There was in fact 
nothing in the use made of the money to sug- 
gest any infirmity in the mortgage. 

The next question to be determined is, 
what are the rights of the appellant, as such 
bona fide purchaser, against the claims of the 
appellees? As there was no attempt by Steers 
to assign the mortgage debt to one person, and 
the mortgage to another, we are not called 
upon to consider the relative equities of one 
who claims as assignee of the debt, and an- 
other who claims as assignee of the mortgage, 
as the court were in the cases of Clark v. 
Levering, 1 Md. Ch. 178, and Byles v. Tome. 
39 Md. 461, which were in part relied on by 
the appellees. What we have to consider is 
the attitude of the appellant, as the bona fide 
purchaser of both debt and mortgage, towards 
the creditors of the mortgagor, who were such 
at the time the mortgage was made. The 
mortgage was not given to secure an actual 
indebtedness of $15,000, as It professes on its 
face to have been. Its execution was evi- 
dently a means adopted by the parties to it 
to clothe Steers, the mortgagee, with the ap- 
pearance of a good title to a large debt secured 
by a valid mortgage, in order to enable him 
to raise money upon it. It was not fraudu- 
lent, in the sense that its execution had been 
procured by fraud, misrepresentation, or con- 
straint practiced on the owner of the land 
who executed it, as was the case in Bank v. 
Copeland, 18 Md. 305, and Cumberland Coal 
& Iron Co. V. Parish, 42 Md. 598, in each of 
which the defrauded mortgagor was protected 
in equity against the assignee of the fraudu- 
lent mortgage. In the present case the execu- 
tion of the mortgage was the voluntary and 
deliberate act of the mortgagor, from which 
he had no equity to be relieved, even as against 
the mortgagee. Snyder v. Snyder, 51 Md. 77; 
Cushwa V. Cushwa's Lessee, 5 Md. 44. We 
have therefore no question before us of sub- 
jecting the rights of the appellant, as assignee 
of the mortgage, to any equities to which the 
assignor would have been liable in favor of 
the mortgagor; for here it is plain that there 
were no such equities. The present mortgage 
is to be regarded as fraudulent only in the 
sense that, having been made to secure a 
simulated, and not a real, indebtedness, it 
operated to hinder, delay, or defraud the cred- 
itors of the mortgagor, and was therefore ob- 
noxious to the provisions of the statute of 
13 Eliz. c. 5. The real question in the case i^ 
thus narrowed down to a comparison of the 
relative strength of the claims on the mort- 
gaged property of the appellant, as assignee 
of the specific lien of the mortgage, and the 
appellees, as subsisting general creditors of 
the mortgagor, having reduced their debts to 
judgments after the assignment of the mort- 
gage had been made. If the conveyance un- 
der consideration had been a fraudulent deed, 
instead of a mortgage, the right of the appel- 
lant, as a bona fide purchaser, to a lien on 
the property for the $5,000 advanced, and in- 
terest, could not seriously be questioned. 



MAXIMS OF EQUITY. 



21 



Cone V. Cross, 72 Md. 102, 19 Atl. 391; Hull 
V. William Deering & Co., 80 Md. 432, 31 
Atl. 416; Hinlile v. Wilson, 53 Md. 293; 
Worthington v. Bullitt, 6 Md. 198. The broad- 
er and more general proposition that a bona 
fide purchaser, without notice, uuder a deed 
from a fraudulent grantee, talies a good title, 
which is not impaired by the fact that judg- 
ments were obtained against the fraudulent 
grantor prior to the conveyance by the fraudu- 
lent grantee, is well sustained by authority. 
4 Kent, Comm. 464; Sleeper v. Chapman, 121 
Mass. 404; Phelps v. Morrison, 24 N. J. Eq. 
195; Totten v. Brady, 54 Md. 170; Swan v. 
Dent, 2 Md. Ch. Ill (note 9, Brantly's Ed.); 
Wait, Fraud. Conv. § 369. In the case of 
Banli V. Brooke, 40 Md. 257, the title of a 
bona fide purchaser of a mortgage note to the 
lien of the mortgage securing it was upheld 
against the suit of the creditors of the mort- 
gagor, although It was admitted that the note 
and mortgage had been given in prejudice of 
the rights of his creditors, and would have 
been void as against t*iem in the hands of the 
mortgagee. The fact that the mortgage in 
that case was accompanied by a promissory 
note distinguishes it from the case at bar, 
but the circumstance of the negotiability of 
the mortgage debt was not expressly men- 
tioned or dwelt upon in the court's opinion. 
See, also, Danbury v. Robinson, 14 N. J. Eq. 
218, 219. 

A bona flde mortgagee from a fraudulent 
grantee has in a number of cases been held 
to be entitled to protection, to the extent of 
the debt due him, against the creditors of the 
fraudulent grantor, upon the ground that a 
mortgagee is to be treated as a purchaser, to 
the extent of his Interest, within the mean- 
ing of the term "purchaser" as used in stat- 
utes such as that of .13 EJiz. c. 5; and this 
where the mortgage was not accompanied by 
a negotiable instrument. Ledyard v. Butler, 
9 Paige, 186, 137; Murphy v. Briggs, 89 N. Y. 
451; Shorten v. Dralie, 38 Ohio St. 70; Moore 
v. Bank, 55 N. Y. 41. If the mortgage in the 
present case had been made directly from 
Cecil R. Atkinson to the appellant, no ques- 
tion could be made by Atkinson's creditors as 
to the appellant's lien upon the mortgaged 
property to the extent of the money advanced 
bona fide upon the faith of the property at 
the time the mortgage was made. When, 
therefore, Atkinson clothed Steers with the 
appearance of a good mortgage title of rec- 
ord to the property, for the purpose of enabl- 
ing him to raise money upon the mortgage, 
and the appellant, relying upon this appear- 
ance of good title in Steers, after a careful 
examination of the public records, and a fail- 
ure to find any prior incumbrances upon the 
property, parted with its money in good faith, 
it is entitled to the favor of a court of equity 
in the consideration of the relative equities of 
the parties to the controversy. This court, in 
Seldner v. McCreery, 75 Md. 296, 23 Atl. 643. 
said, "Where title Is perfect on its face, and 
no known circumstances exist to impeach it 



or put a purchaser on Inquiry, one who buys 
bona fide and for value occupies one of the 
most highly favored positions in the law." 
The appellant did not trust to the personal 
responsibility of the mortgagor, but lent its 
money upon the faith of the particular prop- 
erty covered by the mortgage, and required 
an assignment of the mortgage at the time 
of so doing. On the contrary, the appellees 
trusted to the mortgagor, or to such other col- 
laterals as he lodged with them; and the ap- 
pellee Gordon, although he knew when he 
lent his money that Cecil R. Atkinson owned 
the Howard street warehouse, did not insist 
upon having a lien on it for his loan, but 
deliberately relied, so far as the warehouse 
was concerned, upon his rights as an ordinary 
creditor of its owner. The equities of the ap- 
pellant are at least equal to those of the ap- 
pellees, and, having the' legal title to the 
warehouse, it has the stronger claim thereon, 
under the familiar principle that where equi- 
ties are equal the legal title must prevail. 
Pom. Eq. Jur. § 417; Wait, Fraud. Conv. § 370; 
Townsend v. Little, 109 U. S. 512, 3 Sup. Ct. 
357, 27 L. Ed. 1012; Black v. Cord, 2 Har. & 
G. 103; Bassett v. Noteworthy, 2 Lead. Cas. 
Eq. (4th Am. Ed.) 1. In Dyson v. Simmons, 
48 Md. 214, it was held, upon the authority 
of many cases there cited, tha: If a party 
makes, or affects to make, a mortgage which 
proves to be defective by reason of some in- 
formality or omission, even on the part of the 
mortgagee himself, the conscience of the 
mortgagor is bound, and equity will recognize 
and enforce the lien of the defective mort- 
gage, and give it precedence over the sub- 
sisting creditors of the mortgagor, and also 
over judgments obtained against him after 
the date of the mortgage. General creditors 
have no lien on the property of the debtor, 
and a judgment is only a general lien, and is 
for that reason subordinate to the prior spe- 
cific equitable lien of such a defective mort- 
gage. The case at bar does not come direct- 
ly within the principle asserted in the last- 
mentioned case, but it is certainly one in 
which, by reason of its peculiar facts, the 
conscience of the mortgagor was especially 
bound to the appellant; and we think that 
the same course of reasoning might well be 
applied, within proper limits, to the appel- 
lant's protection. 

This court has frequently been called upon 
to assert and define the rights of the credit- 
ors of a grantor, as against a conveyance 
made by him which, by reason of inadequacy 
or want of consideration, or even by design, 
operated to hinder, delay, or defraud them. 
The court has not hesitated to strike down 
such conveyances at the suit of the creditor, 
holding that one cannot make a voluntary con- 
veyance of his property, as against the rights 
of subsisting creditors, nor can he, as against 
such creditors, sell It for a consideration that 
bears no adequate relation to its real value. 
When, however, in such cases, the rights of 
parties, evea if they were the Immediate 



22 



MAXIMS OF EQUITY. 



grantees under the conveyance, who had in 
good faith parted with value in reliance upon 
the conveyance, have had to be measured 
against those of the creditors, it has uniform- 
ly been held that, in order to do full justice 
to all the parties in such cases, a court of 
equity, in setting aside the deed, will allow it 
to stand as security for the consideration ac- 
tually paid, and apply the balance to the pay- 
ment of the vendor's debts. These proposi- 
tions were distinctly upheld in the cases al- 
ready cited of Cone v. Cross, Hull v. William 
Deering & Co., Hinkle v. Wilson, and Worth- 
ington V. Bullitt. We regard the principle of 
the last-mentioned cases, in none of which 
was the position of the party claiming under 
the conveyance strengthened by any element 
of negotiability in the subject-matter of the 
thing assigned to him, as properly applicable 
to the one at bar. The mortgaged property 
should be sold, and the proceeds of sale, after 
deducting proper expenses, applied first to the 
payment of the $5,000 lent by the appellant to 
Steers, with interest thereon, and then to the 
payment of the creditors of Cecil R. Atkinson, 
the mortgngor, who have come or may cnrae 
into the case, according to their legal priori- 
ties. 

We do not mean by this decision to disturb 
the authority of the Cumberland Coal & Iron 
Co. Case, upon which the learned judge be- 
low mainly relied in changing his opinion, nor 



*hat of the Copeland Case. In each of those 
cases the issue on trial was between the own- 
er of property, who had been fraudulently in- 
duced to execute a mortgage upon it, and an 
assignee of the fraudulent mortgage, and they 
were both cases of flagrant fraud in fact. 
The rights of the creditors of the grantor 
were not in issue in either case. In the 
Cumberland Coal & Iron Co. Case the court 
asserted the proposition that the transfer of 
a mortgage is so far within the rule which 
applies to choses in action, that when the as- 
signment Is made without the concurrence of 
the mortgagor, as in that case, the assignee 
takes subject to the same equities and de- 
fenses to which the assignor was liable. We 
do not, however, understand the court, by 
what was said in that opinion, to intimate 
that, when the equities in behalf of the cred- 
itors of the mortgagor in such a case came 
to be asserted, their claims would be en- 
forced, without regard to the proposition, so 
frequently upheld by this court in setting 
aside fraudulent conveyances at the suit of 
the creditors of the grantor, that, in order to 
do justice to all parties in such cases, the con- 
veyances will be allowed to stand as security 
for the consideration actually paid on the 
faith of it by the party holding the legal title 
under it. Decree reversed, and cause re- 
manded for further proceedings in accordance 
with this opinion. 



MAXIMS OF EQUITY. 



23 



RICE et al. v. RICE et al. 

(2 Drew. 73.) 

High Court of Chancery. Dec. 15, 16, 1853. 

E. F. Smith, for plaintiffs. Mr. Elmsley 
and J. V. Prior, for defendants. 

The VIGE-CHANcaEJLLOR took time to 
consider, and on the 12tli January delivered 
the following judgment: 

The question to be decided In this case is 
whether the equitable interest of the plain- 
tiffs in respect of the vendor's lien for unpaid 
purchase money is to be preferred to the 
equitable Interest of the defendant Ede as 
equitable mortgagee. 

What is the rule of a court of equity for 
determining the preference as between per- 
sons having adverse .equitable interests? The 
rule is sometimes expressed in this form, 
"As between persons having only equitable 
Interests, qui prior est tempore potior est 
jure." This is an incorrect statement of the 
rule, for that proposition Is far from being 
universally true. In fact not only is it not 
universally true as between persons having 
only equitable Interests, but It is not uni- 
versally true even where their equitable In- 
terests are of precisely the same nature, and 
in that respect precisely equal, as in the com- 
mon case of two successive assignments for 
valuable consideration of a reversionary in- 
terest In stock standing in the names of 
trustees, where the second assignee has given 
notice and the first has omitted It. 

Another form of stating the rule is this, 
"As between persons having only equitable 
interests, if their equities are equal, qui prior 
est tempore potior est jure." This form of 
stating the rule is not so obviously incorrect 
as the former; and yet even this enunciation 
of the rule (when accurately considered) 
seems to me to involve a contradiction, for, 
when we talk of two persons having equal 
or unequal equities, in what sense do we use 
the term "equity?" For example, when we 
say that A. has a better equity than B., 
what is meant by that? It means only that, 
according to those principles of right and 
justice which a court of equity recognizes 
and acts upon, it will prefer A. to B., and 
will interfere to enforce the rights of A. as 
against B., and therefore it is impossible, 
(strictly speaking) that two persons should 
have equal equities, except in a case in 
which a court of equity would altogether re- 
fuse to lend its assistance to either party as 
against the other. If the Court will inter- 
fere to enforce the right of one against the 
other on any ground whatever,— say on the 
ground of priority of time,— how can it be 
said that the equities of the two are equal? 
1. e., in other words, how can it be said that 
the one has no better right to call for the in- 
terference of a court of equity than the 
other? To lay down the rule therefore with 
perfect accuracy, I think it should be stated 



in some such form as this, "As between per- 
sons having only equitable interests, if their 
equities are in all other respects equal, prior- 
ity of time gives the better equity, or qui 
prior est tempore potior est jure." 

I have made these observations, not of 
course for the purpose of a mere verbal criti- 
cism on the enunciation of a rule, but in or- 
der to ascertain and illustrate the real mean- 
ing of the rule itself, and I think the mean- 
ing is this, that, in a contest between per- 
sons having only equitable interests, priority 
of time is the ground of preference last re- 
sorted to, i. e., that a court of equity will 
not prefer the one to the other, on the mere 
ground of priority of time, until It finds upon 
an examination of their relative merits that 
there is no other sufficient ground of prefer- 
ence between them, or, in other words, that 
their equities are in all other respects equal, 
and that, if the one has on other grounds a 
better equity than the other, priority of time 
is immaterial. 

In examining into the relative merits (or 
equities) of two parties having adverse 
equitable interests, the points to which the 
court must direct its attention are obviously 
these, the nature and condition of their re- 
spective equitable interests, the circumstan- 
ces and manner of their acquisition, and the 
whole conduct of each party with respect 
thereto. And in examining into these points 
it must apply the test, not of any technical 
rule or any rule of partial application, but the 
same broad principles of right and justice 
which a court of equity applies universally in 
deciding upon contested rights. 

Now in the present case each of the par- 
ties in controversy has nothing but an equita- 
ble interest; the plaintiffs' interest being a 
vendor's lien for unpaid purchase money, and 
the defendant Ede having an equitable mort- 
gage. Looking at these two species of 
equitable interests abstractedly, and without 
reference to priority of time, or possession of 
the title deeds, or any other special circum- 
stances, is there anything in their respective 
natures or qualities which would lead to the 
conclusion that in natural justice the one is 
better, or more worthy, or more entitlPd to 
protection than the other? 

Each of the two equitable interests arises 
out of the forbearance by the party of money 
due to him. There is, however, this differ- 
ence between them, that the vendor's lien for 
unpaid purchase money is a right created by 
a rule of equity, without any special con- 
tract. The right of the equitable mortgagee 
is created by the special contract of the par- 
ties. I cannot say that in my opinion this 
constitutes any sufiicient ground of prefer- 
ence, though, if it makes any difference at 
all, I should say it is rather in favor of the 
equitable mortgagee, inasmuch as there is no 
constat of the right of the vendor to his lien 
for unpaid purchase money uutil it has been 
declared by a decree of a court of equity, 
whereas there is a clear constat of the equi- 



24 



MAXIMS OF EQUITY. 



table mortgagee's title immediately on the 
contract being made; but I do not see in 
this any sufficient ground for holding that 
the equitable mortgagee has the better equi- 
ty. So far, then, as relates to the nature 
and quality of the two equitable interests ab- 
stractedly considered, tliey seem to me to 
stand on an equal footing; and this I con- 
ceive to have been the ground of Lord El- 
don's decision in Mackreth v. Symmons, 15 
Ves. 329, where, in a contest between the 
vendor's lien for unpaid purchase money and 
the right of a person who had subsequently 
obtained from the purchasers a mere con- 
tract for a mortgage, and nothing more, he 
decided in favour of the former, as being 
prior in point of time. 

If, then, the vendor's lien for unpaid pur- 
chase money, and the right of an equitable 
mortgagee by mere contract for a mortgage, 
are equitable interests of equal worth in re- 
spect of their abstract nature and quality, 
is there anything in the special circum- 
stances of the present case to give to the one 
a better equity than the other? 

One special circumstance that occurs is 
this, that the equitable mortgagee has the 
possession of the title deeds. The question 
therefore arises, between two persons having 
equitable interests of equal worth, does the 
possession of the title deeds by one of them 
give him the better equity? In Foster v. 
Blackstone, 1 Myl. & K. 307, Sir John Leach, 
M. R., says, "A declaration of trust of an 
outstanding term, accompanied by n delivery 
of the deeds creating and continuing the 
term, gives a better equity than a mere 
declaration of trust to a prior Incumbrancer." 
That is a case in which the two parties have 
equitable interests in the term of precisely 
the same nature, viz., a declaration of ti'ust 
of the term without an actual assignment; 
and there the delivery of the deeds to the 
subsequent incumbrancer gives him the bet- 
ter equity. To the same effect is the de- 
cision in Stanhope v. Lord Verney, according 
to Lord St. Leonards' view of it, as reported 
in Butl. Co. Lift. p. 290, 1 Mylne & K. note 1, 
§ 15 (which seems a more satisfactory re- 
port than that in 2 Eden, 81). Lord St. 
Leonards, 3 Sugd. Vend. 218, ' states it thus, 
"In Stanhope v. Earl Verney, Lord Xorthing- 
ton held that a declaration of trust of a 
term In favour of a person was tantamount 
to an actual assignment, unless a subse- 
quent incumbrancer, bona flde and without 
notice, procured an assignment, and that 
the custody of the deeds respecting the 
term, with the declaration of the trust of it 
in favour of a second incumbrancer, was 
equivalent to an actual assignment of it, and 
therefore gave him an advantage over the 
first incumbrancer, which equity could not 
take from him." The same doctrine appears 
to be recognized by Lord Eldon in Maun- 
drell v. Maundrell, 10 Ves. 271, where he 
says, "It is clear, with regard to mortgagees 
and incumbrancers, that If they do not get 



in the satisfied term in some sense, either 
taking an assignment, makuig the trustee a 
party to the instrument, or taking possession 
of the deed creating the term, that term can- 
not be used to protect them against any per- 
son having mesne charges or incumbrances," 
implying that taking possession of the deed 
creating the term would confer on a subse- 
quent incumbrancer such right of protection 
by means of the term. We have here, then, 
ample authority for the proposition, or rule 
of equity, that as between two persons 
whose equitable interests are of precisely the 
same nature and quality, and in that respect 
precisely equal, the possession of the deeds 
gives the better equity; and, applying this 
rule to the present case, it appears to me 
that, the equitable interests of the two par- 
ties being In their nature and quality of 
equal worth, the defendant having posses- 
sion of the deeds has the better equity, and 
that there is, therefore, In this case, no room 
for the application of the maxim, "Qui prior 
est tempore potior est jure," which is only 
applicable where the equities of the two par- 
ties are in all other respects equal. I feel 
all the more confidence in arriving at this 
conclusion inasmuch as it is in accordance 
with the opinion expressed by Lord St. 
Leonards in his work on vendors and pur- 
chasers; and I have no doubt that in Mack- 
reth V. Symmons, if the equitable mortgagee 
had, in addition to his contract for a mort- 
gage, obtained the title deeds from his mort- 
gagor. Lord Eldon would have decided in his 
favour. 

I must, however, guard against the sup- 
position that I mean to express an opinion 
that the possession of title deeds will in all 
cases and under all circumstances give the 
better equity. The deeds may be in the 
possession of a party in such a manner and 
under such circumstances as that such pos- 
session will confer no advantage whatever. 
For example, in Allen v. Knight, 5 Hare, 272 
(affirmed by the Lord Chancellor and report- 
ed on appeal in 11 Jur. 527), the deeds had 
been delivered to the first equitable mort- 
gagee, and by some unexplained means they 
had got back into the possession of the mort- 
gagor who delivered them to a subsequent 
equitable mortgagee. It was insisted by the 
latter that it must be presumed that it was 
by the fault or neglect of the first mortgagee 
that the deeds had got out of his possession, 
or that at all events the court should direct 
an inquiry as to the circumstances. But the 
court held that the onus lay on the second 
mortgagee of proving such alleged fault or 
neglect of the first mortgagee; and, as he 
had failed to prove it, the court could not 
presume it, nor direct an Inquiry on the sub- 
ject, and decreed in favour of the first mort- 
gagee. I think it may be clearly inferred 
from this case that if the first mortgagee had 
never had the deeds delivered to him, or if 
it had been proved that the deeds had got 
back to the mortgagor through his fault or 



MAXIMS OF EQUITY. 



25 



deglect, the decision would have been in fa- 
vour of the second mortgagee who had the 
deeds. So the deeds may have come into the 
hands of a subsequent equitable mortgagee 
by means of an act committed by another 
person which constituted a breach of an ex- 
press trust as against the person having the 
prior equitable interest. In such a case it 
would be contrary to the principles of a court 
of equity to allow the subsequent mortgagee 
to avail himself of the injury which had been 
thus done to the party having the prior equi- 
table estate or interest. 

Indeed it appears to me that in all cases of 
contest between persons having equitable in- 
terests the conduct of the parties and all the 
circumstances must be talien into considera- 
tion, in order to determine which has the bet- 
ter equity; and, if we take that course in 
the present case, everything seems in favour 
of the defendant, the equitable mortgagee. 
The vendors, when they sold the estate, 
chose to leave part of the purchase money 
unpaid, and yet executed and delivered to 
the purchaser a conveyance, by which they 
declared In the most solemn and deliberate 
manner, both in the body and by a receipt 
indorsed, that the whole purchase money had 
been duly paid. They might still have re- 
quired that the title deeds should remain in 
their custody, with a memorandum by way of 
equitable mortgage as a security for the un- 
paid purchase money, and, if they had done 
so, they would have been secure against any 
subsequent equitable Incumbrance; but that 
they did not choose to do, and the deeds were 
delivered to the purchaser. Thus they volun- 
tarily armed the purchaser with the means 
of dealing with the estate as the absolute le- 
gal and equitable owner, free from every 
shadow of incumbrance or adverse equity. 
In truth it cannot be said that the purchas- 
er in mortgaging the estate by the deposit 
of the deeds has done the vendors any wrong, 
for he has only done that which the vendors 
authorized and enabled him to do. The de- 
fendant, who afterwards tooli a mortgage, 
was in efCect invited and encouraged by the 
vendors to rely on the purchaser's title. 
They had, in effect, by their acts, assured the 
mortgagee that, as far as they (the vendors) 
were concerned, the mortgagor had an abso- 
lute indefeasible title both at law and in 
equity. 

Tlie mortgagee was guilty of no negligence. 
He was perfectly justified in trusting to the 



security of the equitable mortgage by deposit 
of the deeds, without the slightest obligation 
to go and inquire of the vendors whether 
they had received all their purchase money, 
when they had already given their solemn 
assurance in writing that they had received 
every shilling of it and had conveyed the 
estate and delivered over the deeds; and I do 
not think that the fact of the conveyance 
bearing date only the day before the mort- 
gage imposed on him any such obligation. 
The defendant omitted nothing that was nec- 
essary to constitute a complete and effectual 
equitable mortgage; and although the mort- 
gage was taken, not for money actually ad- 
vanced at the time, but for an antecedent 
debt, the forbearance of that debt constitutes 
a full and sufficient valuable consideration. 

Upon a comparison then of the conduct of 
the two parties, and a consideration of all 
the circumstances of the case, and especially 
the fact of the possession of the deeds, which 
the mortgagee acquired with perfect bona 
fides, and without any wrong done to the 
vendors, I am of opinion that the equity of 
the mortgagee is far better than that of the 
vendor, and ought to prevail. 

I may, in conclusion, venture to make the 
suggestion that the point now under consider- 
ation is often put by text-writers in a form 
calculated to mislead, when it is propounded 
as a question whether the vendor, in re- 
spect of his lien for unpaid purchase money, 
or an equitable mortgagee, ought to be pre- 
feiTed, or when an opinion is expressed that 
the one or the other has the better equity. 
If I am right in my view of the matter, nei- 
ther the one nor the other has necessarily 
and under all circumstances the better eq- 
uity. Their equitable Interests, abstractedly 
considered, are of equal value In respect of 
their nature and quality; but whether their 
equities are in other respects equal, or wheth- 
er the one or the other has acquired the bet- 
ter equity, must depend upon all the circum- 
stances of each particular case, and especial- 
ly the conduct of the respective parties. And 
among the circumstances which may give 
to the one the better equity the possession 
of the title deeds is a very material one. 
But if, after a close examination of all these 
matters, there appears nothing to give to the 
one a better equity than the other, then, and 
then only, resort must be had to the maxim, 
"Qui prior est tempore potior est jure," and 
priority of time then gives the better equity. 



26 



MAXIMS OF EQUITY. 



COMSTOCK V. JOHNSON. 

(46 N. Y. 615.) 

Court of Appeals of New York. 1871. 

CHURCH, C. J. The principal question 
in this case, involving the construction of the 
grant of water, was correctly decided in the 
court below. It is well settled in this State 
that the terms used in this grant are to be 
taken as a measure of the quantity of water 
granted, and not a limitation of the use to 
the particular machinery specified. ( Wakely 
V. Davidson, 26 N. Y., 387; Cromwell v. 
SeMen, 3id., 253.) It was found by the court 
that, at the time the defendant shut the water 
off, he asserted that the plaintiff had forfeited 
his right to the water, and claimed a right to 
shut it off. In this he was mistaken. In de- 
priving the plaintiff of the use of the water 
under an assertion of forfeiture, he rendered 
himself amenable to the process of the court 
for the protection of the plaintiff's rights. 
The judgment enjoining the defendants from 
depriving the plaintiff of the quantity of wa- 
ter to which he was entitled under his deed, 
cannot be disturbed. The only serious ques- 
tion in the case relates to the use of the buzz 
saw in front of the mill. Tlie plaintiff did 
not, by his deed, acquire the title to the land 
in front of the mill, because the description 
is limited to the land upon which the mill 
stands; but he did acquire an easement in 
such land for the purpose of ingress and 
egress, and also for the purpose of piling and 
sawing wood for the use of the mill, as it had 
been used and enjoyed for forty years. Ev- 
erything necessary for the full and free enjoy- 
ment of the mill passed as an incident, ap- 
purtenant to the land conveyed. (2 Kent's 
Com., 467; Blaine's Lessee v. Chambers, 1 
Serg. & Kawle, 174.) But this would not au- 
thorize the plaintiff to erect and use ma- 
chinery upon this land not necessa-ry to the 
use of the mill, as it bad been used, and would 
not authorize the use of the buzz saw upon 
that land. The objection is not that the 
plaintiff propelled the buzz saw with the wa- 
ter from the dam, as be had the right to use 
the water for any machinery and in any place 
which he was entitled to occupy; but he could 
not occupy the space in front of the mill for 
that purpose. At the time the water was 
shut off by the defendants, it was being used 
only to propel this saw ; and it is claimed that 
the defendants were justified in shutting off 
the water from that machinery; and for that 



reason the judgment should be reversed, or, 
at least, that it should be modified so as to 
restrain the plaintiff from using his buzz saw 
on the defendants' premises. As we have 
seen, the judgment against the defendants is 
fully warranted by the findings; and the ques- 
tion is, whether any modification should be 
made against the plaintiff. It is a rule of 
equity that he who asks equity must do eq- 
uity. The plaintiff was In fault in using the 
buzz saw on the defendants' premises. It ia 
said that this was an independent transac- 
tion, for which the defendants might have 
an action; and this was the view of the court 
below. The rule referred to will be applied 
when the adverse equity grows out of the 
very controversy before the court, or of such 
circumstances as the record shows to be a part 
of its liistory, or is so connected with the 
cause in litigation as to be presented in the 
pleadings and proofs, with full opportunity 
afforded to the party thus recriminated to ex- 
plain or refute the charges. (Tripp v. Cook, 
26 Wend., 143; McDonald v. Neilson, 2 Cow., 
190; easier v. Shipman, 35 N. Y., 533.) 

All the facts connected with the right of 
the plaintiff to use the buzz saw were not 
only spread out upon the record, but were in 
fact litigated upon the trial, and, as to his 
strict legal rights, are undisputed; and we 
cannot say that, but for his use of the saw on 
the defendants' premises, the water would 
not have been shut off. Whether this was 
so or not, the controversy in relation to his 
right to use the saw was involved in the liti- 
gation, and was intimately connected with 
the wrongful act of the defendants; and, be- 
ing so, it is proper to apply the equitable 
rule. It is not indispensable to the applica- 
tion of this rule that the fault of the plaintiff 
should be of such a character as to authorize 
an independent action for an injunction 
against him. The plaintiff, in strictness, 
was in the wrong in placing his buzz saw in 
front of the mill. The defendants were in 
the wrong in shutting off the water, and es- 
pecially in asserting a forfeiture; and, as both 
parties are in court to insist upon their strict 
legal rights, we think substantial justice will 
be done by modifying the judgment so as to 
enjoin the plaintiff from using the buzz saw 
on the land in front of his mill, and, as mod- 
ified, judgment affirmed, without costs to 
either party against the other in this court. 

All concur. 

Judgment accordingly. 



MAXIMS OF EQUITY. 



27 



BROWN, BONNELL & 00. v. LAKE SUPE- 
RIOR IRON CO. et al. 

(10 Sup. Ot. 604, 134 U. S. 530.) 

Supreme Court of the United States. April 7, 
1890. 

Appeal from the circui tcourtofthe Unitea 
States for the northern district of Ohio. 

Henry Crawfoid, iov appellant. Francis 
Wing, C. C. Baldwin, S. Sbellabarger, and 
J. M. Wilson, for appellees. 



Brewer, J. On February 20, 1883, two 
of the appellees, the Lake Superior Iron 
Company and the Jackson Iron Company, 
together with the Negaunee Concentrating 
Company, filed their bill against the appel- 
lant, in the circuit court of the United 
States for the northern district of Ohio. 
The appellant was a corporation, created 
under the laws of the state of Ohio, and 
each of the complainants was a creditor; 
two holding claims evidenced by notes 
not then due, and the other, the Negaunee 
Concentrating Company, holding a judg- 
ment. The prayer of the bill was for tlie 
appointment of a receiver to take charge 
of theproperty and assets of the defendant, 
and for such other and further relief as 
was proper. On the same day the defend- 
ant entered its appearance, and accepted 
service of notice of a motion for the ap- 
pointment of a receiver; and Fayette 
Brown was thereupon immediately ap- 
pointed receiver. On the next day subpcB- 
na was served on the defendant. On 
March i!8th a supplemental bill was filed 
making other parties defendants, and on 
June 14th an order pro confesso was en- 
tered against all of the defendants in the 
original and supplemental bills. On April 
23d an order was entered directing all cred- 
itors to file their claims by petition, and 
on October 20th nearly every creditor had 
appeared and filed his petition. On July 
17th an order was entered appointing a 
special master to report on the claims of 
creditors, and marshal the liens thereof. 
Up to the 23d of November the appellant 
made noopposition to the proceeding, and 
apparently assented to the action which 
was being taken by the creditors, looking 
to the appropriation of its property to the 
payment of their claims. On that day a 
change took place in Its attitude towards 
this suit. It went into the state courts, 
and confessed judgment in behalf of sever- 
al of its creditors ; and on the 24th deposit- 
ed in the registry of the circuit court mon- 
ey enough topayoff thejudgment in favor 
of the concentrating company, and filed 
two pleas,— one setting forth the fact of 
payment, and the other that the original 
and supplemental bills disclosed that the 
complainants had a plain, adequate, and 
complete remedy at law, and that there- 
fore the court, sitting as a court of equity, 
had no jurisdiction ; and praying a dis- 
missal of the bills. Subsequently, on De- 
cember 18th, it filed a motion to discharge 
the receiver. This motion was overruled, 
the pleas seem to have been ignored, the 
master reported upon the claims present- 
ed, and on February 28, 1886, the court en- 



tered a decree which, finding the indebted- 
ness to be as stated by the master, also 
what property was in possession of the re- 
ceiver, decreed that upon default in the 
payment of those debts the property be 
sold in satisfaction thereof. From this 
decree the defendant has brought this ap- 
peal, and its principal contention is that 
the circuit court had no jurisdiction what- 
ever over the subject-matter of the suit, 
because it appeared upon the face of the 
bills, original and supplemental, that the 
complainants had a plain, adequate, and 
complete remedy at law. 

As heretofore stated, the bill showed 
that two of the complainants held claims 
not yet due, and the third onlya judgment, 
with no execution. The supplemental bill 
alleged that execution had, since the filing 
of the original bill, been issued on that 
judgment, and returned nulla bona. The 
original bill, besides disclosing the nature 
of complainants' claims, set forth that 
they were proceeding not alone in their 
own behalf, but in that of all other credit- 
ors, whose number was so great as to 
make it impossibleto join them as parties. 
It then averred the insolvenc.v ot the de- 
fendant ; that it was engaged in large and 
various business, manufacturing, and min- 
ing; that its plant and good- will w^as of 
great extent and value; and that it em- 
ployed oi)eratives to the number of at 
least 4,000; and then alleged as follows: 
"And your orators further say that vex- 
atious litigation has been commenced 
against the said defendaut, and many 
more such are threatened, and that such 
litigations are accompanied by attach- 
ments and seizures of property, and such 
threatened litigations will also be accom- 
panied by attachments and seizures, and 
that such attachments and seizures will 
give to those creditors who are pursuing 
them undue and unfair advantage and 
priority over your complainants, whose 
claims are not yet due, and make them ir- 
reparable injury and damage; that if such 
litigations be further instituted and its 
property seized in attachment, as it al- 
ready has been, there is great danger that 
the valuable property of the defendant will 
be irreparably injured, and to a great ex- 
tent destroyed; and your orators say that 
such seizures and interference with the 
business and the property of the defendant 
would wholly destroy the value of the 
good-will of the company as an asset, and 
wholly break up its long-established busi- 
ness, and thereby cause detriment and ir- 
reparable injury to your orators and all 
other creditors. And your orators further 
say that, unless this court shall interfere 
and protect and preserve the property and 
assets of said defendant by putting it into 
the hands of a receiver, the said property 
will be in great danger of destruction and 
dissipation by the large number of oper- 
atives who would necessarily be discharged 
and left without work or means of obtain- 
ing it ; and such operatives, by reason of 
the great distrust they already have, and 
on account of a fear that they will not in 
fuljure receive remuneration, will abandon 
their employment, and thereby cause a 
stoppage of the extensive business of said 



28 



MAXIMS OF EQUITY. 



defendant, to the extent that the creditors 
of said defendant would not be able to 
realize one-half of the amount upon the 
several claims that they would if the said 
business of the defendant were continued. " 

The appellees, while admitting the gen- 
eral rule to be that creditors must show 
that they have exhausted legal remedies 
before coming into a court of equity, insist 
that the bill disclosed a case in equity on 
two grounds : First, that upon the insolv- 
ency of acorporation its properties become 
a trust fund for the benefit of its creditors, 
which can be seized and disposed of by a 
receiver, and in equitable proceedings ; and, 
second, that the vast interests and prop- 
erties of thiscorporation, with their threat- 
ened disintegration through several at- 
tachment suits, justified the interference of 
a court of equity to preserve, for the ben- 
efit of creditors, that large value which re- 
sulted from the unity of the properties. In 
support of these propositions counsel cite, 
as especially applicable, Terrj' v. Anderson, 
95 U. S. 628; Union Trust Co. v. Illinois M. 
Ry. Co., 117 U. S. 434, 6 Sup. Ct. Rep. 809; 
Sage V. Railroad Co., 125 U. S. 361, 8 Sup. 
Ct. Rep. 887; Mellen v. Iron-Works, 131 U. 
S. 352, 9 Sup. Ct. Rep. 781; Barbour v Bank, 
45 Ohio St. 133, 12 N. E. Rep. 5; Rouse v. 
Bank, 46 Ohio St. 493, -'-' N. E. Rep. 293. 

Tit were it conceded that the bill was 
defective; that a demurrer must have been 
sustained ; and that the appellant, if it had 
so chosen to act in the first instance, could 
have defended its possessitm, and defeated 
the action, — still the decree of the circuit 
court must be sustained. Whateverrights 
of objection and defense the appellant had, 
it lost by inaction and acquiescence. Ob- 
viously the proceedings had were with its 
consent. Immediately on filing the bill it 
entered its appearance; and the same daj' 
ft receiver was appointed, without objec- 
tion on its part. It suffered the bills to be 
taken pro confesso. It permitted the re- 
ceiver to go on in the possession of these 
properties for nine months, transacting 
large business, entering into many con- 
tracts, and assuming large obligations, 
without any intimationof a lack of author- 
ity, or any objection to the proceedings. 
After a lapse of nine months, suddenly its 
policy changed; itcon tested where thereto- 
fore it had acquiesced. And this, not be- 
cause of any restored solvency or purpose 
to resume business, but with the evident 
intent to prevent the equality among cred- 
itors which the existing equitable proceed- 
ings would secure, and to give preference 
to certain creditors ; for clearly it was the 
thought of the president of the corpora- 
tion, himself the owner of a large majority 
of its stock, whose management had 
vsrrought its financial ruin, that after the 
setting aside of the equitable proceedings 
the lien of the confessed judgments would 
attach, and thus those favored creditors 
would be preferred. 

So the case stands in this attitude : The 
corporation was insolvent. Its extensive 
and scattered properties had been brought 
into single ownership, and so operated to- 
gether that large benefit resulted in pre- 
serving the unity of ownership and op- 
eration. Disintegration was threatened 



through separate attacks, by different 
creditors, on scattered properties. The 
preservation of this unity, with its conse- 
quent value, and the appropriation of the 
properties for the benefit of all the creditors 
equally, were matters deserving large con- 
sideration in any proper suit. Certain 
creditors, acting for all, initiated proceed- 
ings looking towards this end. In such 
Droceedings the corporation acquiesced. 
Substantially all of the creditors came in- 
to the proceedings. After months had 
passed, much business had been transact- 
ed and large responsibilities assumed, the 
corporation, for the benefit of a few cred- 
itors and to destroy the equality between 
all, comes in with the technical objection 
that the creditors initiating the proceed- 
ings should have taken one step more at 
law before coming into equity. But the 
maxim, "He who seeks equity must do 
equity," is as appropriate to the conduct 
of the defendant as to that of the com- 
plainant; and it would be strange if a 
debtor, to destroy equality and accomplish 
partiality, could ignore its long acquies- 
cence, and plead an unsubstantial techni- 
cality to overthrow protracted, extensive, 
and costly proceedings carried on in reli- 
ance upon its consent. Surely no such im- 
perfection attends the administration of a 
court of equit.y. Good faith and early as- 
sertion of rights are as essential on the 
part of the defendant as of the complain- 
ant. This matter has recently been before 
this court in Reynes v. Dumont, 130 U S. 
354, 395, 9 Sup. Ct. Rep. 486, and was care- 
fully considered, and the rule, with its lim- 
itations, thus stated : " The rule as stated 
inl Danlell's Chancery Practice, (4th Amer. 
Ed.) 555, is that if the objection of want of 
jurisdiction in equity isnottaken in proper 
time, namely, before the defendant enters 
into his defense at large, the court, having 
the general jurisdiction, will exercise it; 
and, in a note on page 550, many casee 
are cited to establish that, 'if a defendant 
in a suit in equity answers and submits to 
the jurisdiction of the court, it is too late 
for him to object that the plaintiff has a 
plain and adequate remedy at law. This 
objection should be taken at the earliest 
opportunity. The above rule must be 
taken with the qualification thatitis com- 
petent for the court to grant the relief 
sought, and that it has jurisdiction of the 
subject-matter.' * * * It was held in 
Lewis V. Cocks, 23 Wall. 466, that if the 
court, upon looking at the proofs, found 
none at all of the matters which would 
make a proper case for equity, it would be 
the duty of the court to recognize the fact, 
and give it effect, though not raised by the 
pleadings nor suggested by counsel. To 
the same effect is Oelrichs v. Spain, 15 Wall. 
211. The doctrine of these and similar 
cases is that the court, for its own protec- 
tion, may prevent matters purely cogniza- 
ble at law from being drawn into chancery 
at the pleasure of the parties interested ; 
but it by no means follows, where the sub- 
ject-matter belongs to the class over which 
a court of equity has jurisdiction, and the 
objection that the complainant has an ad- 
equate remedy at law is not made until 
the hearing- in the appellate tribunal, that 



MAXIMS OF EQUITY. 



29 



the latter can exercise no discretion In the 
disposition of such objection. Under the 
circumstances of this case, it comes alto- 
gether too late, even though, if taken in 
limine, it might have been worthy of at- 
tention. " See, also, Kilbourn v. Sunder- 



land, 130 U. S. 505, 9Sup. Ct. Rep. 594 ; Uni<m 
Trust Co. V. Illinois M. Ry. Co., 117 U. S. 
434-468, 6 Sup. Ct. Rep. 809. Further com- 
ment is unnecessary. The ruling of the cir- 
cuit court was correct, and its decree is 
therefore affirmed. 



30 



MAXIMS OF EQUITY. 



BLBAKLBY'S APPEAL. 

(66 Pa. St. 187.) 

.Supreme Court of Pennsylvania. Oct. 27, 1870. 

AGNBW, J. The facts of this case are 
few. Robert Lamberton was the owner of a 
judgment for $31,000, entered against Sam- 
uel P. Irvin on the 8th day of June, 1865. 
Irvin had purchased of F. D. Kinnear, Esq., 
lot No. 449 In Franklin at $2600, of which 
$820 only remained unpaid, and would fall 
due on the Cth of August, 1865, 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 consclentise, 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 simp^ 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. 
Weitlng, 50 Pa. St. 244, 245. 

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



MAXIMS OP EQUITY. 



31 



KARN V. WALTON et al. 

(20 N. E. 203, 46 Ohio St. 195.) 

Supreme Court of Ohio. Jan. 8, 1889. 

Error to circuit court, Greene county. 

On the 15th day of February, 188*2, Moses 
A. Walton commenced his action in the court 
of common pleas of Greene county against 
the plaintiff In error, Charles Kahn, Jr., and 
the Citizens' National Banli of Xenia, to en- 
join the bank from paying two checks, one 
for $1,500 and the other for $500, dra-wn by 
him upon the bank in favor of Kahn. The 
petition alleges "that on the 14th day of Feb- 
ruary, A. D. 1882, the defendant, Charles 
Kahn, Jr., by fraud and misrepresentation, 
obtained from the plaintifC his two certain 
checks of that date for the sums of $1,500 
and $500, respectively, drawn by him upon 
the Citizens' National Bank of Xenia, a cor- 
poration duly incorporated under th© laws of 
the United States; that said checks were 
given and are wholly without consideration, 
and the plaintifC received no value therefor 
whatever; that defendant, Kahn, is about to 
present the same for collection, and the bank 
is about to, and will, unless restrained by the 
order of the court, pay the checlis, which 
will be an irreparable injury to the plaintiff, 
and for which he has no adequate remedy 
at law; that Kahn is not a resident of said 
county, and has no property therein, and 
who is, as plaintifC is informed and believes, 
wholly insolvent." The petition prays "that 
the bank be restrained and enjoined from 
paying said checks, and that they may be 
ordered to be canceled and delivered up to 
the plaintiff; and for all other and further 
relief to which in equity he may be enti- 
tled." 

At the commencement of the action, the 
plaintifC obtained a temporary injunction as 
prayed for, and on the 6th day of March 
amended his petition by adding to its aver- 
ments the following: "That no considera- 
tion exists for said checli in said petition 
mentioned other than certain gaming con- 
tracts entered into by said plaintifC on or 

about the day of February, 1882, in 

the city of Cincinnati, Ohio, with the said 
Kahn, a broker and commission merchant of 
said city, for the purpose of speculating in 
the price of wheat, pork, and lard, and which 
said contracts made by said Kahn were in 
violation of the statute of gaming, and 
against public policy, and were false and 
feigned, and by which he undertook in form 
to buy and sell wheat, pork, and lard for 
and with this plaintifC, without intending 
thereby either to receive or deliver said 
wheat, pork, or lard, but solely to wager in 
the market price thereof, and to pay or re- 
ceive the difference between the price in the 
contracts and the market rates at any time 
during the month of March, 1882, at the op- 
tion of said Kahn, whichever the same 
would be; that said contracts were made as 



a cover for gambling in the prices of wheat, 
pork, and lard; that no wheat, pork, or lard 
was actually to be delivered or received, but 
the difference in price only was to be paid 
on the one side or received on the other at 
any time during the said month of March, 
at the option of said Kahn; that in pursu- 
ance of the said gaming contracts, and in 
addition to the execution and delivery of 
said checks, this plaintifC delivered and paid 
to said Kahn the sum of $500; that no con- 
sideration for the payment of said sum of 
$500 passed to the plaintifC other than that 
set forth aforesaid; that the said Kahn re- 
ceived to the plaintiff's use said sum of $500 
so lost and paid to said defendant, and said 
defendant, Charles Kahn, Jr., is indebted to 
plaintiff in thef said sum of $500, with in- 
terest from the day of February, 1882. 

Wherefore plaintiff prays as in his original 
petition, and for judgment against said de- 
fendant Kahn, for said sum of $500, with 
interest from February — , 1882." The tem- 
porary injunction was, on motion of the de- 
fendant, Kahn, dissolved, and the plaintiff 
appealed to the district court, where, on the 
28th of April, 1882, the plaintiff, by leave of 
that court, filed another amendment to his 
petition, adding the following averments: 
"That at the time of the execution and de- 
livery of the said checks the plaintifC had on 
deposit with said bank sufficient money to 
pay said checks; that prior to the presenta- 
tion thereof said Kahn, who is insolvent, by 
his agent, made inquiry of said other de- 
fendant as to whether said checks were good 
and ■n'ould be paid on presentation; to wliich 
inquiry said banli made answer that said 
checlvs were good, and would be paid, and 
said bank claims to have certified to said 
checks, and bound itself thereby to pay the 
same; that prior to the filing of the petition 
herein, and the allowance of said restrain- 
ing order, this plaintifC requested and noti- 
fied said bank not to pay said checks; but 
said bank refused said request, and threat- 
ened to, and will, unless restrained, pay said 
checks." 

The defendant, Kahn, then answered, ad- 
mitting "the corporate character of said 
bank; that said Kahn was about to present 
said cheeks for collection; his non-residence; 
that plaintifC had said money on deposit in 
said bank; said inquiries whether said 
checks would be honored, and the response 
of said bank that they would; that said 
bank claims to have certified the same, and 
bound itself to pay the same, and said noti- 
fication to said bank not to pay the same, 
and the refusal of said bank; that a con- 
tract was made between said Kahn and 
plaintiff for the sale of property; that sales 
were made, and $500.00 cash and said checks 
were paid thereon. But said Kahn denies 
each and every other allegation of said peti- 
tion." 

The record shows that at the April term, 
1884, of the district court the cause was by 



32 



MAXIMS OF EQUITY. 



consent of the parties submitted to the court 
upon the pleadings and evidence, and the 
court found the equities of the case in favor 
of the plaintiff and against said defendant, 
Kahn, made the injunction perpetual, and 
adjudged the costs against Kahn. A motion 
for a new trial, filed hy Kahn, was over- 
I'uled, and a bill of exceptions was duly tak- 
en, containing all the testimony given on the 
trial of the cause. It also appears in the bill 
of exceptions that at the close of the testi- 
mony the defendant, Kahn, requested the 
court to find the facts, and state its conclu- 
sions of law and of fact separately, and also 
to find "the following conclusions of fact: 

(1) Whether there was any agreement be- 
tween the plaintiff and Charles Kahn, Jr., 
that the property purchased should not be 
delivered; but that simplj- the difference, if 
any, between the price at which the property 
was purchased and the price at which it 
should rule in March, 1882, should be paid. 

(2) Whether Charles Kahn, Jr., N. B. Ream 
& Co., or the persons of whom the property 
was purchased in January, 1882, intended 
that it should not be delivered, and that 
simply the difference, if any, between the 
price at which it should rule in March, 1882, 
and the price at which it was purchased 
should he paid, and who so intended. (3) 
Whether the court finds that simply the 
difference was to be paid, and no property 
delivered, from the circumstances of the 
transaction, and, if so, what are the circum- 
stances upon which said finding is predi- 
cated? (4) Whether the price of said prop- 
erty on the Cliicago Board of Trade, in March, 
1882, was more or less than the purchase 
price in January, 1882, and, if less, how 
much less. (5) Whether, by the terms of the 
contract between the plaintiff and Kahn, or 
by reason of notice to plaintiff, Kahn was 
justified in selling said property on March 1, 
1882. (6) Whether the persons of whom the 
property Was purchased in January, 1882, or 
their brokers, N. B. Ream & Co., had the 
property on hand ready to deliver on March 
1, 1882. and wliether they gave Kahn notice, 
and whether Kahn gave plaintiff notice of 
their readiness to deliver tlie property, and 
that it would be sold March 1, 1882, if plain- 
tiff \\ould not take it. (7) Upon whom the 
court finds the burden of proof rests to es- 
tablish the character of the transaction; 
whether it was or was not a gambling trans- 
action. (8) Whether Charles Kahn, Jr., was 
simply a broker, agent, and employe of plain- 
tiff in causing the purchase and sale of said 
property on commission, without any inter- 
est in the profit or loss in the transaction." 
And it further appears from the bill of ex- 
ceptions that the court, in response to the 
foregoing request, found as follows: 

"Answer to Requests 1 and 2. We find 
that the transactions in which the parties 
were engaged were mere speculations or ven- 
tures on the future prices of the products 
named in the pleadings, without any inten- 



tion on the part of Walton, Kahn, or Ream 
& Co. that the property would be either paid 
for or delivered, but that the intention wa.s 
that settlements between buyer and seller 
would be made on the differences between 
the market prices at the date named for de- 
livery and the prices named in the contracts; 
that this was understood by all parties inter- 
ested in the deals; that the same were gam- 
bling transactions, and illegal. 

"Answer to Request 3. We find the fore- 
going facts from all the circumstan,ces in the 
case and sun-ounding the transactions, and 
particulai-ly from the fact that if any in- 
quiry had been made it would have devel- 
oped the fact that Walton was wholly un- 
able to pay one-fourth the amount of the 
price of the property ostensibly purchased, 
(being $43,000,) and that in fact said Wal- 
ton was not worth over $3,000 or $4,000 at 
the time. 

"Answer to Requests 4 and 5. We find 
that in March, 1882, the price of property 
embraced in tlie deals mentioned had de- 
clined to an extent that absorbed the mar- 
gins put up, and that, under the rules of 
the Board of Trade of Chicago, Kahn was 
justified in selling whatever interest Walton 
had in any property under his (Kahn's) con- 
trol; but we have not regarded this as an 
Important fact in the case. 

"Answer to Request 6. We find it probable 
that Ream & Co. had control of an amount 
of property equal in bulk and quality to that 
named in the several contracts, and could 
have delivered it on demand March 1, 1882; 
but we further find that in said deals they 
had no intention of so delivering it, nor had 
Kahn any intention of receiving it. Ream 
& Co. gave Kahn notice, and Kahn gave 
Walton notice, of tlieir readiness to deliver 
the property, and that it would be sold 
March 1st if plaintiff did not take it; but 
this was done after the commencement of 
this suit, and with, knowledge that it would 
not be so taken by plaintiff. 

"Answer to Request 7. Upon the plaintitt'. 

"Answer to Request 8. Kahn was, as be- 
tween plaintiff and defendant, a broker 
agent, interested only to the amount of his 
commissions. 

"We further find that after the checks 
named in the pleadings were delivered to 
Kahn, a bank in Cincinnati telegraphed the 
Citizens' National Bank of Xenia as follows: 
'Are M. A. Walton's checks for $2,000 good?' 
To which said Citizens' Bank sent an answer 
as follows: 'Yes, sir.' We find that this 
does not amount to 'certifying' the checks, 
and the Citizens' Bank did not thereby be- 
come bound to the holders of the checks for 
the amounts. We find that the contract was 
not executed by the giving of the checks, 
and that by enjoining the payment of the 
checks we simply stop the carrying out of a 
gambling contract, and thereby leave the 
parties where we find them." 

Judgment having been rendered against 



MAXIMS OF EQUITY. 



S3 



Kahn, as before stated, he prosecutes error 
to this court to reverse the same, upon the 
grounds that the conclusions of law are not 
supported by the facts found, and the evi- 
dence does not sustain the finding of facts. 

Jordan & Jordan, for plaintiff in error. 
John Little, for defendants in error. 

WILLIAMS, J. The evidence tends to 
prove the facts found by the district court, 
and as this court is not required to deter- 
mine the weight of the evidence, the facts 
so found will, In the disposition of the case, 
be regarded as established by the evidence. 
The case shown by these facts, and those 
admitted by the pleadings, is that Kahn was 
a commission broker in Cincinnati, doing 
business with and for Ream & Co., brokers 
and commission merchants in Chicago, and 
bought of or through them wheat and pork 
for future delivery, so called, on Walton's 
account. The transactions were mere spec- 
ulations or ventures on the prices ot the 
commodities named, without any intention 
on the part of the parties concerned that the 
property should either be delivered or paid 
for; but all the parties understood and in- 
tended that settlements should be made be- 
tween them, on the difCerences between the 
market prices, at the dates fixed for de- 
livery, and those named in the contracts. 
Kahn was to have a commission for his 
services, and he advanced margins on the 
deals. Walton was loser, and drew his two 
checks, amounting to $2,000, on the bank 
where he had funds, payable to Kahn, for 
moneys paid by him on the deals and losses. 
Walton also paid Kahn $500 in money on 
the same account. Kahn telegraphed to the 
bank, inquiring if Walton's checks for the 
amount of those drawn to him were good, 
and received an affirmative answer. Wal- 
ton notified the bank not to pay the checks, 
and before their presentation brought his 
action to enjoin their payment. 

1. Upon this state of the case, the first in- 
quiry naturally is, were the speculative trans- 
actions in which the parties engaged in the 
nature of wagers, and, for that reason, ille- 
gal? In the determination of this question 
it is not deemed material whether they fall 
within the provisions of our statutes against 
gaming and wagering, or do not; for it is 
generally held in this country that wager- 
ing contracts, though not prohibited by stat- 
ute, are illegal, and void as against public 
policy, and the great weight of authority 
is to the effect that contracts of the kind 
the district court found those involved in 
this case to be are void as wagering agree- 
ments. This has been held by the courts 
of last resort in every state where the ques- 
tion has been presented, and by the su- 
preme court of the United States. The rule 
generally accepted is that contracts for the 
sale of personal property to be delivered In 
the future are valid if the parties really in- 
HUTCH.& BUNK.EQ.— 3 



tend and agree that the property is to be de- 
livered by the seller, and the price is to be 
paid by the purchaser, though the seller has 
not the goods, nor any other means of get- 
ting them, than to go into the market and 
buy them. But if the real intent be mere- 
ly to speculate on the rise and fall of prices, 
and the goods are not to be delivered, but 
one party is to pay to the other the differ- 
ence between the contract price and the mar- 
ket price of the goods at the date fixed for 
executing the contract, then the contract 
partakes of the nature of a wager, and is 
void. Irwin v. Williar, 110 U. S. 499, 4 Sup. 
Ct. 160; Higgius v. McCrea, 116 U. S. 671, 
6 Sup. Ct. 557; Mann v. Bishop, 136 Mass. 
495; Gregory v. Wendell, -10 Mich. 432; Cole \ 
V. Milmine, 88 111. 349; Kingsbury v. Kir- 
wan, 77 N. Y. 612; Lowry v. Dillman, 59 
Wis. 197, 18 N. W. 4. 

2. The facts found by the district court 
plainly define Kahn's relation to the unlaw- 
ful agreements. He was directly connected 
with them, and, with full knowledge of their 
character, performed services and expended 
money to promote and forward them. It 
was his intention, as well as the intention 
of the other parties, that the property should 
not be delivered or paid for, but that the 
differences in the prices should be adjusted 
in money. It is true, Kahn was the broker, 
and had no pecuniary interest in the ' busi- 
ness except his commissions, and the repay- 
ment of whatever sums he might advance 
for margins, and to pay losses as the busi- 
ness progressed. He, nevertheless, negoti- 
ated the wagering contracts, and was party 
to them. The legal effect of such relation 
to contracts of that nature was determined 
in the case of Irwin v. Williar, supra. The 
conclusion of the court is thus stated: "In 
Rounti-ee v. Smith, 108 U. S. 269, 2 Sup. Ct. 
630, it was said that brokers who had nego- 
tiated such contracts, suing, not on the con- 
tracts themselves, but for services per- 
formed, and money advanced for defendant, 
at his request, though they might, under 
some circumstances, be so connected with 
the immorality of the contract as to be af- 
fected by it, they are not In the same posi- 
tion as a party sued for the enforcement of 
the original agreement. It is certainly true 
that a broker might negotiate suc.h a con- 
tract without being privy to the illegal in- 
tent of the principal parties to it, which ren- 
ders it void; and in such case, being inno- 
cent of any violation of law, and not suing 
to enforce an unlawful contract, has a meri- 
torious ground for the recovery of compen- 
sation for services and advances. But we 
are also of the opinion that when the broker 
is privy to the unlawful design of the par- 
ties, and brings them together for the very 
purpose of entering into an illegal agree- 
ment, he is particeps criminis, and cannot 
recover for services rendered or losses in- 
curred by himself on behalf of either iji 



34 



MAXIMS OF EQUITY. 



forwarding the transaction." We accept tliis 
as a sound and wholesome rule, and under 
its operation the checks given by Walton to 
Kahn for services rendered and losses paid 
by him in the unlawful enterprise are taint- 
ed with the vice of their origin, and are sub- 
ject to all the infirmities of securities given 
for illegal considerations. 

3. It is contended that the drawing of the 
checks by Walton on the bank, where he 
had sufficient funds to pay them, and the 
bank's response to the inquiry of Kahn's 
agent that checks to their amount were 
good, was a specific appropriation of the 
funds, and amounted to payment of the debt 
for which they were drawn, whereby the 
contract became fully executed. A check, 
being simply a written order of a depositor 
to his banker to make a certain payment out 
of his funds, is executory, and, of course, 
revocable at any time before the bank bas 
paid it or committed Itself to its payment. 
It operates, it is true, as an assignment of 
the fund on which it is drawn pro tanto, and 
binds the bank to its payment out of the 
fund when presented, unless revoked; but 
it is not Itself payment of the debt for 
which it is drawn, unless it be so agreed 
between the parties. Ordinarily it is only 
a means of payment, and the debt is not 
extinguished unless and until the check be 
paid, or the holder be guilty of laches, which 
may operate as a discharge of the drawer. 
The bank is the agent of the drawer. Its 
duty is to pay his money as he directs. It 
owes no duty to the holder except under the 
drawer's directions, until, by virtue of those 
directions, it assumes some obligation to the 
holder. Up to that time the latest order 
from the drawer governs. But after the 
bank has paid the check, or placed itself 
under an obligation to pay it, the drawer's 
power of revocation is ended. This obli- 
gation may be incurred by acceptance. It 
is sometimes said that the legal effect of the 
acceptance is to place the holder of the 
check in the position of a depositor. By the 
acceptance a new and specific engagement 
is entered into by the bank; which is to un- 
conditionally pay the sum named to the legal 
holder of the check. The acceptance or cer- 
tification Is sometimes evidenced by writing 
the word "good" on the check by the au- 
thorized officer or agent of the bank; but 
no particular mode or form is necessary, and 
it is generally held that a verbal acceptance 
is sufficient. But whatever the word or 
form employed, there must be enough to 
indicate the acceptance of the particular 
check. 

It is manifest there was no acceptance or 
certification of the checks In question in this 
case. The telegraphic correspondence be- 
tween the bank and Kahn's agent amounted 
to no more than an assurance that valid 
checks to the amount stated, drawn by Wal- 
ton, or that might be drawn by him, were 
then good. No particular checks were men- 



tioned in the inquiry, nor any intimation 
given that the inqtlrer had received, or was 
about to receive, such checks; nor had the 
bank any means of identifying the checks 
to which the inquiry related. Its telegram, 
therefore, did not commit the bank to the 
payment of any particular check. At most 
It was Information that Walton had, at its 
date, money on deposit to the amount stated, 
subject to cheek. Espy v. Bank, 18 Wall. 
(504. If, therefore, before the checks were 
presented for payment, and before they 
were certified or accepted by the bank, or 
it otherwise became committed to their pay- 
ment, Walton revoked them, and notified 
the bank not to pay them, as he claims, and 
as the district court found he did, his de- 
fensive remedy at law would appear to be 
adequate. 

4. But what standing has the plaintifE in 
a court of equity? The transactions upon 
which he founds his claim for relief were 
unlawful, and the remedy he seeks is pro- 
tection against the consequences of his own 
participation in them. In such cases equity 
keeps its hands off, and leaves the parties 
where it finds them. It is a fundamental 
rule of equity that parties wanting its aid 
must come with clean hands. Courts of 
equity require honesty, good faith, and le- 
gality in transactions between men, and if 
a party would pursue his remedy therein, 
his demand must not rest on a violation of 
law for its foundation, or arise from his own 
illegal acts, or conduct contra bonos morals. 
1 Wait, Act. & Def. 153; 3 Wait, Act. & 
Def. 685. It was said by Lord Mansfield, in 
Holman v. Johnson, Cowp. 341, that "no 
court will lend its aid to a man who founds 
his cause of action upon an Immoral or ille- 
gal act. If, from the plaintiff's own stating, 
or otherwise, the cause of action appears to 
arise ex turpi causa, or the transgression of 
a positive law of this country, there the 
court says he has no right to be assisted. 
It is upon that ground the court goes, not 
for the sake of the defendant, but because 
they will not lend their aid to such a plain- 
tiff. So, if the plaintiff and defendant were 
to change sides, and the defendant was to 
bring his action against the plaintiff, the 
latter would then have the advantage of It; 
for where both are equally in fault, potior 
est conditio defendentis." In Atwood v. 
Fisk, 101 Mass. 363, which was a bill in 
equity to compel the surrender and cancel- 
lation of a note, and mortgage given to se- 
cure its payment, on the ground that the 
consideration for them was illegal, the court, 
in denying the relief sought by the bill, de- 
clares it to have long been settled "that the 
law will not aid either party to an illegal 
contract to enforce it against the other; 
neither will it relieve a party to such a con- 
tract who has actually fulfilled it, and who 
seeks to reclaim his money or whatever arti- 
cles of property he may have applied to such 
a purpose. The meaning of the familial 



MAXIMS OF EQUITY. 



maxim In pari delicto potior est conditio de- 
fendentis is simply tliat the law leaves the 
parties exactly where they stand; not that 
it prefers the defendant to the plaintiff, but 
that it will not recognize a right of action 
founded on the illegal contract in favor of 
either party against the other. They must 
settle their own questions in such cases 
without the aid of the courts." The state- 
ment of the rule by Ohancellor Walworth, 
in Harrington v. Bigelow, 11 Paige, 349, 
may be applied directly to this case. He 
says: "Where both parties have been en- 
gaged in an illegal transaction, the court 
will not lend its active aid to the one party 
to get rid of the securities talien upon the 
Illegal transaction, nor will it aid the other 
party in retaining them, but will leave both 
to their strict technical rights." 

In Weakley v. Watliins, 7 Humph. 356, it 
is held that "no court of chancery will en- 
tertain a bill to cancel an obligation, the 
consideration of which was a violation of 
chastity, compounding a felonj-, smuggling 
of goods, gaming, false swearing, or the 
commission of any crime, or a breach of 
good morals." This was a bill in chancery 
filed by Weakley against Watltins and Fer- 
guson to obtain the cancellation of a note 
under seal executed upon a gaming consid- 
eration. A demurrer was filed to the bill, 
and the court in the opinion says: "It is 
true that a court of chancery, upon the 
principle of quia timet, will order said in- 
struments to be delivered up and canceled. 
But this is when the complainant has been 
Imposed upon, alid executed an instrument 
void for fraud, accident, mistake, or other 
cause, which renders it iniquitous and un- 
just that it should be enforced against him, 
and when, in the execution of it, he has him- 
self been guilty of no violation of law or 
good morals. But this principle has never 
been held applicable to instruments know- 
ingly executed in violation of good morals 
or express prohibition, either by common or 
statute law. For instance, no court of chan- 
cery will entertain a bill to cancel an obli- 
gation, the consideration of which was a 
violation of chastity, compounding a felony, 
the smuggling of goods in violation of the 
revenue law, gaming, false swearing, etc.; 
and this for very obvious reasons. The 
complainant shall not be permitted to charge 
himself with crime, and obtain relief out of 
it; and because public policy requires that 
the execution of all such contracts shall be 
discouraged, which cannot be more effect- 
ually done than by repelling all actions upon 
them in courts of justice. In contracts of 
the kind now nnder consideration we have 
held that they are inoperative, and void, as 
contrary to good morals and positive en- 
actment, and that, as such, they are not fit 
subjects for the action of a court. It Is 
true that in the cases we have heretofore 
had the attempt has been to enforce them, 
but we can see no difference in the position 



of the winner and loser, so far as to their 
right in becoming active movers upon such 
contracts in the courts; the one seeking to 
enforce them by the judgment of a court of 
law, the other seeking by the aid of a court 
of chancery to have them delivered up and 
canceled. They are equally repelled upon 
reason and authority." 

It was said by this- court, In Roll v. 
Raguet, 4 Ohio, 400, that "whenever an agree- 
ment appears to be illegal, immoral, or 
against public policy, a court of justice leaves 
the parties as it finds them. If the agree- 
ment be executed, the court will not rescind 
it; if executory, the court will not aid in its 
execution." This was again held in Raguet 
V. Roll, 7 Ohio, pt. 1, p. 77. And see Raguet 
V. Roll, 7 Ohio, pt. 2, p. 70. The doctrine of 
these cases has recently been approved and 
enforced by this court. McQuade v. Rose- 
crans, 36 Ohio St. 442; Williams v. Engle- 
brecht, 37 Ohio St. 383. And in Thomas v. 
Cronise, 16 Ohio, 54, It is laid down as "a 
universal principle both in law and equity 
that where an agreement is founded upon a 
consideration illegal. Immoral, or against pub- 
lic policy, a court will leave the parties where 
it finds them." In Hooker v. De Palos, 28 
Ohio St. 251, the same doctrine is announced 
in the following language: "The maxim 'Ex 
tm-pi causa non oritur actio' is an old and 
familiar one, resting on the clearest prin- 
ciples of public policy, and never to be Ig- 
nored. In accordance with this maxim noth- 
ing is better settled than that, in regard to 
contracts, which are entered into for fraudu- 
lent or Illegal- purposes, the law will aid nei- 
ther party to enforce them while they remain 
executory, either in whole or in part, nor, 
when executed, will It aid either party to 
place himself in statu quo by a rescission, 
but will in both cases leave the parties where 
it finds them. It is true that particular stat- 
utes have been from time to time enacted in 
this state as well as in many of our sister 
states, which are to some extent in contra- 
vention of this common-law doctrine. The 
statutes of this state which allow money won 
by gaming or betting to be recovered back by 
the loser, furnish an example of this kind. 
But such statutes are a recognition of the 
established rule that no recovery could be 
had In such cases at, common law. They are 
exceptional in their character, are in deroga- 
tion of the common law, and therefore are to 
be construed strictly, and not extended by 
implication beyond the particular cases of 
illegality for which they provide." The stat- 
utes adverted to change the common law so 
far as to give the loser the right to recover 
back what he has lost, and provide a rem- 
edy therefor, but no further. In all other 
respects the common law governs. Whether 
the statutes have any application to contracts 
like those under discussion need not now be 
decided, for If it be granted that they have, 
yet, since they make no provision for equita- 
ble actions for Injunctions, the right to such 



36 



MAXIMS OF EQUITY. 



remedy must be determined by considera- 
tions independent of the statutory regula- 
tions. Veach v. Elliott, 1 Ohio St. 139; 
Thomas v. Cronise, 16 Ohio, 54. 

The legislature, apparently recognizing the 
inapplicability of the statutes theretofore in 
force to such contracts and transactions, en- 
acted that of May 4, 1885, (82 Ohio Laws, p. 
254,) which declares all contracts for the sale 
of grain, provisions, and other specified ar- 
ticles, when there is no intention to deliver 
or pay for the articles sold, to be void, and 
makes them gambling and criminal acts. This 
statute, having been passed after the contracts 
between the parties were made, of course 
cannot affect the decision of the case, and, 
if it were otherwise, they do not confer upon 
the plaintiff the right to maintain the action 
prosecuted by him. Precisely what effect 
has been given the English statutes in the 
decisions of the courts of that country upon 
this subject is not very clear. It is, never- 
theless, true that parties to gaming securities 
were expressly authorized by statute to go 
into chancery for discovery, which gave 
ground for the application of the familiar 
rule that courts of chancery, having jurisdic- 
tion for one purpose, will retain the case for 
final relief. In the case of Rawden v. Shad- 
well, 1 Amb. 268, which was a bill for dis- 
covery and cancellation, the report states: 
"Lord Hardwicke decreed with great clear- 
ness, and said that by St. 9 Anne all secur- 
ities for money won at play are made void. 
Consequently the payment under any such se- 
curity caimot be supported." And Baker v. 
Williams is referred to in the report as an 
authority for the decree. In the note to the 
case it is said that the statute of 9 Anne 
"gives leave to come into a court of chan- 
cery for discovery;" and Sir J. Jekyll, M. R., 
in the note, citing Baker v. Williams, said: 
"And if it [the note] was put in suit at law, 
no doubt but the party might make a de- 
fense against it under the act; but that is no 
abjection against coming into this court, 
[chancery,] for the person giving the note is 
entitled to a discovery here. It could not be 
the intention of the legislature that, after 
the discovery, he should be sent to another 
court for relief. So it is that upon the dis- 
covery of assets the court grants relief with- 
out sending the party to law." And it may 
be noticed that In Woodson v. Barrett, 2 Hen. 
& M. 88, the supreme court of Virginia fol- 
lowed Rawden v. Shadwell, under a statute 
which was an exact copy of 9 Anne, except 
that the word "contract" was inserted in it, 
which was omitted in the statute of Anne. 
And the case is followed by the same court 
in Skipwith v. Strother, 3 Rand. (Va.) 216. 
In this respect the statute of Anne differs es- 
sentially from ours. The only actions provid- 
ed for by our statute are the purely legal ones 
to recover back the money lost, and for the 
conversion of the goods won of the plaintiff. 
No suit in equity is authorized or contemplat- 
ed. The provision of the statute that the 



plaintiff may annex to his petition In the 
legal actions it permits interrogatories for 
discovery at once removes the necessity 
and cause for recourse to equity, and the 
statute which created the right having es- 
pecially prescribed the legal remedies men- 
tioned, and none other, they must be deemed 
exclusive. It cannot be denied, however, the 
courts have differed in the application of 
these kindred maxims, "ex turpi causa non 
oritur actio," and "in pari delicto potior est 
conditio defendentis;" especially to gaming se- 
curities, which, it has been held by some 
courts, are so far excepted from the opera- 
tion of the maxims that equity will decree 
them to be surrendered and canceled. The 
reasons given for so holding are that "the 
circulation of gaming bonds is no less to be 
discountenanced than the giving of them, and 
no means are more likely to prevent the giv- 
ing of them than to put an effectual stop to 
their circulation;" and that because the losers 
are permitted to defend against securities 
given by them, on the ground that they were 
given for a gaming consideration, courts of 
equity should entertain suits for their can- 
cellation. 

These appear to be arguments not so much 
in favor of the asserted exception as against 
the maxims themselves, for it is apparent 
that the same reasoning would, in the same 
measure, exclude from their operation every 
contract and security founded upon any other 
illegal consideration. The circulation of all 
bonds and securities given for any illegal or 
immoral consideration is quite as much to be 
discountenanced as the giving of them, — gam- 
ing bonds and securities, no more than oth- 
ers; and if putting a stop to the circulation 
of gaming bonds, by a resort to a court of 
equity to compel their surrender and can- 
cellation, be the most effective means of pre- 
venting the giving of them, then the same 
means should be permitted and adopted, and 
for the same reason, to accomplish the same 
end, with regard to bonds and securities 
given for any other illegal consideration. And 
if because parties may defend against secur- 
ities given by them, on the ground that they 
were given for a gaming consideration, is a 
valid reason why a court of equity should en- 
tertain a suit for the cancellation- of such se- 
curities, it is an equally valid reason why 
that court should entertain suits for the can- 
cellation of instruments founded upon any 
other Illegal consideration; for such consid- 
eration may also be made a ground of de- 
fense to them. Such is the logical result of 
the argument in favor of the exception con- 
tended for; and some English eases have 
gone to that extent. In Neville v. Wilkin- 
son, 1 Brown, Ch. 547, Lord Chancellor Thur- 
low is reported to have said "that in all cases 
where money was paid for an unlawful pur- 
pose, the party, though particeps criminis, 
might recover at law, and that the reason 
was that if courts of justice mean to prevent 
the perpetration of crimes it must be not by 



MAXIMS OF EQUITY. 



37 



allowing a man who has got possession to re- 
mam in possession, but by putting the par- 
ties back to the state in which they were be- 
fore." But Mr. Justice Story, referring to 
the words of the lord chancellor, says: "This 
is pushing the doctrine to an extravagant ex- 
tent, and effectually subverting the maxim 
'in pari delicto potior est conditio defend- 
entis.' The ground of reasoning upon which 
his lordship proceeded is exceedingly ques- 
tionable in itself, and the suppression of ille- 
gal contracts is far more likely in general to 
be accomplished by leaving the parties with- 
out remedy against each other, and by thus 
introducing a preventive check naturally con- 
nected with a want of confidence, and a sole 
reliance upon personal honor. And so, ac- 
cordingly, the modern doctrine is establish- 
ed." 1 Story, Eq. Jur. § 298. The difference 
between the earlier cases and the current au- 
tliorities on the subject is pointed out in the 
following note to this section: "I say at 
present, for there has been considerable fluc- 
tuation of opinion, both in courts of law and 
equity, on this subject. The old cases often 
gave relief, both at law and in equity, where 
the party would otherwise derive an advan- 
tage from his iniquity. But the modern doc- 
trine has adopted a more severely just, and, 
probably, politic, moral rule, which is to leave 
the parties where it finds them, giving no 
relief and no countenance to claims of this 
sort." Mr. Bispham, in his Principles of 
Eqnity, (section 223,) says: "The rule, both 
at law and in equity, in regard to gambling 
transactions, now seems to be that the courts 
will not only refuse to lend their aid for the 
purpose of enforcing such contracts, but they 
will not assist the losing party in setting the 
contract aside, or recovering back the mon- 
ey paid. The maxim applicable to such cases 
is potior est conditio possidentis." The 
opinion of the supreme court of Massa- 
chusetts, in the case of Atwood v. Fisk, be- 
fore cited, is to the same effect. It is there 
stated as the prevailing docti'ine that "the 
suppression of illegal contracts is far more 
likely in general to be accomplished by leav- 
ing the parties without remedy against each 
other; and so the modern doctrine is estab- 
lished that relief is not granted where the 
parties are in pari delicto." A review of all 
the authorities would occupy much space and 
be of little practical value. 

The test for determining when the objec- 
tion that the parties are in pari delicto can 
be sustained is whether the plaintiff can 



make out his case otherwise than through 
the medium and by the aid of the illegal 
transaction' to which he was himself a party, 
and, when applied to this case, is conclusive 
against the plaintiff. He asserts that he 
knowingly entered into an unlawful engage- 
ment; one contrary to good morals and 
against public policy. He entered into it 
with knowledge that either he or the other 
party must lose, and vrith the intention of 
reaping the fruits of his unlawful venture, if 
he should prove to be the winner. His ex- 
pectations were disappointed. He lost, paid 
part of the loss, and, for the purpose of mak- 
ing further payment, drew his check on a 
bank in which he had sufficient funds on de- 
posit to pay them. These checks he deliver- 
ed to the winner, or his agent, and, having 
gone thus far, he appeals to a court of equity 
to interfere in his behalf, and interpose its 
extraordinary aid by injunction to stop their 
payment. After he lost, he might have re- 
fused further to act, and still be safe, and if, 
by giving the checks, the other party has ac- 
quired an advantage over him, it results from 
his voluntary act on the executor of his ille- 
gal enterprise. We fail to perceive how to 
relieve parties in cases like this from the 
consequences in which their own wrongful 
conduct has involved them would tend to dis- 
courage such adventures, promote good 
morals, increase respect for the law, or ac- 
cord with a sound public policy. 

In reaching this conclusion, we have not 
overlooked the rule that a party who ad- 
vances money upon an undertaking or agree- 
ment to do an act that is illegal, immoral, or 
against public policy, may, at any time before 
the wrongful act is done, and while the agree- 
ment or undertaking remains wholly unex- 
ecuted, repent and retract. He may wholly 
rescind the contract, prevent the act from be- 
ing done, and recover back. The law en- 
courages such repentance and abandonment 
of the unlawful undertaking, and will aid the 
party, because it tends to prevent wrong- 
doing. But to be efficacious the repentance 
must be timely, and it comes too late after 
the unlawful act has been done, and the un- 
dertaking in whole or in part performed. 
Then the law will assist neither party in its 
further execution, nor to undo what has been 
done in its execution. Hooker v. De Palos, 
28 Ohio St. 251. 

Judgment reversed and petition dismissed. 

MINSHALL and SPEAR. JJ., dissent. 



88 



MAXIMS OF EQUITY 



CRAIG V. 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 r^ard 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. Ashburner, 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 ds-ected to be 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 not 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. 8 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. 

8 But if the cestui que trust die, without hav- 
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. 



MAXIMS 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, that the oc- 
cupation of the land for two years was too 
short to presume an election. He adds: 
"The opinion of Lord Rosslyn, that proper- 
ty was to be taken as it happened to be at 
the death of the party from 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, the 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 disjKJsed 
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 Eoper v. Radcliffe, 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 RadclifCe, 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 

* The case of Roper t. Radcliffe, 9 Mod. 167, 
examined. 



estate, he gave to the said W. C. 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 
a 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, o 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 prln- 
.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 

B 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 



MAX1M6 OF EQUITY. 



use not disposed of. Such was the case of 
Cruse 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. died 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 
case 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 pai'ty 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. 

8 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 land 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. 
Wms. 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 

e 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 
case 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. 

T 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 neqessary for 
that purpose. 

8 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 Eoper v. Rad- 
cliffe, is deduced from the above prmciples, 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 wei'e referred to, or have 
come under the view of the court, vyhich 
sanction the conclusion made in the unquali- 
fied terms used in the case of Roper v. Rad- 
clifCe. 

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 
ecstend this privilege in all cases to the cestui 
que trust. It will be refused if he be an in- 
fant. In the case of Seeley v. Jago, 1 P. 
Wms. 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., his 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, ajid that such election, if permitted, 
would, in case of his death, be prejudicial 
to his heir. 

In the case of Foone v. Blount, Oowp. 
467, Lord Mansfield, who is compelled to 
acknowledge the authority of Roper v. Rad- 
cliffe in parallel cases, combats the reasoning 
of Chief Justice 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 right 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 ease of Walker v. Denne, 2 Ves. Jr 
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 
was 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- 
djiation 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 where 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 correct 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 which 
it is directed to be converted. 

Having made these observations upon the 
principles laid down in the case of Roper v. 
BadclifCe, 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. 

The incapacities of a papist under the 
English statute of 11 & 12 Wm. III., 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 appears 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, that the money 
given to the papist, which was to be the pro- 
ceeds of the land, was a profit or interest 
out of the land. If this be so, (and it is not 
material in this case to affirm 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 OF 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 hold 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." In this case 
the will being valid, and the alien capable 
of taking under it, there can be no resulting 
trust to the b-^ir, 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. Radcliffe 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 

10 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 wwild 
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 
Roper v. Radcliffe, and as bearing upon th© 
present case. 

The first 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 surplus 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. Radcliffe, 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, whether the money to arise from the 
sale of the land, was to be taken as personal- 
t.v or land; and, although he mentions the 
case of Roper v. Radcliffe, 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 



WTMAN V. FT. DEARBORN NAT. BANK 
et al. 

(54 N. E. 946, 181 111. 279.) 

Supreme Court of lUinoisi. Oct. 16, 1899. 

Appeal from appellate court, First district. 

Bill by Walter Wyman against . the Ft. 
Dearborn National Bank and others. From 
a decree of the superior court of Cook county, 
in favor of complainants, defendants sued 
out a writ of error to the appellate court, 
where the decree was reversed. 80 111. App. 
150. Plaintiff appealed. Reversed. 

On September 1, 1896, the First National 
Bank of Helena, Mont., drew its check upon 
the Ft. Dearborn National Bank of Chicago 
for $10,000, in favor of appellant. At the 
time this check was given, the Ft. Dearborn 
National Bank had in its possession, on de- 
posit to the credit of the First National Bank 
of Helena, $20,523.67. The Ft. Dearbonn 
National Bank at the same time held a cei-- 
tificate of deposit of date May 15, 1895, from 
the First National Bank of Helena, in the 
sum of $25,000, which latter was secured by 
collateral for the face amount of $30,000 of 
notes taken by the First National Bank of 
Helena and indorsed to the Ft. Dearborn 
National Bank. The Helena bank was in- 
debted to the Ft. Dearborn National Bank, 
on account, $649.89. On the 4th day of Sep- 
tember, 1896, the Helena bank was placed 
in the hands of a receiver, and on the same 
day the Ft. Dearborn National Bank trans- 
ferred the account on deposit with it to the 
amount of $20,523.67 to itself, and credited 
its certificate of deposit with that amount, 
debiting the Helena bank with the same sum, 
and leaving a balance due the Ft. Dearborn 
National Bank of $2,321.39, with interest 
thereon. On the 5th day of September the 
check drawn in favor of appellant was pre- 
sented for payment to the Ft. Dearborn Na- 
tional Bank, which was refused. On the 
21st day of January, 1897, the appellant filed 
in the superior court of Cook county his bill, 
making the Ft. Dearborn National Bank and 
the receiver of the Helena bank defendants, 
and sought to marshal assets. To this bill 
of complaint a demurrer was interposed and 
overruled. Subsequently the defendants to 
the bill filed an answer, and the cause was 
submitted upon bill and answer, and a de- 
cree was entered in accordance with the 
prayer of the bill, to reverse which the de- 
fendants sued out a writ of error to the ap- 
pellate court for the First district, where the 
decree was reversed, and the cause remand- 
ed, with directions to dismiss the bill, where- 
upon the appellee in the appellate court 
prosecuted this appeal. 

Peckham, Brown & Packard, for appellant. 
Gilbert & Fell, for appellees. 

PHILLIPS, J. (after stating the facts). 
It is insisted by the appellant that by the 



execution and delivery of its check for $10,- 
000 against the deposit account of the Ft. 
Dearborn National Bank the First National 
Bank of Helena assigned and transfeiTed 
to the appellant, from that deposit account, 
an amount sufficient to pay the check on 
September 1, 1896, the time at which it was 
drawn; and as sustaining this contention 
appellant cites National Bank of America v. 
Indiana Banking Co., 114 111. 483, 2 N. E. 
401; Abt v. Bank, 159 111. 467, 42 N. E. 856; 
and Gage Hotel Co. v. Union Nat. Bank, 
171 111. 531, 49 N. E. 420. The principle is 
clearly established by the foregoing and 
other authorities in this state that the check 
of a depositor upon his banker, delivered 
to another for value, transfers to that other 
the title to so much of the deposit as the 
check calls for, and the banker becomes 
the holder of the money for the use of the 
holder of the check, and is bound to account 
to him for the amount thereof, provided the 
party drawing the check has funds to that 
amount on deposit, subject to his check, at 
the time the same is presented. Munn v. 
Burch, 25 111. 21. The check operates as an 
absolute assignment of the fund on which 
it is drawn from the time it is delivered, 
as between the drawer and the payee, and 
the bank is bound as soon as the check is 
presented, and whatever sum stands upon 
the books to the credit of the depositor at 
the time of such presentation is absolutely 
assigned to the holder of the check. Bick- 
ford V. Bank, 42 111. 238; Brown v. Leckie, 
43 111. 497; Fourth Nat. Bank v. City Nat. 
Bank, 68 111. 398; Union Nat. Bank v. Ocea- 
na Co. Bank, 80 III. 212; Bank v. Jones, 137 
111. 634, 27 N. E. 533; Niblack v. Bank, 169 
111. 517, 48 N. E. 438. And the relation ex- 
isting between the drawer, the check holder, 
and the banker becomes such, when there 
are sufiicient funds on deposit to meet the 
check at the time of presentation, that, be- 
cause such funds were appropriated at the 
time of the drawing of the check, the con- 
tract to be implied between the depositor, 
the banker, and the check holder is that the 
check holder, whoever he may be, may have 
his action, and recover against the bank the 
amount, pro tanto, of the check. Gage Ho- 
tel Co. V. Union Nat. Bank, supra. In the 
latter case it was said (page 536, 171 111., 
and page 422, 49 N. E.): "If the funds are 
In the bank when the check is drawn, the 
drawing is an appropriation, as between the 
drawer and the payee, of the sum of money 
named in the check, which is to lie in the 
bank until called for by a presentation of 
the check. It is true that in such a case 
there is no privity between the bank and the 
check holder until presentment, and that 
priority in drawing a check does not give 
priority of right to the fund as against the 
banker, but that such priority of right is de- 
termined by the order of presentation." It 
was held in Niblack v. Bank, supra (page 
521, 169 111., and page 439, 48 N. E.): "It 



u 



JIAXIMS OF EQUITY. 



is also the law, where a bank holds a de- 
mand note, or a note past due, it has the 
right to charge such obligation up against 
the maker's deposit account; and, if it does 
so before a check drawn by the depositor 
is presented for payment, it will be entitled 
to hold the deposit against any check after- 
wards presented." In this case, on the 4th 
of September— at least one day before the 
presentment of the check for payment— the 
Chicago bank trausfen'ed the account, and 
by proper entries on its books credited the 
Helena bank with all the money held by it 
to the credit of the latter bank, which cred- 
it was made on a certificate of deposit, which 
was, in effect, a demand note. Hunt v. 
Divine, 37 111. 137; Tripp v. Curtenius, 36 
Mich. 494. Appropriating the deposit fund 
in good faith, in pursuance of strict legal 
rights, for the purpose of protecting its own 
interests, and without notice of the appro- 
priation of the money by drawing the check 
in favor of appellant, was not a wrongful 
act, but one authorized by law, and absolute- 
ly transferred the legal and equitable right 
to the fund so deposited to the Ft. Dearborn 
National Bank, the checlt not having been 
presented to it, nor it having any notice of 
the same, until the day after the transfer 
of the account. Under the recognized rule 
in this state there was between the Helena 
bank and the payee of the check an abso- 
lute assignment of $10,000, then on deposit 
with the Ft. Dearborn National Bank, and 
no right existed in the Helena bank to change 
that deposit in any way, or to so draw 
against it as to prevent the assignment pro 
tanto from being carried out. It is clear that 
the holder of the check had an interest in 
the fund so assigned, while it is equally clear 
that until the bank had notice it could pay 
subsequently drawn checks, or credit the 
amount of the deposit on any overdue paper 
of its own. The equitable interest of the 
checlt holder, however, remained the same. 
It is a principle controlling the marshaling 
of securities that where one creditor can 
resort to two funds, and another to one of 
them only, the former must seek satisfaction 
out of that fund which the latter cannot 
touch. In Pom. Eq. Jur. § 1414, it is said: 
"If, therefore, the prior creditor resorts to 
the doubly-charged fund, the subsequent 
creditor will be substituted, as far as possi- 
ble, to his rights. These rules must be tak- 
en with the modifications and exceptions 
that in their application the paramount in- 
cumbrancer shall not be delayed or incon- 
venienced in the collection of his debt, 
* * * that the rights of third parties 
shall not be prejudiced, and that the parties 
themselves are creditors of the same debt- 
or." Numerous authorities are there cited 
as sustaining these propositions. The prin- 
ciple of marshaling securities has been fre- 
quently applied to cases where there is an 
equitable interest or lien on collateral secu- 
rities. In Colebrooke on Collateral Securities 



it is said (section 98): "By this rule, a cred- 
itor having a lien upon two funds for the 
payment of his debt, and a subsequent cred- 
itor a lien upon one only of such funds, the 
former is required to exhaust his remedy 
against the fund which is especially for his 
security before resorting to that in which 
the subsequent creditor is interested. The 
rule, however, is never enforced in cases 
where it would cause an injury or damage 
to the creditor holding such liens upon sep- 
arate funds, or would work Injustice to 
other parties. The rule was applied where a 
merchant had forwarded his note to a broker 
for sale, and the proceeds, less commissions, 
remitted. The broker fraudulently pledged 
the note, with other collaterals, to a bank, 
to secure a loan to himself, of which the 
merchant received nothing. The merchant, 
learning of the misappropriation, gave no- 
tice to the bank, and claimed to be subro- 
gated to any surplus arising from other 
securities held by it after the payment of 
the loan. Subsequently, and before the ma- 
turity of the loan, the note fell due, and was 
paid without suit. Upon realizing the other 
securities, the banlt held a surplus in its 
hands. The merchant was entitled to be 
paid from such surplus, his voluntary pay- 
ment not affecting his right of recovery." 
This principle is sustained by Parwell v. 
Bank, 90 N. Y. 483. In that case the mer- 
chant had an equitable interest in collater- 
als, which, with his note, were put up to 
secure the loan to the broker by reason of 
the broker's misappropriation of the note, 
and it is not, equitably, a stronger case for 
the marshaling of assets than where, as in 
this case, the bank had as security for its 
certificate of deposit and for its account 
due notes aggregating about $30,000, and a 
deposit of over $20,000. Here, $10,000 of the 
amount deposited having been equitably as- 
signed to the complainant, by reason of its 
appropriation by the bank before receiving 
notice of the drawing of the check the com- 
plainant was deprived of all interest in the 
deposit, and the Helena bank, or its receiver 
(who could have no greater interest than 
the bank Itself), received the benefit of the 
application of the deposit by the Ft. Dear- 
born National Bank on its certificate of de- 
posit, and the complainant, as holder of the 
check, had such an interest in the sum de- 
posited that he should be subrogated, as 
against the Helena bank or its receiver, to 
the notes held by the Ft. Dearborn National 
Bank after the payment of the residue due 
the latter bank; and this principle of sub- 
rogation Is applicable because, by reason of 
the appropriation of the fund by the bank 
with which the deposit was made to the 
payment of a debt for which it held two dis- 
tinct characters of securities, one of those 
securities is, to an extent sufficient to pay 
the complainant, released from liability so 
far as the Ft. Dearborn National Bank was 
concerned, and the latter bank had lawfully 



MAXIMS OF EQUITY. 



45 



used $10,000 of a deposit theretofore assign- 
ed to the complainant by the Helena banli. 
2 Beach, Mod. Bq. Jur. § 784; 1 Story, Eq. 
Jur. §§ 635, 636. 

It is a maxim of equity that "equity re 
gards and treats that as done which in good 
conscience ought to be done," and in writing 
of this maxim Mr. Pomeroy, In his worli on 
Equity Jurisprudence (section 865), says: 
"The principle involves the notion ot an equi- 
table obligation existing from some cause; of 
a present relation of equitable right and duty 
subsisting between two parties; a right held 
by one party, from whatever cause arising, 
that the other should do some act, anri the 
corresponding duty— the 'ought'— resting upon 
the latter to do such act. Equity does not re- 
gard and treat as done what might be. done 
or what could be done, but only what ought 
to be done. Nor does the principle operate in 
favor of every person, no matter what may 
be his situation and relations, but only in fa- 
vor of him who holds the equitable right to 
have the act performed, as against the one 
upon whom the duty of such performance has 
devolved." A court of equity, acting upon 
this fundamental principle, may go beneath 
the appearance of things, and deal with the 
real facts, where the interest is a purely equi- 
table one, recognized by courts of equity alone. 
When, therefore, a prior Incumbrancer of two 
funds, by his election of remedies, deprives a 
junior incumbrancer, who has a lien upon one 
of the funds only, from reaching the particu- 
lar fund on which he has a lien, the junior 
incumbrancer, to the extent of his lien, should 
be substituted to the lien of the paramount in- 
cumbrancer upon the other fund bound, as 
against the debtor and all claiming under him 
by lien or title subsequent in time. Gibson 
v. Seagrim, 20 Beav. 614; James v. Hubbard, 
1 Paige, 228; Clowes v. Dickenson, 5 Johns. 
Ch. 235. Under a bill for marshaling securi- 
ties relief may be had in that character of 
case. The Ft. Dearborn National Bank had 



a right to apply the deposit in payment of the 
Indebtedness pro tanto to the extent of the 
deposit, and deprive the check holder of any 
part of that deposit as a fund assigned to him; 
but he had such an equitable interest in that 
fund, by reason of its assignment by the 
check, that he is entitled to be subrogated to 
the extent of his check, with interest thereon 
from the time it was presented, to the fund to 
be derived from the collection or sale of the 
collateral securities held by the Ft. Dearborn 
National Bank as security on its certificate of 
deposit and bank account, after the residue Is 
paid to it. The superior court erred in de- 
creeing that the Ft. Dearborn National Bank 
should deliver to the receiver of the First 
National Bank of Helena the collateral notes, 
but did not err in decreeing that from the pro- 
ceeds of the same there should first be paid 
to the Ft. Dearborn National Bank the 
amount, including interest, due it, and to pay 
to Wyman the amount due on said check and 
interest, and to retain the balance as part of 
the assets of the First National Bank of 
Helena. Nor was there error in the decree of 
the superior court in directing, if there was 
not enough to pay Wyman in full, the amount 
unpaid should be allowed as a claim against 
said First National Bank of Helena, to be 
paid in due course of administration of its 
assets, and that the receiver pay the costs. 
It was error in the appellate court for the 
First district to reverse the entire decree of 
the superior court, and remand the cause with 
directions to dismiss the bill. So far as the 
superior court decreed that the Ft. Dearborn 
National Bank deliver to the receiver of the 
First National Bank of Helena the collateral 
notes, its decree is reversed, but in all other 
respects the decree of said court is affirmed. 
For the error of the appellate court for the 
First district In reversing the entire case, and 
remanding with directions to dismiss the bill, 
its decree is reversed, and the cause Is re- 
manded. Reversed and remanded. 



m 



MAXIMS OF EQUITY. 



STINCH FIELD v. MILLEKEN. 

(71 Me. 567.) 

Supreme Judicial Court of Maine. December, 
1880. 

PETEES, J. The following facts are de- 
ducible from the evidence in this case: The 
complainant purchased of the defendants, 
certain steam-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 Russell, 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 them, 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 compliiinantgave to 
the defendants a mortgage on the mnehinery 
as personal property to secure the notes here- 
after named, in order to protect a lien there- 
on until the machinery sliould 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, Kussell conveyed the 
mill lot to the defendants. On August 2, 
1875, Prentiss conveyed the home lot to them, 
they 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 otlier loans and ad- 
vances. The complainant went on and 
erected and completed a mill on the Russell 
lot, and the steam-mill macliinery 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 
« 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. Brskine, 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 that an absolute convey- 
ance is taken as a security for a debt, it is in 
equity a mortgage. No'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, Fed. Gas. 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 different at lavr, in equity a 
mortgage is not prevented because the con- 
veyance does not come from the equitable 
mortgager. It is suflicient 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 
the property as security for the money ad- 
vanced, he has a right 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 T. Whiting, 
46 N. T. 627; Carr v. Carr, 52 N. Y. 251. 

It is denied that this court lias the power 
to declare that an absolute deed shall be 
deemed to be a mortgage, allowing an equi- 
table mortgager tlie 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, 
196; Whitney v. Bachelder, 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. Rowell v. 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 that 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 the true agreement. Instead 
of setting it wholly aside, equity is worked 
out by adapting it to the purpose originally 
intended. Eauity allows renaration to be 



MAXIMS OF EQUITY. 



47 



made by admitting a verbal defeasnnce 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. That 
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 liave a credit of the net 
proceeds. If the insurance was obtained on 
I lie mortgagees' own account only, they 
should not be allowed. Cushing v. Thomp- 
son, 34 Maine, 496; Pierce v. Faunae, 63 
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, 45 Maine, 
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 shoulii 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- 



field 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 insurjince 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 theprocjBed- 
ings are to be finally terminated. Another 
reason why complai mint 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 no 
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, VIRGIN, and LIBBEY, JJ., con- 
curred. 



48 



MAXIMS OF EQUITY. 



McLARREN v. BREWER, 

(51 Me. 402.) 

Supreme Judicial Court of Maine. 1863. 

Bill in equity. Heard on demurrer. 

B. Bradbury, for complainant. A. Hay- 
den, for defendants. 

KENT, J. The case, as stated In the bill, 
to which a general demurrer has been filed, 
is in substance this: I. N. M. Brewer, the 
intestate, on the 25th of October, 1851, gave 
to the complainant a mortgage of a ship, 
then on the stocks, to secure all sums of 
money then due, and such further sums as 
the complainant might furnish and advance 
to said Brewer, for the purpose of finishing 
said ship and fitting her for sea. The vessel 
was completed, and was registered in the 
name of said Brewer as owner of seven- 
eighths, and of Nathaniel Y. B^-ench of one- 
eightli. The said Brewer, on the back of 
said mortgage, acknowledged in writing that 
the ship thus registered was the vessel nam- 
ed in the mortgage. The mortgage was duly 
recorded, on the day of registry, in the cus- 
tom house, and afterwards in the town 
clerk's office. Soon afterwards the ship pro- 
ceeded to sea, and has never since been In 
this state, except in June, IS.dS, and the 
complainant has not exercised control over 
her or received any possession under his 
mortgage. In February, 18.58. the ship being 
in New Orleans, the said Brewer sold to said 
French the seven-eighths of the ship, which 
then stood in his name, for their full value, 
inn king no reservation of the rights of the 
complainant under his mortgage, but giving 
an absolute bill of sale, with warranty, of 
said seven-eighths. Upon the sale. Brewer 
received from French, as part of the consid- 
eration, his three negotiable notes, amount- 
ing in all to $12,240, in nearly equal sums, 
and payable at different dates, the latest 
being the fii'st day of March, 1859; the said 
notes being secured by a mortgage of said 
vessel given by French to Brewer. In 
March, 1858, a few weeks after the sale. 
Brewer died, and the respondent has been 
appointed as administratrix on his estate, 
and said notes and mortgage to Brewer have 
come into her hands as such administratrix. 
One of the notes has been paid to her, and 
she still holds the other notes and mortgage. 
Brewer's estate is represented as insolvent, 
and commissioners have been appointed, and 
have reported that the claim of the complain- 
ant is $3,654.85; and, at the time of the de- 
cease of Brewer, a large part of the debt 
intended to be secured by the mortgage to 
him was due and unpaid, and has not since 
been paid. 

The prayer of the bill is that the proceeds 
of the sale of the ship, thus existing in the 
notes, should be applied by the . administra- 
trix to the payment of the complainant's 
debt secured by the mortgage, and for such 



relief as the nature of the case may require. 

The principal question which arises is 
whether a mortgagee of a vessel which has 
been sold in another and a distant state, by 
the mortgagor in possession, by an absolute 
bill of sale of the entire vessel or interest, 
and with warranty, without any prior au- 
thority from the mortgagee, can follow the 
proceeds of the sale, existing in the notes 
given for the purchase, and in the possession 
of the mortgagor, or his representative. 

It Is a well-settled doctrine, both in law 
and In equity, that a mere change of prop- 
erty from one form to another cannot, in 
itself, divest the owner, or those who have 
distinct and immediate rights in the thing 
in its original shape, of their property in it. 
As a general rule, that right attaches to the 
new form, so long as such new property is 
capable of being identified and distinguished 
from all other property, and no rights of any 
bona fide purchaser for a valuable consider- 
ation, without notice, intervene. It makes 
no difference, in law, into what other form 
the change may have been made, whether 
into promissory notes received as the consid- 
eration of the transfer, or into other mer- 
chandise. The product is substituted for the 
original thing, and so remains, as long as it 
can be clearly shown to be such substitute. 
It ceases when the means of distinguishing 
and identifying fail. Scott v. Surman, Willes, 
400; Whitcomb v. Jacobs, Salk. IGO; Taylor 
V. Plumer (a leading case) 3 Maule & S. 562; 
Story, Eq. Jur. §§ 1258, 1259. 

Money itself may be followed if it can be 
thus identified. The difficulty in relation to 
money usually is that, as it has "no ear 
mark," it cannot be thus distinguished; but 
this is simply a failure of proof, but does 
not alter or disprove the principle. Taylor 
V. Plumer, above cited. 

This doctrine has been often applied to 
agents, factors, and trustees, where the sale 
has been rightfully made, and the proceeds 
are existing in notes or other property, and 
the agent dies or becomes insolvent. Thomp- 
son V. Perkins, 3 Mason, 232, Fed. Oas. No. 
13,972; Story's Equity, before cited. 

This class of cases is where the sale was 
made by a person intrusted with the prop- 
erty with a power to sell, or where the sale 
has been subsequently ratified and con- 
firmed. 

But the same principle applies to cases 
where the property of a party has been mis- 
applied, or a trust fund has been wrongfully 
converted. "An abuse of trust can confer 
no rights upon the party abusing it, or on 
those who are in privity with him." Story, 
Bq. Jur. § 1258. The case of Taylor v. 
Plumer, before cited, was one of fraudulent 
transfer. Mr. Justice Story, in Conrad v. 
Insurance Co., 1 Pet. 448, says that this 
general principle "has been extended to cases 
where there has been a fraudulent or tor- 
tious misapplication of property." 

It may be admitted that the relation of 



MAXIMS OF EQUITY. 



49 



mortgagor and mortgagee does not of Itself, 
and unconnected with other facts, create the 
relation of principal and agent, or give any 
right to the mortgagor to sell the whole 
property by an absolute bill of sale, with 
warranty of a perfect title. The mortgagor 
in possession may sell his interest, 1. e., his 
right to redeem, but he is a wrongdoer if he 
sells and delivers the entire property to a 
purchaser without the knowledge or assent 
of the mortgagee. Such sale, if the existence 
of the mortgage Is not disclosed, is now made 
a criminal offense. St. 1860, c. 150. It may 
also be granted that, as to the mortgagee and 
his title and interest, such sale does not con- 
vey, nor impair his title, and that he may 
pursue and enforce his right to the thing, 
wherever he may find It. 

But we thinli that, under the circumstances 
stated in this bill, he has an election to do 
so, or to follow the proceeds existing in the 
new form of negotiable notes in the hands 
of the mortgagor or the representative of his 
estate. He may do this on the ground that 
he assents to and alfirms the sale, and to the 
change of the property mortgaged to him 
from a vessel to the notes taken. A subse- 
quent ratification is equivalent to a prior 
authority. We have seen that, if he had had 
prior authority, he would have come under 
the rule so often applied to agents and fac- 
tors. 

He may do this, also, on the other ground, 
that it was a wrongful, if not a fraudulent, 
conversion of his property by the mortgagor 
in possession, and he may so far waive the 
tort as to, pursue the proceeds in the new 
form, whilst they can be identified. He must 
elect which course to pursue. He cannot have 
both remedies. Murray v. Libbern, 2 Johns. 
Ch. 441; Murray v. Ballon, 1 Johns. Ch. 566. 

The bill sufficiently sets out an indebted- 
ness covered by the mortgage. The com- 
plainant must, of course, establish such in- 
debtedness, i. e., for money advanced for the 
purpose of finishing the ship and fitting her 
for sea. No other debt or claim is covered 
by the mortgage. 

But as to this debt, under the circumstan- 
ces of this case, the law imputes a trust in 
the mortgagor during his life, and that trust 
HUTCH.& BXJNK.EQ.^ 



follows the notes in the hands of his per- 
sonal representative. The proceeds of the 
sale of the ship. In her hands, stand in place 
of the thing sold, and should be applied as 
we have a right to presume Mr. Brewer, If 
he had lived, would have applied them, so far 
as needed, to the discharge of the debt se- 
cm'ed by the mortgage. 

In this case there is not a plain and ade- 
quate remedy at law. The estate is insol- 
vent, and, to say the least, it would require 
a peculiar action and judgment in law to 
take these proceeds out of the general mass 
of the estate, which by law should be dis- 
tributed pro rata among all the creditors, 
and appropriate it specifically to the com- 
plainant's debt. Such appropriation is pecul- 
iarly the proper province of a court of equity. 

According to the statement in the bill, the 
claim of the complainant is not equal to any 
one of the notes, and it would be diiflcult to 
find any principle of law by which an action 
of trover could be maintained for them. The 
estate is entitled to the notes and the pro- 
ceeds after the mortgage debt is paid, and 
the claim set up is based on an imputed trust, 
and not on a legal title to the notes. 

It is worthy of observation that the words 
limiting the equity powers of this court to 
cases, "where the parties have not a plain 
and adequate remedy at law," which are 
found in Kev. St. 1841, c. 96, are omitted in 
the present Revised Statutes. We are not 
called upon, in this case, to determine wheth- 
er the omission of these words does in fact 
enlarge or alter the equity powers of this 
court. It seems to leave them under the gen- 
eral rules of equity in all cases where the 
subject-matter is made by statute cognizable 
in equity. 

It was declared by this court, in Tappan 
V. Deblois, 45 Me. 131, that "by the Revised 
Statutes of this state (1857) we have jurisdic- 
tion of all cases of trust, whether arising by 
implication of law or created by deed or 
will." 

Demurrer overruled. 

APPLETON, C. J., CUTTING, DAVIS, 
DICKERSON, and BARROWS, JJ., concur- 
red. 



50 



MAXIMS OF EQUITY. 



CLEMENTS v. TILLMAN et al. 

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

Supreme Court of Georgia. 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, def<?ndant and 
plaintiff in error, for an account and settle- 
ment of a legacy due said Hattie E. Till- 
man imder the will of one Jacob A. Clem- 
ents, John W. Clements being an executor 
of the same. 

The following is the oflBcial 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 bands 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. Clements, 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 
ia 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. 

KIBBBE, 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 efficacious equitable 
remedies, while preserving 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 Blandford, J., being disqualified. Judge Kib- 
bee, of the Oconee circuit, was designated to 
preside in his stead. 



MAXIMS or EQUITY. 



51 



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 



MAXIMS OF EQUITY, 



HART V. SAXSOM et al. 

(3 Sup. Ct. 5S(J, 110 U. S. 151.) 

Supreme Court of the United States. January 
21, 1884. 

Error to the Circuit Court of the United 
States for the Northern District of Texas. 

Henry J. Leovy and W. Hallett Phillips, 
for plaintiff in error. A. S. Lathrop, for de- 
fendants in enor. 

GRAY, J. This is a writ of error sued out 
by Edmoud J. Hurt, a citizen of Louisiana, 
to reverse a judgment rendered against him 
in the circuit court of the United States for 
the Northern district of Texas, in an action 
brought by him against Marion Sansom and 
the heirs at law of Thomas JI. League, cit- 
izens of Texas, to recover a tract of land in 
.Johnson county, in that state, of which they 
had dispossessed him. At the trial. Hart 
proved his title under a patent from the re- 
public of Texas to League, and a deed with 
general covenants of warranty from League, 
dated August 19, 1846, and both recorded on 
December 9, 1879, and it appeared that the 
defendant Sansom held possession of the land 
under a lease from the other defendants and 
as their tenant. The defendants offered in 
evidence the record of a judgment rendered 
by the district court of Johnson county, on 
August 24, 1875, upon a petition filed June 
11, 1873, by the heirs at law of League, (who 
died intestate November 5, 1865,) against 
Virgil Wilkerson, Orlando Dorsey, and sev- 
eral other persons, and Hart, alleging that 
Wilkerson ejected the plaintiffs from this 
land, and unlawfully withheld possession 
thereof from them; that on October 29, 1870, 
the defendant Dorsey, by deed duly recorded, 
conveyed to some of the other defendants 
than Wilkerson and Hart three-fourths of 
the land, reserving in that deed the remain- 
ing fourth to himself, and that other deeds 
(particularly set forth) of parts of the land 
were afterwards made to the rest of such 
other defendants and recorded; that the de- 
fendant Hart "sets up some pretended claim 
and title to said land;" and that "the de- 
fendant Wilkerson is a naked trespasser up- 
on tlie land of the plaintiffs, and that the 
several other defendants' several deeds, 
which appear upon the record of deeds of 
Johnson county as aforesaid, are fraudulent 
and void, and that the said pretended claims 
and deeds, and each and all of them, cast a 
cloud upon the title of the plaintiffs;" and 
praying "that they have judgment, that the 
cloud upon the title of the plaintiffs, created 
by the several deeds aforesaid, be removed, 
and that the said deeds, and each and all 
of them, be declared null and void, and be 
canceled and discharged of record, and that 
the title of the plaintiffs in and to said prem- 
ises and every part thereof, may be confirmed 
and established as against said defendants 
and each and every of them, and all per- 



sons claiming through or under them," and 
for a writ of possession, damages, and costs. 
That record also showed the issue and due 
service of citations to all the defendants ex- 
cept Dorsey and Hart; the issue of a cita- 
tion directing the sheriff to serve Hart, being 
a citizen of Louisiana, by publication, and 
the sheriff's return showing the execution of 
the citation by such publication in a news- 
paper of the county four successive weeks 
before the return day, and a like service by 
publication on Dorsey, a citizen of New 
York. That record further showed a default 
of all the defendants; and that upon a writ 
of inquiry the jury assessed damages against 
Dorsey and Hart; found as facts the issue 
of the patent to League and the title of the 
plaintiffs as his heirs; that Hart "claimed 
said land;" and that a deed was made by 
Dorsey and recorded, as alleged in the peti- 
tion, but that Hart and Dorsey respectively 
had no title of record or otherwise; and re- 
turned a verdict "for the plaintiffs; and that 
they recover the land described in the peti- 
tion." That record finally showed a judg- 
ment "that the plaintiffs recover of the de- 
fendants the premises described," and "that 
the several deeds in the plaintiff's petition 
mentioned be and the same are hereby an- 
nulled and canceled, and for naught held, 
and the cloud tliereby removed," and for 
costs, and that execution issue for the costs. 
The circuit court, against the plaintiff's ob- 
jection, admitted the judgment in evidence, 
instructed the jury that it divested the plain- 
tiff of his title to the land, and directed a 
verdict for the defendants. 

The plaintiff, deriving his title under a 
deed with covenants of general warranty 
from League, is entitled to maintain this 
action against League's heirs, who are es- 
topped by those covenants, unless the former 
judgment in the action brought by them in 
the state court has adjudicated the title as 
between them and the present plaintiff. It 
is therefore necessary to consider the nature 
and effect of that judgment. The petition 
combined, in accordance with the practice 
prevailing in that state, an action in the na- 
ture of ejectment to recover possession of the 
land, and a suit in equity to remove a cloud 
upon the plaintiffs' title; and the service by 
publication was in the form authorized by 
the local statutes against non-residents. 1 
Pasch. Dig. Laws Tex. (4th Ed.) art. 25. 
The petition alleges that Wilkerson was in 
possession; and that the other defendants, 
except Hart, held recorded deeds, which 
were fraudulent and void, and cast a cloud 
upon the plaintiffs' title. But as to Hart, 
it did not allege that he was in possession, 
or was in privity with the other defendants, 
or that he held any deed, but only that he 
set up some pretended claim and title. And 
the verdict finds that he claimed the land, 
but had no title of record or othervsdse there- 
in. The judgment is that the plaintiffs re- 
cover the land of the defendants, and that 



MAXIMS OF EQUITY. 



53 



the deeds mentioned in the petition be and 
are annulled and canceled, and the cloud 
thereby removed, and for costs; and execu- 
tion is awarded for costs only, and not for 
any writ or process in the nature of a writ 
of possession or habere facias. 

It is difficult to see how any part of that 
judgment (except for costs) is applicable to 
Hart; for that part which is for recovery 
of possession certainly cannot apply to Hart, 
who was not in possession; and that part 
which removes the cloud upon the plaintiff's 
title appears to be limited to the cloud creat- 
ed by the deeds mentioned in the petition; 
and tlie petition does not allege, and the ver- 
dict negatives, that Hart held any deed. But 
if there is any judgment (except for costs) 
against Hart, it Is, upon the most liberal 
construction, only a decree removing the 
cloud created by his pretended claim of title, 
and is no bar to the present action. Gen- 
erally, if not universally, equity jurisdiction 
is exercised in personam, and not in rem, 
and depends upon the control of the court 
over the parties, by reason of their presence 
or residence, and not upon the place where 
the land lies in regard to which relief is 
sought. Upon a bill for the removal of a 
cloud upon titie, as upon a bill for the spe- 
cific performance of an agreement to convey, 
the decree, imless otherwise expressly pro- 
vided by statute, is clearly not a judgment in 
rem, establishing a title in land, but oper- 
ates in personam only, by restraining the de- 
fendant from asserting his claim, and direct- 
ing him to deliver up his deed to be can- 
celed, or to execute a relief to the plaintiff. 
Langd. Eq. PI. (2d Ed.) §§ 43, 184; Massie 
V. Watts, 6 Cranoh, 148; Ortoh v. Smith, 
18 How. 263; Vandever v. Freeman, 20 Tex. 
334. It would doubtless be within the power 
of the state in which the land lies to provide 
by statute that if the defendant Is not found 
within the jurisdiction, or refuses to make 
or to cancel a deed, this should be done in 
his behalf by a trustee appointed by the 
court for that purpose. Felch v. Hooper, 



119 Mass. 52; Ager v. Murray, 105 U. S. 
126, 132. But in such a case, as in the or- 
dinary exercise of its jurisdiction, a court of 
equity acts In personam, by compelling a 
deed to be executed or canceled by or in be- 
half of the party. It has no inherent power, 
by the mere force of its decree, to annul a 
deed or to establish a title. 

In the judgment in question, no trustee to 
act in behalx of the defendant was appointed 
by the court, nor have we been referred to 
any statute authorizing such an appointment 
to be made. The utmost effect which can be 
attributed to the judgment, as against Hart, 
is that of an ordinary decree for the removal 
by him, as well as by the other defendants, 
of a cloud upon the plaintiff's titie. Such 
a decree, being in personam merely, can only 
be supported against a person who is not a 
citizen or resident of the state in which it is 
rendered, by actual service upon him within 
its jurisdiction; and constructive service by 
publication in a newspaper is not sufficient. 
The courts of the state might perhaps feel 
bound to give effect to the service made as 
directed by its statutes. But no court de- 
riving its authority from another government 
will recognize a merely constructive service 
as bringing the person within the jurisdic- 
tion of the court. The judgment would be 
allowed no force in the courts of any other 
state; and it is of no greater force, as 
against a citizen of another state, in a court 
of the United States, though held within the 
state in which the judgment was rendered. 
Hollingsworth v. Barbour, 4 Pet. 466, 475; 
Boswell's Lessee v. Otis, 9 How. 336; Bis- 
choff V. Wethered, 9 Wall. 812; Knowles v. 
Gaslight Co., 19 Wall. 58; Pennoyer v. Neff, 
95 U. S. 714. See, also, Schibsby v. Wes- 
tenholz, L. E. 6 Q. B. 155; The City of 
Mecca, 6 Prob. Div. 106. 

The circuit court having ruled and in- 
structed the jury otherwise, its judgment 
must be reversed, and the cause remanded 
with directions to set aside the verdict, and 
to order a new trial. 



54 



MAXIMS OF EQUITY. 



ADAMS V. MESSENGER. 

(17 N. E. 491, 147 Mass. 185.) 

Supreme Judicial Court of Massachusetts. 
Middlesex. June 19, 1888. 

Appeal from supreme judicial court, Mid- 
dlesex county. 

Bill in equity, by George B. Adams against 
William T. Messenger, to compel the per- 
formance of an agreement to furnish the 
plaintiCC with certain perfect working in- 
jectors for steam-boilers, and to apply for 
and assign to plaintiff certain letters patent 
in the dominion of Canada. Hearing in the 
supreme judicial court upon defendant's de- 
murrer, which was sustained, and the plain- 
tiff appealed. The facts are stated in the 
opinion. 

Wm. B. Durant, for plaintiff. Charles S. 
Knowles, for defendant. 

DEVENS, J. It is the contention of the 
defendant that the plaintiff has a full, com- 
plete, and adequate remedy at common law 
by a suit for damages, and that the court, 
sitting in equity, cannot grant the relief 
sought by the prayers of the bill. The con- 
troversy arises from the failm-e to perform 
an executory written contract. So far as 
this relates to personal property, the objec- 
tions arising from the statute of frauds, 
which have sometimes been found to exist 
when oral contracts were sought to be en- 
forced, have, of course, no application. The 
general rule that contracts as to the pur- 
chase of personal property are not specifical- 
ly enforced, as are those which relate to real 
property, does not rest on the ground of any 
distinction between the two classes of prop- 
erty other than that which arises from their 
character. Contracts which relate to real 
property can necessarily only be satisfied by 
a conveyance of the particular estate or par- 
cel contracted for, while those which relate 
to personal property are often fully satisfied 
by damages which enable the party injured 
to obtain elsewhere in the market precisely 
similar property to that which he had agreed 
to purchase. The distinction between real 
and personal property is entirely subordinate 
to the question whether an adequate remedy 
can thus be afforded. If, from the nature 
of the personal property, it cannot, a court 
of equity will entertain jurisdiction to en- 
force the contract. 1 Story, Eq. Jur. § 717; 
Clark V. Flint, 22 Pick. 231. A contract for 
bank, railway, or other corporation stock, 
freely sold in the market, might not be thus 
enforced, but it would be otherwise where 
the stock was limited in amount, held in a 
few hands, and not ordinarily to be obtain- 
ed. White V. Schuyler, 1 Abb. Prac. (N. S.) 
300; Treasurer v. Mining Co., 23 Cal. 390; 
Poole V. Middleton, 29 Beav. 646; Doloret 
V. Kothschild, 1 Sim. & S. 590. Where arti- 
cles of personal property, also, are peculiar 



and individual in their character, or have an 
especial value on account of the associations 
connected with them, as pictures, curiosities, 
family furniture, or heirlooms, specific per- 
formance of a contract in relation to them 
will be decreed. Lloyd v. Loaring, 6 Ves. 
773; Fells v. Read, 3 "Ves. 70; Lowther v. 
Lowther, 13 Ves. 95; Williams v. Howard, 3 
Murph. 74. An agreement to assign a pat- 
ent will be specifically enforced. Binney v. 
Annan, 107 Mass. 94. Nor do we perceive 
any reason why an agreement to furnish ar- 
ticles which the vendor alone can supply, 
whether because their manufacture is guard- 
ed by a patent or for any other reason, 
should not also be thus enforced. Hapgood 
V. Rosenstock, 23 Fed. 86. As the value of 
a patent-riglit cannot be ascertained by com- 
putation, so it is impossible, with any ap- 
proach to accuracy, to ascertain how much 
a vendee would suffer from not being able 
to obtain such articles for use in his busi- 
ness. 

The contract of the defendant was two- 
fold: to furnish and deliver certain describ- 
ed working steam-injectors, within a speci- 
fied time, to the plaintifC; and also that if 
the defendant shall make improvements in 
injectors for steamboilers, and shall take 
out patents therefor in the United States, he 
will apply for letters patent in Canada, and, 
on obtaining them, will assign and convey 
the same to the plaintifC, and that he will 
not do any act prejudicial to these letters 
patent of Canada, or the monopoly thus se- 
cured. It is said that the court will not 
enforce a contract for personal services when 
such services require the exercise of peculiar 
skill, intellectual abiUty, and judgment, and 
that, therefore, the defendant cannot be or- 
dered to make and deliver the injectors con- 
tracted for. But the principle on which it 
is held that a court of equity cannot decree 
one to perform a personal service involving 
peculiar talent or skill, because it cannot 
so mould its order and so supervise the in- 
dividual executing it that it can determine 
whether he has honestly obeyed it or not, 
has no application here. The defendant has 
agreed to furnish and deliver certain inject- 
ors, which the contract shows to be patented 
articles. There is nothing in the bill from 
which it is to be inferred that they were yet 
to be made when the contract was executed; 
but. If it be assumed that they were, there 
is nothing from which it can be inferred 
that any skill peculiar to the defendant was 
required to construct them. For aught that 
appears, they could be made by any intelli- 
gent artificer in the metals of which they 
were composed. The details of their manu- 
facture are given by reference to the pat- 
ents, which are referred to in the agreement; 
so that no diflSculty, such as has sometimes 
been experienced, could have been found in 
describing accurately and even minutely the 
articles to be furnished. Nor are there 
found in the case at bar any continuous du- 



MAXIMS OF EQUITY. 



55 



ties to be done, or work to be performed, 
requiring any permanent supervision, which, 
as it could not be concluded within a definite 
and reasonable time, has sometimes been 
held an obstacle to the enforcement of a con- 
tract by the court. Agreements to make an 
archway under a railway, or to erect a sid- 
ing at a particular point for the convenience 
of the land-owner, have been ordered to be 
specifically enforced. Although the party ag- 
grieved might have obtained damages which 
would have been sufficient to have enabled 
him to pay for constructing them, and al- 
though the work to be done necessarily in- 
volved engineering skill as well as labor, he 
was not bound to assume the responsibility 
or the labor of doing that which the defend- 
ant had agreed to do. Storer v. Railway Co., 
2 Youuge & C. Ch. 48; Greene v. Railway 
Co., L. R. 13 Eq. 44. The case at bar Is 
readily distinguishable from that of WoUen- 
sak V. Briggs, 20 Bradw. 50, on which the 
defendant much relies. In that case the de- 
fendant was to construct for the plaintiff 
certain improved machinery for a particular 
purpose, but no details were given as to the 
form, structure, principle, or mode of op- 
erating the proposed machine. It was ob- 
viously a contract too indefinite to enable the 
court to order its specific enforcement. 

It is urged that specific performance of a 
part only of a contract will not be ordered 
when it is not in the power of the court to 
order the enforcement of the whole, and that 
it would not be possible to enforce that por- 
tion of the contract which relates to the ap- 
plication for letters patent in Canada, and the 
subsequent assignment of them. But where 
two parts of a contract are distinctly separa- 
ble, as in the case at bar, there is no reason 
why one should not be enforced, and the 
plaintiff compensated in damages for the 
breach of the other. When a contract relates 
to but a single subject, and it is impossible 
for the defendant to perform it except par- 
tially, the plaintiff is entitled to the benefit of 
such partial performance, and to compensa- 
tion, if it be possible to compute what is just, 
so far as it is unperformed. It was therefore 
held in Davis v. Parker, 14 Allen, 94, that 
where one had agreed to convey land, with 
release of dower, and was unable to procure 
a release of dower, the purchaser was en- 
titled to a conveyance without such release, 
with an abatement from the purchase money 
of the value of the wife's interest at the 
time of the conveyance. See, also, Milkman 
V. Ordway, 106 Mass. 253; Ourran v. Water- 
Power Co., 116 Mass. 90. 

We have assumed, in favor of the defend- 
ant's contention, that the only relief that the 



plaintiff could obtain for the breach of thai 
portion of the agreement which relates to 
the application for a patent in Canada for 
the improvements which defendant had 
made, would be In damages. We have not 
intended thus to decide. That equity, by 
virtue of its control over the persons before 
the court, takes cognizance of many things 
which they may do or be able to do abroad, 
while they are themselves personally here, 
will not be controverted. One may be enjoin- 
ed from prosecuting a suit abroad. He may 
be compelled to convey land situated abroad, 
although the conveyance must be according 
to the laws of the foreign country, and must 
be sent there for record. Pingree v. Coffin, 
12 Gray, 288; Dehon v. Poster, 4 Allen, 545; 
Cunningham v. Butler, 142 JIass. 47, 6 N. 
E. 782; Bailey v. Ryder, 10 N. Y. 363; New- 
ton V. Bronson, 13 N. Y. 587. There is noth- 
ing to show that the plaintiff, in making his 
application in Canada for the patent, is com- 
pelled to leave the state, any more than he 
would be compelled to do so if he was an 
applicant at Washington. The grant of such 
a patent is an act of administration only. 
If it were to be granted here, the party 
would be ordered to make application. It 
was held in Runstetler v. Atkinson, 4 Mac- 
Arthur, 382, that where a formal assignment 
of an invention had not been made, but a 
valid agreement had been made so to assign, 
equity would order the party to make the 
formal assignment, and also to make appli- 
cation for the patent, which, in such case, 
would issue to the assignee. The laws of 
Canada, which we can know only as facts, 
are not before us by any allegations as to 
them. If all that is required by them is a 
formal application in writing by the inven- 
tor, there would seem to be, from the alle- 
gations of the bill, sufficient reason why the 
defendant should be required to make and 
forward it, or place it in the hands of the 
plaintiff to be forwarded, to the Canadian 
authorities. In any event, as the application 
is preliminary only to obtaining letters pat- 
ent for the purpose of assigning them to the 
plaintiff, the averments of the biU, taken in 
connection with the terms of the agreement, 
set forth a good reason why the plaintiff may 
ask an assignment of his title to the im- 
provements in question from the defendant, 
so far as the dominion of Canada is con- 
cerned, and also why the defendant should 
be restrained from alienating or in any way 
incumbering any right he may have to let- 
ters patent from Canada if plaintiff should 
decide to seek his remedy in this form, rather 
than in damages for breach of this part of 
the contract. Demurrer overruled. 



56 



PENALTIES AND FORFEITURES. 



EWING V. LITCHFIELD et al. 

(212 S. E. 362, 91 Va. 575.) 

Supreme Court of Appeals of Virginia. June 
27, 1805. 

Appeal from circuit court, Washington 
county; ShefCey, Judge. 

Bill by one Litchfield and cthei-s against 
Thomas Ewlng. Decree for complainants, 
and defendant appeals. Reversed. 

White & Penn, for appellant. Daniel Trigg, 
for appellees. 

KEITH, P. This bill was filed in the circuit 
court of Washington county by Litchfield 
and others, and sets forth the following facts: 
In January, 1890, the plaintiffs entered into 
a contract with J. D. Imboden, by which the 
plaintiffs and the said Imboden agreed to pro- 
cure $100,000 of the stock of the Virginia & 
Tennessee Coal & Iron Company at the price 
of $10 or less per share of $100 each. These 
shares, together with 15,000 shares owned by 
the plaintiffs, were to be voted in a stock- 
holders' meeting, to be held within a period 
named, and upon a notice prescribed in the 
contract, so as to acquire the control of $1,- 
950,000 of the stock which remained in the 
treasury of the Virginia & Tennessee Coal & 
Iron Company. This block of 19,500 shares 
of stock was to be sold to Imboden at $10 per 
share, and In consideration of his purchase 
of the said treasury stock at this reduced rate 
he undertook to secure and cause to be sub- 
mitted to the said meeting of stockholders, 
for their ratification, a contract, by and on 
behalf of the Danville & East Tennessee 
Railroad Company and the Atlantic cfe Dan- 
ville Railroad Company with the Virginia & 
Tennessee Coal & Iron Company, binding the 
railroad companies to extend their roads into 
the lands and coal fields of the coal and iron 
company, or to make connections therewith 
satisfactory to the said parties by means of 
other railroads, by the 1st of January, 1893, 
and to complete and have in operation the 
line of said I'ailroad companies from Abing- 
don to Damascus on or before the 1st day of 
January, 1891, and to complete and have in 
operation all that part of the line of said 
railroads and their connections, so as to con- 
nect Abingdon and the coal fields, by the 1st 
of January, 1898, and then binding the said 
railroad companies, under certain terms 
therein named, for the transportation of the 
product of the coal fields, owned by the Vir- 
ginia & Tennessee Coal & Iron Company. It 
is further provided that, unless the party of 
the first part, J. D. Imboden, or his assignees, 
shall, at the meeting of the stockholders pro- 
vided in the contract, purchase the treasury 
stock and deliver or cause to be delivered the 
contract of the railroad companies, as here- 
inbefore provided, or in the event of the fail- 
ure of the first party to notify the parties of 
the second part of his readiness to conform 
to and to comply with the provisions of this 



agreement, then the contract entered Into was 
to be null and void, except that the parties of 
the second part "shall be entitled to demand 
and receive from the party of the first part 
the amount of $50,000 of the stock of the Vir- 
ginia & Tennessee Coal & Iron Company, or 
$5,000 in lieu thereof by way of ascertained 
and liquidated damages on account of the 
breach of this contract." There are details of 
the contract entered into between the parties 
Which I have thought it unnecessary to set 
out but have contented myself with reciting 
what I conceived to be the features of the 
contract upon which this controversy de- 
pends. The $50,000 of stock was to be de- 
posited with the Exchange National Bank of 
Lynchburg by the party of the first part, to 
be held in accordance with the provisions of 
the contract, and it was also provided that 
the party of the first port should have the 
right to elect to pay either the stock or the 
money in cash as damages, in the event of 
his failure to comply with his contract. Sub- 
sequently an amended bill was filed, and 
Thomas Ewing was made a party defendant, 
it appearing that J. D. Imboden, in execut- 
ing the contract set out in the original bill, 
was acting as the agent of Swing, and that 
Imboden had no personal interest In It. To 
this bill there was a demurrer, which the 
circuit court overruled, and such proceedings 
were had that a final decree was entered in 
the cause, from which Thomas Ewing, has 
appealed, and his appeal presents for our 
consideration at the outset the propriety of 
the decree of the circuit court upon the de- 
muiTer to the bill. 

It will be observed that this suit Is not 
brought to enforce the specific performance 
of that which the defendant contracted to do, 
—that is, to procure contracts from certain 
railroad coi-porations to build a line of rail- 
way into the coal fields controlled by the 
plaintiffs within a stipulated period; in other 
words. It is not a suit for the specific per- 
formance of the principal contract entered in- 
to between the parties. Stated broadly, that 
was a contract upon the part of Ewing to con- 
struct, or for him to procure others to con- 
Btruct, certain lines of road to certain points 
named In the conti-act, the object being to de- 
Felop the coal fields owned by the Virginia & 
Tennessee Coal & Iron Company, In which 
company the plaintiffs were large stockhold- 
ers. Upon the part of the plaintiffs. In con- 
sideration of Ewing procuring this road to be 
built, or procuring a satisfactory contract up- 
on the part of others to build it, they were 
to unite with him, who. In the meantime, 
with their aid, was to secure $100,000 of the 
stock of the Virginia & Tennessee Coal & 
Iron Company, thus constituting a controlling 
interest in the company, and thereby give to 
the appellant the control of 19,500 shares of 
stock, at $10 per share. In a proper case a 
court of equity delights specifically to en- 
force contracts where the parties have no 
other remedy, or the remedy afforded else- 
where Is less complete or satisfactory; but 



PENALTIES AND FORFEITURES. 



57 



here the undertaking of the defendant is to 
■build a, railroad, or to procure others to build 
It, and courts of equity will not enforce con- 
tracts for that purpose. This seems to be 
well settled. 

The object, and the only object, of this bill 
is to recover what the parties have agreed up- 
on, either as a penalty or forfeiture, or as 
liquidated damages. The breach of the con- 
tract is recognized as the foundation of the 
relief sought, and the plaintiffs have resorted 
to this court, and invoked its aid to enable 
them to gather in the form of damages the 
fruits of a mere breach of contract. There 
are cases in which courts of equity will 
award damages, but they are cases where, 
having obtained Jurisdiction over the subject 
and of the parties, under some of the well- 
recognized sources of equity jurisdiction, it 
is found necessary to award damages in or- 
<ier to do full and complete justice by way 
of compensation, as when, in the enforce- 
ment of a contract for the sale of land, the 
court finds itself unable to give the party 
seeking and entitled to its aid all that, under 
his contract, he should recover. In such a 
case the court will, as far as possible, spe- 
cifically execute the contract, and then ascer- 
tain the damages accruing by reason of its 
inability in the particular case thus to afford 
complete relief. The giving of the damages 
is ancillai-y or auxiliary to the jurisdiction 
specifically to enforce the performance of the 
contract. See Nagle v. Newton, 22 Grat. 814. 
The case before us being in its essence for the 
recovery of damages for a breach of contract, 
a. court of equity is not to be beguiled into 
granting the relief sought because it is in- 
geniously and artfully concealed under cover 
<if a prayer to compel the assignment of cer- 
tain shares of stock. The great weight of au- 
thority in this countriy is that a court of equi- 
ty will not entertain a bill for such a purpose, 
though in England it seems to be otherwise. 
Had the subject and object of the principal 
contract between the parties in this case been 
the sale and purchase of the $50,000 of the 
stock in question, a court of equity would 
have left them to their remedy at law, and 
will certainly not barken to their prayer when 
it appears that the stock, the assignment of 
which is sought, is itself but one form of the 
penalty or liquidated damages agreed upon 
as the measure of the injury sustained by the 
breach of the contract entered into. Much of 
the argument addressed to us had for its ob- 
ject to enable us to determine whether or not 
the stock, or in lieu thereof the $5,000 in 
money, agreed to .be transferred or paid by 
the appellant in case of a failure to perform 
the contract, was to be considered as a pen- 
alty or as liquidated damages. This is a 
feature of the controversy which it is not 
necessary for us to determine, because in 
neither aspect of it are the plaintiffs entitled 
to the relief sought A court of equity will 
neither enforce a penalty or forfeiture, nor 
permit it to be enforced in a court of law. 



It will go even further than this. It will not 
permit a party, by the voluntary payment of 
the agreed penalty, to defeat the enforcement 
of the alternative contract. It will not en- 
tertain a suit for the recovery of damages 
merely, nor will it undertake to give damages 
save, as before observed, as ancillary or aux- 
iliary to some one of its recognized subjects 
of jurisdiction; and so far from liquidated 
damages constituting an exception to the rule 
that courts of equity will not entertain suits 
for damages for breach of contract, it seems 
that, if the damages for the breach of a con- 
tract have been liquidated by the parties to 
the contract (that is, ascertained and agreed 
upon), that fact, so far from inviting the 
assistance of a court of equity, is sufficient to 
repel it. Indeed, this must of necessity be 
so, for, as the jurisdiction of the court to en- 
force contracts specifically rests upon the in- 
sufficiency of damages as a redress or remedy 
for failure to comply with a contract, the 
very foundation of jurisdiction seems wanting 
in those cases where the parties themselves 
have otherwise determined, and have fixed a 
money value in the form of liquidated dam- 
ages upon the injury sustained by its breach. 
In this view is found an explanation of the 
leaning shown by courts of equity, in doubt- 
ful cases, to construe such agreements as we 
are here considering as creating a penalty or 
forfeiture rather than liquidated damages. 
For, if it be determined that it is but liqui- 
dated damages, the jurisdiction of a court of 
equity is at an end, but if it be construed as 
a forfeiture or penalty, then it affords no ob- 
struction to the interpretation of the court 
of equity, because it will prohibit either the 
enforcement or the voluntary payment of the 
penalty or forfeiture, and will compel the 
performance of the alternative contract if a 
proper case be made. Courts of equity, there- 
fore, always strongly incline to that construc- 
tion which declares it to be a forfeiture or 
penalty rather than liquidated damages. In 
this case, however, a court of equity is with- 
out motive to prefer the one to the other con- 
struction. The alternative for which the pen- 
alty is given, if it be a penalty, is the securing 
of a contract for the building of a railroad. 
It is obviously impossible to compel the de- 
fendant either to build it himself or to pro- 
cure others to build it. It will leave the par- 
ties, in the forum appropriate for that relief, 
to recover damages for its breach,— liquidated 
damages, if a court of law shall be of opinion 
that the parties so intended ihe stipulation in 
the contract, or damages in ordinary cases, 
if a court of law shall be of opinion that the 
stock or money stipulated to be paid was a 
penalty. We have not referred to cases. 
Cases upon the subject of the specific per- 
foi-mance of contracts and other subjects dis- 
cussed are too numerous even for citation. 
The whole subject has been treated with 
gi'eat fullness and ability in Pomeroy's Equi- 
ty, and we shall content ourselves with re- 
ferring to the appropriate chapters in that 



5S 



PENALTIES AND FORFEITURES. 



work, and especially to sections 446, 447, 
1401-1403, and to Lawson, Rights, Rem. & 
Prac. pp. 2588, 2590, 2591, as sustaining the 
views here presented. 
We are of opinion that the demurrer to the 



bill should have been sustained, and the bill 
dismissed, and therefore enter a decree re- 
versing the decree of the circuit couit. 

BUCHANAN, J., absent. 



PENALTIES AND FORFEITURES. 



59 



CRAIG V. HUKILL et al. 

(16 S. E. 363, 37 W. Va. 520.) 

Supreme Court of Appeals of West Virginia. 
Dec. 22, 1892. 

Appeal from circuit court, Monongalia coun- 
ty. 

Bill by Joseph W. Craig against E. M. 
Hul^ill & Co. and others for partition of 
lanil. There was a decree for partition. De- 
fendant E. M. Hukill appeals. Reversed. 

Okey Johnson, W. P. Hubbard, and Keck, 
Son & Fast, for appellant. Cox & Baker, 
for appellee. 



BBANNON, J. W. M. Davis executed to 
David Kennedy a lease of a tract of land for 
a term of years, for the purpose of drilling 
for petroleum oil, which lease has come by 
assignment to B. M. Hukill. The deed of 
lease contains a covenant on the part of the 
lessee to commence operations for oil develop- 
ment within nine months, or for payment of a 
certain sum of money per month until com- 
mencement of work, with a provision that 
a failure to do one or the other should work 
an absolute forfeiture of the lease. After- 
wards Davis executed an instrument by 
which he agreed to sell to H. P. Griffith all 
the oil and gas under the said tract, and 
Griffith transferred all his right in said tract 
to Joseph W. Craig. Davis had a life estate 
in said tract, with remainder in fee to his 
children; and, by the death of one of them, he 
inherited an undivided one-fifth share therein. 
Hukill, claiming under the first-mentioned 
lease, as also under a lease from the guard- 
ian of the surviving children, bored for and 
produced oil on the premises. Craig brought 
a suit in equity In the circuit court of Monon- 
galia county against Hukill, Davis, and oth- 
ers, praying that the tract be partitioned, 
and one-fifth assigned as the share of Davis 
in fee, and that all the oil and gas under 
it be assigned to the plaintiff, Craig. The 
theory of Craig for relief is that by reason 
of failure to commence operations, or to pay 
money in lieu thereof, as provided in the lease 
to Kennedy, it had become forfeited, and he 
had, by the said agreement between Davis 
and Griffith, become entitled, in exclusion of 
all rights under the Kennedy lease, to all 
oil which Davis could convey. Obviously, 
Craig can get relief only through an enforce- 
ment of the forfeiture of the Kennedy lease. 
Thus, at the threshold of the case, we are 



met with the question whether a court of 
equity will enforce this alleged forfeiture. 

Affirmative relief against penalties and for- 
feitures was one of the springs or fountains 
of equity jurisdiction, and the jurisdiction 
was very early exercised; and it would be 
going in the very opposite direction, and act- 
ing contrary to its essential principles, to af- 
firmatively enforce a forfeiture. The ele- 
mentary books on equity jurisprudence state 
the rule as almost an axiom, that equity nev- 
er enforces a penalty or forfeiture. 2 Story, 
Eq. Jur. § 1319; 1 Pom. Eq. Jur. § 459; Bisp. 
Eq. § 181; Beach, Mod. Eq. Jur. § 1013. 
Mr. Pomeroy, in 1 Pom. Eq. Jur. § 460, says 
that rule is without exception; and I con- 
fess my search has led me to the same con- 
clusion. This doctrine is supported in Amer- 
ica by decisions of the highest authority, com- 
ing from jurists of the most eminent name, 
—among them, Kent and Marshall; and there 
seems to be no change or qualification in 
later decisions. Livingston v. Tompkins, 4 
Johns. Ch. 415; Hbrsblirg v. Baker, 1 Pet. 
232; Marshall v. Vicksburg, 15 Wall. 146. 
The estate under the Kennedy lease certainly 
vested; and the plaintiff seeks, by a suit In 
equity, to divest it, which he can only do by 
declaring and enforcing the forfeiture of that 
lease, for the plaintiff's right must depend 
for its birth and existence on that forfei- 
ture. In Livingston v. Tompkins, supra, it 
was held that "equity will not assist the re- 
covery of a penalty or forfeiture, or anything 
in the nature of a forfeiture," and "will not 
lend its aid to divest an estate for the 
breach of a condition subsequent." McKim 
V. Mason, 2 Md. Oh. 510; Warner v. Bennett, 
31 Conn. 468; Smith v. Jewett, 40 N. H. 
530. In Oil Creek R. Co. v. Atlantic & G. 
W. R. Co., 57 Pa. 65, a bill was filed to en- 
force a forfeiture of a lease because of failure 
to build a road according to the express pro- 
visions of the lease; and the court refused, 
on the ground that equity never lends its 
aid in enforcement of a forfeiture, but will 
leave the parties to their legal remedies. 
Many cases cited in the text-books above cit- 
ed sustain this principle. Though equity has 
jurisdiction in partition, yet it will not exer- 
cise it when it can be done only by enforcing 
a forfeiture, when the plaintiff's right grows 
only out of a forfeiture. As equity has no 
jurisdiction, we cannot decide the merits of 
the case, and therefore reverse the decree 
and dismiss the bill, without prejudice to the 
plaintiff to seek to assert his rights by any 
appropriate legal remedy. 



60 



PENALTIES AND FOKFEITURES. 



KUNKLE et al. v. WHERRY. 

(42 Atl. 112, 189 Pa. 198.) 

Supreme Court of Pennsylvania. Jan. 2, 1899. 

Appeal from court of common pleas, Alle- 
gheny county. 

Action by H. H. Kunkle and Conrad Jor- 
dan, partners doing business as Kunkle & 
Jordan, against James Wherry, to recover a 
balance alleged to be due on a contract for 
granite construction. Judgment for plain- 
tiffs, and defendant appeals. Reversed. 

R. A. & Jas. Balph, for appellant. J. S. & 
E. G. Ferguson, for appellees. 

FELL, J. The defendant was the contractor 
for the construction of a large, 10-stoiy build- 
ing, which he was required to complete in 11 
months. By the terms of his contract with 
the owner, he was to receive $100 for each 
day less than the time limit, and to pay 
$1,000 for each day that he should exceed 
it, in the completion of the work. He en- 
tered Into a contract with the plaintiffs for 
the stone and granite work. They agreed to 
furnish the materials, and to finish the work 
to the top of the second story, ready for the 
bricklayers, in six weeks' time after three 
stories of ironwork had been erected, and 
bound themselves "to pay the sum of $150 
per day as a penalty for each and every day 
thereafter that the said work remains unfin- 
ished, as and for liquidated damages." The 
learned judge held that this stipulation should 
be regarded as a penalty, and not as liqui- 
dated damages, and that the defendant could 
set off against the plaintiffs' claim such dam- 
ages only as he proved to have been actually 
sustained by him because of the delay of the 
plaintiffs In completing the work. 

The rule that in actions ex contractu, where 
the breach of an agreement admits of com- 
pensation, the recovery may be limited to 
the loss actually sustained, notwithstanding 
a stipulation for a penalty, is founded upon 
the principle that one party should not be 
allowed to profit by the default of the other, 
and that compensation, and not forfeiture, is 
the equitable rule. Equity will regard a pen- 
alty or forfeiture as Intended to secure the 
fulfillment of a contract, and It may preclude 
the injured party from recovering more than 
a just compensation, or from obtaining a col- 
lateral advantage. Notes to Peachy v. Duke 
of Somerset, 2 White & T. Lead. Cas. Eq. 
2044; Bisp. Eq. 178. Whether a sum named 



as compensation for the breach of a contract 
is to be considered as a penalty to secure Its 
fulfillment, from which equity will relieve, 
or as damages liquidated by the parties them- 
selves, is a question which cannot be an- 
swered by the application of any general rule. 
The question is always ohe ot construction, 
and any rule upon the subject is a mere guide 
to the totention of the parties. The grounds 
on which each case is to be considered and 
determined are clearly stated by our Brother 
Mitchell In Keck v. Bieber, 148 Pa. St. 645, 
24 Atl. 170: "The general principle upon 
which the law awards damages is compensa- 
tion for the loss suffered. The amount may 
be fixed by the parties in advance, but, where 
a lump sum is named by them, the court will 
always look into the question whether this 
is really liquidated damages, or only a pen- 
alty; the presumption being that it is the lat- 
ter. The name by which it is called is of but 
slight weight; the controlling elements being 
the intent of the parties, and the special cir- 
cumstances of the case." And he quotes 
with approval March v. AUabough, 103 Pa. 
St. 335: "The question * ♦ * is to be de- 
termined by the intention of the parties, 
drawn from the words of the whole contract, 
examined in the light of its subject-matter 
and its surroundings; and in this examina- 
tion we must consider the relation which the 
sum stipulated bears to the < injury which 
may be caused by the several breaches pro- 
vided against, the ease or difilculty of meas- 
uring a breach in damages, and such other 
matters as are legally or necessarily inherent 
In the transaction." From the nature of this 
case, the actual damages which would result 
from a breach of the contract would not read- 
ily be susceptible of ascertainment, and it 
seems to us that it was the manifest Intention 
of the parties not to leave them to the un- 
certain estimate of a jury, but to fix them by 
express agreement. "Uncertainty as to the 
extent of the injuries which may ensue" was 
said in Powell v. Burroughs, 54 Pa. St. 329, 
and Coal Co. v. Schultz, 71 Pa. St. 180, "to 
be a criterion by which to determine whether 
it is a case of liquidated damages ot a pen- 
alty." The damages named were for the 
breach of a single stipulation, and were not 
disproportionate to the loss which would 
probably result to the defendant from the 
failure of the plaintiffs to complete their 
work in time. The fifth, and seventh assign- 
ments of error are sustained, and the judg- 
ment is reversed, with a venire facias de 
novo. 



PENALTIES AND FORFEITURES. 



61 



JAQUITH V. HUDSON. 
(5 Mich. 123.) 

Supreme Court of Jlichigan. May Term, 

1858. 

Error to circuit court, Wayne county. 

The action was by Jaqultli against Hud- 
son, upon a promissory note for one thou- 
sand dollars, given by the latter to the for- 
mer, April 15th, 1855, and payable twelve 
months after date. Defendant pleaded the 
general Issue, and gave notice that on the 
trial he would prove that, previous to said 
] 5th day of April, 1^5, plaintiff and defend- 
ant had been and were partners In trade, at 
Trenton, in said county of Wayne, under 
the name of Hudson & Jaquith; that, on 
that day the copartnership was dissolved, 
and the parties then entered into an agree- 
ment, of which the following is a copy: 

"This article of agreement, made and en- 
tered into between Austin B. Jaquith, of 
Trenton, Wayne county, and state of Michi- 
gan, of the first part, and Jonathan Hudson, 
of Ti-enton, county of Wayne, and state of 
Michigan, of the second part, witnesseth, 
that the said Austin E. Jaquith agrees to 
sell, and by these presents does sell and con- 
vey unto the said Jonathan Hudson, his 
heirs and assigns, all his right, title, and in- 
terest in the stociv of goods now owned by 
the firm of Hudson and Jaquith, together 
with all the notes, books, boolc accounts, 
moneys, deposits, debts, dues, and demands, 
as well as all assets that in anywise belong 
to the said firm of Hudson & Jaquith; and 
that the copartnership that has existed be- 
tween the said firm of Hudson & Jaquith is 
hereby dissolved; and that the said Austin 
E. Jaquith, by these presents, agrees that he 
will not engage in the mercantile business, in 
Trenton, for himself, or in connection with 
any other one, for the space of three years 
from this date, upon the forfeiture of the 
sum of one thousand dollars, to be collected 
by the said Hudson as his damages. In con- 
sideration whereof, the said Jonathan Hud- 
son, of the second part, agrees for himself, 
his heirs and administrators, to pay unto the 
said Austin E. Jaquith the sum of nine hun- 
dred dollars, for his services in the firm of 
Hudson & Jaquith, together with all the 
money that he (the said Austin E. Jaquith) 
paid into said firm, deducting therefrom the 
amount which he (the said Austin B. Jaq- 
uith) has drawn from said firm; the re- 
mainder the said Hudson agrees to pay to the 
said .Taquith, his heirs or assigns, at a time 
and in a' manner as shall be specified in a 
note bearing even date with these presents. 
And the said Hudson, for himself, his heirs 
and assigns, agrees to pay all the debts, 
notes and liabilities of the firm of Hudson & 
Jaquith, and to execute unto the said Jaq- 
uith a good and sufficient bond of Indemnifi- 



cation against all claims, debts, or liabilities 
of the firm of Hudson & Jaquith. 
"Trenton, April, 1855. 

"Austin E. Jaquith. [L. S.] 
"Jonathan Hudson. [L. S.] 
"Witness: Arthur Edwards. Arthur Ed- 
wards, Jr." 

And defendant further gave notice, among 
other things, that he would show, on the 
trial, tliat, after the execution of said agree- 
ment In writing, and the giving of said note 
In pursuance thereof, and on or about ,th^ 
15th day of July, 1855, plaintiff, In violation 
of said agreement, entered into the mercan- 
tile business at Trenton, and had continued 
to cari-y on the same ever since; by means 
whereof the consideration of said note had 
failed. And he further gave notice, that he 
(the defendant) continued to carry on the 
mercantile business at Trenton, after the dis- 
solution of said copartnership; and by means 
of the breach of said articles by plaintiff, 
defendant had sustained damages to the sum 
of one thousand dollars, liquidated by said 
articles for a breach thereof, which sum he 
would claim to have deducted from the 
amount of said note, on the ti-ial. 

On the trial, the plalntiflE, having intro- 
duced the note in evidence, rested his case. 

Defendant then proved by Arthur Edwards 
the due execution of said agreement. The 
defendant also proved by the said witness 
that the plaintiff resumed mercantile busi- 
ness in July, 18.55, in the village of Trenton, 
within eighty rods of the old stand of Hud- 
son & Jaquith, and had ever since contlniied 
in such business. 

On cros.s-examination, Capt. Edwards tes- 
tified that the above agreement was made in 
duplicate, and signed by the parties about 
the middle of April, 1855, which duplicates 
were placed In his hands, to be kept till the 
bond of indemnity and note mentioned In the 
agreement were executed; that the dupli- 
cates were not to be delivered till both par- 
ties came and demanded them. Hudson at 
once took exclusive possession of tlie store, 
goods, books, and papers of the old firm of 
Hudson & Jaquith, where the duplicate 
agreements were signed, and they were left 
In witness' hands until the other papers men- 
tioned in them were executed. Witness did 
not recollect whether it was said by the par- 
ties that the agreement was not to take ef- 
fect till both parties came for the duplicates. 
Witness never delivered to the defendant the 
agreement now produced by him, and cannot 
tell how, it came into his possession. The 
plaintiff and defendant never came and joint- 
ly demanded the duplicates of him. He has 
no recollection that either of tlie parties ever 
notified him not to deliver over the papers. 

On re-examination, witness said he lived 
at Trenton in 1855, and his papers were for 
the most part kept there. Witness cannot 
remember delivering this duplicate to de- 



62 



PENALTIES AND FORFEITURES. 



fendant It might have been delivered by 
him to defendant, but witness has no recol- 
lection of it. 

Tlie defendant then, by another witness, 
gave evidence tending to show that, not long 
after the date of said agreement, tlie bond 
of Indemnity mentioned in the agreement 
was executed by defendant and delivered to 
the plaintiff. 

No evidence was given to show any dam- 
age sustained by the defendant by reason of 
plaintiff's again engaging in business in Tren- 
ton. 

The plaintiff then called as a witness Ar- 
thur Edwards, .Jr., who testified that he was 
one of the subscribing witnesses to said 
agreement. The duplicate agreements were 
to go into Capt. Edwards' hands, and to be 
delivered only when plaintiff and defendant 
came together for and demanded them. 
When they were ready for signing, plaintiff 
hesitated about signing the duplicates, but 
witness thinks that Capt. Edwards then said 
that plaintiff could sign them safely, as he 
(the said Capt. Edwards) would hold them 
until they were jointly demanded; cannot 
remember whether Hudson or Edwards 
made the remark, but one of them made 
some remark- which gave witness the im- 
pression that these duplicate papers were to 
be null until they should be both simultane- 
ously delivei'ed to the parties. Witness was 
in and out of the room, and did not hear 
the whole conversation, and cannot say pos- 
itively whether Hudson was there when this 
remark was made. There was something 
said about some other papers, but witness 
could not recollect it distinctly. 

The court was then asked by plaintiff's 
counsel to charge the jury as follows: 

"(1) That a delivery to both parties, at the 
same time, of the agreement in duplicate, 
by Capt. Arthur Edwards, was essential to 
give it effect, and render it operative be- 
tween the said plaintiff and defendant; and, 
before the defendant can claim the full bene- 
fit of it, he must show either such a de- 
livery as was agreed upon, or a willful re- 
fusal, on the part of the plaintiff, that such 
delivery should be made. 

"(2) That, even if the agreement set up 
was, in the opinion of the jury, properly de- 
livered, as between the parties, the defendant 
can not recoup any damages against the 
plaintiff, except upon evidence showing that 
some damage was actually sustained by 
him; that the clause in the agreement as to 
damages cannot, of itself, and In the ab- 
sence of evidence, operate to the reduction 
of the claim of the plaintiff, as the sum fixed 
in the agreement Is In the nature of a pen- 
alty, and not liquidated damages; and no 
damages can be recovered under it except 
such as are proven." 

The court refused so to charge; and plain- 
tiff excepted. 

The court then charged the jury in sub- 
stance as follows: 



That, if the jury were satisfied that the 
duplicate agreements were placed in Capt. 
Edwards' hands under the agreement be- 
tween the parties that the same were not to 
become operative until both parties called on 
him to deliver them, that then they must be 
satisfied that such a delivery had taken 
place, or the agreement had never taken 
effect; but if, on the other hand, they should 
be satisfied that the real nature of the trans- 
action was that the said duplicate agree- 
ments were to be placed in Oapt. Edwards' 
hands solely to await the future execution 
and delivery of the bond, note, etc., mention- 
ed in the agreement, and were thereupon to 
become operative, that then no formal de- 
livery of said duplicates was necessary. 
The agreement in such case would take ef- 
fect as soon as the bond, note, etc., men- 
tioned, were made and delivered to plaintiff. 

The court further charged the jury, that it 
was not necessary for the defendant to prove 
any actual damage under the plaintiff's 
breach of the said agreement, as the dam- 
ages therein fixed were liquidated damages, 
and not a penalty. 

The issue was then submitted to the jury 
on the evidence, who found a verdict for the 
plaintiff, In the sum of eighteen dollars and 
eight cents, allowing the defendant the sum 
of one thousand dollars mentioned In the 
agreement. 

Plaintiff brought the case to this court, by 
writ of error, accompanied by bill of excep- 
tions. 

D. Bethune Dufiield, for plaintiff in error. 
G. V. N. Lothrop, for defendant in error. 



CHRISTIANCY, J. The first point upon 
which the court below was requested to 
charge, and for the refusal of which the first 
exception Is taken, assumed that, by the ar- 
rangement between the parties, the contract 
was not to become operative, or to have any 
force or effect, until the duplicates should be 
delivered by Capt. Edwards to both parties 
at the same time. 

Whether such was the effect of the ar- 
rangement, or whether the agreements were 
placed in the hands of Capt. Edwards solely 
to await the execution and delivery of the 
bond and note mentioned In the contract, 
and thereupon to become operative, was a 
question which depended upon the intention 
of the parties, to be gathered from the whole 
transaction, their acts and declarations, and. 
In some measure, upon the nature and pro- 
visions of the contract itself. It was a ques- 
tion of fact Involved in the issue. The couit 
had no right to assume the truth or false- 
hood of either side of the question. The evi- 
dence bearing upon the point was conflict- 
ing. It was as clearly a question of fact for 
the jury as any other fact in issue in the 
cause. To have charged the jury as re- 
quested would have been an encroachment 
by the court upon the province of the jury. 



PENALTIES AND FORFEITURES. 



63 



The question was, therefore, properly sub- 
mitted to the jury. The charge of the court 
In this particular was in all respects fair and 
correct, and the verdict of the jury is conclu- 
sive upon this point. The first exception, 
therefore, is not well taken. 

The second exception raises the single 
question, whether the sum of $1,000, men- 
tioned in the covenant of Jaquith not to go 
into business in Trenton, is to be construed 
as a penalty, or as stipulated damages— the 
plaintiff in error insisting it should be con- 
strued as the former, the defendant as the 
latter. 

We shall not attempt here to analyze all 
the decided cases upon the subject, which 
were read and cited upon the argument, and 
which, with others, have been examined. It 
is not to be denied that there is some con- 
flict, and more confusion. In the cases; judges 
have been long and constantly complaining 
of the confusion and want of harmony in 
the decisions upon this subject. But, while 
no one can fall to discover a very great 
amount of apparent conflict, still it will be 
found, on examination, that most of the cases, 
however conflicting in appearance, have yet 
been decided according to the justice and 
equity of the particular case. And while 
there are some Isolated cases (and they are 
but few), which seem to rest upon no very 
intelligible principle, it will be found, we 
think, that the following general principles 
may be confidently said to result from, and 
to reconcile, the great majority of the cases, 
both in England and in this country: 

First. The law, following the dictates of 
equity and natural justice, in cases of this 
kind, adopts the principle of just compensa- 
tion for the loss or injury actually sustained; 
considering It no greater violation of this 
principle to confine the injured party to the 
recovery of less, than to enable him by the 
aid of the court to extort more. It is the 
application, In a court of law, of that prin- 
ciple long recognized in courts of equity, 
which, disregarding the penalty of the bond, 
gives only the damages actually sustained. 
This principle may be stated, in other words, 
to be, that courts of justice will not recog- 
nize or enforce a contract, or any stipulation 
of a contract, clearly unjust and unconscion- 
able; a principle of common sense and com- 
mon honesty so obviously in accordance with 
the dictates of justice and sound policy as 
to make it rather matter of surprise that 
courts of law had not always, and in all 
cases, adopted it to the same extent as courts 
of equity. And, happily for the purposes of 
justice, the tendency of courts of law seems 
now to be towards the full recognition of the 
principle, in all cases. 

This principle of natural justice, the courts 
of law, following courts of equity, have, in 
this class of cases, adopted as the law of 
the contract; and they will not permit the 
parties by express stipulation, or any form 
of language, however clear the intent, to set 



It aside; on the familiar ground, "conventus 
privatorum non potest publico juri derogare." 

But the court will apply this principle, 
and disregard the express stipulation of par- 
ties, only in those cases where it is obvious 
from the contract before them, and the whole 
subject-matter, that the principle of com- 
pensation has been disregarded, and that to 
carry out the express stipulation of the par- 
ties, would violate this principle, which alone 
the co^urt recognizes as the law of the con- 
tract. 

The violation, or disregard, of this prin- 
ciple of compensation, may appear to the 
court in various ways,— from the contract, 
the sum mentioned, and the subject-matter. 
Thus, where a large sum (say one thousand 
dollars) is made payable solely in conse- 
quence of the non-payment of a much small- 
er sum (say one hundred dollars), at a cer- 
tain day; or where the contract is for the 
performance of several stipulations of very 
different degrees of importance, and one 
large sum is made payable on the breach 
of any one of them, even the most trivial, 
the damages for which can, in no reason- 
able probability, amount to that sum; In 
the first case, the court must see that the 
real damage is readily computed, and that 
the principle of compensation has been over- 
looked, or purposely disregarded; in the 
second case, though there may be more diffi- 
culty in ascertaining the precise amoimt of 
damage, yet, as the contract exacts the same 
large sum for the breach of a trivial or com- 
paratively unimportant stipulation, as for 
that of the most important, or of all of them 
together. It Is equally clear that the parties 
have wholly departed from the idea of just 
compensation, and attempted to fix a rule 
of damages which the law will not recognize 
or enforce. 

We do not mean to say that the principle 
above stated as deducible from the cases. Is 
to be found generally announced In express 
terms, in the language of the courts; but it 
will be found, we think, to be necessarily 
Implied In, and to form the only rational 
foundation for, all that large class of cases 
which have held the sum to be in the nature 
of a penalty, notwithstanding the strongest 
and most explicit declarations of the parties 
that it was intended as stipulated and as- 
certained damages. 

It Is true, the courts In nearly all these 
cases profess to be construing the contract 
with reference to the intention of the par- 
ties, as if for the purpose of ascertaining and 
giving effect to that intention; yet It Is ob- 
vious, from .these cases, that wherever it has 
appeared to the com-t, from the face of the 
contract and the subject-matter, that the sum 
was clearly too large for just compensation, 
here, while they will allow any form of 
words, even those expressing the direct con- 
trary, to indicate the Intent to make it a 
penalty, yet no form of words, no force of 
language, is competent to the expression ot 



64 



PENALTIES AND FORFEITURES. 



the opposite intent. Here, tlien, Is an in- 
tention incapable of expression in words; 
and as all written contracts must be ex- 
pressed in words, it would seem to be a 
mere waste of time and effort to look for 
such an intention in such a contract. And 
as the question is between two opposite in- 
tents only, and the negation of the one 
necessarily implies the existence of the other, 
there would seem to be no room' left for 
construction with reference to the intent. It 
must, then, be manifest that the Intention 
of the parties in such cases is not the govern- 
ing consideration. 

But some of the cases attempt to justify 
this mode of construing the contract with 
reference to the intent, by declaring, in sub- 
stance, that though the language is the 
strongest which could be used to evince the 
intention in favor of stipulated damages, 
still, if it appear clearly, by reference to the 
subject-matter, that the parties have. made 
the stipulation without reference to the prin- 
ciple of just compensation, and so excessive 
as to be out of all proportion to the actual 
damage, the court must hold that they could 
not have intended it as stipulated damages, 
though they have so expressly declared. 
See, as an example of this class of cases, 
Kemble v. Farren, 6 Bing. 141. 

Now this, it is true, may lead to the same 
result in the particular case, as to have 
placed the decision upon the true ground, 
viz., that though the parties actually intend- 
ed the sum to be paid, as the damages agreed 
upon between them, yet it being clearly un- 
conscionable, the court would disregard the 
intention, and refuse to enforce the stipula- 
tion. But, as a rule of construction, or in- 
terpretation of contracts, it is radically vi- 
cious, and tends to a confusion of ideas in 
the construction of contracts generally. It 
is this, more than anything else, which has 
produced so much apparent conflict in the 
decisions upon this whole subject of penalty 
and stipulated damages. It sets at defiance 
all rules of interpretation, by denying the 
Intention of the parties to be what they, in 
the most unambiguous terms, have declared 
it to be, and finds an intention directly op- 
posite to that which is clearly expressed — 
"divinatlo, non interpretatio est, quEe omnino 
recedit a litera." 

Again, the attempt to place this question 
upon the intention of the parties, and to 
make this the governing consideration, nec- 
essarily implies that, if the intention to make 
the sum stipulated damages should clearly 
appear, the court would enforce the contract 
according to that intention. To test this, let 
it be asked, whether, in such a case, if it 
were admitted that the parties actually in- 
tended the sum to be considered as stipulat- 
ed damages, and not as a penalty, would a 
court of law enforce It for the amount stipu- 
lated? Clearly, they could not, without go- 
ing back to the technical and long exploded 
doctrine which gave the whole penalty of 



the bond, without reference to the damages 
actually sustained. They would thus be sim- 
ply changing the names of things, and en- 
forcing, under the name of stipulated dam- 
ages, what in its own nature is but a pen- 
alty. 

The real question in this class of cases 
will be found to be, not what the parties 
intended, but whether the sum Is, in fact, 
in the nature of a penalty; and this is to be 
determined by the magnitude of the sum', in 
connection with the subject-matter, and not 
at all by the words or the understanding of 
the parties. The intention of the parties can 
not alter it. While courts of law gave the 
penalty of the bond, the parties intended the 
payment of the penalty as much as they 
now intend the payment of stipulated dam- 
ages; it must, therefore, we think, be very 
obvious that the actual intention of the par- 
ties, in this class of cases, and relating to 
this point, is wholly immaterial; and though 
the courts have very generally professed to 
base their decisions upon the intention of the 
parties, that intention is not, and can not 
be made, the real basis of these decisions. 
In endeavoring to reconcile their decisions 
with the actual intention of the parties, the 
courts have sometimes been compelled to 
use language wholly at war with any idea 
of interpretation, and to say "that the par- 
ties mu.st be considered as not meaning ex- 
actly what they say." Homer v. Flintoff, 
9 Mees. & W., per Park, B. May it not be 
said, with at least equal propriety, that the 
courts have sometimes said what they did 
not exactly mean? 

The foregoing remarks are all to be con- 
fined to that class of cases where it was 
clear, from the sum mentioned and the sub- 
ject-matter, that the principle of compensa- 
tion had been disregarded. 

But, secondly, there are great numbers of 
cases, where, from the nature of the con- 
tract and the subject-matter of the stipula- 
tion, for the breach of which the simi is 
provided, it is apparent to the court that 
the actual damages for a breach are un- 
certain in their nature, diffleult to be ascer- 
tained, or impossible to be estimated with 
certainty, by reference to any pecuniary 
standard, and where the parties themselves 
are more intimately acquainted with all the 
peculiar circumstances, and therefore better 
able to compute the actual or probable dam- 
ages, than courts or juries, from any evi- 
dence which can be brought before them. 
In all such cases, the law permits the par- 
ties to ascertain for themselves, and to pro- 
vide in the contract itself, the amount of 
the damages which shall be paid for the 
breach. In permitting this, the law does 
not lose sight of the principle of compensa- 
tion, which is the law of the contract, but 
merely adopts the computation or estimate 
of the damages made by the parties, as be- 
ing the best and most certain mode of as- 
certaining the actual damage, or what sum 



PENALTIES AND F0RP"'E1TURES. 



65 



will amount to a just compensation. The 
reason, therefore, for allowing the parties to 
ascertain for themselves the damages in this 
class of cases. Is the same which denies the 
right in the former class of cases; viz., the 
courts adopt the best and most practicable 
mode of ascertaining the sum which will 
produce just compensation. 

In this class of cases where the law per- 
mits the parties to ascertain and fix the 
amount of damages in the contract, the first 
inquiry obviously is, whether they have done 
so in fact? And here, the intention of the 
parties is the governing consideration; and 
in ascertaining this intention, no merely 
technical effect will be given to the particu- 
lar words relating to the sum, but the en- 
tire contract, the subject-matter, and often 
the situation of the parties with respect to 
each other and to the subject-matter, will be 
considered. Thus though the word "penal- 
ty" be used (Salnter v. Fergason, 7 Man., G. 
& S. 716; Jones v. Green, 3 Younge & J. 
299; Pierce v. Fuller, 8 Mass. 223), or "for- 
feit" (Noble V. Noble, 7 Cow. 307), or "for- 
feit and pay" (Fletcher v. Dycke, 2 Term R. 
32), it will still be held to be stipulated dam- 
ages, if, from the whole contract, the sub- 
ject-matter, and situation of the parties, it 
can be gathered tliat such was their inten- 
tion. And in proportion as the difBculty of 
ascertaining the actual damage by proof is 
greater or less, where this difficulty grows 
out of the nature of such damages, in the 
lilce proportion is the presumption more or 
less strong that the parties intended to fix 
the amount. 

It remains only to apply these principles 
to the case before us. It is contended by 
the plaintiff in error, that the payment of 
the one thousand dollars mentioned in the 
covenant of Jaqulth is not made dependent 
solely upon the breach of the stipulation not 
to go into business In Trenton, but that it 
applies equally — First, to the agreement to 
sell to Hudson his interest in the goods; 
second, to sell his Interest In the books, 
notes, accounts, etc.; and, third, to the agree- 
ment to dissolve the partnership. But we 
can perceive no ground for such a construc- 
tion. The language in reference to the sale 
of the interest in the goods, books, notes, 
accounts, etc., and that in reference to the 
dissolution. Is not that of a sale in futuro, 
nor for the dissolution of the partnership at 
a future period, but it Is that of a present 
sale and a present dissolution — "does hereby 
sell," and "the copartnership is hereby dis- 
solved," Is the language of the instrument. 
It Is plain, from this language, from the 
subject-matter, and from all the acts of the 
parties, that these provisions were to take, 
and did take. Immediate effect. There could 
be no possible occasion to provide any pen- 
alty or stipulated damages for the non-per- 
formance of these stipulations, because this 
sale and dissolution would already have been 
accomplished the moment the contract took 
HUTCH.& BUNK.EQ.— 5 



effect for any purpose; and, until It took 
effect, the stipulation for the one thousand 
dollars could not take effect or afford any 
security, nor would Hudson be bound or 
need the security. But it remained to pro- 
vide for the future. If Jaqulth were to be 
at liberty to set up a rival store in the same 
village, it might seriously affect the success 
of Hudson's business; and we are bound to 
infer, from the whole scope of this contract, 
that Hudson would never have agreed to 
pay the consideration mentioned In it, nor 
to have entered Into the contract at all, but 
for the stipulation of Jaqulth "that he will 
not engage in the mercantile business In 
Trenton, for himself or In connection with 
any other one, for the space of three years 
from: this date, upon the forfeiture of the 
sum of one thousand dollars, to be collected 
by said Hudson as his damages." This 
stipulation of Jaqulth not to go Into busi- 
ness, is the only one on his part which looks> 
to the future; and it Is to this, alone, that 
the language in reference to the one thou- 
sand dollars applies. Any other construction 
would do violence to the language, and be 
at war with the whole subject matter. 

The damages to arise from the breach of 
this covenant, from the nature of the case, 
must be not only uncertain in their nature, 
but impossible to be exhibited in proof, with 
any reasonable degree of accuracy, by any 
evidence which could possibly be adduced. 
It Is easy to see that while the damages 
might be very heavy, it would be very diffi- 
cult clearly to prove any. Their nature and 
amount could be better estimated by tfie 
parties themselves, than by witnesses, courts, 
or juries. It is, then, precisely one of thai 
class of cases In which It has always been 
recognized as peculiarly appropriate for the 
parties to fix and agree upon the damages 
for themselves. In such a case, the lan- 
guage must be very clear to the contrary, to 
overcome the inference of intent (so to fix 
them), to be drawn from the subject-matter 
and the situation of the parties; because, it 
Is difficult to suppose, in such a case, that 
the party taking the stipulation intended it 
only to cover the amount of damages actual- 
ly to be proved, as he would be entitled to 
the latter without the mention of any sum 
In the ■ contract, and he must also be sup- 
posed to know that his actual damages, from 
the nature of the case, are not susceptible 
of legal proof to anything approaching their 
actual extent. That the parties actually in- 
tended, in this case, to fix the amount to be 
recovered. Is clear from the language itself,, 
without the aid of a reference to the sub- 
ject-matter, "upon the forfeiture of the sum 
of one thousand dollars, to be collected by 
the said Hudson as his damages." It is 
manifest from this language that it was in- 
tended Hudson should "collect," or, in other 
words, receive this amount, and that it 
should be for his damages for the breach 
of the stipulation. This language is stronger 



66 



PENALTIES AND FORFEITURES. 



than "forfeit and pay," or "under tlie pen- 
alty of," as these might be supposed to have 
reference to the form of the penal part of a 
bond, or to the form of action upon it, and 
not to the actual "collection" of the money. 
It is, therefore, very clear, from every 
view we have been able to take of this case, 
that it ^vas competent and proper for the 
parties to ascertain and fix for themselves 
the amount of damages for the breach com- 
plained of, and equally clear that they have 
done so in fact. From the uncertain nature 
of the damages, we cannot say that the sum 
in this case exceeds the actual damages, or 
that the principle of compensation has been 
violated. Indeed, it would have been per- 
haps difficult to discover a violation of this 



principle had the sum in this case been 
more than It now is, though, doubtless, even 
in such cases as the present, if the sum 
stated were so excessive as clearly to exceed 
all reasonable apprehension of actual loss or 
injtu'y for the breach, we should be com- 
pelled to disregard the intention of the par- 
ties, and treat the sum' only as a penalty to 
cover the actual damages to be exhibited in 
proof. In this case the party must be held 
to the amount stipulated in his contract. 

The second exception, therefore, is not well 
taken; the court properly refused to charge 
as requested, and no error appearing in the 
record, the judgment of the circuit court for 
the county of Wayne must be affirmed. 

The other justices concurred. 



PENALTIES AND FORFEITURES. 



67 



KEEBLE V. KEEBLE. 

(5 South. 149, 85 Ala. 552.) 
Supreme Court of Alabama. Dec. 8, 1888. 

Appeal from city court, Dallas county; John 
Haralson, Judge. 

This was an action brought by the appel- 
lant, Henry C. Keeble, against the appellee, 
Julia P. Keeble, as the executrix of E. 0. 
Keeble, deceased, for the recovery of money 
alleged to be due the plaintiff by the de- 
fendant's testator. The defendant pleaded 
the general issue, payment, accord and satis- 
faction, and set-off. The only question in the 
case arose on the instruction given the jury 
by the court, founded on the facts set out 
in the seventh plea. The demurrer to this 
plea vras overruled by the court. It -wsls, in 
substance, that plaintiff and defendant's tes- 
tator had been in partnership in the merdan- 
tile business. Plaintiff sold out to defend- 
ant's testator, but was employed by the lat- 
ter as business manager. The terms of the 
employment imposed on plaintiff the obliga- 
tion to wholly abstain from the use of in- 
toxicating liquors, and, in the event he should 
become intoxicated, that "he should pay, "as 
liquidated damages," the sum of $1,000. The 
plea alleged that plaintiff violated his promise 
to keep sober, and thereby became bound to 
pay to defendant's testator said sum of $1,000, 
which sum was offered as a set-off to plain- 
tiff's demand. 

Mr. Roy and White & White, for appellant. 
Pettus & Pettus, for appellee. 

SOMERVILLE, J. The only question in 
this case is whether the sum of $1,000, agreed 
to be paid by the appellant, Henry C. Keeble, 
to Richard C. Keeble, the testator of the ap- 
pellee, as mentioned in the written contract 
of employment between the parties, is to be 
regarded by the court as a penalty or as 
liquidated damages. The city court held it, 
in effect, to be liquidated damages, by char- 
ging the jury to find for the defendant, if 
the facts set out in the seventh plea were 
satisfactorily proved. The solution of this 
question is one which the courts have often 
confessed embarrassment in determining. No 
one rule can be announced which will fur- 
nish a single test or criterion for all cases, 
but, in most cases, a multitude of considera- 
tions are to be regarded in seeking to reach 
the real intention of the parties. The follow- 
ing general rules may be deduced from the 
authorities, each having more or less weight, 
according to the peculiar circumstances of 
each case, and the nature of the contract 
sought to be construed: (1) The court will 
always seek to ascertain the true and real in- 
tention of the contracting parties, giving due 
weight to the language or words used in the 
contract, but not always being absolutely con- 
trolled by them, when the enforcement of 
such contract operates with unconscionable 
hardship, or otherwise worlds an injustice. 



(2) The mere denomination of the sum to be 
paid as "liquidated damages," or as "a pen- 
alty," Is not conclusive on the court as to 
its real character. Although designated as 
"liquidated damages" it may be construed as 
a penalty, and often when called a "penalty" 
it may be held to be liquidated damages, 
where the intention to the contrary is plain. 

(3) The courts are disposed to lean against 
any interpretation of a contract which will 
make it liquidated damages; and, in all cases 
of doubtful intention, will pronounce the stip- 
ulated sum a penalty. (4) Where the pay- 
ment of a smaller sum is secured by an obli- 
gation to pay a larger sum, it will be held 
a penalty, and not liquidated damages. (5) 
Where the agreement Is for the performance 
or non-performance of a single act, or of sev- 
eral acts, or of several things which are but 
minor parts of a single complex act, and the 
precise damage resulting from the violation 
of each covenant is wholly uncertain or in- 
capable of being ascertained save by con- 
jecture, the parties may agree on a fixed sum 
as liquidated damages, and the courts will 
so construe it, unless it is clear on other 
grounds that a penalty was really intended. 
(6) When the contract provides for the per- 
formance of several acts of different degrees 
of importance, and the damages resulting 
from the violation of some, although not all, 
of the provisions are of easy ascertainment, 
and one large gross sum is stipulated to be 
paid for the breach of any, it will be con- 
strued a penalty, and not as liquidated dam- 
ages. (7) When the agreement provides for 
the performance of one or more acts, and the 
stipulation is to pay the same gross sum for 
a partial as for a total or complete breach of 
performance, the sum will be construed to 
be a penalty. (8) Whether the sum agreed 
to be paid is out of proportion to the actual 
damages, which will probably be sustained 
by a breach, is a fact into which the court 
will not enter on inquiry, if the intent is other- 
wise made clear that liquidated damages, and 
not a penalty, are in contemplation. (9) Where 
the agreement is in the alternative, to do one 
of two acts, but is to pay a larger sum of 
money in the one event than in the other, 
the obligor having his election to do either, 
the amount thus agreed to be paid will be 
held liquidated damages, and not a penalty. 
(10) In applying these rules, the controlling 
purpose of which is to ascertain the real in- 
tention of the parties, the court will consider 
the nature of the contract, the terms of the 
whole Instrument, the consequences naturally 
resulting from a breach of its stipulations, 
and the peculiar circumstances surrounding 
the transaction; thus permitting each case to 
stand, as far as possible, on its own merits 
and peculiarities. These rules are believed 
to be sustained by the preponderance of ju- 
dicial decisions. Graham v. Bickham, 1 Am. 
Dec. 328, and note, pp. 331-340; Williams v. 
Vance. 30 Am. Rep. 26, and note, pp. 28-36; 
1 Pom. Eq. Jur. §§ 440-446; McPherson v. 



08 



PENALTIES AND FORFEITURES. 



Robertson, 82 Ala. 459, 2 South. 333; Hooper 
V. Railroad Co., 69 Ala. 529; Watts v. Shep- 
pard, 2 Ala. 425; Bish. Cont. § 1452; Curry 
V. Larer, 7 Pa. St. 470; Foley v. McKeegan, 
4 Iowa, 1; Nash v. Hermosilla, 9 Cal. 584; 
Muse V. Swayne, 2 Lea, 251; 2 Greenl. Ev. 
§ 258. 

The appellant was in the employment of the 
appellee's testator as a business manager, at 
very liberal wages, having been a partner 
with him In the mercantile business, under 
the firm name of R. C. Keeble & Go. Al- 
though he was but an employe, having sold 
to R. C. Keeble his entire interest in the part- 
nership business, he remained ostensibly a 
partner. The terms of the employment, re- 
duced to writing, imposed on the appellant, 
Henry Keeble, the obligation, among other 
duties, "to wholly abstain from the use of 
intoxicating liquors," and "to continue and re- 
main sober," giving his diligent attention to 
the business of his employer, and promising, 
in the event he should become intoxicated, 
that he would pay, "as liquidated damages," 
the sum of $1,000, which the testator, Rich- 
ard Keeble, was authorized to retain out of 
a certain debt he owed the appellant. The 
appellant violated his promise by becoming 
intoxicated, and remained so for a long time, 
and acted rudely and insultingly towards the 
customers and employes of the testator, and 
otherwise deported himself, by reason of in- 
toxication, in such manner as to do injury to 
the business. It is not denied by appellant's 
counsel that this is a total breach of the prom- 
ise to keep sober; nor is it argued that the 
damage resulting from the violation of such a 
promise can be ascertained with any degree of 
certainty; nor even that the amount agreed 
to be paid as liquidated damages, in the event 
of a breach, is disproportionate to the dam- 
ages which may have been actually sustained 
in this case. But the contention seems to be 
that, inasmuch as it was possible for a breach 
to ocfcur with no actual damages other than 
nominal, the amount agreed to be paid should 
be construed to be a penalty. Unless this 
view is correct, the application of the fore- 
going rules to the construction of the agree- 
ment manifestly stamps it as a stipulation 
for liquidated damages, and not a penalty. 
It is argued, in other words, that becoming 
intoxicated in private, while off duty, would 
be a violation of the contract, but would be 
attended with no actual damage to the busi- 
ness of R. C. Keeble & Co. This fact would, 
in our opinion, except the case from the oper- 
ation of the rules above enunciated. There 
are but few agreements of this liind where 
the stipulation is to do or not do a particular 
act, in which the damages may not, accord- 
ing to circumstances, vary, on a sliding scale, 
from nominal damages to a considerable sum. 
One may sell out the good-will of his busi- 
ness in a given locality, and agree to abstain 
from its further prosecution, or, in the event 
of his breach of his agreement, to pay a cer- 



tain sum as liquidated damages; as, for ex- 
ample, not to practice one's profession as a 
physician or lawyer, not to run a steam-boat 
on a certain river or to carry on the hotel 
business in a particular town, not to re-estab- 
lish a newspaper for a given period, or to 
carry on a particular branch of business with- 
in a certain distance from a named city. In 
all such cases, as often decided, it is compe- 
tent for the parties to stipulate for the pay- 
ment of a gross sum by way of liquidated 
damages for the violation of the agreement, 
and for the very reason that such damages 
are uncertain, fluctuating, and incapable of 
easy ascertainment. Williams v. Vance, 30 
Am. Rep. 29-31, note; Graham v. Bickham, 1 
Am. Dec. 336-338, note; 1 Pom. Eq. Jur. 
§ 442, note 1. It is clear that each of these 
various agreements may be violated by a sub- 
stantial breach, and yet no damages might 
accrue except such as are nominal. The 
obligor may practice medicine, and possibly 
never interfere with the practice of the other 
contracting party; or law, without having a 
paying client; or he may run a steam-boat 
without a passenger; or an hotel without a 
guest; or carry on a newspaper without the 
least injury to any competitor. But the law 
will not enter upon an investigation as to the 
quantum of damages in such cases. This is 
the very matter settled by the agreement of 
the parties. If the act agreed not to be done 
is one from which, in the ordinary course of 
events, damages, incapable of ascertainment 
save by conjecture, are liable naturally to fol- 
low, sometimes more and sometimes less, ac- 
cording to the aggravation of the act, the 
court will not stop to investigate the extent of 
the grievance complained of as a total breach, 
but will accept the sum agreed on as a proper 
and just measurement, by way of liquidated 
damages, unless the real intention of the par- 
ties, under the rules above announced, de- 
signed it as a penalty. We may add, more- 
over, that no one can accurately estimate the 
physiological relation between private and 
public drunkenness, nor the causal connec- 
tion between Intoxication one time and a score 
of times. The latter, in each instance, may 
follow from the former, and the one may 
naturally lead to the other. There would 
seem to be nothing harsh or unreasonable in 
stipulating against the very source and be- 
ginning of the more aggravated evil sought to 
be avoided. The duty resting on the court. 
In all these cases, is to so apply the settled 
rules of construction as to ascertain the legal- 
ly expressed and real intention of the parties. 
Courts are under no obligations, nor have they 
the power, to make a wiser or better contract 
for either of the parties than he may be sup- 
posed to have made for himself. The court 
below, in our judgment, did not err in hold- 
ing, as it did, by its rulings, that the sum 
agreed to be paid the appellee's testator was 
liquidated damages, and not a penalty. Af- 
firmed. » 



PRIORITIES AND NOTICE. 



69 



HEYDER et al. v. EXCELSIOR BUILDING 

LOAN ASS'N NO. 2 OF CITY 

OF NEWARK. 

(8 Atl. 310, 42 N. J. Eq. 408.) 

Court of Errors and Appeals of New .Jersey. 
March 5, 1887. 

C. T. Glen, for appellants. Guild & Lum, 
for respondents. 

KNAPP, J. The learned master who de- 
cided this cause reached the conclusion on 
the evidence that the purchaser of the prem- 
ises, and not the mortgagee, should bear the 
loss incident to the fraudulent cancellation of 
the mortgage made upon the record prior to 
the purchase, on the faith of which cancella- 
tion the buyer parted with the whole pur- 
chase money believing the property to be un- 
incumbered. After a careful review of the 
case, I am led to an opposite result. I am 
fully impressed with the importance of se- 
curing due protection to the holders of mort- 
gage securities, where, in pursuit of the pro- 
visions of the registry laws, the lien has been 
made apparent on the record. The security 
afforded by registry should remain undisturb- 
ed by a cancellation effected through mis- 
talie, accident, or fraud of third persons, even 
if by such cancellation subsequent mortga- 
gees or purchasers are made to suffer loss. 
Such after-acquired rights ought not to pre- 
vail against the just claims of an innocent 
non-negligent incumbrancer, because the rec- 
ord has been wrongly effaced. Cancellation 
of a mortgage on the record is only prima 
facie evidence of its discharge, and it is left 
to the owner making the allegation to prove 
the canceling to have been done by fraud, 
accident, or mistake. Such proof being made, 
the mortgage will be established, even 
against subsequent purchasers or mortgagees 
without notice. Banking Co. v. Woodruff, 
2 N. J. Eq. 117; Harrison v. Railroad Co., 
19 N. J. Eq. 488. 

Between a mortgagee whose mortgage has 
been discharged of record solely through the 
unauthorized act of another party, and a 
purchaser who buys the title in the belief, 
induced by such cancellation, that the mort- 
gage is satisfied and discharged, the equities 
are balanced, and the rights in the order of 
time must prevail. The lien of the mortgage 
must remain despite the apparent discharge. 
But this 13 apart from any default attributa- 
ble to the holder of the lien. If through his 
negligence the record is permitted to give 
notice to the world that his claim is satisfied, 
he cannot, in the face of his own careless- 
ness, have his mortgage enforced against a 
bona fide purchaser taking his title on the 
faith that the registrj' is discharged. Where 
one gives to another the power to practice a 
fraud upon innocent parties, the court will 
not interfere in his protection at the expense 
of those who have been deceived and misled 
by such fraud. What circumstance shall be 



sufficient to establish negligence, such as 
shall preclude a mortgagee from a decree 
establishing his canceled paper, must be de- 
termined as a question of fact in each par- 
ticular case, tested by those rules of conduct 
which men of common prudence usually ob- 
serve in the care and management of such 
securities. That it is negligence in the own- 
er of a mortgage to permit it to be in the 
custody and control of the mortgagor or own- 
er of the mortgaged premises, in view of the 
provisions of our statute of registry, will not 
admit of denial. Such an occurrence is so 
unusual, so Imperils the owner, and there- 
fore so unlikely to happen in business deal- 
ings, that it was regarded in Harrisop v. Rail- 
road Co. as ground for the gravest suspicion 
of the truthfulness of a witness who had tes- 
tified to such custody by the assent of the 
owner of the security. 

The minute of discharge of this mortgage 
made upon the record by the register ex- 
pressed, in general form, the fact of cancella- 
tion. The entry was made upon evidence 
presented to the register such as the statute 
has declared to be sufficient authority for so 
doing. The mortgage was produced by the 
mortgagor, canceled, and there is no doubt 
that upon the faith of this cancellation the 
purchaser took title to the property, and paid 
the consideration. But it clearly appears 
that the mortgage was unpaid, and that the 
act of tbe mortgagor in procuring the entry 
of the discharge was fraudulent, and without 
the knowledge or assent of the mortgagee. 
If this were all of the case, and no default 
appeared on the part of the mortgagee, not- 
withstanding the forcible language of the 
act which declares such minute to be a full 
and absolute bar to and discharge of the said 
entry, registry, and mortgage, the riglit of 
the respondent to the lien of its security 
should be maintained; and it is solely upon 
the ground that the respondent is chargeable 
with negligence which tended to and actual- 
ly did produce the injury that I think the 
decree should be reversed. The mortgage 
was in the possession and under the control 
of the mortgagor at the time when it was 
produced for cancellation on the record. How 
long he had such custody does not positive- 
ly appear, but the strong inference from the 
testimony is that it was during the whole 
time between the registry of the mortgage 
and its cancellation. Neither the president 
of the association, nor its treasurer, who had 
charge of its securities, were able to say that 
they ever had the actual custody of this mort- 
gage; and they further declare that the 
mortgagor, although an officer of the com- 
pany, had no access whatever to the securi- 
ties in the possession of the treasurer. It is 
therefore impossible that he should have ob- 
tained its possession by means resembling 
theft. His possession must, I think, be at- 
tributed either to the assent or to the negli- 
gence of the officers of the association respon- 
sible for its securities. If we regard the the- 



70 



PRIORITIES AND NOTICE. 



ory that the mortgagor, at the conclusion of 
his transaction of the loan, fraudulently sub- 
stituted a copy of the mortgage for the orig- 
inal paper, and delivered that to the associa- 
tion, I am still forced to the conclusion that 
the officers were culpably negligent in per- 
mitting themselves to be thus imposed upon. 
The fact that he was the law officer of this 
body would not justify so implicit a trust 
in him in the matter of a loan to himself. 
We must assume that these officers were men 
of business capacity and sliill. The ti'ans- 
aetion was in the line of their ordinary du- 
ties. Indeed, they did not trust to him, but 
employed other counsel to make searches 
against his property. In their ordinary trans- 
actions their habit was to submit to counsel 
the securities received for loans for inspec- 
tion and approval. The slightest examina- 
tion of the paper received by them would 
have shown it to be but a copy. They sub- 
mitted it to no legal adviser; they gave It 
no examination. If it were not intended to 
be, as was its purport a mere copy, leaving 
the original in other hands, any degree of 
care, exceeding the blindest confidence, must 
have revealed the deception. The theory fails 
to lead us out of the difficulty. I do not 



think that any circumstance presented in this 
case made it the appellant's duty, in order to 
avail himself of the rights of a bona fide 
purchaser, to institute personal inquiry of 
the mortgagee. Any rule placing him under 
this exaction would embrace every case of 
a purchase of lands that had ever been sub- 
ject to mortgage which the record showed to 
be canceled. Such a rule, it is needless to 
say, would render this provision of the regis- 
try act entirely nugatory. A purchaser could 
then only buy with safety when the registry 
had been discharged, and an admission of 
payment obtained from the mortgagee. 
Doubtless circumstances may, and frequently 
do, arise to put the purchaser upon Inquiry, 
and charge him with notice. It seems to me 
that nothing appears in this transaction 
which should have put tliis purchaser upon 
further inquiry. He was permitted to rely 
upon the record. He did so, purchasing 
upon the belief that it spoke the fact truly. 
It was false, but the deception was directly 
traceable to the culpable negligence of the 
mortgage owner, and the loss should fall up- 
on the party chargeable with the fault. 

The decree below should be reversed, and 
the bill of complainants be dismissed. 



PRIORITIES AND NOTICE. 



71 



PHILLIPS V. PHILLIPS. 

(4 De Gex, F. & J. 208.) 

Court of Appeal in Chancery. Jan. 11, 1862. 

F. O. Haynes, for plaintiff. Mr. Malins 
and John Pearson, for defendants. 

Tile LORD CHANCELLOR. 

When I reserved my judgment at the con- 
clusion of the argument in this case, it was 
rather out of respect to that argument than 
from a feeling of any difBculty with regard 
to the question that had been so strenu- 
ously contested before me. 

The case is a very simple one. The plain- 
tiff claims as the grantee of an annuity 
granted by a deed dated In the month of 
February, 1820, to issue out of certain lands 
in the county of Monmouth, secured by 
powers of distress and entry. The annuity 
or rent charge was not to arise until the 
death of one Rebecca Phillips, who died in 
the month of December, 1839, and the first 
payment of the annuity became due on the 
8th March, 1840. 

The case was argued on both sides on the 
admitted basis that the legal estate was out- 
standing in certain incumbrancers, and is 
still outstanding. Subject to the annuity 
the grantor was entitled in fee simple in 
equity. In February, 1821, the grantor in- 
termarried with one Mary Phillips. On the 
occasion of that marriage a settlement, dated 
in February, 1821, was executed, and un- 
der this deed the defendants claim, and 
claim, therefore, as purchasers for a valu- 
able consideration. No payment has ever 
been made in respect of the annuity. 

The bill was filed within twenty years, 
and seelis the ordinary relief applicable to 
the case. The defendants by their answer 
insist that the deed was voluntary, and 
therefore void, under the statute of Eliza- 
beth, as against them in their character of 
purchasers for valuable consideration, and 
they also Insist upon the statute of limita- 
tions. But in the answer the defense of 
purchase for valuable consideration with- 
out notice is not attempted to be raised. 

At the hearing an affidavit of Mary Phil- 
lips and another person was produced, de- 
nying the fact of notice of the annuity at 
the time of the grant and at the time of the 
creation of the marriage settlement, and the 
contention at the bar was that the defense 
of purchase for valuable consideration with- 
out notice was available for the defendants 
under these circumstances, and ought to be 
allowed as a bar to the claim by the court. 
The vice chancellor in his judgment refused 
to admit the defense of purchase for valu- 
able consideration without notice, and I en- 
tirely agree with him in the conclusion that 
such a defense requires to be pleaded by 
the answer, more especially where an an- 
swer has been put in. 



But I do not mean to rest my decision 
upon that particular ground because I have 
permitted the argument to proceed with ref- 
erence to the general proposition, which was 
maintained before me with great energy 
and learning, viz., that the doctrine of a 
court of equity was this, that it would give 
no relief whatever to any claimant against 
a purchaser for valuable consideration with- 
out notice. It was urged upon me that au- 
thority to this effect was to be foun^ in 
some recent decisions of this court, and 
particularly in the case decided at the rolls 
of Attorney General v. Wilkins, 17 Beav. 
285. 

I undoubtedly was struck with the nov- 
elty and extent of the doeti-ine that was 
thus advanced, and in order to deal with 
the argument it becomes necessary to re- 
vert to elementary principles. I take it to 
be a clear proposition that every convey- 
ance of an equitable interest is an innocent 
conveyance, that is to say, the grant of a 
person entitled merely in equity passes only 
that which he is justly entitled to and no 
more. If, therefore, a person seised of an 
equitable estate (the legal estate being out- 
standing) makes an assurance by way of 
mortgage or grants an annuity, and after- 
wards conveys the whole estate to a pur- 
chaser, he can grant to the purchaser that 
which he has, viz., the estate subject to the 
mortgage or annuity, and no more. The 
subsequent grantee takes only that which 
is left in the grantor. Hence grantees and 
incumbrancers claiming in equity take and 
are ranked according to the dates of their 
securities; and the maxim applies, "Qui 
prior est tempore potior est jure." The first 
grantee is potior, that is potentior. He has 
a better and superior, because a prior, eq- 
uity. The first gi-antee has a right to be 
paid first, and it is quite immaterial wheth- 
er the subsequent incumbrancers, at the 
time when they took their securities and 
paid their money, had notice of the first in- 
cumbrance or not. These elementary rules 
are recognized in the case of Brace v. 
Duchess of Marlborough, 2 P. Wms. 491, 
and they are further illustrated by the fa- 
miliar doctrine of the court as to tacking 
securities. It is well known that if there 
are three incumbrancers, and the third 'in- 
cumbrancer, at the time of his incumbrance 
and payment of his money, had no notice 
of the second incumbrance, then, if the first 
mortgagee or incumbrancer has the legal 
estate, and the third pays him off, and 
takes an assignment of his securities and a 
conveyance of the legal estate, he is enti- 
tled to tack his third mortgage to the first 
mortgage which he has acquired, and to ex- 
clude the intermediate incumbrancer; but 
this doctrine is limited to the ease where the 
first mortgagee has the legal title, for, if 
the first moitgagee has not the legal title, 



72 



PRIORITIES AND NOTICE. 



the third does not, by the transfer, obtain 
the legal title, and the third mortgagee, by 
payment off of the first, acquires no pri- 
ority over the second. Now the defense of 
a purchaser for valuable consideration is the 
creature of a court of equity, and it can 
never be used in a manner at variance with 
the elementary rules which have already 
been stated. It seems at first to have been 
used as a shield against the claim in equity 
of persons ha^•ing a legal title. Bassett v. 
Nosworthy, Finch, Hr-'. 2 White & T. Lead. 
Cas. Eq. 1, is, if not the earliest, the best 
early reported case on the subject. There 
the plaintiff claimed under a legal title, and 
this circumstance, together with the maxim 
which I have referred to, probably gave rise 
to the notion that this defense was good 
only against the legal title; but there ap- 
pear to be three cases in which the use of 
this defense is most familiar: 

First, where an application is made to an 
auxiliary jurisdiction of the court by the 
possessor of a legal title, as by an heir at 
law (which was the case in Bassett v. Xos- 
worthy. Finch, 102. 2 White & T. Lead. Cas. 
Eq. 1), or by a tenant for life for the deliv- 
ery of title deeds (which was the case of 
Wallwyn v. Lee, 9 Ves. 24), and the de- 
fendant pleads that he is a bona fide pur- 
chaser for valuable consideration without 
notice. In such a case the defense is good, 
and the reason given is that, as against a 
purchaser for valuable consideration with- 
out notice, the court gives no assistance, 
that is, no assistance to the legal title. But 
this rule does not apply where the court ex- 
ercises a legal jurisdiction concurrently with 
courts of law. Thus it was decided by Lord 
Thurlow in Williams v. Lambe, 3 Brown 
Ch. 264, that the defense could not be plead- 
ed to a bill for dower, and by Sir J. Leach 
in Colluis V. Archer, 1 Russ. & M. 284, that 
it was no answer to a bill for fines. In 
those cases the court of equity was not 
asked to give the plaintiff any equitable, as 
distinguished from legal, relief. 

The second class of cases Is the ordinary 
one of several purchasers or incumbrancers, 
each claiming in equity, and one who is later 
and last in time succeeds in obtaining an 
outstanding legal estate not held upon exist- 
ing' trusts or a judgment, or any other legal 
advantage the possession of which may be 
a protection to himself or an embarrassment 
to other claimants. He will not be deprived 
of this advantage by a court of equity. To 
a bill filed against him' for this purpose, by 
a prior purchaser or incumbrancer, the de- 
fendant may maintain the plea of pm'chase 
for valuable consideration without notice, for 
the principle is that a court of equity will 
not disarm a purchaser, that is, will not take 
from him the shield of any legal advantage. 
This is the common doctrine of the tabula in 
naufragio. 

Thirdly, where there are circumstances 



that give rise to an equity as distinguished 
from an equitable estate,— as, for example, 
an equity to set aside a deed for fraud, or 
to correct it for mistake,— and the purchaser 
under the instrument maintains the plea of 
purchase for valuable consideration without 
notice, the court will not interfere. 

Now these are the three cases in which the 
defense in question Is most commonly found. 
None of them involve the case that is now 
before me. 

It was indeed said at the bar that the de- 
fendants, being in possession, had a legal 
advantage in respect of the possession, of 
which they ought not to be deprived; but 
that is to confound the subject of adjudi- 
cation with the means of determining it. 
The possession is the thing which is the sub- 
ject of controversy, and is to be awarded by 
the court to one or to the other; but the 
subject of controversy and tlie means of de- 
termining the right to that subject are per- 
fectly different. The argument, in fact, 
amounts to this, "I ought not to be deprived 
of possession, because I have possession." 
The purchaser will not be deprived of any- 
thing that gives him a legal right to the pos- 
session, but the possession itself must not be 
confounded with the right to it. 

The case therefore that I have to decide is 
the ordinary case of a person claiming, un- 
der an innocent equitable conveyance, that 
interest which existed in the grantor at the 
time when that conveyance was made; but, 
as I have already said, that interest was di- 
minished by the estate that had been pre- 
viously granted to the annuitant, and, as 
there was no ground for pretending that the 
deed creating the annuity was a voluntary 
deed, so there is no ground whatever for con- 
tending that the estate of the person taking 
under the subsequent marriage settlement is 
not to be treated by this court, being an 
equitable estate, as subject to the antecedent 
annuity, just as effectually as if the annuity 
itself had been noticed and excepted out of 
the operation of the subsequent instrument. 

I have no difficulty, therefore, in holding 
that the plea of purchase for valuable con- 
sideration is upon principle not at all ap- 
plicable to the case before me, even if I 
could take notice of it as having been rightly 
and regularly raised. 

We next come to examine the authorities 
upon which the defense relies. Now, un- 
doubtedly, I cannot assent to some observa- 
tions which I find attributed to the master of 
the rolls in the report of the case of Attorney 
General v. Wilkins, 17 Beav. 285, but to the 
decision of that case, as explained by his 
honor in the subsequent case of Colyer v. 
Finch, 19 Beav. 5CI0, I see no reasonable ob- 
jection, and the principles that I have here 
been referring to are fully explained and 
acted on by the master of the rolls In the 
case of Colyer v. Finch, 19 Beav. 500. It is 
impossible, therefore, to suppose that he in- 



PEIORITIES AND NOTICE. 



73 



tended to lay down anything in ttie case of 
Attorney General v. Wilkins, 17 Beav. 285, 
which is at variance with the ordinary rules 
of the court as I have already explained 
them, or which could give countenance to the 
argument that has been raised before me at 
the bar. 

I have consequently no difficulty in holding 
that the decree of his honor the vice chancel- 
lor Is right upon the grounds on which be 
placed it in the court below, and that also it 
would have been right if he had considered 
the grounds which have been urged before 
me in support of this petition of rehearing. 
I therefore affirm the decree and dismiss the 
petition of rehearing; but, inasmuch as the 



plaintiff sues In forma pauperis, of course 
it must be dismissed without costs. 

Mr. Pearson, for appellant, asked for a re- 
turn of the deposit. 

The LORD CHANOEILLOR. 

I think that the respondent should have the 
benefit of the deposit. You purchase the lib- 
erty of coming here by the deposit. I do not 
think that I can give the appellant any fur- 
ther costs against you, but I can give him the 
benefit of the deposit which, according to the 
rules of the court, you have made. There- 
fore the deposit will be given to him, unless 
it exceeds the costs of the appeal. 



74 



PRIORITIES AND NOTICE. 



KNAPP V. BAILEY. 

(9 Atl. 122, 79 Me. 195.) 

Supreme .Tudicial Court of Maine. March 1, 

1887. 

On appeal from decision of single justice 
at nisi prius, Penobscot county. 

Bill in equity brought to remove a cloud 
from the complainant's title, and to redeem 
the land from an equitable mortgage. The 
judge at nisi prius rendered a decision in fa- 
vor of the complainant, and the respondent 
appealed to the law court. 

A. W. Paine and 0. P. Stetson, for com- 
plainant. Davis & Bailey, for respondent. 

PETERS, C. J. This bill seeks to remove 
a cloud overhanging the complainant's title 
to an undivided parcel of land,— in effect, to 
redeem the land from an equitable mortgage, 
the allegation being that the debt has been 
paid. We can have no reasonable doubt of 
the facts thus far alleged. The defendant's 
grantor was called as a witness by the com- 
plainant. The defendant contends that his 
testimony was inadmissible, and cites cases 
which sustain the ordinary principle that a 
grantor cannot dispute with his grantee the 
title which he has assumed to convey. The 
objection goes to the testimony, and not to 
the witness personally. The principle of es- 
toppel, which is involied, is aimed, not 
against the witness because he is a grantor, 
but against any oral testimony to contradict 
the terms of a deed. As said by .Judge Cur- 
tis in answer to the same objection: "The 
facts to be proved were dehors the record, 
and one witness was as competent, in point 
of law, [to prove them,] as another." 'Where 
a grantor is allowed to prove a fact by an- 
other, he may do so by himself. Holbrook v. 
Bank, 2 Curt. 246. 

It is true, as a general rule, that the effect 
of a deed cannot be controlled by oral evi- 
dence. But among the exceptions to the rule 
is that in equity, where the proof is clear 
and convincing, a deed absolute on its face 
may be construed to be an equitable mort- 
gage. In Rowell v. Jewett, 69 Me. 293, this 
exceptional doctrine was first allowed to 
have operation in this state. It was fuUy 
accepted in Stinchfield v. Milliken, 71 Me. 
567, where the opinion says: "But the trans- 
action was In equity a mortgage,— an equlta- 
able mortgage. The criterion is the intention 
of the parties. In equity this intention may 
be ascertained from all pertinent facts, ei- 
ther within or without the written parts of 
the transaction. Where the Intention is clear 
that an absolute conveyance is taken as a 
security for a debt, it is in equity a mort- 
gage. The real intention governs." In Iiew- 
is V. Small, 71 Me. 552, the same doctrine 
is admitted. It has since been affirmed in 
other cases, receiving an able discussion in 
the late case of Reed v. Reed, 75 Me. 264. 



The effect of many of the older cases In this 
state has been swept away by this new prin- 
ciple in our legal system,— a product of the 
growth of the law, very greatly promoted by 
legislative stimulation. The present case 
must be governed by the equitable rule de- 
clared in the later decisions. 

Another question presented by the case is 
whether the statutory provision (Rev. St. c. 
73, § 12) which declares that a title of a pur- 
chaser for a valuable consideration cannot 
be defeated by a trust, unless the purchaser 
had notice thereof, means actual or con- 
structive notice. Section 8 of the same chap- 
ter requires "actual notice" of an unrecorded 
deed to defeat a subsequent purchaser's title 
from the same grantor. The two sections 
were incorporated in our statutory system at 
the same time,— in the Revision of 1841. 
One requires "notice," the other "actual no- 
tice." We think the difference In phrase- 
ology may be accounted for partly on the 
idea that section 8 would be applicable more 
to law cases, and section 12 more to ques- 
tions in equity. We can have no doubt that 
there may be cases of constructive trusts 
where section 12 would apply. At the same 
time, where the facts present questions 
analogous to those ordinarily arising under 
the other section, we think actual notice 
would be required; that under either sec- 
tion, in cases generally, actual notice, as we 
understand the meaning of the term, would 
be the rule; and that actual notice applies in 
the present case. 

There is a conflict in the cases and among 
writers as to what is actual notice. Much 
of the difference is said to be verbal only, — 
more apparent than real. Certain proposi- 
tions, however, are quite well agreed upon by 
a majority of the authorities. Notice does not 
mean knowledge; actual knowledge Is not 
required. Mr. Wade describes the modes of 
proving actual notice as of two kinds. One 
he denominates express notice, and the other 
implied. "Implied, which imputes knowl- 
edge to the party because he is shown to be 
anxious of having the means of knowledge, 
though he does not use them; in other 
words, where he chooses to remain volun- 
tarily ignorant of the fact, or is grossly neg- 
ligent in not following up the inquiry which 
the known facts suggest." Wade, Notice (2d 
Ed.) § 5. Some writers use the word "im- 
plied" as meaning constructive, and would 
regard what is here described to be implied 
actual notice as constructive notice merely. 
As applicable to actual notice, such as is re- 
quired by the sections of the statute under 
consideration, we think the classification of 
the author whom we quote is satisfactory. 
The author further explains the distinction 
by adding that "notice by implication dilfers 
from constructive notice, with which it is 
frequently confounded, and which it greatly 
resembles, with respect to the character of 
the inference upon which it rests; construct- 
ive notice being the creature of positive- 



PRIORITIES AND NOTICE. 



75 



law, or resting upon strictly legal Inference, 
while implied notice arises from inference 
of fact." It amounts substantially to this: 
that actual notice may be proved by direct 
evidence, or it may be inferred or implied 
(that Is, proved) as a fact from indirect evi- 
dence,— by circumstantial evidence. A man 
may have notice or its legal equivalent. He 
may be so situated as to be estopped to deny 
that he had actual notice. We are speaking 
of the statutory notice required under the 
conveyances act. A higher grade of evidence 
may be necessary to prove actual notice ap- 
pertaining to commercial paper. ICellogg v. 
Curtis, 69 Me. 212. The same facts may 
spmetimes be such as to prove both construct- 
ive and actual notice; that is, a court might 
infer constructive notice, and a jury infer 
actual notice, from the facts. Tliere may 
be cases where the facts show actual, when 
they do not warrant the inference of con- 
structive, notice; as where a deed is not 
regularly recorded, and not giving construct- 
ive notice, but a second purchaser sees it on 
the records, thereby receiving actual notice. 
Hastings v. Cutler, 24 N. H. 481. 

Mr. Pomeroy (2 Eq. Jur. 596, note) sum- 
marizes the effect of the American cases on 
the point under discussion in the following 
words: "In a few of the states the courts 
have interpreted the intention of the legis- 
lature as demanding that the personal infor- 
mation of the unrecorded instrument should 
be proved by the direct evidence, and as ex- 
cluding all instances of actual notice estab- 
lislied by circumstantial evidence. In most 
of the states, however, where this statutory 
clause is found, the courts have defined the 
'actual notice' required by the legislature as 
embracing all instances of that species in 
contradistinction from constructive notice; 
that is, all kinds of actual notice, whether 
proved by direct evidence or inferred as a 
legitimate conclusion from circumstances." 

The doctrine of actual notice implied by 
circumstances (actual notice in the second 
degree) necessarily involves the rule that a 
purchaser, before buying, should clear up the 
doubts which apparently hang upon the title, 
by making due inquiry and investigation. 
If a party has knowledge of such facts as 
would lead a fair and prudent man, using 
ordinary caution, to make further Inquiries, 
and he avoids the inquiry, he is chargeable 
with notice of the facts which by ordinary 
diligence he would have ascertained. He 
has no right to shut his eyes against the 
light before him. He does a wrong not to 
heed the "signs and signals" seen by him. 
It may be well concluded that he is avoid- 
ing notice of that which he in reality be- 
lieves or knows. Actual notice of facts 
which to the mind of a prudent man indi- 
cate notice is proof of notice. 3 Washb. 
Real Prop. (3d Ed.) 335. 

It must be admitted that our present views 
are not fully supported by the case of Spof- 
ford V. Weston, 29 Me. 140, a decision made 



40 years ago. But the doctrine has grown 
liberally since that day, and the correctness 
of some things pronounced in that opinion is 
virtually denied in subsequent cases. Por- 
ter V. Sevey, 43 Me. 519; Hull v. Noble, 40 
Me. 459; Jones v. McNan-in, 68 Me. 334. 
Many cases which affirm the doctrine con- 
tended for by the complainant, as well as 
many opposing cases, are cited by the text 
writers. Wade, Notice, §§ 10, 11, et seq., and 
cases in notes; 2 Pom. p:!q. Jur. § 603, and 
notes. The decided preponderance of author- 
ity supports the position that the statutory 
"actual notice" is a conclusion of fact capa- 
ble of being established by all grades of 
legitimate evidence. 

As to what would be a sufficiency of facts 
to excite inquiry no rule can very well estab- 
hsh. Each case depends upon its own facts. 
There is a great inconsistency in the cases 
upon this point. But we are satisfied that 
in the case before us the defendant must be 
charged with notice that his grantor held 
title by what equity must declare to be an 
invalid deed. He saw the grantor was out of 
possession. He could have easily ascertained 
that he never had possession. He. knew that 
others had controlled the property in many 
ways for many years. He examined the 
registry when he discovered the deed in 
question, and there must have seen evidence 
of other conveyances inconsistent with its 
full validity. He purchased the property for 
$40, while worth, had the title been perfect, 
nearer $1,000. He took a quitclaim deed; 
and it is held by some courts that such an 
instrument of conveyance does not make 
him a bona fide purchaser without notice 
(Baker v. Humphrey, 101 U. S. 494), al- 
though in our system it is a circumstance 
only bearing on the question (Mansfield v. 
Dyer, 181 Mass. 200). More than all else, 
perhaps, the defendant made no inquiry of 
the grantor whether he had any real title or 
not, asking no explanations, but insisting to 
him that he had no valuable title. It is im- 
possible for us to say, in the light of these 
impressive illuminating proofs, that the de- 
fendant purchased without notice. He pur- 
chased on the basis of a merely nominal title. 
We would not say that he did not believe 
he could legally purchase, encouraged, as he 
was, by the doctrine of the earlier cases, now 
abrogated; nor do we impute more than a 
want of caution and of diligence. Men's in- 
terests spur their judgments to one-sided 
conclusions oftentimes. The great dramatist 
makes a character reluctant to acknowledge 
the situation say, "I cannot dare to know 
that which I know;" while another, more 
quick-sighted, because anxious to believe, ex- 
claims, "Seems, Madam! Nay, it is. I know 
not seems." One rejects proof on the clear- 
est facts; the other accepts it on the slight- 
est. Judgment affirmed. 

WALTON, DANFORTH, EMERY, POS- 
TER, and HASKELL, JJ., concurred. 



76 



PRIORITIES AND NOTICE. 



KIRSCH et al. v. TOZIEK et al. 

(38 N. E. 375, 143 N. Y. 390.) 

Court of Appeals of New York. Oct. 23, 1S94. 

Appeal from supreme court, general term, 
fifth department. 

Action brought by Theodore Klrsch and 
another against Orange L. Tozier, the Buf- 
falo Savings Bank, and others, to reinstate 
a mortgage executed by defendant Lester H. 
Tozier and wife to defendant Orange L. 
Tozier, in trust for plaintiffs, to set aside its 
discharge, and for its foreclosure. The bank 
held a subsequent mortgage. From a judg- 
ment of the general term (18 N. Y. Supp. 
•j.'U) aiflrming a judgment for plaintiffs, de- 
fendants appeal. Affirmed. 

This action was brought to reinstate a 
mortgage executed by the defendant Lester 
H. Tozier and his wife to the defendant Or- 
ange L. Tozier, which was made in trust for 
the plaintiffs, Michael Kirsch and Theodore 
Kirsch, and for Peter Kirsch, now deceased, 
minor children of John Kirsch, to set aside 
a discharge of such mortgage executed by 
Orange L. Tozier, and for foreclosure of the 
mortgage and sale of the mortgaged premises 
for the benefit of the persons named, as ces- 
tuis que ti'ustent. The lands in question con- 
sist of 102 acres, situate in the town of Shel- 
don, Wyoming comity, N. Y., of which John 
Kirsch died seised in the year 1872. On the 
8th day of January, 1873, the defendant Or- 
ange L. Toziei- was appointed general guard- 
ian of the infant children, Michael J., Theo- 
dore and Peter Kirsch. At the time of his 
death John Kirsch owed debts which, with 
the Incumbrances upon his real estate, ex 
ceeded the value of both his personal and 
real property. Orange L. Tozier and Eliza- 
beth Kirsch, the latter the widow of the de- 
ceased, were appointed administrators of 
the estate of John Kirsch. Subsequently to 
this it was agreed between them and Les- 
ter H. Tozier, a son of Orange L. Tozier, that 
they should purchase the mortgages then ex- 
isting on the farm, foreclose them, and pro- 
cm-e a title to the land, and convey the same 
to Elizabeth Kirsch, who should, in turn, by 
mortgage thereon, secm-e to Lester H. Tozier 
the amoimt paid by him, and give a mort- 
gage upon the farm of $1,000 to these three 
children. This arrangement was carried 
out, except that upon a sale of the lands, 
either by direct purchase at the sale or by 
deed coming immediately from the purchas- 
er, Lester H. Tozier became the owner for 
the consideration, in all, of $1,131.56. There- 
upon It was further arranged between Or- 
ange L. Tozier and the widow, Elizabeth 
Kirsch, that the widow should convey to the 
then holder of the title, Lester H. Tozier, 
all her interest in the lands to which she was 
entitled as widow, and that a mortgage 
should be executed by Lester H. Tozier to 
Orange L. Tozier, in trust for the three chil- 
dren, in the sum of $1,000, one-third thereof 
payable to each of the three children when 



he should arrive at age, with interest in tha 
meantiine. Having received the deed from 
Mrs. Elizabeth Kirsch, Lester H. Tozier and 
his wife executed to Orange L. Tozier, in 
trust for Michael Kirsch, Peter Kirsch, and 
Theodore Kirsch, "minor children of John JI, 
Kirsch, deceased," the mortgage in question, 
dated the loth day of October, 1875, ex 
pressing a consideration of $1,000 payable 
as follows: The sum of $333.33 November 
13, 1887; the sum of $333.33 March 18, 1891, 
and the sum of $333.33 October 6, 1892,— with 
interest, payable annually, from the 1st day 
of April, 1876. This instrument was deliv- 
ered to Orange L. Tozier, who caused the 
same to be recorded in the proper clerk'a 
office on the 23d day of October, 1875. Tha 
mortgagee and trustee paid the interest up- 
on this mortgage to Elizabeth Kirsch, tha 
mother of the children, in pm-suance of a 
previous arrangement, until the spring of 
1880, since which time no pai't of the princi- 
pal or interest has been paid thereon by the 
ti'ustee for the benefit of either of the chil- 
dren. On the 3d day of September, 1883, 
Lester H. Tozier and his wife executed and 
delivered a deed of the farm to Orange L. 
Tozier, at a consideration, as expressed in 
the deed, of $4,000, and the record title of 
such farm has since been in Orange L. To- 
zier. After acquiring this title, and on the 
19th day of Pebmary, 1886, Orange L. To- 
zier executed and acknowledged a discharge 
of the mortgage, and caused the same to be 
recorded in the proper clerk's office on the 
0th day of Jlarch, 1886. On the 27th day of 
January, 1886, before the execution of such 
discharge, Orange L. Tozier applied to the 
defendant the Buffalo Savings Bank for a 
loan of $2,000 upon his fai'm, which applica- 
tion was granted on the 1st day of Febru- 
ary, 1886; and on an examination of the 
title of such farm, submitted to the officers 
of the bank, there was an abstract certified 
by the proper clerk of Wyoming county to 
the effect that Orange L. Tozier appeared 
to be the owner of the farm. On such ab- 
sti-act a memorandum of the mortgage sought 
by this action to be reinstated described the 
mortgage simply as being given for $1,000 
and interest, "in ti'ust for Michael Kirsch, 
Theodore Kirsch, and Peter Kirsch, minor 
children of John M. Kirsch, deceased," hav- 
ing written across the face of the memoran- 
dum as follows: "Discharged March 9, 
1886. E. M. Jennings, Clerk." The defend- 
ant the Buffalo Savings Bank, at the time of 
taking its mortgage and advancing the 
money thereon, had not, either through any 
of its officers or attorneys, any knowledge or 
notice of the existence of this mortgage now 
sotight to be reinstated in this action, except 
the memorandum on the abstract of title of 
its discharge, and the constructive notice 
given by the record of such mortgage. 

Adolph Rebadow, for appellants. F. 0. 
Peck, for respondents. 



PRIORITIES AND NOTICE. 



77 



ANDREWS, C. J. (after stating the facts). 
TIio ouly serious question presented on the 
record ai'ises on tlie claim of the Buffalo Sav- 
iufis! Bank that it was not chargeable with 
notice nor put upon inquiry to ascertain that 
the defendant Tozier had no authority to dis- 
charge the mortgage in question. The sav- 
ings hank, when it took its mortgage, had con- 
structive notice of every fact which could 
have been ascertained by an inspection of the 
deeds or mortgages or record in the chain of 
title. An inspection of the records of the 
title Co the land upon which Its mortgage was 
taken would have disclosed the mortgage giv- 
en by Lester H. Tozier in October, 1875, and 
that it was given "in trust" for the three mi- 
nor children of John M, Ku'sch, deceased; 
that the lands covered by the mortgage were 
subsequently, in 1883, conveyed by Lester H. 
Tozier to Orange L. Tozier, the mortgagee 
named in the mortgage given in trust for the 
minor children of John M. Kirsch; that after 
such conveyance, and in March, 1886, Orange 
L. Tozier, then being the owner of the lands, 
and also the mortgagee "in ti-ust" in that 
mortujge, himself executed and caused to be 
recorded a satisfaction of the mortgage, and 
that this occurred before any part of the sum 
secured by the mortgage had become due. 
There can be no doubt that the satisfaction of 
the mortgage was, as to the defendant Orange 
L. Tozier, a breach of trust. The satisfac- 
tion was without consideration. The ques- 
tion whether Tozier held the mortgage as tnis- 
tee impressed with a trust in favor of the 
three children of John M. Kirsch admits of 
no doubt. The implication from the nature 
of the instrument, the character of the bene- 
liciaries, and the division of the payments in- 
to ttoee equal parts, payable at specified, but 
different, dates in the futm'e, is that the in- 
strument was intended to secm-e to the sev- 
eral beneficiaries as they became of age an 
equal share of the sum for which the mort- 
gage was given. The acceptance by Orange 
L. Tozier of the mortgage containing the dec- 
laration of the ti'ust was an acknowledgment 
of the trust on his part and bomid him to 
perform it. The trust was expressed in the 
instniment, although not fully set out in 
words, and anj' act thereafter done by him 
In conti-aventiou of the trust was by the com- 
mon law and by the statute void. Statute of 
Uses and Trusts (1 Rev. St. 730, § 63). The 
dischaige of the mortgage was not iut.'uded 
for the benefit of the infants, but to deprive 
them of the benefit of the secm'ity, and, as 
we have said, was a plain breach of trust. 
The bank knew, or must be presumed to have 
known, when it took its mortgage, because 
an examination of the records would have 
disclosed the facts, (1) tliat the mortgage was 
taken by Tozier in ti-ust for Infants; (2) that 
he satisfied it before it became due; (3) that 
his relation to the property had changed, so 
that when he executed the satisfaction he 
was himself the owner of the land, having 
an adverse interest to those beneficially inter- 



ested in the security; and (4) that in satisfy- 
ing the mortgage he was dealing with him- 
self. Persons dealing with a trustee must 
take notice of the scope of his authority. An 
act within his authority will bind the trust 
estate or the beneficiaries as to third persons 
acting in good faith and without notice, al- 
though the trustee intended to defraud the es- 
tate, and actually 'did accomplish his purpose 
by means of the act in question. It has fre- 
quently been held that a peison dealing with 
an executor, administrator, or trustee, who, 
from the nature of his office, or by the terms 
of the trust, has power to satisfy or transfer 
the securities of the estate, or to vary the in- 
strument from time to time, is not bound to go 
further, and ascertain whether in fact the act 
of the executor or ti-ustee is justified, and that 
no breach of tnist was intended. It is suffi- 
cient for his protection that he acts in good 
faith, and. If the act of the executor or trus- 
tee is justified by the terms of the power, the 
party dealing with him is protected. Field 
T. SchlefCelin, 7 Johns. Ch. 153. But circum- 
stances were disclosed by the record when 
the bank took its mortgage which precluded 
the bank from relying upon the recorded sat- 
isfaction of the prior mortgage. There was 
no indication in the mortgage that any power 
was vested in the trustee, Tozier, to accept 
payment of the mortgage before it became 
due, or to vary the trust secm'ity. There was 
no such aflirmative power conferred upon him 
in fact, and the case of McPherson v. Rollins, 
107 N. Y. 316, 14 N. E. 411, seems to be a de- 
cisive authority that tliere is no implication of 
such a power in case of a tmstee of a speci- 
fied security for the benefit of minors, and no 
other evidence of his actual authority exists 
than may be implied from the fact that he is 
trustee of the securit;)'. The rule declared in 
that case operated with great severitj^ upon 
one who, without any actual notice, bought 
the property upon an official certificate that 
no lien existed on the premises, paying full 
value therefor. There the mortgage was giv- 
en to secm'e the payment of an annuity to the 
mortgagee, and also annuities to two minors 
until they should become of age. TTie mort- 
gagee afterwards, and before the expiration 
of the minority of the two children, without 
consideration, assumed to discharge the mort- 
gage, and the satisfaction was duly recorded. 
It was held that the ti-ustee had no power to 
satisfy the mortgage before the termination 
of the trust, and that the purchaser was not 
protected. It is difficult to perceive any solid 
distinction between that case and the present. 
In McPherson v. Rollins there was no ex- 
press direction that the mortgage security 
should remain unchanged dm'ing the term of 
the tnist. It was given to secure annuities, 
presumably for maintenance. Here the mort- 
gage was given to secm'e a gross sum, for the 
benefit of infants, the shares being payable, 
as was to be infeiTed, on their severally at- 
taining full a; ^ There is a very pregnant 
circumstance in the present case bearing up- 



78 



PRIORITIES AND NOTICE. 



on the point of constructive notice. Tlie bank 
relied upon a discharge by Tozier of a Hen 
'leld by him as trustee on his own land. The 
transaction as disclosed by the record showed 
that in executing the satisfaction Tozier was 
dealing with himself, and that the act was in 
his own interest; and not only so, but that 
the mortgage was not due. Tozier was act- 
ing in the double capacity of owner of the 
land and trustee of a lien thereon for other 
persons. The transaction was unusual and 
special, and the savings bank, with knowl- 
edge of Tozier's relation to the land as owner 
and trustee, was, we think, bound to inquire 
by what authority he acted, and, if inquiry 
had been made, the invalidltj' of the transac- 
tion would or might have been disclosed. 
What circumstances will amount to construct- 
ive notice, or will put a party upon inquiry, 
is in many cases a question of much difficulty. 



A purchaser is not required to use the utmost 
circumspection. He Is bound to act as an 
ordinarily prudent and careful man would 
do imder the circumstances. He cannot act 
in contravention to the dictates of reasonable 
prudence, or refuse to inquire when the pro- 
priety of inquiry Is naturally suggested by 
circumstances known to him. The circum- 
stances of this case made it, we think, the 
duty of the bank to inquire in respect to the 
authority of Tozier to discharge the prior 
mortgage, and, having failed to do so, it is not 
entitled to protection as a bona fide purchas- 
er. Baker v. Bliss, 39 N. Y. 70, and cases 
cited; Story, Eq. Jur. § 400 et seq. The other 
questions are satisfactorily disposed of in the 
opinions of the referee and at general term, 
and do not require further elaboration. The 
judgment should be affirmed, with costs. All 
concur. Judgment affirmed. 



PRIORITIES AND NOTICE; 



79 



KNOBLOCH V. MUBLER. 

(17 N. E. 696, 123 111. 554.) 

Supreme Court of Illinois. Jan. 20, 1888. 

Appeal from circuit court, St. Clair county; 
A. Watts, Judge. 

George Christian Mueler died March 27, 
1870. By his will, dated Mra-ch 14, 1870, 
his real estate was devised to his sons, 
George and Solomon. Mueler. The will was 
admitted to probate, but afterwards, at the 
January term, 1871, in the circuit court of 
St. Clair <;ounty, this instrument was, on 
bill filed for that pm'pose, set aside, and de- 
clared not to be the will of said deceased. 
This decree was affirmed by this court. 
Mueller v. Eebhan, 94 111. 142. On the 27th 
day of March, 1879, Catharine Rebhau, one 
of the heirs at law of said George C. Mueler, 
deceased, filed in the circuit court of St. 
Clair county her bill for partition of the W. 
% N. W., and the N. E. N. W. %, of section 
28, town 1 N., range 7 W., — alleging the 
death of said George C. Mueler intestate; 
that at his death he left him surviving 
George Mueler and Solomon Mueler, Mar- 
garite Ehinehardt, and complainant, Cathar- 
ine Rebhau, his children and only heirs at 
law, to whom descended in equal parts the 
said lands; that on the death of said ances- 
tor, George and Solomon had taken posses- 
sion of the land jointly, and received the 
rents thereof until February 29, 1875, when 
George died, leaving all his property to Solo- 
mon by his will duly probated, etc., since 
when said Solomon has received the rents 
and profits of said land. The bill alleged 
that Solomon was the owner in fee of the 
undivided one-half of said lands, and the 
complainant and Mrs. Rhinehardt were each 
the owner in fee of the undivided one-fourth 
part thereof, as tenants in common, and 
prayed for partition of the land, and that 
Solomon be required to account for the rents 
and profits, etc. At the February term, 1880, 
of said court, said bill was taken as con- 
fessed as to Mrs. Rhinehardt, and Solomon 
Mueler and his wife, who was also made a 
party, filed their answer, admitting the ma- 
terial allegations of the bill, and consenting 
to partition of said premises according to the 
prayer thereof. Subsequently an amended 
answer and cross-bill was filed, setting up 
that said Solomon had made lasting and 
valuable improvements on the land, etc. On 
hearing, said defendant Solomon admitted in 
open court the allegations of the bill in re- 
spect of the interest of the parties as tenants 
in common, the death and intestacy of the 
ancestor, and consented to a decree of parti- 
tion; and a decree declaring the several in- 
terests of the parties as set up in the bill 
as heirs at law of said George C. Mueler, 
deceased, in and to said land, was entered 
by the court by consent, and commission- 
ers were appointed to make partition accord- 
ingly. At the May term, 1880, of said court, 
on proof that defendant Solomon had pur- 



chased the interest of his co-defendant, Mar- 
garite Rhinehardt, the decree was, on his mo- 
tion, so changed as to require the commis- 
sioners theretofore appointed to set off to 
the said Solomon three-fourths, and to the 
complainant one-fourth, of said land. The 
issue as to rents and profits and improve- 
ments was referred to the master for proofs. 
At the same term the commissioners filed 
their report, setting o£E to the complainant, 
Mrs. Rebhau, as and for her one-fourth in- 
terest in said land, lot 10, as shown in their 
report, containing 48 acres of the land; and 
set off the residue of said tracts of land to 
the said Solomon. Exceptions to the report 
were filed, which were, at the May term, 
1881, overruled by the court, and the report 
approved by decree duly entered. No writ 
of error was prosecuted or appeal taken from 
the decree of partition. At the February 
term, 1883, of said court, on hearing of the 
issues as to rents and profits, a decree was 
rendered in favor of complainant Rebhau 
for $1,638.97, from which an appeal was 
prosecuted to the appellate court. On the 
8th day of March, 1881, in consideration of 
$5,050, Mrs. Rebhau, and Emil, her husband, 
by their warranty deed, conveyed the undi- 
vided one-fourth part of the premises of 
which her father died seized, and all their 
right, title, and interest in the whole of said 
land, to appellant, Thomas Knobloch; re- 
serving, however, her rights to rents and 
profits theretofore accrued. This deed was 
filed for record March 10, 1881. At the Feb- 
ruary term, 1882, appellant brought an action 
of trespass against said Solomon for alleged 
trespasses upon said 48 acres of land set off 
to Mrs. Rebhau, and afterwards brought 
ejectment to recover the same. In March 
or April, 1883, appellee found a paper dated 
March 9, 1855, purporting to be the last will 
and testament of George Christian Mueler, 
deceased, in and by which the testator de- 
vised all his land to his two sons, George 
and Solomon, subject to the payment of 
$1,500 to Catharine Rebhau. This will was 
duly admitted to probate. On July 6, 1883, 
Solomon Mueler, appellee here, filed in the 
St. Clair circuit court the present bill against 
appellant, Catharine Rebhau, Emil Rebhau, 
Margarite Rhinehardt, and Edward Abend, 
who, prior to the probate of the last will, 
had been appointed administrator of the es- 
tate of said George C. Mueler, deceased, 
substantially setting up the foregoing facts, 
and praying that said will (1855) stand as the 
last will and testament of the said George 
Christian Mueler; that the deed from Cath- 
arine and Emil Rebhau to said Knobloch be 
set aside as being a cloud upon complainant's 
title; that all proceedings in partition re- 
garding said land, and the stating of an ac- 
count of rents and profits now pending in the 
appellate court, and all actions commenced 
by said Edward Abend as aforesaid, and by 
said Knobloch, be no further prosecuted; 
and that the defendants, their attorneys, 



80 



PRIORITIES AND NOTICE. 



agents, etc., be perpetually enjoined from 
taking any furtlier steps in regard to said 
action. An injunction was granted as pray- 
ed in the bill of August 2.d. 1883. Appellant 
answered, setting up that he had purchased 
in good faith and paid $5,050 for the interest 
of Mrs. Rebhau in said land, without any 
notice of any adverse claim or title, and also 
setting up that complainant, Solomon, is es- 
topped, by the decree of partition rendered 
by his consent In open court, from disputing 
complainant's title. At the September term, 
1885, of said circuit court, a decree was en- 
tered perpetually enjoining the pi'osecution 
of said suits, and setting aside the deed from 
Mrs. Rebhau and her husband to appellant 
as a cloud on. complainant's title. From this 
decree appellant, Knobloch, alone appealed. 

W. C. Kueffner and James M. Dill, for 
appellant. A. R. Halbert, for appellee. 

SHOPIfl, J., (after stating the facts as 
above.) The bill in this case seeks to re- 
move, as a cloud upon the title of appellee, 
Solomon Mueler, derived under the will of 
1855, the deed of Catharine and Emil Reb- 
hau to appellant; and restrain by injunction 
the prosecution of an action of ejectment 
brought by appellant to recover the land par- 
titioned to Catharine Rebhau in the proceed- 
ings Instituted by her for partition of the 
lands of which her father died seized, and to 
enjoin a certain trespass suit brought for al- 
leged trespasses upon said land by appellee, 
and to restrain Mrs. Rebhau from collecting 
.*1,638.97, decreed as rents and profits in said 
partition proceeding. Jlrs. Rebhau not hav- 
ing appealed from the decree against her, 
the latter branch of the case made by the bill 
is not before us. When the instrmnent dat- 
ed March 14, 1870, purporting to be the last 
will and testament of George C. Mueler, who 
died March 20, 1870, was set aside upon bill 
filed for that purpose, it was supposed by all 
the parties in interest that his estate had de- 
scended to his heirs at law as intestate es- 
tate, and letters of administration were 
granted accordingly. All the parties ac- 
quiesced in this condition of affairs, and rest- 
ed in the belief that the property had so 
descended until the discovery, in March or 
April, 188.3, 18 years after the death of the 
ancestor, of the will of the 9th of March, 
1855, by which the estate in question was 
devised to George and Solomon Mueler. The 
good faith of the parties is not questioned, 
no fraud or misconduct is alleged, or laches 
imputed or imputable to any one, on account 
of the delay in the production of this will, 
or in any of the proceedings had in respect 
to the real or personal estate prior to its dis- 
covery. When Catharine Rebhau, daughter 
and one of the heirs at law of said George 
C. Mueler, deceased, on the 22d day of 
March, 1879, filed her bill for partition of the 
real estate of which said George C. had 
died seized; and when Solomon Mueler flled 
his answer, admitting the intestacy of his 



father and consenting to the partition to 
Mrs. Rebhau and Mrs. Rhinehardt, his sis- 
ters, each a one-fourth part or interest in the 
land of which their common ancestor died 
seized, and consented to the decree therefor, 
the several parties in good faith believed the 
facts alleged in her bill to be true, and that 
the land had descended to the four children 
of George C. Mueler, deceased, in equal 
parts in fee. It is also equally clear that 
when api>ellant, Thomas Knobloch, purchas- 
ed the interest of Catharine Rebhau In said 
land, and paid her therefor $5,050, that he 
did so in good faith, relying upon the title 
of said Catharine as found and declared by 
the circuit court of St. Clair county in said 
partition proceeding by the consent of appel- 
lee. Upon the production and probate of the 
will of 1855, in April, 1883, it became mani- 
fest that the title to said land had not in 
fact so descended to the heirs at law of said 
George Christian Mueler; but by virtue of 
that will the legal title thereto, at the death 
of the testator, vested in the devisees, George 
and Solomon Mueler, and that by the last 
will of said George Mueler, who died Feb- 
ruary 29, 1875, the legal title to the whole 
of said land became vested in appellee, Solo- 
mon JIueler. It is apparent that all parties, 
while acting in good faith, were mistaken, 
and that the decree of the circuit court, find- 
ing one-fourth interest of said land in fee in 
Catharine Rebhau, would not have been en- 
tered had the court or parties been aware of 
the true condition of the title to the land. 

It is said by counsel for appellee that this 
bill may be maintained, if upon no other 
ground than as a bill in the nature of a bill 
of review. This is manifestly a misappre- 
hension. In neither the frame of the bill, or 
in the prayer, has the pleader attempted a 
review of the decree rendered in the partition 
proceeding of Rebhau against Mueler et al. 
The bill sets out the tiling of that bill, the 
decree of partition, and for rents and profits; 
but it nowhere seeks to reopen that decree, 
or reverse, impeach, or alter it, or to pro- 
cure a rehearing of that cause upon the al- 
leged newly-discovered matter. The prayer 
is to remove appellant's title, derived there- 
under, as a cloud upon appellee's title, and to 
restrain proceedings under that decree with- 
out reopening it or setting it aside. The 
whole scope of the bill is to procure the reliel! 
sought upon the equitable ground of mistake 
of fact, as to the title at the time of the 
enti-y of that decree, without in any way in- 
terfering with it by seeking to enjoin pro- 
ceedings imder it. The two grounds upon 
which a bill of review, or bill in the nature 
of a bill of review, will lie, are: Errors of 
law, appearing on the face of the decree, 
without further examination of facts; and 
new fact or facts, discovered since the de- 
cree, which are material, and which it was 
impossible for the party to produce at the 
time the decree passed. 2 Daniell, Ch. Prac. 
1576; 2 Smith, Ch. Prac. 50. Bills contain- 



PRIORITIES AND NOTICE. 



81 



ing newly-discovered matter are in the na- 
ture of original bills, in so far as such new 
matter presents an issuable fact, and there- 
fore admits an answer and the formation of 
an issue; but only so far as it relates to the 
truth and sufficiency of the alleged new mat- 
ter, and its admissibility for the purpose of 
affecting and opening the original decree. 
Authorities supra; Buffiugton v. Harvey, 95 
U. S. 99. The purpose of a bill of the char- 
acter named is to procure a reversal, alter- 
ation, or explanation of the former decree. 
The bill should state the former bill, the pro- 
ceedings thereon, and the decree rendered by 
the court, the grievance under the decree of 
the party presenting the bill, and the error 
of law or new matter discovered upon which 
it is sought to reverse, reopen, or impeach it. 
In bills of review, if the former decree has 
not been carried into execution, the prayer 
may simply be that the same may be reversed 
and set aside; if the former decree has been 
executed, that the decree be reversed, and 
the complainant be restored to his former con- 
dition, or status, as if it had not been ren- 
dered. In bills in the nature of bills of re- 
view, Instead of praying the reversal of the 
former decree, the prayer should be that the 
cause be reheard in respect to and consider- 
ing the new matter at the same time it is 
reheard upon the original bill, etc. 2 Daniell, 
Ch. Prac. 1581, 1582. 

The decree of partition rendered at the 
February term, 1880, and the subsequent de- 
cree approving the report of the commission- 
ers rendered at the May term, 1881, of said 
court, remain unreversed and in full force 
and effect. The court had jurisdiction of the 
subject-matter and of the parties, and ren- 
dered its decree determining the several in- 
terests of the complainant Catharine Rebhau 
and appellee, by the consent of appellee, as 
appears by his answer filed in said cause, and 
by the recitals in said decree of partition. 
Decrees of courts of chancery, in respect of 
matters within their jurisdiction, are as bind- 
ing and conclusive upon the parties and their 
privies as are judgments at law; and a de- 
cree by consent in an amicable suit has been 
held to have an additional claim to be con- 
sidered final. Allason v. Starli, 9 Adol. & 
E. 255. Decree so entered by consent cannot 
be reversed, set aside, or impeached by bill 
of review or bill in the nature of a bill of re- 
view, except for fraud, unless it be shown 
that the consent was not in fact given, or 
something was inserted, as by consent, that 
was not consented to. 2 Daniell, Ch. Prac. 
1576; Webb v. Webb, 3 Swanst. 658; Thomp- 
son V. Maxwell, 95 U. S. 391; Armstrong v. 
Cooper, 11 111. 540; Cronli v. Trumble, 66 111. 
432; Haas v. Society, 80 111. 248; Atkinson 
V. Manlis, 1 Cow. 693; Winchester v. Win- 
chester, 121 Mass. 127; Allason v. Stark, 
9 Adol. & B. 255; Earl of Hopetoun v. Ram- 
say, 5 Bell, App. Cas. 69. See, also, note to 
Duchess of Kington's Case, 2 Smith, I^ead. 
Cas. *826 et seq. It is the general doctrine 
HUTCH.& BUNK.EQ.— 6 



that such a decree is not reversible upon ap- 
peal or writ of error, or by bill of review for 
error. Armstrong v. Cooper, 11 111. 540. No 
exceptions were taken to the decree of parti- 
tion, or attempt made in the cause in which 
it is rendered to vacate or modify it. It is 
undoubtedly true that, as between the parties 
and those chargeable with notice, courts of 
equity will entertain jurisdiction and grant 
relief, on proper bill filed, from the injurious 
effects of admissions and confessions of ma- 
terial facts, made in course of judicial pro- 
ceedings, in ignorance of the rights of the 
party making them, where he has been guilty 
of no negligence, either in the discovery of 
the fact, or in applying to the proper forum 
for relief; but such relief can only be granted 
upon such grounds and for such reasons as 
would authorize the court to set aside agree- 
ments or contracts entered into by the par- 
ties. Attorney General v,. Tomline, 7 Ch. 
Div. 388; Millspaugh v. McBride, 7 Paige, 
509; Furnival v. Bogle, 4 Kuss. 142; The 
Hiram, 1 Wheat. 440. But it is apparent 
that the decree in the partition proceedings 
can only be attacked, reversed, annulled, or 
set aside by direct proceedings in that case, 
or upon bill of review, or bill in the nature of 
a bill of review. 

If this were not so, however, there is an- 
other ground upon which the decree must be 
reversed. It is the well-settled doctrine of 
this court that no relief will be granted in 
equity, in cases of this sort, injuriously af- 
fecting intervening rights acquired in good 
faith, after the rendition of a judgment or 
decree, and in reliance thereon. So it has 
been held that amendments may be made in 
judicial proceedings, but not so as to affect 
the intervening rights of third persons accru- 
ing prior to such amendment. Shirley v. 
Phillips, 17 111. 473; Coughran v. Gutcheus, 
18 111. 390; Sickmon v. Wood, 69 III. 329; 
1 Story, Eq. Jur. 166. Relief will not be 
granted to the prejudice of appellant, if he 
has an equal equity with appellee, and is 
equally entitled to the protection of the court. 
1 Story, Eq. Jur. 165. As already seen, all 
the parties to the partition proceedings sup- 
posed in good faith that ilrs. Rebhau was 
the owner in fee of the undivided one-fourth 
of the lands of which her father died seized, 
and that on the 8th day of March, 1881, ap- 
pellant purchased her interest in such lands 
for a full and adequate consideration, with- 
out notice, actual or constructive, of any de- 
fect in her title, and in good faith. All the 
elements to constitute him a bona fide pur- 
chaser are present; that is, a valuable con- 
sideration paid, absence of notice, and pres- 
ence of good faith. 2 Pom. Eq. Jur. § 745. 
His grantor had, by a court of competent 
jurisdiction, in a proceeding instituted' to 
find and declare her interests in these lands, 
been adjudged, by the consent and admission 
of appellee, to be the owner in fee of the un- 
divided one-fourth part thereof, and there 
was nothing in the record or elsewhere ap- 



82 



PRIORITIES AND NOTICE. 



parent to disclose that she, who was thus 
clothed with apparent legal title, was not the 
owner in fact of that interest in the land. 
Nor is it shown or claimed that further in- 
quiry would then have disclosed anything to 
cast suspicion upon her title. The defense 
of a bona fide purchaser had its rise in eq- 
uity, upon the doctrine that a court of eq- 
uity acts upon the conscience of Mm against 
whom relief is sought; and if he has done no 
wrong, or it would be unconscientious or in- 
equitable to grant the relief, the court will 
refuse to exercise its jurisdiction. If, in 
equity and good conscience, the complainant 
should not obtain what he seeks, or the de- 
fendant ought not to suffer what is demand- 
ed, then the court will withhold its power. 
In theory, it is said, the defense of a bona 
fide purchaser presupposes some defect in 
purchaser's title; but the court refuses to 
investigate the validity of the title of either 
party, upon the ground that good conscience 
does not dictate that he who has dealt hon>- 
estly, in good faith, and without notice, 
should be deprived of the legal right he has 
thereby gained. Id. § 739. There was for- 
merly much apparent conflict in the adjudg- 
ed cases as to when the defense of a bona fide 
purchaser would be availing. In Phillips v. 
Phillips, 4 De Gex, F. & J. 208, Lord West- 
bury grouped the cases in which a bona fide 
purchaser will be protected into three general 
classes, and reduced the doctrine to a for- 
mula, which it is said by Pomeroy (2 Eq. 
Jur. § 742) has been accepted, by subsequent 
judges almost without exception. The doc- 
trine thus formulated, so far as appli^ ible 
here, is: "Thirdly, when there are circum- 
stances which give rise to an equity, as dis- 
tinguished from an equitable estate,— as, for 
example, an equity to set aside a deed for 
fraud, or to correct it for mistake,— and the 
purchaser under the instrument maintains 
the plea of purchase for valuable considera- 
tion without notice, the court will not inter- 
fere." 

Without extended discussion, it is apparent 
that the bill here filed seeks relief ancillary 
to the legal estate of appellee. The purpose 
of the bill is to remove the deed to appellant 
as a cloud upon appellee's legal title, and to 
enjoin the assertion of rights by appellant 
thereunder. The right to the relief sought 
exists, if at all, upon the equity arising out 
of the alleged mistake as to the title to said 
land in the grantor of appellant. This brings 
the case directly within the rule above giv- 
en, which is sustained by the weight of mod- 
ern authority; and, if appellant has made out 
his defense as bona fide purchaser, he should 
have prevailed in the court below. The de- 
cree of partition, as seen, was rendered by a 
court of competent jurisdiction, having juris- 
diction of the person and of the subject-mat- 
ter, and by appellee's consent. Appellant 
without notice, for full value, and in perfect 
good faith, acquired the title, sought to be 
removed as a cloud upon appellee's title, from 



the party found and declared by that decree 
to be the owner, and we can perceive no 
principle upon which a court of conscience 
can hold that appellant shall lose in conse- 
quence of the mutual mistake, rather than 
appellee. It cannot be said that the equi- 
ties of appellee are superior to those of ap- 
pellant in respect of the title thus acquired, 
and, the equities being equal, the court will 
give no assistance to the legal title, (2 Pom. 
Eq. Jur. § 742, and cases cited,) but will re- 
mit the complainant to his remedy at law. 

It is said, however, that, at the time ap- 
pellant purchased, the report of the com- 
missioners had not been confirmed by the 
court, and that he purchased subject to hav- 
ing the interest of his grantor, as found by 
the commissioners, set aside. It is true that 
exceptions to the report of the commissioners 
were then pending, but none of the excep- 
tions questioned the right or title of Cath- 
arine Rebhau to the undivided one-fourth part 
of the real estate of which her father died 
seized. Such exception related simply to the 
manner of partition, and the conduct of the 
commissioners in making the same. There 
was nothing therein to put appellant upon 
notice or inquiry as to the title of Mrs. Reb- 
hau. He bought subject, as a matter of 
course, to having the amount set off to Mrs. 
Rebhau changed or diminished by subse- 
quent action of the commissioners, or to have 
their report set aside by the court; but his 
purchase was of her interest in the land, 
which was conceded by appellant and de- 
clared by the court to be a one-fourth inter- 
est therein. 

It is also said by counsel for appellee that 
appellant may rely upon the covenants of 
warranty in his deed from the Rebhaus, and 
therefore the equities are with appellee. It 
is not shown whether Mrs. Rebhau, and her 
husband, who joined in the execution of said 
deed, are solvent or insolvent, and we per- 
ceive no principle, nor is any suggested by 
counsel, upon which appellant should be 
driven to resort to his legal remedy against 
his gi'antor for indemnity from loss, especial- 
ly in view of the fact that it is not shown 
that such remedy would be availing. It will 
not be proper for us to here discuss or deter- 
mine the right of appellee to the money paid 
by appellant for the land in question, or as 
to whether he has any remedy in respect of 
the same. 

We are of opinion that the defense of a 
bona fide purchaser has been maintained, 
and, upon both of the grounds indicated, the 
right of appellee to the relief sought should 
have been denied, as against appellant, 
Knobloch, and the bill dismissed as to him. 
For the error of the court in this regard, 
the decree, in so far as it affects the appel- 
lant, Knobloch, will be reversed, and the 
cause remanded to the circuit court of St. 
Clair county, with instructions to enter a de- 
cree in conformity with this opinion, dismiss- 
ing the bill as to said appellant. 



PRIORITIES AND NOTICE. 



83 



MATOR, ETC., OF CITY OF BALTIMORE 
et al. V. WHITTINGTON. 

(27 Atl. 984, 78 Md. 2.31.) 

Court of Appeals of Maryland. Nov. 16, 1893. 

Appeal from circuit court of Baltimore 
city. 

Suit by Jacob Craft Whittington against 
the mayor and city council of Baltimore and 
Clarence M. EUinger for injunction. From a 
decree for complainant, defendants appeal. 
Affirmed. 

Argued before ROBINSON, 0. J., and 
BRISCOE, BRYAN, FOWLER, and Mc- 
SHERRY, J J. 

Thos. G. Hayes, Jas. P. Gorter, Wm. S. 
Bryaa, Jr., and F. W. Story, for appellants. 
F. O. SlingluCE and T. Wallis Blakiston, for 
appellee. 

McSHERRY, J. By section 47, art. 49, of 
the Municipal Code of Baltimore City, it is 
enacted, in substajice, that when any lots 
of ground are chargeable with the payment 
of taxes, and are subject to ground rents 
or leases for terms of years, renewable for- 
ever, the collector shall, in the sale of such 
lots for nonpayment of taxes, first sell only 
the leasehold interest, If it should sell for 
an amount sufficient to pay the taxes, but, 
if it should not, then that he shall sell the 
whole fee-simple estate, provided these pro- 
visions "shall not apply to cases where the 
books of the city do not disclose the fact 
that the lot or lots are on lease as aforesaid, 
or unless the collector shall have actual no- 
tice of such lease prior to the sale thereof." 
The city tax collector of Baltimore sold in 
March, 1891, for the nonpayment of state 
and city taxes, the fee-simple estate in a 
lot of ground on Druid HiU avenue, and the 
mayor and city council became the pur- 
chaser. The sale was reported to the rarcuit 
court of Baltimore city, and was ratified in 
May. 1892. lu October following, the city, 
through and by its comptroller, sold the lot 
to Clarence M. Ellinger, to whom it was 
thereafter conveyed. When the sale was 
made by the collector, the lot was subject 
to a lease for 99 years, renewable forever, 
which was owned by J. Hem-y Weber, and 
the reversion or fee was owned by the ap- 
pellee, Whittington. The unpaid taxes were 
due by the owner of the leasehold estate, but 
the collector sold the whole fee, without hav- 
ing first offered, or having attempted to sell, 
the leasehold, as rectuired by the section of 
the City Code to which reference has been 
made. There was no entry on the books of 
the collector showing that the lot was sub- 
ject to a lease, and the single question In- 
volved in the case is whether, when the col- 
lector made the sale, he had "actual notice" 
of the existence of the lease. If he hael, the 
sale was irregular. If it was irresrular, the 
decree of the circuit court of Baltimore city, 
restraining by Injtmction the mayor and city 



council, and its grantee, Ellinger, from dis- 
turbing the possession of the owner of the 
reversion, must be affirmed. 

It appears by the record that In 1883 pro- 
ceedings were instituted In the circuit court 
of Baltimore city by Rebecca and Mary Mc- 
Kaen against J. Henry Weber for a sale of 
this same leasehold estate under a mortgage 
thereon executed by Weber in 1881. Mr. 
T. Wallis Blackiston was appointed trustee 
to make the sale. He took possession of the 
property, and collected the rents and profits, 
but, owing to a depreciation in its value, 
made no sale of it. In the meantime the 
gi-oimd rent was regularly paid to the ap- 
peUee, up to July, 1892, but the state and 
city taxes for the eight years beginning with 
1882 remained unpaid. On the 1st day of 
December, 1890, Lewis N. Hopkins, city col- 
lector, filed a petition in the foreclosiu-e pro- 
ceedings representing that taxes for the 
years just mentioned were in arrear upon 
the property "decreed to be sold." The peti- 
tion further stated that the collector was una- 
ble to enforce the collection of those taxes 
by reason of the pendency of the foreclosure 
proceedings, and it prayed that the trustee 
might be required to pay the taxes out of 
the rents theretofore collected from the prop- 
erty, or that the collector might "be allowed 
to proceed to coUect said taxes by sale of 
the property in the ordinary way." This peti- 
tion was signed by the late Mr. W. A. Ham- 
mond, "city solicitor, attorney for petitioner," 
and was sworn to by the deputy city col- 
lector. Subsequently, an order was passed, 
requiring the trustee to pay the taxes within 
five days out of the funds previously collected 
by him "as rents from the property decreed 
to be sold," and directing, upon his failure to 
do so, that the property be sold in the ordi- 
nary way by the collector. The trustee did 
faU to pay the taxes, and the collector made, 
under authority of this order, the sale of 
March, 1891, already mentioned. It is upon 
these facts that the appellee relies to show 
that the collector had "actual notice" oi the 
existence of the leasehold estate. 

Notice is of two kinds, — actual and con- 
structive. Actual notice may be either (■ 
press or implied. If the one, it is estab- 
lished by direct evidence; If the other, by 
the proof of circumstances from which it is 
inferable as a fact. Constructive notice is, 
on the other hand, alvsnays a presumption of 
law. Express notice embraces, not only 
knowledge, but also that which is communi- 
cated by direct information, either writtei* 
or oral, from those who are cognizant of the 
fact communicated. Wade, Notice, § 6. Im- 
plied notice, which is equally actual notice., 
arises where the party to be charged is 
shown to have had knowledge of such facts 
and circumstances as would lead him, by th6 
exercise of due diligence, to a knowledge of 
the principal fact. 16 Amer. & Eng. Enc. 
Law, 790. Or, as defined by the supreme 
court of Missouri in Rhodes v. Outcalt, 48 



84 



PRIORITIES AND NOTICE. 



Mo. 370, "a notice is regarded in law as ac- 
tual when the party sought to be affected 
by it knows of the particular fact, or is con- 
scious of having the means of knowing it, 
although he may not employ the means in 
his possession for the purpose of gaining fur- 
ther information." It is simply circumstan- 
tial evidence from which notice may be la 
ferred. It differs from constructive notice, 
with which it is frequently confotmded, and 
which it greatly resembles, in respect to the 
character of the inference upon which It 
rests; constructive notice being the creature 
of positive law, resting upon strictly legal 
presumptions, which are not allowed to be 
controverted, (1 Story, Eq. Jur. § 399; Tovra- 
send V. Little, 109 U. S. 504, 3 Sup. Ct. 357,) 
while implied notice arises from Inference of 
fact, (Williamson v. Brown, 15 N. Y. 354; 
Wade, Notice, § 3.) With constructive no- 
tice we are not now concerned, and it is not 
pretended that the city collector had express 
notice, or knowledge personally, of the exist- 
ence of the leasehold estate. But he be- 
came a party to the equity proceeding, where- 
in a decree had been passed directing a sale 
of the leasehold interest He did more. Ho 
asked, notwithstanding the decree had been 
long before signed and enrolled, that be be 
permitted to sell for the nonpayment of 
taxes, imder the summary process of dis- 
traint, the identical property previously do- 
creed to be sold, and no other or different 
Interest; and the property which had been 
thus previously decreed to be sold was not 
the fee simple, but only the leasehold interest 
in the lot In question. He obviously knew 
there was a proceeding pending in the cir- 
cuit court of Baltimore city, having for Its 
object the sale of some interest in the prop- 
erty. He knew, further, the equity proceed- 
ing interfered with the execution of his dis- 
traints, and he applied to the court for leave 
to proceed, in spite of the decree, to sell the 
same property which had been decreed to 
be sold. We say he knew these things, and 
we say so, not because the record shows that 
he was pereonally aware of them, as mat- 
ters of actual knowledge, but because the 
deputy city collector and the collector's at- 
torney, both of whom were his agents In this 
transaction, did have such knowledge; the 
one having sworn to the facts stated In the 
petition, and the other having signed the pe- 
tition itself. So both the attorney and the 
deputy collector knew, or at least were in 
possession of facts which would necessarily 
lead, upon the exercise of the slightest dili- 
gence, to a knowledge or notice, of the exist- 
ence of the lease. They must therefore be 
regarded as knowing that which, with ordi- 



[ nary diligence, they might have known, or 
I that which they were conscious of having the 
means of knowing. This result is not a 
legal presumption, but an Inference of fact, 
I and it seems to us an Irresistible inference. It 
1 would be idle to say that the collector was 
; ignorant of facts relating to the title to prop- 
erty which he was about to sell for the non- 
payment of taxes, when his deputy, acting 
for him and In his name, was In full posses- 
sion of them, or that he did not know the 
things which his attorney was aware of in 
that particular proceeding respecting the 
state of the title; and it would be equally idle 
to say that the deputy, when he swore to the 
petition, and the attorney, when he signed it, 
filed it, and procured a court's order upon It, 
were not apprised of the character of the es- 
tate previously decreed to be sold, or were 
not in a position where they were conscious 
of having the means of knowing precisely 
what property the decree affected. At ail 
events, the exercise of ordinary diligence 
would most assuredly have informed both of 
these agents of the collector of every fact 
which the records in the equity case dis- 
closed, and among those facts was the mate- 
rial and Important one that the lot was sub- 
ject to a lease for 99 years, renewable for- 
ever. It Is consequently a legitimate infer- 
ence of fact that both of these representa- 
tives of the collector knew what the record in 
the foreclosure case disclosed as to tliere be- 
ing a leasehold estate in Weber, and not a 
fee, and this was implied actual notice. No- 
tice to the attorney, as well as notice to the 
deputy, was notice to the collector, and was 
actual, and not merely constructive, notice 
to him, for the principal is bound by and 
affected with notice to his agent, and he is 
equally bound by notice received by his attor- 
ney in the same transaction. Astor v. Wells, 
4 Wheat 466; Reed's Appeal, 34 Pa. St 209; 
Houseman v. Association, 81 Pa. St 256; 
Smith V. Ayer, 101 tJ. S. 320. If this were 
not so, then. In every case where notice is 
necessary, it might be avoided by simply em- 
ploying an agent. We are, for the reasons 
we have given, of opinion that the collector 
had, through the means we have Indicated, 
such actual notice of the existence of the 
lease as to bring him within the proviso 
quoted from the City Code, and that he w.is 
therefore not authorized to sell the fee-simple 
estate until he had first offered the lease- 
hold for sala It results, then, that the sale 
made by him was Irregular, and the decree 
granting the injunction applied for by the ap- 
pellee must be afllrmed. Decree affirmed, 
with costs in this court and In the court be- 
low. 



PRIOBITIEIS AND NOTICE. 



85 



WILLIAMSON V. BROWN. 

(15 N. Y. 354.) 

Court of Appeals of New York. 1857. 

The plaintiff was the grantee of fifty acres 
of land on which there was no recorded in- 
cumbrance. His grantor purchased the land 
of the defendant, giving back a mortgage for 
a part of the purchase price. 

The defendant commenced to foreclose his 
mortgage by advertisement, whereupon this 
action was brought to restrain the foreclo- 
sure. The other material facts appear in the 
opinion. 

D. H. Marsh, for appellant. J. R. Law- 
rence, for respondent. 

SELDEN, J. The referee's report. is con- 
clusive as to the facts. It states, in sub- 
stance, that the plaintiff had sufficient in- 
formation to put him upon inquiry as to %he 
defendant's mortgage; but that, after mak- 
ing all the inquiry which upon such informa- 
tion it became his duty to make, he failed to 
discover that any such mortgage existed. 
This being, as I think, what the referee in- 
tended to state, is to be assumed as the true 
interpretation of his report. 

The question in the case, therefore, is, as 
to the nature and effect of that kind of no- 
tice so frequently mentioned as notice suffi- 
cient to put a party upon inquiry. The 
counsel for the plaintiff contends that while 
such a notice may be all that is required in 
some cases of equitable cognizance, it is not 
sufficient, in cases arising under the registry 
acts, to charge the party claiming under a 
recorded title with knowledge of a prior un- 
registered conveyance. He cites several au- 
thorities in support of this position. 

In the case of Dey v. Dunham, 2 Johns. 
Ch. 182, Chancellor Kent says, in regard to 
notice under the registry act: "If notice 
that is to put a party upon inquiry be suffi- 
cient to break in upon the policy and the 
express provisions of the act, then indeed the 
conclusion would be different; but I do not 
apprehend that the decisions go that length." 
Again, in his Commentaries, speaking on the 
same subject, he says: "Implied notice may 
be equally effectual with direct and positive 
notice; but then it must not be that notice 
which is barely sufficient to put a party up- 
on Inquiry." 

So in Jackson v. Van Valkenburgh, 8 Cow. 
260, Woodworth, J., says: "If these rules 
be applied to the present case, the notice 
was defective. It may have answered to 
put a person on inquiry, in a case where that 
species of notice is sufficient; but we have 
seen that to supply the place of registry, the 
law proceeds a step further." 

A reference to some of the earlier decisions 
under the registry acts of England will tend, 
I think, to explain these remarks, which were 
probably suggested by those decisions. One 
of the earliest, if not the first of the English 



recording acts was that of 7 Anne, chapter 
20. That act differed from our general regis- 
try act in one important respect. It did not, 
in terms, require that the party to be pro- 
tected by the act should be a bona fide pur- 
chaser. Its language was: "And that 
every such deed or conveyance, that shall at 
any time after, etc., be made and executed, 
shall be adjudged fraudulent and void, 
against any subsequent purchaser or mort- 
gagee for valuable consideration, unless," 
etc. 

The English judges found some difficulty 
at first in allowing any equity, however 
strong, to control the explicit terms of the 
statute. It was soon seen, however, that ad- 
hering to the strict letter of the act would 
open the door to the grossest frauds. Courts 
of equit.v, therefore, began, but with great 
caution, to give relief when the fraud was 
palpable. Hine v. Dodd, 2 Atk. 275, was a 
case in which the complainant sought relief 
against a mortgage having a preference un- 
der the registry act, on the ground that the 
mortgagee had notice. Lord Hardwicke 
dismissed the bill, but admitted that "ap- 
parent fraud, or clear and undoubted notice 
would be a proper ground of relief." Again, 
he said: "There may possibly have been 
cases of relief upon notice, divested of fraud, 
but then the proof must be extremely clear." 

Jolland V. Stainbridge, 3 Ves. 478, is an- 
other case in which relief was denied. Tlie 
master of the rolls, however, there says: 
"I must admit now that the registry is not 
conclusive evidence, but it Is equally clear 
that it must be satisfactorily proved, that 
the person who registers the subsequent deed 
must have known exactly the situation of 
the persons having the prior deed, and know- 
ing that, registered in order to defraud them 
of that title." 

Chancellor Kent refers to these cases in 
Dey V. Dunham (supra) and his remarks in 
that case, as to the effect, under the registry 
acts, of notice sufficient to put a party upon 
inquiry, were evidently made under the in- 
fluence of the language of Lord Hardwicke 
and the master of the rolls, above quoted. 

But the English courts have since seen, 
that if they recognized any equity founded 
upon notice to the subsequent purchaser of 
the prior unregistered conveyance, it be- 
came necessarily a mere question of good 
faith on the part of such purchaser. They 
now apply, therefore, the same rules in re- 
gard to notice, to cases arising under the 
registry acts, as to all other cases. 

It will be sufficient to refer to one only 
among the modern English cases on this sub- 
ject, viz.: Whitbread v. Jordan, 1 Younge 
& C. 303. The plaintiff was a London brew- 
er, and supplied Jordan, who was a publican, 
with beer. It was the common practice with 
brewers in London to lend money to pub- 
licans whom they supplied with beer, upon a 
deposit of their title deeds. Jordan had de- 
posited certain deeds with the plaintiff, pur- 



86 



PRIORITIES AND NOTICE. 



suant to this custom. He aftei-ward gave to 
ODe Boulnois, a wine mercliant, a mortgage 
upon the property covered by the deeds de- 
posited, which was duly recorded. Boulnois 
had notice of Jordan's debt to the plaintiff, 
and of the existing customs between brewers 
and publicans, but he made no inquiry of the 
brewers. The suit was brought to enforce 
the equitable mortgage arising from the de- 
posit. Baron Alderson held that the notice 
to Boulnois was sufHcient to make it his duty 
to inquire as to the existence of the deposit; 
that his not doing so was evidence of bad 
faith; and the plaintiff's right, under his 
equitable mortgage, was sustained. No case 
could show more strongly that notice which 
puts the party upon inquiry is sufficient even 
under the registry act. 

The cases in our own courts, since Dey v. 
Dunham and Jackson v. Van Valkenburgh 
(supra), hold substantially the same doctrine. 
(Tuttle V. Jackson, 6 Wend. 213; Jackson v. 
Post, 15 Wend. 588; Grimstone v. Carter, 3 
Paige, 421.) 

I can see no foundation in reason for a dis- 
tinction between the evidence requisite to es- 
tablish a want of good faith, in a case aris- 
ing under the recording act, and in any other 
case, and the authorities here referred to are 
sufficient to show that no such distinction is 
recognized, at the present day, by the courts. 
The question, however, remains, whether this 
species of notice is absolutely conclusive up- 
on the rights of the parties. The plaintiff's 
counsel contends, that knowledge sufficient 
to put the purchaser ujwn Inquiry is only 
presumptive evidence of actual notice, and 
may be repelled by shovring that the party 
did inquire with reasonable diligence, but 
failed to ascertain the existence of the un- 
registered conveyance; while, on the other 
hand, it is Insisted that notice which makes 
it the duty of the party to inquire, amounts 
to constructive notice of the prior conveyance, 
the law presuming that due inquiry will nec- 
essarily lead to its discovery. 

The counsel for the defendant cites several 
authorities in support of his position, and 
among others the cases of Tuttle v. Jackson 
and Grimstone v. Carter (supra). In the 
first of these cases, Walworth, chancellor, 
says: "If the subsequent purchaser knows 
of the unregistered conveyance at the time 
of his purchase, he cannot protect himself 
against that conveyance; and whatever is 
sufficient to make it his duty to inquire as 
to the rights of others is considered legal 
notice to him of those rights;" and in Grim- 
stone V. Carter, the same judge says: "And 
if the person claiming the prior equity is in 
the actual possession of the estate, and the 
purchaser has notice of that fact, it is suffi- 
cient to put him on inquiry as to the actual 
rights of such possessor, and is good con- 
structive notice of those rights." 

It must be conceded that the language 
used by the learned chancellor in these cases, 
if strictly accurate, would go to sustain the 



doctrine contended for by the defendant's 
counsel. Notice is of two kinds: actual and 
constructive. Actual notice embraces all de- 
grees and grades of evidence, from the most 
direct and positive proof to the slightest cii'- 
cumstance from which a jury would be war- 
ranted in inferring notice. It is a mere 
question of fact, and is open to every spe- 
cies of legitimate evidence which may tend 
to strengthen or Impair the conclusion. Con- 
structive notice, on the other hand, is a legal 
inference from established facts; and like 
other legal presumptions, does not admit of 
dispute. "Constructive notice," says Judge 
Story, "is in its nature no more than evi- 
dence of notice, the presumption of which is 
so violent that the court will not even allow 
of its being controverted." (Story, Eq. Jur. 
§399.) 

A recorded deed is an instance of construc- 
tive notice. It is of no consequence whether 
the second purchaser has actual notice of 
the prior deed or not. He is bound to take, 
and is presumed to have, the requisite no- 
tice. So, too, notice to an agent is construc- 
tive notice to the principal; and it would not 
in the least avail the latter to show that the 
agent had neglected to communicate the fact. 
In such cases, the law imputes notice to the 
party whether he has it or not. Legal or im- 
phed notice, therefore, is the same as con- 
structive notice, and cannot be controverted 
by proof. 

But it will be found, on looking into the 
cases, that there is much want of precision 
in the use of these terms. They have been 
not unfrequently applied to degrees of evi- 
dence barely sufficient to warrant a jury in 
inferring actual notice and which the slight- 
est opposing proof would repel, instead of be- 
ing confined to those legal presumptions of 
notice which no proof can overthrow. The 
use of these terms by the chancellor, there- 
fore, in Tuttle v. Jackson, and Grimstone v. 
Carter, is by no means conclusive. 

The phraseology uniformly used, as de- 
scriptive of the kind of notice in question, 
"sufficient to put the party upon inquiry," 
would seem to imply that if the party is 
faithful in making inquiries, but fails to 
discover the conveyance, he will be protect- 
ed. The import of the terms is, that it be- 
comes the duty of the party to inquire. If, 
then, he performs that duty is he still to be 
bound, without any actual notice? The pre- 
sumption of notice which arises from proof 
of that degree of knowledge which will put 
a party upon inquiry is, I apprehend, not a 
presumption of law, but of fact, and may, 
therefore, be controverted by evidence. 

In Whitbread v. Jordan (supra). Baron 
Alderson laid down the rule as follows: 
"When a party having knowledge of such 
facts as would lead any honest man, using 
ordinary caution, to make further inquiries, 
does not make, but on the contrary studious- 
ly avoids making, such obvious inquiries, he 
must be taken to have notice of those facts, 



PRIORITIES AND NOTICE. 



87 



which, If he had used such ordinary diligence, 
he would readily have ascertained." This 
very plainly implies tliat proof that the party 
has used due diligence, but without effect, 
would repel the presumption. In this case it 
is true the decision was against the party 
having the notice. But in Jones v. Smith, 
1 Hare, 43, we have a case in which a party, 
who had linowledge sufficient to put him on 
inquiry, was nevertheless held not bound by 
the notice. 

The defendant had loaned money upon the 
security of the estate of David Jones, the 
father of the plaintiff. At the time of the 
loan he was informed by David Jones and 
his wife, that a settlement was made pre- 
vious to the marriage, but was at the same 
time assured that it only affected the prop- 
erty of the wife. He insisted upon seeing 
the settlement, but was told that it was in 
the hands of a relative, and that it could not 
be seen without giving offense to an aged 
aunt of the wife, from whom they had ex- 
pectations. David Jones, however, after 
some further conversation, promised that he 
would try to procure it for exhibition to the 
defendant. This promise he failed to per- 
form. It turned out that the settlement in- 
cluded the lands upon which the money was 
loaned. Here was certainly knowledge 
enough to put the party upon inquiry; for he 
was apprised of the existence of the very 
document which was the foundation of the 
complainant's claim. He did inquire, how- 
ever, and made every reasonable effort to see 
the settlement itself, but was baffled by the 
plausible pretenses of David Smith. The 
vice-chancellor held the notice insufficient. 
He said: "The affairs of mankind cannot be 
carried on with ordinary security, if a doc- 
trine like that of constructive notice is to be 
refined upon until it is extended to cases like 
the present." 

Possession by a third person, under some 
previous title, has frequently but inaccu- 
rately been said to amount to constructive 
notice to a purchaser, of the nature and ex- 
tent of such prior right. Such a possession 
puts the purchaser upon inquiry, and makes 
it his duty to pursue his inquiries with dili- 
gence, but is not absolutely conclusive upon 
him. In Hanbury v. Litchfield, 2 Mylne & 
K. 020, when the question arose, the master 
of the rolls said: "It is true that when a ten- 
ant is in possession of the premises, a pur- 
chaser has implied notice of the nature of his 
title; but, if, at the time of his purchase, 
the tenant in possession is not the original 
lessee, but merely holds under a derivative 
lease, and has no knowledge of the cov- 
enants contained in the original lease, it has 
never been considered that it was want of 
due diligence in the purchaser, which is to 
fix him with implied notice, if he does not 
pursue his inquiries through every derivative 
lessee until he arrives at the person entitled 
to the original lease, which can alone convey 
to him information of the covenants." 



This doctrine is confirmed by the language 
of Judge Story in Flagg v. Mann, 2 Sumu. 
554, Fed. Cas. No. 4,847. He says: "I admit 
that the rule in equity seems to be, that 
where a tenant or other person is in posses- 
sion of the estate at the time of the pup- 
chase, the purchaser is put upon inquiry as 
to the title; and if he does not inquh-e, he 
is bound in the same manner as if he had 
inquired and had positive notice of the title 
of the party in possession." 

It is still further confirmed by the case of 
Rogers v. Jones, 8 X. H. 264. The language 
of Parker, J., In that case is very emphatic. 
He says: "To say that he (the purchaser) 
was put upon inquiry, and that having made 
all due investigation without obtaining any 
knowledge of title, he was still chargeable 
with notice of a deed, if one did really exist, 
would be absurd." 

If these authorities are to be relied upon, 
and I see no reason to doubt their correct- 
ness, the true doctrine on this subject is, 
that where a purcliaser has knowledge of any 
fact sufficient to put him on inquiry as to 
the existence of some right or title in con- 
flict with that he is about to purchase, he is 
presumed either to have made the inquiry 
and ascertained the extent of such prior 
right, or to have been guilty of a degree of 
negligence equally fatal to his claim to be 
considered as a bona fide purchaser. This 
presumption, however, is a mere inference of 
fact, and may be repelled by proof that the 
purchaser failed to discover the prior right, 
notwithstanding the exercise of proper dili- 
gence on his part. 

The judgment should be reversed, and 
there should be a new trial, vnth costs to 
abide the event. 

PAIGE, J. The question to be decided is, 
whether, under the finding of the referee, 
the plaintiff is to be deemed to have had at 
the time of his purchase legal notice of the 
prior unrecorded mortgage of the defendant. 
The referee finds that the plaintiff had suffi- 
cient information or belief of the existence 
of such mortgage to put him upon inquiry, 
but that upon pursuing such inquiry to the 
extent of such information and belief, he did 
not find that such mortgage existed or had 
been given. It seems to me that the two 
findings are inconsistent with each other. 
If the plaintiff, on pursuing an inquiry to 
the full extent of his information and behef 
as to the existence of the jiefendant's mort- 
gage, was unable to find that it either then 
existed or had been given, the highest evi- 
dence is furnished that the information re- 
ceived or belief entertained by the plaintiff 
was not sufficient to put him on inquiry as 
to the existence of such mortgage. The last 
part of this finding effectually disproves the 
fact previously found of the sufficiency of 
notice to put the plaintiff on inquiry. The 
two facts are utterly inconsistent with each 
other, and cannot possibly co-exist 



S8 



PRIORITIES AND NOTICE. 



■J'he remarks of Parker, J., in Rogers v. 
Jones, 8 X. H. 264, 269, are directly apposite 
to the facts found by ttie referee. Judge 
Parker says: "To say that he (demandant) 
was put upon inquiry, and that having made 
all due investigation without obtaining any 
knowledge of title, he was still chargeable 
with notice of a deed, if one did really exist, 
would be absurd." The sound sense of these 
observations is clearly shown by the princi- 
ple of the rule that information sufBcient to 
put a party upon inquiry is equivalent to evi- 
dence of actual notice or to direct and posi- 
tive notice. That principle is that such infor- 
mation will, if followed by an inquiry pros- 
ecuted with due diligence, lead to a knowl- 
edge of the fact with notice of which the 
party is sougjat to be charged. Hence, in all 
cases where the question of implied notice 
of a prior unrecorded mortgage or convey- 
ance arises as a question of fact to be detei^ 
mined, the court must decide whether the in- 
formation possessed by the party would, if 
it had been followed up by proper examina- 
tion, have led to a discovery of such mort- 
gage or conveyance. If the determination is 
that such an examination would have result- 
ed in a discovery of the mortgage or convey- 
ance, the conclusion of law necessarily re- 
sults that the information possessed by the 
party amounted to Implied notice of such in- 
strument. But if the determination is the 
converse of the one stated, the information of 
the party cannot be held to be an implied 
notice of the deed or mortgage. These prop- 
ositions will be found to be fully sustained 
by authority. (Kennedy v. Green, 3 Mylne 
& K. 699; 2 Sugd. Vend. 5.j2 [Am. Ed. 1851] 
marg. p. 1052; 4 Kent, Comm. 172; Insur- 
ance Co. V. Halsey, 4 Sandf. 577, 578: Id., 8 
X. Y. 274, 275; 1 Story, Eq. Jur. §§ 398-400, 
400a; Jackson v. Burgott, 10 Johns. 461; 
Dunham v. Dey, ]5 Johns. .568. 569, in error; 
Jackson v. Given, 8 Johns. 137; JoUand v. 
Stainbridge, 3 Ves. 478; Pendleton v. Pay, 
2 Paige, 205.) Where the information is suf- 
ficient to lead a party to a knowledge of a 
prior unrecorded conveyance, a neglect to 
make the necessary inquiry to acquir.. .«iuch 
knowledge will not excuse him, but he will be 
chargeable with a knowledge of its existence; 
the rule being that a party in possession of 
certain information will be chargeable with 
a knowledge of all facts which an inquiry, 



suggested by such information, prosecuted 
with due diligence, would have disclosed to 
him. (4 Sandf. 578; 3 Mylne & K. 699.) In 
this case the fact being found by the referee 
that the plaintiff, after pursuing an inquiry 
to the extent of his information, failed to dis- 
cover the existence of the defendant's mort- 
gage, it seems to me that neither law nor 
justice will justify us in holding the plaintiff 
chargeable with implied notice of such mort- 
gage. The doctrine of notice and its opera- 
tion in favor of a prior unrecorded deed or 
mortgage rests upon a question of fraud, and 
on the evidence necessary to infer It. (4 
Kent, Comm. 172.) Actual notice affects the 
conscience, and convicts the junior purchaser 
of a fraudulent intent to defeat the prior con- 
veyance. His knowledge of facts and cir- 
cumstances at the time of the second pur- 
chase sufficient to enable him, on due inquiry, 
to discover the existence of the prior convey- 
ance, is evidence from which a fraudulent in- 
tent may be inferred. (15 Johns. 569; 2 
Johns. Oh. 190; Jackson v. Burgott, 10 Johns. 
4(:2.) Now, if it is ascertained and found as 
a fact, that the facts and circumstances 
within the knowledge of the second purchas- 
er, at the thue of his purchase, were insuffi- 
cient to lead him, on a diligent examination, 
to a discovery of the prior conveyance, how 
upon this finding can a fraudulent intent be 
inferred, and if not, how can he be charged 
with notice which implies a fraudulent in- 
tent? It is not in the nature of things, that 
a knowledge of the same facts and circum- 
stances shall, at one and the same time, be 
held evidence of both innocence and guilt. I 
thinli the rule well established, that an in- 
ference of a fraudulent intent on the part 
of a junior purchaser or mortgagee must, 
in the absence of actual notice, be founded on 
clear and strong circumstances, and that 
such inference must be necessary and unques- 
tionable. (McMechan v. Griffing, 3 Pick. 149, 
154, 155; Hine v. Dodd, 2 Atk. 275; Jack- 
son V. Given, 8 Johns. 137; 2 Mass. 509; 
2 Johns. Ch. 189; 15 Johns. 569; 8 Oow. 264, 
266.) 

For the above reasons, both the judgment 
rendered on the report of the referee and the 
judgment of the general term aflirming the 
same, should be reversed, and a new trial 
should be granted. 

Judgment reversed. 



PRIORITIES AND NOTICE. 



89 



THOMAS et al. v. BURNETT. 

(21 N. B. 352, 128 111. 37.) 

Supreme Court of Illinois. April 5, 1889. 

Error to circuit court, Randolph county; 
George W. Wall, Judge. 

Charles W. Thomas, pro se. James A. 
Watts, for defendant in error. 

Shope, J. This was a bill filed by Martha 
J. Burnett against Charles W. Thomas and 
the sheriff of Randolph county, to set aside 
a certiflcate of purchase held by Thomas up- 
on a 40-acre tract of land owned by the com- 
plainant, as a cloud on her title, and to en- 
join the sheriff from making a deed under 
such certiflcate. Both parties claimed title 
under .James Burnett, a son of the complain- 
ant. It is conceded that on the 29th day of 
March, 1882, Jame:_ Burnett was the owner 
of the tract of land in controversy, which 
was inclosed and in cultivation, but upon 
which there was no house. On that day the 
complainant, as it is shown, bought the land 
in good faith from her son for the sum of 
$1,600. No deed was made until in the 
month of April following, when James Bur- 
nett conveyed the land to complainant. No 
question arises in respect to the payment of 
the purchase money at the date of the pur- 
chase. The land had been fenced, and under 
cultivation for over 20 years. David C. 
Thompson had for some years acted as the 
agent of James Burnett, while he was owner, 
and had rented the land from year to year. 
The deed to complainant was not recorded 
until October 22, 188i, and the land stood on 
the assessment books in the name of James 
Burnett, until 1885. The complainant, after 
her purchase, retained Thompson as her 
agent in respect of this land, who, in August, 
1882, rented the land as the complainant's to 
one Jordan for one year, who raised a crop 
thereon, and retained possession of the same 
until in August, 1883, when he surrendered 
possession to Thompson. In March, 1884, 
the agent rented the lands to Yagle. At 
each renting the agent informed the tenants 
that complainant was the owner of the 
premises, and that he was renting it for her. 
A crop was raised on the land each year aft- 
er 1882 by the tenants of complainant, and 
the fences were kept in repair by her agent, 
who collected the rent, and paid the same to 
her. On the 10th day of October, 1883, 
Margaret Gilflllen sued out an attachment 
against James Burnett in the Randolph cir- 
cuit court returnable to the March term 
thereof, then following, and this land was 
levied upon on that day as the property of 
James Burnett, and a certiflcate of levy duly 
filed. At the September term, 1884, of said 
court, said plaintiff in attachment recovered 
judgment for $2,500 against said Burnett. 
Special execution was issued thereon, under 
which, on October 22, 1884, the tract in con- 
troversy was sold to defendant Thomas, at- 
torney of the plaintiff in question, for $1,900, 
and the sheriff delivered to Thomas a certifi- 



cate of purchase, which is the certiflcate now 
sought to be set aside. 

Section 31 of the conveyance act declares 
that all deeds, etc., authorized bylaw to be 
recorded, "shall take effect and be in force 
from and after the time of flling the same for 
record, and not before, as to all creditors and 
subsequent purchasers without notice; and 
all such deeds and title papers shall be ad- 
judged void as to all Such creditors and sub- 
sequent purchasers without notice, until the 
same shall be filed for record." An attach- 
ing creditor, who levies his attachment with- 
out notice of a prior unrecorded deed of his 
debtor, either actual or constructive, acquires 
a lien, which, if perfected by judgment, exe- 
cution, sale, and deed, will hold the legal 
estate as against the grantee in a prior unre- 
corded deed. Having acquired a lien as an 
innocent creditor without notice, he will have 
a right to enforce the same, notwithstanding 
he may have, subsequently to the levying of 
his attachment, received notice of the deed. 
Martin v. Dryden, 1 Gilman, 187; Stribling 
V. Ross, 16 111. 122; Jones v. Jones, Id. 117; 
Henderson v. Downing, 24 Miss. 106. Un- 
less, therefore, the plaintiff in attachment 
had notice, either actual or constructive, of 
the unrecorded deed from James Burnett to 
Mrs. Burnett, the lienthereby acquired must 
prevail over the rights of the complainant 
under that deed. The statute makes her 
deed void as against the attaching creditor if 
a lien on the property was thereby secured in 
good faith, and without notice of her rights. 
Complainant's right to the relief sought de- 
pends, therefore, upon the fact whether the 
plaintiff in attachment, at the time of the levy 
of the writ, had notice of her rights. There 
is no pretense that she had actual notice of 
the unrecorded deed, but it is claimed that 
she had constructive notice, arising from the 
possession of the land by complainant. Com- 
plainant took possession after her purchase 
by her agent and tenants, as we have seen, 
long prior to the levy of the attachment, and 
which possession she has ever since retained. 
It is well settled that actual possession of 
land by a party under an unrecorded deed is 
constructive notice of the legal and equitable 
right of the party in possession. The posses- 
sion by tenant is the same in all respects as 
if by the party himself. Franz v. Orton, 75 
111. 100; Whitaker v. Miller, 83 111. 381; 
Coari v. Olsen, 91 HI. 273. It is claimed by 
plaintiff in error that possession, to have the 
effect of notice, must be of that character 
which will arrest attention, and the case ot 
Lougliridge v. Bowland, 52 Miss. 546, is re- 
ferred to as sustaining that position. In that 
case the grantor of the land at the time of the 
con^yance was in possession of the same by 
his tenant. After the sale the same tenant 
continued to hold possession under an agree- 
ment to pay rent to the grantees. There was 
then nothing more than a technical attorn- 
ment by the tenant to the purchaser. And 
the court held that the mere attornment of 
the tenant, without any visible change in the 



90 



PRIORITIES AND NOTICE. 



character of the holding, was not sufBcient to 
put a creditor or subsequent purchaser on in- 
quiry. It is not necessary to the decision of 
tliia case to express any opinion in respect of 
the doctrine there announced, for the reason 
that after the complainant's purchase she 
through her agent made a lease of the prop- 
erty to Jordan. This was in August, 1882, 
and for one year, and under it a crop was 
raised. The tenant was informed that his 
landlord was Mrs. Burnett, the complainant. 
The agent, as before stated, kept the place in 
repair as her agent, collected the rents, and 
paid them to her. Here were open, notorious 
acts of ownership asserted in an unequivocal 
manner by the complainant. Thompson, the 
agent, was not himself in possession of the 
property, but the tenants of complainant were, 
and it was their possession which constituted 
notice. It is, however, said that there was 
no tenant in actual possession at the time of 
the levy of the attachment, and therefore the 
plaintiff in error was not chargeable with 
notice of the unrecorded deed. The tenant's 
possession of land is that of his landlord. 
The Jordans occupied the land up to August, 
1883, and this was notice to the world of Mrs. 
Burnett's title, to all intents as if she had oc- 
cupied it. Actual residence is not essential 
to continuous possession. If the party is in 
actual possession of the land, and there are 
continuous acts of ownership, it is sufficient. 
Coleman v. Billings, 89 111. 183; Ford v. 
Marcall, 107 111. 136. The land here in con- 



troversy was improved, and under fence. In 
such case, the owner will not lose his posses- 
sion by failing to be continuously in the 
actual occupancy or use of the land by him- 
self or tenant. The fact that a short time 
may have elapsed between the actual occu- 
pancy by one tenant, before another tenant 
takes possession, will not be a loss of posses- 
sion by the owner. The improvements, the 
fact that a crop had been raised the previous 
season, will clearly indicate the possession, 
and will be sufficient to put others dealing 
with the property upon inquiry. The attach- 
ment here was levied October 10, 1883, a short 
time after the tenants had surrendered posses- 
sion, to Thompson, complainant's agent, 
who still continued to act as such agent in 
taking care of the property, and the plaintiff 
should have made inquiry before levying her 
writ of attachment. It is apparent this could 
have been done, either of the outgoing tenants 
or of the agent. Any reasonable, prudent 
man, contemplating a purchase of the prop- 
erty, would have made such inquiry; and it 
is clear that an inquiry of the Jordans or of 
Thompson would have led to notice of the 
claim of complainant, and of the existence 
of the unrecorded deed. We think the cir- 
cumstances are such as to charge the attach- 
ing creditor with notii-e of the deed from 
Jaines Burnett lo the complainant. This be- 
ing so, the circuit court committed no error 
in granting the relief prayed, and its decree 
will be affirmed. 



PRIORITIES AND NOTICE. 



01 



PRINGLE V. DUNN et al. 

(37 Wis. 449.) 

Supreme Court of Wisconsin. Jan. Term, 1875. 

Appeal from circuit court, Milwaukee coun- 
ty. 

Action by one Pringle against Andrew 
Dunn and wife and others to foreclose a 
mortgage given to the La Crosse & Mil- 
waukee Railroad Company to secure a bond 
of said company for $5,000, payable Jan- 
uary 1, 1864, said mortgage bearing date 
April 11, 1854, and alleged to have been re- 
corded on such date, and afterwards assigned 
to plaintiff, as a bona fide purchaser for 
value. There was no record of the assign- 
ment. The court found that the witnesses 
to the mortgage did not subscribe it at the 
time of its execution, but after it had been 
recorded; that, after such subscription, it 
was not again recorded; that the plaintiff 
was the bona fide holder of the bond and 
mortgage; that the defendants other than 
Andrew Dunn and wife had no actual knowl- 
edge of the mortgage, and the recording of 
the mortgage before it was subscribed was 
not constructive notice; and dismissed the 
complaint. Plaintiff appeals. Modified. 

Mariner, Smith & Ordway, for appellant. 
Guy C. Prentiss, J. P. C. Cottrill, and John 
W. Gary, for respondents. 

COLE, J. Before approaching the legal 
questions involved In this case, it is neces- 
sary to determine a question of fact; and 
that is, does the evidence show that the 
mortgage sought to be foreclosed was prop- 
erly attested when first left at the otfice of 
the register, so as to entitle it to record? 
There is considerable testimony in the case 
which tends strongly to prove that the mort- 
gage had no witnesses when it was record- 
ed. And the court found as a fact that the 
mortgage was not subscribed by the wit- 
nesses Baker and McFarlane at the time 
of its execution, and before it was tran- 
scribed upon the records and entered in the 
general index, but was subscribed by these 
witnesses after it was recorded, and that 
it was not again recorded. This finding af- 
firms one important fact, which is much 
contested by the defendants, which is the 
genuineness of the signature of the witness 
A. J. McFarlane to the instrument. An at- 
tempt is made to prove, and it is argued 
that the evidence shows, that McFarlane 
never signed the mortgage as a witness, 
and that his signature thereto is a forgery. 
On this point we will only make the re- 
mark that we are satisfied from the evi- 
dence, and especially by an inspection of 
the writings themselves, of the authenticity 
of the signature. Whether the mortgage was 
subscribed by the witnesses at the time of 
its execution and before it was left at the 
office for registry is a question of more doubt 
upon the evidence. The testimony is quite 



strong and positive that the mortgage had 
no subscribing witnesses when it was re- 
corded. But this testimony is contradicted; 
and, considering the circumstances attend- 
ing the execution and delivery of the mort- 
gage, we think the probabilities favor the 
inference that the instrument was witnessed 
when it was left for record. According to 
this view, there was a mistake in transcrib- 
ing the mortgage upon the record by omit- 
ting the names of the witnesses. The weight 
of the evidence, to our minds, supports this 
inference or conclusion. It is to be observed 
that the mortgage is perfect and fair on its 
face, showing two witnesses. A strong pre- 
sumption fairly arises from the insti'ument 
itself that it was witnessed at the time of 
its execution. This presumption is not over- 
come nor repelled by the testimony offered 
to show that it was not witnessed at that 
time. In respect to the degree or quantity 
of evidence necessary to justify a finding 
that the subscribing witnesses signed the 
instrument after it was executed and re- 
corded, the case would seem to come within 
the rule laid down in Kercheval v. Doty, 
31 Wis. 478, where it is said: "The prop- 
osition being to set aside or Invalidate a 
written contract by evidence of a far less 
certain and reliable character than the writ- 
ing itself, the greatest clearness and certainty 
of proof should be required. It is like the 
cases where the object is to correct or re- 
form a deed or other instrument on the 
ground of mistake, or to set aside or rescind 
it on the same ground; where the rule is 
that tlie fact must be ti.tablished by clear 
and satisfactory evidence." The testimony 
offered to show that the mortgage was not 
witnessed when executed and before it was 
recorded falls short of this rule. The fact 
is not established by clear and conclusive 
proof that it was not witnessed when ex- 
ecuted. It would serve no useful purpose 
to go into a detailed discussion of the evi- 
dence upon this point, and we shall not do 
so. It is sufficient to say that, giving to 
the testimony offered to show that the mort- 
gage was not witnessed before it was re- 
ceived for record all the weight to which 
it is entitled, it fails to establish that fact 
in a clear, satisfactory manner. 

Assuming, then, that the mortgage was 
witnessed when it was left at the office of 
the register to be recorded, the further im- 
portant inquiry arises as to what effect must 
be given to the record as constructive no- 
tice to subsequent bona fide purchasers for 
value. This record was in this state. The 
entry of the mortgage was made in the gen- 
eral index book, but the full record of the 
instrument had no subscribing witnesses; 
and therefore the question is, would such 
a record operate as constructive notice to 
subsequent purchasers for value, independent 
of any actual notice? It Is claimed by the 
counsel for the plaintiff that the record does 
and should so operate, notwithstanding the 



92 



PRIORITIES AND NOTICE. 



mistake in tlie registration or recording of 
the instrument in extenso. Tliis presents a 
question of no little difficulty, which must 
be solved by the application of general prin- 
ciples of law to the provisions of our stat- 
ute. 

It is a familiar rule that an instrument 
must be properly executed and acknowledged 
so as to entitle it to record, in order to 
make the registry tliereof operate as con- 
structive notice to a subsequent purchaser. 
Says Mr. Justice Story: "The doctrine as 
to the registration of deeds being consti-uc- 
tive notice to aU subsequent purchasers is 
not to be understood of all deeds and con- 
veyances which may be de facto registered, 
but of such only as are authorized or re- 
quired by law to be registered, and are duly 
registered in compliance with law. If they 
are not authorized or required to be regis- 
tered, or the registry itself is not in com- 
pliance with the law, the act of registration 
is treated as a mere nullity; and then the 
subsequent purchaser is affected only by 
such actual notice as would amount to a 
fraud." 1 Bq. Jur. § 404. See, also Ely v. 
Wilcox, 20 Wis. 528; Fallass v. Pierce, 30 
Wis. 444; X,essee of Heister v. Fortner, 2 
Bin. 40; Shove v. Larsen, 22 Wis. 142. and 
cases cited on page 146. Under our statute, 
among other requisites, two witnesses are 
essential to a conveyance, to entitle it to 
record. The statute requires every register 
to keep a general index, each page of which 
shall be divided into eight columns, with 
heads to the respective columns as pre- 
scribed; and the duty is imposed upon the 
register to make correct entries in said in- 
dex of every instrument received by him 
for record, under the respective and appro- 
priate heads, and immediately to enter in 
the appropriate column, and in the order of 
time in which it was received, the day and 
hour of reception; and it is declared that 
the instrument "shall be considered as re- 
corded at the time so noted." Rev. St. 1858, 
c. 13, §§ 142, 143. In Shove v. Larsen, supra, 
the effect of this index containing correct 
entries of matters required to be made there- 
in was considered, and it was held that by 
force of the statute it operated as construc- 
tive notice to a subsequent purchaser. In 
that case the index contained an accurate 
description of the land mortgaged, but in 
transcribing the mortgage at large upon the 
records a mistake was made in the descrip- 
tion; and it was claimed in behalf of the 
subsequent purchaser that it was the regis- 
tration of the instrument at large which alone 
amounted to constructive notice. But this 
construction of the statute was not adopted, 
the court holding that a subsequent purchaser 
was bound to take notice of the entries in 
the index, which the law required the regis- 
ter to make. This result seemed to follow 
necessarily from the language of the statute, 
which declared that the instrument should 



be considered as recorded at the time noted. 
Time might elapse before the instrument 
was transcribed at large on the record, or 
it might be lost, and not transcribed at all, 
leaving the index the only record of its con- 
tents. And the manifest Intention of the 
statute seemed to be to make the index no- 
tice of all proper entries from its date, and 
also of the instrument Itself until It was 
registered in full. The further consequence 
would seem necessarily to result from this 
view of the statute that the registration of 
the conveyance in extenso relates back to 
the registration in the index, and from thence 
there is constructive notice of the contents 
of the instrument. The doctrine of Shove 
V. Larsen was approved in Hay v. Hill, 24 
Wis. 235i but the court refused to make the 
entry in the index in that case operate as 
constructive notice, because upon its very 
face it bore conclusive evidence that it was 
not made at its date; in other words, the 
rectitude and integrity of the index were 
successfully impeached by the index itself. 
See, also. Insurance Co. v. Scales, 27 Wis. 
640. Where there is nothing upon the face 
of the index to impeach or throw suspicion 
upon its accuracy, there it would affect a 
subsequent purchaser with notice of those 
facts which the law required to appear there- 
in. Doubtless, a still further consequence fol- 
lows from this construction of the statute, 
namely, that where, by some mistake, there 
is a discrepancy between the proper index 
entries and the instrument as registered, 
there each supplies the defects of the other 
in the constructive notice thereby given; that 
is, it appears to be the intention of the stat- 
ute to charge the subsequent purchaser con- 
sti-uctively with such knowledge as the prop- 
er index entries afford, as well as with 
notice of those facts derived from the regis- 
tration itself. He is presumed to have ex- 
amined the whole record, and is affected with 
notice of what it contains. But when the 
instrument, as registered in full, appears 
defective in some material and essential 
parts, which are not supplied by the index 
entries, what effect, then, must be given the 
record as constructive notice? This is real- 
j ly the difficult question in this case. From 
I the entries in the index it would not appear 
whether the mortgage was witnessed or not. 
The presumption from the mere entries them- 
selves would be that it was witnessed and 
acknowledged, so as to entitle it to record; 
but when the mortgage, as registered in full, 
was examined, it would be found that it 
had no witnesses, and had no business on 
the records. As the record itself is only 
constructive notice of its contents, it is dif- 
ficult to perceive how it can go beyond the 
facts appearing upon it, and charge a pur- 
chaser constructively with knowledge of a 
fact not in the record. 

One of the counsel for the defendants states 
the argument on this point as follows: He 



PRIORITIES AND NOTICE. 



93 



insists and claims that the entries in the 
index books, so fax as they indicated that 
the mortgage had been filed fox- record, in- 
dicated also that the mortgage was so ex- 
ecuted as to entitle these entries of it to 
be made; but that, when the full record 
was looked at for all the particulars of the 
mortgage, and perhaps for the express pur- 
pose of verifying the entries in the index, 
it is found that the apparent assertion by 
the index entries that the mortgage was 
properly executed was wholly unti-ue, and 
that the mortgage in fact was no incum- 
brance. The fact, as truly shown to exist 
by the full record, overcomes and destroys 
the false assertion as to the fact in the 
index. And, it appearing by the insti'ument 
registered that it was not entitled to record, 
both the registration and index itself cease 
to affect the purchaser with constructive no- 
tice. 

It is not readily perceived wherein this ar- 
gument as to the effect of our various pro- 
visions upon the subject of registration is 
unsound. The question mainly depends up- 
on the construction of our own statutes. So 
far as we are aware, this is the first time the 
point lias been presented in this court for 
adjudication. We have derived but little 
aid from the decisions in other states, for 
the reason that few of them have similar 
statutory provisions. We have been referred 
by the counsel for the plaintiff to two cases 
in Michigan,— Brown v. McCormick, 28 Mich. 
215, and Starkweather v. Martin, Id. 472. 
In Brown v. McCormick the effect of the reg- 
istry, as notice to subsequent purchasers, 
was made to turn upon the curative act of 
1861, mentioned in the opinion. In Stark- 
weather V. Martin the question was, how far 
the absence, on the registry of a deed, of 
any mark or device indicating a seal, or of 
any statement of the register that the orig- 
inal was sealed, affected the validity of the 
record entry as evidence of title. The rec- 
ord entry of the deed was made more than 
forty years before the cause was decided, 
by the proper oflicer, and in the appro- 
priate place for the registry of deeds, under 
the law permitting the registry of only seal- 
ed instruments; and the instrument was in 
the form of a warranty deed, purporting to 
be acknowledged and dated at a time when 
it was the common and lawful course to 
seal conveyances, and contrary to official 
duty to take the acknowledgment unless the 
conveyance was sealed, and where the con- 
clusion, attestation clause, and certificate of 
acknowledgment of the instrument all spoke 
of it as under seal. The court said that 
these facts and incidents, taken together, 
afforded a very strong presumption that the 
original was sealed. 

The doctrine of this case does not seem 
to have a very strong bearing upon the ques- 
tion under consideration. It may be said 
that it was contrary to the duty of the reg- 



ister to record the mortgage unless It was 
properly acknowledged and witnessed, and 
that a presumption arises that he would not 
have done so. But in answer to this it may 
also be said that the law made it the duty 
of the register to record the mortgage unless 
it was properly acknowledged and witness- 
ed, and that a presumption arises that he 
would not" have done so. But in answer to 
this it may also be said that the law made 
it the duty of the register to record, or cause 
to be recorded correctly, all instruments au- 
thorized by law to be recorded. Section 140, 
c. 13, Rev. St. 1858. And the presumption 
that he performed his duty in recording the 
mortgage correctly is as strong as the pre- 
sumption that he would not have recorded it 
unless it was entitled to registry. 

Ill Shove V. Larsen, a number of cases are 
referred to which hold that a mistake in re- 
cording a deed, or recording it out of its 
order, renders the registration ineffectual as 
notice to subsequent incumbrancers and pur- 
chasers. The doctrine of those cases would 
seem to be applicable to the case before us. 
The registration and index entries being in- 
complete, because showing that the mort- 
gage had no subscribing witnesses, construc- 
tive notice could not be presumed of such 
a record; for the principle "that the registry 
is notice of the tenor and effect of the instru- 
ment recorded only as it appears upon that 
record" fully applies. Shepherd v. Burkhal- 
ter, 13 Ga. 443. See, in addition to the cases 
cited in Shove v. Larsen, Brown v. Kirkman, 
1 Ohio St. 116; Stevens v. Hampton, 46 Mo. 
404; Bishop v. Schneider, Id. 472; Terrell v. 
Andrew Co., 44 Mo. 309; Frost v. Beekman, 
1 Johns. Ch. 288. 

The question, then, arises whether the evi- 
dence shows that any of the defendants were 
affected with actual notice of the mortgage. 
This question, we think, must be answered 
in the affirmative, so far as the defendants 
Thomas Maloy and Stanislaus Bartosz are 
concerned. 

In the deposition taken on his own behalf, 
but read as a part of the plaintiff's case. 
Thomas Maloy distinctly admits that he had 
heard, when he purchased his lots, that there 
was a defective railroad mortgage upon 
them, but that he did not look for it, because 
his abstract did not show it. It is claimed 
by one of the counsel for the defendants that 
this related to the Aiken mortgage, and not 
to the one upon which this action is brought 
It seems to us, however, that this is a total- 
ly inadmissible construction of the testi- 
mony. He most certainly refers to the mort- 
gage in suit. And what he had heard about 
there being a defective railroad mortgage 
upon the property was sufficient to put him 
upon inquiry. Parker v. Kane, 4 Wis. 1. 
"What is sufficient to put a purchaser upon 
an inquiry is good notice; that is, where a 
man has sufficient information to lead him 
to a fact, he shall be deemed conusant of it." 



94 



PRIORITIES AND NOTICE. 



Sugd. Veod. (9th London Ed.) p. 335. "In re- 
gard to the inquiry required of a party, it 
should be such as a prudent and careful man 
would exercise in his own business of equal 
importance. Accordingly, where the mortga- 
gee is informed that there are charges affect- 
ing the estate, and is cognizant of two only, 
he cannot claim to be a purchaser without 
notice of other charges, because lie believes 
that the two, which satisfy the word "char- 
ges," are all the charges upon it. He is 
bound to inquire whether there are any oth- 
ers. The rule with respect to the consequen- 
ces of a purchaser abstaining from making 
inquiries does not depend exclusively upon a 
fraudulent motive. A man may abstain from 
mere heedlessness or stupidity, and be none 
the less responsible for the consequences; 
but, if he make reasonable inquiry, and is 
deterred by a false answer, he is excusable, 
if it be of a character to delude a prudent 
man." 1 Story, Bq. Jur. § 400b; Jackson v. 
Van Valkenburgh, 8 Cow. 260. Independent- 
ly of the record, llaloj- had notice of the ex- 
istence of the mortgage, or had a knowledge 
of such facts as to call for further inquiry. 
He cannot, therefore, be protected as an in- 
nocent purchaser for value. 

The defendant Bartosz must be charged 
with notice of the mortgage by the recitals 
in the deed from Tenney and wife to his im- 
mediate grantor. He was present when that 
deed was executed and delivered to his uncle. 
He testifies that he did not know whether 
anything was said about the railroad mort- 
gage at that time or not; that he did not un- 
derstand English very well. The purchase 
was really made by his uncle for him. And, 
whether he fully understood the conversa- 
tion at the time about incumbrances, he 
must be chargeable with notice of what ap- 
pears in his chain of title. This clause was 
in the deed to his uncle; "Said premises are 
free and clear from all incumbrances except 
a mortgage to the La Crosse Railroad Co., 
which I am to save said Bartosz harmless 
from." The general rule upon this subject 
is "that, where a purchaser cannot make out 
a title but by a deed which leads him to an- 
other fact, he will be presumed to have 
knowledge of that fact." The following au- 
thorities are very clear and decisive upon 
that point: Pitzhugh v. Barnard, 12 Mich. 
105; Case v. Erwin, 18 Mich. 434; Baker v. 
Mather, 25 Mich. 51; Insurance Co. v. Hal- 
sey, 8 N. Y. 271; Frost v. Beekman, 1 Johns. 
Ch. 298; Gibert v. Peteler, 38 N. Y. 105; Acer 
V. Westcott, 40 N. Y. 384; Coles v. Sims, 5 
De Gex, M. & G. 1. The clause in the deed 
referred to the mortgage as an existing in- 
cumbrance, and he cannot now, in good faith, 
claim that it is not a lien upon his property. 

The counsel for the plaintiff claims that 
tlie defendant McLindon had actual knowl- 
edge of the existence of the mortgage. It 
is true, he testified that when he purchased 
he knew by report that there was a railroad 
mortgage upon the property, but he says 



that the report stated that the mortgage was 
void, \yere he not protected by another prin- 
cipal, he could not certainly be regarded as a 
bona fide purchaser. But he purchased from 
S. S. Johnson, or claims through Johnson, in 
whom the title stood free from any taint. 
For the rule is well settled that a purchaser 
affected with notice may protect himself by 
purchasing of another who is a bona fide 
purchaser for a valuable consideration. For 
a similar reason, if a person who has notice 
sells to another who has no notice, and is a 
bona fide purchaser for a valuable considera- 
tion, the latter may protect his title, al- 
though it was affected with the equity aris- 
ing from notice in the hands of the person 
from whom he derived it. Mr. Justice Story 
says this doctrine, in both of its branches, 
has been settled for nearly a century and a 
half in England. 1 Eq. Jur. § 410. He states 
an exception to the rule, which was recog- 
nized and enforced in Ely v. Wilcox, 26 Wis. 
91, where the estate became revested in the 
original fraudulent grantee, when the orig- 
inal equity was held to reattach to it. There 
is no pretense that McLindon comes within 
the exception; and, as a bona fide purchase 
of an estate for a valuable consideration 
purges away the equity from the estate in 
the hands of all persons who derive title 
under it, he is protected. It is said that it 
does not appear that Johnson's title was de- 
rived from the common source. As we un- 
derstand the bill of exceptions, an abstract 
was offered in evidence to show title from 
Bunn, by various intermediate conveyances, 
to the defendant, which was ruled out on 
the plaintiff's objection. But perhaps it is a 
better answer to the objection to say that 
the plaintiff has made the defendants parties 
under the general allegation that they claim 
some interest in or title to the mortgaged 
premises, which was subject to the mort- 
gage. This allegation implies that this in- 
terest was not adverse, but was derived 
from Dunn, though subsequent in date, and 
inferior in right, to the plaintiff's mortgage. 
It was further insisted that the evidence 
showed that the defendant Mary Maloy had 
actual notice of the mortgage. We do not 
think this position is sustained by the tes- 
timony. It is attempted to charge her with 
the same actual knowledge her husband had, 
because he aided her when she made her pur- 
chase of Martin Maloy. It does not appear that 
anything was said at this time about the rail- 
road mortgage, or that she ever had any notice 
of it. It does not appear, even, that he was 
acting as her agent in any legal sense; and, 
besides, if he were, his knowledge, acquired 
at another time, when not engaged in her 
business, ought not to be imputed to her. 
Notice, to bind the principal, should be 
brought home to the agent while engaged 
in the business or negotiation of the prin- 
cipal, and when it would be a breach of trust 
in the former not to communicate the knowl- 
edge to the latter. 1 Story, Eq. Jur. § 408, 



PRIORITIES AND NOTICE. 



95 



and cases cited in note 1. The evidence fails 
to bring her within that rule. 

A numher of other questions were discuss- 
ed upon the argument; but we believe these 
observations dispose of all the more impor- 
tant ones. 



The judgment of the circuit court as to the 
defendants Thomas Maloy and Stanislaus 
Bartosz must be reversed, and the cause re- 
manded for further proceedings in accord- 
ance with this decision. 

It is so ordered. 



96 



PRIORITIES AND NOTICE, 



DEASON et al. t. TAYLOR. 

(53 Jliss. 697.) 

Supreme Court of Jlississippi. Oct., 1876. 

Appeal from chancery court, Lincoln coun- 
ty; Thomas Y. Berry, Chancellor. 

Bill in equity by Bentonville ' Taylor 
against J. B. Deason, M. W. Hoskins, and 
G. W. Hoskins, her husband, Ellen McClen- 
don and A. D. McClendon, her husband, to 
recover the balance of the purchase money 
of certain land, and to subject land to the 
payment of the same. 

The bill showed that on February 16, 1872, 
the complainant sold and conveyed the land 
in question to J. B. Deason; the deed, which 
was duly recorded on February 19, 1872, re- 
citing a consideration of "the sum of $700, 
to be paid to the party of the first part on 
or before the first day of July, 1872, by the 
party of the second part." For the purchase 
money Deason gave his note, of even date 
with the deed, as follows: "On or before 
the first day of July next, I promise to pay 
Bentonville Taylor, or bearer, the sum of 
$700, for town lots conveyed by him to me 
this day. This sum is to be paid in Missis- 
sippi state certificates of indebtedness at 
par." After maturity of the note, Deason 
sold and conveyed the lots to the defendant 
M. W. Hoskins, and the latter and her hus- 
band sold and conveyed the same to the 
defendant Ellen McClendon. When Deason 
sold and conveyed the lots to the defendant 
Hoskins, he informed her agent that he had 
paid Taylor all the purchase money. 

The defendants demurred to the bill, on 
the ground that the complainant had no 
vendor's lien, it appearing on the face of 
the bill that the consideration for the sale of 
the lands was not money or United States 
currency; and because the recital in the 
deed was not notice to the defendants Hos- 
kins and McClendon of the complainant's 
equity. 

The demurrer was overruled, and an an- 
swer filed, and upon final hearing a decree 
was rendered for the complainant for the 
balance of the purchase money due him, and 
foreclosing his vendor's lien on the land. 
The defendants appeal. 

Sessions & Cassedy, for appellants. Chris- 
man & Thompson, for appellee. Bentonville 
Taylor, pro se. 

CHALMERS, J. We are content with the 
finding of the chancellor on the facts. If 
any injustice was done in fixing the amount 
due, it was to the appellee, and not to the 
appellants. The fact that the note was dis- 
chargeable in Mississippi certificates of in- 
debtedness (known as Alcorn money) did not 
deprive it of the protection of the vendor's 
equitable lien. Hai-vey v. Kelly, 41 Miss. 
490. 

In the face of the deed which Taylor exe- 



cuted to Deason was this recital: "The par- 
ty of the first part (the vendor), for and In 
consideration of the sum of $700, to be paid 
on or before the first day of July, 1872, by 
the party of the second part" (the vendee i. 
&c. For this sum of $700, Deason, the ven- 
dee, executed his note to Taylor, due 1st of 
July, 1872. The deed was recorded at once,, 
and Deason took possession of the premises. 
Without having completed payment in full 
of the note, Deason sold the premises in 
1874 to Hoskins, who subsequently sold to 
Mrs. McClendon. Both Hoskins and Mrs. 
ilcOlendon deny actual knowledge, at and 
before their purchases, that any thing re- 
mained due to Taylor. 

Did the law give them constructive notice 
of Taylor's rights? Nothing is better set- 
tled than that the purchaser of real estate 
is bound to take notice of all recitals in the 
chain of title through which his own title 
is derived. Not only is he bound by every- 
thing stated in the several conveyances con- 
stituting that chain, but he is bound fully 
to investigate and explore everything to 
which his attention is thereby directed. 
Where, therefore, he is informed by any of 
the preceding conveyances, upon which his 
own deed rests, that the land has been sold 
on a credit, he is bound to inform himself 
as to whether the purchase money has been 
paid since the execution of the deed. Wise- 
man V. Hutchinson, 20 Ind. 40; Croskey v. 
Chapman, 26 Ind. 333; Johnston v. Gwath- 
mey, 4 Lift. (Ky.) 317.' 

It is argued, however, that this principle 
only applies before the maturity of the notes. 
as shown by the recitals of the deed, and 
that it will not apply where, as in the case 
at bar, subsequent purchasers have bought 
after the notes were past due. It is said 
that, in such case, the subsequent purchas- 
ers may rely upon a presumption that the 
original debt has been paid. We know of 
no principle which would justify a reliance 
upon such a presumption, and it is expressly 
negatived by the cases of Honore v. Bake- 
well, 6 B. Mon. 67, and Thornton v. Knox, 
Id. 74. They may rely upon such presump- 
tion after sufficient time has elapsed to bar 
the notes, although, in fact, they may have 
been renewed. Avent v. McCorkle, 45 Miss. 
221. 

It appears In the case at bar that the sub- 
sequent purchasers knew that Deason had 
bought the realty on a credit, because they 
asked him at the time of their purchase if 
he had paid all the money due Taylor. It 
was their own folly if they relied upon his 
assurances. Instead of applying for informa- 
tion to Taylor, who lived in an adjoining 
county, and is shown by the bill to be a 
practising lawyer, well known in Brook- 
haven, where the lots were situated and all 
the defendants resided. 

Decree affirmed. 



LIS PENDENS. 



97 



HOUSTON V. TIMatERMAN.i 

(21 Pac. 1037, Vf Or. 499.) 

Supreme Court of Oregon. May 3, 1889. 

Appeal from circuit court, Liinn county. 

Hewitt <& Bry,ant and Tilman Fojrd, for 
appellant. /. K. Weatlierford and D. R. N. 
Blackburn, for respondent. 

LORD, J. This was a suit to partition cer- 
tain lands described herein. The defendant 
denied tliat the respondent had any interest 
in said lands, and alleged that she was (»he 
owner in fee-simple, and entitled to the pos- 
session of the whole of said premises. The 
plaintiff, in reply, denied tiiis, and alleged 
afflrmatively that some time in July, 1S84, 
she commenced a suit against A. J. Houston 
for a divorce and alimony, and for an equal 
undivided one-third of the real property then 
owned by said Houston, and that he was the 
owner in fee of said real property, which 
was duly described therein. That the sum- 
mons in said divorce suit was served on 

■ , 1884, and that prior to that time and 

prior to tlie 26th day of September, 1884, the 
defendant Timmerman had notice that the 
complamt for divorce and one-third of said 
real property had been filed by the plaintiff 
against her husband. That on the 5th day 
of February, 1886, a decree was entered, 
granting a divorce in favor of the plaintiff, 
and adjudging her to be the owner of the un- 
divided one-third of said real property, etc. 
The court below, after a trial of said cause, 
rendered a decree therein, granting the 
prayer of plaintiff for partition, except as to 
the 160 acres of land mentioned therein, and 
partition was ordered and made on June 26, 
1888, and confirmed by the court. The de- 
fendant Timmerman derived her title to the 
premises in dispute in this wise: On the 
15th day of March, 1880, the plaintiff's hus- 
band, A. J. Houston, for value, made and 
delivered his promissory note to the defend- 
ant Timmerman for the sum of $3,400, with 
interest at the rate of 10 per cent, per an- 
num from date; that, the said A. J. Hous- 
ton failing to pay said note, the defendant 
Timmerman commenced suit on the 26th 
day of September, 1884, and caused service 
of summons to be made upon him on that 
day, and that on October 27, 1884, the de- 
fendant Timmermau recovered judgment 
against the said A. J. Houston for tlie sum 
oJE $5,463.87, which, on the same day, was 
duly docketed in the judgment lien doclcet, 
and thereupon became a lien upon all the 
real property mentioned in the complaint in 
this suit. It further appears that on March 
19, 1883, said A. J. Houston made and de- 
livered his promissory note to J. T. Williams 
for $1,000, with interest from date at the 
rate of 10 per cent, per annum, payable six 
months after date, and to secure the pay- 
ment of the same executed a mortgage, which 
was duly recorded, upon the 160 acres of land 
set out in the complaint. The said Houston 



' Upon the subject ot lis pendens generally, see 
note to Newman v. Chapman, 14 Am. Dec. 774-779. 
HUTCH.& BUNK.EQ.— 7 



failing to pay said note, the mortgage was 
foreclosed against the said Houston and the 
plaintiff herein. The defendant Timmer- 
man, however, answered, setting up her 
judgment, and asked, if the property be sold 
to foreclose said mortgage, that the over- 
plus, if any, should be applied in payment of 
her judgment, and a decree was accordingly 
so entered, etc.; that execution was issued 
upon said decree, and said 160 acres was sold 
to the defendant Timmerman for $2,500; 
that thereafter, on May 13, 1885,, execution 
was issued upon said judgment, and the re- 
mainder of the premises described herein 
was sold to the defendant Timmerman, and 
said sale confirmed, and deeds were duly ex- 
ecuted by the sheriff to said defendant. 

It will be noticed that the suit of the de- 
fendant Timmerman to recover the amount 
due on the note against A. J. Houston, 
who was then the husband of the plaintiff 
herein, was commenced after the suit of the 
plaintiff for divorce against her husband, and 
that a judgment was recovered and docketed 
before a decree in the divorce suit was ren- 
dered, and in which one-third of the real es- 
tate then owned by the liusband was decreed 
the plaintiff. It is true, there wiis no direct 
proof of the date of the service of the sum- 
mons in the divorce suit; but, as this will 
not affect the result reached, it is immaterial . 
The contention is that the defendant Tim- 
merman was a purchaser pendente lite. 
There is, however, a preliminary question to 
be first disposed of, namely, that the appeal 
was not taken within six months as allowed 
by law. The answer to this is that the ob- 
jection relates to the inteilocutory or first de- 
cree, and not to the final decree, and that, as 
our own Code does not authorize an appeal 
from interlocutory judgments or decrees, but 
only from such as are final, and, the appeal 
from the final decree being within six 
months, there was a right of appeal, and the 
objection, therefore, is unavailing. 

An examination of the statutes of the two 
states from which the authorities were read, 
to the effect that an apjieal might be taken 
before a final judgment or decree was entered 
shows that appeals in those states may be 
taken from interlocutory judgments or de- 
crees, which, not being the case under our 
Code, they fail on application. See Freem. 
Co-tenancy, §§ 519, 527. But to return. 
Among the ordinances or rules adopted by 
Lord Chancellor Bacon "for the better and 
more regular administration of justice" was 
one which provided that, where a person 
"comes in pendente lite, and while the suit 
is in full prosecution, and without any color 
of allowance, or privity of the court there 
regularly, the decree bindeth." Chancellor 
Kent said that a "Us pendens duly prose- 
cuted and not conclusive is notice to a pur- 
chaser so as to affeitaud bind his interest by 
the decree." Strictly speaking, however, the 
doctrine of lis pendens is not founded upon 
notice, but upon reasons of public policy, 
founded upon necessity. "It affects him," 
said Lord Chancellor Cranwoktii, "not be- 



98 



LIS PEXDEXS. 



cause it amounts to notice, but because the 
law does not allow litigant parties to give to 
others, pending the litigation, rights to the 
property in dispute, so as to prejudice the 
opposite party. * * * The necessities of 
mankind require that the decision of the 
court shall be binding, not only on the liti- 
gant parties, but also on those who derive 
title under them by alienation made pending 
the suit, whether such alienees had or had 
not notice pending proceedings. If this 
were not so, there could be no certainty that 
litigation would ever come to an end. " Bel- 
lamy V. Sabine, 1 De Gex & J. 566. The 
main purpose of the rule is to keep the sub- 
ject-matter of the litigation within the power 
of the court until the judgment or decree 
shall be entered; otherwise, by successive 
alienations, its judgment or decree could be 
rendered abortive, and thus make it impossi- 
ble for the court to execute its judgments or 
decree. Hence the general proposition that 
one who purchases of either party to the suit 
the subject-matter of the litigation, after the 
court has acquired jurisdiction, is bound by 
the judgment or decree, whether he purchased 
for a valuable consideration or not, and with- 
out any express or implied notice in point of 
fact, is sustiiined by many authorities, and 
disputed by none. E^'ster v. Gaff, 91 U. S. 
521; Grant v. Bennett, 96 111. 513; Randall 
V. Lower, 98 Ind. 261; Daniels v. Henderson, 
49 Cal. 242; Blanchard v. Ware, 43 Iowa, 530; 
Carr v. Lewis, 15 Mo. App. 551; Currie v. 
Fowler, 5 J. J. Marsh. 145; Ilinrn v. Mill, 
13 Ves. 120; 1 Story, Eq. .Jiu-. § 405. The 
doctrine of lis pendens was introduced in 
analogy to the rule at common law in a real 
action "where if the defendant aliens after 
pendency of the writ, the judgment in the 
action will overreach such alienation." Sor- 
rell V. Carpenter, 2 P. Wms. 482. And this 
may account for the leaning in some of the 
courts to restrict the application of the rule 
■of Us pendens to actions or suits affecting 
title to real property. McLaurine v. Mon- 
roe, 30 Mo. 469; Winston v. Westfeldt, 22 
Ala. 760; Baldwin v. Love, 2 J. J. Marsh. 
489; Murray v. Lylburn, 2 Johns. Ch. 441. 
But it is hardly considered well settled that 
it may not witli equal propriety be applied to 
the sales of chattels. Two things, liowever, 
seem indispensable to give it effect: (1) That 
the litigation must be about some specific 
thing, which must necessarily be affected by 
the termination of the suit; and (2) that the 
particular property involved in the suit 
" must be so pointed out by the proceeding as 
to warn the whole world that they intermed- 
dle at their peril." Freem. Judgm. §§ 196, 
197. Now, the divorce suit of the plain- 
tiff was not brought specifically to recover 
the one-third of the real estate of her hus- 
band, as was decreed in the divorce proceed- 
ing. The land was not the subject-matter of 
the litigation, and the subject of the suit was 
not to recover title that belonged to the 
plaintiff. It was incidental and collateral to 
the divorce proceeding. The court has no 



jurisdiction to affect the title of the husband 
to his lands, or decree that one-third of them 
shall be set apart for her in her own right 
and title, independent of a decree for divorce. 
Nor has the plaintiff any title on which to 
base a suit to recover any portion of the same, 
except as it comes by force of the statute 
upon a decree for divorce. A proceeding in 
divorce is partly in personam and partly in 
rem, and, in so far as it is to affect the mar- 
riage status, it is to change a thing 
independent of the parties, and is a proceed- 
ing not against the parties in personam, but 
against their status in rem. 5 Amer. & Eng. 
Cyclop. Law, "Divorce," 751. The matter 
upon which the jurisdiction acts is the sta- 
tus. The marriage is the thing which the 
suit is brought to dissolve. It is the subject 
of the litigation; but, as incidental to it, the 
court may grant temporary nWmony pendente 
lite, or permanent alimony, when a decree 
for divorce is rendered. And the general 
rule is that bills tor alimony do not bind the 
property of the defendant with lis pendens. 
1 Story, Eq. Jur. § 196; Brightman v. Bright- 
man, 1 R. I. 112; Isler v. Brown, 66 N. C. 
556; Almond v. Almond, 4 Rand.(Va.) 662. 
But the court cannot affect the title of the 
real property of the defendant in a divorce 
proceeding until the point is reached that a 
decree of divorce is to be rendei-ed. Tempo- 
rary alimony may be granted pendente lite, 
but the title of the real estate of the defend- 
ant remains intact, and cannot be affected 
during the pendency of the proceeding, but 
only when the proceeding for a divorce has 
terminated, and a decree rendered that the 
marriage is dissolved, and then only by force 
of the statute. 

Our statute provides: "Whenever a mar- 
riage shall be declared void or dissolved the 
party at whose prayer such decree shall be 
made shall in all cases be entitled to the un- 
divided one-third part in his or her undivided 
right in 'fee of the whole of the rfal estate 
owned by the other at the time of such 
decree; and it * * * shall be the 
duty of the court to enter a decree in 
accordance with this provision." Code 
Or. § 499. It is " whenever a marriage shall 
be declared dissolved" that the statute oper- 
ates, not before, or pendente lite; and the 
court then becomes authorized, and it is its 
"duty, " " to enter a decree" for the undivided 
one-third part in fee of the whole of the real 
estate "owned by the defendant at the time 
of such decree" for a divorce. It must be 
manifest, then, that the primary object of the 
suit is to affect the marriage relation, — its 
status; that it is the specific matter in con- 
troversy to be affected; and that it is only 
when the status is changed by a decree of di- 
vorce that the statute operates to divest title 
"owned" by the defendants, and that it then 
becomes the duty of the court to enter a de- 
cree in accordance with its provisions. Nor 
do the cases cited by counsel sustain his con- 
tention. In Tolerton v. Williard, 30 Ohio St. 
586, the suit was of "double aspect," as said 



LIS PENDENS. 



00 



by the court, and was brought to protect her 
equitable right in property which was the 
subject of dispute. This property was bought 
with the wife's money, and she sought a res- 
toration of lier riglits. The court says: "It 
is evident that the court in coming to its con- 
clusion did take these equities into consider- 
ation, so that the decree may fairly be con- 
sidered an equitable one in her favor." And 
again: "In a proceeding like the one under 
consideration where the wife claims rights in 
her husband's property other than those aris- 
ing from the marital relation, and insists up- 
on them in connection with her claim for ali- 
mony, the court is fully authorized to pass 
upon them." In Daniel v. Hodges, 87 N. 
C. 97, the proceeding was for alimony, and 
the only property which the husband owned 
was a lot that the wife sought to have sub- 
jected to her claim, and was in actual pos- 
session of it by order of the court when her 
husband, pending the litigation, conveyed it 
to another, and the court held, under the ex- 
ceptional circumstances of the case, that the 
doctrine of Us pendens applied. There the 
proceeding was to subject the specific thing 
to her claim, which the husband attempted 
to defeat by conveying away the property, 
and tlie court, while admitting the general 
doctrine that a lis pendens was not applicable 
in such cases, said: "We are of the opinion 
the petition for alimony under the particular 
circumstances of the case constituted such a 
lis pendens as affected the purchaser with 
notice, independent of the actual notice had, 
and rendered the deeds void." But this has 
no relevancy to the case at bar. There she 
sought to subject tlie property to her claim 
for alimony, and the suit was directed specif- 
ically against it, and she was put in actual 
possession by order of the court, and then it 
was only "under the peculiar circumstances 
of the case" that the court thought the 
purchaser from the husband pending the liti- 
gation was affected with the rule of lis pen- 
dens. Here there was no alienation of the 
property, which was only incidentally in- 
volved, or any charge of any act on the part 
of the defendant Houston to defeat any right 
whatever which might accrue to the plaintiff, 
if the marriage should be dissolved. If the 
defendant Houston had conveyed away the 
property to another with the object of defeat- 
ing her right, upon a decree for divorce, to 
any interest in his lands, such purchaser may 
be affected with the rule of lis pendtns in 
such case; but that is not the question here, 
and which it will be time enough to decide 
when properly presented for our considera- 
tion. The debt which the defendant Hous- 
ton owed the defendant Timmerman was 
contracted long before the suit for divorce 
was commenced, or the cause or ground of 
the divorce existed, and doubtless the credit 



was given on the faith of the property, a part 
of which included the property in dispute, 
then owned by Houston. There is no pre- 
tense of any fraud or collusion, or that the 
debt is not an honest obligation which Hous- 
ton ought to have paid long before the di- 
vorce proceeding was instituted. Although 
the commencement of the divorce suit 
might result in a decree which would affect 
the property of the defendant, the property 
was not the subject specifically of the litiga- 
tion, and by reason thereof was not with- 
drawn from such burdens as might be legally 
imposed upon it for just claims upon judg- 
ments recovered and docketed against its 
owner, prior to divesting him of his title by 
force of the statute under the decree. The 
defendant Timmerman had the legal right to 
commence her action to recover the money 
due on the note of Houston, and the fact that 
the wife of Houston had instituted proceed- 
ings for a divorce did not affect that right, 
but when judgment was recovered thereon, 
and docketed, by force of law, the lands then 
owned by him in that county, including the 
land in dispute, became subject to the lien of 
such judgment; and, as the facts show that 
this was before any decree was rendered in 
the divorce whereby title to such lands could 
be divested, it follows that whoever took title 
from him subsequently, either by contract or 
by operation of law, took said title «tm onere, 
or subject to the lien of such judgment. It 
results, as a purchaser of said lands at an ex- 
ecuLion sale upon such judgment, the defend- 
ant Timmerman was not affected by or sub- 
ject to the rule of lis pendens, and her deed 
thereby rendered invalid. It is true, in the 
divorce suit the property was described in 
the complaint and decree, which, since the 
decision in Bamford v. Bamford, 4 Or. 30, 
has been deemed essential to reach the prop- 
erty of the guilty party, but it is apprehended 
that neither allegation or proof concerning 
the lands is necessary, but that it is enough 
and a sufiicient compliance with the latter 
clause of section 499, Code Or., to say in ef- 
fect that the party obtaining the divorce is 
hereby entitled to one-third of the real prop- 
erty owned by the other, whatever it may be. 
In this view, if any question arises as to 
what property was so owned by him, it can 
be determined by appropriate proceedings for 
that purpose between the parties interested, 
much better than in a divorce suit, in which 
it is neither proper nor convenient that third 
parties, in order to protect their rights, should 
be compelled to intervene and become parties 
to a controversy between husband and wife 
in a divorce proceeding. Barrett v. Failing, 
6 Sawy. 475, 3 Fed. Rep. 471. So that, how- 
ever we look at the facts of this record, our 
conclusion is that the decree of the lower 
court must be reversed, and it is so ordered. 



100 



EQUITABLE ESTOPPEL. 



HORN V. COLE et al. 

(51 N. H. 287.) 

Supreme Judicial Court of New Hampshire. 
July Term, 1868. 

Mr. Fletcher, for plaintiff. Mr. Ray, for 
defendants. 

PEllLEy, C. J. There is no complaint 
tliat the rulings and instructions of the court 
im the trial were erroneous or improper, pro- 
vided the evidence warranted the jury in re- 
turning a verdict for the defendants; and the 
verdict must stand, if the evidence was com- 
petent to prove such representations by the 
plaintiff as would estop him to set up his 
title to the goods attached to the property of 
Charles E. Horn. 

The evidence reported in the ca.se was com- 
petent to prove that the plaintiff made the 
representations on the occasion and in the 
r-ircumstances testified to by Cole; that the 
plaintiff, though not indebted to Cole, was 
in debt to others; that Cole, believing the 
representations to be true, and relying on 
them as true, caused the goods to be at- 
tached as the property of Charles E. Horn; 
and, also, that the plaintiff made these rep- 
resentations knowing them to be false, with 
the intention that all persons who were In- 
terested in the subject should take them to 
be true, and act on them as such, and with 
the intention to mislead and deceive all to 
whom the representations were communi- 
cated, and induce them to act on them as 
true; that his intention was to deceive his 
own creditors, and prevent them from taking 
the goods as his for the debts which he owed 
to them. These facts must be taken to have 
been established by the verdict. 

But, as there was no evidence that the 
plaintiff knew Cole had any demand against 
Charles E. Horn, we cannot infer that the 
plaintiff had Cole in his mind as an individ- 
ual whom he meant to deceive by his false 
representations, or that he had an intent to 
prevent Cole from taking the goods for a 
debt which he owed to Cole, as he owed no 
such debt; and, on the evidence reported, 
the jury were not at liberty to find that the 
plaintiff had Cole In his mind as an individ- 
ual whom he meant to deceive and defraud 
by inducing him to take the goods for his 
demand against Charles E. Horn. This rais- 
es the point, which the counsel for the plain- 
tiff takes, whether, to estop a party from 
showing that his representations were false, 
it is necessary that the false representations 
should have been intended to deceive and de- 
fraud tlie individual party who trusted to 
them and acted on them, provided there was 
a general iijtention to deceive and defraud all 
persons who were interested in the subject- 
matter of the false representations. 

The ground on which a party is precluded 
from proving that his representations on 
which another has acted were false is, that 



to permit it would be contrary to equity and 
good conscience. This has been sometimes 
called an "equitable estoppel," because the 
jurisdiction of enforcing this equity belong- 
ed originally and peculiarly to courts of equi- 
ty, and does not appear to have been fa- 
miliarly exercised at law until within a com- 
paratively recent date; and, so far as relates 
to suits at law affecting the title to land, 
I understand that in England and in some 
of the United States the jurisdiction is still 
confined to courts of equity. Storrs v. Bar- 
ker, (i Johns. Oh. 166, 168; Evans v. Bicknell, 
6 Ves. 174, 178; Pickard v. Sears, 6 Adol. & 
E. 469. The doctrine, however, is a vei-y 
old head of equity, and is recognized and 
applied in a great number of the early cases. 
Dyer v. Dyer, 2 Ch. Cas. 108; Teasdale v. 
Teasdale, 13 Vin. Abr. 539; Hobbs v. Norton, 
1 Vern. 136; Gale v. Lindo, Id. 475; Huns- 
den v. Oheyney, 2 Vern. 150; Lamlee v. 
Hanman, Id. 499; Raw v. Pote, Id. 239; 
Blanchet v. Foster, 2 Ves. Sr. 2(!4; East In- 
dia Co. V. Vincent, 2 Atk. 83; Stiles v. Cow- 
per, 3 Atk. (593; Webber v. Farmer, 13 Vin. 
Abr. .-)25; 2 Brown, Pari. Cas. 88; 2 Eq. 
Cas. Abr. 481; Neville v. Wilkinson, 1 
Brown, Ch. 543; Storrs v. Barker, 6 Johns. 
Gh. 160; Strong v. Ellsworth, 26 Vt. 366. 

JIany of these cases related to underhand 
agreements in fraud of marriage settlements; 
but the principle is of general application. 
1 Fonbl. Eq. 267, note x. Relief was given 
according to the circumstances of the case, 
— sometimes by enjoining suits at law, in 
which the legal title was set up, and some- 
times by decreeing conveyances and the can- 
celling of deeds and other instrtmients; but 
in all these cases relief was given in equity 
contraiy to the strict legal rights of the de- 
fendants. 

Thus, in the case of an equitable estoppel, 
a party is not allowed to assert his strict le- 
gal right because, in the circumstances of 
the individual case, it would be contraiy to 
equity and good conscience. Take the pres- 
ent case for an Illustration. In trover, fol- 
lowing the legal definition of the action, if 
the plaintiff proves property in himself and 
a conversion by the defendant, he has main- 
tained his action, and is entitled to a ver- 
dict and judgment. It is conceded that the 
plaintiff owned the goods, and that the de- 
fendants converted them. The defense here 
set up appeals from the strict rule at law 
to the equitable doctrine that a party shall 
not be allowed to exercise his legal right of 
proving the facts, if, on account of his pre- 
vious declarations or conduct, it would be 
contrary to equity and good conscience. So 
in a vvrit of entry; by the technical rules 
at law, if the demandant proves seisin In 
himself and a disseisin by the tenant within 
the time of limitation, he is entitled to judg- 
ment; but if the demandant, having a dor- 
mant title to the land demanded, concealed 
his title, and encouraged the tenant to pur- 
chase from another, he is not allowed, in our 



EQUITABLE BSTOPPEL. 



101 



practice, to set up his legal title, because it 
would be contrary to equity and good con- 
science. 

It thus appears that what has been called 
an "equitable estoppel," and sometimes, with 
less propriety, an "estoppel in pais," is prop- 
erly and peculiarly a doctrine of equity, orig- 
inally introduced there to prevent a party 
from taking a dishonest and unconscientious 
advantage of his strict legal rights,— though 
now with us, like many other doctrines of 
equity, habitually administered at law. But 
formerly the practice was different, and suits 
at law, the courts being Incapable of giving 
effect to this equity, were often enjoined 
where the party insisted on his rights at law 
contrary to the equitable doctrine, as in 
Raw V. Pote, Stiles v. Cowper, and Webber 
V. Farmer, qua supra. 

It would have a tendency to mislead us in 
the present inquiry, as there is reason to sus- 
pect that it has sometimes misled others, if 
we should confound this doctrine of equi- 
ty with the legal estoppel by matter in pais. 
The equitable estoppel and legal estoppel 
agree indeed in this, that they both preclude 
from showing the truth in the individual 
case. The grounds, however, on which they 
do it are not only different, but directly op- 
posite. The legal estoppel shuts out the 
truth, and also the equity and justice of the 
individual case on account of the suppos- 
ed paramount importance of rigorously en- 
forcing a certain and unvarying maxim 
of the law. For reasons of general policy, 
a record is held to import incontrovertible 
verity, and for the same reason a party is 
not permitted to contradict his solemn ad- 
mission by deed. And the same is equally 
true of legal estoppels by matter in pais. 
Certain acts done out of court and without 
deed were, by a technical and unyielding rule 
of law, upheld on like grounds of public pol- 
icy, and followed always by certain legal 
consequences. The legal effect of such acts 
was not permitted to be controverted by 
proof. 

Thus, if one accepts a lease and enters 
under it, he Is estopped to claim any other 
estate in the land during the term; he can- 
not show that he owned the land when the 
lease was made. Estoppels by matter in 
pais were few in number, and all of this 
general and well defined character; and 
they all enforced some technical rule of the 
law against the truth, and also against the 
justice and equity of the individual case. 
Coke, in his examination of the different 
kinds of estoppel by matter in pais, enumer- 
ates the following: "By livery, by entiy, by 
acceptance of rent, by partition, and by ac- 
ceptance of an estate." Co. Litt. 352a. In 
Lyon v. Reed, 13 Mees. & W. 309, Parke, B., 
speaking of legal estoppels by matter in 
pais, says: "They are but few, and are point- 
ed out by Lord Coke, Co. Litt. 352a. They 
are all cases which anciently really were, 
and in contemplation of law have always 



continued to be, acts of notoriety no less sol- 
emn than the execution of a deed, such as 
livery, acceptance of an estate, and the like. 
Whether a party had or had not concurred 
in an act of this sort was deemed a matter 
which there eould be no difficulty in ascer- 
taining, and then the legal consequences fol- 
low." 

In the authorities which contain the most 
complete enumeration of the different kinds of 
legal estoppels and the fullest discussion of 
the law on the subject, I find no allusion to 
the equitable estoppel which we are now con^ 
sidering. All legal estoppels, whether by rec- 
ord, by deed, or by matter in pais, depended 
on strict legal rules, and shut out proof of the 
truth and justice of the individual case. Vin- 
er, Abr., "Estoppel," passim; Lyon v. Reed, 
13 Mees. & W. 809; Freeman v. Cooke, 2 
Exch. 658. 

For this reason, because legal estoppels, 
whether by record, deed, or matter in pais, 
shut out proof of the truth and justice of indi- 
vidual cases, they have been called odious, and 
have been construed with much strictness 
against parties that set them up. They were 
formerly required, like other defences regard- 
ed as inequitable, to be pleaded with certainty 
to a certain intent in every particular. If 
they were relied on by way of averment, and 
tried by the jury, the jury might find, and 
according to some authorities were bound by 
their oath veritatem dicere to find, according 
to the truth of the case, regardless of the es- 
toppel. Trials Per Pais, 284; Co. Litt 227a; 
Com. Dig. "Estoppel," E, 10. The practice is 
now different, and legal estoppels may be re- 
lied on, when given in evidence, without being 
specially pleaded. Legal estoppels exclude 
evidence of the truth and the equity of the 
particular case to support a strict rule of law, 
on grounds of public policy. 

Equitable estoppels are admitted on the ex- 
actly opposite ground of promoting the equity 
and justice of the individual case by prevent- 
ing a party from asserting his rights under a 
general technical rule of law, when he has so 
conducted himself that it would be contrary 
to equity and good conscience for him to al- 
lege and prove the truth. The facts upon 
which equitable estoppels depend are usually 
proved by oral evidence; and the evidence 
should doubtless be carefully scrutinized, and 
be full and satisfactory, before it should be 
admitted to estop the party from showing the 
truth, especially in cases affecting the title to 
land. But where the facts are clearly proved, 
the maxim that estoppels are odious — which 
was used in reference to legal estoppels, be- 
cause they shut out the truth and justice of 
the case — ought not to be applied to these 
equitable estoppels, as it has sometimes been, 
inadvertently, as I think, from a supposed an- 
alogy with the legal estoppel by matter in pais, 
to which they have, in this respect, no resem- 
blance whatever. Lord Campbell, in Howard 
V. Hudson, 2 El. & Bl. 10; Andrews v. Lyons, 
11 Allen, 349, 351. In other cases, where 



102 



EQUITABLE ESTOPPEL. 



more attention has been paid to the real nature 
of this equitable doctrine, it has been held 
that such estoppels are not odious, and to be 
construed strictly, but are entitled to a fair 
and liberal application, like other equitable 
doctrines which are admitted to suppress 
fraud and promote honesty and fair dealing, 
ilellor and Compton, JJ., in Ashpitel v. Bryan, 
3 Best & S. 474; Cowen, J., in Dezell v. Odell, 
3 Hill, 220; Com. v. Moltz, 10 Pa. St. 530, 531; 
Buckingham v. Hanna, 2 Ohio St. 557; Van- 
Eensselaer v. Kearney, 11 How. 326; Preston 
V. Mann, 25 Conn. 118, 128. 

In this equitable estoppel, the party is for- 
bidden to set up his legal title because he has 
so conducted himself that to do it would be 
contrary to equity and good conscience. As 
in other cases of fraud and dishonesty, the 
circumstances out of which the question may 
arise are of Infinite variety; and, unless courts 
at law are willing to abdicate the duty of ad- 
ministering the equitable doctrine effectually 
in suppression of fraud and dishonesty, the ap- 
plication of it cannot be confined within the 
limit of any narrow technical definition, such 
as will relieve courts from looking, as in other 
cases depending on fraud and dishonesty, to 
the circumstances of each individual case. 
Certain general rules will doubtless apply, as 
in other cases where relief is sought on such 
grounds. But I find myself unable to agree 
with the authorities where the old maxim that 
legal estoppels are odious has been applied to 
this equitable estoppel, and where attempts 
have been made to lay down strict definitions, 
such as would defeat the remedy in a large 
proportion of the cases that fall within the 
principle on which the doctrine is founded. 

The doctrine having been borrowed from 
equity, courts at law that have adopted it 
should obviously look to the practice in equity 
for their guide in the application of it; and in 
equity, the doctrine has been liberally applied 
to suppress fraud and enforce honesty and 
fair dealing, without any attempt to confine 
the docti'ine within the limits of a strict defini- 
tion. For Instance, the doctrine has not in 
equity been limited to cases where there was 
an actual intention to deceive. The cases are 
numerous where the party who was estopped 
by his declarations or his conduct to set up 
his legal title, was ignorant of it at the time, 
and of course could have had no actual inten- 
tion to deceive by concealing his title. Yet, 
if the cu'cumstances were such that he ought 
to have informed himself, it has been held to 
be contrary to equity and good conscience to 
set up his title, though he was in fact ignorant 
of it when he made the representations. 
Hobbs V. Norton, Hunsden v. Cheyney, Teas- 
dale V. Teasdale, qua supra; and Burro wes v. 
Lock, 10 Ves. 470. So, if the party knew the 
facts, but mistook the law. Storrs v. Barker, 
6 Johns. Ch. 166. Nor is it necessary in 
equity that the intention should be to deceive 
any particular individual or individuals. If 
the representations are such, and made in such 
circumstances, that all persons interested in 



the subject have the right to rely on them as 
true, their truth cannot be denied by the party 
that has made them against any one who has 
trusted to them and acted on them. Gale v. 
Lindo, Webber v. Farmer, qua supra. 

In the much and well considered case of 
Preston v. Mann, 25 Conn. 118, 128, Storrs, J., 
delivering the opinion of the court, says: 
"The doctrine of estoppel in pais, notwith- 
standing the great number of cases which 
have turned upon it and are reported in the 
books, cannot be said even yet to rest upon 
any determinate legal test which will reconcile 
the decisions, or will embrace all transactions 
to which the general principles of equitable 
necessity wherein it originated demand that it 
should be applied. In fact, it is because it is 
so peculiarly a doctrine of practical equity, 
tha,t its technical application is so dilHcult, and 
its reduction to the form of abstract formulas 
is still unaccomplished." This was said in 
185(i, and little has since been done towards 
extricating the doctrine from the confusion 
and conflict of authority with which it was 
then embai'rassed. This, as I think, has been 
caused by the fact that courts have continued 
to exercise their ingenuity in the vain attempt 
to compress a broad doctrine of equity within 
the narrow limits of a technical definition. 

The case of Pickard v. Sears, 6 Adol. & H. 
469, decided as late as 1837, appears to have 
been regarded, both in England and in this 
country, as the leading case at law on this 
subject. It was trover by the mortgagee of 
personal goods against the defendants, who 
were purchasers at a sheriff's sale on execu- 
tion against the mortgagor. The facts set up 
in defence were, that the plaintiff was pres- 
ent at the sale, did not disclose his title as 
mortgagee, and encouraged the defendants to 
purchase. The question on trial was as to 
the property of the plaintiff in the goods, and 
Lord Denman directed a verdict for the plain- 
tiff. A rule to show cause why the verdict 
should not be set aside was made absolute. 

In delivering the judgment of the court. 
Lord Denman said: "His [the plaintiff's] ti- 
tle having been established, the property could 
only be devested by gift or bale, of which no 
specific act was even surmised. But the rule 
of law is clear that where one, by his words 
or conduct, willfully causes another to believe 
the existence of a certain state of things, and 
induces him to act on that belief so as to alter 
his own previous position, the former is con- 
cluded from averring a different state of 
things as existing at the same time; and the 
plaintiff might have parted with his interest 
in the property by a verbal gift or sale, with- 
out any other formalities that threw technical 
difliculties in the way of legal evidence. And 
we think his conduct in standing by and giv- 
ing a kind of sanction to the proceedings un- 
der the execution was a fact of such a nature 
that the opinion of the jury ought to have 
been taken whether he had not, in point of 
fact, ceased to be the owner." 

It is worthy of note that in this suit at law 



EQUITABLE ESTOPPEL. 



103 



the court, so late as 1837, after stating the 
general equitable doctrine, did not venture to 
put the defence directly on the ground that 
the plaintiff was estopped by his conduct to 
prove the truth of the case, but allowed the 
facts to go to the jury as evidence that the 
plaintiff, in some undefined and mysterious 
way, had parted with his property in the 
goods. So late and so reluctant were the 
courts to admit in suits at law this defence, 
which depended on fraud and dishonesty, and 
which belonged, originally and appropriately, 
to the jurisdiction in equity. 

It can hardly be supposed that Lord Den- 
man, in the statement which he made of this 
equitable doctrine in reference to the facts of 
that case, understood that he was laying down 
a technical definition fixing the limits of the 
doctrine, and excluding all cases that did not 
come clearly within the terms which he used 
on that occasion. Nevertheless, the remarks 
of Lord Denman have often been treated aa 
a sort of authoritative text covering the whole 
ground, which it was the business of courts 
in later cases to expound and exijlain. And it 
is curious to observe what different and con- 
tradictory interpretations have been put on his 
statement of the equitable doctrine. It has 
been cited in Massachusetts as authority for 
decisions in which it has been held that the 
representations, to estop the party from show- 
ing they were not true, must have been made 
with the intent to deceive, and the intent to 
deceive the party who sets up the defence. 
Plumer v. Lord, 9 Allen, 455; Andrews v. Ly- 
ons, 11 Allen, 349. And in California the same 
case has been relied on for the rule that where 
a representation comes in any way to the ears 
of a party, who acts on it, the party making 
the representation is estopped to deny its 
truth, unless it had the character of a confi- 
dential communication. Mitchell v. Keed, 9 
Cal. 204. In England it has been treated as a 
statement of the equitable doctrine made in 
reference to the circumstances of that case, 
and not intended as a formal and complete 
definition. Freeman v. Cooke, 2 Exch. 654; 
Gregg V. Wells, 10 Adol. & E. 90; Jorden v. 
Money, 5 H. L. Oas. 212. 

It would be a laborious and not a profitable 
task to attempt an analysis of all the recent 
decisions on this subject. I will briefly advert 
to some of those which appear to be the most 
important. 

In Plumer v. Lord, 9 Allen, 455, it was 
held that to create an estoppel in pais, the 
declarations or acts must have been accom- 
panied with a design to mislead; and Lang- 
don V. Doud, 10 Allen, 433, is to the same 
point. In Andrews v. Lyons, 11 Allen, 349, 
the court went one step further, and decided 
that the declarations or acts must have been 
accompanied with a design to deceive the 
pai'ty who sets up the estoppel, and induce 
him to act on them; and in this last case 
it is said that such an estoppel shuts out the 
truth, and is odious, and must be strictly 
proved. In Hawes v. Marchant, 1 Cmt. 144, 



Fed. Cas. No. 6,240, the rule is laid down 
that to be estopped the party must have de- 
signedly made admissions inconsistent with 
the defense or claim which he proposes to 
set up, and another, with his knowledge and 
consent, so acted on this admission, that he 
will be injured by allowing the admission 
to be disputed; and this mle is cited and 
apparently approved in Audenried v. Bette- 
ley, 5 Allen, 382. 

In these cases. It is to be observed, the 
court have not been content with saying, in 
reference to the facts before them, that, if 
certain things concurred in the case, it would 
fall within the equitable doctrine, and the 
party would be estopped, but they have un- 
dertaken to lay down a strict legal defini- 
tion of general application, excluding from 
the operation of the doctrine all cases that 
do not fall within the terms of the definition. 
Applying the rule as laid down in Hawes v. 
Marchant to the present case, if Horn had 
known that Cole had a demand against 
Charles E. Horn, had falsely represented to 
Cole that the goods belonged to Charles, 
with the design to deceive him and induce 
him to attach the goods as the property of 
Charles, and Cole, relying on the representa- 
tion, had taken the goods as the property of 
Charles, and as Horn intended, yet if, after 
he had made the false representation, he did 
not know that the goods were taken as the 
property of Charles, and assent that they 
should be so taken, he would not be estop- 
ped to set up his own title in the goods. The 
statement that another party must have act- 
ed on the false statement with his knowl- 
edge and assent must mean this, or it can 
mean nothing; for he could not know that 
he had acted on it at all until the act was 
done and accomplished. 

The remark of Lord Campbell in Howard 
V. Hudson, qua supra, though not called for 
by the case, is to the effect that the repre- 
sentation must have been intended to de- 
ceive. 

These authorities would seem to sustain 
the plaintiff's counsel fully in his position 
that the false representation must not only 
be intended to deceive but also to deceive 
the identical party that acted on them. 

There are, however, authorities of equal 
respectability, and in greater numbers, which 
maintain a different doctrine. 

In England, the case of Pickard v. Sears 
does not appear to have been understood as 
intended to lay down a complete definition 
of the equitable doctrine excluding all cases 
that could not be brought within the terms 
of the remarks made by Lord Denman. In 
Freeman v. Cooke, 2 Exch. 654, it was held 
that the term "willfully," used in Pickard v. 
Sears, was not to be understood in the sense 
of "maliciously"; and that, whatever a 
man's real meaning may be, if he so con- 
ducts himself that a reasonable man would 
take the representation to be true, and be- 
lieve it was meant he should act on it, and 



104 



EQUITABLE ESTOrPEL. 



he did act on it as true, the party mailing 
the representation would be equally preclud- 
ed from contesting its tmth. This is wholly 
inconsistent with the notion that an inten- 
tion to deceive is an essential ingredient of 
the representation, which precludes the par- 
ty making it from showing that it was false. 
So in Jorden v. Jloney, 5 H. L. Cas. 212, it 
was held not to be necessary that the party 
making the representations should know 
that they were false; that no fraud need 
have been intended at the time; but, if the 
party unwittingly misled another, you must 
add that he has misled him under such cir- 
cumstances that he had reasonable ground 
for supposing that the pei-son whom he was 
misleading would act upon what he was say- 
ing. 

In Gregg v. Wells, 10 Adol. & B. 90, Lord 
Denman says: "Pickard v. Sears was in my 
mind at the time of the trial, and the prin- 
ciple of that case may be stated even more 
broadly than it is there laid down. A party 
who negligently or culpably stands by and 
allows another to contract on the faith and 
understanding of a fact which he can con- 
tradict, cannot afterwards dispute that fact 
In the action against the person whom he 
has himself assisted in deceiving." This 
shows that Lord Denman did not himself 
understand that his remarks in Pickard v. 
Sears were to be talien as a definition and 
limitation of the equitable doctrine, for he 
says the principle of the case might be stat- 
ed more broadly than it is laid down there, 
and may include the case of a culpable neg- 
ligence. So Hobbs V. Norton, 1 A'ern. 136; 
Hunsden v. Gheyney, 2 Vern. 150; Teasdale 
V. Teasdale, 13 Vin. Abr. 539; Burrow es v. 
Lock, 10 Ves. 475,— before cited, show that the 
practice in equity does not require that there 
should in all cases be an intention to de- 
ceive, or even a knowledge that the repre- 
sentation was false. 

We come now to the decisions in this coun- 
try, which give a broader application to this 
doctrine than those before cited. 

In Dezell v. Odell, 3 Hill, 221, the general 
doctrine is said to be that when a party, ei- 
ther by his declarations or his conduct, has 
influenced a third lierson to act in a particu- 
lar manner, he will not be afterwards per- 
mitted to deny the trath of the admission if 
the consequence would be to work an injui-y 
to such third person, and that in such case 
it must appear— First, that he made an ad- 
mission which is clearly inconsistent with 
the evidence he proposes to give, or the 
claim which he proposes to set up; second, 
that the party has acted on the admission; 
third, that he will be injured by allowing 
the truth of the admission to be disputed. 
According to this interpretation of the equi- 
table doctrine, it would seem not to be nec- 
essary that the representation should be in- 
tended to deceive, or that the party making 
it should know it to be false, or ihat il 
should be intended the i-arty should act on 



it. who does so in fact, and is deceived by It. 
The rule of this case has been adopted and 
followed in Newman v. Hook. 37 Mo. 207; 
Cai-penter v. Stillwell, 32 Barb. 135; and 
Eldred v. Hazlett, 33 Pa. St. 310. 

In Roe V. Jerome, 18 Conn. 138, the gen- 
eral doctrine is stated to be that where one 
person, by his words or conduct causes an- 
other to believe in a certain state of things, 
and thus induces him to act on that belief, 
so as injuriously to affect his previous posi- 
tion, he is concluded from averring a differ- 
ent state of things as existing at the time; 
and this rule was followed in the later cases 
of Gowles V. Bacon, 21 Conn. 451, and Dyer 
V. Cady, 20 Conn. 563; and in Preston v. 
Mann, 25 Conn. 118, before cited, it is said 
that the doctrine did not then rest on any 
determinate, legal test which will embrace 
all transactions to which the general princi- 
ples of equity, in which it originated, de- 
mand that it should be applied. 

Buchanan v. Moore, 13 Serg. & R. 304, 30(1. 
is to the point that, though the party be- 
lieved his representation to be true, and 
made it under a mistake, he is estopped to 
show that he made the representation inno- 
cently believing it to be true, provided the 
other party acted on it, and had reason to 
act on it, as true. So in Strong v. Ells- 
worth, 26 Vt. 366, it is said by Redfield, C. 
.T., that he who by his woi-ds or actions, or 
his silence even, intentionally or carelessly 
induces another to do an act which he 
would not otheiTvise have done, and which 
will prove injurious to him if he is not al- 
lowed to insist on the fulfillment, may insist 
on such fulfillment; and that the doctrine 
of equitable estoppels lies at the foundation 
of morals. In Mitchell v. Reed, 9 Gal. 204, 
it was held that where a statement made to 
a third person is not confidential, but gen- 
eral, and is acted on by others, the party 
making the declaration is estopped to deny 
Its truth; that the intention with which the 
declaration is made is not material, except, 
perhaps, where it is confidential. This case 
and Quirk v. Thomas, 6 Mich. 76, are au- 
thorities that to work the estoppel it is not 
necessary the declaration should be made to 
the party who acts on it, nor in his presence, 
nor that the declaration should be intended 
to come to the knowledge of any particular 
person. 

In a suit at law to recover damages for a 
false affirmation that the signer of a note 
was of age. it was decided, in Lobdell v. 
Baker, 1 Mete. (Mass.) 193, that it was not 
necessai-y to allege or prove (hat the defead- 
ant knew the sign-r was an infaot. Wiide, 
.T., in delivering the opinion of the comt, said: 
"A party may render himself ii.nble in an ac- 
tion lor damages to a I'^arty prejudiced by 
a false aflirmation, thuugii not made with 
any fraudulent iureulion." This, it may be 
sakl, is not directly in point, but the only dif- 
ference is in the form of the reineily. The 
principle involved is the same, whether the 



EQUITABLE ESTOPT'EL. 



105 



question Is raised in a suit to recover dam- 
ages for the false representation, or redress 
is souglit by estopping tlie party to prove the 
falsehood of the representation. Both cases 
go on the same genei-al ground that the party 
is responsible for the consequences of his 
false representation. 

There are numerous autliorities thai it is 
not necessary to the estoppel that the decla- 
rations or conduct should be intended to de- 
ceive any particular person or persons; that, 
if they were intended to deceive generally, or 
vyere of such a character, and made in such 
circumstances, that it must have been under- 
stood they were likely to deceive, and any 
person using due diligence was in fact de- 
ceived by them, it is enough. Gregg v. Wells, 
10 Adol. & E. 90; Wendell v. Van Rensselaer, 
1 Johns. Ch. 353; Adams v. Brown, 16 Ohio 
St. 78; Dezell v. Odell, 3 Hill, 221; Quirk 
V. Thomas, 6 Mich. Tii; Mitchell v. Reed, 9 
Cal. 204. 

It has been declared in many cases that 
this equitable estoppel involves a question of 
legal ethics, and applies wherever a party 
has made a representation, by words or con- 
duct, which he cannot in equity and good 
conscience prove to be false; and that this 
kind of estoppel, being a broad doctrine of 
equity, cannot be limited in application by 
the tenns of any narrow legal definition. In 
Canal Co. v. Hathaway, 8 Wend. 483, it 
is said by Sutherland, J., that the party 
is estopped when in good conscience and 
equity he ought not to be permitted to gain- 
say his admission; and in the same case, by 
Nelson, J.: "From the means in which the 
party must avail himself of these estoppels, 
it is obvious there can be no fixed and settled 
rules of universal application." And in De- 
zell V. Odell, 3 Hill, 22.j. Bronson, J., adopting 
the language of Nelson, J., in Canal Co. 
V. Hathaway, adds, "It is a question of eth- 
ics." In Strong v. Ellsworth, 26 Vt. 366, 
Redfield, J., says the doctrine lies at the 
foundation of morals. In Lucas v. Hart, 5 
Iowa, 415, the court holds that: "In these 
estoppels there can be no fixed and settled 
rules of universal application to regulate 
them as in technical legal estoppels; that in 
many, and probably in most, instances, 
whether the act or admission shall operate as 
an estoppel or not must depend on the cir- 
cumstances of the case, though there are 
some general rules which may materially as- 
sist in the examination of such cases." In 
the application of these general rules to that 
case the court decided that the acts and ad- 
missions of the respondent estopped him from 
asserting his title to the property in question; 
that to permit him to do it would be "un- 
conscionable, and conti'ary to that fairness 
and honest dealing which courts of equ;:.7 
seek ever to promote and encourage." 

In Frost v. Saratoga Ins. Co., 5 Denio, 154, 
it is said by Beardsley, C. J., that such an 
estoppel is a question of ethics, and is al- 
lowed to prevent fraud and injustice, and 



exists wherever a party cannot in good con- 
science gainsay his own acts or assertions. 

The case of Preston v. Mann, 25 Conn. 118, 
is strong to the point that this estoppel, de- 
pending on a broad doctrine of equity, cannot 
be governed in application by narrow and 
strict rules of constniction, such as have pre- 
vailed in legal estoppels 

In some, if not in most, of the cases, In 
which it is said that if a party makes repre- 
sentations intending to deceive the party that 
acts on them, the equitable estoppel applies, 
it was not intended, as I think, to lay down 
a rule excluding all cases that did not fall 
within the statement made in reference to 
the facts of the case then under considera- 
tion; that what is said is not to be taken as 
a rule to limit and define the doctrine and 
exclude all other cases. They say, if such 
and such things concur, "this case will fall 
within the doctrine"; but they do not intend 
to say no other cases are within it. For ex- 
ample, in Kinney v. Famsworth, 17 Conn. 
361, Storrs, J., says that "admissions which 
have been the means, designedly, of leading 
others to a particular course of conduct, can- 
not afterwards be conscientiously retracted 
by one who has made them." He could not 
have intended to lay down the rule that one 
would in no case be estopped by a repre- 
sentation not designed to deceive, because 
the same judge, in Preston v. Mann, says: 
"The doctrine is not reduced to the limits of 
any formula," and, "whatever the motive 
may be, if one so acts or speaks that the 
natural consequence of his words or conduct 
will be to influence another to change his con- 
dition, he is legally charged with the intent 
to induce the other to believe and to act on 
that belief, if such proves to be the result." 
So Lord Denman, speaking, in Gregg v. 
Wells, 10 Adol. & E. 90, of his judgment in 
Pickard v. Sears, says: "The principle of 
that case may be stated even more broadly 
than it is there laid down." 

In this state we have several cases where 
the general question has been more or less 
considered. In Wells v. Pierce, 27 N. H. 503, 
the doctrine of equitable estoppel was traced 
to its origin in equity, and it was held that 
if the owner actively encourages the pur- 
chase of his property from another, he will 
be precluded from claiming it, though he 
was not aware of his interest at the time; 
which is clearly in conflict with the notion 
that the representation must be accompanied 
with an intention to deceive. In Davis v. 
Handy, 37 N. H. 65, the doctrine of Wells v. 
Pierce was approved and applied. In the 
recent case of Drew v. Kimball, 43 N. H. 
285, one point directly involved was whether 
it was necessary that the party to be estop- 
ped should intend to deceive and defraud the 
individual to whom the representation was 
made, and who set up the defence; and it 
was held that it was not necessary. Indeed 
it seems to me that it would be trifling with 
a doctrine depending on equity and good con- 



106 



EQUITABLE ESTOrPEL. 



science to hold otherwise. So, if a repre- 
sentation was intended to deceive one man, 
and it In fact deceived and defrauded an- 
other. Then, again, if the representation 
were intended to have one operation, and, as 
it turned out, deceived and defrauded by 
another method not contemplated by the 
party at the time, but still the natural con- 
sequence of the representation, it would be 
quibbling with a doctrine depending for its 
aijplication on the morality of the act to hold 
that the party would not be answerable for 
the consequences of his false and fraudulent 
representation as much as if it had taken 
effect on the party and in the manner intend- 
ed. In a case depending on a question of 
"legal ethics," it would bring down the mor- 
ality of the law to a very low standard to 
hold that a party was not liable for the 
wrong caused by his fraud to one man, be- 
cause the fraud was contrived against an- 
other man. 

In Drew v. Kimball the case did not raise 
the precise point taken in this case. But, on 
a full discussion of the general doctrine, and 
a review of the authorities, the court, adopt- 
ing the hypothetical case put by Tarke, B., 
in Freeman v. Cooke, say: "If, whatever a 
man's intentions may be, he so conducts him- 
self that a reasonable man would take the 
representation to be true, and believe it was 
meant he should act upon it, and he did act 
upon it, as tnie, the party making the repre- 
sentation would be equally precluded from 
contesting its truth. In short, the repre- 
sentations are to be regarded as willful when 
the person making them means them to be 
acted on, or if, without regard to intention, 
he so conducts himself that a reasonable man 
would take the representation to be true, 
and believe it was meant he should act 
on it." 

There have been several other cases in this 
state where this equitable doctrine has been 
considered and applied. Thompson v. San- 
born, 11 N. H. 201; Simons v. Steele, 36 N. 



H. 73; McMahon v. Portsmouth Mut. Fire 
Ins. Co., 22 X. H. 15; Odlin v. Gove, -il N. 
H. 473; Corbett v. Norcross, 35 N. H. 99, 
115; Richardson v. Chickering, 41 N. H. 380, 
385. Though I do not find that the precise 
point taken here for the plaintiff has been 
directly decided in any of our cases, yet the 
genera^ current of our decisions on the sub- 
ject tends to a liberal application of the doc- 
trine for the suppression of fraud and dis- 
honesty, and the promotion of justice and 
fair dealing. No disposition has been shown 
In the courts of this state to treat this equita- 
ble estoppel as odious, and embarrass its ap- 
plication by attempts to confine it within the 
limits of a narrow technical definition. We 
are content to follow where the spirit and 
general tone of these decisions lead; and they 
lead plainly to the conclusion that, where a 
man makes a statement disclaiming his title 
to property, in a manner and under circum- 
stances such as he must understand those 
who heard the statement would believe to be 
true, and, if they had an interest in the sub- 
ject, would act on as true, and one, using 
his own means of knowledge with due dili- 
gence, acts on the statement as true, the 
party who makes the statement cannot show 
that his representation was false, to the in- 
jury of the party who believed it to be true, 
and acted on it as such; that he will be lia- 
ble for the natural consequences of his rep- 
resentation, and cannot be heard to say that 
the party actually injured was not the one 
he meant to deceive, or that his fraud did 
not take effect in the manner he intended. 

Our conclusion is that, on the facts which 
the verdict has established, the plaintiff was 
estopped to show his representation that the 
goods belonged to Charles B. Horn to be 
false, though he did not know that the de- 
fendant Cole had any demand against 
Charles E. Horn, and though he had not Cole 
in his mind as the party whom he meant to 
deceive. 

Judgment on the verdict. 



EQUITABLE ESTOPPEL. 



107 



DICKERSON V. COLGROVE. 

(100 U. S. 578.) 

Supreme Court of the United States. Oct., 
1879. 

Error to the Circuit Court of the United 
States for the Western District of Michigan. 

George W. Lawton, for plaintiff in error. 
M. J. Smiley, for defendant in error. 

Mr. Justice SWAYNE delivered the opinion 
of the court. 

This is an action of ejectment brought by 
Dlckerson and Wheeler. The latter died 
during the progress of the suit. The parties 
agreed in writing to submit the case to the 
court without the intervention of a jury. 
The court found the facts. So far as it is 
necessary to state them, they may be thus 
summarized: Micajah Chauncey owned the 

land in controversy. He died on the 

day of February, 1853, leaving two children, 
Edmund Chauncey and Sarah Kline. They 
were his only heirs at law. He is the com- 
mon source of title of all the parties in this 
litigation. On the 3d of March, 1858, John 
Kline and Sarah, his wife, conveyed by war- 
ranty deed the entire premises to Lowell 
Morton. The deed was duly recorded on the 
6th of March, 1854, and on the 1st of April, 
1854, Lowell Morton entered into possession 
of the premises. He and the defendants have 
ever since been in actual possession, claiming 
to own and hold the property as tenants in 
common. The latter were in possession at 
the commencement of this suit, claiming title 
through conveyances from Lowell Morton. 
Prior to the 1st of April, 1856, Lowell Mor- 
ton learned that Edmund Chauncey was one 
of the children of Mica] ah Chauncey, and 
that he lived in California. Whereupon Low- 
ell Morton procured Eleazer Morton to write 
to Edmund Chauncey to learn whether he 
made any claim to the premises. On the 1st 
of April, 1856, Edmund Chauncey, still living 
in California, addressed a letter to his sister, 
Sarah Kline, then living In Michigan, wherein 
he disavowed, in strong terms, the intention 
ever to assert such a claim. 

The contents of this letter subsequently 
came to the knowledge of Lowell Morton, 
who thereafter conveyed to the defendants 
by warranty deeds. Under these deeds they 
have since held and claimed title, and have 
occupied and improved the property. On the 
9th of July, 1865, Edmund Chauncey convey- 
ed the undivided half of the premises, by 
quitclaim deed, to Orlando B. Dlckerson and 
James Witherell. On the 1st of May, 1868, 
Witherell conveyed all his right, title, and in- 
terest to William W. Wheeler, one of the 
original plaintiffs. The suit was Instituted 
on the 6th of March, 1873. Lowell Morton 
and the defendants had then been In posses- 
sion eighteen years and eleven months. The 
court below held as conclusions of law that 
the action was barred by the statute of lim- 



itations of Jlichigan of 1863, and by an es- 
toppel in pais, and gave judgment according- 
ly. The plaintiff thereupon sued out this 
writ of error. 

Both the conclusions of law are relied upon 
as errors for the reversal of the judgment. 
Our remarks will be confined to the point of 
estoppel. 

This defence Is founded upon the letter of 
Edmund Chauncey. The contents of the let- 
ter of Morton, to which it refers, are not 
given In the finding of facts, but the sub- 
ject of that letter and the Inquiry which it 
made appear clearly in the letter of Chaun- 
cey. He said: "Mr. Morton wrote me a let- 
ter. He wanted to know If I intended to 
claim any of the Conger farm" (meaning the 
premises in controversy). "You can tell Mr. 
Morton for me, he need not fear any thing 
from me. Thank God, I am well off here, 
and you can claim all there. This letter will 
be enough for him. I intended to give you 
and yours all my property there, and more 
if you need it." The phrase, "I Intended to 
give," etc., implies that he knew his half of 
the farm had already been sold to Morton, and 
that he could not, therefore, give his sister, 
to whom the letter was addressed, any part 
of that property. It does not appear that 
there was any other property held by them as 
coparceners. He says further, that he in- 
tended to give her more if she needed it. 
AU this was communicated to Lowell Morton. 
What was the effect upon him? He was 
lulled into security. He took no measures to 
perfect his title, nor to procure any redress 
from the Klines, who had conveyed and been 
paid for the whole of the property while they 
owned but the half. On the contrary, he 
gave thereafter deeds of warranty to all the 
defendants, — who are sixty-two in number, — 
and he and they occupied and Improved the 
premises down to the commencement of this 
suit. Between that time and the date of the 
letter was a period of nearly seventeen years. 
What improvements were made and how far 
the property had risen in value are not dis- 
closed, nor does It appear what stimulated 
Chauncey to violate his promise and com- 
mence this attack on the defendants. 

The estoppel here relied upon is known as 
an equitable estoppel, or estoppel in pais. 
The law upon the subject is well settled. 
The vital principle Is that he who by his lan- 
guage or conduct leads another to do what 
he would not otherwise have done, shall not 
subject such person to loss or Injm'y by dis- 
appointing thfe expectations upon which he 
acted. Such a change of position is sternly 
forbidden. It Involves fraud and falsehood, 
and the law abhors both. This remedy Is al- 
ways so applied as to promote the ends of 
justice. It is available only for protection, 
and cannot be used as a weapon of assault. 
It accomplishes that which ought to be done 
between man and man, and Is not permitted 
to go beyond this limit. It is akin to the 
principle involved in the limitation of ac- 



108 



EQUITABLE ESTOPPEL. 



tious, and does its work of justice and re- 
)iosp where the statute cannot be invoked. 
Here, according to the finding of the court, 
the time of adverse possession lacked but a 
year and a month of being twenty years,— 
when it is conceded the statutory bar would 
have been complete. 

In Faxton v. Faxon, 28 Jlich. 159, a mort- 
gagee holding several mortgages prevailed on 
a son of the deceased mortgagor, then intend- 
ing to remove to a distance, to remain on the 
premises and support the family, by assuring 
him that the mortgages should never be en- 
forced. The son supported the family, and 
the property grew in value under his tillage. 
After the hiiisf of several years the mort- 
gagee proceeded to foreclose. He was held 
to be estopped by his assurances upon which 
the son had acted. The court said: "The 
complainant may have estopped himself with- 
out any positive agreement, if he intentional- 
ly led the defendants to do or abstain from 
doing any thing involving labor or expendi- 
ture to any considerable amount, by giving 
them to understand they should be relieved 
from the burden of the mortgages. In Hark- 
ness V. Toulmin, 25 Mich. SO, and Truesdale 
V. Ward, 24 Mich. 117, this principle was ap- 
plied, in the former case, to the extent of de- 
stroying a chattel mortgage, and in the lat- 
ter, of forfeiting rights under a land con- 
tract, where parties were led to believe they 
were abandoned. There is no rule more nec- 
essary to enforce good faith than that which 
compels a person to abstain from asserting 
claims which he has induced others to sup- 
pose he would not rely on. The rule does 
not rest on the assumption that he has ob- 
tained any personal gain or advantage, but 
on the fact that he has induced others to act 
in such a manner that they will be serious- 
ly prejudiced if he is allowed to fall in carry- 
ing out what he has encouraged them to ex- 
pect." Cooley, J., was inclined to doubt the 
sufficiency of the proof, but said, finally: 
"His" (the mortgagee's) "assurances have un- 
doubtedly been relied upon and acted upon by 
the defendants, and, considering the great 
lapse of time without any claim under the 
mortgages on the part of the complainant, I 
am not disposed to dissent from the conclu- 
sion of my Brethren." The case before us 
arose also in Michigan. In Evans v. Snyder, 
04 Mo. 516, the heirs assailed an adminis- 
trator's sale. No order of sale could be 
J'ound. This was held to be a fatal defect. 
But the supreme court of the state held that 
where they stood silently by for years, while 
the occupant was making valuable and last- 
ing improvements on the property, and re- 
deeming it trom the lien of the ancestor's 
debts, they would be estopped from after- 
wards asserting their claim. Here, as by 
Judge Cooley, stress is laid upon the lapse of 
time. This is also a feature of the case in 
hand. 

Other authorities to the same effect are 
very numerous. They may be readily found. 



It is unnecessary to extend this opinion by re- 
ferring to them. 

We think the facts disclosed in the record 
make a complete case of estoppel in pais. 

But it is said this objection to the plain- 
tiff's claim is not available at law, and must 
be set up in equity. 

"This is certainly not the common law. 
Littleton says: 'And so a man can see one 
thing in this case, that a man shall be es- 
topped by matter of fact, though there be no 
writing, by deed or otherwise.' Lord Coke, 
commenting hereon, gives an instance of es- 
toppel by matter in fact,— this very case of 
partition. Co. Litt. 356, § 667. And such an 
award has been held sufficient to estop a 
party against whom ejectment was brought. 
Morris v. Rosser, 3 Bast, 15." Brown v. 
Wheeler, 17 Conn. 345, 353. 

In City of Cincinnati v. White's Lessee, 6 
Pet. 431, the proprietors of the city plat, in 
1789, dedicated the ground between Fi'ont 
street and the Ohio river to the public for 
commercial and other purposes. The legal 
title had not then emanated from the govern- 
ment of the United States. In this state of 
things the statute of limitations does not run. 
White long subsequently acquired the legal 
title and brought ejectment for the premises. 
This court said (page 441): "This is a pos- 
sessory action, and the plaintiff, to entitle 
himself to recover, must have the right of 
possession; and whatever takes away this 
right of possession will deprive him of the 
remedy by ejectment. Adams, Ej. 32; 
Starkie, part 4, 505-507." This Is the rule 
laid down by Lord Mansfield, in Atkyns v. 
Hoarde, 1 Burr. 119. "Ejectment," says he, 
"is a possessory remedy, and only competent 
where the lessor of the plaintiff may enter, 
and every plaintiff in ejectment must show a 
right of possession as well as of property." 
If the plaintiff in the present case was not 
entitled to possession, how, according to this 
authority, could he recover? If he had re- 
covered, and a court of equity would have en- 
joined him from executing the judgment by a 
writ of possession, we ask, again, how could 
he recover in this action? Is not the conces- 
sion that relief could be had In equity fatal to 
the proposition we are considering? In Stod- 
dard V. Chambers, 2 How. 284, it was said by 
this court: "On a title by estoppel, an action 
of ejectment can be maintained." We do not 
overlook the fact that a land claim had been 
conveyed before it was confirmed by an act 
of congress to the assignor and his legal rep- 
resentatives. It was held that on such con- 
firmation the legal title became vested in the 
former, "and inured, by way of estoppel, to 
his grantee and those who claimed by deed 
under him.'' In that case, as in this, there 
was no formal transfer of the title. The 
transfer was made, as under a statute of lim- 
itations, when the bar is complete, by opera- 
tion of law. Leffingwell v. Warren, 2 Black, 
599. Why may not a like transfer be held to 
have been made in this case? The reason 



EQUITABLE ESTOPPEL. 



109 



given for the rule of inurement and estoppel 
by virtue of conveyances is, that it avoids 
circuity of action. Does not the same con- 
sideration apply, with equal force, in cases 
of estoppel in pais? Why is it necessary to 
go into equity in one case and not in the 
other? 

It has never been held that the statute of 
frauds applies to cases of Inurement, and it 
has been conceded that It does not affect 
cases of dedication. Where is the difference 
in principle in this respect between those 
cases and the one before us? But here this 
point cannot arise, because the promise relied 
upon was In writing. In City of Cincinnati v. 
White's Lessee, supra, this court, speaking of 
the dedication there in question, said, "The 
law considers it in the nature of an estoppel 
in pais, which precludes the original owner 
from revoking such dedication," and that a 
grant might have been presumed, "if that 
had been necessary, and the fee might be 
considered in abeyance until a competent gran- 
tee appeared to receive it; which was as ear- 
ly as the year 1802, when the city was incor- 
porated." Here there was a grantee capable 
of taking the fee all the time from the date 
of tlie letter. The common law is reason 
dealing by the light of experience with hu- 



man affairs. One of its merits is that it has 
the capacity to reach the ends of justice by 
the shortest paths. 

The passage of a title by inurement and es- 
toppel is its work without the help of legis- 
lation. We think no sound rensou can be 
given why the same thing should not follow 
in cases of estoppel in pais where land is con- 
cerned. 

This subject has been carefully examined 
in Bigelow, Estop, pp. 533, 537. The learn- 
ed author comes to no final conclusion wheth- 
er in cases like this the defence may be made 
at law, or whether a resort to equity is neces- 
sary. The former is our view. Whether the 
title passed or not, the fact that the plaintiff 
was not entitled to possession of the prem- 
ises was fatal to the action. 

Chauncey conveyed to the plaintiff in error 
by deed of quitclaim. He is not, therefore, 
a bona fide purchaser. Piatt v. Oliver, 3 
How. 333; May v. Le Claire, 11 Wall. 217. 
Morton and the defendants were in posses- 
sion. For both these reasons, he took what- 
ever title he acquired subject to all the rights, 
legal and equitable, of Morton and of the de- 
fendants, who deraigned their titles from the 
latter. 

Judgment atfirmed. 



110 



EQUITABLE ESTOPPEL. 



CONTINENTAL NAT. BANK v. NA- 
TIONAL BANK OP COM- 
MONnVEALTH. 

(50 N. Y. 575.) 

Court of Appeals of New York. 1872. 

Action to recover $63,062.50 paid by plain- 
-ift' upon a clieek dated May 1, 1860, drawn 
upon plaintiff by John Ross to the order of 
J. S. Cronise & Co. The headnote states the 
facts. Judgment for plaintifC. 

Luther E. Marsh, for appellant. James 
Emott, for respondent. 

FOLGER, J. The jury have found to be 
a forgery, the veriting on the check, which 
purports to be a certification thereof by the 
plaintiff's teller. They have also found that 
the teller, when resorted to, in effect pro- 
nounced it genuine. 

That the plaintiff would be bound by the 
act of its teller, had he in fact certified the 
check, is settled. Farmers' & Mechanics' 
Bank v. Butchers' & Drovers' Bank, 16 N. 
Y. 125, 69 Am. Dec. 678; 14 N. Y. 623. Nor 
do we doubt that an admission by him that 
it was genuine, made on the presentation to 
him of the counterfeited certification and In- 
quiry put, also binds the plaintiff. We can 
see no difference in result, and effect upon 
others dealing with the check on the strength 
of that admission, between writing "Timp- 
son, teller," signifying good, upon a worth- 
less check, and declaring that the words 
"Timpson, teller," already there, were writ- 
ten there by him. In the one case they are 
his own, and signify good. In the other he 
adopts them as his own, and so malies them 
his own, and tlie.y signify good. This was the 
effect of his admission. And see 53 Me. 103, 
and Bank v. Crafts, 4 Allen, 447. 

There seems to be no dispute but that the 
defendant takes the place of Cronise & Co., 
and may avail itself of any defense to the 
action of the plaintiff which that firm of 
brokers could have made. 

The question then arises, is the plaintiff, 
by the other facts presented, estopped from 
maintaining that in truth the certification 
was a forgery, and the admission of its tel- 
ler an innocent mistake? 

There is no disagreement as to the gen- 
eral definition of an estoppel in pais. It is 
agreed that tliere must have been some act 
or declaration of the plaintiff or of its agent 
to the defendant's assignors, which so af- 
fected the conduct of the latter to their 
injury, as that it would be unjust now to 
permit the plaintiff to set up the truth of 
the case to the contrary of its mistaken act 
or declaration. 

But the plaintiff insists that there are cer- 
tain limitations to be put upon this gener- 
ality. 

1st The plaintiff claims that it is neces- 
sary that its act or declaration must have 
been made to mislead. 



To this proposition the plaintiff cites Plck- 
ard V. Sears, 6 Adol. & E. 469; 33 Eng. Com. 
Law, 115, where the court say: "Where one 
by his words or conduct willfully causes an- 
other," etc. But this word "willfully," used 
in the decision in that case, has subsequent- 
ly received judicial comment and limitation. 
Thus in Freeman v. Cooke, 2 Exch. 654, the 
court say: "By the term 'willfully,' how- 
ever, in that rule, we must understand, if, 
whatever a man's real Intentions may be, 
he so conducts himself that a reasonable 
man would take the representation to be 
true, and believe that it was meant that he 
should act upon it, and he did act upon It 
as true, the party making the representa- 
tion would be equally precluded from con- 
testing its truth; and conduct by negligence 
or omission, where there is a duty cast upon 
any person by usage of trade or otherwise 
to disclose the truth, may often have the 
same effect." 

So in Cornish v. Abington, 4 Hurl. & N. 
549, Pollock, C. B., says: "The jury having 
found that the defendant, whether inten- 
tionally or not, led the plaintiff to form an 
opinion that he was dealing with the defend- 
ant and induced him to furnish goods to the 
defendant, the defendant must pay him for 
them." And referring to Freeman v. Cooke, 
and Pickard v. Sears, supra, the learned 
chief baron remarks to the effect that the 
word "willfully" means nothing more than 
"voluntarily," and he holds that if the rep- 
resentation was made voluntarily, though 
the effect upon the hearer was produced un- 
intentionally, the same result would follow; 
and that if a party uses language which, in 
the ordinary course of business and the gen- 
eral sense in which words are understood, 
conveys a certain meaning, he cannot after- 
ward say that he is not bound, if another 
so understanding it has acted upon it. Of 
course, this general language here extractecJ 
should be read in connection with the fact" 
of that case to prevent carrying the force o' 
these words too far. But it is shown that 
"willfully" and "voluntarily," as used in the 
definition of an estoppel, are convertible. 

In Manufacturers' & Traders' Bank v. 
Hazard, 30 N. Y. 226, it is said that it is aot 
necessary to an equitable estoppel that the 
party should design to mislead. Be this dic- 
tum or rule, we do not find that it has been 
in this state disputed or questioned. 

In In re Bahia & S. P. Ry. Co., L. R., 3 
Q. B. 584, it is held that if a representation 
is made with the intention that it shall be 
acted upon by another, and he does so, there 
is an estoppel from denying the truth of 
what was represented to be the fact, and 
that the case is within the principle of Pick- 
ard V. Sears, as explained by Freeman v. 
Cooke, both supra. 

The word "willful" does not mean malo 
animo, but so far willfully that the party, 
making the representation acted upon, means 



EQUITABLE ESTOPPEL. 



Ill 



that it shall be acted upon in that way. Per 
Compton, J., in Howard v. Hudson, 2 Ell. 
& Bl. 1. 

And we hold that there need not be, upon 
the part of the person making a declaration 
or doing an act, an intention to mislead the 
one who is induced to rely upon it. There 
are cases in which parties have been es- 
topped where their acts or declarations have 
been done or made in ignorance of their own 
rights, not knowing that the law of the land 
gave them such rights. Here, certainly, there 
could be no purpose to mislead others, for 
there was not the knowledge to inform the 
purpose, and both parties were equally and 
innocently misled. Storrs v. Barker, 6 
Johns. Ch. 166, 10 Am. Dec. 316. Indeed, 
it would limit the rule much within the rea- 
son of it, if it were restricted to cases where 
there was an element of fraudulent purpose. 
In very many of the cases in which the rule 
has been ai^plied, there was no more than 
negligence on the part of him who was es 
topped. And it has long been held, that 
where it is a breach of good faith to allow 
the truth to be shown, there an admission 
will estop. Gaylor v. Van Loan, 15 Wend. 
308. There are decisions where the rule has 
been stated as the plaintiff claims it. We 
have looked at those cited by it. It was not 
necessary to the conclusions of the court in 
those, that such restriction should be put 
upon the rule, and we do not think tliat the 
language employed was used with the inten- 
tion of making such a limitation, for the 
facts of the case did not require it. 

2d. The plaintiff further claims that Cron- 
ise & Oo. parted with the gold and took the 
check before the declaration of the teller 
was made known to them, and that before 
an estoppel can be insisted upon, it must ap- 
pear that they acted in reliance thereupon, 
or altered their position In consequence 
thereof, or parted with some value on the 
faith therein. 

The fair result of the testimony is, that 
Ross left the office of Cronise & Co. before 
the return of their messenger to it from the 
bank, and Cronise & Co. had then delivered 
the gold checks. They did not act, after his 
return, relying upon the declaration of the 
teller which the messenger brought to them. 

Assuming, for the present, that they did 
in reliance upon that declaration refrain 
from action and left untaken any measures 
for the aiTest of Ross or the stoppage of 
payment on the checks he had received; as- 
suming that it is reasonably probable, that 
if they had been told by the plaintiff the 
reverse of what they were told, they would 
have acted and would have taken those 
measures; assuming that it is reasonably 
probable that action and such measures 
would have prevented the whole or some 
part of the damage which befell, can it be 
held that the conduct of Cronise & Co. was 
so affected to their injury by the declara- 
tion of the plaintiff as that the defendant 



may set up the declaration in estoppel of the 
plaintiff? The proposition contained in this 
query we understand the plaintiff to resist. 
And this, because the act, the affirmative 
act, had been done which changed the posi- 
tion of Cronise & Oo. toward Boss and the 
transaction before the declaration was made 
known to them, and had not been done in 
reliance upon it. And this is a denial, that 
after a declaration is made and is relied 
upon, an omission thereby induced to act 
and to take such measures as will arrest an 
impending evil, and an injury resulting from 
such omission, can be made available as an 
estoppel. 

In Howard v. Hudson, supra, Lord Camp- 
bell, Ch. J., recognizes the existence of the 
principle, that doing an act and omission to 
act are the same. And see Helme v. Insur- 
ance Co., 61 Pa. 107, 100 Am. Dec. 621. In 
Knights V. Wiffln, L. R., 5 Q. B. 660, the per- 
son who relied upon the declaration had be- 
fore it was made and not in reliance upon it, 
paid his money for property not delivered, 
but after it was made, relying upon it, took 
no active course of conduct, remaining con- 
tent and passive. Had the declaration been 
the reverse of what it was, which would 
then have been true, he might have taken 
active measures tending to retrieve his posi- 
tion. He rested satisfied in the belief, as 
a reasonable man, that the property had 
been passed to him as agreed. And he was 
damaged. The right of estoppel was there 
upheld, and it was maintained upon the 
ground of the plaintiff relying upon the 
statement and taking no steps further, and 
of his abstaining from active measures of re- 
covery in consequence of the statement. It 
was there held, that acquiescent reliance 
upon the defendant's statement was an alter- 
ation of the plaintiff's position. 

In Bank v. Keene, 53 ^Me. 103, the ques- 
tion was presented. The plaintiff there held 
a note purporting to have been signed by 
the defendant. Hearing that the same was 
forged, the plaintiff asked the defendant, 
who, looking at the note, admitted the signa- 
ture to be genuine. The plaintiff, in reli- 
ance on that admission, refrained from tak- 
ing any proceedings against him who passed 
the note to it, so as to secure payment from 
him. The insti'uctions to the jury were: 
That if the plaintiff, relying upon the de- 
fendant's admission, was induced to refrain 
from obtaining security by arrest of the one 
passing the note upon it, or by attachment 
of his property, and thereby sustained an 
injury, the defendant would be estopped from 
denying his signature. This instruction was 
declared by the court on review to be in 
harmony with the principles applicable to es- 
toppels in pais. And see 15 Wend. 308. and 
Brown v. Sprague, 5 Denio, 545. 

These cases appear to us to lay down a 
sound rule. It must be that the conduct of 
men. which may be influenced by the dec- 
larations of those with whom they deal, is 



112 



EQUITABLE ESTOPPEL. 



not ((iiiliLied to that which is shown by 
iithrmative and positive acts following upon 
and induced by those declarations. Conduct 
is not alone that which is active, positive 
and affirmative. Conduct, as limited to this 
inquiry, is the reserve of one's own powers 
of person and property, and of those means 
of help which can be summoned from friend- 
ly or accommodating sources and from the 
tribunals and officers of justice, and is as 
often forbearance of their use and quies- 
cence and contentment ^\'ith affairs as they 
ure, as action designed to change affairs. 
And such quiescence and content, induced 
by false or erroneous statement, may be 
quite as damaging as any result from ac- 
tion. It is as bad to fail to recover property 
gone, when with the knowledge of an exist- 
ing fact it might have been retrieved, as it 
is to lose it. And so it is as damaging to 
rely in quiet upon an untrue statement, to 
the neglect of using the means of recovery, 
as it is to rely upon an untrue statement, 
and by action thereon meet with loss irrep- 
arable. To hold otherwise, would be to as- 
sert that the law makes a difference between 
damage received by action and omission to 
act, in circumstances precisely similar, save 
in these elements. When an act produces 
conduct from which flows injury, it cannot 
matter whether that conduct be affirmative 
or negative, active or quiescent. 

Vi'e assumed, for the purpose of the pre- 
vious consideration of one branch of the sub- 
ject, that Cronise & Co. did, in reliance upon 
the declaration of the plaintiff, refrain from 
action and leave untaken any measures. 
The jury have so found the fact, and the 
finding is sust.-iined by the testimony. We 
also assumed that it was reasonably prob- 
able that if they had been told the truth by 
the plaintiff they would have acted, and have 
taken measures which would have prevented 
the whole or some of the injury which be- 
fell. The jury have found that this assump- 
tion is well founded. 

Tliough, as is conceded herein, Ross left 
the office of the brokers before their messen- 
ger returned, he had left but a very short 
time; a time so short that had the plaintiff 
declared the cei'tiflcation a forgery and the 
check worthless, there was ground for the 
jury to find that there was time for the 
broker's clerk, with his speed of foot, to have 
gone from the bank of plaintiff to the office 
of Speyers, there have learned the falsity of 
Ross' assertion of a delivery of gold to Spey- 
er, and thence to the office of Cronise & Co., 
and have delivered his message soon enough 
for measures to have been decided upon and 
taken for the stoppage of the payment of 
the checks at the Bank of New York. We 
leave out of view for the present the checks 
iqoon the sub-ti'easury. 

Nor was it a strained, unnatural nor unjus- 
tified inference for the jury to make that the 
clerk would so have done, and that Cronise 



& Co. would have taken such measures and 
made stoppage of payment. It was but ap- 
plying to the facts of the case and to the 
position of the parties in this transaction, the 
common knowledge of human nature and its 
workings under powerful incentives, and at 
a particular spot in the state and a particu- 
lar hour of the day when those incentives 
are pressed in their greatest strength. 

And from these findings thus authorized, 
it was a legitimate conclusion that Cronise 
& Co. suffered injury by the declaration to 
them of the plaintiff. 

And if there is nothing else in the case 
the verdict and judgment are to be sus- 
tained. 

The plaintiff insists however that the 
learned judge at circuit made several errors 
in his refusals to charge as requested, and 
in the charge which he delivered to the jury. 

y\'e will notice all of these instances which 
are indicated upon the points handed up, 
alluding to the requests by the numbers 
given to them in the points. 

The second, third and fifth requests are 
already covered by what we have said. 

The seventh request is: "That the jury 
cannot speculate upon what might have been 
done or attempted by Cronise & Co. after the 
delivery by them of the gold certificates or 
gold checks to the person calling himself 
.John Ross, had they been apprised that the 
certificate was a forgery after such deliv- 
ery." 

If by the word "speculate," which is the 
word of controlling meaning in the request, 
was meant to guess, or to reason to practical 
results from unproven prem.ises, doubtless 
the juiy had no right so to do. And there 
would have been no error in the learned 
judge if he had so told the jury. But it 
would have been in the nature of an abstract 
proposition not necessarily involved in not 
growing out of the particular case. Hence 
it was not error for him to decline to charge, 
except as he did thereafter charge. He did 
charge them that Cronise & Co. to set up an 
estoppel must have had time to stop pay- 
ment of the gold; that the circumstances 
must have been such as that they could have 
done it; that they must have occupied such 
a relation to the transaction as that they 
could with reasonable diligence have arrest- 
ed the crime in its consummation and have 
secured the gold; that they must have still 
stood in a position where they could have 
corrected any act and could have saved the 
gold. This put the jui-y upon the proper in- 
quiry. Nor can we concede that at the close 
of the trial the question of estoppel had be- 
come one of law only and for the court, as 
is claimed by the learned counsel for the 
plaintiff. He admits that there were two 
questions yet for the jury; whether the cer- 
tification was forged or not, and whether its 
genuineness was admitted. And surely it 
was still a question of fact how much rela- 



EQUITABLE ESTOPPEL. 



113 



tlve time had been spent by the respective 
actors from the moment Ross left the office 
of Cronise & Co. until the payment of the 
checks at the Bank of New York, and con- 
sidering the relative positions of the differ- 
ent business places, whether in that lapse of 
time Cronise & Co. under all the circum- 
stances could have made effectual interpo- 
sition to stop payment of the checks deliv- 
ered to him, or have made any successful 
effort at recaption of the gold if he had re- 
ceived it. 

It is claimed that the learned judge erred 
in charging the jury that the delivery of the 
gold checks was not in law a delivery of the 
gold. 

The points call our attention to that part 
of the charge in which the language of the 
judge is: "The delivery of these gold checks 
on the part of Mr. Cronise, it Is insisted 
upon, is in law a delivery of the gold. I 
think that it was not." 

It is proper to see in what connection this 
was said. For standing alone or applied to 
any and every case of a delivery of checks, 
it might be in some of them erroneous. 
What was the practical application of it for 
the minds of the jm-y? The topic then un- 
der the learned judge's and the jury's atten- 
tion was whether Cronise & Co. could, un- 
der the facts of the case, in any proper view 
of them, be considered as injured by the 
plaintiff's declaration; and the judge pre- 
cedes the remark excepted to by saying: "If 
Cronise, in point of fact, had done all that 
could be done on his part at that time, and 
had put himself in such a position that this 
admission could not affect his action to his 
prejudice, then the principle of estoppel 
would have no application to the case so 
far as he is concerned." Then he tells them, 
in the remark excepted to, in effect: It is 
insisted that the delivery of these checks 
was a delivery of the gold, in law, so that 
he could not reclaim it; and if he could not 
reclaim it then he was not injured by the 
declaration, for there was nothing he could 
do after such delivery. We may infer, prop- 
erly, from the words "it is insisted," that all 
this had passed before the jury in the argu- 
ment of counsel, either to the jury or to the 
court, and was a reference thereto. If it 
should be admitted to be technically inaccu- 
rate as a statement of law, applicable to all 
cases, it did not tend to mislead on this oc- 
casion; and for the purpose for which it 
was uttered, it was correct. Doubtless the 
handing over of the checks was a delivery 
of the gold to fulfill the contract for the sale 
of it, in accordance with the rules of the 
brokers' board under which the original par- 
ties to the transaction acted. But it was 
not such a delivery as prevented Cronise & 
Co. from Intercepting the checks at the 
counter of the Bank of New York, and there 
forbidding and stopping payment of them. 
HUTCH.& BUNK.EQ.-8 



And this is true, whether the gold be dol- 
lars, in which to make payment of a debt 
payable, or a commodity to be ti'ansferred 
in satisfaction of a contract for the sale and 
delivery of a chattel. The scope of the re- 
marks of the court to the jury was that not- 
withstanding Cronise & Co. had put these 
checks into the hands of Ross, still they 
could stop payment of them at the place of 
payment. And, so considered, it did not mis- 
lead the jury from the question at issue, or 
give them an erroneous rule of law by which 
to dispose of it. 

The plaintiff claims that even if it should 
be held that it is estopped to show the truth, 
as to so much of the gold as was paid to 
Ross over the counter of the Bank of New 
York, it should not be as to so much of it 
as was represented by the checks on the sub- 
treasury. And if these checks were alone 
concerned In the transaction, it might be 
said with force that Ross could have as soon 
got payment on them and clear escaped, as 
Harmon, the clerk, could have made his er- 
rand and returned. But these checks are 
connected with those on the Bank of New 
York; and Ross did not depart with the 
avails of the one until he had got the avails 
of the othei'. If Ross first went to the sub- 
treasury and obtained payment, then he aft- 
erward went to the Bank of New York; 
and he was there, or to and from there, 
from ten to fifteen minutes; and this op- 
portunity for stopping payment of the checks 
at the Bank of New York was also oppor- 
tunity for arrest of his person, and obtaining 
from him the gold got at the sub-treasury. 
And if it be said that he may have passed 
away the checks on the sub-treasury in the 
street to a confederate, still he was at the 
Bank of New York to be seized, and the 
coercion of arrest to be used upon him. In 
53 Me. 103, arrest is named as one of the 
means of obtaining security which the plain- 
tiff had let slip; and in L. R., 5 Q. B. 660, 
Blackburn, J., goes so far as to say that it 
needs not that it should appear that any 
benefit would result from the attempt to se- 
cure payment, but that the injured party 
had the right to make that attempt; and 
losing the exercise of the right by his reli- 
ance on the declaration, the declarant was 
estopped. We need not go so far here. Ar- 
rest and detention of the swindler is a pow- 
erful means in coercing restoration; and ar- 
rest and detention were as probably in the 
power of Cronise & Co. as the stoppage of 
the payment of the checks at the Bank of 
New York. 

The judgment appealed from should be 
affirmed, with costs to the respondent. 

All concur except RAPALLO, J., who con- 
curs as to all but the sub-treasury gold. 
Judgment affirmed. 



114 



EQUITABLE ESTOPPEL. 



GALBRAITH et al. v. LUNSPORD.i 

(9 S. W. 365, 87 Tenn. 89.) 

Supreme Court of Tennessee. Oct. 18, 1888. 

Appeal from chancery court, ECnox county; 
Henry R. Gibson, Chancellor. 

Ejectment by J. P. Galbraith and others 
against B. F. Lunsford; the controversy be- 
ing as to the location of a division line. In 
the plot referred to by the arbitrator the line 
from F to E represents the original bound- 
ary, and the one which complainant now 
seeks to have established as the true one. 
The line from O to P represents the bound- 
ary as recognized for many years, and al- 
leged by defendants to have become the 
boundary by estoppel. Defendant had judg- 
ment and complainant appealed. 

Lnckey & Yoe and Pickle & Turner, for 
complainants. Jesse L. Rogers, for respond- 
ent. 

FOLKES, J. This is an ejectment bill, 
the disposition of which was dependent upon 
a question of boundary. After answer and 
proof, the cause was submitted to Mr. Je- 
rome Templeton, a solicitor of this court, as 
an arbitrator, who was "to hear and decide 
the same according to the law and the evi- 
dence." The award was to be in writing, 
and was to be made the decree of the court. 
The arbitrator presented his award, wherein 
was stated his findings of fact and of law, 
adjudging that the bill should be dismissed. 
Complainants excepted to the award, upon 
the ground that the arbiti'ator manifestly 
undertook, as he was required by the sub- 
mission, to decide the case according to law; 
but that he had misconceived the law, and 
determined the case contrary thereto, upon 
the facts as found by him. The chancellor 
overruled the exceptions, and entered a final 
decree, making the award the judgment of 
the court. Complainants have appealed, as- 
signing as error the action of the court in 
refusing to set aside the award, and in en- 
tering decree thereon. Under the submission 
the arbitrator was judge of the facts and 
the law, and was not required to give the 
grounds of his decision; in which event it 
would have been presumed that he had de- 
cided according to law. But, having stated 
his findings of fact, it was proper for the 
•eoui't to determine, on the exceptions pre- 
sented, whether the conclusions of law an- 
nounced by the arbitrator were warranted by 
the facts as found in a case where, by the 
terms of the submission, the award was to 
be in accord with the law. Powell v. Riley, 
15 Lea, 153. The proof is not in the record, 
having properly been omitted, inasmuch as 
no question was made — if, indeed, any could 
have been made — as to the correctness of the 
conclusions of fact reached by the arbitrator. 

1 Upon the subject of equitable estoppel gen- 
erally, see note to this case in 1 L. R. A. &22- 
524. 



We are therefore to consider only the ques- 
tion propounded in the exception to the 
award, to wit, that the deductions of law 
upon the facts as found are contrary to law. 

The complainants, in support of their ex- 
ceptions in the court below, now advance 
the following propositions in their assign- 
ments of error in this court: (1) "A line 
which could be easily ascertained by survey, 
and which had been known, and was lost or 
overlooked by mutual mistake, was and Is 
not a doubtful line, that could be agreed 
upon or fixed, or become the true line, and 
binding by recognition, because void under 
the statute of frauds." (2) "Recognition of 
a line under a mistake of fact, where it was 
mutual, and either could have discovered the 
mistake by survey or otherwise, is not bind- 
ing on either party, and neither party can 
set up the mistake against the other, by way 
of estoppel or otherwise; as mistake is as 
much that of one as the other, and fault, if 
any, is equal; and, besides, one's admission, 
made under mistake, will be relieved against 
in equity, more especially when mistake is 
mutual." (3) "Recognition of a line, not the 
true one, will not divest title to land out of 
a married woman nor minor, by estoppel or 
otherwise, as a married woman cannot be 
divested or part with title to land in that 
way; but more especially when it was by 
mistake of fact, as well upon the part of her 
adversary as that of her own, and when 
either could have easily discovered the mis- 
take; nor is such married woman or de- 
scendant estopped to set up the truth, and 
recover accordingly; and more especially in 
a court of equity." 

Robbed of their verbiage, the assignments 
of error are to the effect (1) that the line or 
boundary, under the facts as foimd by the 
arbitrator,— there being, as assumed by the 
assignments, no bona fide doubt, as to the 
true line, entertained by both parties,— was 
not such a doubtful boundary as could be 
established by parol or acquiescence. (2) 
That the doctrine of equitable estoppel does 
not apply at all to the facts as found. (3) 
And, if applicable, it cannot be effectual, as 
against married women. 

Before disposing of these propositions, let 
us see what are the findings of the arbitra- 
tor, as shown by the award itself. We 
quote: 

"Without going into the details of the 
proof, I find as follows: 

"(1) The south boundary line of grant No. 
18,417, to Wm. Cox, issued October 3, 1833, 
Is the line from F to E in plot (Exhibit A) 
to the deposition of F. W. Galbraith. I fur- 
ther find that, as an original proposition, the 
north boundary line of the 250-acre tract— 
Wm. Cox to Jacob Pate, September 22, 1814 
—was the line from I to T, on same plot; 
and in 1833, when said grant was issued, the 
two tracts adjoined the lines here above de- 
scribed,— being the same as far as the latter 
extended, and being the dividing line of the 



EQUITABLE ESTOPPEL. 



115 



tracts. I add that, If I am mistaken as to 
the true south boundary of said grant, the 
result would be the same, because the deed— 
Geo. M. Combs to Wm. Cox, February 10, 
1814— covered both tracts, and both parties 
to this suit derive title from Wm. Cox; and 
I am convinced the north boundary line of 
the 250-acre tract Is the line I to T; that is, 
if not under said grant, certainly under the 
Combs deed, so far as these parties are con- 
cerned, Wm. Cox ov^ned the land in contro- 
versy. 

"(2) I And that somewhere between Au- 
gust 11, 1846, and March 28, 185T,— that is, 
while Presley S. Chesher owned the 250- 
acre tract, or prior to August 11, 1846,— 
said dividing line was lost, or at least its 
location became doubtful. As a consequence, 
Chesher, between the point, I, and the New 
Market road, on said plot, cleared and in- 
closed the land up to and along the line from 
O to P on said plot, being the disputed line, 
as defendants claim It. Chesher did this 
under a claim of right, which, I infer from 
the circumstances, he thought that was his 
line. There is a marked line there, not as old 
as the line from F to E, but still an old line. 
Further, B. F. McFarland and wife, Sarah 
M. L. McFarland, a daughter, and the ven- 
dee of Wm. Cox, made the same mistake. 
They either forgot or never knew where the 
true dividing line was, and they clearly rec- 
ognized the line from O to P as the dividing 
line between them and Chesher. I find no 
evidence that Mrs. McFarland ever recog- 
nized said last-named line before her mar- 
riage. The deed to her from her father, con- 
taining the boundaries of said grant, is dat- 
ed April 16, 1841, and conveys to her by her 
maiden name. Her marriage was subse- 
quent, but the date does not appear. On one 
occasion, while John B. Hopkins owned the 
82-acre tract, being the northern portion of 
the 250 acres,— that is, after November 3, 
1866, and prior to 1869, when Mrs. McFar- 
land died,— she and John E. Hopkins went 
along the Chesher fence, along the line from 
O to P, talking about a trade as to Mrs. 
McFarland's land north of said line. She 
then recognized said line as the dividing line 
between her and Hopkins. This is cited as 
showing the recognition of said line, as de- 
fendants claim it, was not by B. F. Mc- 
Farland only, but also by his wife. This 
recognition extends as far back as 40 years 
ago, or to 1848. In 1870 the heirs at law of 
Sarah M. L. McFarland, deceased, recogniz- 
ed the same line, O to P, when they parti- 
tioned among themselves the lands Inherited 
from their mother. When John Neal bought 
the 82-acra tract from B. F. McFarland, No- 
vember 3, 1863, and when Hopkins bought 
the same from Neal, In 1866, said line, O to 
P, was the dividing line, being lived up to 
and recognized by McFarland and wife; and 
we may assume that both Hopkins and Neal 
bought with that understanding, well justi- 
fied by the conduct of McFarland and wife. 



In 1870 the commissioners making partition 
did the locating of lines; but that only shows 
the mistake about the division line had be- 
come the understanding of the neighborhood. 
By accepting the partition, the heirs showed 
themselves ignorant of any mistake, so long 
had it (the line) been recognized. In 1873, 
John E. Hopkins, desiring to build a new 
dwelling-house, procured the division line to 
be run by J. P. Galbraith, the husband of 
one of the McFarland heirs, who showed 
him where to build. Several other of the 
McFarland heirs were then at home in the 
neighborhood, and must have known of the 
building of the house, which was on their 
land, as they claim it now; but was on Hop- 
kins' land, and just south of the division 
line, as they must have known Hopkins 
claimed it. To say the least of It, they were 
silent when they should have spoken. In 
1877, R. M. Barton, Jr., and wife, Jennie 
M. Barton, the latter being one of the Mc- 
Farland heirs, by deed called for the Hop- 
kins division line from O to P. In July, 
1877, Barton and wife sold the residue of 
the land partitioned to the latter to Wm. 
Galbraith; and some time afterwards, and 
prior to June, 1882, when Wm. Galbraith 
filed his bill against John B. Hopkins, the 
discovery was made that the line, so long 
recognized and lived up to on both sides as 
the true division line,— that is, the line from 
O to P, — was a mistake, and that the true 
line was from F to E or from 3 to J on said 
plot. The line from O to P never was con- 
sistent with the 2d call, 'thence north 10 
poles to a stake,' or with the fourth call, 
'thence north 44 poles to a stake,' in the deed 
from McFarland to John Neal, made in 1863. 
Nor was the same consistent with the calls 
of the deed from Wm. Cox to Jacob Pate, 
made September 22, 1814; nor was the same 
consistent with the oldest marked line on 
the ground. An accurate survey, at any 
time, ought to have discovered the true line. 
But so it was, the parties on both sides the 
line made a mutual mistake, without taking 
the trouble of a survey, on which they acted 
from some time prior to 1848 to some time 
after 1877. After so long a public acquies- 
cence, and so many public acts, some by 
solemn deeds of record on the part of Sarah 
M. L. McFarland, her husband, and her 
heirs, under the influence and with the 
knowledge of which strangers have bought 
the adjoining land, and built a valuable 
house thereon worth many more times the 
value of land involved, can the McFarland 
heirs now be heard to complain of said mis- 
take, and be allowed to correct the same? 
"Where the true locality of the line is doubt- 
ful, such acts are regarded as furnishing 
evidence that the line so recognized is the 
true line; nor are either of the parties at 
liberty afterwards to abandon such line, al- 
though the line should afterwards be ascer- 
tained at a different place. Gilchrist v. Mc- 
Gee, 9 Yerg. 458, 459, Green, J. See, also, 



116 



EQUITABLE ESTOPPEL. 



SleiTiwetlier v. Larmon, 3 Sneed, 446, 448. 
lu the application of the principle of equi- 
table estoppel, there is no exception in the 
case of married women. 2 Herm. Estop. 
1232. See, also, Howell v. Hale, 5 Lea, 405; 
2 Pom. Eq. Jur. §§ 814-818; Crittenden v. 
Posey, 1 Head, 320; Stephenson v. Walker, 
8 Baxt. 289. And the doctrine applies to 
infants having such intelligence aa to enable 
them to comprehend the import of their con- 
duct. Barham v. Turbeville, 1 Swan, 438. 
If this authority is doubted, still the only 
infant affected is llrs. Barton; who with her 
husband, after her majority, ratified her for- 
mer recognition of the line so long lived up 
to. I do not think the case of Wm. Gal- 
braith v. John E. Hopkins, is res adjudicata, 
because (1) complainants in this cause (ex- 
cept Barton's wife) were not parties to that 
suit; (2) the land involved here was not in- 
volved in that suit. The subject-matter was 
not the same. Being clear in my convictions 
above expressed, without discussing the ques- 
tion of the statute of limitations, I decide, 
having considered the ease as arbitrator, ac- 
cording to the submission made in the case, 
that complainants' bill be dismissed, with 
costs. LSigned] Jerome Templeton." 

We have given the entire award, so that 
it may be seen what were the findings of 
fact and of law. The award must be taken 
as a whole, and not in detached sentences. 
It will not do to cull out words here and 
there, and from them argue that the parties 
, knew where the true line was. The mutual- 
ity of the mistake, and the ease with which 
the parties might have discovered the same, 
had they taken the old deeds and procured 
the services of a competent surveyor, does 
not render it any the less a mistake. The 
fact still remains that there was an honest 
ignorance of the whereabouts of the true 
line, and a bona fide recognition of the line 
indicated on the plot as O to P. If, with 
full knowledge of the true line, another be 
fixed by verbal agreement, such agi-eement 
is within the statute of frauds, and conse 
quently void; but, where there is doubt or 
ignorance as to the true locality of the line, 
a parol agreement, fixing the line between 
adjoining owners, is not within the statute; 
and, where satisfactorily established, will be 
enforced by the courts, notwithstanding it 
may afterwards be demonstrated that the 
agreed line was erroneously fixed. And such 
adjustment may be shown, as well by cir- 
cumstances and recognition, as by direct evi- 
dence of a formal agreement, when parties 
have acted thereon. Houston v. Matthews, 
1 Yerg. 116; Gilchrist v. McGee, 9 Yerg. 
458: Merri wether v. Larmon, 3 Sneed, 451; 
Lewallen v. Overton, 9 Humph. 76; Rogers 
V. White, 1 Sneed, 69; Riggs v. Parker, 
Meigs, 49; Yarborough v. Abernathy, Id. 420. 

The cases on this subject are numerous 
in this state, and citations might be multi- 
plied; but they clearly make the distinction, 
and establish the principles as stated above. 



This being so, It Is not difficult to apply 
them to the findings of fact made by the 
arbitrator in the case at bar. We have ad- 
missions and declarations, we have convey- 
ances made, and partitions had, calling for 
the line O tq P. We have long acquiescence 
on the part of complainants, and those un- 
der whom they claim', coupled with the ex- 
penditure of money by defendant in building 
improvements upon the property In dispute, 
largely in excess of the value of the land 
itself, induced not only by what had long 
been the understanding of the parties as to 
the location of the line, but by positive point- 
ing out of the line, with knowledge that the 
Improvements were then about to be made. 
And during all this time we have absolute 
ignorance on the part of the adjoining owner 
as to the true line; ignorance none the less 
absolute by reason of the fact that, in the 
opinion of the arbitrator, it might have easily 
been removed by a survey. There was no 
survey, and the honest ignorance remained, 
until shortly before the filing of the bill in 
this cause. This is not a case of silence, 
but of numerous affirmative acts and admis- 
sions that were calculated to and did in- 
fluence the conduct of defendants, and which 
acts and admissions are inconsistent with 
the claim of title now sought to be set up. 
The facts as found would seem to make out 
a case of estoppel, unless the disability of 
coverture prevents the application of this 
doctrine, as is strenuously insisted upon by 
the learned counsel for complainants. Let 
us see how this Is. The contention is that, 
as a married woman cannot. In reference to 
her lands, bind herself by title-bond, power 
of attorney, contract of sale, or even a deed, 
without privy examination, and certificate of 
acknowledgment In a prescribed form show- 
ing that it was done freely, voluntarily, and 
understandingly, it would be an anomaly in 
the law to hold that she might part with 
her title indirectly, when she had no pur- 
pose to do so, and when, instead of doing 
so freely, voluntarily, and understandingly, 
she was actually in Ignorance, or laboring 
under a mistake of fact. And cases are cit- 
ed which seem to sustain the contention. It 
must be admitted that the cases on this 
subject are to a certain extent conflicting. 
But much of the difficulty and confusion Is 
due to a failure to observe the distinction 
between the cases which seek, by the doc- 
trine of estoppel, to validate those contracts 
of a married woman which by law are de- 
clared void, and the cases where, in the 
absence of any contract, and independent of 
any contract or agreement, her conduct has 
been held to prevent her from asserting what 
would otherwise be a right. To the former 
class belongs the case of Dodd v. Benthal, 
4 Helsk. 601. And the language of the judge 
delivering the opinion In that case, at page 
607, where he says: "The complainant be- 
ing both an Infant and feme covert at tlfe 
time of the execution of the deed in ques- 



EJQUITABLB ESTOPPEL, 



117 



tion, no act of affirmance or disaffirmance in 
pais on her part during coverture could be 
binding upon her," etc.,— is correct when con- 
fined to a contract of a person under dis- 
ability, which by law is void in consequence 
of such disability. To the latter class, above 
referred to, belongs the case of Howell v. 
Hale, 5 Lea, 405. Here the conduct of the 
married woman, independent of any con- 
tract, operates to estop her in the same man- 
ner and to the same extent as if she were a 
feme sole. So in the case at bar, while 
there are facts and circumstances upon which 
a contract might be implied that would be 
binding upon a person sui juris, yet there 
are also such admissions, statements, and 
conduct on the part of the complainants and 
their ancestor as are amply sufficient to 
create an estoppel entirely independent of, 
and altogether outside of, any idea or claim 
of a contract. Mr. tomeroy says "that 
while, upon the question how far the doe- 
trine of equitable estoppel by conduct applies 
to married women, there is some conflict 
among the decisions, the tendency of modern 
authority, however, is strongly towards the 
enforcement of the estoppel against married 
women, as against persons sui juris, with 
little or no limitation on account of their 
disability;" and that the decisions to the 
contrary seem to be in opposition to the 
general current of authority. Modern Eng- 
lish cases, as vv^ell as American, are cited to 
sustain the text. Section 814, and notes. 
The case of Morrison v. Wilson, 13 Cal. 495, 
relied on so confidently by counsel for com- 
plainants, seems to not only deny the ap- 
plication of- an estoppel in pais to a married 
woman, but goes so far as to hold that af- 
firmative fraud on her part will not effect 
that result. It is sufficient to say of this 
case that it not only loses sight of the dis- 
tinction referred to as to the defective exe- 
cution of a contract, but is directly opposed 
to our own adjudged cases, so far as the 
element of fraud is concerned. The doctrine 
of estoppel has, by courts of this state, been 
applied to married women and infants. Thus 
in Howell v. Hale, 5 Lea, 405, she was held 
estopped by matter in pals. She had by her 
conduct induced Thornhill to purchase the 
mortgage debt on her land, leading him to 
believe that the land should stand liable 
therefor. This court held her estopped by 
her conduct to make defense to said mort- 
gage, whether she might have done so or 
not, as against the original mortgagee. In 
Cooley V. Steele, 2 Head, 606, we have a 
clear case of estoppel in pais applied to a 
married woman. She had, in a deposition, 
made a statement, as to title to certain 
shares, contrary to what she there asserted 
in the case before the court. This court 
said: "Complainant would be clearly enti- 
tled, upon well-established principles, to the 
relief sought, but for the estoppel created by 
her oath in the before-mentioned deposition." 
To the same effect is Pilcher y. Smith, Id. 



208, where it Is said: "The legal disability 
of coverture carries with it no license or 
privilege to practice fraud or deception on 
other persons." Estoppel in pais has also 
been applied to infants by this court. Bar- 
ham V. Turbeville, 1 Swan, 437; Adams v. 
Fite, 3 Baxt. 69. In the latter case the 
court, after finding the weight of the proof 
in favor of the complainant having been of 
age at time of the execution of the deed, 
continuing, said: "Both on the ground of 
long acquiescence, and of the concealment of 
the fact that he was not of age, when com- 
plainant had good reason to know that 
Ewing was trading with him as sui juris, 
complainant is repelled, even if he was in 
fact only twenty years of age when he made 
the deed." It is true that in the case of 
Barham v. Turbeville the infant was not 
merely silent, but actively proclaimed his 
father's title to the property he subsequent- 
ly sued for; and the court puts the estoppel 
upon the ground of actual and purposed 
fraud, which was right and proper, under 
the facts of that case. But, so far as the 
opinion in this case undertakes to hold that 
actual and positive fraud, at the time of the 
act set up as constituting the estoppel, is 
essential to the application of the doctrine of 
estoppel, it is obiter and unsound, as we 
shall presently undertake to show. 

It is also urged that actual fraud must 
exist before an estoppel can be maintained 
against one sui juris; and a fortiori before 
it can be applied to a married woman, if 
against the latter it can be invoked at all. 
It is true that there is a theory which makes 
the essence of equitable estoppel to consist 
of fraud; but this theory is not sustained 
by principle nor authority. There are many 
well-settled cases of estoppel familiar to 
courts of equity, which do not rest upon 
fraud; and instances pre admitted, even by 
the courts, which maintain this theory, which 
cannot be said to involve any element of 
fraud, iinless by a complete perversion of 
language and misuse of terms. The con- 
fusion to be found in some of the books on 
this subject is due doubtless to the fact that 
the fraud referred to has its origin in the 
effort afterwards to set up rights contrary 
to the conduct of the party, although at the 
time of the act constituting the estoppel there 
was the most perfect good faith. The term, 
as used in such cases, is, as Mr. Pomeroy ex- 
presses it, virtually synonymous with "un- 
conscientious" or "inequitable." It is in this 
sense that it may be said that it is a fraud 
or fraudulent to attempt to repudiate the 
conduct which has induced the other party 
to act, and upon which the estoppel is predi- 
cated; but it is entirely another thing to say 
that the conduct itself— the acts, words, or 
silence of the party — constituting the estop- 
pel must be an actual fraud, done with the 
intention of deceiving. It may therefore be 
safely said that although fraud may be, and 
often is, an ingredient in the conduct of the 



118 



EQUITABLE ESTOPPBI/. 



party estopped, It Is not an essential element, 
if the word is used in its commonly accepted 
sense; and the use of the term is unneces- 
sary, and often improper, unless applied to 
the efCort of the party estopped to repudiate 
his conduct, and to assert a right or claim 
in contravention thereof. The best-consider- 
ed cases are in accord with the views above 
expressed. Bank v. Bank, 50 N. Y. 575; War- 
ing V. Sombom, 82 N. Y. 601. And although 
the earlier Pennsylvania decisions generally 
leaned strongly In favor of the theory that 
an actual fraud is of the essence of every 
such estoppel by conduct, it is worthy of 
note that in the late case in that state of 
Bidwell V. Pittsburgh, 85 Pa. 4:12, it is said: 
"It is not necessary that the party against 
whom an estoppel is alleged should have in- 
tended to deceive. It is sufficient if he in- 
tended that his conduct should Induce an- 
other to act upon it, and the other, relying 
on it, did so act." 2 Pom. Eq. Jur. §§ 804, 
805, et seq. The case of Brant v. Coal Co., 
93 TJ. S. 326, pressed upon us by counsel for 
complainant as establishing the contention 
that fraud is an essential element in the ap- 
plication of the doctrine of estoppel, and that 
it is essential that the party invoking the es- 
toppel was himself not only destitute of the 
knowledge of the true state of the title, but 
also of any convenient or available means of 
acquiring such knowledge, merits special 
mention. In addition to what we have al- 
ready said as to the first proposition, we will 
be content to adopt Mr. Pomeroy's note upon 
this case, where, after quoting freely of the 
opinion, he says: "With great deference to 
the opinion of so able a judge, I think his 
error in this passage is evident. It consists 
in taking a special rule, established from 
motives of policy for a particular condition 
of fact, and raising it to the position of a 
universal rule. Where an estoppel by con- 
duct is alleged to prevent a legal owner of 
land from asserting his legal title, courts 
of equity, in order to avoid the literal re- 
quirements of the statute of frauds, were 
driven to the element of fraud in the con- 
duct as essential. See the text, sections SOS- 
SOT. The passage quoted from Judge Story 
Is dealing with this long-settled rule of eq- 
uity, and not with the subject of equitable 
estoppel in general. When this special rule 
is made universal, its inconsistency vrith 
many familiar instances of equitable estop- 
pel becomes apparent, and Judge Field is 
forced to escape from the antagonism by 
denying that these instances do in fact be- 
long to the doctrine. If this conclusion be 



correct, then some of the most Important and 
well-settled species of the estoppel, uniformly 
regarded as such by text writers and courts, 
must be abandoned, and the beneficent doc- 
trine Itself must be curtailed in its operation 
to one particular class of cases. This result 
is In direct opposition to the tendency of ju- 
dicial decisions, and of the discussion of 
text writers." See note 1 to section 806, 
Pom. Eq. Jur., and cases there cited. It is 
worthy of notice, also, that, in the opinion 
referred to. Judge Field quotes approvingly 
from the Pennsylvania case of Hill v. Epley, 
31 Pa. 334, language which is practically, to 
all intents, an abandonment of the extreme 
position supposed to be maintained in the 
Brant Case. The language referred to is: 
"The primary ground of the doctrine is that 
it would be a fraud in a party to assert 
what his previous conduct had denied, when 
on the faith of that denial others have act- 
ed." The element of fraud is essential either 
in the Intention of the party estopped, or in 
the effect of the evidence which he attempts 
to set up; so that at last the difficulty seems 
to be in the use of terms, rather than in the 
true principles controlling the doctrine under 
consideration. As to the second proposition 
for which the Brant Case is cited. It is suffi- 
cient to say that it does not sustain the posi- 
tion that the mutuality of the mistake, or 
the possibility of having discovered It, pre- 
vents the application of the doctrine of es- 
toppel. It merely asserts the familiar rule 
that where the party setting up the estoppel 
knew the true condition of the title, either 
in fact or in contemplation of law, the doc- 
ti'ine will not avail him; the fact being in 
that case, as shown in the opinion, that "he 
knew he was obtaining only a life-estate by 
his purchase." 

This opinion is already too long to allow 
further elaboration on the question of estop- 
pel under the facts of this case. It Will, 
however, not be out of place to add that I 
find nothing in the numerous reported cases 
in this state, from Patton v. McOlure, Mart. 
& Y. 339, down to Allen v. Westbrook, 16 
Lea, 251, that makes willful fraud on the 
part of the party sought to be estopped, in 
the act constituting the grounds of the es- 
toppel, essential to the application of the 
doctrine. We hold, therefore, that there is. 
In the case at bar, on the facts as found by 
the arbitrator, every element of an equitable 
estoppel, and complainants must be repelled. 
The disability of coverture is not sufficient 
to defeat this result. Let the decree of the 
chancellor be affirmed, with costs. 



EQUITABLE ESTOPPEL. 



119 



STARRY V. KOEAB. 

(21 N. W. 600, 65 Iowa, 267.) 

Supreme Court of Iowa. Dec. 8, 1884. 

Appeal from superior court of Cedar Rap- 
ids. 

Tliis is an appeal from an order in a gar- 
nishment proceeding discliarging the gar- 
nishee. Plaintiff obtained judgment against 
one Joseph Lustick, on which execution issu- 
ed, and appellee was garnished as a suppos- 
ed debtor of the defendant in execution. At 
the proper time he appeared, and answered 
that he was not indebted to said Lustick in 
any sum, and that he did not have any prop- 
erty in his possession belonging to him. 
Plaintiff filed a pleading controverting this 
answer, in which it is alleged that in a con- 
versation had between plaintiff and gar- 
nishee before the execution was issued, gar- 
nishee stated that he was indebted to Lustick 
in a certain sum, and that he would not pay 
the same to Lustick until plaintiff bad an 
opportunity to procure the issuance of an 
execution on said judgment and serve notice 
of garnishment on him thereunder; and that, 
relying on this representation, and believing 
it to be true, plaintiff, at great expense and 
trouble to himself, procured said execution 
to issue, and caused the garnishee to be serv- 
ed with notice of garnishment thereunder, 
and that the garnishee is now estopped by his 
representation and conduct from denying that 
he was indebted to Lusticls; at the time he 
was served with the notice. The garnishee 
demurred to this pleading on the ground that 
it did not show that he was in fact indebted 
to Lustick when the notice of garnishment 
was served, and the facts averred in the 
pleading did not create an estoppel. The de- 
murrer was sustained, and, plaintiff declin- 
ing to plead further, judgment was entered 
discharging the garnishee. Plaintiff appeals. 

Blake & Hormel, for appellant. Bowman 
& Swisher, for appellee. 

REED, J. The purpose of the pleader was 
undoubtedly to set up in the pleading con- 
troverting the answer of the garnishee what 
is denominated an equitable estoppel. The 
effect of such estoppel is to preclude the party 
from asserting a strict legal right, on the 
ground that his assertion of such right, under 
the circumstances of the case, would be 
against equity and good conscience. The 
pleading assumes that at the time the notice 
of garnishment was served on the garnishee 
he was not in fact indebted to Lustick, and 
that on strict legal grounds he was entitled 
to be discharged. But the claim is that, hav- 
ing induced plaintiff, by the representation 
that he was indebted to Lustick, to institute 
the garnishment proceeding and incur the ex- 
pense and trouble incident thereto, it would 
be manifestly unjust and inequitable in him 
to assert his exemption from liability there- 
on. And the question presented by the rec- 
ord is whether, under the facts stated in the 



pleading, the garnishee is estopped to deny 
that he is indebted to Lustick. 

It will be' observed that the representation 
on which plaintiff claims to have acted in 
instituting the garnishment proceedings con- 
sisted (1) in the statement of a matter of fact, 
viz., that the garnishee was at that time in- 
debted to Lustick in a certain amount; and 
(2) in a promise or agreement as to his con- 
duct in the future, viz., that he would with- 
hold the amount and not pay it over to Lust- 
ick until plaintiff would have an opportunity 
to procure an execution to issue, and notice 
of garnishment to be served upon him. But 
it does not appear from the averments of the 
pleading that the statement as to the matter 
of fact was not true when it was made; that 
is, it is not averred that the garnishee was 
not indebted to Lustick at the time the rep- 
resentation was made. Some time elapsed 
between the making of the representation 
and the service of the garnishment notice, 
and for anything that appears in the pleading 
the garnishee may have been ind,ebted to 
Lustick at the time of the representation, 
and have paid the amount to him before the 
notice was served upon him. If those are 
the facts, the injury and damages which 
would result to plaintiff in case of the gai^ 
nishee's discharge would be occasioned, not 
by his denial of the truth of his statement 
that he was indebted to Lustick, but by his 
failure to perform the agreement to retain in 
his hands the amount of the indebtedness 
until the notice of garnishment should be 
served upon him. But an estoppel does not 
arise from the mere failure of a party to per- 
form an executory agreement. 

The doctrine of estoppel is applied to pre- 
vent the injustice which would result if one 
who has once asserted the existence of a fact, 
and thereby induced another to act in the be- 
lief of the truth of that statement so as to 
change his previous position, were permitted 
afterwards to deny its truth. Under such 
circumstances, and as against the one who 
made the statement, the law is that it shall 
be conclusively presumed to be true. Pick- 
ard V. Sears, 6 Adol. & E. 469. But it is 
difficult to conceive a case in which one who 
is sued for the mere failure to perform an 
executory agreement would be precluded by 
the law from making any defense against the 
claims. It may be that plaintiff has a cause 
of action against the garnishee on the agree- 
ment; but if so he clearly cannot enforce it 
in this proceeding. His remedy in that case 
must be sought in an original action against 
the party as defendant. In this proceeding, 
if he can recover at all, he can do so only by 
showing either tliat the garnishee was indebt- 
ed to the defendant in execution when the 
notice of garnishment was served on him, 
or that such a state of facts existed as that 
he is estopped to deny that he was so Indebt- 
ed. The pleading in question, in our opinion, 
does not show either of these states of fact. 
Affirmed. 



120 



ELECTION. 



TENN et al. v. GXJGGENHEIMER et al. 
(70 Va. 839.) 

Supreme Court of Appeals of Virginia. Oct. 16, 

1882. 

Appeal from circuit court, Botetourt county. 

Bill by Jlax Gugsenlieimer and otliers 
against William J. Penn, as administrator 
of Stuart B. Penn and in his own right, 
Ann S. Penn, and others, to ascertain the 
interest of William J. Penn in the estate of 
S. B. Penn, deceased, and to subject the 
same to judgments of plaintiff against said 
AVilliam J. Penn. Under the will of Charles 
B. Penn certain lands were given to his 
children. He owned a third interest in cer- 
tain land on James river, known as the 
"Home Place," the other two-thirds of which 
belonged to his wife by descent from her 
father. Under said will he expressed a wish 
that his wife should retain the "home place," 
and at her death It should be the property 
of her son Stuart B. Penn. The widow, in 
1850, received the personal estate given to 
her under the will of her husband, and gave 
a receipt reciting that she received it "agree- 
ably to the provisions of his said last will 
and testament." At the same time the 
"home place" was put on the land book of 
the county and assessed for taxes in her 
name as tenant for life and devisee of her 
husband. She never renounced the will, nor 
had dower assigned, but she filed an answer 
in 1867 to the plaintiff's bill, in which an- 
swer she denied that she had done anything 
to divest herself of her two-thirds in the 
"home place. ' The circuit court entered a 
decree that the widow had elected to accept 
the provision in the will of her husband, and 
that the remainder of the "home place" 
passed on the death of the said Stuart B. 
Penn, childless, among others, to the said 
William J. Penn, who was entitled to an 
interest of one-fourth, subject to his moth- 
er's life estate, which Interest was liable to 
be subjected by his creditors to the satis- 
faction of their judgment liens. Prom this 
judgment Ann S. Penn appealed, and, pend- 
ing the appeal, died. Affirmed. 

Edmund Pendleton, for Mrs. Ann S. Penn. 
J. H. H. Piggatt and John J. Allen, for Max 
Guggenheimer. G. W. & L. C. Hansbrough, 
for George Skillen Penn and Mrs. Frances 
L. Mayo. 

STAPLES, J. The main question in this 
case turns upon the construction to be giv- 
en to the will of Charles B. Penn which was 
admitted to probate at the September term 
of the county court of Botetourt, in the year 
1849. The testator, at the time of his death, 
was possessed of a valuable real and person- 
al estate, which he devised and bequeathed 
to his wife, Mrs. Ann Penn, and to his four 
children. To his two sons George S. Penn 
and William Penn he gave severally a tract 
of land. To Mrs. Mayo, his married daugh- 
ter, he gave certain real estate and a sum of 



$10,000 in bank stock. To his wife he be- 
queathed all his slaves, with the full confi- 
dence that she would make such disposition 
of them among his children as should be 
just and equitable, after retaining such of 
them as she might desire for her own use 
during her lifetime. His other personal es- 
tate he directed to be sold, and the balance 
remaining, after the payment of his debts, 
together with the proceeds of any real es- 
tate not specifically devised, he bequeathed 
to his wife, with the full confidence that she 
would divide it among his children as she 
might deem just and proper. 

The third clause of the will, which gives 
rise to this controversy, is as follows: 

"It is my will and desire that my wife 
shall retain the home place, and at her death 
it shall be the property of my son Stuart B. 
Penn, which I hereby give to him, his heirs, 
and assigns forever." 

The home place, thus mentioned by the 
testator, is a tract of about 820 acres, one- 
half of which, known as the "lower half," 
was the property of Mrs. Penn, devised to 
her by her father. She was also the owner 
of one-third of the upper half of the tract, 
derived by descent from her sisters. 

The testator was entitled to two undivided 
thirds acquired by purchase in the upper 
half of the tract. So that his Interest at the 
time of his "death did not exceed one-third 
of the entire ti'act. 

The first question arising under the clause 
already quoted is whether the testator in- 
tended to dispose of the entire tract, or 
whether the will is to be construed as dis- 
posing merely of his undivided third. 

If the former interpretation be the true 
one, it is conceded that it was incumbent 
upon Mrs. Penn, the widow, to make her 
election, and that she cannot claim both her 
own estate and the provision made for her 
by the will. 

Before entering into a discussion of that 
question it will be proper briefly to advert 
to some of the principles of law governing 
in such cases. 

The doctrine of election Is said to rest up- 
on the equitable ground that no man can 
be permitted to claim inconsistent rights 
with regard to the same subject, and that 
any one who asserts an interest under an 
instrument is bound to give full effect, as 
far as he can, to that instrument. Or, as it 
is sometimes expressed, he who accepts a 
benefit under a deed or will must adopt the 
contents of the whole instrument, conform- 
ing to all its provisions, and relinquishing 
every right inconsistent with It. 

In the terse language of Lord Rosslyn In 
Wilson V. Lord Townsend, 2 Ves. Jr. 697: 
"You cannot act. You cannot come forth to 
a court of justice claiming In repugnant 
rights. When you claim under a deed, you 
must claim under the whole deed together. 
You cannot take one clause, and advise the 
court to shut their eyes against the rest. 



ELECTION. 



121 



Suppose, in a will, a legacy is given to you 
by one clause; by another, an estate of 
which you are in the possession is given to 
another. While you hold that, you shall not 
claim the legacy." 1 Pom. Eq. Jur. &§ 465, 
466; 1 White & T. Lead. Cas. Eq. pt. 1, pp. 
541, 547, 548; Kinnaird v. Williams, 8 Leigh, 
400; Craig v. Walthall, 14 Grat. 518; Dixon 
V. McCue, Id. 540. In order, however, to 
raise a case of election, it is well settled the 
intention on the part of the testator to 
give that which is not his own must be clear 
and unmistakable. It must appear from lan- 
guage which is unequivocal, which leaves no 
room for doubt as to the testator's design. 
The necessity for an election can never arise 
from an uncertain or dubious interpretation 
of the clause of donation. 1 Pom. Eq. Jur. § 
472; 2 Story, Eq. Jur. § 10. 

It is not necessary, however, that this in- 
tention should be expressly declared. The 
dispositions of the instrument, fairly and 
reasonably interpreted, may of themselves 
show a clear design on the part of the testa- 
tor to bestow upon the devisee property 
wliich in fact belongs to another. 

As in other cases, the intention may be 
gathered from the whole and every part of 
the instrument. The difficulty of ascertain- 
ing the testator's intent, it is said, is al- 
ways much greater where he has a partial 
interest in the estate devised than where he 
undertakes to dispose of an estate in which 
he has no interest. 

In the former case, the presumption is that 
he intended to dispose of that which he might 
properly dispose of, and nothing more; and 
this presumption will always prevail, unless 
the intention is clearly manifested by demon- 
stration plain, or necessary implication on the 
part of the testator to dispose of the whole es- 
tate, including the interest of third parties. 
Generally, when the testator has an undivided 
interest in certain property, and he employs 
general words in disposing of it, as "all my 
lands," or "all my estate," no case of election 
arises from it; for it does not plainly appear 
that he meant to dispose of anything but what 
was strictly his own. 2 Story, Bq. Jur. § 1087; 
1 Pom. Eq. Jur. § 489. 

A case of election does arise, however, when 
the testator, having an undivided or partial 
interest in an estate, devises it specifically, 
thus indicating a purpose to bestow it as an 
entirety. This rule on this subject is thus 
laid down in 1 Pom. Bq. Jur. § 489. Where 
the testator proposes to give the whole thing 
itself, using language which, by reasonable in- 
tention, must necessarily describe and define 
the whole corpus of the thing in which his 
particular interest exists as a distinct and 
identified piece of property, then an intention 
to bestow the whole, and not merely the tes- 
tator's individual share, must be inferred, and 
a case for an election arises. This rule is 
mentioned and commented on by Judge Chris- 
tian in delivering the opinion of this court in 
Gregory v. Gates, 30 Grat. 83, to which I refer 



as authority for other views here announced. 

Now, let us apply these principles to the case 
in hand. In the first place, there can be no 
doubt that the tract of land or estate in ques- 
tion was universally known and described as 
the "Home Place." It is so spoken of by all 
the witnesses, by the parties, and it was so de- 
nominated in all the pleadings. Mrs. Penn, 
in her answer, describes it as the "Home 
Place." She speaks of the "upper half of the 
home place" and the "lower half of the home 
place." It is scarcely to be supposed that the 
testator would term it differently from every 
other person; that he referred only to his 
partial interest of one-third when by universal 
consent, usage, and habit, the entire tract was 
known and recognized as the home place. His 
language is: "That my wife shall retain the 
home place, and at her death it [the home 
place] shall be the property of my son Stuart 
B. Penn, which I hereby give him, his heirs 
and assigns, forever." What gives some sig- 
nificance, at least, to this language is that the 
mansion house, occupied by the testator and 
his family for many years, was located, not 
upon the half in which the testator had an 
interest of two-thirds, but upon that portion 
exclusively owned by Mrs. Penn. It was this 
portion upon which the family resided that 
might with some propriety be termed the 
"Home Place," and not the two undivided 
thirds of one-half, constituting merely a part 
of the tract. 

It was said in the argument before this 
court that the language of the clause now un- 
der consideration is different from the other 
clauses of tlie will. For example, that the 
testator, when disposing of his own property, 
invariably uses the words, "I give and be- 
queath," whereas in the present instance he 
merely expresses the wish that his wife shall 
retain the home place. This difference of 
phraseology grows out of the fact that the tes- 
tator was .carefully defining and limiting an 
estate to be enjoyed by his wife during her 
life, and the language used by him was such 
as he supposed would accomplish the object. 
He then proceeds to say that it is his will and 
desire at her death it (the home place) "shall 
be the property of my son Stuart B. Penn, 
which I hereby give him, his heirs and as- 
signs, forever." It is impossible by argument 
or illustration to add to the force and perspicu- 
ity of this language. Nothing can be plainer, 
more direct and comprehensive. The cases of 
Padbury v. Clark, 2 ilacn. & G. 298; Howells 
V. Jenkins, 2 Johns. & H. 706; Grosvenor v. 
Durston, 25 Beav. 97; Grissell v. Swinhoe, L. 
R. 7 Eq. 291, 295,— in which it was held that 
the devLsee was bound to elect,— are directly 
in point and conclusive of the question. 

The other dispositions made by the testator 
confirm thoroughly this view of his intention. 
He gave to his son George S. Penn an estate 
worth about $11,000, to his son William Penn 
an estate of the value of $14,000, and to Mrs. 
Mayo property worth $12,000 or $15,000. 

The provision made for his wife was more 



V22 



BLECXJON. 



than sufficient for her support and mainte- 
nance during her life in the most comfortable 
and abundant manner. If, however, he de- 
signed that his son Stuart B. Penn should take 
the one-thii-d of the home place, subject to the 
incumbrance of the life estate, the provision 
for him was wholly inadequate, and dispro- 
portionate to the benefits conferred upon his 
other children. On the other hand, if the tes- 
tator intended that the entire home place 
should be the property of his son Stuart B. 
Penn, the period of his enjoyment would be 
postponed until the death of Mrs. Penn, and 
the value of the devise would be about equal 
to the provision for the other children. 

I am therefore of opinion that by the plain 
terms of the will Mrs. Penn was put to her 
election, and that she could not and cannot 
choose both her own estate and the bequests 
made in her favor. 

The next inquiry is, whether Mrs. Penn did, 
in fact, elect to claim under the will. 

An election may be Implied as well as ex- 
pressed. Whether there has been an election 
must be determined upon the circumstances 
of each particular case, rather than upon any 
genei-al principles. 1 White & T. Lead. Cas. 
Eq. 539, 571, 572. It may be inferred from 
the conduct of the party, his acts, his omis- 
sions, and his mode of dealing with the prop- 
erty. Unequivocal acts of ownership, with 
knowledge of the right to elect, and not 
through a mistake with respect to the condi- 
tion and value of the estate, will generally be 
deemed an election to take under the will. 1 
Pom. Eq. Jur. §§ 514, 515. Lapse of time, al- 
though not of itself conclusive, yet, when con- 
nected with circumstances of enjoyment, may 
be decisive upon the question of election. 

In Adsit V. Adsit, 2 Johns. Ch. 448, 451, 
Chancellor Kent said: "Taking possession of 
property under a wiU or other Instrument, and 
exercising unequivocal acts of ownership over 
it for a long period of time, will amount to a 
binding election." 

"Positive acts of acceptance or renuncia- 
tion," says Mr. Justice Story, "may arise from 
long acquiescence, or from other circumstances 
of a stringent nature, and are not indispensa- 
ble." 

"Again," he says, "it may be necessary to 
consider whether he [the devisee] can restore 
other persons affected by his claim to the same 
situation as if the acts had not been perform- 
ed, or the acquiescence had not existed, and 
whether there has been such a lapse of time 
as ought to preclude the court from entering 
upon such inquiries upon its. general doctrine 
of not entertaining suits upon stale demands 
or after long delays." 2 Story, Eq. Jur. §§ 
1097-1098. 

Where the election Is once made by the 
party bound to elect, either expressly or im- 
pliedly, and with full knowledge of all the 
facts, it binds not only himself, but also all 
those parties who claim under him, his rep- 
resentatives and heirs. 1 Pom. Eq. Jur. § 516. 



Let us apply these principles to the case be- 
fore us. Upon the death of the testator, in 
the year 1849, Mrs. Penn continued in the pos- 
session of the home place until the present 
time, a period of 30 years. It does not appear 
that she ever expressed any dissatisfaction 
with the provisions of the will till the filing 
of her answer in the cause in the year 1807. 
In the year 1850 the entire tract was entered 
upon the commissioner's books of the county 
and assessed with taxes in her name, as ten- 
ant for life. Whether this was done by her 
direction or not, it does not appear. It can 
scarcely be supposed she was ignorant of a 
fact disclosed on every tax ticket paid by her. 

It has been already stated that by the will 
testator's slaves were given to Mrs. Penn, in 
full confidence that she would make such dis- 
position of them among his children as would 
be just and equitable, after retaining such 
proportion of them as she might desire for her 
own use during her life. 

The residue of the real and personal es- 
tate was also given to her in trust for the 
benefit of the children. In the year 1850,— 
not long after the testator's death,— the ex- 
ecutors tui'ued over to her the entire person- 
al estate, including slaves, and took her re- 
ceipt, stating that this was done in con- 
formity with the provisions of the will. The 
executors must therefore have understood 
that Mrs. Penn had accepted the provision 
made for her benefit. Upon no other ground 
would they have been warranted in thus 
dealing with the assets. The terms of the 
receipt given by her show that she was per- 
fectly apprised of the contents of the will, 
that she knew the condition and value of the 
property, and that she had united with the 
executors in fulfilling the intentions and 
wishes of the testator. Had Mrs. Penn re- 
nounced the will, as she was bound to do, 
in order to claim her own estate, she would 
have been entitled only to one-third of the 
slaves for life, and one-third of the personal 
property absolutely. As it was, she received 
from the executors under the will 49 slaves, 
of the value of $18,370, and other property, 
worth between $5,000 and $6,000. The testi- 
mony shows that Mrs. Penn never made any 
formal division of the property; that she, 
however, distributed among her children 
about 12 of the slaves, retaining the residue 
in her own possession, for her own use and 
benefit, until their emancipation in 1865. 
It is of no sort of consequence that during 
his lifetime Stuart B. Penn resided at the 
home place, and managed and controlled all 
the operations of the estate. This was, of 
course, done by the authority of Mrs. Penn, 
and doubtless for the reason that it was 
more agreeable to her that one of her sons 
should relieve her of the trouble and re- 
sponsibility, to which, amid the Infirmities 
of declining years, she was unequal. She 
certainly exercised a dominion and owner- 
ship of the property, to which she was en- 



ELECTION. 



123 



titled only under her husband's will, and 
Tpyhich she could never have assumed unless 
she intended to conform to its provisions. 

After this long lapse of time, after this 
long-continued enjoyment and possession of 
the estate, and unequivocal recognition of 
the provisions of the will by receiving the 
property from the executors, it is too late 
for Mrs. Penn, at this day, to disclaim the 
testator's bounty, and assert title to her own 
estate. 

The slaves have long since been emanci- 
pated, the personal property exhausted, and 
It is now impossible to place the children in 
the condition they would have occupied had 
Mrs. Penn in the outset declared her inten- 
tion to hold her own property. 

So far from it, It is very clear that she 
made her election to claim under the will, 
and that she did so with a deliberate and 
intelligent choice, and with a full knowledge 
of all the circumstances, and of her own 
rights. No possible Injury can accrue to any 
one from the conclusion thus reached, for 
Mrs. Penn lived and died in the enjoyment 
of the estate. She never attempted any 
other disposition of it. 

Stuart B. Penn, the devisee, is dead, with- 
out children, and the estate has passed in 
due course of law to Mrs. Penn's children. 
A contrary decision can result only in dis- 
turbing a condition of things settled and 
acquiesced In for many years by all parties. 
I think, therefore, there is no error upon 
this branch of the case in the decision of 
the circuit court 

The learned counsel for the appellant. In 
his petition for an appeal, and in his argu- 
ment before this court, has taken the ground 
that the parties bringing this suit are neither 
heirs nor purchasers nor beneficiaries under 
the will of Charles Penn, but judgment cred- 
itors of William J. Penn, and, as such, in- 
truders and volunteers, seeking to set aside 
a family settlement, and to vest in William 
J. Penn an Interest which he himself does 
not claim, and to which he never asserted 
any title. It will not be denied that com- 
plainants, by virtue of their judgments, 
have a lien upon all the real estate of their 
debtor, and that under our statute they 
may enforce that lien in a court of equity. 

This right of the complainants, and. In- 
deed, of all judgment creditors, cannot be 
affected by any omission of disclaimer on 
the part of the debtor. According to repeat- 
ed decisions of this court, when the free- 
hold has once vested, the owner cannot di- 
vest himself of the title by any mere parol 
disclaimer; but he can only do so by deed 
or some other act sufficient to pass an es- 
tate. Even had William J. Penn executed 
such deed, voluntarily relinquishing his title, 
his creditors would not be bound by it. 
When the court has once settled that Stuart 
B. Penn Is entitled to the home place under 
the will of his father, William J. Penn, as 
one of his heirs, has an absolute title to 



his just share or proportion of that estate, 
and his creditors may not only subject it to 
satisfaction of their debts, but they may re- 
sort to a court of equity for the purpose of 
ascertaining that Interest, and of removing 
every obstacle in the way of the just en- 
forcement of their liens. William J. Penn 
can no more defeat the claims of his cred- 
itors by a disclaimer of title than he could 
do so by a voluntary deed, or gift or assign- 
ment. 

In Dold V. Geiger's Adm'r, 2 Grat. 98, It 
was held that choses in action, to which the 
wife becomes entitled during coverture, are 
liable to the claims of the husband's cred- 
itors, and a voluntary relinquishment of the 
same by the husband, and a settlement upon 
the wife, before being reduced into posses- 
sion, will not protect such choses In action 
from such creditors' claims. 

Judge Stanard, in answer to an objection 
similar to the one made here, said: "I think 
it may safely be laid down as a just deduc- 
tion from the elementary principles of our 
law that the general rule is that the rights 
of property of a debtor, whether in posses- 
sion or In action, present or reversionary, 
in law or in equity, and of value adequate 
to pay his debts, and without which -he is 
Insolvent, and the payment of his debts 
must be frustrated, cannot by the mere vo- 
lition of the debtor, in the form of assign- 
ment, surrender, or other modes of arrest, 
pass to volunteers without valuable consid- 
eration, and be thereby placed In the hands 
of such volunteers, beyond the reach and 
secure from the claims of such creditors." 
This opinion of Judge Stanard, and, Indeed, 
the decision Itself, constitutes a complete 
answer to the points made by counsel, and 
render unnecessary any further discussion 
of the subject. 

The next question is whether the circuit 
court erred In disallowing the account of 
William J. Penn against the estate of Stuart 
B. Penn, for money alleged to have been 
paid by the former as administrator of 
Stuart B. Penn. The latter died In the year 
1857, considerably indebted. William B. 
Penn qualified as his administrator, and re- 
moved to the home place, thereafter resid- 
ing with his mother, the life tenant. There 
Is no doubt that the net income derived 
from the estate was appropriated by him to 
the payment of his brother's debts. The 
only question is whether this Income was 
sufficient for that purpose, or whether any 
part of the Indebtedness was discharged by 
William J. Penn out of his private means. 
William J. Penn, in one of his depositions, 
states that from 1857 to 1860 he realized 
from the home place an income of $6,196.15, 
all of which, by the direction of his mother, 
was applied to the payment of his brother's 
debts. He further states that Stuart B. 
Penn had a note In bank of $4,600, for which 
the witness, at the request of his mother, 
substituted his own note. The larger por- 



124 



ELECTION. 



tion of this latter note was paid off by him 
in February, 1804, and the balance in 1865, 
in Confederate money. This, reduced to its 
actual value in sound money, amounts to a 
very insignificant sum. 

In the concluding part of William J. Penn's 
deposition he expresses the opinion that he 
has been fully reimbursed for all moneys ex- 
pended by him in the payment of his 
brothei-'s debts. Unfortunately for the par- 
ties setting up this claim, William J. Peun 
is their witness, and their only witness. 
They cannot ask the court to discard their 
own testimony, and enter a decree in their 
favor upon a case unsupported by proof. I 
have no doubt, however, that William J. 
Penn has given an accurate and tnithful ac- 
count of his transactions and dealings with 
the estate. 



The home place was regarded as one of 
the most valuable estates on James river, 
yielding a large income annually to its own- 
ers. A very small portion of its profits was 
required for the support of Mrs. Penn; the 
balance passed into the hands of William J. 
Penn, and I am satisfied that he was fully 
reimbursed for every dollar appropriated by 
him for the payment of his brother's debts. 

The complainants, after the fullest oppor- 
tunity, have been unable to adduce any tes- 
timony to the contrary. They are clearly 
not entitled to a reversal of the decree in the 
present state of the case, and it is most ap- 
parent that nothing is to be gained by fur- 
ther inquiry. 

Upon the whole, I thiulv the decree of the 
circuit court should be affirmed. 

Decree affirmed. 



ELECTION. 



125 



FITZHUGH V. HUBBARD. 

(41 Ark. 64.) 

Supreme Court of Arkansas. May Term, 1883. 

Appeal from circuit court, Phillips county; 
J. N. Oypert, Judge. 

M. T. Sanders and Tappan & Homor, for 
appellant. Thweatt & Quarles, for appellee. 

SMITH, J. William St. Jolin Hubbard 
died in the year 1878. Just before his death 
he made his will, which was afterwards duly 
proved, and which is in the words following: 

"I bequeath and leave unto my brother, 
Edward L. Hubbard, the full amount of his 
indebtedness to me, and the remainder of 
my property, both personal and real, to my 
sister, Mrs. Sarah L. Fitzhugh, after paying 
all of my debts, and my sister to administer 
without bond." 

In point of fact Edward L. Hubbard was 
not then indebted to the testator. He had 
formerly owed the testator a debt of $4,221.- 
61, which was evidenced by note and secur- 
ed by deed of trust upon real estate; but 
this debt had been transferred, eight months, 
before the execution of the will, to Mrs. 
Sarah L. Fitzhugh. The deed of trust con- 
tained the usual power of foreclosure Tjy 
advertisement and sale upon default in pay- 
ment; and, in case of the refusal of the 
trustee to act, the sheriflE of Phillips county 
was empowered to execute it. 

Cage, the trustee, who was also the drafts- 
man of the will, did refuse to sell the prop- 
erty, alleging as his reason that the debt had 
been satisfied by the provisions of the will, 
whereupon the services of the sheriff were 
called into requisition. After due notice he 
sold and conveyed the lands to Mrs. Fitz- 
hugh, who brought ejectment. The defend- 
ant set up as an equitable defense that the 
deed of trust under which the plaintiff claim- 
ed title had been canceled, and the debt 
which it was intended to secure had been 
released to him by virtue of said will. The 
cause was transferred to equity. Testimony 
was taken on both sides, and at the hearing 
the court required Mrs. Fitzhugh to elect 
whether she would affirm the will and ac- 
cept the devise to her, or renounce the same 
and assert a right to the debt due by Ed- 
ward L. Hubbard. She elected to take un- 
der the will. The court thereupon dismissed 
her complaint, set aside the trustee's sale 
and conveyance, and canceled Edward L. 
Hubbard's note and deed of trust. Mrs. 
Fitzhugh has appealed, and the main ques- 
tion is whether this is a proper case for the 
application of the doctrine of election. 

"An election in equity is a choice which a 
party is compelled to make between the ac- 
ceptance of a benefit under an instrument 
and the retention of some property, already 



his own, which is attempted to be disposed 
of in favor of a third party by virtue of the 
same instrument. The doctrine rests upon 
the principle that a person claiming under an 
instrument shall not interfere by title para- 
mount to prevent another part of the same" 
instrument from having effect according to 
its construction. He cannot accept and re- 
ject the same instrument. It is a doctrine 
which is principally exhibited in cases of 
wills. * * * 

"The most common instance which is put 
of a case of an election is where a testator 
gives money or lands to A., and by the 
same will gives something of A.'s to B. 
Here A. must elect. He must either give 
effect to the will by allowing B. to have the 
property which the testator intended should 
go to him, or, if he chooses to disregard the 
will and retain his own property, he must 
make good the value of the gift to the dis- 
appointed beneficiary." Bisp. Eq. § 295; see, 
also, Story, Bq. Jur. § 1076 et seq.; 1 White 
& T. Lead. Cas. Bq. 342. 

Here the testator has undertaken to dis- 
pose of a debt which belonged to Mrs. Fitz- 
hugh. But he has given her the whole of 
his own estate. Her conscience is therefore 
affected by the implied condition annexed to 
the testator's bounty that, while availing her- 
self of the will in one direction, she shall 
not defeat its operation in another. 

The ultimate question in all such cases is 
this: Did the testator intend that the dev- 
isee, upon accepting the benefit conferred up- 
on him, should acquiesce in the donation of 
the devisee's own property to another? 
Hence it becomes important to determine 
how far parol evidence is receivable to mani- 
fest such intention. Cage and other wit- 
nesses were sworn to prove declarations of 
the testator that in using the language, "in- 
debtedness to me," he referred to the debt 
which had been assigned to Mrs. Fitzhugh. 
In Robinson v. Bishop, 23 Ark. 378, this 
court expressed its preference to construe 
wills from their own terms, rather than to 
take the deposition of the scrivener as to 
what the testator meant by particular claus- 
es. 

Parol evidence is admissible, in this class 
of causes, to the same extent as in other 
cases, in aid of the construction of written 
instruments, and no further. You may show 
the condition of the subject-matter and the 
surrounding circumstances, so as to place 
the court in the position of the testator; 
but his purpose to put the devisee to his 
election must appear from the wiU itself. 
2 Redf. Wills, 745. 

But as it was in proof that Edward L. 
Hubbard owed the testator no other debt, 
the will can have no reasonable construction 
without including Mrs. Fitzhugh's debt. 

The decree below is affirmed. 



126 



ELECTION. 



WILBANKS et al. v. WILBANKS. 

(18 111. 17.) 

Supreme Court of Illinois. Nov. Term, 1856. 

Error to circuit court, JefEersoD county. 

The defendant in error filed bis bill 
against the plaintiffs, to enjoin the plaintiffs 
from prosecuting an action of ejectment 
against Walter S. Akin and David Rotramel, 
for the recovery of forty acres of land vrhich 
the defendant In error claims under the will 
of his father, Robert A. D. Wllbanks, de- 
ceased. 

The biU states that R. A. D. Wllbanks, the 
father, entered the forty acres in the name 
of his wife, Sarah V. Wilbanks; that she 
died leaving the plaintiffs In error her heirs 
at law by her said husband; that the forty 
acres in dispute were part of the homestead 
or farm upon which said Wilbanks, the fath- 
er, and wife resided. 

That Wilbanks, the father, married a sec- 
ond time and afterward died, leaving a son, 
the defendant in error, by his second wife, 
and made a will bequeathing to his said 
second wife, for life, the homestead, and at 
her death willed It to the defendant in error, 
and that the forty acres were included In the 
bequest. 

That the plaintiffs in error were also pro- 
vided for, one of them (T. J. Wilbanks) hav- 
ing a specific bequest left to him, of real 
and personal estate, and that the others 
were also as to the balance of the real es- 
tate of the testator undisposed of, made 
residuary legatees. 

The defendant In error asl;s that the plain- 
tiffs be enjoined from prosecuting their ac- 
tion at law, for the reason that the intestate, 
by devising the said tract of land to the de- 
fendant, intended to put the plaintiffs off 
with what he gave them under the will, and 
that the plaintiffs ought to elect whether 
they would refund the value of the land or 
be perpetually enjoined from prosecuting 
their action at law. 

The plaintiffs demurred to the bill gener- 
ally and specially, and contend that the facts 
stated In the bill do not warrant the issu- 
ance of an Injunction against the plaintiffs, 
because the defendants to the suit at law 
are not parties; that from the face of the 
bill they are manifestly proper parties to the 
proceedings, and for that cause the demur- 
rer ought to have been sustained to the bill; 
they also contend that the facts stated in the 
bill do not show a case of election in equity 
at all, because: 1st, they were residuary 
legatees; 2d, Wilbanks, the Intestate, was 
tenant by the curtesy, and had an interest 
In the land in question; 3d, because the tes- 
tator treated the land as his own property; 
and, 4th, the forty acres of land in dispute 
are not described In the will at all, and the 
court will not supply the defect by implica- 
tion, from the fact that it was within the 
boundaries of the land bequeathed to his sec- 



ond wife and the defendant upon her de- 
cease. 

The demurrer was sustained. The plain- 
tiffs stood by their demurrer; but the court 
ruled them notwithstanding to answer over, 
which they refused to do. A decree pro con- 
fesso was entered at September term, 1855, 
of the Jefferson circuit court, and the plain- 
tiffs were perpetually and unconditionally en- 
joined from prosecuting their suit at law. 

The plaintiffs assign for error, the niling 
of the court below, on the demurrer, and 
contend that the demurrer ought to have 
been sustained to the bill, and that the over- 
ruling the demurrer and granting the in- 
junction was erroneous, and that the decree 
of the court was rendered without any eq- 
uity whatever to support it; and further, 
that if the injunction ought to have been 
awarded at all, it ought to have been award- 
ed on condition of the plaintiff failing to 
elect. 

R. S. Nelson, for plaintiffs in error. D. 
Baugh, for defendant in error. 

SCATES, C. .T. The testator in this case 
disposed of all his estate, both real and per- 
sonal. The objects of his bounty were ex- 
clusively those upon whom the law would 
have cast the estate in case of Intestacy; but 
whether in the same proportions under the 
will as at law, does not appear. Whether 
the provisions of the will are as beneficial 
as those of the law, or not, the devisees may 
not therefore disturb or set aside its provi- 
sions, unless under circumstances which 
raise a right of election. 

The widow accepted the devise made to 
her, which barred her dower; and the heirs 
as such merely could not avoid the provi- 
sions of the will, which disposed of the 
whole estates, real and personal, so far as 
they belonged to the testator. The legal title 
to the tract in controversy was not in the 
testator, but the plaintiffs, his children by a 
former wife, as heirs to their mother, in 
whose name the land had been purchased of 
the United States. 

The testator devised this tract to his sec- 
ond wife for life, as a part of his homestead, 
with remainder to defendant in fee, his son 
by the second wife. 

The object of the bill by defendant is to 
enjoin the plaintiffs from proceeding in eject- 
ment, to recover the land as heirs at law of 
their mother, upon the ground that they 
have devises and bequests made to them 
by the same will, of which they have ac- 
cepted, and they cannot, therefore, in equity 
and conscience be permitted to claim under 
the will the benefit of the devises and be- 
quests to them, without giving full effect to 
it in every respect, so far as they are con- 
cerned. 

We think the circumstances clearly pre- 
sent a case for election (waiving any question 
of a resulting trust for the husband), and 
assuming the fact to be as is alleged, that 



ELECTION. 



127 



the provisions of the will have been accept- 
ed, the plaintiffs are estopped in equity and 
conscience from all claim to this tract of 
their own, which is given to the defendant. 
In the general language of the authorities, 
they may not, at the same time, take under 
the will and contrary to it. This was the 
doctrine of the civil law, from whence, 
doubtless, we derived the rule. But it seems 
to have been confined to cases of wills by 
the civil law, while the rule with us has 
been extended to deeds and other contracts; 
and it has been held to be the rule at law 
as well as in equity. 

The intention of the author of the deed 
or will to dispose of property which is not 
his, must be manifest; it is difficult to ap- 
ply the doctrine of election when the testator 
has some present interest in the estate dis- 
posed of, though, not entirely his own; for it 
might be that he intended to dispose only of 
his own interest. Yet it Is a question of in- 
tention, which is to prevail, and will be 
gathered from the terms of the instrument. 

An absolute power in the testator to dis- 
pose of the subject, and an intention to ex- 
ercise that power, seems in general suflScient 
to malce a case of election; a devise to the 
heir, although inoperative, compels him to 
elect between the estate devised, and claims 
adverse to the will. The estate descending 
to the heir under his election to claim against 
the will, descends subject to the implied con- 
dition. 

These principles are extracted from Mr. 
Swanston's note to Dillon v. Parker, 1 
Swanst. 394b. The doctrine of election is 
very fully and comprehensively laid down 
in that case and note, and in Gratton v. 
Haward, 1 Swanst. 413, and note c. See 
also, Noys v. Mordaunt, 2 Vern. 581; 2 Story, 
Bq. Jur. §§ 1075-1096; 2 Williams, Ex'rs 1236, 
section 9 of Election (B) and notes; 1 Eop. 
Husb. & Wife, 566, note 1; (7 Law Lib. 334.) 

It has been suggested that the testator 
here was tenant by the curtesy of this tract 
of land, and it should therefore be intended 
and understood that he devised that interest 
which belonged to him, and not the fee, 
which was in his children by his first wife. 
This view of the devise cannot help or ex- 
plain away the plain and obvious meaning 
and intention upon the face of the instru- 
ment; and that was to pass the fee in all 
the lands disposed of in the will. Besides, 
this would make the will inoperative as to 
this tract; for the estate by curtesy termi- 
nated with the life of the testator, at which 
time the devise took effect. We cannot in- 
dulge in a construction that would defeat 
the intention, make the provision inoperative, 
or render the will void. Nor can we indirect- 
ly do the same thing by supiwsing that the 
testator believed this tract to belong to him; 
and intended only to dispose of so much as 
belonged to him. Where such appears to 
have been the clear Intention of the testator 



to dispose of so much, and no more than he 
might own, and the particular property was 
devised or bequeathed under the impression 
that it belonged to the testator, then, it may 
be, that the question of repugnancy and elec- 
tion might not arise; but the devisee or 
legatee might take the interest given, with- 
out surrendering his claim to his own proper- 
ty. Still the foundation of the doctrine of 
election is the intention of the testator. So 
that when he clearly intends to dispose of 
the property of another, real or personal, al- 
though the will or deed alone and of itself 
may be ineffectual, inoperative, or void as a 
conveyance or sale, yet it affords authentic 
evidence of the intention of the testator or 
grantor, and that intention shall be made 
effectual and prevail to transfer the property 
of one who accepts a benefit under such will 
or deed. 2 Story, Bq. .Jur. § 1077. Indeed, 
in section 1076, Mr. Justice Story illustrates 
this doctrine of election by putting a case 
precisely like that before us. If the testator 
should devise an estate belonging to his son, 
or heir at law, to a third person, and should 
in the same will bequeath to his son, or heir 
at law, a legacy of one hundred thousand 
dollars, etc., an implied or constructive elec- 
tion is raised. The son or heir must relin- 
quish his own estate or the bequest under 
the will. 

The party is entitled to a full knowledge 
of the circumstances, and of the situation 
and value of the estates or provisions made; 
and an election made in actual ignorance of 
material facts will not preclude the party 
from exercising the right anew upon obtain- 
ing full information. This record does not 
show that the election here was without full 
Ivuowledge of all material facts. 

But admitting that the plaintiffs may yet 
make a new election, if they claim, by de- 
scent and against the will, all the lands and 
personalty devised and bequeathed to them 
in the will, they will be liable to make com- 
pensation to the disappointed devisee to the 
extent of the value of the devise intended 
for him. So that equity will lay hold of the 
devise or bequest renounced, and substitute 
compensation for the devise or bequest de- 
feated. See 2 Story, Eq. Jur. and 1 Swanst. 
above. 

Whether by renunciation the party for- 
feits all interest, as in case of estates upon 
express conditions, or is entitled to any sur- 
plus after full compensation, as seems to be 
warranted by the current of authorities, is 
immaterial here, it seems to us. For its loss 
to defendant from the midst of his home- 
stead tract, would cost plaintiffs more in 
compensation out of their devises than it 
could be worth to them thus situated and 
surrounded. And they cannot now assert 
their title as heirs to their mother, without 
making compensation to defendant, out of 
the devises to them in the will. Decree af- 
firmed. 



128 



ELECTION. 



ROGERS V. JONES. 

(3 Ch. DiT. 688.) 

High Court of Justice. Aug. 3, 1876. 

By a marriage settlement dated the lltli 
of November, 1833, certain messuages and 
hereditaments (including six cottages in 
Rhos street, Ruthin) were settled to the use 
of William Williams for life, with remain- 
der to the use of his wife, Jane Williams, for 
life, with remainder to the use of the first 
and other sons of W. Williams in tail, and 
for default of such issue to the use of his first 
and other daughters in tail, and for default 
of such issue to the use of the heirs of the 
survivor of them, the said W. Williams and 
Jane Williams. 

William Williams, by his will made in 
1860, gave to his said wife, Jane Williams, 
all his real estate during her life, and after 
her decease he purported to devise '■;ill those 
six cottages situate in Rhos street" (being 
part of the property included in the said set- 
tlement) to his nephew, Thomas Rogers, his 
heirs and assigns. 

The testator died in ]8<'iO without issue, 
and his widow, Jane Williams, became abso- 
lutely entitled under the settlement to the 
property therein comprised. 

In 1864 Thomas Rogers, not being aware 
of the settlement, sold and conveyed to the 
plaintiff his supposed reversionai-y interest 
under the testator's will in the said cottages. 

In 1875 .Jane Williams died, having ap- 
pointed the defendants, W. D. Jones and 
R. P. Davies, her executors. 

After the death of Jane Williams, the 
plaintiff first ascertained that she had, in 
1872, sold the six cottages in Rhos street 
to a ptu'chaser for value without notice of 
the devise in the testator's will. 

The plaintiff now brought his action 
against the executors of Jane Williams, and 
submitted that he was entitled to be indem- 
nified out of her estate in respect of the 
loss sustained by him in consequence of the 
sale of the cottages by the defendant, or that 
such sale was an election by her to take the 
cottages against the will of the testator, and 
that, consequently, the plaintiff, as the per- 
son injured by such election, was entitled to 



receive compensation for such Injury out of 
the other benefits derived by Jane Williams 
under the will of the testator, for the loss 
occasioned to the plaintiff by such election, 
and to have the amount of such benefits as- 
certained and paid out of her estate. 

C. C. Ellis & Co., for plaintiff. F. W. 
Adams, for defendant. 

Chitty, Q. C, and Mr. Romer, for plaintiff. 
Cookson, Q. C, and Mr. Bradford, for de- 
fendant. 

JESSEL. M. R. The testator in this case 
gave his real estate to his wife for her life, 
with remainder as to six cottages, which did 
not belong to him, to his nephew Thomas 
Rogers. At the time of the devise the tes- 
tator's only interest in these cottages was a 
life estate under the settlement, with a con- 
tingent remainder if he survived his wife. 

Under these circumstances a case of elec- 
tion arises. The doctrine of election is this, 
that if a person whose property a testator 
affects to give away takes other benefits un- 
der the same will, and at the same time 
elects to keep his own property, he must 
make compensation to the person affected 
by his election to an extent not exceeding 
the benefits he receives. In this case the 
widow, having elected to take against the 
will, was bound to make compensation to 
the plaintiff to the extent of the benefits she 
received under the will. Therefore, in her 
lifetime, she might to this extent have been 
thus made liable. 

But it is said that the plaintiff's right to 
be indemnified is lost by the death of the 
widow. Why? I see no principle upon 
which her death should exonerate her es- 
tate. The liability of her estate must now 
be ascertained, and there must be an in- 
quiry as to the amount of the benefits which 
the widow received in her lifetime under the 
will, and as to the compensation to which 
the plaintiff is entitled in respect of the loss 
he has sustained by not getting possession 
of the six cottages at the death of the 
widow, so far as such loss does not exceed 
her benefits under the will. 

The pleadings to be amended by making 
T. Rogers coplaintiff. 



ELECTION. 



129 



KONVALINKA v. SOHLEGEL et al. 

(9 N. E. 868, 104 N. Y. 125.) 

Court of Appeals of New York. .Tan. 18, 1887. 

Appeal from supreme court, general term, 
second department. 

John W. Konvalinka, Henry McCloskay, 
and W. E. Glover, for appellant, Konvalinka, 
Bx'r, etc. George Bliss, for respondents, 
Maria Schlegel and another. 

ANDREWS, J. The question is whether 
the widow of the testator is put to her elec- 
tion between dower and the provision in the 
will. The estate of the testator consisted of 
both real and personal property. The will, 
after directing the payment of the testator's 
debts and funeral expenses, and after giving 
to his wife the bedroom furniture in his 
dwelling-house, and to his children the rest 
of the furniture therein, proceeds as follows: 
"All the rest, residue, and remainder of my 
estate, property, and effects of every nature, 
kind, and description I give, devise, and be- 
queath to my executors and executrix here- 
inafter named, and I authorize and direct 
them to sell and dispose of the same at such 
time, and on such terms, as to them shall 
seem best, and to divide the proceeds there- 
of equally among my wife and children, 
share and share alike." There can be no 
controversy as to the general principles gov- 
erning the question of election between dow- 
er and a provision for the widow In the will. 
Dower is favored. It is never excluded by a 
provision for a wife except by express words, 
or by necessary implication. Where there are 
no express words, there must be, upon the 
face of the will, a demonstration of the inten- 
tion of the testator that the widow shall not 
take both dower and the provision. The will 
furnishes this demonstration only when it 
clearly appears, without ambiguity or doubt, 
that to permit the widow to claim both dow- 
er and the provision would interfere with 
the other dispositions, and disturb the 
scheme of the testator as manifested by his 
will. The intention of the testator to put 
the widow to an election cannot be inferred 
from the extent of the provision, or because 
she is devisee under the will for life or in 
fee, or because it may seem to the court 
that to permit the widow to claim both the 
provision and dower would be unjust as a 
family arrangement; or even because it may 
be inferred or believed, in view of all the 
circumstances, that, if the attention of the 
testator had been drawn to the subject, 
he would have expressly excluded dower. 
We repeat, the only sufficient and adequate 
demonstration which, in the absence of ex- 
press words, will put the widow to her elec- 
tion, is a clear incompatibility arising on the 
face of the will between a claim of dower 
and a claim to the benefit given by the will. 
We cite a few of the cases in this state show- 
HUTCH.& BXJNK.EQ.— 9 



Ing the general principle, and the wide range 
of application. Adsit v. Adsit, 2 Johns. Ch. 
452; Sanford v. Jackson, 10 Paige, 266; 
Church V. Bull, 2 Denio, 430; Lewis v. 
Smith, 9 N. Y. 502; Fuller v. Yates, 8 Paige, 
325; Havens v. Havens, 1 Sandf. Ch. 331; 
Wood v. Wood, 5 Paige, 599. 

In view of these settled rules, we think 
the widow in this ease was riot put to her 
election. The devise to the executors was 
void as a trust, but valid as a power in 
trust, for the sale of the lands and a divi- 
sion of the proceeds, and the lands descend- 
ed to the heirs of the testator subject to the 
execution of the power. 1 Rev. St. p. 729, 
§ 56; Cooke v. Piatt, 98 N. Y. 35. 

It is strenuously urged that, the power of 
sale being peremptory, it worked an eqluita- 
ble conversion of the land into personalty, 
as of the time of the testator's death, and 
created a trust in the executors in the pro- 
ceeds for the purpose of distribution, which 
trust it is alleged is inconsistent with a 
claim of dower. The doctrine of equitable 
conversion, as the phrase implies, is a fiction- 
of equity, which is frequently applied to 
solve questions as to the validity of trusts; 
to determine the legal character of the inter- 
ests of beneficiaries; the devolution of prop- 
erty, as between real and personal represen- 
tatives; and for other purposes. It seems to 
be supposed that there is a necessary repug- 
nancy between the existence of a trust in 
real property created by a will and an out- 
standing dower interest of a widow in the 
trust property. We perceive no foundation 
for this contention. If the purposes of a 
trust, as declared, require that the entire 
title, free from the dower interest of the 
widow, should be vested in the trustees, in 
order to effectuate the purposes of the testa- 
tor in creating it, a clear case for an elec- 
tion is presented. Vernon v. Vernon, 53 N. 
Y. 351. But the mere creation of a trust 
for the sale of real property, and its distri- 
bution, is not inconsistent with the exist- 
ence of a dower interest in the same prop- 
erty. There is no legal difficulty in the trus- 
tee executing the power of sale, but the sale 
will necessarily be subject to the widow's 
right of dower, as it would be subject to any 
outstanding interest in a third person para- 
mount to that of the trustee. 

In the cases of Savage v. Burnham, 17 X. 
Y. 577, and Tobias v. Ketchum, 32 N. Y. 
327, the widow was put to her election, not 
because the vesting of the title in trustees 
was per se inconsistent with a claim for 
dower, but for the reason that the will made 
a disposition of the income, and contained 
other provisions which would be in part de- 
feated if dower was insisted upon. There 
is language in the latter case which, discon- 
nected from the context, may give color to 
the contention of the appellant. But it is 
the principle upon which adjudged cases pro- 
ceed which is mainly to be looked to, be- 
cause a correct principle is sometimes mis- 



130 



ELECTION. 



applied. There is, however, no ground for 
misapprehension of the meaning of the 
learned judge in that case, interpreting his 
language with reference to facts then under 
consideration. 

It has frequently been declared that pow- 
ers of or in trust for sale are not inconsistent 
with the widow's right of dower. Gibson 
V. Gibson, 17 Eng. Law & Eq. 349; Bending 
V. Bending, 3 Kay & J. 257; Adsit v. Adsit, 
supra; In re Frazer, 92 N. Y. 239. And it 
was held in Wood v. Wood, 5 Paige, 596, 
that the widow was not put to her election, 
where the testator devised all his property 
to trustees, with a peremptory power of 
sale, and directed the payment to the widow 
of an annuity out of the converted fund. 
The same conclusion was reached, under 
very similar circumstances, in Fuller v. 
Yates, 8 Paige, 32.3; and in Re Prazer, su- 
pra, the widow's dower was held not to be 
excluded by a provision in the will, although 
as to a portion of the realty the power of 
sale given to the executors was peremptory. 

The general doctrine is very clearly stated 
by the vice-chancellor in Ellis v. Lewis, 3 
Hare, 310: "I take the law to be clearly set- 
tled at this day that a devise of lands eo 
nomine upon trusts for sale, or a devise of 
lands eo nomine to a devisee beneficially, 
does not, per se, express an intention to de- 



vise the lands otherwise than subject to Its 
legal incidents, dower included." This re- 
mark of the vice-chancellor also answers the 
claim that the testator, when he described 
as the subject of the dower, "all the rest, 
residue, and remainder of my estate," meant 
the entire title, or the estate as enjoyed by 
him. A similar argument was answered by 
Lord Thurlow in Poster v. Cook, 3 Brown, 
Ch. 347. "Because," he said, "the testator 
gives all his property to the trustees, I am 
to gather, from his having given all he has, 
that he has given that which he has not." 

The argument that the testator intended 
equality of division between his wife and 
children is also answered by the same con- 
sideration. The proceeds of the testator's es- 
tate were by the will to be equally distributed. 
It left untouched the dower of the widow, 
which he could not sell or authorize to be 
sold, and which was a legal right not derived 
from him, and paramount to all others. It 
may be conjectured, perhaps reasonably in- 
ferred, that the testator really intended the 
provision for his wife to be exclusive of any 
other interest, but so it Is not written in the 
will, and we are not permitted to yield any 
force to the suggestion. It is a question of 
legal interpretation, which has been settled. 

The judgment should therefore be affirm- 
ed. All concur. 



ELECTION. 



131 



EEED V. DICKEEMAN. 

(29 Pick. 146.) 

Supreme Judicial Court of Massachusetts. 
October Term, 1831. 

Writ of dower. The following facts were 
agreed to by the parties. 

Elijai Reed, the late husband of the de- 
mandant, died seised in fee of the land describ- 
ed in the writ. On August 8, 1816, he made 
his last will, containing the following provi- 
sions: "I give and bequeath to my beloved 
wife, Lucy Eeed, and Alice Eeed, my daugh- 
ter, one-half of my dwelling house where I 
now live, the southerly part of said house, 
and the north buttery in said house, during 
my wife's natural life. Also to my beloved 
wife I give and bequeath one-half of my in- 
door movables. I also give and bequeath to 
my beloved wife one cow, which I order my 
sons, Solomon and Elijah, to keep for her, or 
some other in the room of it, free from any 
expense to her during her natural life. Also 
I give and bequeath to my wife and my 
daughter, Alice Eeed, one heifer, a year old 
last spring, and hereby order my two sons, 
Solomon and Elijah, to be at one-half the ex- 
pense of keeping said heifer for their moth- 
er." The will was proved In September, 
1816. Soon after the death of the testator, 
the demandant selected a cow from the stock 
on the farm, and that cow, or another in- 
stead of it, has ever since been kept on the 
farm for her by her sons, Solomon and 
Elijah, and she has had the use of it ever 
since, until within a year past, when she sold 
it. A heifer was provided for her and Alice 
by Solomon and Elijah, and was kept by 
them for their mother until it died, which 
happened soon after the probate of the will. 
The demandant has always, since the death 
of her husband, been in the possession of the 
indoor movables. She has always lived in 
that part of the house which was devised to 
her, and Alice has lived with her. It ap- 
peared by the records of the probate court 
that in March, 1829, the judge of probate ap- 
pointed a committee to set off by metes and 
bounds and define that part of the dwelling 
house of the testator unto his widow and 
Alice, which was devised to them for their 
use during their natural life, together with 
the cellar, privileges, and appurtenances; and 
In April, 1829, the committee made a return, 
showing their performance of the duty re- 
quired of them. The real estate of the tes- 
tator was appraised, soon after his death, at 
$10,529, and the personal at ?647, his debts 
amounted to a sum between $3,000 and $3,- 
600, the real estate given to Alice was worth 
$900, one-half of the indoor movables was 
worth $95, and the fee simple of the whole 
dwelling house was worth between $1,300 
and $1,400. A demand was made upon the 
defendant, on July 5, 1830, to assign dower to 
the demandant. 

On the foregoing facts, or such of them as 
would be admissible in evidence on a trial 



before a jury, and on such Inferences as may 
be legally made from them, the case was 
submitted to the court, and If, in the opinion 
of the court, the demandant was entitled to 
recover, the defendant was to be defaulted; 
but otherwise, the demandant was to become 
nonsuit. 

Mr. Eddy, for demandant. W. Baylies and 
Mr. Miller, for tenant. 

MORTON, J. The demandant is clearly 
entitled to recover her dower, unless she is 
barred by the provision made for her in the 
will of Elijah Eeed. In that is given to her 
a freehold estate In a part of the dwelling 
house of the deceased, and also certain per- 
sonal property. The will contains no declara- 
tion of the testator's intention, whether this 
was to be in lieu of, or in addition to, the 
dower of his widow. 

By St. 1788, c. 24, § 8, "the widow, in all 
cases, may waive the provision made for her 
in the will of her deceased husband, and 
claim her dower, and have the same assigned 
her In the same manner as though her hus- 
band had died intestate, in which case she 
shall receive no benefit from such provision, 
unless It appears by the will plainly the tes- 
tator's intention to be in addition to her 
dower." This Is a material alteration of a 
rule of the common law applicable to this 
case. By that rule a devise or bequest to 
a widow is presumed to be in addition to her 
dower, unless It clearly appears that it was 
the intention of the testator that it should be 
in lieu of dower. 

The wife has a legal interest in her hus- 
band's estate, of which she cannot be de- 
vested without her own consent. After his 
death she is legally entitled to dower, un- 
less by some act of her own during his life- 
time she has barred her right, or after his 
decease voluntarily relinquished that right. 
A bequest or devise Is deemed a bounty, and 
not the payment or satisfaction of a pre-ex- 
isting debt or obligation. A gratuity cannot 
extinguish a legal right; hence the common- 
law rule that a donation in a vyill does not 
operate as an extinguishment of the right of 
dower, but is presumed to be a gratuity in 
addition to the existing legal right, but a 
donation may be made on a condition, and 
that condition may as well be the relinquish- 
ment of the right of dower as the perform- 
ance of any other act, and if a donation In a 
wiU be made on the express condition that 
dower shall not be claimed, or. If it clearly 
appear from the will that it was the Inten- 
tion of the testator that the widow should not 
have both the donation and the dower, then 
the donation shall be taken to be in lieu of 
dower, and the widow cannot hold both. She 
may have her election. She cannot claim un- 
der the will and adversely to it; but she is 
not thereby devested of her right of dower, 
but may have -her election between her dower 
and the provision made for her in the will. 

By the clause of our statute just quoted. 



132 



ELECTION. 



this presumption of law is reversed, and the 
provision in the will is deemed to be in lieu 
of dower, unless it plainly appears that the 
testator intended it to be in addition to it. 

In this case there is no express declara- 
tion that the testamentary provision was in- 
tended to be in addition to dower, nor can 
any such intention be inferred from all the 
will taken together. The inadequacy of the 
provision alone will not justify such an in- 
ference. 

The plaintiff must therefore take the de- 
vise and bequests in the will, unless she sea- 
sonably elected to waive them. The statute 
seems to presume an acceptance. There is 
some positive act to be done by the widow, 
indicating her election, before she can be en- 
titled to dower. The demand required to be 
made thirty days before an action can be 
commenced might be considered an election, 
where no election had previously been made. 

Within what time shall a widow be holden 
to waive the provision made for her in the 
will, or to be bound by it? In New York, 
the widow shall be deemed to have elected 
to take the testamentary provision, unless 
she enters upon or commences a suit for her 
dower within one year after her husband's 
death. In Virginia, she is allowed nine 
months, and in Vermont only sixty days, in 
which to make her election; and, on failure 
to do it, she is confined to her dower at com- 
mon law. Our statute has not fixed any pre- 
cise time for the election; but doubtless the 
widow would be holden to have accepted the 
testamentary provision, unless she waived 
it in a reasonable time, that the settlement 
of the estate might be closed and distribution 
made among the heirs. What shall be deem- 
ed a reasonable time, not being fixed by stat- 
ute, cannot be accurately defined by any gen- 



eral rule, and need not now be discussed. 
For we are all of opinion that, under the cir- 
cumstances of this case, the demandant is pre- 
cluded from waiving the provisions of the 
will and claiming dower. 

Fourteen years elapsed after the probate 
of the will before any demand of dower was 
made. During the whole of this time she oc- 
cupied the real estate which was devised to 
her. The personal property bequeathed to her 
was received by her, and some of it has been 
disposed of by her. The benefit of the other 
provision in the will in her favor had been 
enjoyed by her. A decree of the probate 
court has been made, assigning to her by 
definite bounds that part of the real estate 
which was devised to her; and the whole es- 
tate has passed out of the hands of the orig- 
inal devisees. We think, after all this, it is 
too late for the widow to waive the provision 
made for her In the will and claim her 
dower. 

It is true that in equity the widow may 
sometimes be relieved from an improvident 
election; but this can only be done where 
some deception or fraud was practiced upon 
her, or at least where she acted under an 
ignorance of the facts or a misapprehension 
of her legal rights. But here is no evidence 
of any deception, or misapprehension, or even 
ignorance of the circumstances of the case. 
The plaintiff chose to regard and carry into 
effect the provisions and directions contained 
in her husband's will. No desire to avoid it 
on her part was known to exist till many 
years after the death of her husband, and 
not until the estate had passed from her fam- 
ily into the hands of strangers. We are en- 
tirely clear that she cannot now change her 
determination, waive the provisions of the 
will, and claim her dower. 



SATISFACTION. 



13:^ 



STRONG V. WILLIAMS. 

(12 Mass. 391.) 

Supreme Judicial Court of Massachusetts. 
1815. 

PUTNAM, J. delivered the opinion of the 
court. 

The general rule anciently established in 
chancery was, that when a testator being in- 
debted gave to his creditor a legacy equal to, 
or exceeding the amount of his debt, the leg- 
acy should be considered as a satisfaction for 
the debt. The rule has been acknowledged 
in later cases, but with marks of disapproba- 
tion, and a disposition to restrain its opera- 
tion in all cases where, from circumstances 
to be collected from the will, it might be in- 
ferred that the testator had a different inten- 
tion. Haynes v. Mico, 1 Bro. Cha. Ca. 131. 
Thus where the testator left a sufBcient es- 
tate, it was determined that he was to be pre- 
sumed to have been kind as well as just. So 
if the legacy was of a less sum than the debt; 
or of a different nature; or upon conditions; 
or not equally biBneflcial in some one particu- 
lar, although more so in another. 

All the cases agree that the intention of the 
testator ought to prevail; and that, prima 
facie at least, whatever is given in a will is 
to be intended as a bounty. But by later 
cases the courts have not been disposed to 
understand the testator as meaning to pay a 
debt, when he declares that he makes a gift; 
unless the circumstances of the case should 
lead to a different conclusion. 

Thus in the case cited for the plaintiff. 
Brown v. Dawson, 2 Vern. 498, where the 
wife joined in the sale of her jointure, and 
the husband gave her a note of 11. 10s. per 
annum for her life; and afterwards upon an- 
other such sale he gave her a bond for &l. 
10s. per anjp,um for her life; and he after- 
wards made his will, and gave her 141. per 
annum for life: the legacy was adjudged to 
be a satisfaction for the note and bond. Here 
it will be perceived that the annuity given in 
the will amounted exactly to the sums se- 
cured by the bond and note: and the pre- 
sumption of satisfaction proceeded upon the 
similitude of the legacy to the debt. 2 Fonbl. 
330, in notis. So in the case of Fowler v. 
Fowler, 3 P. "Will. 353, the general rule was 
applied. There the husband, being indebted 
to the wife for arrears due by the marriage 
settlement, gave her a larger legacy by the 
will: and it was held a satisfaction of the 
debt. But it is to be observed that lord chan- 
cellor Talbot expressed great dissatisfaction 
with the rule: and it does not appear that 
any circumstances could be found, to take 
the case out of its general application. In 
that case the court refused parole evidence, 
to prove that the testator intended both 
should be paid. 

But cases of this nature must depend upon 
the circumstances: and there must be a 
strong presumption, to induce a belief that 



the testator intended the legacy as a payment, 
and not as a bounty. 2 Fonbl. 332. Thus 
where the testatrix had given her servant a 
bond for 201. free of taxes for her life, and 
afterwards made her will and gave the serv- 
ant 20Z. per annum payable half yearly, but 
said nothing about the taxes, the court held 
that both should be paid. Atkinson v. Webb, 
2 "Vern. 478. — Here the legacy, being not 
quite so beneficial as the debt, did not raise 
a presumption that it was intended as a pay- 
ment. 

So where the testator having sufBcient as- 
sets, and having manifested great kindness 
for the legatee, gave a legacy of a greater 
amount than he owed, it was holden by lord 
chancellor Cowper, that the testator might 
be presumed to be kind as well as just: and 
he decreed the payment of the legacy as well 
as the debt. Cuthbert v. Peacock, 1 Salk. 155. 
It has been holden that a legacy for a less 
sum than the debt shall never be taken as 
satisfaction; 2 Salk. 508; and that specific 
things devised are never to be considered as 
satisfaction of a debt, unless so expressed. 2 
Eq. Ca. Abr. title Devises pi. 21, cited Bac. 
Abr. Legacies D. 

So the circumstance, that the testator had 
devised " that all his debts and legacies should 
be paid," was holden sufficient to take the 
case out of the general rule: as where the tes- 
tator, indebted to his maid servant 1001., by 
bond for wages, afterwards gave her 500^. 
lord chancellor King decreed that both should 
be paid, as the testator had made provi- 
lion for the payment of his debts. 1 P. 
"Will. 408, 409. vide note. 

So where it appeared that the legatee had 
lived with the testatrix as a servant for twen- 
ty or thirty years, and she had given her a 
bond for 2601. and in one montli afterwards 
she made her will and gave her 500Z. : and 
in another clause she gave the rest of her 
servants 51. apiece, but not to Jane Oreese, 
the legatee; "because," said the testatrix, "I 
have done well for her before;" and she also 
made provision for her debts and legacies. 
Lord Hardwicke thought the circumstances 
above stated took the case out of the general 
rule, and decreed the legacy to be no satisfac- 
tion for the debt. Richardson v. ffreese, 3 
Atk. 65; Nicholls v. Judson, 8. P., 2 Atk. 
301; Clark v. Sewell, S. P., 3 Atk. 97. 

So where the testator was indebted for 
goods on an open account, a legacy for a larger 
sura was not held a satisfaction: because he 
might not know whether he was indebted or 
not; and therefore no presumption was to 
arise, that he intended merely to pay a debt. 
Powers Case, 1 P. "Will. 299; 10 Mod. Case 
No. 201, p. 398. 

In the case at bar, the consideration for the 
.legacy appears from the will to have been for 
the services of the legatee. A presumption 
that the legacy was intended to be a satisfac- 
tion of the bond also, must rest on the fact 
that the bond was given for the same serv- 
ices: of which fact there is no evidence be- 



134 



SATISFACTION. 



fore us. It may have been for a different 
cause. We can only presume that it was for 
a lawful one. 

It appears also from the will, that the tes- 
tator intended his debts and legacies should 
be paid, before his residuary legatees should 
take any thing. The pecuniary legacy to the 
plaintiff also is not so much as the debt; and 
therefore cannot be considered as a payment 



of it. Neither is there any declaration of the 
testator, that the specific articles given should 
be considered as a satisfaction of the debt. It 
appears also that there are sufficient assets. 
From a consideration of the principles and 
decisions applicable to this case, we are there- 
fore all of opinion that the plaintiff ought to 
recover. 

B^endant d^aulted. 



SATISFACTION. 



135 



DEICHMAN V. ARNDT. 

(22 Atl. 799, 49 N. J. Eq. 106.) 

Court of Chancery of New Jersey. Oct. 26, 1891. 

Action by Delchman against Arndt for 
the construction of a will. 

Charles .A. 2^ite/j, for complainant. Wm. 
M. Davis, for defendant 

BIRD, V. C. By the bill in this caHe the 
complainant asks the aid of the court in 
determining the true construction of the 
last will of Ann Arndt, deceased, and con- 
sequently the rights of the legatees and 
devisees under said will. At the time of 
her death and of the making of her will 
she was the owner of a lot of land with 
a dwelling thereon, in which she resided. 
Before the making of her will she gave a 
bond to William M. Davis, the guardian 
of Harry King Arndt, one of her infant 
children, conditioned for the payment of 
$500, with interest. To secure this bond 
she gave a mortgage upon said house and 
lot. By her will she devises this house and 
lot to her son Harry in the following 
language : " I give to my son Harry King 
Arndt, absolutely, to be held in trust, 
however, by my executor hereinafter 
named, the dwelling-house and lot where- 
in I now reside, situate on Main street, in 
Phillipsburg, N. J., until he arrives at the 
age of twenty-one (21) years; my executor 
to rent the same, collect the rent, pay all 
taxes, insurance, services, anH repairs, and 
the balance remaining to be used for the 
support and maintenance of my son Har- 
ry King Arndt, hereinbefore named." 
Two questions are presented in the bill 
for consideration, viz.: Is the devise to be 
regarded as a payment and discharge of 
the bond, and is the gift to Harry an 
absolute fee? In this case the testatrix in 
clear language directs that all of her 
debts be paid as soon as conveniently can 
be after her decease. She makes disposi- 
tion of her personal estate. Including bank- 
stock, giving a portion thereof to her 
daughter, a portion to another son, and 
a portion to the said Harry. The divis- 
ion of this personal property is not equal, 
but the extent of inequality is not made 
apparent. She first gives to her daugh- 
ter certain household furniture; and, in 
the second place, to her son Frank cer- 
tain household furniture; and, in the third 
place, makes the devise of the house and 
lot to Harry. She then provides for the 
protection of her cemetery lot, and gives 
the three children all of her silver-ware. 
Immediately after this she directs her ex- 
ecutor to sell "the balance of my house- 
hold effects, " and to divide the proceeds 
thereof between her three children, direct- 
ing him, however, to hold the share of 
Harry until he arrives at the age of 21 
years. Then she directs her executors to 
collect the dividends of her 19 shares of 
bank-stock, and to pay the same towards 
the support and maintenance of Harry 
until he arrives at the age of 21 years, at 
which last-mentioned date he is author- 
ized to sell the said stock and divide the 
proceeds between her three children. Not- 
withstanding this last provision, she au- 
thorizes her executor to sell all the said 



shares of bank-stock at snch time or 
times as he shall think fit, and to iiive.st 
the proceeds, and pay tlie interest thereof 
for the support and maintenance of her 
son Harry until he arrives at the age of 
21 years. She then directs that the residue 
of her estate, "consisting principally of 
bonds and mortgages and notes, money 
and stock, should be divided equally be- 
tween my three children, share and share 
alike, my executor, however, retaining 
that portion falling to my son Harry 
King Arndt until he arrives at the age of 
twenty-one years. " From this it appears 
that the testatrix was indebted to the 
guardian of her son in the sum of $500: 
that she made her said son both devisee 
and legatee, imposing a condition upon 
the devise that the executor should re- 
ceive the rents and profits until the son 
arrives at the age of 21 years, for his sup- 
port and maintenance, and a like condi- 
tion upon the gift of the legacy ; and that, 
as the matter stands, both the devise and 
the legacy are of uncertain value. Where 
there is nothing to show a contrary in- 
tention upon the part of the testator, and 
he directs the payment of his debts, the 
gift of a legacy is never presumed to have 
been given for the purpose of discharging 
a debt due from the testator to the lega- 
tee. Van Riper v. Van Riper, 2 N. J. Eq. 
1 , Heisler v. Sharp, 44 N. J. Eq. 167, 14 
Atl. Rep. 624; Rusling v. Rusling, 42 N. .T. 
Eq.5<J4,8Atl.Rep. 534; Chaucey'sCase,! P. 
Wras. 408, 410, 2 White & T. l.ead. Cas. 
7.^12, notes, 820; Reynolds v. Robinson, 
82 N. Y. 103; Boughton v. Flint, 74 N. Y. 
477; In re Huish, 43 Ch. Dlv. 260. The 
courts so little favor the discharge of debts 
by legacies that they have uniformly laid 
hold of slight circumstances to overcome 
the presumption that payment was in- 
tended independently of the direction to 
pay debts. Hence, when the gift has been 
of land or of goods and chattels, or upon 
conditions unfavorable to the donee when 
compared with the present discharge of 
the debt, the payment of both has been 
required. 2 White & T. Lead. Cas. 821. 
"Money and land being things of a differ- 
ent kind, the one, though of greater value, 
shall never be taken in satisfaction of the 
other, unless so expressed." "Whatever 
is given by will is prima facie to be in- 
tended a benevolence. " Eastwood v. 
Vinke, 2 P. Wms. 613, 616. In this casethe 
court remarked: "But, though the court 
has gone so far, it never yet construed a 
devise of land to be a satisfaction for a 
debt of money." In Bryant v. Hunter, 
3 Wash. C. C. 48, Fed. Cas. No. 2,068, 
Washington, J., says: "The general 
rule is that a devise of land is not a 
satisfaction or part performance of an 
agreement to pay money." See, also, 
Eaton V. Benton, 2 Hill, 576, 580. The 
bond in this case being for the payment 
of money, and the gift being land, the 
construction must necessnrily be con- 
trolled by the cases cited. It can make 
no difference that the payment of the bond 
was secured by mortgage on the land de- 
vised. It cannot be doubted but that the 
gifts of goods and chattels and proceeds 
of bank-stock and residue by the testa- 
trix to her son Harry are alike subject to 
the same conditions that govern with 



136 



SATISFACTION. 



respect to the devise of land. According; 
to all of the cases there is no similitude 
whatever between those gifts and the ob- 
ligation which the testatrix had directed 
her executor to pay. 

I have not thought it necessary to put 
any stress upon the fact that both the 
bond and the mortgage -were given to the 
guardian of the devisee and legatee. It 
has been suggested that if this bond be 
paid to the guardian of Harry, Harry's 
proportion of the estate of the testatrix 
vsrill be much larger than the portion re- 
ceived by his brother and sister. This 
would be an important consideration if 
it were the duty of courts to construe 
wills BO as to make an equal disposition 
of the estate disposed of thereby among 
legatees and devisees, irrespective of the 
directions of the will. There is nothing 
in this will to give any certain assurance 
to the court that the testatrix intended 
to make an equal disposition of her es- 
tate among herchildren. If there be any 
inequality in the value of the gifts, the 
testatrix may have had very good reason 
therefor; but, whether she had or not, 
she had a lawful right to make any dis- 
tinction she chose. This bond must be 
first paid out of the personal estate, as 
other debts, before the payment of any of 
the legacies. 

The next question presented tor consid- 



eration is whether or not the Interest de- 
vised to Harry be less than the fee-simple 
absolute. When the sentence making the 
devise to Harry is read, if there be any 
doubt as to the extent of the interest de- 
vised, such doubt will be dissipated upon 
careful reflection. The testatrix first de- 
clares that she gives him the premises ab- 
solutely, but afterwards gives such direc- 
tions as at first view would seem to have 
I been intended as a qualification to the ex- 
tent of limiting his interest to the rents 
and profits until he arrives at the age of 
21 years. But when this sentence and this 
apparent qualification are read in connec- 
tion with the succeeding clauses in the 
will, by which gifts are made to Harry, the 
doubt is removed. She ordered the silver 
to be divided between her three children ; 
but Harry's interest in other personal 
property and in the bank stock and in 
the residue of the personal property is to 
be retained by the executor, and the in- 
terest and dividends paid to Harry, until 
he arrives at the age of 21 years, when he 
is entitled to the possession of the prin- 
cipal. From the control given to the ex- 
ecutor over the interest of Harry until 
he arrive at the age of 21 years the testa- 
trix in all probability intended to provide 
against the necessity of appointing a 
guardian for him. In my judgment the 
fee-simple absolute vested In Harry. 



SATISFACTION. 



137 



DEWITT V. YATES. 

(10 Johns. 156.) 

Supreme Court of New York. May, 1813. 

This was an action of debt for a legacy. 
The cause was tried at the Saratoga circuit 
in September, 1812. Peter Yates, by his last 
will, dated the loth of August, 1807, be- 
queathed as follows: "Item, I give to my 
daughter Maria's children, of her body, two 
hundred and fifty pounds; if any of the five 
children should decease before my decease, 
or after, the parts of the deceased shall 
come to the then living; each of them is to 
have fifty pounds when they come of age, 
or when thev or either of them should mar- 
ry." 

In a subsequent part of the will, the tes- 
tator having devised the half of a farm, etc., 
to his son-in-law, Philip Vanderbergh, and 
his wife, and the other half to his wife, etc., 
directs as follows: "In consideration of 
which, it is my will, and I do hereby order, 
that the said Philip Vanderbergh, his heirs, 
etc., shall pay to the children of my said 
daughter Maria, to wit, Sarah (the wife of 
the plaintiff), John, Maria, Catalina, and 
Catharine, the sum of two hundred and fifty 
pounds, equal to 625 dollars, to be paid unto 
them and each of them, in sums of fifty 
pounds, as they respectively shall arrive at 
the age of 21 years, or on the day that they 
or either of them shall marry," and appoint- 
ed the defendant and three others his exec- 
utors. 

It was proved that Philip Vanderbergh, 
the devisee, in October, 1807, paid to the 
plaintiffs the 50 pounds given to Sarah, the 
wife of the plaintifE, and named in the sec- 
ond clause of the wUl. 

It was admitted that a year had elapsed 
since the death of the testator; that the 
plaintiffs had duly demanded payment of the 
legacy, mentioned in the first clause, of the 
defendant, previous to the commencement of 
the suit, and had tendered and filed a bond 
according to the directions of the statute; 
and that the defendant had assets in his 
hands, after payment of all debts and other 
legacies, sufficient to pay the legacy in ques- 
tion. 

The defendant offered a witness to prove 
that, before and at the time the testator 
made his will, he expressed his intention to 
give one legacy to the children of his daugh- 
ter Maria, and that was the legacy directed 
to be paid by Philip Vanderbergh; but the 
evidence was objected to, and overruled by 
the judge. 

A verdict was taken for the plaintiffs, sub- 
ject to the opinion of the court, on a case 
made. 

Mr. Huntington, for plaintiffs. Mr. Skin- 
ner, for defendant. 

KENT, C. J., delivered the opinion of the 
court. This is the case of a sum of money 



given twice in the same instrument to the 
same legatee. The general rule on this sub- 
ject, from a review of the numerous cases, 
appears evidently to be that where the sum 
is repeated in the same writing the legatee 
can take only one of the sums bequeathed. 
The latter sum' is held to be a substitution, 
and they are not taken cumulatively, unless 
there be some evident intention that they 
should be so considered, and it lays with 
the legatee to show that intention and rebut 
the contrary presumption; but where the 
two bequests are in different instruments, as 
by will in the one case and by a codicil in 
the other, the presumption is in favor of the 
legfitee, and the burden of contesting that 
presumption is cast upon the executor. The 
presumption either way, whether against the 
cumulation because the legacy is repeated in 
the same instrument, or whether in favor 
of it because the legacy is by different in- 
struments, is liable to be controlled and re- 
pelled by internal evidence, and the circum 
stances of the case. Godol. Leg. p. 3, c. 26, 
§ 46; Swinb. pt 7, c. 21, § 13; Duke of St. 
Albans v. Beauclerk, 2 Atk. 636; Garth v. 
Meyrick, 1 Brown, Ch. 30; Ridges v. Mor- 
rison, Id. 389; Hooley v. Hatton, Id. 390, 
note; Wallop v. Hewett, 2 Ch. R. 37; New- 
port V. Kinaston, Id. 58; James v. Semmens, 
2 H. Bl. 214; Allen v. Callen, 3 Ves. Jun. 
289; Barclay v. Wainwright, Id. 462; Os- 
borne V. Duke of Leeds, 5 Ves. 369. This 
question, which appears to have arisen so 
often and to have been so learnedly and ably 
discussed in the English courts, was equally 
familiar to the civil law. The same rule ex- 
isted there, and subject to the same control. 
Dig. 30, 1, 34; Dig. 22, 3, 12; and the notes 
of Gothofrede, Id.; Voet, Con. ad Pand. tom. 
2,408, s. 34. And Chancellor D'Aguesseau, in 
his pleadings in the Case of the Heirs of 
Vaugermain (Oeuvres, tom. 2, 21), adopts 
and applies the same rule to a case arising 
under the French law. The civil law puts 
the case altogether upon the point of the 
testator's intention; but then, if the legacy 
was repeated in the same instrument, it re- 
quired the highest and strongest proof to 
accumulate it. Bvidentissimis probationibus 
ostendatur testatorem multiplicasse legatum 
voluisse. 

In the present case, what are the intrinsic 
circumstances to show a manifest intent of 
the testator to multiply the legacy? The 
only material variation in the two bequests 
is that, in the latter instance, the legacy 
was charged upon Philip Vanderbergh in 
respect of the real estate to him devised; 
but this affords no evidence of an intention 
to accumulate. The inference is the other 
way. It was only strengthening the security 
of the legacy by means of the charge. There 
was no specified object. There was no as- 
signed reason or cause, as respected the lega- 
tees, for repeating the bequest Courts have 
required some new or additional cause for 
enlarging the bounty before they have held 



138 



SATISFACTION. 



it accumulative, unless the words of the will 
clearly showed the intent. In a will, the 
testator gave double legacies to his daugh- 
ters, but he added, in those cases, that they 
were "in addition" to what he had before 
given; and the master of the rolls, in Bar- 
clay V. Wainwright, said that he laid con- 
siderable stress upon this, that where the 
testator meant addition he expressed it. The 
whole will denotes throughout a careful and 
studied apportionment of the testator's es- 
tate among his children, according to his 
opinion of their wants and circumstances; 
and he imposed several trusts and charges, 
probably with a view to greater accuracy In 
the partition of his estate. He appoints fqur 
sons executors, but he charges his funeral 
expenses upon three, and his debts upon two, 
of them. A small variation in the direction 



as to payment will not alter the construc- 
tion. In Halford v. Wood, 4 Ves. 76, the 
legacy was an annuity of £30 for life, and 
in the one instance It was declared to be 
payable quarterly, and In the other instance 
the will was silent as to the payment, and 
yet it was not held accumulative. So, also, 
in Greenwood v. Greenwood, 1 Brown, Ch. 
31, note, the one legacy was simply to Mary 
Cook, but the other was to Mary Cook "for 
her own use and disposing, notwithstanding 
her coverture"; and yet Lord Bathurst de- 
creed that she was entitled to one legacy 
only. 

As, then, the substituted legacy In this 
case has been paid by the devisee, on whom 
it was charged, the defendant is entitled to 
judgment. 

Judgment for the defendant. 



SATISFACTION. 



139 



EDWARDS et al. v. RAINIER'S EX'RS. 

(17 Ohio St. 597.) 

Supreme Court of Ohio. Dec. Term, 1867. 

Error to court of common pleas, Pickaway 
county. Reserved in the district court. 

The original petition was filed by the ex- 
ecutors of Isaac Rainier, deceased, against 
his devisees and legatees, on the 3d day of 
June, 1864, in the court of common pleas 
of Pickaway county, to obtain a construction 
of the wiU of said deceased. 

The will Is dated September 8, 1860, to 
which a codicil is added, dated December 4, 
1861. The testator died March 25, 1863, and 
his will was admitted to probate April 29, 
1863, and Is as follows: 

"(1) I will that all my just debts and fu- 
neral charges be paid. 

"(2) I give and bequeath to Mary Rainier, 
my much-esteemed wife, in lieu of her right 
of dower, thirty acres of land during her nat- 
ural life, and bounded as follows: * * * 
Out of the farm on which I now reside, sit- 
uated in Madison township, Pickaway coun- 
ty. And I also give to my wife all the 
household and kitchen furniture of every 
description, except what is hereafter willed. 
And I also give to my wife five hundred dol- 
lars in cash; and I also give her my sorrel 
mare Fly, and my top buggy, with the har- 
ness belonging thereto. And my said wife 
is to have sufficient timber of any part of 
said quarter section, for the use and support 
of her said dower, together with fuel suffi- 
cient for fire. And the widow may select 
what books she may think proper for her 
own use, except those hereafter willed. 

"(3) I give and bequeath to my daughter 
Sarah A. Edwards, wife of Stephen S. Ed- 
wards, all notes I hold against Stephen S. 
Edwards, of every description whatever, up 
to the first day of November, 1852; and I 
also give to my daughter, Sarah A. Edwards, 
fifteen hundred dollars in cash. 

"(4) I give and bequeath to my son Isaac 
Rainier the use, occupation, and enjoyment 
of the northwest quarter of section eleven, 
in Violet township, Fairfield county, Ohio, 
to have and to hold during his natural life, 
and then to his heirs. 

"(5) I give and bequeath to my daughter 
Hester Ann Adell the use, occupation, and 
enjoyment of the northeast quarter of sec- 
tion number fourteen, situate in Violet town- 
ship, Fairfield county, and state of Ohio, to 
have and to hold during her natural life, and 
then to her heirs, subject to the dower of 
my wife, Mary Rainier. And the said Hes- 
ter Ann Adell, wife of George Adell, is to 
pay to my daughter Sarah A. Edwards, wife 
of Stephen S. Edwards, one thousand dol- 
lars in money, in the following payments, to 
wit, one hundred dollars per year. The first 
payment to be made one year after my 
death, and if the said Hester Ann Adell 
should fail to make the above payments as 
required, and should it become necessary to 



sell any portion of the land, it is my will it 
shall be taken off the west side, not to ex- 
ceed thirty acres." 

(6) In this item the testator gives to his 
son John F. Rainier the northwest quarter 
of section niunber fom'teen, in Madison town- 
ship, "subject to the widow's dower above 
written"; and he also gives him "the horse 
power wood saw, and all the reaping and 
mowing machines, and all wagons and farm- 
ing utensils of every description whatever, 
and all the stock of every kind (except two 
cows, wbich I leave to the widow, she hav- 
ing choice); also Clerk's Commentaries on 
the Old and New Testament, six volumes, 
Webster's Unabridged Dictionary, and all 
the books belonging to me not taken by the 
widow; and I also give to my son John F. 
Rainier all mechanic tools of every kind 
whatever, and one bedstead, bed, and bed- 
ding." 

(7) In this item he gives to his daughter 
Mary B. Pontius, wife of Franklin G. Pon- 
tius, the northwest half of the northeast 
quarter of section eleven, in Violet town- 
ship, and "five hundred dollars in money, in- 
cluding a duebill" of $82 against said Frank- 
lin G. Pontius. 

"(8) I give and bequeath to my niece Al- 
mina Ebright one bedstead, bed, and bed- 
ding; and I also give to Almlna Ebright one 
hundred dollars in money, provided she con- 
tinues to live with the family imtll she ar- 
rives at the age of eighteen years, if there 
should be that amount remaining after pay- 
ing off the other legatees as above given. 

"If the widow should see proper to marry 
again, she then shall forfeit her interest in 
my real estate, and my daughter Hester Ann 
Adell and my son John F. Rainier shall pay, 
each of them, two hundred and fifty dollars 
in lieu thereof. 

"All the above legacies to be paid in two 
years after my decease, or as soon after as 
can be collected." 

The testator appointed John F. Rainier 
and George Adell executors of his will. 

By the codicil, the testator gave the north- 
west quarter of section eleven, m. Violet 
township, to John F. Rainier and George 
Adell in trust for Isaac Rainier for life, and 
then to his heirs, and revoked all right that 
Isaac had in the foregoing will except as 
expressed in the codicil. 

He gives to John all the household furni- 
ture after the death of iis wife, and adds 
the following clause: "And it is my will 
that each my several children shall have all 
the growing and matured crops that may be 
(on) the different tracts of land that I have 
willed to them as above written." 

It was claimed by the executors that the 
sum of $1,000, mentioned in the fifth item 
of the will, was intended to be a part pay- 
ment of the sum of $1,500 bequeathed in the 
third item to Sarah A. Edwards; while the 
latter claimed that said sum of $1,000 was 
a legacy to her in addition to the sum of 



140 



SATISFACTION. 



$1,500. The executors aver tbat the person- 
alty is Insufllcient to pay said legacy unless 
said sum of $1,000 be applied for that pur- 
pose; but Mrs. Edwards answers that the 
personalty was sufficient when the will was 
executed, and that if there is not now 
enough it is because it was expended in im- 
provements on the real estate. This is not 
denied by reply. 

The executors claim the corn in cribs, on 
the lands devised as aforesaid, at the time 
of the testator's decease; but the same is 
claimed by the respective devisees of the 
land on which the corn was grown and ma- 
tured, and on which the cribs were several- 
ly located. 

The court of common pleas decreed that 
the will be consti'ued to give to Sarah A. 
Edwards a legacy of $1,500 only; that the 
sum of $1,000 mentioned in the fifth clause 
is a fund for the part payment thereof, and 
not an additional legacy; that the corn in 
the cribs passed to the executors, and not 
to the devisees; and that the sum of $500 
given to the widow is a debt in lieu of dow- 
er, and not a legacy. 

To reverse this decree a petition in error 
was filed in the district court, which was 
there reserved for decision in this court. 

The following are the assignments of er- 
ror: 

(1) There was error in finding that the 
legacy to Sarah A. Edwards was a legacy 
of $1,500 only, and not a legacy or legacies 
of $2,.5O0. 

(2) There was error in finding that the 
corn named in the petition as being in the 
cribs on the land of Isaac is not embraced 
in the provisions of the will, but belongs to 
the executors. 

(3) There was error in finding that the 
sum of $.500 to the widow is a debt in lieu 
of dower, and not a legacy. 

(4) General assignment of errors. 

C. N. Olds, for plaintiffs. Henry F. Page, 
for defendants. 



DAY, 0. J. We are called upon, under 
this proceeding in error, to determine wheth- 
er the court of common pleas correctly con- 
strued the will of Isaac Rainier, deceased. 
Xo bill of exceptions was taken in that court 
embodying the evidence there given, and, so 
far as evidemce was admissible to aid in the 
construction of the will, it may be presumed 
to have been before the court. At most, 
however, the evidence could only inform the 
court of all the circumstances that sur- 
rounded the testator, to aid it in determin- 
ing the meaning the testator intended should 
be given to the words he used in the will. 

With this presumption in favor of the 
judgment below, we are left to construe the 
will by the language used therein, aided 
only, on the principal question, by a fact 
conceded by the pleadings, that the testator, 



when he executed the will, had personal 
property sutticient to fill all the legacies 
upon the largest construction of the bequests. 

It is claimed by the executors that the 
sum of $1,000, to be paid by Mrs. Adell to 
;Mrs. Edwards, is to be applied on the legacy 
to her of $1,500, and is not to be regarded 
as a legacy in addition to that sum. 

Jlrs. Edwards claims that it was the in- 
tention of the testator to give her both sums. 

Here arises the principal question pre- 
sented for our consideration: Was the $1,000 
Intended by the testator to be an additional 
benefit or legacy to Mrs. Edwards? 

The books afford us but little aid in the 
solution of this question: for. in the lan- 
guage of Chief Justice Hornblower in Jones 
V. Creveling's Ex'rs, 19 N. J. Law, 127: 
".4.fter a careful examination of the cases 
cited on the argument and of many others, 
I am satisfied, notwithstanding all the nice 
distinctions that have been taken by courts 
of law and courts of equity upon the sub- 
ject of single or cumulative legacies, we 
must come down to the plain common-sense 
question of what was the intention of the 
testator." 

Chief Justice Kent, after much research, 
arrived at substantially the same result in 
De Witt V. Yates, 10 Johns. 156. Although 
he recognizes the general rule that, where 
the sum is repeated in the same writing, the 
presumption is against the legatee, and that 
where the two bequests are in different in- 
struments tlie presumption is in his favor, 
he adds: "The presumption either way, 
whether against the cumulation, because the 
legacy is repeated in the same Instrument, 
or whether In favor of it, because the legacy 
is by different instruments, is liable to be 
controlled and repelled by internal evidence, 
and the circumstances of the case." 

The general rule is stated in an English 
treatise to be that, where two legacies are 
given by the same testamentary instrument 
of equal amount, courts infer an intention in 
the testator to give but one legacy; and that, 
"where the legacies given by the same tes- 
tamentary instrument to the same person are 
of different amounts, the legacy shall be con- 
sidered accumulative." Rop. Leg. *996, *998. 

If the $1,000 was in the form of a direct 
bequest, these authorities might aid us in 
arriving at a conclusion; but the real ques- 
tion Is whether that sum was intended to be 
in part payment of a legacy already ex- 
pressly given in the will; if not, the ques- 
tion Is settled, for it Is clear that the tes- 
tator intended Mrs. Edwards should have 
the money. If he did not intend that It 
should apply In part payment of the $1,500, 
it is equally clear that he intended it should 
be an additional legacy. 

The only question then is whether the tes- 
tator intended that Mrs. Edwards should re- 
ceive the sum of $1,000, to be paid to her 
as directed in the fifth item of the will, in 



SATISFACTION. 



141 



part payment of the legacy he had given 
her in the third. 

The Intention of the testator in relation to 
this "is to be gathered from the phraseology 
of the will itself, and, to arrive at this in- 
tention, it is necessary to look into the en- 
tire instrument." Williams v. Veach, 17 
Ohio, 180; Beckwith v. Moore, 14 Ohio St. 
129; Brasher v. Marsh, 15 Ohio St. 103. 

Let us then look at the will. We search 
in vain for any expression of a purpose that 
the $1,000 should be applied in part satis- 
faction of the legacy bequeathed in the third 
item of the will. There is no language used 
in the instrument from which such an in- 
tention can fairly be implied. It would have 
been most natural, in a matter of so much 
importance, to have indicated that the $1,000 
was to be paid to Mrs. Edwards, to apply on 
the legacy before given to her, if such was 
the intention of the testator. If he intended 
to make the mode of paying this legacy of 
$1,500 to differ so widely from that of pay- 
ing all the other legacies in his will, it is 
singular that he did not add to the gift of 
"fifteen hundred dollars in cash" some words 
indicating such a purpose, or else have done 
so In connection with the direction that a 
$1,000 should be paid to the legatee of the 
$1,500. This strikes us with the more sur- 
prise, if such was his intention, since in 
other parts of his will, in matters of less im- 
portance, he is sufficiently explicit. Where 
he directs two of his legatees to pay money 
to his widow in the contingency of her mar- 
riage, he specifies that it shall be "in lieu" 
of her interest in his real estate. In the sec- 
ond item he gives his wife all the house- 
hold and kitchen furniture, except what is 
"hereafter willed"; she is also to have such 
books as she may select, "except those here- 
after willed"; and in the sixth clause he de- 
vises land subject to the widow's dower 
"above written." While thus explicit in 
minor matters, if such was his purpose he 
would naturally have added to the legacy of 
$1,500, or to the requirement to pay the leg- 
atee of that amount the sum of $1,000, some 
words indicating a purpose to have the lat- 
ter sum applied on the former. 

Nor was it at all singular, as contended in 
argument, tliat the testator did not embrace 
in the third item all he intended to give his 
daughter Mrs. Edwards, but left a part to be 
inserted in the fifth. 

After providing for his wife in the second 
clause, it would seem that he makes a fur- 
ther provision for her in the fifth, in rela- 
tion to the real estate; clearly, in the sixth, 
he gives her some property in addition to 
that bequeathed to her in the second. More- 
over, there are obvious reasons, if he did 
intend to give the $1,000 in addition to the 
$1,500, why he should insert that gift in the 
clause we find it, and no particular reason 
why both gifts should be inserted in one 
item' of the will. One was a general legacy; 
the other was to be paid by a particular 



person, and at particular times, and is in a 
clause naming the person to pay it, and pro- 
viding the means of securing payment. It 
would have been more certain, doubtless, if 
the testator had added, in the fifth item, for 
what purpose he directed the sum of $1,000 
to be paid to Mrs. Edwards, whether as pay- 
ment on the legacy already given to her, or 
in addition thereto. He did, however, take 
care to express a pm'pose that the money 
should be paid by Mrs. Adell to Mrs. Ed- 
wards; and there he leaves it in her hands, 
without any intimation but that he intended 
it should be fully and unconditionally her 
property; certainly there is no intimation 
that he intended it to diminish the amount 
of the legacy before given to her. 

Nor can the failure to express any pm'- 
pose to have the $1,000 applied on the leg- 
acy of $1,500 be the result of haste, for the 
testator lived two years and a half after he 
made the will; neither was it the result of 
accident or oversight, for he carefully re- 
vised his will, more than a year after its 
execution, as is shown by the codicil then 
added thereto. 

While, then, we fail to find in the will 
anything from which it can fairly be in- 
ferred that the testator intended the $1,000 
should be applied in reduction of the legacy 
of $1,500, is it not clearly inferable from 
the will that he intended it should be in 
addition thereto? 

In Creveling's Ex'rs v. Jones, 21 N. J. 
Law, 570, it is said: "Upon a question 
whether two legacies shall be construed to 
be cumulative or not, a fair and forcible 
argument in support of the increase may be 
drawn from the fact that they are for differ- 
ent sums; or the sums are stated in differ- 
ent sections of the will; or one in the will 
and another in a codicil; or the sums are 
made payable at different times, or out of 
different funds." 

We find in this will nearly all these in- 
dices of cumulative legacies. But if we 
seek to find the intent of the testator, I 
think it may be clearly discovered if we 
give to the language he has used in the will 
its natural and ordinary meaning, and give 
to every part of the instrument its just oper- 
ation and effect. 1 Redf. Wills, 431. 

The testator concludes his will by direct- 
ing "aU the above legacies to be paid in two 
years" after his decease. This embraces the 
whole $1,500, as much as any part of it. It 
is a direction to his executors not to pay 
part of any legacy, but "all." This direc- 
tion applies only to the legacies to be paid 
by the executors, and not to the amount to 
be paid by one legatee to another. In such 
cases the testator not only specifies the 
amount to be paid, but the person to pay it, 
and in every instance it is to be paid in 
consideration of real estate devised. The 
executors have no more to do, for aught that 
appears in the will, with the amount to be 
paid by Mrs. Adell to Mrs. Edwards, than 



142 



SATISFACTION. 



they have with the several amounts to be 
paid by other devisees to the widow in case 
of her marriage. 

The sum directed to be paid by Jlrs. Adell 
to Mrs. Edwards is a matter that the testa- 
tor has left entirely between them, and not 
as a legacy that the executors are called up- 
on to settle out of the personalty; therefore 
they are directed to pay "all" the legacies 
in two years, and the sum to be paid by 
one daughter to the other is left upon a 
different security, and to be divided Into 
payments that are to run for longer periods. 
Moreover, upon the other construction, the 
executors might not linow for years, beyond 
the time limited for the payment of legacies, 
what amount to pay on the $1,500, for they 
could not know how much Mrs. Adell would 
pay, or, if she failed to pay, how much the 
land charge would sell for. 

If the clear and plain directions of the 
testator in his will be executed, there will 
be no difficulty; the executors will pay "all" 
the legacies in two years, and the annual 
payments due from Mrs. AdeU will be paid 
every year for ten years; then the intent ot 
the testator, as expressed by the language 
he has used, will be fulfilled. 

The will cannot be construed to apply the 
$],000 to the reduction of the legacy of 
$1,500, without adding to the instrument ma- 
terial words not written there by the testa- 
tor. 

We cannot think, in the absence of any 
intimation of the kind, that the testator In- 
tended to diminish his legacy of $1,500 "in 
cash," which he positively directs to be paid 
in two years, by directing that part of it be 
paid In ten years without Interest. 

The plain reading of the will affords the 
only consistent construction that can be giv- 
en to it, and points out the only practical 
method of its execution. If we give to all 
the language the testator has used bearing 
upon the question its natural and ordinary 
Import, and there stop to Inquire for the 
meaning of the testator, his intention Is clear 



and obvious. It Is only when we begin to 
strain or distort what the testator has said 
by constructions or presumptions that doubts 
of his intention arise. To adopt the con- 
struction claimed by one party, "we mnst 
expunge, transpose, or interpolate material 
words; to sustain that of the other, we 
leave the will as it is." Reading the will, 
then, as It Is vsrltten, we think the testator 
clearly intended to give Mrs. Edwards a leg- 
acy of $1,500 in cash, to be paid In two 
years by his executors, out of the estate that 
would come to their hands; and, In addition 
thereto, to give her $1,000, to be paid by a 
different person, out of a different fund, and 
at widely different times. In so holding we 
but leave the money where the testator 
willed to leave it, and so left It after a de- 
liberate revision of his will. 

The court of common pleas, therefore, err- 
ed In their construction of the will upon this 
point. 

As to the amount bequeathed to the wid- 
ow In lieu of dower, although error is as- 
signed upon this ruling of the common pleas. 
It is not now urged. We do not feel called 
upon, therefore, to express an opinion on 
that point. Indeed, It is doubtful If the 
question can be made on this record. The 
reasons, however, for sustaining the holding 
of that court on this point are so strong, 
that we are content to affirm that part of the 
decree without further consideration. 

As to the corn In the cribs, we think the 
codicil may be fairly construed to meaif as 
held by the common pleas. 

We see no reason, therefore, why the de- 
cree of that court should not be affirmed In 
all respects, except as to the construction of 
the win relating to the bequests to Mrs. Ed- 
wards; as to that, it must be reversed; and, 
unless cause be shown to the contrary, a 
final decree will be entered here in favor of 
the plaintiffs In error. 

WHITE, WELCH, BRINKERHOFF, and 
SCOTT, 33., concur. 



SATISFACTION. 



143 



ROQUET v. ELDRIDGE et al. 

(118 Ind. 147, 20 N. E. Rep. 733.) 

Supreme Court of Indiana. April 2, 1889. 

Appeal from circuit court, Vigo county; 
Josliua Jump, Special Judge. 

Action by Hugh D. Roquet, administrator 
c. t. a., etc., of William B. Eldridge, de- 
ceased, against William G. Eldridge and 
others, heirs, devisees, and legatees of said 
decedent, to settle the estate. From a judg- 
ment declaring certain legacies adeemed, 
the legatees, William G. Eldridge and others, 
appeal. 

0. F. McNutt and Stimson & Stimson, for 
appellants. S. 0. Davis and S. B. Davis, for 
appellee. 



MITCHELL, J. After the issues were 
joiued in the court below, the judgment ap- 
pealed from was rendered upon an agreed 
statement of facts. The questions for deci- 
sion arise out of the facts agreed upon, 
which, so far as they are material, are as 
follows: In November, 1863, William B. 
Eldridge executed his last will and testa- 
ment, by the second clause of which he de- 
vised to his sons Hamilton Eldridge and 
Abram A. Eldridge his homestead farm, to 
be held by them jointly. To his daughters, 
Amanda and Cynthia, and to his sons Wil- 
liam G. and Robert B., he bequeathed $500 
each, to be paid in cash, which sums were 
to be taken and considered as in full of each 
of their respective interests in the home- 
stead farm. The will contained a recital, 
the effect of which was that the devises and 
bequests thus made were to be considered as 
the disposition of the homestead farm 
among the testator's children, and were not 
to affect any other interest or estate. After- 
wards, and during the life-time of the testa- 
tor, his sons Hamilton and Abram A. El- 
dridge, devisees of the homestead farm, fur- 
nished their father $2,000 in money, out of 
which he paid to each of the four legatees 
above named the sum of $500, and received 
from each a receipt of the following tenor, 
viz.: "Received of William B. Eldridge, 
$500, in consideration of my interest in his 
homestead farm, corresponding with his last 
will." One of the daughtei-s was a married 
woman at the time she received the money 
and executed the receipt therefor, as above. 
The testator died in February, 1881, having 
had but the six children named above. He 
had only about $500 in value of personal 
property, which, with the farm above men- 
tioned, valued at about $6,400, comprised his 
whole estate. 

On behalf of the administrator with the 
will annexed, it is insisted that the sums 
paid to the several legatees by the testator 
In his life-time constituted a satisfaction or 
ademption of the legiacies provided by the 
will, while the legatees insist that the lega- 



cies are specific or demonstrative in their 
character, and that since it does not appear 
that the money paid them was raised out 
of, or derived from, the land comprised in 
the homestead farm, the payment did not 
work an ademption of the sums bequeathed 
by the will. The legacies were, however, 
neither specific nor demonstrative. Speak- 
ing upon the subject of specific legacies, the 
lord chancellor in Fielding v. Preston, 1 De 
Gex & J. 438, said: "There have been at- 
tempts in various cases to determine the 
meaning of a specific legacy, and what is 
the test whereby such legacies may be dis- 
tinguished from general bequests. There 
are objections to most of the definitions, but 

1 think we are quite safe in treating that as 
a specific bequest which the testator directs 
to be enjoyed in specie." A legacy is specif- 
ic when it can be satisfied only by the trans- 
fer or delivery of some particular portion of 
or article belonging to the estate, which the 
testator intended should be transferred to 
the legatee in specie. 2 Redf. Wills, 122; 

2 Rap. & L. Law Diet tit. "Legacy." Lord 
Hardwicke said, in Ellis v. Walker, Amb. 
309: "The court leans against considering 
legacies as specific." Unless, therefore, it 
appears that the money or thing to be trans- 
ferred is so clearly identified and inherently 
described as that the legatee can say to the 
executor that all or a portion of the very 
fund or property in question was transfer- 
red by the will, the bequest will not be re- 
garded as specific. Sidebotham v. Watson, 
11 Hare, 170. 

While it is true the doctrine of ademption 
does not apply to specific devises or legacies, 
as a general rule, (Swails v. Swails, 98 Ind. 
511,) yet, even in case of a specific devise 
or bequest, if the very thing devised or be- 
queathed had been transferred to the dev- 
isee or legatee in the life-time of the testator, 
so that there would be nothing left for the 
will to operate upon, an effectual ademption 
would have taken place. 

Accepting the foregoing as the true cri- 
terion of a specific legacy, it becomes clear 
that the bequest of $500 in cash to each of 
the sons and daughters named, and the fur- 
ther direction that this was to be considered 
in full of their respective interests in the 
homestead farm, and that the devises and 
bequests previously made were not to af- 
fect any other interest or estate, did not con- 
stitute a specific bequest of any portion of 
the testator's estate to be transferred in 
specie. Neither did the legacies belong to 
that intermediate class which are sometimes 
denominated "demonstrative," and which 
are peculiar, in that they are not ordinarily 
liable to be adeemed or abated by an ad- 
vancement made in a general way. "A 
demonstrative legacy is a bequest of a sum 
of money payable out of a particular fund or 
thing. It is a pecuniary legacy, 'given gen- 
erally, but with a demonstration of a par- 
ticular fund as the source of its payment' 



144 



SATISFACTION. 



It is therefore equivalent to, or in the nature 
of, a devise or bequest of so much or such 
a part of the fund or thing specified." Glass 
V. Dunn, 17 Ohio St. 413; 5 Amer. & Bng. 
Enc. Lave, 541; 2 Redf. Wills, 140, 141. 

^A'hile it is quite true the -will plainly in- 
dicates that the sums bequeathed to the 
sons and daughters named were to be tak- 
en in full of their respective interests in the 
homestead farm, which was specifically de- 
vised to the two other sons named in the 
will, there is no direction that the bequests 
are to be paid out of any particular fund, 
or that the fund out of wliich payment is 
to be made is to be derived from the rents, 
issues, or profits of the land, or that the 
legatees are to have any interest, as such, 
in the land itself. The implication is that 
the bequests were chargeable against the 
devisees of the land, or, at most, that they 
should be chargeable upon the farm. More- 
over, since it appears by the agreed state- 
ment of facts that the sons to whom the 
homestead farm was devised furnished the 
money with which the legacies were paid, 
it is not apparent why this should not be 
held to satisfy the bequests, even though it 
should be conceded that they were payable 
out of the land. If thus payable, it must 
have been contemplated that the amount 
should constitute a charge upon the farm, 
to be removed by the devisees at some time, 
hy paying the several amounts to the lega- 
tees. We know of no authority which 
would justify a holding that a general leg- 
acy which is payable out of a particular 
fund, or in a specified manner, may not be 
satisfied, in case the legatee receives the 
amount thereof from the testator in his life- 
time, out of the very fund devoted to the 
payment of the bequest, provided it clearly 
appears that the amount was given and re- 
ceived with the intention that it should work 
an ademption of the legacy. If we assume 



that the homestead farm was to be the 
source from which the fund was to be de- 
rived, out of which the legacies were pay- 
able, the conclusion follows that the dev- 
isees of the farm were to take it subject to 
the burden of paying the legacies after the 
testator's death. Having furnished the 
money to the testator during his life-time 
with which to pay off the bequests, and the 
money having been paid to the legatees and 
received by them for that purpose, the lega- 
cies are effectually satisfied from the very 
source contemplated by the will. An ademp- 
tion results where a parent or other person 
standing in loco parentis, after having made 
a bequest, gives a portion to the child to 
whom the bequest is made, equal to or in 
excess of the amount bequeatlied, the por- 
tion given and the legacy being ejusdem 
generis. Weston v. .Tolmson, 48 Ind. 1. 
Within the rule thus stated the legacies 
were adeemed. 

Whether a legacy be specific or demonstra- 
tive, if it clearly appears that the particular 
thing or fund bequeathed has been irrevoca- 
bly delivered over to the legatee in the life- 
time of the testator, the legacy is adeemed 
because the testator's title to the thing or 
fund has been divested by the gift, and has 
become vested in the legatee during the life- 
time of the testator. Clayton v. Akin, 38 
Ga. 320. 

The fact that one of the legatees was a 
married woman at the time she received the 
money from her father and signed the re- 
ceipt is of no consequence. The receipt of 
the money from the source contemplated by 
the will satisfied the legacy by operation of 
law, and not by force of any contract. Mon- 
ey paid to a married woman in ademption of 
a legacy produces the same legal result as if 
she were unmarried. 

There wii,s no error. The judgment is af- 
finned, with costs. 



SATISFACTION. 



145 



EOGEKS et al. v. FRENCH. 

(19 Ga. 316.) 

Supreme Court of Georgia. Jan. Term, 1856. 

Error from superior court, Marion county; 
Worrill, Judge. 
In equity. 

Jolin French and Elizabetb, his wife, filed 
a bill against the executors of John Rushin, 
deceased, for the recovery of the legacies 
left them under the will. The bill and an- 
swer are voluminous, as is also the evidence 
in the case. The following is sufficient to 
understand the questions made in this court: 

The defendants gave in evidence the fol- 
lowing receipt: 

"July 30, 1830. Received of John Rushin 
Five Hundred Dollars, which is considered 
and to be considered by all whom it may 
concern as that amount advanced by him, 
the said John Rushin, to me as legacy, that 
would ever be coming to me from him in 
his lifetime, or from his estate after his de- 
cease. 

"[Signed] John French." 

John Rushin's will was dated 26th June, 
1855, and by that will he gave to Mrs. 
French a little negro worth not exceeding 
$200, and one equal share of all his prop- 
erty. Subsequent to the making of his will, 
he distributed some of his negroes to his 
children, among others, to Mrs. French. 
There was some evidence to show that the 
question of the ademption of this legacy of 
the little negro had been submitted to Judge 
Taylor. Defendants' solicitors requested the 
court to charge: "(1) That if they believed 
that after the making of the will, bequeath- 
ing to complainant a little negro worth $200, 
over and above her equal proportion of the 
property to be distributed under the will of 
John Rushin, the testator, in his lifetime, 
gave complainant a negro of equal or greater 
value than the one mentioned in the will, 
this Is prima facie an ademption of the leg- 
acy; and, to rebut this presumption of an 
ademption, the testimony must be clear and 
relevant, not presumptive merely, but a 
demonstration from the language and con- 
duct of the testator that he considered the 
gift by the will as a subsisting benefit." 

The court declined to charge the latter 
portion of this request, but charged "that, to 
rebut the presumption of an ademption, the 
jury might resort to presumptive evidence, 
but the presumption must be clear and sat- 
isfactory; that if they believed the testator 
gave complainant, after the making of the 
will, and at or about the same time he gave 
other property to each of his other children 
of equal value, they might infer from these 
facts that the legacy was not adeemed." 

Defendants' counsel farther requested the 
court to charge: (2) That In a court of eq- 
uity the presumption is against a double 
portion, and the receipt given by French in 
1830, although It bears date prior to the will, 
HUTCH.& BUNK.BQ— 10 



Is, nevertheless, a charge against him, for 
which he is bound to account. 

This the court declined to charge: (3) As 
to effect of a responsive answer as evidence, 
and that an answer is responsive where it 
has necessary connection with and grows out 
of the allegation, and is explanatory thereof. 

This the court gave, and added: He sup- 
posed the latter clause referred to that por- 
tion of defendants' answer which stated that 
Judge Taylor had determined that the legacy 
of the little negro was adeemed. The court 
charged that this was not responsive, there 
being no allegation in the bill on the subject. 

To these charges as given, and refusals to 
charge, defendants excepted, and have as- 
signed eiTor tliereon. 

Miller & Hall, for plaintiffs In error. 
Stubbs & Hill, for defendant in error. 

LUMFKIN, J. (1) Was the court right In 
refusing to give the first charge as request- 
ed, without the modification and explanation 
which accompanied It In the charge as giv- 
en? 

In Ex parte Pye, 18 Ves. 152, Lord Eldon 
observes "that where a father gives a legacy 
to a child the legacy, coming from the fa- 
ther to his child, must be understood as a 
portion, though it is not so described In the 
will, and afterwards advancing a portion to 
that child, though there may be slight cir- 
cumstances of difference between the ad- 
vance and the portion, and a difference in 
amount, yet the father will be intended to 
have the same purpose in each Instance; and 
the advance is, therefore, an ademption of 
the legacy. But a stranger giving a legacy 
is understood as giving a bounty, not paying 
a debt. He must, therefore, be proved to 
mean it as a portion or provision, either on 
the face of the will, or If it may be, as it 
seems It may, by evidence applying directly 
to the gift proposed by the will." (See, also, 
Elkenhead's Case cited in 2 Vern. 257; Prece- 
dents in Chancery, 182, and Ambler, 325.) 

Thus, then, we have the rule clearly stat- 
ed and carrying this doctrine of ademption 
to Its utmost limits. The English courts re- 
gret, as well they may, that it has been 
pushed so far. We see and feel the reason- 
ableness of the rule which requires the courts 
to lean against double portions, as it is called; 
and we can readily understand why a legacy 
in a will should be adeemed by a subse- 
quent advance having the same object in 
view as the legacy, notwithstanding any 
slight difference in value or amount between 
the legacy and the advance. A father, for 
Instance, directs by his will his executors to 
pay to a daughter $1,000 to purchase, upon 
her marriage, household furniture. The 
child, however, marries in the lifetime of 
the father, and he advances to her $1,000, or 
some sum approximating to that, for the 
same purpose specified In the wlU. This is, 
and manifestly should be, a case of ademp- 



146 



SATISFACTION. 



tion, and so should all others standing upon 
the same footing. But suppose the legacy 
be a little negro for a nurse, and the subse- 
quent advance be of money to buy a car- 
riage, is there any propriety in construing 
this advance to be an ademption of the leg- 
acy? 

Listen to the reasoning of the chancellor 
in the case of Pye, just cited, in support of 
what he deduces from the boolis as the 
"unquestionable doctrine" of the courts up- 
on the subject: "By a sort of artificial rule, 
in the application of which legitimate chil- 
dren have been very harshly treated, upon 
an artificial notion that the father is paying 
a debt of nature, if the father after\^ards 
advances a portion on the marriage of that 
child, though of less amount, it is a satis- 
faction of the whole or in part; and in some 
cases it has gone the length, consistent with 
the principle, but showing the fallacy of 
much of the reasoning, that the portion, 
though much less than the legacy, has been 
held a satisfaction, in some instances, upon 
this ground, that the father, owing what is 
called a debt of nature, is the judge of that 
provision by which he means to satisfy it; 
and though, at the time of making the will, 
he thought he could not discharge that debt 
with less than £10,000, yet, by a change of 
his circumstances and of his sentiments up- 
on that moral obligation, it may be satisfied 
by the advance of a portion of £5,000." 

Is not such reasoning from the mouth of 
such a judge well calculated to inspire the 
hope that the day is not distant when all 
precedents will be abolished, and every case 
be tried by an enlightened tribunal upon its 
own merits? To such a consummation the 
world must, from the necessity of the case, 
to say nothing of its policy, sooner or later 
come; for the world will not contain the 
law books that \ull be written, much less 
will lawyers and judges, with th€ir stinted 
income, be able to buy them. Necessity will 
become the mother of justice in this case, 
as she is said to be generally of Invention. 
Would that some Caliph Omar would arise 
to apply the torch to all the repositories of 
legal learning throughout the globe! Prece- 
dent! Precedent! This is the vampire that 
is forever draining the very life blood of jus- 
tice. Give the books of reports as fuel for 
baths. They will contribute much more to 
the health, happiness, and convenience of 
the people than as at present employed. 

But to return from this digression, and 
without elaborating the rule further, we re- 
mark that the presumed ademption may be 
destroyed or confirmed by the application of 
parol evidence of a different Intention by the 
testator. 2 Atk. 48; 3 Atk. 77; 7 Ves. 708; 
Select Eq. Cas. 141. And this was the sub- 
stance of the charge as given. The judge 
instructed the jury that they might, in order 
to rebut the presumption that the advance 
made by the testator to French and wife, in 
his lifetime, and subsequent to the making 



of the will, was an ademption, look to the 
fact of whether or not similar advancements 
were made to the other children; and this 
the court was authorized to do by the testi- 
mony of Mrs. Wilkes, the widow of John 
Rushin, who states that she lived with the 
testator from 1834. the year before he made 
his will, down to 1843. when he died, and 
that the advancements made to all the chil- 
dren during that period were equal, and that 
the testator ti-ied to make them so. 

(2) Was the advance of $500 made in land 
by the testator to John French, the hus- 
band of his daughter, in 1830, five years he- 
fore he made his will, a charge against his 
share of the estate? The case of Upton v. 
Prince, Cases Tem. Talb. 71, is cited in sup- 
port of the proposition that an advance made 
prior to the making of a will may adeem a 
legacy. The testator, William Prince, had 
two sons,— William and Peter, Elizabeth, 
Sarah, Mary, and Anne. In his lifetime, 
and soon after the sons became of age, they 
desired their father to advance to each of 
them a sum of money toward setting them 
up in the world, and agi'eed that whatever 
he should advance should be part of what 
he should give them by will, whereupon the. 
father, on the 11th of June, 1734, advanced 
£1500 to William Prince, who gave the fol- 
lowing instrument for the same: "Received 
of my father the sum of £1500, which I do 
hereby acknowledge to be on account and in 
part of what he hath given or shall, in and 
by his last will, give unto me his son." And 
on the 31st March, 1727, the father ad- 
vanced £1500 to Peter Prince, who gave a 
similar instrument to that of his brother. 
On the 17th of August, 1730, William Prince, 
the father, executed hig will, which contains 
the following recital: "And whereas, I have 
heretofore paid to, given, or advanced with 
my children, William, Elizabeth and Sarah, 
the sum of £1500 apiece, now, I do hereby, 
in like manner, give and bequeath unto my 
three other children, Peter, Mary and Anne, 
the several sums of £1500 apiece." He then 
willed that the residue of his estate should 
be divided in six equal parts, and gives the 
one-sixth to each of his children. He de- 
posited the two receipts given by William 
and Peter in a drawer with his will, and in- 
timated that the said drawer should not be 
opened after his death by either of his aaid 
sons unless his other children, or one of his 
sons-in-law, were present. 

The question was whether Peter should 
have a new sum of £1500 upon the words of 
the will, or whether he should not be in the 
same case with William; they both being 
equally advanced by the father, and this 
seeming only a mistake la the testator. The 
lord chancellor decreed the £1500 received 
by Peter in his father's lifetime to be a sat- 
isfaction for what the father gave him by 
his will, and that he should not have an- 
other £1500 upon the words of the will. 

While we controvert the general doctrine 



SATISFACTION. 



147 



that a previous advance made to a child 
shall adeem an express gift by a subsequent 
will, wherein and whereby the testator un- 
dertakes to dispose of the property which he 
then has, still we are not prepared to deny 
the justice of this case. Here it was a ques- 
tion of intention, as it should be in every 
case, and all the facts go to show that Pe- 
ter's name was, by mistake, inserted with 
those of the unportioned part of the chil- 
dren. The whole will establishes that it 
was the intention of the testator that the 
two sums of £1500 paid to William and 
Peter should be deducted out of the legacies 
given to them; else why deposit their re- 
ceipts in a drawer with his will with direc- 
tions that the drawer should not be opened 
after his death by either of his said sons 
unless his other children, or one of his sons- 
in-law, were 'present? 

Before dismissing thia case, I would re- 
mark that the able counsel, Mr. Hall, who 
adduces it, concedes that it is the only direct 
authority he can find upon the point; and, 
if he has found none others, we may safely 
assume that none other exists. I will add 
that Upton v. Prince is only recognized by 
Mr. Williams on Executors, and other law 
writers in this way. They say, in referring 
to it, that if an advance previously made 
will adeem a legacy a fortiori will an ad- 
vance made subsequent to the execution of 
the will. In our judgment it is always a 
question of mtention, in all cases, whether 
the advance be before or after the execution 
of the will, and that no arbitrary rule should 
control the matter. 

How, then, stands the present case? The 
testimony shows that in 1830, the date of 
the receipt given for $500 given by French 
to his father-in-law, old man Rushin ad- 
vanced $500 to each of his children. This 
fact is not disputed, but it is insisted that 
French got $500 extra of the rest; else it is 
asked, why should a receipt be required of 
him when the rest gave none? Perhaps 
they have been lost or destroyed. The de- 
fendants, and not French, have had the cus- 
tody of the testator's papers. Perhaps 
French lived at a distance and forwarded 
this receipt, not knowing but such an ac- 
knowledgment would be exacted of all. Be 
this as it may, there is one fact which, to 
our minds, is conclusive, that this $500 was 
not intended by the testator to be a charge 
on the legacy of French and wife. In his 



will he mentions, in every other case, what 
sums are to be charged against his other 
children, or a portion of them; and there is 
not a word as to this extra advance, as it ia 
pretended, to French. It was made five 
years only before the will was executed, and 
his attention was called to the subject by 
referring to the respective advances made to 
some of the other children. It is not likely 
that this would have been overlooked or for- 
gotten. He is silent as to the $500 advance 
made to each of the children in 1830, and 
from this we infer that the testator himself 
considered that all, at that time, were ad- 
vanced pari passu. 

But it is suggested that the defendants 
have sworn to the fact, and that their an- 
swer is not overcome by counteracting tes- 
timony. They only testify as to their infor- 
mation and belief, and the rule does not ap- 
ply to such answers. 

(3) Was the court wrong in making the 
addition which it did to the third charge, as 
requested? It is not complained that the 
charge, as asked, was not given. The error 
assigned is that the judge selected that por- 
tion of the defendant's answer which set 
forth the award made by Judge Taylor, and 
stated that the same was not responsive to 
the bill, whereas, it is urged that the same 
was responsive, and that admitting it was 
not. Still, it was wrong to single out this 
particular portion of the answer and omit 
any reference to the rest. 

In the first place, we concur with the cir- 
cuit court in holding that the reference to 
the award made by Judge Taylor was not 
responsive to any allegation, but matter 
purely in evidence; and, secondly, that the 
omission of the court to refer to the rest of 
the answer was favorable to the defendants. 
It left the jury to infer that the balance of 
the answer was responsive. 

It is finally contended -that the advance- 
ments made to the different legatees, and 
to French and wife amongst the rest, should 
be brought into hotchpot; but no such neces- 
sity exists, provided the advancements were 
equal, for in that event each is entitled to an 
equal share under the will of what remains. 
We see no error in this record, to make it 
proper to send back a case, like this, which 
has been pending so long, and occupied so 
much time of the country. There should be 
an end of litigation unless manifest injustice 
has been done. 



148 



SATISFACTION. 



CLARK V. JETTON. 

(5 Sneed, 229.) 

Supreme Court of Tennessee. December 
Term, 1857. 

This bill was filed in the chancery court 
at Murfreesboro, for the purposes fully stat- 
ed in the opinion. At the October Term, 
1857, Chancellor Ridley gave a decree for the 
complainants, from which the defendants 
appealed. 

W. L. Martin, for complainants. Ruclser 
and E. A. Keeble, for defendants. 

CARUTHERS, J. On the 29th April, 1851, 
John L. Jetton made his will, disposing of 
all his property to his wife, children, and 
grandchildren. He gave to his wife one- 
third of his land for life, and one-tenth of 
"all his slaves and other personal property," 
after the payment of debts and expenses. 
Item 3. "After the payment of debts and ex- 
penses aforesaid, and the taliing out one- 
tenth for my widow, the residue of said 
slaves, and other personal property, monies, 
etc.," "I direct to be divided into nine equal 
parts, one part of "which I give to my son 
Lewis, one part to the children of Mary 
Graham, one part to Jane Barr, one part to 
Charlotte Bryant;" and so on to each of his 
daughters, nine in number. He limits the 
estates of his daughters to their natural 
lives, to their separate use, and then to their 
cliildren, in remainder. He died in 1854. 
His will was proven and recorded without 
contest. After the execution of this will, 
the testator made several deeds of gift to a 
part of his children and his widow, the de- 
fendant. On the 19th August, 1853, he made 
a deed of gift to his wife for life, and then 
to all her children one negro woman and 
child; and, on the same day, he gave by 
deed to a trustee, for the benefit and sepa- 
rate use of his daughter Francis L. Burlie, 
a negro man; and at the same time, and in 
the same way, a negro man was given to 
his daughter Jane Barr. On the 25th Au- 
gust, 1853, he gave a negro boy to his son 
Lewis; and, on the 29th, he gave to a trus- 
tee, for the use and benefit of his daughter 
Martha A. Sawer, a lot in Pulasis;! and a 
negro man, with the same limitations and 
restrictions. 

These deeds of gift were all regularly 
proven and recorded. This bill was filed 
September, 1856, by the children and lega- 
tees, not thus advanced, for the purpose of 
setting aside all said deeds of gift, upon the 
ground of the mental incapacity of the 
donor, and undue influence on the part of 
his wife; and, if this cannot be done, they 
pray that the several gifts may be held to 
satisfy the legacies of defendants by way 
of ademption. Upon the first question we 
have no difliculty. The old man was very 
intemperate and aged, but had suflScient ca- 
pacity to make a binding contract at the 



time these deeds were made. Such is the 
opinion of the witnesses to the deeds, al- 
though one of them, who was draftsman, 
was led to doubt upon that subject by some 
interviews a month or more afterwards, yet 
at the time of the transaction he has no 
doubt. The proof falls short entirely of 
showing that degree of mental unsoundness 
or imbecility that would invalidate the gifts; 
but it is insisted that, if he were not of un- 
sound mind, yet his intellect was so en- 
feebled by long-continued inebriety that he 
was easily influenced by his wife, and that 
she, against his will, caused him to malie 
these donations, by the exercise of an abso- 
lute dominion over his will. As an evidence 
of this, it is said that she procured, by her 
dictation and power over him, a remainder 
interest to be vested in an illegitimate child 
of hers, born before his marriage with her, 
jointly with her children by him, in the two 
slaves given to her for life. He had talien 
this child with her, and raised it in his house 
with his other children; and it is not un- 
natural that he should freely yield to hei' 
wishes in giving to it a small pittance of his 
estate. Whether this child will get anything 
under the deed is a question not now to be 
decided, and does not affect the argument. 
There is evidence that for several of the last 
years of his life, embracing the time of these 
gifts, she managed most of his business, and 
that he deferred to her in many things; but 
this was rendered necessary by his intem- 
perate habits, and was a prudent delegation 
of authority, rather than an evidence of 
either a want of sense or submission to un- 
due influence. He sometimes said he was 
in torment, etc., when he was drunlc. It 
was very natural he should feel that way 
when under the dominion of liquor; and that 
she should "torment" him about his self-de- 
stroying habits was to be expected, in view 
of the destruction of health and happiness, 
which was the inevitable consequence of his 
ruinous course; but it by no means follows, 
as a necessary consequence, that the fact 
that she vexed or tormented him would aug- 
ment her influence. His remarks about not 
being able to do as he pleased, or at liberty 
to invite his friends to dinner, etc., are all 
attributable to the same cause, and have 
very little weight in establishing this point, 
for which they are adduced in evidence. In 
all this, we find nothing to authorize the con- 
clusion, or at least not suflicient for that 
purpose, that he was unduly influenced by 
her to make the deeds of gift in question, or 
that there was any fraud practiced upon him 
by his wife, or anybody else. He dellljer- 
ately made the arrangement with his attor- 
ney to write them, and gave every evidence 
of a free and settled purpose in doing what 
he did. The deeds of gift were, therefore, 
valid and binding, and vested good titles In 
the donees. 
2. The second ground assumed by the com- 



SATISFACTION. 



149 



plainants is that the gifts, if good, operated 
as an ademption of thp legacies in the will to 
the extent, at least, of the Talue of the prop- 
erty, and that, in the division of the property 
under the will, the respective donees must be 
made to account for it. This is a more diffi- 
cult question, and must be decided by refer- 
ence to the authorities. The general rule on 
this subject is that where a parent, or one 
standing in loco parentis, gives a legacy to a 
child, and afterwards advances a portion to 
that child, it will be an ademption or satis- 
faction of the legacy to the extent of the val- 
ue of the portion, unless a contrary intent 
appears. 2 Williams, Eix'rs, 1143, and sub- 
sequent pages; 2 Story, Eq. Jur. § 1111. But 
the rule has several qualifications and excep- 
tions. It is founded on the presumption that 
a bequest by the father is intended as a por- 
tion to the child, and so of the after gift; 
and the presumption will be that a double 
portion was not intended, where nothing else 
appears, and therefore it will be talien that 
the gift was intended as a satisfaction of the 
legacy when it is of equal or greater value, 
and, if less, pro tanto. Eop. Leg. 370, 374; 
2 Williams, Ex'rs, 1143. The word "ademp- 
tion," is synonymous with "satisfaction" 
when applied to specific legacies. In that 
case, the disposition of the thing given before 
the death of the testator is a complete ex- 
tinction of the legacy, and the intention of 
the testator in such cases is immaterial, be- 
cause there is nothing at the time the Tvill 
takes effect for it to operate upon. Rop. Leg. 
329. But in respect to general legacies, the 
question is one of intention, and this inten- 
tion will be presumed, as we have said, in 
all cases of legacies and subsequent gifts by 
a parent, or one standing in, or occupying the 
place of, parent, unless that presumption is 
rebutted. Such is the general rule. But 
tliis presumption of ademption will not pre- 
vail, (1) where the testamentary portion and 
subsequent advancement are not of the same 
nature; (2) where the latter depends on a 
contingency, and the former is certain; (3) 
when either is in lieu of, or a compensation 
for, an interest to which the child is entitled; 
or (4) where the bequest is of a residue or 
part of a residue. Williams, Ex'rs, 1144, 
1145. Rop. Leg. 377, states that another ex- 
ception to the general rule is where the be- 
quest is of an "uncertain amount." "It has, 
therefore, been determined more than once," 
he says, "that a devise of a residue, or of part 
of a residue, to a child, is not adeemed oy a 
subsequent gift upon the legatee's marriage." 
Though, Sir W. Grant intimated a doubt as 



to the correctness of this opinion, in 15 Ves. 
513, as the author states, yet it is considered 
well settled as the law, when not controlled 
by special circumstances. In Farnham v. 
Philips, 2 Atk. 216, Lord Hardwicke said, 
"There was no case where the devise had 
been of a residue that was uncertain, and 
that at the testator's death might be more or 
less, in which the gift of a subsequent por- 
tion had been held an ademption." Where 
a testator directed a debt of 100 pounds to be 
paid out of an estate, and the residue divid- 
ed between his wife and children, and after- 
wards gave one of his daughters a thousand 
pounds, it was held that this did not operate 
as an ademption of her testamentary share 
of the residue. This was the case of Farn- 
ham V. Philips, above cited. The application 
of this doctrine to the case before us pro- 
duces a result that we would rather avoid, 
if we could do so upon any principle settled 
by authority. It must result in giving the 
defendants the benefit of the will, as well as 
tlie deeds of gift. The provision for them un- 
der the will is that they are each to have one- 
ninth of the residue of his slaves and other 
personal property and money, after the pay- 
ment of debts, expenses, and the one-tenth 
to the widow. The testamentary portions or 
legacies must be fluctuating and uncertain, 
or, in the language of the books, they may 
"be more or less, something, or nothing" at 
the death of the testator and settlement of 
the estate. In answer to the seeming injus- 
tice of this doctrine, it may be said that it is 
the right of every man to give as a bounty 
to his children, or others, in such proportions 
as he chooses, to some more and others less. 
Where he intends or desires equality, or to 
make gifts in his lifetime operate in the 
ademption or satisfaction of general legacies, 
it is easy to express such purpose. Where 
he fails to do so, the rules of law must pre- 
vail without regard to the consequences. 
This doctrine of ademption does not apply to 
real estate, nor to legacies and gifts to oth- 
ers than children, or those who stand In that 
relation, in cases of general legacies. This 
distinction rests upon artificial reasons, the 
justice and propriety of which are not very 
clear, nor the reasons on which it is founded 
approved; but that branch of the doctrine, 
having no application to the case before us, 
need not be discussed, but left for a case to 
which it applies. The decree will be revers- 
ed, and the bill dismissed as to this branch 
of the case, but remanded for further pro- 
ceedings as to other matters connected with 
the settlement of the estate. 



150 



CONVERSION AND RECONVERSION. 



KEEP et al. v. MILLER et al. 

(6 Atl. 495, 42 N. J. Eq. 100.) 

Court of Chancery of New Jersey. Nov. 6, 
1880. 

Bill for relief. On final hearing upon 
pleadings and proofs. Facts are given in 
the opinion. 

Alfred Mills, for complainants. S. D. 
Haines and S. B. Ransom, for defendant 
Faults. 

RUNYON, Ch. The bill states that John 
B. Miller, deceased, late of Madison, in the 
county of Morris, made and entered Into a 
valid contract in writing with Jehiel K. 
Hoyt upon the twenty-fifth of April, 1872, 
for the sale and conveyance by him to the 
latter, or to such company of individuals as 
might be named by him, (Hoyt,) certain land 
therein mentioned for the price of $800 an 
acre; and that on or about the tenth of 
June following he made another like agree- 
ment in writing with Hoyt for the convey- 
ance to him, his heirs and assigns, or to 
such person or persons as he might desig- 
nate, of the same property, on or before the 
first day of September then next, for the 
price of $39,392, to be paid, and which Hoyt 
thereby stipulated to pay, as follows: $100 
upon the execution of the agreement, and 
$4,900 on the delivery of the deed,— the bal- 
ance, $34,.392, to be secured by the bond of 
the grantee or grantees, and his or their 
mortgage of the property; that the time for 
the delivery of the deed was, by another 
agreement in writing, made on the twentieth 
of August, 1872, between Miller and Hoyt, 
extended to the first day of October then 
next; that Miller died September 5, 1872, 
intestate, leaving a widow and a sou, the 
defendant David L. Miller, who was his only 
heir at law; that letters of administration 
of his estate were granted to Theodore Lit- 
tle, October 1, 1872; that after the death of 
John B. Miller, and on or about the twenty- 
eighth of September, 1872, -Hoyt notified Da- 
vid L. Miller that he would be ready to take 
the deed, and carry out the agreement on 
his part on the first of October then next, 
and requested Miller, as heir at law, to de- 
liver at that date a deed for the property, in 
conformity with the contract, to Henry E. 
Reddish and Henry 0. Ohlen, whom he des- 
ignated as grantees; that David L. Miller 
did not and never would convey the prop- 
erty, except upon condition that he should 
receive the purchase money for his own use; 
that the complainants are informed that 
Reddish and Ohlen, on or about the first of 
October, 1872, demanded of David L. Miller 
that he convey the property to them by war- 
ranty deed, free from any dower of his wife, 
and from the dower of the widow of his 
father, and from the lien of certain judg- 
ments which were of record against him, 
David L. Miller, and tendered the money and 



bond and mortgage, but he would not com- 
ply with the request; that neither David L. 
Miller, nor Hoyt, Reddish, or Ohlen, ever 
requested the widow to release her dower to 
Reddish and Ohlen; that she never refused 
to release it to them, but was at all times 
ready to release it upon condition that the 
purchase money should be paid, and secured 
to be paid, to the administrator of John B. 
:Miller, and that David L. Miller was aware 
of her readiness to release upon that condi- 
tion; that on or about the thirteenth of De- 
cember, 1872, the widow wrote a letter to 
her late husband's administrator In which 
she said that she had expected to join with 
her husband in the conveyance to the pur- 
chaser, but he died before any conveyance 
was made; that she was still ready to do 
I all that she could to perform the agreement, 
I and was ready to release her dower on condl- 
I tion that the purchase money should be paid, 
or secured to be paid, to the administrator, 
and she offered to release her dower upon 
those terms in case the administi-ator should 
take judicial proceedings to compel specific 
performance of the agreement; that he did 
bring suit to that end in this court in Decem- 
ber, 1872; that in January following the 
widow died, and the complainants in this 
suit were appointed administrators of her 
estate; that in the suit brought by the ad- 
ministrator of John B. Miller specific perform- 
ance was decreed, but the decree was, upon 
appeal, reversed, so far as Hoyt and Reddish 
and Ohlen, and the performance of the agree- 
ment by them, were concerned. 

By the decree of the court of errors and 
appeals the bill was dismissed as to those 
defendants, but was retained as to the others, 
in order that the legal representatives of the 
widow might have an opportunity of raising, 
by cross-bill, the question whether they have 
any remedy against David L. Miller. This 
suit is brought accordingly by the administra- 
tors of Mrs. Miller against David L. Miller 
and his wife, and his assignee in bankruptcy, 
(he filed his petition in bankruptcy after the 
decree for specific performance was entered,) 
the administrator of John B. Miller, (he re- 
fused to bring the suit, or to join in it, or 
to permit the complainants to bring It in his 
name,) and the administrators of a judgment 
creditor of David L. Miller. The prayer of 
the bill is that the land may be decreed to 
be personal property, and may be sold under 
the order of this court; that the proceeds of 
the sale may go into the hands of the admin- 
istrator of John B. Miller as personal prop- 
erty, to be administered and distributed by 
him accordingly; that it may be decreed that 
the complainants, as the legal representatives 
of the widow, shall have her share thereof 
according to law; and that, if necessary, it 
may be decreed that David L. Miller's wife 
has no dower in the property, and that the 
judgment above mentioned is no lien upon the 
premises. None of the defendants have an- 
swered except the assignee In bankruptcy. 



CONVERSION AND RECONVERSION. 



151 



By the decree in the above-mentioned suit, 
brought by John B. Miller's administrator, 
(Miller's Adm'r v. Miller, 25 N. J. Eq. 355; 
S. C. on appeal, Reddish v. Miller's Adm'r, 
27 N. J. Eq. 514,) in addition to decreeing 
specific performance, it was decreed that 
David L. Miller, at and ever since the death 
of his father, had been, and at the date of 
the decree was, seized of the property as a 
trustee to and for the use of Reddish and 
Ohlen, and not otherwise, and that David L. 
Miller's wife was not, and had not been, en- 
titled to any dower or right of dower in or 
to the land, and that the judgment creditors 
of David L. Miller were not entitled to any 
lien to or claim upon or against the property 
by virtue of their judgments, and also that 
the moneys decreed to be paid, and the bond 
and mortgage decreed to be given, on account 
of purchase money, were and should be per- 
sonal assets in the hands of the administrator 
of John B. Miller, and should be by him ad- 
ministered as personal property in due and 
legal course of administration, and that he 
should pay to the administrators of the widow 
her distributive share thereof. That decree 
(it was made over 10 years ago) was not ap- 
pealed from by David L. Miller. 

The only question presented for decision is 
whether, under the circumstances of the case, 
the contract of sale worked an equitable con- 
version of the land into money at the death 
of John B. Miller. That it would have done 
so had the contract been enforced against the 
vendee is indisputable, and is not denied. 
But the answering defendant insists that the 
failure to compel specific performance pre- 
vents such result. That failure, however, 
was due, not to the invalidity of the con- 
tract, but to the fact that, because of the 
length of time which had elapsed between 
the time fixed by the contract (as extended) 
for the completion of the purchase and the 
making of the decree for specific perform- 
ance, it was inequitable to require the ven- 
dee to coraplete the purchase, seeing that he 
had tendered himself ready to comply with 
the requirements of the contract on his part 
at the time fixed, and that in the meantime 
the property had fallen in value. It may be 
remarked that the noncompliance upon the 
part of the ieir was not due to the widow. 
She did not refuse to release. She was never 
asked to release. On the thirteenth of De- 
cember, 1872, she stated to her late husband's 
administrator, by letter, that she was willing 
to release in case he should take judicial pro- 
ceedings to compel specific performance of 
the contract. It is proved that on the very 
day on which, under the contract as extend- 
ed, the deed was to be delivered, her attorney 
stated to the attorney of Reddish and Ohlen 
that she was wUling to release upon such a 
payment as would secure her rights, by 
Which was meant payment to her husband's 
administrator, and not to David L. Miller. 

A valid and binding contract of sale such 
as a court of equity will specifically enforce 



against an unwilling purchaser operates as 
a conversion. The cases in which the comt 
has refused to decree that a contract for 
sale works equitable conversion are those 
in which the contract was such as equity 
would not enforce. 

The counsel for the answering defendant 
insists that the decision in the case of Ten- 
eick V. Flagg, 29 N. J. Law, 25, is decisive 
of the question under consideration, and is 
adverse to the claim of the complainants. 
But it is to be observed that that was an 
action at law. Mrs. Attie Teneick had 
agreed to convey laud to James Buckalew, 
and had received part of the purchase mon- 
ey. He refused to accept the deed because of 
the pendency of an action of ejectment 
brought against Mrs. Teneick by other pai-- 
ties to obtain possession of the land. She 
delivered a deed for the property to her 
agent, to be delivered by him to Buckalew 
upon the favorable termination of the action 
of ejectment. She died before the termina- 
tion was reached. By her death the action 
of ejectment abated, and it was not renewed. 
After her death her heirs conveyed the prop- 
erty to Buckalew in pursuance of her agree- 
ment, and the pvu-chase money was paid to 
her administrators. The husband of one of 
the heirs brought suit against the adminis- 
trators to recover a share of the money. 
The court held that he was entitled to re- 
cover, on the ground that on the death of 
Mrs. Teneick the title descended to her 
heirs; the deed held in escrow passing no 
title, since the event on which it was to be 
delivered to Buckalew did not happen in 
the life-time of the grantor, and at her death 
the deed ceased to have any validity. In 
the decision of the case the difference be- 
tween the equitable rule and the legal rule 
was distinctly recognized by Justice Haines 
in his opinion. The cause was, of course, de- 
cided in the court of law upon the legal 
rule. 

Upon a full and careful consideration of 
the matter I reached the conclusion in the 
suit for specific performance that the con- 
tract worked a conversion. See Miller's 
Adm'r V. Miller, supra. The only new fea- 
ture now presented is the fact that the ap- 
pellate court has decided that specific per- 
formance ought not to have been decreed. 
The reason for that conclusion has already 
been stated. It was not the invalidity of the 
contract, nor any consideration which ren- 
dered the contract unenforceable in equity 
at the death of John B. Miller, or at the time 
fixed by the contract for completing the pui'- 
chase. The contract was one which, at the 
time fixed by it for completing the purchase, 
could have been enforced against the pur- 
chaser in equity, and it would have been en- 
forced at that time on the application of the 
heir, with the consent of the widow, and she 
was willing to join him in enforcing it if he 
had been willing to secure to her her right 
in the purchase money. In equity he ought 



152 



CONVERSION AND RECONA^ERSION. 



to have enforced It. Equity regards that as 
done wliich ought to have been done. The 
doctrine of conversion is a reasonable one. 
In this case, John B. Miller had made a sale 
of the property, which, had he lived, he 
would have been able to enforce in equity, 
and which it is to be presumed he would 
have enforced. He had sold the property 
at a high price. It should not he, and it is 
not, in the power of the heir to defeat the 
right of the next of kin by his ovsm unwill- 
ingness to carry out the contract. By force 
of the contract the vendor became in equity 
trustee of the property for the vendee, and 
the latter became trustee of the purchase 
money for the former. It has been held that 
the equitable rights of the next of kin of the 
vendor are not defeated, where the vendee. 



by his laches, after the death of the vendor, 
loses his right to specific performance, pro- 
vided the contract was enforceable in equity 
at the death of the vendor. Curre v. Bow- 
yer, reported in a note to Farrar v. Earl of 
Winterton, 5 Beav. 1. Where there is a con- 
tract for the sale of an estate, the estate is 
in equity considered as converted into per- 
sonalty from the time of the contract, al- 
though the purchaser has an election to pur- 
chase or not as he shall see fit. Lawes v. 
Bennet, 1 N. J. Law, 167; Sugd. Vend. (8th 
Am. Ed.) 187, and cases cited. 

The sale in this case worked an equitable 
conversion of the land into money, and the 
widow was entitled, accordingly, to a distrib- 
utive share of the purchase money as part 
of the personal property of her husband. 



CONVERSION AND RECONVERSION. 



153 



WHELESS V. WHELBSS et al. 

(21 S. W. 595, 92 Tenn. 293.) 

Supreme Court of Tennessee. March 2, 1893. 

Appeal from chancery court, Davidson 
county ; J. A. Cartwright, Special Ctian- 
cellor. 

Bill for partition by Joseph Wheless and 
others against H. H. Wheless. Judgment 
forcoraplainants. Defendant appeals. Af- 
firmed. 

Dickenson & Frazer, Stokes & Stokes, 
and Frizzell & Zarecor, for appellant. Jo- 
seph Wheless, Jr., and N. D. Malone, for 
respondent G. A. Tillman, guardian ad 
litem. J. S. Pilcher, for widow of J. F. 
"Wheless. J. W. Byrnes, lor petitioner Mc- 
Crosky. 

CALDWELL, J. Gen. John F. Wheless 
died intestate and without issue, leaving 
a widow, andnumerouscoUateralkindred. 
The bill in this cause was filed for a parti- 
tion of his lands, where that could be done, 
ana for sale and division of proceeds, 
where partition in kind might not he prac- 
ticable. The widow, in her answer, 
claimed that the undivided interest of her 
husband in what is known as the" Baxter 
Smith Tract" was not realty, but personal 
property, under the doctrine of equitable 
conversion, and that it therefore belonged 
to her, as distributee, and not to the heirs. 
The chancellor decided this question 
against her, and she appealed. 

No doctrine is more firmly fixed in Eng- 
lish and American jurisprudence than that 
of equitable conversion, by which, under 
certain circumstances, real estate is 
treated, in equity, as personal property, 
and personal estate as real property. 
Through this doctrine, courts of equity 
treat as land money directed to be em- 
ployed in the purchase of land, and, as 
money, land directed to be sold and con- 
verted into money; and the direction upon 
which the conversion arises may be made 
by will, or by deed, settlement, or other 
contract inter vivos. Adams, Eq. *135, 
136; 1 Pom. Eq. Jur. § 371 ; 2 Story, Eq. 
Jur. § 790; 4 Araer. & Eng. Enc. Law, 127; 

6 Araer. & Eng. Enc. La w, 664, 665. It was 
early recognized in this state, (Stephenson 
V. Yandle, 3 Hayw. [Tenn.] 109,) and has 
since been applied in several cases upon 
the construction of wills. McCormick v 
Cautrell, 7 Yerg. 615; Williams v. Bradley, 

7 Heisk. 58; Green v. Davidson, 4 Baxt. 
448. The difficulty which sometimes arises 
in the application of the principle to a par- 
ticular instrument lies, not in the subtlety 
of the principle itself, but rather in ascer- 
taining the intention of the maker from 
the words employed. To operate as a con- 
version, (he direction that the form of the 
property be changed must be imperative, 
in the sen.se of being positive and unmistak- 
able. If the Intention, as gathered from 
the whole instrument, be left in doubt, or 
the direction allows the trustee to sell or 
not, as he deems best, the courts are not 
at liberty to say that a conversion has 
taken place, but must deal with the prop- 
erty according to its actual form and char- 
acter. 2 Story, Eq. Jur. § 1214. Mr. 



Pomeroy says: "No express declaration in 
the instrument is needed that land shall 
be treated as money, although not sold, 
or that money shall be deemed laud, al- 
though not actually laid out in the pur- 
chase of land. The only essential requisite 
is an absolute expression of an intention 
that the land shall be sold, and turned in- 
to money, or that the money shall be ex- 
pended in the purchase of land. » • * 
The true test, in all such cases, is a simple 
one: Has the will or deed creating the 
trust absolutely directed, or has the con- 
tract stipulated, that the real estate be 
turned into personal, or the personal es- 
tate be turned into real?" 3 Pom. Eq. 
Jur. § 1159. Again: "The whole scope 
and meaning of the fundamental principle 
underlying the doctrine are involved in the 
existence of a duty resting upon the trus- 
tees or other parties to do the specified 
act; for, unless the equitable right ex- 
ists, there is no room for the operation of 
the maxim, 'Equity regards that as done 
•which ought to be done.' The rule is there- 
fore firmly settled that, in order to work 
a conversion while the property is yet ac- 
tually unchanged in form, there must be a 
clear and imperative direction in the will, 
deed, or settlement, or a clear, imperative 
agreement in the contract, to convert the 
property; that is, to sell the land for 
money, or to lay out the money in the pur- 
chase of land. If the act of converting — 
that is, the act, itself, of selling the land, 
or of laying out the money in land — is left 
to the option, discretion, or choice of the 
trustees, or other parties, then no eq- 
uitable conversion will take place, because 
no duty to make the change rests upon 
them. It is not essential, however, that 
the direction should be express, in order 
to be imperative. It may be necessarily 
implied. * * * If by express language, 
or by a reasonable construction of all its 
terms, the instrument shows an intention 
that the original form of the property 
shall be changed, then a conversion neces- 
sarily takes place." Id. § 1160. To the 
same effect are Wurt's Exr's v. Page, 19 
N. J. Eq. 375; Ford v. Ford, 7P Wis. 19, 33 
N. W. Eep. 188; Hobson v. Hale, 95 N. Y. 
588. Numerous other authorities, text- 
books, and judicial decisions are at hand; 
but they are, in the main, so harmonious, 
and so entirely in accord with the full 
quotations just made from Mr Ponieroy, 
that we forbear to make further citations 
with respect to the character of direction 
necessary to work the notional change, 
and call the doctrine of equitable conver- 
sion into play. As a matter of some mo- 
ment on the question of construction, it is 
well to oDserve that unless the sale or 
purchase contemplated is expressly di- 
rected to be made at a specified timeln the 
future, or upon the happening of some 
particular event, which mayor may not 
happen, the conversion takes place, in 
wills, as from the death of the testator; 
and in deeds, and other instruments in- 
ter vivos, as from the date of their execu- 
tion. 3 Pom. Eq. Jur. § 1162. 

The instrument upon which the contro- 
versy arises in this cause is a deed, in the 
following language: " We, Baxter Smith 
and wife, Bettie G. Smith, * • • in 
consideration of the sum of $34,395.60, paid 



154 



CONVERSION AND RECONVERSION. 



and secured to be paid as hereinafter men- 
tioned, have bargained and sold, and do 
hereby transfer and convey, unto James 
H. Yarbrough.in trust, as hereinafter men- 
tioned, the following tract of land * * * 
to have and to hold, for himself and other 
beneficiaries hereinafter named, in trust for 
the following uses and purposes : That is 
to say, said tract of land has been jointly 
purchased by James C. Warner, Percy 
Warner, John P. White, John F. Wheless, 
B. F. Wilson, W. M. Grantland, Charles L. 
Ridley, Baxter Smith, and J. H. Yar- 
brough, L. H. Davis, and G. A. Maddux,— 
the last three purchasing as a firm, under 
the firm name and style of Yarbrough, Mad- 
dux and Davis,— each paying and to pay 
one tenth of the purchase money for said 
land, as hereafter set out, except John P. 
White, whopays twotentiiH. * * * Said 
tract of land is conveyed to said J. H. 
Yarbrough, as trustee for eaid named pur- 
chasers, with power and authority to hold, 
possess, and manage thesamein theirinter- 
est and behalf, and to sell and convey the 
same, by deed in fee simple, upon the writ- 
ten direction of a majority in value of the 
adult beneficial owners then living, upon 
such terms and conditions as they may 
direct, and to collect and divide the pro- 
ceeds of sale among said beneficiaries, 
their heirs, administrators, executors, and 
assigne, as their several interests may ap- 
pear. * * The aforesaid sura of $34,395.60 
has been paid, and secured to be paid, as 
follows: * * To secure the payment of 
the promissory notes herein described, a 
lien is expressly retained upon the share 
or interest of the maker alone, and not 
against the tract as a whole. In case 
any of the beneficiaries herein named, in 
order to preserve his or their ovi^n title, 
should have to pay and discbarge for an- 
other any accruing taxes or other incum- 
brance or lien upon the whole property, 
then, in that event, he or they shall have 
a lieu upon the share or interest of the per- 
son who has failed to make such pay- 
ment. Should said J. H. Yarbrough de- 
sire to resign the trust herein given him, 
he may do so, by and with the consent 
and approval, in writing, of a majority 
in value of the adult beneficiaries, owners, 
named above, and appoint in his room 
and stead a new trustee, and clothe him 
with like power and duties as those now 
conferred on him, by a suitable deed of 
conveyance in writing, to be recorded in 
the register's office of Davidson county, 
Tennessee." 

Such are the material portions of the 
instrument the court is called upon to con- 
strue in this case; and the inquiry is wheth- 
erthe land conveyed thereby is to be treat- 
ed, in equity, as realty, or as personalty. 
If as realty, the share of Gen. Wheless 
passed to his heirs, under the statute of 
descent; if as personalty, it went to his 
widow, as sole distributee, subject in ei- 
ther case, of course, to his debts. 

A general view of the deed readily dis- 
closes a proposed speculation, entered into 
by several persons jointly, — a syndicate 
buying land to sell again. In furtherance 
of the scheme a trustee was appointed, 
and the land conveyed to him for the ben- 
efit of all the purchasers, — for each of them 
according to his interest. The idea of a 



resale, as the ultimate object of the enter' 
prise, runs through the Avhole instrument. 
It appears, from thenature of the transac- 
tion ; from the words conferring upon the 
trustee power and authority "to sell, 
* * * and collect and divide the pro- 
ceeds;" and from the provision for ap- 
pointment of a successor in case the trus- 
tee should resign. That a partition in 
kind should ever occur, or that the trust 
should cease before a sale of the land and 
division of its proceeds were fully accom- 
plished, was never contemplated. The 
land was bought to sell again, and a trus- 
tee was appointed as a part of the plan. 
All this is clear; but it is entirely consist- 
ent with the proposition that the trust 
was created merely as a cheaper and more 
convenient method of preserving and con- 
veying theland. More is required to mako 
a case of equitable conversion. The fact 
of a contemplated resale is present in ev- 
ery purchase of land upon speculation ; 
and land purchased with such view is not 
converted into personalty by the mere ap- 
pointment of a trustee to receive the title. 
and as the agency through which there- 
sale is to be accomplished for the owners. 
It is manifest that the paramount object 
of the enterprise was a resale of the land 
through the trustee, as representative of 
the beneficial owners, yet the deed does 
not contain any Imperative direction that 
he shall sell; no absolute, unconditional 
duty to sell is placed upon him. "The 
equitable ' ought' " is not to be found in 
the deed, either as a matter expressed or 
to be necessarily implied. Not only does 
it contain no positive direction that he 
shall sell, but it, in reality, does not even 
permit him to sell, upon his own motion. 
His only power of sale is made to depend, 
expressly, upon the direction of others. 
He has no independent authority in that 
respect. The words of the deed on this 
point are: " With power and authorit.y to 
bold, possess, and manage the same in 
their interest and behalf, and to sell and 
convey the same, by deed in fee simple, up- 
on the written direction of a majority in 
value of the adult beneficial owners then 
living, upon such terms and conditions as 
they may direct. " This language imposes 
upon the trustee no positive, unqualified 
obligation to sell the land at all events. 
At most, it but gives him authority to 
sell at such time, and upon such terms and 
conditions, as others may direct. In effect, 
it but makes him the instrumentalit.v 
through which a majority of the beneficial 
owners living at any given time may 
make a sale. He has no right to sell with- 
out their written direction, and no au- 
thority to demand or require such direc- 
tion at one time or another. It cannot be 
that a conversion was wrought by the 
creation ofa trust so passive as thisoneis. 
To meet the fact that the trustee has no 
power to sell unless directed by a majority 
of the adult beneficiaries to do so, it is 
suggested that thebeneficiariestbemselves 
are clothed with a trust, to the extent of 
being empowered to direct when and how 
the sale shall be made, and that they are 
bound to give such direction. There can 
be no doubt that it was contemplated 
that the beneficiaries should at some time 
give the trustee the required direction to 



CONVERSION AND RECONVEESION. 



155 



sell the land, and that a duty was, to that 
extent, indirectly devolved upon them ; 
but that can hardly be said to have made 
trustees of them, or to have magnifled the 
limited power of the real trustee into an 
imperative obligation to convert the land 
into money. The purchasers, though in- 
tending an ultimate sale, clearly had no 
thought that the terms of the deed 
changed the character of the property, 
and converted the real estate into person- 
alty. That they intended the land to be 
held as realty until actually sold and 
turned into money is manifest from the 
general frame and terms of the deed, and 
especially from those parts of it retaining 
separate liens in favor of the grantor, and 
providing for a special lien in favor of 
such beneficiaries as might be compelled 
to pay taxes or discharge liens for others. 
In the portion of the deed last referred to, 
the interest of each of the several benefi- 
ciaries is referred to as an interest in land, 
as such, and provisions are made with ref- 
erence thereto which would be inappro- 
priate as applied to personalty. We are 
of opinion that the deed shows upon its 
face when considered as a whole, that the 



land was conveyed to a trustee merely for 
convenience, and to save expense and 
trouble in the ultimate sale and convey- 
ance, and that no conversion took place. 

Our attention has been called to the 
very instructive and soundly reasoned 
case of Crane v. Bollea, (N. J. Ch.) 24 
Atl. Rep. 237, in which a conversion of 
land into money was held to have oc- 
curred under direction contained in a will. 
There are several points of similarity be- 
tween that case and this one, and perhaps 
as many important differences. The prin- 
ciples of law laid down in that case are 
the same recognized and applied by us in 
this one, the difference in result reached 
being due to differencein purport of instru- 
ments construed. Without stating the 
aspects in which the two instruments 
agree, or those in which they differ, we 
are content with simply saying that the 
court in that case said that the direction 
for sale was "imperative," and did not 
depend on the "request or consent" of the 
testator's children, while in this case there 
is no imperative direction to sell, and the 
power to sell does depend on the direction 
of the beneficiaries. Affirm the decree. 



156 



CONVERSION AND RECONVERSION. 



PRENTICE V. JANSSEN. 

(79 N. Y. 478.) 

Court of Appeals of New York. 1879. 

0. Bainbridge Smith, for appellants. Josh- 
ua M. Van Cott, for respondents. 

MILLER, J. The complaint In this action 
demands an equitable partition or sale of 
several pieces of land therein described, up- 
on a portion of which was erected a hotel, 
called the Pavilion Hotel, together with the 
personal property, consisting of furniture in 
said hotel, and that an account be taken of 
the disbursements and expenditures made by 
the plaintiff, Augustus Prentice, for the bene- 
fit of and as additions to said property, and 
that the share of the defendant, Mary Ann 
Janssen, be charged upon the same and de- 
ducted from her portion of the proceeds of 
the sale of the property. The land belonged 
to Francis Blancard at the time of his de- 
cease in 1868, and the title is derived under 
the provisions of his last will and testament. 
The plaintiff, Augustus Prentice, holds three- 
fourths, by conveyances from' the residuary 
legatees or their representatives, and the de- 
fendant, Mary Ann Janssen, the remaining 
one-fourth. The defendant last named has 
joined with the plaintiff in making leases of 
the property since 1873; large sums have 
been expended in making improvements by 
the owners, and the rents have been re- 
ceived and applied In part, if not entirely, for 
that purpose. 

The residuary clause in the will of Fran- 
cis Blancard devised and bequeathed his 
property to five of his children, among whom 
were Francis H. Blancard and the defend- 
ant, Mary Ann Janssen. It also authorized 
Francis H. Blancard to carry on the hotel 
business in the Pavilion Hotel, for the term 
of five years, if he so desired, and the ex- 
ecutors were empowered and directed, after 
the testator's death, to sell and convert into 
money all the real and personal property of 
which he shoidd be seized or possessed, in- 
eluding the hotel property, after the right 
of occupancy of his son had ceased, as they 
should deem advisable, and divide the pro- 
ceeds equally among the residuary legatees. 
The son, Francis H., died before the testa- 
tor, and no action was ever taken by the 
executors to sell the property, and it re- 
mained undisposed of, and was used and 
regarded by the owners as real estate to 
which they had title. Only one of the ex- 
ecutors, the defendant, Gerhard Janssen, 
was living at the time of the commence- 
ment of this action, and he is made a party, 
as the husband of the defendant, Mary Ann 
Janssen, and does not by his answer claim 
any rights as executor or that he Is a proper 
party as such. The answers admitted that 
plaintiff and the defendant, Mrs. Janssen, 
owned the property as tenants in common. 
We think that under the provisions cited 



from the testator's will, the executors who 
were donees of a power took no estate in 
the lands as trustees, but merely a power in 
trust to be executed for the purposes of dis- 
tribution, according to the will, which was 
liable to be defeated by a reconversion of 
the property, which was made personal by 
the will, into real estate. 

The testator by the authority and direc- 
tion to his executors to sell the real estate, 
constructively converted the same Into per- 
sonal estate, and being thus converted, the 
residuary legatees were entitled to take the 
same as such and had a right at their elec- 
tion to reconvert into real estate. No dis^ 
tinct and positive act is required for such a 
purpose, and the rule applicable to such a 
case is that "in the reconversion of real es- 
tate a slight expression of intention will 
likewise be considered suiHcient to demon- 
strate an election on the part of those ab- 
solutely entitled." Leigh & D. Conv. (5 
Law Library), m. p. 168; Mutlow v. Bigg, 
L. R., 1 Ch. Div. 385; 1 Jarm. Wills, 523 et 
seq. The real estate was not disposed of 
by the executors under the provisions con- 
tained In the will, and as there was no 
lawful purpose for which a sale was abso- 
lutely required there was no obstacle to pre- 
vent a reconversion of the same by the par- 
ties in interest from personal into real es- 
tate. This they elected to do by positive 
and unequivocal acts. Three of the four 
residuary interests were conveyed to the 
plaintiff, Augustus Prentice, and the defend- 
ant, Mary Ann Janssen, retained the other 
one-fourth. The whole has since been en- 
joyed, possessed and treated the same as real 
estate. This was done by the acquiescence 
of the executors and all the parties in Inter- 
est, not only by possession, but by acts show- 
ing their Intention beyond any question. In 
Story, Eq. Jur. § 793, it is said that if land 
is directed to be converted into money mere- 
ly, the party entitled to the beneficial inter- 
est may If he elects so to do, prevent any 
conversion of the property and hold it as it 
is. This has been done by the residuary 
legatees here; and as the lands were not 
sold and disposed of by the executors, and 
no diversion made, the rule applies that the 
person entitled to the money, being of law- 
ful age, can elect to take the land, if the 
rights of others will not be affected by such 
election. Hetzel v. Barber, 69 N. Y. 1, 11. 
No rights of other parties were injured by 
the election to reconvert; and as three- 
fourths of the residuary interests had been 
sold and conveyed to the plaintiff by those 
who were entitled to the proceeds of a sale, 
if one had been made under the power, and 
the owner of the remaining one-fourth had 
assented to the reconversion, by exercising 
acts of ownership, and the purpose of the 
power had become unattainable, the power 
to sell became extinguished, and the plain- 
tiff and defendant already named became 
owners as tenants in common. Hetzel t. 



CONVERSION AND KEOONVBESION. 



157 



Barber, supra; Garvey v. McDevitt, 72 N. 
Y. 563. Neither the will Itself nor the sur- 
rounding circumstances evince in any way 
that the testator intended not only to confer 
a power of sale, but that the exercise of such 
power would become absolutely necessary to 
enable the executors to make the distribution 
required to the residuary legatees, within the 
principle laid down in Crittenden v. Fair- 
child, 41 N. Y. 289, 292, which is relied upon 
by the defendant's counsel. The facts here 
are far different from the case cited. The 
distribution was actually made and the pur- 
pose of the will fully accomplished by the 
reconversion of the personal estate into real 
estate by the parties in Interest, as is quite 
obvious, and each of the legatees had re- 
ceived their full share as directed; thus ren- 
dering the exercise of the power of no avail. 
It follows that the executors having only a 
power to sell for the purpose of distribution 
— which power never was exercised, and 
which became of no use by reason of the 
reconversion of the land into realty— Ger- 
hard Janssen, the surviving executor, had no 
right, title, interest, or lien upon the prop- 
erty, which rendered him a necessary party 
to the action as such executor. The provi- 
sion of 1 Rev. St. p. 735, § 107, which makes 
a power of sale a lien or charge upon the 
land, has no application when it had ceased 
to operate, and was of no practical use. As 
by the reconversion no interest remained in 
the executors, there could be no lien or 
charge upon the land. Equity would not in- 
terfere to compel the execution of the power 
under 1 Rev. St. p. 784, § 96, because the 
purpose had been accomplished without its 
exercise. 

Nor was it necessary that Gerhard Jans- 
sen, the surviving executor, should be a par- 
ty for any other reason. In regard to the 
payment of debts and legacies there was no 
evidence that any debt or legacy remained 
unpaid when this action was brought. Sev- 
en years had then elapsed, and as debts and 
legacies are primarily to be paid out of the 
personal estate, unless express directions or 
a clear intent to the contrary is found, or to 
be gathered from the will (Bevan v. Cooper, 
72 N. Y. 317; Klnnier v. Rogers, 42 N. Y. 
531J, the presumption is that they have been 
paid. The burden of proof was on the de- 
fendants to establish that they were not, if 
such was the fact. No such defense was set 
up in the answer or interposed upon the 
trial, and as the case stood the plaintiff was 
not required to show that the debts and leg- 
acies had been paid. The same remarks 
will apply to the point made, that there was 
no payment or accounting for the testamen- 
tary expenses. 

Charles Blancard, a son of the testator, 
was not, we think, a necessary party de- 
fendant in this action. By the will he is 
bequeathed the sum of $5,000, and he is not 
named therein as a residuary legatee. It is 



claimed that he became entitled to an inter- 
est in the residuary portion of the estate 
which was given by the testator to his broth- 
er Francis, who died before the testator, 
without leaving any child or descendant, 
and that the share bequeathed and devised 
to Francis lapsed and his share descended to 
the testator's heirs at law; that Charles 
Blancard was one of them, and therefore a 
necessary party to the action. Without con- 
sidering the question whether the devise to 
Francis H. Blancard having lapsed it pass- 
ed, under the residuary clause, to the four 
children named who survived him, or wheth- 
er the papers produced upon the argument of 
this appeal, showing that Charles Blancard 
had sold and conveyed away all the interest 
which he may have had in the property, and 
therefore was not a proper and necessary 
party to the action, it is sufficient to say that 
the point does not arise upon the record be- 
fore us, and it is a complete answer fo the 
objection that the admission made by the 
pleadings, that the plaintiff and the defend- 
ant are the sole owners of the real estate, 
dispensed with the production of evidence 
upon the trial to establish such fact and pre- 
clude the objection that Charles Blancard 
had an outstanding interest as an heir at 
law under the residuary clause in the will of 
Francis Blancard. 

No title was acquired by the deed from 
Wemple, as executor of Caroline Blancard, 
deceased, of the interest of the decedent in 
one of the lots of the Pavilion Hotel, to the 
defendant, Mary Ann Janssen. Nor is there 
any valid reason why Mrs. Janssen should 
be subrogated in this action to his rights be- 
cause the real estate had been converted into 
personalty. By the will of Caroline Blan- 
card the executor was authorized and em- 
powered, during the minority of the nephews 
and nieces of the testatrix, to whom she had 
given one-half of the property, to sell or 
lease jointly with the other owners of the 
undivided shares therein. After one of the 
devisees became of age the executor con- 
veyed to Mrs. Janssen all the interest and 
estate vested in him as such. He had no 
estate in the premises and only a power In 
trust, which was to be executed while the 
devisees were in a minority in connection 
with the other owners. He had therefore 
no authority to execute the conveyance to 
Mrs. Janssen, and the deed was invalid and 
conferred upon her no title. Subsequently 
Mr. Wemple, as special guardian of one of 
the devisees, who was an infant, by order 
of the court conveyed all of her interest un- 
der the will of Caroline Blancard, including 
that which had been previously attempted to 
be conveyed to Mrs. Janssen, to the plaintiff, 
Augustus Prentice, and by other conveyan- 
ces the interest of the other devisees was 
acquired by him. As the executor had no 
authority to convey the premises, the right 
acquired by the deed of the special guard- 



158 



CONVERSION AND RECONVERSION. 



ian could not be affected by the knowledge 
of the puichaser of the conveyance to ilrs. 
Janssen. 

We think that the share of ilre. Janssen 
was properly chargeable with its proportion 
of expenditures made by Augustus Prentice, 
the plaintiff, for repairs and improvements 
of the property. By the lease ?5,000 was to 
be applied for improvements and repairs. It 
was supposed that they would not exceed 
that amount; but the covenant to make re- 
pairs was properly construed by the referee 
to mean that the lessors were to make all 
repairs, whether they exceeded the sum nam- 
ed or not. It also appears from the referee's 
findings that Mrs. Janssen after she had 
knowledge that the repairs exceeded the 
sum specified, assented to the appropriation 
of additional sums due for rents, to be used 
in making improvements; that she stood by 
and did not object to the erection of a new 
building, and she thus acquiesced in all the 
expenditures actually made. Under such cir- 
cumstances there certainly was an implied 
obligation that she should pay her share of 
the moneys expended for the benefit of the 
property in which she had a common inter- 
est, and they are a proper charge against the 
defendant's portion of the real estate sought 
to be partitioned or sold. In making the re- 
pairs the plaintiff, Augustus Prentice, did 
not occupy the position of a volunteer, with- 
out any authority of his co-tenant, but acted 
under the lease, which, as we have seen, 
covered the amount actually expended, and 
that this was done with the assent and ap- 
proval of the defendant. The case of Taylor 
V. Baldwin, 10 Barb. 582, 026, which is re- 
lied upon by the defendant's counsel, is not 
adverse to the views expressed. 

There Is no valid objection to charging the 
defendant's share of the proceeds of the sale 
with the amounts expended, as found by the 



referee. These expenses were incurred In 
reference to the property under special cir- 
cumstances which, we think, render it 
chargeable therewith, and the judgment 
properly provided for the payment of de- 
fendant's proportion out of her share of the 
avails realized upon a sale. Nor is any rea- 
son shown why she should not be charged 
with her share of the costs, as found by the 
referee. 

There was no error in the allowance of the 
architect's fees. Although there is some con- 
fusion in the referee's report in regard there- 
to, it nevertheless appears from the receipts 
introduced in evidence that the amounts 
charged in the account were actually paid to 
him. 

We think the court properly ordered that 
the sale of the real estate and the personal 
property should be made as one parcel. The 
real estate as the referee found was so sit- 
uated that a sale of one portion would in- 
terfere materially with the value of the re- 
mainder, and the personal property, being 
purchased for the benefit of the hotel, was 
of such a character that it could be disposed 
of more advantageously by a sale with the 
real estate than by a separate sale. No rea- 
son therefore exists why the sale of the 
whole real and personal estate should not be 
made together in a single lot. We have ex- 
amined the authorities cited by the defend- 
ant's counsel upon the question last consid- 
ered, and none of them sustain the position 
that the court has not the power, in an 
equitable action, where the parties are ten- 
ants in common of real and personal prop- 
erty, to direct a sale of both In one parcel 
when their interest will be promoted by such 
a sale. 

There was no error, and the judgment 
should be affirmed. All concur. 

Judgment aflirmed. 



ACCIDEiNT, 



159 



KOPPER V. DYER. 

DYER V. KOPPER et al. 

(9 Atl. 4. 59 Vt. 477.) 

Supreme Court of Vermont. April 30, 1887. 

Appeal from chancery, Addison county, 
December term, 1886; Tal;t, Chancellor. 

Bill in chancery seeking relief from a de- 
cree of foreclosure, which had become abso- 
lute, on the ground of accident. Heard on 
pleadings and master's report. Decree that 
the orator is entitled to relief according to 
the prayer of his bill, and that the cross-bill 
of defendant, Dyer, be dismissed, with costs, 
from which defendant appealed. 

In August, 1880, defendant, John M. Dyer, 
sold and conveyed to Frederick Kopper the 
premises in controversy, known as the "Lake 
Dunmore Hotel Property," together with a 
large amount of personal property used in 
connection therewith, for $13,500. Of said 
purchase money, $10,500 was secured by 
mortgages of said real estate and personal 
property, both executed by Kopper to Dyer, 
August 23, 1880, conditioned that Kopper pay 
Mary C. Goddard, according to their tenor, 
certain notes, amounting to $10,500, which 
Dyer had executed, and which were secured 
by mortgage on his other real estate; that 
Kopper pay all unassessed taxes on the Lake 
Dunmore property on the grand list of 1880; 
and that he keep the premises insured in the 
sum of $5,000 for Dyer's benefit. The prem- 
ises have been continually occupied by Kop- 
per, with the exception stated below, and he 
is now in possession. The taxes were paid 
by Kopper to and including 1884. The con- 
dition respecting insurance has not been 
complied with. In 1884, Dyer paid insur- 
ance premiums to the amount of $75. For 
default in payment, Mary C. Goddard fore- 
closed her mortgage against Dyer, and ob- 
tained a decree of foreclosure at the Septem- 
ber term, 1882, of the Franklin county court 
of chancery. January 19, 1883, DyeV, fear- 
ing that Kopper might not satisfy the God- 
dard decree, and for the purpose of being 
sure that his own property would not be 
sacrificed, procured the National life Insur- 
ance Company to hold in readiness for him 
the amount required to pay that decree; and 
on May 23, 1883, obtained the same from the 
company, and paid it in satisfaction of that 
decree. Dyer was also compelled to pay the 
company the further sum of $193.85, in con- 
sideration of its having held said amount in 
readiness from January to May. Dyer also 
paid $32.86 costs of the Goddard foreclosure. 
Dyer made several attempts to foreclose his 
mortgage against Kopper, and finally it was 
decreed "that, unless the said Frederick Kop- 
per pay to the clerk of this court, for the 
benefit of the orator, the sum of $500 on or 
before January 1, 1885, and the sum of $8,052.- 
09 on or before the first day of June, 1885, 
he, (the said Frederick Kopper,) and all per- 
sons claiming under him, shall be foreclosed 



and forever barred from all equity of re- 
demption in said premises." Kopper did not 
pay the $500 as required by the decree, but 
sent his personal check under circumstances 
stated in the opinion. January 2, 1885, Dyer 
obtained of the clerk of the court a certified 
copy of the decree tor record, and a writ of 
possession thereunder, and immediately took 
possession of the property, and has paid tax- 
es thereon since. Kopper at once brought 
the original bill in this cause, praying for 
such relief as shall give the orator the ben- 
efit of the payment already made, as much as 
he would have had if the currency had been 
paid into court, as ordered by the decree; 
that the decree be opened, and further order 
made on terms, meet to the court, to relieve 
the orator from the loss that must result to 
him should no relief be granted; and for an 
Injunction restraining the defendant from 
any further proceedings under the writ of 
possession', and from exercising any use or 
control of the premises. The bill and in- 
junction were served, and Dyer withdrew 
from the premises. June 1, 1885, Kopper 
caused the sum of $8,600 to be tendered Dyer 
in payment of the installment of said decree 
falling due on that day. Dyer refused to 
receive It, claiming that Kopper did not owe 
him, and that the property was his. Kop- 
per afterwards filed his supplemental bill in 
this cause, setting up the tender, and claim- 
ing the benefit thereof, with said payment of 
$500 to the clerk as a compliance with the 
terms of the foreclosure decree. Dyer filed 
his answer to said bill, September 22, 1885, 
and an amendment thereto, February 20, 
1886. May 29, 1885, Kopper conveyed the 
premises, together with the personal property 
thereon, which had been mortgaged to Dyer, 
to Wyman H. Merritt and Frank E. Brlggs by 
warranty deed, which deed was given Merritt 
and Briggs as security to them for the loan of 
the money which was tendered to Dyer, June 
1, 1885. April 14, 1886, Dyer filed his cross- 
bill against Kopper, Merritt, and Briggs, for 
a disclosure of the mortgaged personal prop- 
erty, for surrender of the premises, and an 
accounting for their use; or, if the decree is 
to be opened and further time given to re- 
deem, for a correction of the decree, and an 
accounting and foreclosure. Demurrers to 
the cross-bill having been overruled, the same 
was taken as confessed against Merritt and 
Briggs; and Kopper filed his answer thereto 
June 19, 1886. The other facts appear in the 
opinion. 

Stewart & Wilds, for Dyer. Ormsbee & 
Briggs, J. M. Slade, and Noble & Smith, for 
Kopper. 

ROWELL, J. Kopper seeks relief on the 
ground of accident. That chancery may 
grant relief on that ground, in cases of this 
kind, cannot be doubted; and the first ques- 
tion that arises is, has the orator made a case 
that calls for the interposition of the court 
in his behalf? 



IGO 



ACCIDEiXT. 



The term "accident," In its legal significa- 
tion, Is difficult to define. Judge Story de- 
fines it as embracing, "not merely inevitable 
casualty, or the act of Providence, or what 
Is technically called vis major, or irresistible 
force, but such unforeseen events, misfor- 
times, losses, acts or omissions, as are not 
the result of any negligence or misconduct 
in the party" affected thereby. 1 Story, Bq. 
Jur. § 78. Mr. Pomeroy justly criticises this 
definition as including vchat are not accidents 
at all, but mistakes, and as omitting the very 
central element of the equitable conception, 
and defines it thus: " 'Accident' Is an un- 
foreseen and unexpected event, occurring ex- 
ternal to the party affected by It, and of 
vt^hlch his own agency is not the proximate 
cause, whereby, contrary to his own inten- 
tion and wish, he loses some legal right, or 
becomes subjected to some legal liability, and 
another person acquires a corresponding le- 
gal right, which it would be a violation of 
good conscience for the latter person, under 
the circumstances, to retain." 2 Pom. Eq. 
Jur. § 823. And the chief point of the thing 
is that, because of the unforeseen and unex- 
pected character of the occiu-rence by which 
the legal relation of the parties has been 
unintentionally changed, the party injurious- 
ly affected thereby is. In good conscience, en- 
titled to relief that will restore those rela- 
tions to their original character, and place 
him in his former position. Id. § 824. But, 
as a general rule, relief will not be granted 
unless it can be done with justice to the oth- 
er party; for, if he cannot be put in as good 
a situation as he would have been in had 
the other party performed, the court will not 
Interpose. Eose v. Rose, Amb. 331. 

Equity, in many instances, relieves against 
forfeitures occasioned by the non-payment of 
money at a day certain; and this, although 
there is no accident, but negligence instead, 
on the ground that the condition and the for- 
feiture are regarded as merely security for 
the payment of the money. This is the 
ground on which tenants are relieved from 
forfeitures for the non-payment of rent as 
stipulated, and mortgagors are allowed to 
redeem after the law-day has passed. And 
although the agreement Is not wholly pe- 
cuniary, nor measured by pecuniary compen- 
sation, still, if the party bound by it has 
been prevented by accident, without his fault, 
from an exact fulfillment, so that a forfeiture 
is thereby Incurred, equity will Interpose, 
and relieve him from the forfeiture, upon 
his making compensation. If necessary, or do- 
ing anything else in his power to satisfy the 
equitable rights of the other party. 2 Pom. 
Eq. Jur. § 833. 

In Cage v. Russel, 2 Vent. 352, It is laid 
down as a standing rule of equity that a for- 
feiture shall not bind when the thing can 
be done afterwards, or any compensation can 
be made for it. Forfeitures are odious, and 
courts struggle against them, and relief is 
granted for the non-performance of diverse 



collateral acts whereby they are Incurred; as 
for not laying out a specific sum in repairs 
in a given time, (Sanders v. Pope, 12 Ves. 
282,) for cutting down timber when cov- 
enanted against, (Northcote v. Duke, Amb. 
511,) for not renewing a lease in time, (Raw- 
storne v. Bentley, 4 Brown Ch. *415,) and the 
like. Relief is also granted against forfeit- 
ures incurred by unintentional breaches of 
the condition of mortgages for support, on 
terms that the party in fault fully compen- 
sate and indemnify the other party for all 
he has lost by reason of the breach. Henry 
V. Tupper, 20 Vt. 358. 

In Adams v. Haskell, 10 Wis. 123, the de- 
fendants were prevented by accident from 
reaching the place of a foreclosure sale until 
after It was completed, and the court for 
that reason ordered a resale, but on terms. 

In Piersou v. Clayes, 15 Vt. 93, the orator, 
by reason of pending negotiations of settle- 
ment, without negligence on his part, let the 
time of redemption expire; and he was re- 
lieved by opening the decree, and giving fur- 
ther time to redeem. 

ITie case of Bostwick v. Stiles, 35 Oonn. 
195, Is confessedly much in point. That was 
a bill to open a decree ol foreclosure, and ob- 
tain further time. The mortgage debt was 
about ?4,C00, and the value of the premises 
twice that sum. The time limited for pay- 
ment was August 5th. The petitioner intend- 
ed to redeem, but, not having sufficient 
means of his own, he applied to his uncle— a 
man of property — to help him, and he agreed 
to, and to furnish the money on August 3d, 
on which the petitioner relied; but, for some 
reason not explained, he did not furnish the 
money as agreed, and the petitioner delayed 
making other arrangements until the evening 
of August 5th, when he applied to Russell for 
assistance. Russell had no money, but plen- 
ty of government bonds, and agreed to make 
payment In them If defendant would take 
them; and accordingly went to defendant's 
house that evening, after defendant had gone 
to bed, and told his wife that he had come 
prepared to redeem the mortgage for the pe- 
titioner, but defendant did not get up, but 
sent word by his wife that he was sick, and 
Russell went away. On this state of facts, 
the court held that the petitioner's failure to 
pay on August 5th was occasioned by acci- 
dent, without fault or neglect on his part, 
and that the accident lay in the fact of his 
uncle's failure to furnish the money as 
agreed, and as the petitioner had reason to 
believe he would. The court says that there 
Is a degree of uncertainty in regard to all 
business expectations, and that no more 
ought to be required in respect of future obli- 
gations Imposed by law than that such means 
shall be taken to fulfill them as will render 
it reasonably certain, as far as human sagaci- 
ty can foresee, that they will be perfoimed. 

It Is common in England to enlarge the 
time of redemption on application before the 
day of payment; and, though the indulgence 



ACCIDENT. 



161 



is not granted of course, it is said not to re- 
quire a very strong case to obtain it. And 
the time may be enlarged more than once. 
Thus, In Jones v. Creswicke, 9 Sim. 30i, aft- 
er the time had been enlarged, and after 
the order absolute had been made, though 
not drawn up, the time was again enlarged, 
on the ground that the man who had agreed 
to lend the defendant the money was pre- 
vented by illness from going up to London on 
the day it was due, and his wife, whom he 
had deputed to carry it up, was prevented 
from doing so because the London coach was 
full the day before. And see Edwards v. 
CunlifCe, 1 Madd. 287. 

And the decree may be opened after the 
order absolute has been made and enrolled. 
Thus, in Ford v. Wastell, 6 Hare, 229, not- 
withstanding the order absolute had been 
drawn up and enrolled, the decree was open- 
ed because all the plaintiff's property was 
involved in an administration suit that she 
was justified in believing would terminate 
in season to enable her to avail herself of 
her property with which to meet the pay- 
ment, but which had not yet terminated. 
See, also, Thornhill v. Manning, 1 Sim. (N. 
S.) 451, in which the promptness of the 
mortgagor in applying was regarded as the 
great and important feature in the case to 
guide the court in deciding what it ought 
to do. 

Applying these principles, as shown and 
illustrated by the cases, it is quite out of 
the question to say that the defendant is 
entitled to keep this property, and that the 
orator has not made a case that calls for the 
interposition of the court in his behalf. 
The orator gave $13,500 for the property, 
and had paid .?2,724 towards it, and expend- 
ed about $10,000 upon it in improvements 
and repairs; and on January 1, 1885, the 
time limited bj' the decree for paying the 
installment of $500, he believed the real es- 
tate fairly worth $5,000 or $6,000 more than 
he gave for it. He was exceedingly anxious 
to redeem the property, but had no available 
means of his own, and relied for means 
wherewith to pay his debts partly on income 
assured to members of his family, and part- 
ly on the equity of redemption in the prop- 
erty, his ability to make which available at 
the value he put upon it being his only 
means of escape from absolute bankruptcy. 
It appears that his wife and her sister. Miss 
Jenkins, owned property in New York City, 
as to which he was agent, and that before 
and on December 29, 1884, he had been in 
negotiation with one Martin of that city in 
respect to leasing it to him; and it was 
agreed that, on delivery of proper leases 
thereof, Martin should advance to him $650 
towards performance on his part, and Kop- 
per relied on the use of that money to pay 
the $500 installment. Accordingly he went 
to New York on December 30th, with the 
lease executed, found Martin, and made an 
appointment with him for 11 o'clock the next 
HUTCH.& BUNK.EQ.— 11 * 



day; and, on going to the place at the time 
appointed, found a message postponing the 
appointment to the office of an attorney 
down town at 2 that afternoon; whereupon, 
being unable to commtinicate with Martin, 
he went to the office down town at 2, and 
found that Martin had been there, but had 
gone. He afterwards met Martin on the 
street, and, being exceedingly anxious to 
obtain the money, persuaded him to go 
back to the attorney's office; but, he being 
out, they went to another attorney's office, 
and he was out; and iinally he persuaded 
Martin to give him his check for $650 be- 
fore the leases were approved by an attor' 
ney. But this was after 3 o'clock, when 
.all the banks in the city were closed. Said 
check was good, but, being drawn on a 
bank in the upper part of the city, and it 
being after banking hours, it was impossi- 
ble for Kopper to draw the money on it 
that day. He had for several years kept a 
deposit account with the Second National 
Bank of that city, and had at this time a 
small balance standing to his credit there, 
and that bank was accustomed to place to his 
credit the amount of such checks as he de- 
posited there properly indorsed. He had 
previously carried checks to that bank after 
business hours for deposit, handing them in 
over the railing to be credited to him at the 
opening of the bank the next day. On this 
occasion he properly indorsed said check 
"for deposit," and sent it to said bank by a 
district messenger boy, but whether it reach 
ed the bank or not that day does not appear. 
At the same time he drew two checks on 
said hank to the order of the person who 
was then the clerk of the court in which 
the decree was obtained,— one for $575, 
(which he supposed to be the amount re- 
quired to pay said installment, but which 
was in fact more than was required;) and 
one for $25, for a sum otherwise payable to 
the clerk, — inclosed them in an envelope, 
with a letter to the clerk, went to the Grand 
Central Depot, and sent the package to Mid- 
dlebury by the porter of the sleeping-car, 
inclosing it in another envelope to the sta- 
tion-agent there, requesting him to deliver 
the package to the clerk immediately, which 
he did on the morning of January 1st, which 
day was a legal holiday in New York; and 
the $650 check was passed to Kopper's credit 
by the Second National Bank on the next 
day, the first business day after it was re- 
ceived. Dyer refused to take Kopper's check 
of the clerk, and the clerk did not treat it 
as payment of the installment, nor regard 
it as available funds in his hands, until it 
was paid, and the avails credited to him by 
the collecting bank, which was on January 
5th, on which day he was trusteed by some 
of Kopper's other creditors, and on the 6th 
this bill was brought. 

On these facts, and the others disclosed 
by the record, Kopper cannot justly be char- 
ged with negligence. The means he had tak- 



i(;2 



ACCIDBXT. 



en to obtain the money rendered it reasona 
bly certain tliat he would succeed, and that 
he was anxious to obtain it abundantly ap- 
pears. That he did not meet Martin at 11 
nor at 2 was an unforeseen and unexpected 
occurrence, external to himself, of which 
his agency was not the proximate, nor even 
the remote, cause, and thereby he was pre- 
vented ffom sending his money seasonably, 
in a form that would have been treated and 
regarded as payment, whereby, contrary to 
his own Intention and wish, he lost his legal 
right to pay, and Dyer acquired a legal right 
not to have him pay; and in these circum- 
stances Kopper is entitled to relief that will 
reinstate him in his former position, on terms 
that he satisfy the equitable rights of the 
other party. 

I'>ut he cannot have relief under his bill 
as drawn, for it is not adapted to his case. 
The original bill goes upon the ground that 
he Is entitled to have his attempted payment 
of the first installment treated as an actual, 
seasonable payment; while the supplemental 
bin sets up a tender of the other install- 
ment, and aslis that it be adjudged a pay- 
ment thereof, and that the defendant be 
decreed to accept and receive the same in 
full satisfaction and discharge of the decree. 
But his attempted payment was not pay- 
ment, and he is not entitled to have it treat- 
ed as such, because neither the money, nor 
its equivalent, seasonably came into the 
hands of the clerk, and Dyer was not bound 
t) accept and receive his checli as payment, 
though he might have safely taken the mon- 
ey after the time expired, if he could have 
got it; for taking an installment after the 
time for paying it Is expired does not open 
the decree as to installments for the payment 
of which the time has not expired. Smalley 
V. Hickok, 12 Vt. 153; Gilson v. Whitney, 
an unreported case in Windsor county a few 
years ago, ut audivi. Nor was the tender 
of the second installment effective; for, not 
having paid the first, he had no legal stand- 
ing for tendering the second. 

Redemption is the appropriate relief in 
this case. Indeed, it is said that whenever 
a mortgagor is driven to the necessity of fil- 
ing a bill against the mortgagee, it must be 
one to redeem, and that the court can relieve 
him' only by allowing a redemption. Gold- 
smith V. Osborne, 1 Edw. Oh. 560; Cholmley 
V. Countess of Oxford, 2 Atk. 267; Lord 
Langdale in Dalton v. Hayter, 7 Beav. 313. 
But the bill lacks some of the essential ele- 
ments of a bill to redeem. It neither offers 
nor avers a willingness to pay, which is nec- 
essary by all the authorities. But, inas- 
much as the orator is entitled to relief, he 
should not be turned out of court, but al- 
lowed to amend his bill into a bill to re- 
deem, if he shall be so advised. Harrigan 
V. Bacon, 57 Vt. 644. 

There was no necessity for bringing the 
cross-bill. The chattel mortgage was not em- 
braced in the original bill, and so could not 



be the subject of a decree; and discovery of 
property subject to it could not aid in de- 
feuding the original bill. As to the execu- 
tion of the decree by giving possession, that 
can be done by summary process. R. L. §§ 
TOO, 767; Kershaw v. Thompson, 4 Johns. 
Oh. 609; Ludlow v. Lansing, Hopk. Ch. 231; 
Valentine v. Teller, Id. 422; Yates v. Ham- 
bly, 2 Atk. 237. 

As to the use of the premises pending suit, 
the defendant would be entitled in respect 
thereof, if at all, only on failure of the 
original bill, in which event he could avail 
himself of his rights by way of claim for 
injunction damages. And, as to the alterna- 
tive prayer for foreclosing any remaining 
equity, that would be the result of any de- 
cree on the original bill. Nor was there 
any necessity for bringing in Briggs and 
Merritt, for they purchased pendente lite, 
and so will be bound by any decree made. 
Besides, treating them as entitled to the 
benefit of their demm'rer, as they were treat- 
ed at the bar, they are not proper parties to 
the cross-bill; for new parties cannot be 
made in that way. A cross-bill, by force of 
the term, is a bill by a defendant against 
the plaintiff or other defendants in the same 
suit, or both. If an orator desires to make 
new parties, he amends his bill, and makes 
them, although it be in respect of matters 
that have transpired since the filing of his 
bill; though until very recently, in respect 
of such matters, he would have brought a 
supplemental bill. If the interest of the 
defendant requires the presence of new par- 
ties, he takes his objection for want of 
them, and the orator is forced to bring them 
in, or have his bill dismissed; and if, at the 
hearing, the court finds new parties indis- 
pensable, it refuses to proceed. These rem- 
edies cover the whole subject, and a cross- 
bill to make new parties is not only Irregu- 
lar and improper, but wholly unnecessary. 
Shields v. Barrow, 17 How. 130. 

But if they are not entitled to the benefit 
of their demurrer because the bill has been 
taken as confessed as to them, yet Kopper's 
defense avails for them; for, when the de- 
fendants are jointly interested, a decree pro 
confesso as to some merely takes away their 
standing in court, and disentitles them' to 
appear or be heard on many questions cer- 
tainly without an order of court; but the 
success of the others avails for them, and 
the bill will be dismissed as to all. 1 Hoff. 
Ch. Pr. 554; Clason v. Morris, 10 Johns. 524; 
Frow V. De La Vega, 15 Wall. 552. 

As to the terms that will satisfy the eq- 
uitable rights of Dyer. As between the two, 
it belonged to Kopper to pay the Goddard 
mortgage, and Dyer stood as his surety in 
respect thereof. Field v. Hamilton, 45 Vt. 
35; Wells v. Tucker, 57 Vt. 223; Comstock 
V. Drohan, 71 N. Y. 9. Hence Dyer is en- 
titled to be reimbursed, not only the principal 
sum that he paid to redeem said mortgage, 
but his reasonable costs and expenses in that 



ACCIDENT. 



163 



behalf In good faith Incurred. Hayden v. 
Cabot, 17 Mass. 168; Downer v. Baxter, 30 
Vt. 467; Hulett v. Soullard, 26 Vt. 295; Com- 
stock V. Drohan, 71 N. Y. 9. 

As to the costs of that foreclosure, It suf- 
ficiently appears that they were properly in- 
curred, and Dyer is justly entitled to reim- 
bursement. But, as to the amount paid by 
him to the insurance company for holding 
in readiness the money wherewith to re- 
deem, it does not sufficiently appear that that 
was such a prudent and necessary thing to 
do in the circumstances as to entitle him to 
reimbursement. The mortgage of the prem- 
ises in question being conditioned to keep 
the property insured for Dyer's benefit, 
which Kopper neglected to do, he is chargea- 
ble with the insurance premium of $75 that 
Dyer was compelled to pay in 1884, and this 
was included In the decree. He is also 



chargeable with the $60.30 paid by Dyer 
for taxes, as shown by the master's report, 
as well as with all the other taxes that Dyer 
has since paid, or that he shall hereafter 
pay, or become liable to pay, on the property. 

As Kopper put his bill upon false ground, 
namely, that he had performed the decree 
when he had not, Dyer was justified in de- 
fending it, and should recover his costs; and 
as Dyer had a right, after the decree became 
absolute, to deal with the property as his 
own, he is entitled to the costs of his writ of 
possession, and of the execution of it. Cree 
V. Lord. 25 Vt. 498. In Thornhill v. Man- 
ning, ] Sim. (N. S.) 451, the costs of an 
ejectment were allowed in a similar case. 

The decree dismissing the cross-bill is af- 
firmed; but the decree for the orator in the 
original bill Is reversed, a.nd the case re- 
manded, with mandate. 



l(U 



ACCIDENT. 



PATTON et al. v. CAMPBELL. 

(70 111. 73.) 

Bupreme Court of Dlinois. Sept. Term, 1873. 

Bentley, Swett & Quigg, for appeUants. 
Waite & Clarke, for appellee. 

CRAIG, J. This was a bill In chancery, 
filed in the superior court of Cook county, 
by George W. Campbell, as assignee in bank- 
ruptcy of the late firm of Durham & Wood, 
against William Patton and others, to re- 
cover the value of certain goods which had 
been replevied by Patton & Co. from Dur- 
ham & Wood. 

It appears from the record that on or about 
the 20th of October, 1870, Patton & Co., of 
New York, sold Durlham & Wood, of Chi- 
cago, a bill of goods, amounting to $1,600, on 
a credit of four months. About the first of 
November, after the sale, Durham & Wood 
failed, and Patton & Co. commenced an ac- 
tion of replevin to recover the goods they 
had sold. A replevin bond in the penal sum 
of $1,000, in the usual form, was filed with 
the papers in the action, and $800 or $900 
worth of the goods were replevied. 

In the fire of October 8th and 9th, 1871, the 
papers in the case, including the bond, were 
destroyed. Subsequently the action was dis- 
missed. 

The defendants answered the bill, to which 
replication was filed, the cause was heard on 
the proofs taken, and decree rendered In 
favor of complainants for $850. 

The defendants bring the cause to this 
court, and seek to reverse the decree on two 
grounds: 

First. For the reason a court of chancery 
has no jurisdiction, the remedy of complain- 
ants being complete at law. 

Second. The purchase of goods from Pat- 
ton & Co., by Dm-ham & Wood, was fraudu- 
lent, and Patton & Co., upon discovery of 
the fraud, had the right to rescind the sale 
and replevy the property. 

The questions will be considered In the 
order in which they are raised. 

The bill in this case is filed to recover upon 
aD instrument under seal, which had been 
destroyed. 

The jurisdiction of a cotttt of equity aris- 
ing from accident is a very old head, in 
equity, and probably coeval with its exist- 
ence. But it is not every case of accident 
which wiU justify the interposition of a 
court of equity. The jurisdiction will be 
maintained only when a court of law can not 
grant siiitable relief; and where the party 
has a conscientious title to relief. 1 Story, 
Eq. Jur., § 79. 

In case, however, of lost instruments under 
seal, equity takes jurisdiction, on the ground 
that, untU a recent period, it was the settled 
doctrine that there was no remedy on a lost 
bond in a court of common law, because there 
could be no profert of the instrument, with- 
out which the declaration would be defect- 



ive. The jurisdiction having been assumed 
and exercised on this groimd. It is stlU re- 
tained and upheld. 1 Story, Eq. Jur., § 81; 
Walmsley v. ChUd, 1 Vesey, Sen., 341; Fisher 
V. Sievres, 65 lU. 99. 

Under the allegations In the bill In this 
cause, we think it is well settled that a court 
of equity had jurisdiction. 

The remaining question in the case Is, were 
the goods purchased under such circum- 
stances as gave the appellants the right of 
rescission on the ground of fraud, or was 
there such a fraud practised that the title 
to the property did not pass to Durham & 
Wood? 

The evidence shows that Hart, who was a 
traveling agent for appellants, called on Dur- 
ham & Wood, in Chicago, to sell them goods. 
They examined his samples and told him 
they wanted to make a large order, and 
wanted to buy on four months' time. Hart 
told them, Patton & Co. hardly ever vary 
from three months' time. Durham remarked, 
he had bought and could buy of A. T. 
Stewart & Co., of New York, on four months' 
time. On tills statement. Hart sold the 
goods on four months' time. 

It turned out, on investigation, that Dur- 
ham & Wood had only bought two biUs of 
goods of Stewart & Co., and they were sold 
on thirty days' credit. 

While it is true the statement made by 
Durham, that he had bought and could buy 
goods of Stewart & Co. on four months' 
time, was false, yet, it does not appear that 
this statement induced Hart to seU the goods; 
it only had the effect to cause him to 
give one month longer credit on the goods 
than he otherwise would, which did not, in 
this case, in anywise affect the rights of ap- 
pellants, for the reason that the failure oc- 
curred and the goods were replevied witMn 
less than two months after the sale. 

It appears, from the evidence, that Hart 
made no objection to sell the goods on three 
months' time; he neither asked nor required 
any repre.sentations from Diu-ham, as to the 
standing or responsibility of the firm, to in- 
duce him to seU the goods on a credit of 
three months. At the time the goods were 
purchased, it does not appear that Durham 
& Wood were in failing circumstances. In- 
solvent, or in any manner pressed by their 
creditors; for aught that appears they were 
at that time solvent, and responsible for all 
their contracts. 

Neither does it appear that they made any 
false representations in regard to what they 
were worth, what property they owned, or 
the amount of debts they had contracted. 

It is not shown that the goods were bought 
with the intent not to pay for them, or with 
a view to make an assignment. 

We understand the rule to be, that if a 
party, knowing himself to be insolvent, or 
in failing circumstances, by means of fraudu- 
lent pretenses or representations, purchases 
goods with the intention not to pay for them. 



ACCIDENT. 



165 



but with the design to cheat the vendor out 
of his goods, such facts would warrant the 
vendor in rescinding the contract for fraud, 
and would justify him in recovering posses- 
sion of the property by replevin, where the 
goods had not in good faith passed into the 
hands of third parties. Henshaw v. Bryant, 
4 Scam. 97. 

But the case under consideration does not 
come within this rule. 

There is no evidence in this record to show 



that the goods were bought with any Impure 
or wrong motives. 

It is true that, some two months after the 
purchase of the goods, the parties went into 
banliruptcy, but this was involuntary, and 
does not, of itself, show the condition of the 
firm at the time the goods were bought. 

Upon a careful examination of the whole 
record, we are satisfied the decree of the 
court below was correct, and It will be af- 
firmed. 



1G6 



ACCIDENT. 



BREWER V. HERBERT. 

(30 Md. 301.) 

Court of Appeals of Maryland. March 11, 
1869. 

Appeal from circuit court, Washington 
county, as a court of equity. 

The bill in this case was filed by the ap- 
pellee for an Injunction to restrain proceed- 
ings at law and for the specific performance 
of a contract. The appellee was the owner 
of a dwelling house and balf lot of ground 
situate in Hagerstown, and sold the same to 
the appellant on the 9th of October, 1865, by 
their agreement in writing, as follows, to wit: 

"Articles of agreement made and concluded 
this 9th day of October, 1865, between F. 
Dorsey Herbert and John A. K. Brewer, both 
of Washington county and state of Maryland, 
witnesseth: That in consideration of the sum 
of four thousand dollars, to be paid as here- 
inafter mentioned, the said Herbert has this 
day sold to the said Brewer his house and 
half lot of ground, situated on the corner of 
West Washington and Prospect streets, in 
Hagerstown; and the said John A. K. Brew- 
er on his part agrees to pay the said sum of 
four thousand dollars, as follows: Two thou- 
sand dollars on the 1st day of April, 1866; 
and one thousand dollars on the 1st day of 
April, 1867; and one thousand dollars on the 
1st day of April, 1868,— with interest from the 
1st day of April, 1866; and the said Herbert 
doth further agree to give the said Brewer 
possession of the same on the 1st day of 
April, 1866, and on payment of the whole 
purchase money to make a good and sufficient 
deed for the same, clear of all incumbrances, 
to the said Brewer. In witness whereof the 
parties hereto have set their hands and seals 
on the day and year first above written. 

"[Signed] F. Dorsey Herbert. [Seal.] 
"J. A. K. Brewer. [Seal.]" 

Of the $2,000 to be paid by the agreement 
on the 1st day of April, 1866, the appellant, 
at the request of the appellee, paid $1,000 on 
the 10th day of October, 1865. At the time 
of sale the said premises were under lease by 
Herbert to Dr. Berry, whose term expired on 
the 1st day of April, 1866. The appellee held 
a policy of insurance for $1,000 on the house 
at the time of sale, which was allowed by 
him to expire about the last of January, 1866. 
On the 5th day of February, 1866, the house 
was totally destroyed by fire, but without any 
fault on the part of the appellee or his tenant, 
Berry. On Monday, the 2d day of April, 1866, 
the 1st being Sunday, the appellee made a 
tender of the premises, then a vacant lot, to 
the appellant, which he refused to receive in 
its destroyed condition. The appellant hav- 
ing refused to receive the ground, and holding 
that the appellee was unable to perform his 
part of the contract, by reason of the destruc- 
tion of the house, brought suit on the law 
side of the court, to recover from the appel- 
lee the said $1,000, so as aforesaid paid to 



him. Whereupon the appellee filed the bill 
In this cause to enjoin said proceedings at 
law and for a specific execution of the agree- 
ment. The court below by Its decree enjoin- 
ed said proceedings at law, and decreed a 
specific execution. From this decree the 
present appeal was taken. 

Before BARTOL, C. J., and GRASON, 
MILLER, and ROBINSON, JJ. 

Wm. T. Hamilton, for appellant. A. K. 
Syester, for appellee. 

MILLER, J. After the execution of the 
written contract for the sale of the house and 
lot, and before the day fixed for delivery of 
possession and payment of the first install- 
ment of purchase money, the house was acci- 
dentally destroyed by fire, without fault of ei- 
ther party or of the tenant then in posses- 
sion of the same. The vendor had a fee 
simple title to the property, and at the proper 
time, under the contract, offered to deliver 
possession of the premises in the condition in 
which they then were. Tliis the vendee re- 
fused to receive because of the destruction of 
the house by fire, and the main question in 
the case is, can he on this ground successfully 
resist this application in equity by the vendor 
for a specific performance of the contract? 

In contracts of this kind between private 
parties, the vendee is in equity the owner of 
the estate from the time of the contract of 
sale, and must sustain the loss if the estate 
be destroj'ed between the agreement and the 
conveyance, and will be entitled to any bene- 
fit which may accrue to it in the interim. 
This doctrine, notwithstanding the dictum in 
Stent V. Bailey, 2 P. Wms. 290, to the con- 
trary, was plainly announced and settled by 
the decision of Lord Bldon, In Paine v. Mel- 
ler, 6 Ves. 349, a case very similar In its cir- 
cumstances to the present, where it was held 
that if there was no objection to the title of 
the vendor, or it had been accepted in fact 
by the vendee before the houses were burned, 
no solid objection to the bill for specific per- 
formance could be founded on the mere effect 
of the accident before conveyance, "for if 
the party," says the lord chancellor, "by the 
contract has become in equity the owner of 
the premises, they are his to all Intents and 
purposes. They are vendible as his, charge- 
able as his, capable of being incumbered as 
his; they may be devised as his; they may 
be assets; and they would descend to his 
heir." This decision has always been regard- 
ed as fixing the true equitable rule in such 
cases. It was recognized by Sir Thomas 
Plumer in Harford v. Purrier, 1 Madd. Oh. 
287, and In Rawlins v. Burgis, 2 Ves. & B. 
387, and by Lord Chancellor Manners in Be- 
vell V. Hussey, 2 Ball & B. 287. From these 
and other authorities of equal weight an- 
nouncing the maxim that equity regards as 
done that which was agreed to be done is 
deduced as the established doctrine In equity 
that from the time the owner of an estate 



ACCIDENT. 



167 



enters into a binding agreement for its sale 
lie holds the same in trust for the purchaser, 
and the latter becomes a trustee of the pur- 
chase money for the vendor, and being thus 
in equity the owner the vendee must bear any 
loss which may happen, and is entitled to any 
benefit which may accrue to the estate in the 
Interim between the agreement and the con- 
veyance. 1 Sugd. Vend. 228, 388-391; 2 Pow- 
ell, Cont. 69; Dart, Vend. 114^118; 2 Story, 
Eq. § 1212. The contract here is not for a 
sale at a future day; it does not use in this 
respect prospective or contingent terms. Its 
language is: The vendor "has this day sold 
to" the vendee his house and lot, which clear- 
ly imports a binding contract then executed 
and consummated. By such terms the title 
in equity passes from the date of the contract, 
and if there were nothing else in it there 
would be no room for argument, for It would 
be impossible to withdraw the case from the 
operation of the rule above stated. 

But It has been earnestly and strenuously 
urged by the appellant's counsel that as the 
contract contains an agreement by the ven- 
dor to deliver possession of the house and 
lot to the vendee on the 1st of April, 1866, 
the destruction of the house by fire before 
that period rendered performance by the 
vendor of this part of the contract impossi- 
ble, and he cannot, therefore, either' in law 
or equity, ask the vendee to perform his 
part of it; and this circumstance, it is in- 
sisted, distinguishes the case from those cit- 
ed, and prevents it from falling within the 
principle established by them. Let us test 
the soundness of this argument. The ven- 
dee knew before and at the time of the con- 
tract there was a tenant In possession whose 
term would not expire until the 1st of April, 
and the first Installment of the purchase mon- 
ey is made payable on, and interest on the 
deferred payments runs from, that day. The 
subject-matter of sale is realty,— a lot of 
ground with a house upon it, described as a 
house and lot. The agreement as to deliv- 
ery is not like the usual covenant by a ten- 
ant in a lease, to deliver in as good condi- 
tion and repair as when the contract was 
made. There is also no difficulty about de- 
livery, except that the premises were not, 
as to the buildings upon them, in the same 
condition as at the date of the contract. 
The question then resolves itself into this, 
does the fact of the insertion into a contract 
like the present for the sale of real estate, 
of an agreement to deliver possession at a 
future day, make any difference in the ap- 
plication of the rule? It is true it does not 
appear in the cases cited there were in the 
contracts any stipulations as to delivery of 
possession at a future day, nor is this cir- 
cumstance alluded to, but they explicitly 
say it is the passing of the title in equity 
which throws the risk of loss upon the ven- 
dee, and entitles him to accruing benefits. 
To this, as we have seen, a conveyance is 
not necessary, nor is payment of the pur- 



chase money or any part of it; for in Hamp- 
son V. Edelen, 2 Har. cfe J. 66, this court 
has decided that "a contract for land bona 
fide made for a valuable consideration vests 
the equitable interest in the vendee from the 
time of the execution of the contract, al- 
though the money is not paid at that time." 
See, also, Siter's Appeal, 26 Pa. 180. Nei- 
ther can possession nor delivery of posses- 
sion be necessary, for, if the contract had 
been silent on this subject, the vendor would 
have had the right to retain possession at 
least until the 1st of April, when the first in- 
stallment of the purchase money was paya- 
ble, and if the vendee had obtained posses- 
sion before he would have been restrained 
in equity from exercising any acts of owner- 
ship prejudicial to the inheritance (Crock- 
ford V. Alexander, 15 Ves. 138; Reed v. 
Lukens, 44 Pa. 202); and yet the equitable 
title would all the while have been in him, 
subject to his disposition by deed or will, 
and liable for his debts. If, then, in the ab- 
sence of a stipulation to deliver at a future 
day, there is an implied right in the ven- 
dor to retain possession until that period, 
and this would make no difference as to the 
liability of the vendee for an intermediate 
loss, how can the insertion of such a stipula- 
tion have in equity any different effect? The 
whole foundation of this doctrine of equity 
is that the equitable title and interest passes 
by the contract of sale, and from the time 
of its execution, and it contemplates deliv- 
ery of possession as well aa payment of pur- 
chase money, and a conveyance at a future 
period. Hence Sir Edward Sugden and Sir 
Thomas Plumer both cite, as in exact accord 
with the decision of Lord Eldon, the rule of 
the civil law, where the very case is put in 
the Institutes: "Cum autem emptio et ven- 
ditio contracta sit, periculum rei venditse 
statim ad emptorem pertinet, tametsi adhuc 
ea res emptori tradita non sit: Itaque, si 
cedes totfe vel aliqua ex parte incendio con- 
sumptae fuerint— emptoris damnum est, cul 
necesse est, licet rem non fuerit nactus, pre- 
tium solvere." In sales of personal property 
delivery of the goods sold is not necessary 
to pass the title as between the parties, 
where the statute of frauds has been grati- 
fied by giving something in earnest, or pay- 
ment of the whole or part of the purchase 
money, or a sufficient note or memorandum 
in writing of the bargain, and in such case 
the property is at the buyer's risk before de- 
livery. Franklin v. Tx)ng, 7 Gill & J. 418. 
And even where the seller remaining in ac- 
tual possession agi'ees to deliver the prop- 
erty at a particular place, and it is destroyed 
by fire before such delivery, the loss will 
fall on the purchaser. Terry v. Wheeler, 
25 N. Y. 520. Where sales are made under 
authority of a court, the contract is not re- 
garded as consummated until it has received 
the court's sanction or ratification, and there- 
fore any loss happening before confirmation 
falls upon the vendor. Ex parte Minor, 11 



168 



ACCIDENT. 



Ves. 559; Wagner v. Cohen, 6 Gill, 102. 
But where a loss occurs after confirmation, 
by which the contract is consummated, it 
falls upon the vendee, even though no pur- 
chase money has been paid, and the vendor 
remains in possession. This was exisressly 
decided in Kobertson v. Skelton, 12 Beav. 
260, where Lord Langdale also said: "In 
equity the estate belongs to the purchaser 
from the date of the order to confirm the re- 
port, and the right of possession belongs to 
the vendor till the purchase money, for which 
it is securitj', has been paid." Again, if we 
look to the contract itself, and gather there- 
from the intent of the parties, it is clear 
from the language used their intention was 
that the equitable title and interest should 
pass from the day of its execution. Upon 
this point its tenns are too positive and ex- 
plicit to admit of doubt. Delivery of pos- 
session and payment of purchase money were 
postponed to a future day for the convenience 
of each party respectively, and we cannot 
construe the agreement to deliver into a con- 
dition that the contract shall be void if 
there is any change in the state or value of 
the property on the day of delivery, nor in- 
terpolate any such words into the instru- 
ment. AVe are therefore constrained to hold 
the argument founded on this delivery clause 
to be unavailing to the appellant. 

But it is said specific execution of con- 
tracts is in all cases not a matter of absolute 
right, but of sound discretion in the court, 
and as the vendor cannot now deliver the 
house which was the main Inducement to the 
vendee to buy, and constituted the chief 
value of the property, it would be inequita- 
ble to enforce the contract as against him. 
If this objection were sound, this doctrine of 
losses and benefits could never have been 
established. But, whilst it is conceded an 
application for specific performance is al- 
ways addressed to the sound discretion of 
the court, yet where a conti-act respecting 
real estate Is in writing, and is in its nature 
and circumstances unobjectionable, it is as 
much a matter of course for a court of equi- 
ty to decree a specific performance of it as it 
is for a court of law to give damages for a 
breach of it. Smoot v. Eea, 19 Md. 405; ■ 2 
Story, Eq. Jnr. § 751. "The fairness or 
hardship of a contract, like all its other 
qualities, must be judged of at the time it 
was entered into, not by subsequent events." 
If It was then certain, mutual, fair in all its 
parts, and for an adequate consideration, it is 
immaterial that by force of subsequent cir- 
cumstances it has become less beneficial to 
one party, unless such change is in some 
way the fault of the party seeking its spe- 
cific execution. Revell v. Hussey, 2 Ball & 
B. 2X8: Lawder v. Blachford, Beat. 526; 
Webb V. Railway Co., 9 Hare, 129; Low v. 
Tread well, 3 Fairf. .')41; Fry, Spec. Pert. 93, 
88. Adherence to principle compels the 
courts to overlook the hardship of particular 
cases. But the doctrine upon which this de- 



cision rests is founded in strict justice and 
equity, for whilst the vendee may think it 
hard to be compelled to pay for that which 
he cannot have in the condition it was when 
he purchased, the vendor, with equal jus- 
tice, might think it hard to lose his money 
after a bona fide sale of his property, be- 
cause of an accident accruing to it without 
fault on his part. It is to be remembered 
too that whilst the rule burthens the vendee 
with a loss it also entitles him to all benefits. 
Thus where a reversionary interest is agreed 
to be purchased, and lives drop, or one 
agrees to purchase an estate in considera- 
tion of a life annuity to the vendor, and the 
cestui que vie dies, or where there is a sud- 
den rise in the value of the land from its be- 
ing required for a public purpose, before con- 
veyance, in all such cases the vendee reaps 
the benefit. So in the case before us, if a 
valuable mine had been discovered on the 
premises the day after the contract, or by 
any unforeseen or unexpected circumstances 
their value had been increased a hundred 
fold, the benefit would have resulted to the 
vendee, and the vendor could not have been 
released from his contract. We cannot, 
therefore, sustain this objection to the bill. 

It appears that at the date of the contract 
the vendor held a policy of insurance upon 
the house, which by accident he allowed to 
expire without renewal before the fire, and 
of this the vendee received from him no no- 
tice. A similar state of facts existed in 
Paine v. Meller, and was held to constitute 
no objection to the vendor's bill. It is ad- 
mitted there was no understanding between 
the parties that the vendor should keep the 
policy alive. They did not contract on any 
such basis. After the contract the vendee 
had an insurable interest In the house, and, 
in the absence of all agreement on the sub- 
ject, the presumption is he intended to pro- 
tect himself by insuring In his own name, or 
to take the risk of a failure to insure. The 
vendor was not bound to keep up the insur- 
ance or give notice to the vendee of its hav- 
ing expired. If the policy had existed at 
the time of the loss, the vendor could have 
recovered from the insurance company, but, 
being trustee of the premises for the vendee, 
he would be bound in equity to account to 
the latter for the money so received (Reed v. 
Lukeus, 44 Pa. 200); but his failure to re- 
new or to give notice cannot deprive him of 
his right to enforce the contract of sale. 

It also appears there was at the date of 
the contract a judgment against the vendor 
for $2,363.38, but he had at tliat time enter- 
ed an appeal from the judgment to the court 
of appeals, and given an appeal bond with 
security amply suflicient for that purpose to 
pay the amount of the judgment with costs, 
in case he should fail to prosecute his appeal 
with effect. The authorities are dear that 
equity will not compel a vendee to take an 
imperfect or defective title, yet cases of high 
authority are to be found in which a pe- 



ACCIDENT. 



169 



iiuniary charge against which adequate se- 
curity has been given has been held not to 
constitute a defect In title, and also where 
equity has enforced the agreement where a 
perfect title can be made at the time of the 
decree. But this judgment thus appealed 
from, with appeal bond given, does not, in 
the sense in which courts of equity use the 
terms, maie this such an imperfect or de- 
fective or incumbered title as will prevent 
specific execution, and especially not where 
the decree itself, as that appealed from in 
fact does, can protect the vendee by pro- 



viding that the judgment debt may be paid 
by him out of the purchase money due on 
the conti'act and in discharge thereof. 

We have bestowed upon the case our best 
care and consideration. We find nothing in 
the authorities cited by the appellant's coun- 
sel sufficient to overthrow the doctrine upon 
which we have based our decision, and can 
discover no ground upon which, in justice 
and equity, the appellee can be denied the 
relief he seeks. The decree must be af- 
firmed. 

Decree affirmed. 



MISTAKE OF LAW. 



HUNT V. ROTJSMANIER'S ADM'RS. 

(8 Wheat. 174.) 

Supreme Court of the United States. March 
14, 1823. 

Appeal from circuit court of Rhode Island. 

The original bill, filed by the appellant, 
Hunt, stated, that Lewis Rousmanier, the in- 
testate of the defendants, applied to the 
plaintiff, in January, 1820, for the loan of 
$1,450, offering to give, in addition to his 
notes, a bill of sale, or a mortgage of his in- 
terest in the brig Nereus, then at sea, as 
collateral security for the repayment of the 
money. The sum requested was lent; and 
on the 11th of January the said Rousmanier 
executed two notes for the amount; and on 
the 15th of the same month, he executed a 
power of attorney, authorizing the plaintiff 
to make and execute a bill of sale of three- 
fourths of the said vessel to himself, or to 
any other person; and in the event of the 
said vessel, or her freight, being lost, to col- 
lect the money which should become due on 
a policy by which the vessel and freight 
were insured. TUs instrument contained 
also, a proviso, reciting, that the power was 
given for collateral security for the payment 
of the notes already mentioned, and was to 
be void on their payment; on the failure to 
do which, the plaintiff was to pay the amount 
thereof, and all expenses, out of the proceeds 
of the said property, and to return the resi- 
due to the said Rousmanier. The bill fur- 
ther stated, that on the 21st of March, 1820, 
the plaintiff lent to the said Rousmanier the 
additional sum of $700, tailing his note for 
payment, and a similar power to dispose of 
his interest in the schooner Industry, then 
also at sea. The bill then charged, that on 
the 6th of May, 1820, the said Rousmanier 
died insolvent, having paid only $200 on the 
said notes. The plaintiff gave notice of his 
claim; and on the return of the Nereus and 
Industry, took possession of them, and offer- 
ed the intestate's interest in them, for sale. 
The defendants forbade the sale; and this 
bill was brought to compel them to join in it. 
The defendants demurred generally, and the 
court sustained the demurrer; but gave the 
plaintiff leave to amend his biU. Hunt v. 
Ennis, 2 Mason, 244, Fed. Gas. No. 6,889. 

The amended bill stated, that it was ex- 
pressly agreed between the parties, that 
Rousmanier was to give specific security on 
the Nereus and Industry; and that he offer- 
ed to execute a mortgage on them. That 
counsel was consulted on the subject, who 
advised, that a power of attorney, such as 
was actually executed, should be taken in 
preference to a mortgage, because it was 
equally valid and effectual as a security, 
and would prevent the necessity of changing 
the papers of the vessels, or of taking pos- 
session of them on their arrival in port. The 
powers were, accordingly, executed, with 
the full belief that they would, and with the 
intention that they should, give the plaintiff 



as full and perfect security as would be 
given by a deed of mortgage. The bill pray- 
ed, that the defendants might be decreed to 
join in a sale of the interest of their intestate 
in the Nereus and Industry, or to sell the 
same themselves, and pay out of the pro- 
ceeds the debt due to the plaintiff. To this 
amended bill, also, the defendants demurred, 
and on argument, the demurrer was sustain- 
ed, and the bill dismissed. From this de- 
cree, the plaintiff appealed to this court 
The cause was argued at the last term. 

Mr. Wheaton, for appellant. Mr. Hunter, 
for respondents. 

MARSHALL, O. J., delivered the opinion 
of the court. The counsel for the appellant 
objects to the decree of the circuit court on 
two grounds. He contends, 1. That this 
power of attorney does, by its own opera- 
lion, entitle the plaintiff, for the satisfaction 
of his debt, to the interest of Rousmanier in 
the Nereus and the Industry. 2. Or, if this 
be not so, that a court of chancery will, the 
conveyance being defective, lend its aid to 
carry the contract into execution, according 
to the intention of the parties. 

1. We will consider the effect of the power 
of attorney. This instrument contains no 
words of conveyance or of assignment, but 
is a simple power to sell and convey. As 
the power of one man to act for another, 
depends on the will and license of that other, 
the power ceases, when the wiU, or this per- 
mission, is withdrawn. The general rule, 
therefore, is, that a letter of attorney may, 
at any time, be revoked by the party who 
nmkes it; and is revoked by his death. But 
tills general rule, which results from the na- 
ture of the act, has sustained some modifi- 
cation. Where a letter of attorney forms a 
part of a contract, and is a security for 
money, or for the performance of any act 
which is deemed valuable, it is generally 
made irrevocable, in terms, or if not so, is 
deemed irrevocable In law. 2 Bsp. 565. Al- 
though a letter of attorney depends, from its 
nature, on the wUl of the person making it, 
and may, in general, be recalled at his will; 
yet, if he binds himself, for a consideration, 
in terms, or by the nature of his contract, 
not to change his will, the law wiU not per- 
mit him to change It Rousmanier, there- 
fore, could not, during his life, by any act 
of his own, have revoked this letter of at- 
torney. But does it retain its efficacy after 
his death? We think, it does not. We think 
it well settled, that a power of attorney, 
though irrevocable during the life of the par- 
ty, becomes extinct by his death. 

This principle is asserted in Littleton (sec- 
tion 66), by Lord Coke, in his commentary 
on that section (52b), and in Willes' Re- 
ports (105, note, and 565). The legal reason 
of the rule is a plain one. It seems founded 
on the presumption, that the substitute acts 
by virtue of the authority of his principal, 
existing at the time the act is performed; 



aSTAKE OF LAW. 



171 



and on the manner in ■which Jie must execute 
his authority, as stated in Combes' Case, 9 
Coke, 766. In that case, it was resolved, that 
"when any has authority, as attorney, to do 
any act, he ought to do it in his name who 
gave the authority." The reason of this 
resolution is obvious. The title can, regular- 
ly, pass out of the person in whom It is 
vested, only by a conveyance In his own 
name; and this cannot be executed by an- 
other for him, when it could not, in law, be 
executed by himself. A conveyance in the 
name of a person, who was dead at the time, 
would be a manifest absurdity. 

This general doctrine, that a power must 
be executed in the name of a person who 
gives it, a doctrine founded on the nature 
of the transaction, is most usually engraft- 
ed In the power itself. Its usual language is, 
that the substitute shall do that which he is 
empowered to do, in the name of his prin- 
cipal. He is put in the place and stead of 
his principal, and is to act In his name. 
This accustomed form is observed In the 
instrument under consideration. Hunt is con- 
stituted the attorney, and is authorized to 
make, and execute, a regular bill of sale, 
in the name of Kousmanier. Now, as an 
authority must be pursued, in order to make 
the act of the substitute the act of the prin- 
cipal, it is necessary, that this bill of sale 
should be In the name of Rousmanier; and 
it would be a gross absurdity, that a deed 
should purport to be executed by him, even 
by attorney, after his death; for, the attor- 
ney is in the place of the principal, capable 
of doing that alone which the principal might 
do. 

This general rule, that a power ceases with 
\he life of the person giving it, admits of 
one exception. If a power be coupled with 
an "Interest," It survives the person giving 
it, and may be executed after his death. As 
this proposition Is laid down too positively 
in the books to be controverted. It becomes 
necessary to inquire, what is meant by the 
expression, "a power coupled with an inter- 
est ?" Is It an interest in the subject on which 
the power Is to be exercised? or is it an in- 
terest in that which Is produced by the ex- 
ercise of the power? We hold it to be clear, 
that the interest which can protect a power, 
after the death of a person who creates it, 
must be an Interest In the thing Itself. In 
other words, the power must be engrafted on 
an estate in the thing. The words them- 
selves would seem to import this meaning. 
"A power coupled with an interest," Is a 
power which accompanies, or Is connected 
with, an Interest. The power and the inter- 
est are united In the same i)erson. But if we 
are to understand by the word "interest," 
an interest in that which is to be produced 
by the exercise of the power, then they are 
never united. The power, to produce the 
interest, must be exercised, and by Its ex- 
ercise, is extinguished. The power ceases, 
when the interest commences, and therefore. 



cannot, in accurate law language, be said 
to be "coupled" with it. 

But the substantial basis of the opinion of 
the court on this point, is found in the legal 
reason of the principle. The Interest or title 
in the thing being vested in the person who 
gives the power, remains in him, unless it 
be conveyed with the power, and can pass 
out of him only by regular act In his ovra 
name. The act of the substitute, therefore, 
which, in such a case, is the act of the 
principal, to be legally effectual, must be in 
his name, must be such an act as the princi- 
pal himself would be capable of performing, 
and which would be valid, if performed by 
him. Such a power necessarily ceases with 
the life of the person making it But if the 
interest, or estate, passes with the power, 
and vests in the person by whom the power 
is to be exercised, such person acts In his 
own name. The estate, being In him, passes 
from him, by a conveyance In his own name. 
He Is no longer a substitute, acting in the 
place and name of another, but Is a princi- 
pal, acting in his own name, in pursuance 
of powers which limit his estate. The legal 
reason which limits a power to the life of the 
person giving It, exists no longer, and the 
rule ceases with the reason on which It is 
founded. The intention of the instrument 
may be effected, without violating any legal 
principle. 

This idea may be in some degree Illustrated 
by examples of cases In which the law is 
clear, and which are incompatible with any 
other exposition of the term "power coupled 
with an interest" If the word "Interest," 
thus used, indicated a title to the proceeds 
of the sale, and not a title to the thing to be 
sold, then a power to A., to sell for his own 
benefit, would be a power coupled with an 
Interest; but a power to A., to sell for the 
benefit of B., would be a naked power, which 
could be executed only in the life of the per- 
son who gave It. Yet, for this distinction, 
no legal reason can be assigned. Nor is 
there any reason for It in justice; for, a 
power to A., to sell for the benefit of B., may 
be as much a part of the contract on which 
B. advances his money, as if the power had 
been made to himself. If this were the true 
exposition of the term, then a power to A., 
to sell for the use of B., Inserted in a con- 
veyance to A., of the thing to be sold, would 
not be a power coupled with an interest, 
and, consequently, could not be exercised, 
after the death of the person making it; 
while a power to A., to sell and pay a debt 
to himself, though not accompanied with any 
conveyance which might vest the title in 
him, would enable him to make the convey- 
ance, and to pass a title, not In him, even 
after the vivifying principle of the power 
had become extinct. But every day's ex- 
perience teaches us, that the law is not, as 
the first case put would suppose. We know, 
that a power to A., to seU for the benefit 
of B., engrafted on an estate conveyed to 



172 



MISTAKE OP LAW. 



A., may be exercised at any time, and is 
not affected by the death of the person who 
created it. It is, then, a power coupled with 
an interest, although the person to whom it 
is given had no interest in its exercise. His 
power is coupled with an interest in the 
thing, which enables him to execute it in 
his own name, and is, therefore, not depend- 
ent on the life of the person who created it. 

The general rule, that a power of attorney, 
though Irrevocable by the party, during his 
life, is extinguished by his death, is not af- 
fected by the circumstance, that testamenta- 
ry powers are executed after the death of 
the testator. The law, in allowing a testa- 
mentary disposition of property, not only 
permits a wUl to be considered as a con- 
veyance, but gives it an operation which is 
not allowed to deeds which have their effect 
during the life of the person who executes 
them. An estate given by will may take ef- 
fect at a future time, or on a future contin- 
gency, and in the meantime, descends to the 
heir. The power is, necessarily, to be ex- 
ecuted after the death of the person who 
makes It, and cannot exist during his life. 
It is the intention, that it shall be executed 
after his death. The conveyance made by 
the person to whom it is given, takes effect 
by virtue of the will, and the purchaser holds 
his title under it. Every case of a power 
given in a will, is considered in a court of 
chancery as a trust for the benefit of the 
person for whose use the power is made, 
and as a devise or bequest to that person. 

It is, then, deemed perfectly clear, that the 
power given in this case, is a naked power, 
not coupled with an interest, which, though 
irrevocable by Rousmanier himself, expired 
on his death. It remains to inquire, whether 
the appellant is entitled to the aid of this 
court, to give effect to the Intention of the 
parties, to subject the interest of Rousmanier 
in the Nereus and Industry to the payment 
of the money advanced by the plaintiff, on 
the credit of those vessels, tlie instrument 
taken for that purpose having totally failed 
to effect its object. 

This is the point on which the plaintiff most 
relies, and is that on which the court has 
felt most doubt That the parties intended, 
the one to give, and the other to receive, an 
effective security on the two vessels men- 
tioned in the bill, is admitted; and the ques- 
tion is, whether the law of this court will 
enable it to carry this intent into execution, 
when the instrument relied on by both par- 
ties has failed to accomplish its object The 
respondents insist, that there is no defect 
in the instrument itself; that it contains 
precisely what it was intended to contain, 
and is the instrument which was chosen by 
the parties, deliberately, on the advice of 
counsel, and intended to be the consumma- 
tion of their agreement. That in sucn a case 
the written agreement cannot be varied by 
parol testimony. The counsel for the appel- 
lant contends, with great force, that the cases 



in which parol testimony has been rejected, 
are cases in which the agreement itself has 
been committed to writing; and one of the 
parties has sought to contradict, explain or 
vary it, by parol evidence. That in this case, 
the agreement is not reduced to writing. The 
power of attorney does not profess to be the 
agreement, but is a collateral instrument, to 
enable the party to have the benefit of it, 
leaving the agreement still in full force, in its 
original form. That this parol agreement, not 
being within the statute of frauds, would be 
enforced by this court, if the power of attorney 
had not been executed; and not being merged 
In the power, ought now to be executed. That 
the power being incompetent to its object, the 
court will enforce the agreement against gen- 
eral creditors. This argument is entitled to, 
and has received, very deliberate considera- 
tion. 

The first inquiry respects the fact. Does 
this power of attorney purport to be the 
agreement? Is it an instrument collateral to 
the agreement? Or is it an execution of the 
agreement itself, in the form intended by 
both the parties ? The biU states an offer on 
the part of Rousmanier to give a mortgage 
on the vessels, either in the usual form, or 
In the form of an absolute bill of sale, the 
vendor taking a defeasance; but does not 
state any agreement for that particular se- 
curity. The agreement stated in the bill is, 
generally, that the plaintiff, In addition to 
the notes of Rousmanier, should have specific 
security on the vessel; and it alleges that the 
parties applied to counsel for advice re- 
specting the most desirable mode of taking 
this security. On a comparison of the ad- 
vantages and disadvantages of a mortgage, 
and an irrevocable power of attorney, counsel 
advised the latter instrument, and assigned 
reasons for his advice, the validity of which 
being admitted by the parties, the power of 
attorney was prepared and executed, and 
was received by the plaintiff as full security 
for his loans. This Is the case made by the 
amended bUl; and it appears to the court, to 
be a case in which the notes and power of 
attorney are admitted to be a complete con- 
summation of the agreement. The thing 
stipulated was a collateral security on the 
Nereus and Industry. On advice of counsel, 
this power of attorney was selected, and giv- 
en as that security. We think it a complete 
execution of that part of the agreement; as 
complete, though not as safe an execution 
of it, as a mortgage would have been. 

It is contended, that the letter of attorney 
does not contain all the terms of the agree- 
ment Neither would a bill of sale, nor a 
deed of mortgage, contain them. Neither in- 
strument constitutes the agreement itself, 
but is that for which the agreement stipulat- 
ed. The agreement consisted of a loan of 
money on the part of Hunt, and of notes for 
its repayment, and of a collateral security 
on the Nereus and Industry, on the part of 
Rousmanier. The money was advanced, the 



MISTAKE OF LAW. 



notes were given, and this letter of attorney 
was, on advice of counsel, executed and re- 
ceived as the collateral security which Hunt 
required. The letter of attorney is as much 
an execution of that part of the agreement 
which stipulated a collateral security, as the 
notes are an execution of that part which 
stipulated that notes should be given. 

But this power, although a complete securi- 
ty, diu'ing the life of Rousmanier, has been 
rendered inoperative by his death. The le- 
gal character of the security was misunder- 
stood by the parties. They did not suppose, 
that the power would, in law, expire with 
Rousmanier. The question for the consid- 
eration of the coiurt is this: If money be 
advanced on a general stipulation to give se- 
curity for its repayment on a specific article; 
and the parties deliberately, on advice of 
counsel, agree on a particular instrument, 
which is executed, but, from a legal quality 
Inherent in its nature, that was unknown to 
the parties, becomes extinct by the death of 
one of them; can a court of equity direct a 
new security of a different character to be 
given? or direct that to be done which the 
parties supposed would have been effected 
by the instrument agreed on between them? 
This question has been very elaborately 
argued, and every case has been cited which 
could be supposed to bear upon it No one 
of these cases decides the very question now 
before the court It must depend on the 
principles to be collected from them. 

It is a general rule, that an agreement in 
writing, or an instrument carrying an agree- 
ment into execution, shall not be varied by 
parol testimony, stating conversations or cir- 
cumstances anterior to the written instru- 
ment This rule is recognized in courts of 
equity as well as in courts of law; but 
courts of equity grant relief in cases of 
fraud and mistake, which cannot be obtained 
in coxurts of law. In such cases, a court of 
equity may carry the intention of the parties 
into execution, where the written agreement 
fails to express that intention. In this ease, 
there is no ingredient of fraud. Mistake is 
the sole ground on which the plaintiff comes 
into court; and that mistake is in the law. 
The fact is, in all respects, what it was sup- 
posed to be. The instrument taken, is the 
instrument intended to be taken. But It is, 
contrary to the expectation of the parties, ex- 
tinguished by an event not foreseen nor ad- 
verted to, and is, therefore, incapable of ef- 
fecting the object for which it was given. 
Does a court of equity, in such a case, sub- 
stitute a different instrument for that which 
has failed to effect its object? 

In general, the mistakes against which a 
court of equity relieves, are mistakes in fact 
The decisions on this subject, though not al- 
ways very distinctly stated, appear to be 
founded on some misconception of fact. Yet 
some of them bear a considerable analogy to 
that under consideration. Among these, Is 



that class of cases In which a joint obliga- 
tion has been set up in equity against the 
representatives of a deceased obligor, who 
were discharged at law. If the principle of 
these decisions be, that the bond was joint, 
from a mere mistake of the law, and that 
the court wlU relieve against this mistake, on 
the ground of the pre-existing equity, arising 
from the advance of the money, it must be 
admitted, that they have a strong bearing 
on the case at bar. But the judges in the 
courts of equity seem to have placed them 
on mistake in fact, arising from the ig- 
norance of the draftsman. In Simpson v. 
Vaughan, 2 Atk. 33, the bond was drawn by 
the obligor himself, and under circumstances 
which induced the court to be of opinion, 
that it was intended to be joint and several. 
In Underbill v. Hoi-wood, 10 Ves. 209, 227, 
Lord Eldon, speaking of cases in which a 
joint bond has been set up against the repre- 
sentatives of a deceased obligor, says, "the 
court has inferred, from the nature of the 
condition, and the transaction, that it was 
made joint, by mistake. That is, the instru- 
ment is not what the parties intended lu 
fact. They intended a joint and several ob- 
ligation; the scrivener has, by mistake, pre- 
pared a joint obligation." 

All the cases in which the coiurt has sus- 
tained a joint bond against the representa- 
tives of the deceased obligor, have turned up- 
on a supposed mistake in drawing the bond. 
It was not until the case of Sumner v. Pow- 
ell, 2 Mer. 36, that anything was said by 
the judge who determined the cause, from 
which it might be inferred, that relief in 
these cases would be afforded on any other 
principle than mistake in fact In that case, 
the court refused its aid, because there was 
no equity antecedent to the obligation. In 
delivering his Judgment, the master of the 
rolls (Sir W. Grant) indicated very clearly 
an opinion, that a prior equitable considera- 
tion, received by the deceased, was indis- 
pensable to the setting up of a joint obliga- 
tion against his representatives; and added, 
"so, where a joint bond has, in equity, been 
considered as several, there has been a credit 
previously given to the different persons who 
have entered into the obligation." Had this . 
case gone so far as to decide, that "the credit 
previously given" was the sole ground on 
which a court of equity would consider a 
joint bond as several, it would have gone far 
to show, that the equitable obligation re- 
mained, and might be enforced, after the 
legal obligation of the instrument had ex- 
pired. But the case does not go so far; 
it does not change the principle on which the 
court had uniformly proceeded, nor discard 
the idea, that relief is to be granted, because 
the obligation was made joint, by a mistake 
in point of fact. The case only decides, that 
this mistake, in point of fact, will not be 
presumed by the court, in a case where nc 
equity existed antecedent to the obligation. 



174 



MISTAKE OF LAW. 



where no advantage was received by, and 
no credit given to, the person against whose 
estate the instrument is to be set up. Yet, 
the course of the court seems to be uniform, 
to presume a mistake, in point of fact, in ev- 
ery case where a joint obligation has been 
given, and a benefit has been received by the 
deceased obligor. No proof of actual mis- 
tsike is required; the existence of an ante- 
cedent equity is sufficient. In cases attend- 
ed by precisely the same circumstances, so 
far as respects mistake, relief will be given 
against the representatives of a deceased 
obligor, who had received the benefit of the 
obligation, and refused against the repre- 
sentatives of him who had not received it. 
Yet the legal obligation is as completely ex- 
tinguished in the one case as in the other; 
and the facts stated, in some of the cases in 
which these decisions have been made, 
would rather conduce to the opinion, that the 
bond was made joint, from ignorance of the 
legal consequences of a joint obligation, than 
from any mistake in fact 

The case of Lansdown v. Lansdown, Mos. 
364, If It be law, has no inconsiderable bear- 
ing on this cause. The right of the heir- 
at-law was contested by a yoimger member 
of the family, and the arbitrator to whom 
the subject was referred decided against 
him. He executed a deed in compliance with 
this award, and was afterwards relieved 
against It, on the principle that he was igno- 
rant of his title. The case does not sup- 
pose this fact, that he was the eldest son, 
to have been unknown to him; and if he was 
ignorant of anything, it was of the law, 
which gave him, as eldest son, the estate he 
had conveyed to a younger brother. Yet he 
was relieved In chancery against this con- 
veyance. There are certainly strong objec- 
tions to this decision In other respects; but, 
as a case in which relief has been granted 
on a mistake in law. It cannot be entirely 
disregarded. 

Although we do not find the naked prin- 
ciple, that relief may be granted on account 
of ignorance of law, asserted In the books, 
we find no case in which it has been decided, 
that a plain and acknowledged mistake in 
law Is beyond the reach of equity. In the 
case of Iiord Irnham v. Child, 1 Brown, Ch. 
91, application was made to the chancellor 
to establish a clause, which had been, it was 
said, agreed upon, but which had been con- 
sidered by the parties, and excluded from 
the written Instrument, by consent It Is 



true, they excluded the clause, from a mis- 
taken opinion that it would make the con- 
tract usurious, but they did not believe that 
the legal effect of the contract was precisely 
the same as if the clause had been inserted. 
They weighed the consequences of inserting 
and omitting the clause, and preferred the 
latter. That, too, was a case to which the 
statute applied. Most of the cases which 
have been cited were within the statute of 
frauds, and it is not easy to say, how much 
has been the influence of that statute on 
them. 

The case cited by the respondent's counsel 
from Precedents In Chancery, is not of this 
description; but it does not appear from that 
case that the power of attorney was intend- 
ed, or believed, to be a lien. In this case, 
the fact of mistake is placed beyond any 
controversy. It is averred in the bill, and 
admitted by the demurrer, that "the powers 
of attorney were given by the said Rous- 
manier, and received by the said Hunt, un- 
der the belief that tbey were, and with the 
Intention that they should create, a specifla 
lien and security on the said vessels." We 
find no case which we think precisely in 
point; and are unwilling, where the effect of 
the instrument is acknowledged to have been 
entirely misunderstood by both parties, to 
say, that a court of equity is incapable of 
affording relief. The decree of the circuit 
court is reversed; but as this is a case in 
which creditors are concerned, the court, in- 
stead of giving a final decree on the demur- 
rer, in favor of the plaintiff, directs the cause 
to be remanded, that the circuit court may 
permit the defendants to withdraw their de- 
murrer, and to answer the bill. 

Decree: This cause came on to be heard, 
on the transcript of the record of the cir- 
cuit court of the United States for the dis- 
trict of Rhode Island, and was argued by 
counsel: on consideration whereof, this court 
Is of opinion, that the said circuit court erred, 
in sustaining the demurrer of the defend- 
ants, and dismissing the bill of the complain- 
ant It Is, therefore, decreed and ordered, 
that the decree of the said circuit court in 
this case be, and the same is hereby, re- 
versed and annulled. And It Is further or- 
dered, that the said cause be remanded to 
the said circuit court, with directions to per- 
mit the defendants to withdraw their de- 
murrer, and to answer the bill of the com- 
plainants. 



MISTAKE OF LAW. 



175 



HUNT V. KOUSMANIERE'S ADM'KS. 
(1 Peters, 1.) 

Suprene Court of the United States. January 
Term, 1828. 

(See ante, 170.) 

Appeal from the circuit court of Rhode Is- 
land. The appellant filed a bill on the chan- 
cery side of the circuit court of the United 
States for the district of Rhode Island, set- 
ting forth that, in January, 1820, Louis 
Eousmaniere obtained from him two loans 
of money, amounting, together, to $2,150; 
and at the time the first loan was made, 
Rousmaniere offered to give, in addition to 
his notes, a bill of sale, or mortgage, of his 
interest in the brig Nereus, then at sea, as 
a collateral security for the repayment of 
the money. A few days after the delivery of 
the first note, dated 11th of January, 1820, 
he executed a power of attorney, authoriz- 
ing the plaintiff to malie and execute a bill 
of sale, of three-fourths of the Nereus, to 
himself, or to any other person; and in the 
event of the loss of the vessel, to collect the 
money which should become due on a pol- 
icy, by which the vessel and freight were 
insured. In the power of attorney, it was 
recited that it was given as collateral secu- 
rity for the payment of the notes, and was 
to be void on their payment; on the fail- 
ure of which, the plaintiff was to pay the 
amount and all expenses, and to return the 
residue to Rousmaniere. On the 21st of 
March, 1821, an additional sum of ¥700 was 
loaned, for which a note was taken, and 
similar power of attorney given, to sell his 
interest in the schooner Industry; this ves- 
sel being also still at sea. 

On the 6th of May, 1820, Rousmaniere 
died intestate and Insolvent, having paid 
$200 on account of the notes; and the plain- 
tiff gave notice of his claim to the commis- 
sioners of insolvency, appointed under the 
authority of the insolvent law of Rhode Is- 
land. The plaintiff, in his bill, alleged, that, 
on the return of the Nereus and Industry, 
he took possession of them, and offered the 
interest of the intestate in them, for sale; 
and the defendants having forbidden the 
sale, this bill was brought to compel them 
to join in it. 

To this bill, the defendants demurred; and 
their demurrer was sustained in the circuit 
court; but leave was given to the plaintiff 
to amend. An amended bill was then filed, 
in which it was stated, that it was express- 
ly agreed between the parties, that Rous- 
maniere was to give specific security on the 
Nereus and Industry, and that he offered to 
execute a mortgage on them. Counsel was 
consulted on the subject, who advised that 
the power of attorney, which was actually 
executed, should be taken in preference to 
a mortgage, because It was equally valid 
and effectual as a security, and would pre- 
vent the necessity of changing the papers of 
the vessels, or of taking possession of them 
on their return to port. These securities 



were, it was alleged, executed, with a full 
belief that they would, and with intention 
that they should, give to the plaintiff, as full 
and perfect a security, as would be given 
by a mortgage. 

The defendants having also demurred to 
the amended bill, the circuit court decided 
in favor of the demurrer, and dismissed the 
bill; and an appeal was entered to this 
court. At the February session, 1823, this 
court considered that the appellant might be 
entitled to the relief prayed for in equity, 
but the respondents were permitted to with- 
draw their demurrer, and to file an. answer 
in the court below. 8 Wheat. 174, 5 L. Ed. 
589. The answer of the defendants admit- 
ted the loans of money, and the delivery of 
the promissory notes, and that but $200 were 
paid, before the death of the intestate. The 
execution of the powers of attorney was also 
admitted, but it was denied that possession 
of the vessels was taken by the appellant; 
and they alleged their resistance of the at- 
tempt to take possession of them. The an- 
swer also asserted ignorance of any agree- 
ment for a specific lien on the vessels, ex- 
cept that imported by the language of the 
powers of attorney; that they had heard 
and believed, that the appellant meant to 
be concerned, as a partner, in a voyage of 
one of the vessels, which was relinquished, 
and that afterwards he offered to loan the 
money on security; upon which, the intes- 
tate offered to give a mortgage, but the ap- 
pellant preferred taking the powers of at- 
torney, to avoid inconvenience, and took the 
powers of attorney, by advice of counsel. 
The answer also stated, that a bill of sale 
of the vessels, dated the day before the 
death of the intestate, by which the vessels 
were Intended to be conveyed to one Bate- 
man, and which the respondents stated, they 
had heard and believed; was intended to be 
executed on the evening of that day. The 
answer also alleged the insolvency of Rous- 
maniere, and that it existed a long time be- 
fore his death; which they asserted must 
have been known to the appellant, and that 
the intestate resorted to improper modes to 
keep up his credit. 

The evidence taken in the case, consisted 
of the deposition of Mr. Hazard, the counsel 
who drew the papers, and in which he stat- 
ed, that they were intended by both parties 
to have the effect of a specific lien or mort- 
gage, and he advised them, they would have 
that effect; and also the deposition of Mr. 
Merchant, to show that the appellant admit- 
ted, that the motive by which he was in- 
duced to make the loan, was to compensate 
Rousmaniere for the disappointment sus- 
tained by his not uniting with him in a voy- 
age of one of his vessels; and, accordingly, 
an agreement was made, by which the ap- 
pellant was to let Rousmaniere have a sum 
of money, and that he was to give a bill of 
sale of a certain vessel; but that afterwards 
he refused to take the same, on account of 
the inconvenience and difficulties which 



176 



MISTAKE OF LAW. 



might attend tbe same; aud that he had 
consulted with Mr. Hazard, upon the sub- 
ject, who told him, that he could or would 
draw an irrevocable power of attorney to 
sell, which would do as well, or words to that 
effect; and which was accordingly done. 

The circuit court pronounce a decree, de- 
claring, that the appellant had no specific 
lien or security upon either of the vessels, 
and no equity to be relieved respecting 
them, and dismissing the bill, with costs; 
from which decree, an appeal was entered to 
this court. 

On the part of the appellant it was con- 
tended, that the decree ought to be reversed, 
and a decree entered for the appellant. That 
the answers to the bill did not respond to 
the only material facts in the cause; it be- 
ing fully proved, that the powers of attor- 
ney were intended to have the effect of a 
specific lien, the appellant was entitled to 
the relief he sought, upon the principles laid 
down in the former decisions of this court. 

Kimball & Webster, for appellant. Mr. 
Wirt, Atty. Gen., and Mr. Robbins, for ap- 
pellees. 

WASHINGTON, J. This case was before 
this court in the year 1823, and is reported 
in 8 Wheat. 174, 5 L. Ed. 589, and was then 
argued at great length, by the counsel con- 
cerned in it. After full consideration, it was 
decided, that the power of attorney given by 
Rousmaniere, the intestate, to the appellant. 
Hunt, authorizing him to malje and execute 
a bill of sale of three-fourths of the Nereus 
and of the Industry, to himself, or any other 
person, and in the event of their being lost, 
to collect the money which should become 
due under a policy upon them and their 
freiglit, was a naked power, not coupled 
with an interest, which, though irrevocable 
by Rousmaniere, in his lifetime, expired on 
his death. 

That this species of security was agreed 
upon, and given under a misunderstanding 
by the parties, of its legal character, was 
conceded in the argument of the cause by 
the bar and bench; and the second question 
for the consideration of the court, was, 
whether a court of equity could afford re- 
lief in such a case, by directing a new secu- 
rity of a difiCerent character to be given? 
or by decreeing ihat to be done, which the 
parties supposed would have been effected 
by the instrument agreed upon? After an 
examination of the cases, applicable to the 
general question, it was stated by the chief 
justice, who delivered the opinion of the 
court, that none of them asserted the najked 
principle, that relief could be granted, on the 
ground of ignorance of law. or decided, that 
a plain and aclinowledged mistake in law, 
(vas beyond the reach of a court of equity. 
The conclusion, to which he came, is ex- 
pressed in the following terms: "We find no 
case which we think precisely in point; and. 
are unwilling, where the effect of the instru- 



ment is acknowledged to have been entirely 
misunderstood, by both parties, to say, thac 
a court of equity is incapable of affording 
relief." The decree was, accordingly, re- 
versed; but the case being one In which 
creditors were concerned, the court, instead 
of giving a final decree on the demurrer. 
In favor of the plaintiff, directed the cause 
to be remanded, that the circuit court might 
permit the defendants to withdraw their de- 
murrer, .and to answer the bill. 

After The cause was returned to that court, 
the demurrer was withdrawn, and an an- 
swer was filed, in which the defendants, 
after admitting the loans mentioned in the 
bills, by the plaintiff to their intestate, and 
the notes given for the same, by the latter, 
and their non-payment; asiiert their igno- 
rance of any agreement between the plaintiff 
and their intestate, that the former' should 
have a specific security, other than the pow- 
ers of attorney, to sell vessels and to collect 
the proceeds, or, the amount of the policies, 
in case they should be lost; but express their 
belief, that the powers of attorney were se- 
lected by the plaintiff, in preference to the 
other securities, which were offered by the 
intestate. The answer further states, that 
the estate of Rousmaniere is greatly insol- 
vent, and had been so before his death; that 
the plaintiff had exhibited and proved his 
demand, as stated in his bill, before the 
commissioners of insolvency, duly appointed 
upon the estate of Rousmaniere; and that 
his dividend thereon declared, or to be de- 
clared, the defendants were, and would be 
ready to pay according to law. 

The principal deposition, taken in the 
cause, is that of Benjamin Hazard, counsel- 
lor at law, who deposes, that he drew the 
powers of attorney, annexed to the original 
bill; that on the day the first power was 
eiecuted. Hunt and Rousmaniere came to 
his oflice, when the latter stated, that the 
former had loaned, or agreed to loan, to him, 
a sum of money, upon security to be given 
by him, on his interest in the brig Nereus, 
and that he was desirous the security should 
be as ample and avajlable to Hunt, as it 
could be made; that he wished and was 
ready, to give a bill of sale ot the property, 
or a mortgage on it, or any other security, 
which Mr. Hunt might prefer. Both the 
parties declared, that they had called upon 
the witness, to request him to draw the 
writings, and to obtain his opinion, as to 
the kind of instrument which would give the 
most perfect security to the lender. That 
the deponent then told the parties, that a 
bill of sale, or mortgage, would be good 
security, but that an irrevocable power of 
attorney, such as was afterwards executed, 
would be as effectual aud good security, as 
either of the others; and would prevent the 
necessity of changing the vessel's pajyers, 
and of Hunt's taking possession of the ves- 
sel, upon her arrival from sea. That the 
parties then requested him to draw such 
an instrument, as, in his opinion, woul(} 



MISTAKE OF LAW. 



177 



most effectually and fully secure Mr. Hunt; 
and that the plaintiff frequently asked him, 
whilst he was drawing the power, and after 
he had finished, and read it to the parties, 
if he was quite certain, that the power 
would be as safe and available to. him, as a 
bill of sale or mortgage, and that upon his 
assurances that it was, it was then executed. 
The witness then proceeds to express his 
opinion, from his knowledge of the parties, 
and from their declaration at the time, that 
Rousmaniere would readily have given an 
absolute bill of sale of the property or any 
other security which could have been asked; 
and that Hunt would not have accepted the 
one which was afterwards executed, if he 
had not considered it to be as extensive and 
perfect a security, in all respects, as an ab- 
solute bill of sale; and he adds, more posi- 
tively, that such was the understanding and 
agreement of both the parties. It appears, 
by the testimony of this witness, that he 
drew the power of attorney concerning the 
Industry, for securirg the second loan made 
by the plaintiff to Rousmaniere, and that the 
circumstances attending that transaction, 
were essentially the same as those which 
have been stated, in respect to the first loan. 

We find another deposition In the record, 
which deserves to be noticed, as it consists 
of declarations, made by the plaintiff, after 
the powers of attorney were executed, and 
may serve, in some measiu-e, to explain the 
more positive testimony given by Mr. Haz- 
ard. This witness, William Merchant, de- 
poses, that after the decease of Rousman- 
iere, the plaintiff stated to him, and to a Mr. 
Rhodes, that in consequence of his declining 
to engage in an enterprise in one of the ves- 
sels of Rousmaniere, to which he had at one 
time consented, and of the complaints of 
Rousmaniere, on that account, he was in- 
duced to offer to Rousmaniere a loan of 
money. That an agreement was accordingly 
made, by which he. Hunt, was to let Rous- 
maniere have a certain sum on loan, and 
Rousmaniere was to give him a bill of sale 
of a certain vessel; but that, afterwards. 
Hunt, reflecting, that If he took that secu- 
rity, he would have to take out papers at 
the custom-house, in his own name, be sub- 
ject to give bonds for the vessel, and per- 
haps, be made liable for breaches of law 
committed by others, he consulted with Mr. 
Hazard upon the subject; who told him, 
that he could, or would, draw an irrevoca- 
ble power of attorney to sell, which would 
do as well, and which was accordingly done. 

The cause coming on to be heard in the 
court below, and that court being of opin- 
ion, that the plaintiff had no lien or specific 
security upon these vessels, and no equity 
to have such lien or security created, against 
the general creditors of Rousmaniere, dis- 
missed the bill; from which decree, the 
cause has been brought, by appeal, to this 
court. It must be admitted, that the case, 
AS it is now presented to the court, is not 
materially variant from that which we for- 
HUTCH.& BUNK.BQ.— 12 



merly had to consider; except in relation to 
the rights of the general creditors, against 
the insolvent estate of a deceased debtor, in 
opposition to the equity which a particular 
creditor seeks, by this bill, to set up. The 
allegations of the bills, filed in this cause, 
which were, on the former occasion admit- 
ted by the demurrer to be true, are now fully 
proved, by the testimony taken in the cause. 

Before proceeding to state the general 
question, to which the facts in this case give 
rise, or the principles of equity which apply 
to it, it will be necessary, distinctly, to as- 
certain, what was the real agreement con- 
cluded upon between the plaintiff and the 
intestate, the performance of which, on the 
part of the latter, was intended to be secured 
by the powers of attorney? Was it, that 
Rousmaniere should, in addition to his notes 
for the money agreed to be loaned to him by 
the plaintiff, give a specific and available 
security on the Nereus and the Industry, or 
was the particular kind of security selected 
by the parties, and did it constitute a part 
of the agreement? It is most obvious, from 
the plaintiff's own statement, in his amended 
bill, as well as from the depositions appear- 
ing in the record, that the agreement was 
not closed, until the interview between the 
parties to it, with Mr. Hazard, had taken 
place. The amended bill states, that the spe- 
cific security which Rousmaniere offered to 
give, was a mortgage of the two vessels, for 
which irrevocable powers of attorney were 
substituted, by the advice of Mr. Hazard, 
and for reasons, which it would seem, were 
approved of and acted upon by the plain- 
tiff. From the testimony of Mr. Merchant, 
it would appear, that the security proposed 
by Rousmaniere was a bill of sale of the 
vessels, which the plaintiff declined accept- 
ing, for reasons of his own, uninfiuenced by 
any suggestions of Mr. Hazard, who merely 
proposed the powers of attorney as a sub- 
stitute for the other forms of security which 
had been offered by Rousmaniere. The dif- 
ference between these statements is not 
very material, since it is apparent, from both 
of them, that the proposed seciu-ity, by Irrev- 
ocable powers of attorney, was selected by 
the plaintiff, and Incorporated into the agree- 
ment, by the assent of both the parties. 
The powers of attorney do not contain, nor 
do they profess to contain, the agreement of 
the parties; but was a mere execution of 
that agreement, so far as it stipulated to 
give to the plaintiff, a specific security on 
the two vessels, in the mode selected and 
approved of by the parties; to which ex- 
tent, it was a complete consummation of 
the agreement. Such was the opinion of 
this court, upon a former discussion of this 
cause, In the year 1823, and such is its pres- 
ent opinion. Upon this state of the case, the 
general question to be decided, is the same 
now that it formerly was, and is that which 
has already been stated. 

There are certain principles of equity, ap- 
plicable to this question, which, as general 



178 



MISTAKE OF LAW. 



principles, we hold to be incontrovertible. 
The first Is, that where an Instrument is 
drawn and executed, which professes, or is 
intended, to carry into execution an agree- 
ment, whether in writing or by parol, pre- 
viously entered into, but which, by mistake 
of the draftsman, either as to fact or law, 
does not fulfil, or which violates, the mani- 
fest intention of the parties to the agree- 
ment, equity will correct the mistake, so as 
to produce a conformity of the instrument 
to the agreement. The reason is obvious: 
the execution of agreements, fairly and le- 
gally entered into, is one of the peculiar 
branches of equity jurisdiction; and if the 
instrument which is intended to execute the 
agreement, be, from any cause, insufficient 
for that purpose, the agreement remains as 
much unexecuted, as if one of the parties 
had refused, altogether, to comply with his 
engagement; and a court of equity will, in 
the exercise of its acknowledged jurisdiction, 
afford relief in the one case, as well as in 
the other, by compelling the delinquent party 
fully to perform his agreement, according to 
the terms of it, and to the manifest intention 
of the parties. So, if the mistake exist, not 
in the instrument, which is intended to give 
effect to the agreement, but in the agree- 
ment itself, and is clearly proved to have 
been the result of ignorance of some mate- 
rial fact, a court of equity will, in general, 
grant relief, according to the nature of the 
particular case in which it is sought. Wheth- 
er these principles, or either of them, apply 
to the present case, must, of course, de- 
pend upon the real character of the agree- 
ment under consideration. It it has been 
correctly stated, it follows, that the instru- 
ment, by means of which the specific secu- 
rity was to be given, was selected by the 
parties to the agreement, or rather by the 
plaintiff; Rousmaniere having proposed to 
give a mortgage or bill of sale of the vessels, 
which the plaintiff, after consideration, and 
advice of counsel, thought proper to reject, 
for reasons which were entirely satisfactory 
to himself. That the form of the instru- 
ment, so chosen by the plaintiff, and pre- 
pared by the person who drew it, conforms 
not, in every respect, to the one agreed upon, 
is not even asserted in the bill, or in the 
argument of counsel. The avowed object of 
the plaintiff was, to obtain a valid security, 
but in such a manner, as that the legal inter- 
est in the property should remain with Rous- 
maniere, so that the plaintiff might be under 
no necessity to take out papers at the cus- 
tom-house, in his own name, and might not 
be subject to give bonds for the vessels, or 
to liabilities for breaches of law, committed 
by those who were intrusted with the man- 
agement of them. That the general inten- 
tion of the parties was, to provide a security, 
as effectual as a mortgage of the vessels 
would be, can admit of no doubt; and if 
such had been their agreement, the insuffi- 
ciency of the instruments to effect that ob- 
■ject, which were afterwards prepared, would 



I have furnished a ground for the interposi- 
tion of a court of equity, which the repre- 
sentatives of Rousmaniere could not easily 
have resisted. But the plaintiff was not sat- 
isfied to leave the kind of security which he 
was willing to receive, undetermined; hav- 
ing finally made up his mind, by the advice 
of his counsel, not to accept of a mortgage, 
or bill of sale, in nature of a mortgage. He 
thought it safest, therefore, to designate the 
instrument; and having deliberately done so, 
it met the view of both parties> and was 
as completely incorporated into their agree- 
ment, as were the notes of hand for the sum 
intended to be secured. In coming to this 
determination, it is not pretended, that the 
plaintiff was misled by ignorance of any 
fact, connected with the agreement which 
he was about to conclude. If, then, the 
agreement was not founded in a mistake of 
any material fact and if it was executed in 
strict conformity with itself; we think it 
would be unprecedented, for a court of 
equity to decree .another security to be given, 
not only different from that which had been 
agreed upon, but one which had been delib- 
erately considered and rejected by the party 
now asking for relief; or to treat the case, 
as if such other security had in fact been 
agreed upon and executed. Had Rousma- 
niere after receiving the money agreed to be 
loaned to him, refused to give an irrevocable 
power of attorney, but offered to execute 
a mortgage of the vessels, no court of equity 
could have compelled the plaintiff to accept 
the security so offered. Or, if he had totally 
refused to execute the agreement, and the 
plaintiff had filed his bill, praying that the 
defendant might be compelled to execute a 
mortgage. Instead of an iri-evocable power of 
attorney; could that court have granted the 
relief specifically asked for? We think not. 
Equity may compel parties to perform their 
agreements, when fairly entered into, ac- 
cording to their terms; but it has no power 
to make agreements for parties, and then 
compel them to execute the same. The for- 
mer is a legitimate branch of its jurisdic- 
tion, and in its exercise, is highly beneficial 
to society; the latter is without its author- 
ity, and the exercise of it would be not only 
an usurpation of power, but would be high- 
ly mischievous in its consequences. 

If the court could not have compelled the 
plaintiff to accept, or Rousmaniere to exe- 
cute, any other instrument than the one 
which had 'been agreed upon between them, 
the ease is in no respect altered, by the 
death of the latter, and the consequent in- 
efflclency of the particular security which 
had been selected; the objection to the re- 
lief asked for, being in both cases the same, 
namely, that the court can only enforce the 
performance of an agreement, according to 
its terms, and to the intention of the par- 
ties; and cannot force upon them a differ- 
ent agreement. That the intention of the 
parties to this agreement, was frustrated, 
by the happening of an event, not thought 



MISTAKE OF LAW. 



179 



yf, probably, by them, or by the counsel who 
ivas consulted upon the occasion, Is manl- 
iest. The kind of security which was 
chosen, would have been equally effectual, for 
the purpose intended, with a mortgage, had 
Rousmaniere lived until the power had been 
executed; and it may, therefore, admit of 
some doubt, at least, whether the loss of the 
intended security is to be attributed to a 
want of foresight, in the parties, or to a 
mistake of the counsel, in respect to a mat- 
ter of law,. The case will, however, be con- 
sidered in the latter point of view. 

The question, then, is, ought the court to 
grant the relief which is asked for, upon the 
ground of mistake arising from any igno- 
rance of law? We hold the general rule to 
be, that a mistake of this character is not a 
ground for reforming a deed founded on such 
mistake; and whatever exceptions there may 
be to this rule, they are not only few in 
number, but they will be found to have 
something peculiar in their characters. 

The strongest case which was cited and 
relied upon by the appellant's counsel, was 
that of Lansdown v. Lansdown, reported in 
Mos. 364. Admitting, for the present, the au- 
thority of this case, it is most apparent, 
from the face of it, that the decision of the 
court might well be supported, upon a prin- 
ciple not involved in the question we are 
examining. The subject which the court 
had to decide, arose out of a dispute be- 
tween an heir-at-law, and a younger member 
of the family, who was entitled to an estate 
descended; and this question the parties 
agreed to submit to arbitration. The award 
being against the heir-at-law, he executed a 
<Jeed in compliance with it, but was relieved 
against it, on the principle, that he was 
ignorant of his title. If the decision of the 
court proceeded upon the ground, that the 
plaintiff was ignorant of the fact that he 
was the eldest son, it was clearly a case 
proper for relief, upon a principle which has 
already been considered. If the mistake 
was of his legal rights, as heir-at-law, it is 
not going too far, to presume, that the opin- 
ion of the court may have been founded 
upon the belief, that the heir-at-law was im- 
posed upon by some unfair representations 
of his better informed opponent; or that his 
ignorance of a legal principle, so universally 
understood by all, where the right of primo- 
geniture forms a part of the law of descents, 
demonstrated a degree of mental imbecility, 
which might well entitle him to relief. He 
acted, besides, under the pressure of an 
award, which was manifestly repugnant to 
law, and for aught that is stated in this case, 
this may have appeared upon the face of it. 
But if this case must be considered as an 
•exception from the general rule which has 
been mentioned; the circumstances attend- 
ing it, do not entitle it, were it otherwise ob- 
jectionable, to be respected as an authority, 
but in cases which it closely resembles. 

There is a class of cases which, it has 
■been supposed, forms an exception from this 



general rule, but which will be found, upon 
examination, to come within the one which 
was first stated. The cases alluded to, are 
those in which equity has afforded relief 
against the representatives of a deceased 
obligor, in a joint bond, given for money 
lent to both the obligors, although such rep- 
resentatives were discharged at law. The 
principle upon which these cases manifestly 
proceed, is, that the money being lent to 
both, the law raises a promise in both to 
pay, and equity considers the security of the 
bond as being intended, by the parties, to 
be co-extensive with this implied contract 
by both to pay the debt. To effect this in- 
tention, the bond should have been made 
joint and several; and the mistake in the 
form, by which it is made joint, is not in the 
agreement of the parties, but in the execu- 
tion of it by the draftsman. The cases m 
which the general rule has been adhered to, 
are, many of them, of a character which 
strongly test the principle upon which the 
rule itself is founded. Two or three only 
need be referred to. If the obligee, in a 
joint bond, by two or more, agree with one 
of the obligors, to relieve him from his obli- 
gation, and does accordingly execute a re- 
lease, by which all the obligors are dis- 
charged at law, equity will not afford relief 
against this legal consequence, although the 
release was given under a manifest misap- 
prehension of the legal effect of it, in rela- 
tion to the .other obligors. So, in the case 
of Worrall v. Jacob, 3 Merv. 271, where a 
person having a power of appointment and 
revocation, and, under a mistaken supposi- 
tion, that a deed might be altered or re- 
volted, although no power of revocation had 
been reserved, executed the power of ap- 
pointment, without reserving a power of rev- 
ocation; the court refused to relieve against 
the mistake. The case of Lord Irnham v. 
Child, 1 Brown, Ch. 92, is a verj' strong one 
in support of a general rule, and closely re- 
sembles the present, in most of the material 
circumstances attending it. The object of 
the suit was to set up a clause containing a 
power of redemption, in a deed granting an 
annuity, which, it was s.aid, had been agreed 
upon by the parties, but which, after delib- 
eration, was excluded by consent, from a 
mistaken opinion, that it would render the 
contract usurious. The court, notwithstand- 
ing the omission manifestly proceeded upon 
a misapprehension of the parties as to the 
law, refused to relieve, 'by establishing the 
rejected clause. 

It is not the Intention of the court, in the 
case now under consideration, to lay it 
down, that there may not be case in which 
a court of equity will relieve against a plain 
mistake, arising from ignorance of law. 
But we mean to say, that where me parties, 
upon deliberation and advice, reject one spe- 
cies of security, and agree to select another, 
under a misapprehension of the law as to 
the nature of the security so selected, a 
court of equity will not, on the ground of 



ISO 



MISTAKE OF LAW. 



such misupprehenslon, and the insufficiency 
of such security, in consequence of a subse- 
quent event, not foreseen, perhaps, or 
thought of, direct a new security, of a dif- 
ferent character, to be given, or decree that 
to be done, which the parties supposed would 
have been effected by the instrument which 
was finally agreed upon. 

If the court would not Interfere In such a 
case, generally, much less would it do so in 
favor of one creditor, against the general 
creditors of an insolvent estate, whose equity 
Is, at least, equal to that of the party seek- 
ing to obtain a preference, and who, in 
point of law, stand upon the same ground 
with himself. This is not a bill asking for 
a specific performance of an agreement to 
execute a valid deed for securing a debt; In 



which case, the party asking relief would be 
entitled to a specific lien; and the court 
would consider the debtor as a ti'ustee for 
the creditor, of the property on which the 
security was agreed to be given. The agree- 
ment has been fully executed, and the only 
complaint is, that the agreement itself was 
founded upon a misapprehension of the law, 
and the prayer is to be relieved against the 
consequences of such mistake. If all other 
difficulties were out of the way, the equity 
of the general creditors to be paid their 
debts equally with the plaintiff, would, we 
think, be sufficient to induce the court to 
leave the parties where the law has placed 
them. The decree is to be affirmed, with 
costs. 
Decree affirmed. 



MISTAKE OF LAW. 



181 



JORDAN T. STEVENS. 

(51 Me. 78.) 

Supreme Judicial Court ol Maine. 1863. 

Suit In equity submitted on bill, answers 
and proofs. 

Howard & Strout, for complainant. E. & P. 
Fox, for respondents. 

DAVIS, J. Jonathan Stevens, tbe father 
of the parties to this suit, died in November, 
1857, leaving personal property valued at 
about $3,000, and real estate worth nearly 
$5,000. The plaintiff, being a widow, had 
worked in his family for many years, receiv- 
ing therefor one dollar a week. A short time 
before his death he gave her a life lease of 
his homestead in Portland, worth about $2,- 
000, to take effect upon his decease. Wheth- 
er he did this for the reason that he thought 
that he had not paid her enough for her serv- 
ices, or because she needed a larger share 
of the property than the other heirs, does not 
appear, and is immaterial. He died intestate, 
leaving seven children, and the issue of an- 
other not living. 

The property leased to the plaintiff was de- 
scribed as situated "on Chestnut street." 
After the death of her father, the plaintiff had 
the lease altered so as to read "Wilmot 
street." This was done at the suggestion of 
some of the defendants; and besides, as the 
property was otherwise sufficiently described, 
the mistake of the street did not affect the 
lease, and the alteration was immaterial. 

It is contended that the lease was void be- 
cause it was not to take effect until a future 
day; but, whatever may have been supposed 
to be the law in regard to the validity of 
deeds to take effect In futuro, it is now well 
settled in this state that such deeds are not 
for that reason void. Wyman v. Brown, 50 
Me. 139. 

But some of the defendants thought the 
lease to the plaintiff was invalid, and so in- 
formed her. Taking their testimony as true, 
which we do not question, they did not inten- 
tionally deceive her on this point. They ac- 
tually thought there was a defect of which 
they could take advantage. She was un- 
learned in every respect, not being able to 
write her own name. It is evident that she 
put confidence in them, believing them to be 
better informed than herself; and supposing, 
from their representations, that her title to 
the homestead, by the lease, had failed, she 
was induced by them to relinquish all her 
interest in the whole estate of her father, in 
consideration of a new life lease from them of 
the same property embraced in her first lease. 

One-eighth of the estate, subject to her 
life interest in the homestead, must have 
been worth nearly or quite eight hundred 
dollars. This she conveyed to them. Their 
new lease to her was of no value whatever; 
for the title was already in her. Can she ob- 
tain relief in equity? 

It is claimed that she has no remedy, be- 



cause there was no fraud; and the mistake 
was not one of fact, but of law. 

In this state Jurisdiction in equity in cases 
of "mistake" is expressly conferred by stat- 
ute; nor is it, in terms, limited to mistakes 
of fact. The legislature may be presumed 
to have used the word as generally under- 
stood in equity proceedings; and therefore we 
shall have to inquire whether courts of equity 
have been accustomed to grant relief in cases 
like the one before us. 

This question has frequently arisen in this 
country and in England, and authorities are 
not wanting in both countries in support of 
the doctrine that no distinction should be 
made between mistakes of law and mistakes 
of fact. 

It is quite true, as Judge Bedfield observes 
(1 Story, Eq. Jur. § 130, note), "that the dis- 
tinction between mistakes of law and mis- 
takes of fact, so far as equitable relief is con- 
cerned, is one of policy rather than of prin- 
ciple"; and yet it may not be the less neces- 
sary to maintain and observe it. No govern- 
ment could be administered at all, under 
which ignorance of the criminal law should 
be held a sufficient excuse for violating it; 
and the same principle is applicable to the 
civil law. This is not on the ground that 
every one is presumed to know the law; for, 
though this is often repeated as an axiom, 
a presumption so variant from the truth can- 
not be recognized by the law. The ground 
on which the doctrine rests is this, that it is 
impossible to uphold the government, and so 
to maintain its administration as to protect 
public and private rights, except on the prin- 
ciple that the rights and liabilities of every 
one shall be the same as if he knew the law. 

If all contracts made in ignorance of the 
law were to be held invalid, there would be 
no certainty in business and no security in 
titles. AH rights of property would be en- 
dangered, and the most important encourage- 
ments for industry and enterprise would be 
taken away. It is indispensable, therefore, 
that the obligation of contracts should be 
maintained, unless there is some stronger rea- 
son for annulling them than a mere mistake 
of the law. Champlin v. Daytin, 18 Wend. 
407. 

This question is discussed at length by 
Judge Story, and nearly all the English and 
American authorities are referred to, and 
many of them examined. 1 Story, Eq. Jur. 
c. 5 (Redf. Ed.). But while the weight of 
authority is clearly against granting relief 
merely on account of a mistake of the law, 
it seems to be conceded in nearly all the 
cases, and expressly decided in many of them, 
that there are exceptions to this rule. Hunt 
V. Rousmanier, 1 Pet. 15; Bank v. Daniel, 12 
Pet. 32. 

Instead of saying that there are "excep- 
tions" to the rule, it would probably be more 
correct to say that, while relief will never 
be granted merely on account of the mistake 
of the law, there are cases where there are 



182 



MISTAKE OF LAW. 



other elements, not in themselves sufHcient to 
authorize the court to interpose, but which, 
combined with such a mistalie, will entitle 
the party to relief. It is important therefore 
to inquire what it is that, with a mistake of 
the law, will justify the interposition of the 
court, where there is no fraud, or accident, or 
mistake of fact. 

If a party, who himself knows the law, 
should deceive another, by misrepresenting 
the law to him, or, knowing him to be ig- 
norant of it, should therein take advantage 
of him, relief would be granted on the ground 
of fraud. So that such a case is within nei- 
ther the rule nor the exception. 

It has sometimes been said that when mon- 
ey or other property has been obtained un- 
der a mistake of the law, which the defend- 
ant ought not in good conscience to retain, he 
should be compelled to restore it. Northrup 
V. Graves, 19 Conn. 548; Stedwell v. Ander- 
son, 21 Conn. 139. This is just as a princi- 
ple, but entirely indefinite as a rule. It pro- 
poses nothing but the opinion of the court in 
each case, on a matter In regard to which 
there may be great differences of opinion. 
It overlooks the public interests involved in 
maintaining the obligation of contracts. Gen- 
erally, as between the parties, a mistake of 
law has as equitable a claim to relief as a 
mistake of fact. 

It is believed that in nearly all such cases, 
where relief has been granted, in addition 
to the intrinsic equity in favor of the plain- 
tiff, two facts have been found, (1) that 
there has been a marked disparity in the po- 
sition and intelligence of the parties, so that 
they have not been on equal terms; and (2) 
that the party obtaining the property per- 
suaded or induced the other to part with it, 
so that there has been "undue influence" on 
the one side and "undue confidence" on the 
other. 1 Story's Eq. 120. ^^'hen property 
has been obtained under such circumstances, 
and by such means, courts of equity have 
never hesitated to compel its restoration, 
though both the parties acted under a mis- 
take of the law; and there would be still 
stronger reasons for granting relief in such 
a case, if the party from whom the property 
had been obtained had been led into his mis- 
take of the law by the other partry. Sparks 
V. "White, 7 Humph. 86; Fitzgerald v. Peck, 4 
Litt. (Ky.) 127. 

Thus, in Pickering v. Pickering, 2 Beav. 
31, Lord Langdale set aside certain agree- 
ments entered into under a mistake of the 
law, on the ground that "the parties were 
not on equal terms," and that the plaintiff 
acted under the Influence of the defendant; 
and the same thing was done in Wheeler v. 
Smith, 9 How. 55, because the parties "did 
not stand on equal ground," and the plaintiff 
"did not act freely, and with a proper under- 
standing of his rights." 

This question has arisen more frequently 
In cases where parties have been mistaken in 
regard to their titles to real estate. Thus, 



in Bingham v. Bingham, 1 Ves. 126, the de- 
fendant sold to the plaintiff property which 
he already owned, and the court compelled a 
restoration of the purchase money. It may 
have been, as Bronson, J., suggests, in 
Champlin v. Laytin, 18 Wend. 407, on the 
ground that the defendant "misled" the plain- 
tiff in regard to his title; but the correctness 
of the decision is not questioned by Lord C5ot- 
tenham, In Stewart v. Stewart, 6 Clark & 
F. 964. 

Judge Story suggests that such a case 
"seems to involve, in some measure, a mis- 
take of fact,— that is, of the fact of owner- 
ship, — arising from a mistake of the law." 1 
Story, Bq. Jur. §§ 122, 130. And, in King v. 
Doolittle, 1 Head, 77, the decision is put on 
that ground. But, if all the other facts are 
agreed and known to the parties, the ques- 
tion of "ownership" can be nothing but one 
of law; and in such cases, as in others, 
courts of equity should not interfere, unless 
it appears that there was a difference in the 
condition of the parties, so that, instead of 
both acting voluntarily, one was misled or 
unduly influenced by the other. Nor will the 
court then interpose, in the absence of fraud, 
unless the defendant, as well as the plain- 
tiff, can be restored substantially to the same 
situation as before. Crocier v. Acer, 7 Paige, 
187. 

Nor where there is a real controversy be- 
tween parties, and the case is one of any 
doubt, will the court set aside a compromise 
fairly made by them, though it should after- 
wards appear that one has thereby received 
property to which he was not legally entitled. 
Steele v. White, 2 Paige, 478; Trigg v. Reed, 
5 Humph. 529. On the contrary, courts of 
equity encourage such compromises; but 
here, too, as In other cases, if the parties are 
not on equal terms, and one misleads the 
other, and obtains property thereby against 
right and equity, as well as against law, he 
will be compelled to restore it. "If a party, 
acting in Ignorance of a plain and settled 
principle of law," says the vice chancellor, 
Sir John Leach, "is induced to give up a por- 
tion of his indisputable property under the 
name of a compromise, a court of equity will 
relieve him from the consequences of his 
mistake." Naylor v. Winch, 1 Sim. & S. 564. 
And though this was a dictum, the princi- 
ple was fully applied by the supreme court 
of the United States In Wheeler v. Smith, 
previously cited. And the same doctrine has 
been recognized by this court in the case of 
Freeman v. Curtis, 51 Me. 140. And, in 
both of these cases, relief was granted, not 
on the ground that a mistake of the law 
alone entitles one to relief, but that, though 
there be no actual fraud, if one is unduly in- 
fluenced and misled by the other to do that 
which he would not have done but for such 
influence, and he has In consequence convey- 
ed to the other property without any con- 
sideration therefor, or purchased what was 
already legally his own, the court will. If it 



MISTAKE OF LAW. 



183 



cair be done, restore both of the parties to the 
same condition as before. 

The ease at bar is one of this kind. The 
parties were not on equal terms. The plain- 
tiff was ignorant, in business affairs, as well 
as in other respects. Having confidence in 
the defendants, she relied upon what they 
told her. It does not appear that she doubt- 
ed the validity of her father's lease to her, 
until such doubts were communicated to her 
from them. The proposition for her to re- 
lease her interest in all the other property 
did not originate with her, but with them; 
and she was induced to accept it by the fear 
which they had impressed upon her that she 
otherwise would have to give up the home- 
stead. She acted under their Influence. They 
believed that there was a defect in the first 
lease, and they meant to take advantage of 



it. As was said by the master of the rolls, 
afterwards Lord Kenyon, in Evans v. Llewel- 
lyn, 1 Ooxe, 333, "though there was no fraud, 
there was something like fraud, for an undue 
advantage was taken of her situation. The 
party was not competent to protect herself, 
and therefore this court is bound to afford 
her such protection." 

The bill is sustained, with costs; and the 
defendants must be decreed to pay her a dis- 
tributive share of the personal estate, vnth 
interest from the time of distribution, mak- 
ing her equal with them, and to release to 
her on(^eight,h of all the real estate, and ac- 
count to her for her share of the rents atid 
profits of the portion not occupied by her. 

APPLETON, O. J., and KENT, WALTON, 
and DICKERSON, JJ., concurred. 



184 



MISTAKE OF LAW. 



STAFFORD v. FETTERS. 
(8 N. W. 322, 55 Iowa, 484.) 

Supreme Court of Iowa. March 23, 1881. 

Appeal from circuit court, Warren coun- 
ty. 

Action at law against the Indorser of a 
promissory note. Defendant set up an eq- 
uitable defense, and the relief prayed for 
therein was granted him by the decree of the 
circuit court. Plaintiff appeals. 

Seevers & Sampson, for appellant. H. Mc- 
Neil, for appellee. 

BECK, J. 1. The defendant, being the 
payee of a negotiable promissory note, trans- 
ferred it to plaiutltc by the following in- 
dorsement: "For value received, I assign 
the within note to James Stafford. [Signed] 
H. J. Fetters." The action was brought at 
law upon this indorsement. The defendant 
pleaded an equitable defense, wherein he sub- 
stantially alleged that, by the agreement 
under which the note was transferred, the 
plaintiff was to take the note without re- 
course upon defendant, and that the parties 
adopted the form of transfer as expressing 
such agreement, and neither of them at the 
time intended that it should have any other 
effect than to express the agreement between 
them, and neither knew that it did have the 
effect which the law gives to such instru- 
ments. Defendant, upon this answer, as in 
a cross-bill, prays that the indorsement be 
reformed so as to express the true agree- 
ment made and intended to be set out by the 
parties, and that other proper relief be grant- 
ed. A demurrer to this count of the answer 
was overruled, and the issues raised by this 
pleading were tried as an action in chan- 
cery. It is triable here de novo. 

2. The evidence very satisfactorily estab- 
lishes the facts set up in the equitable de- 
fense. The defendant positively and ex- 
plicitly testifies that the agreement requir- 
ed him to transfer the note without liabil- 
ity; that he had no intention to express any 
different contract by the indorsement, and 
was Ignorant of the legal effect of the in- 
strument; and that plaintiff expressly dis- 
claimed that he expected or desired defend- 
ant to become bound for the payment of the 
note. Six witnesses positively and strongly 
corroborated defendant's testimony. They 
heard the conversation between the parties 
when defendant signed the indorsement 
The plaintiff, in his testimony, denies the 
statement of defendant. We must accept 
the facts of the case presented by the testi- 
mony of defendant and hia witnesses. We 
are required to determine whether, upon these 
facts, equity will grant relief to defendant 
by reforming the indorsement upon the note 
so that it will express the real contract of 
the parties. 

3. The agreement of the parties, the meet- 
ing of their minds upon the conditions and 
obligations touching the subject contemplat- 



ed by them, constitutes their contract The 
written instrument is made the evidence of 
that contract If it falls to present their 
agreement the contract It expresses Is not 
the agreement of the parties, and the true 
contract remains unexecuted. In such a case 
equity will reform the writing, causing 
it to express the intentions of the parties. 
This relief will be granted without regard to 
the cause of the failure of the Instrmnent 
to express the true contract, whether it be 
from fraud, mistake in the use of language, 
or any other thing which prevented the ex- 
pression of the intentions of the parties. 

4. But there Is another familiar rule of 
equity upon which plaintiff relies to defeat 
the application of these doctrines to this 
case, namely, relief will not be granted to 
correct mistakes at law. 

The rule has no application to mistakes in 
the language of a contract, or in the choice 
of the form of an instrument, whereby it 
has an effect different from the intention of 
the parties. If parties, intending to sell and 
purchase lands, should, in ignorance of its 
legal effect, execute a lease, equity would 
reform the instrument, though it was a mis- 
take of law which led them to adopt it. 
This mistake, it will be noticed, affects the 
very contract the parties intended. They in- 
tended a deed, but a lease was made. But 
where two are bound by a bond, and the 
obligee releases one, mistakingly believing 
that the other will remain bound, equity will 
not grant him relief, for the reason that the 
release is just what he intended it to be; 
his mistake related to the effect of the con- 
ti'act in matters not contemplated therein. 
The mistakes of law against which equity 
will riot relieve are those which pertain to 
the subject of the contract, and were in- 
ducements thereto, or considerations there- 
for. In such cases the parties intended to 
make the very contracts which they executed, 
but were induced to make them by a mis- 
take of law. 

Further illustrations taken from the books 
make our expression of the rules plainer. 
A tenant for life purchased a reversion un- 
der the mistake of law that such purchase 
would cut off the remainder in tail and vest 
the fee in him. It was held that he could 
not have relief. A power of attorney was 
taken from a debtor as a security; bvit the 
debtor died before the power was executed. 
Equity would not grant relief. In each of 
these cases the very contracts entered into 
by the parties were embodied in the instru- 
ments. The mistakes were as to the results 
to be reached which were Inducements to the 
contracts. In the first case the purchaser 
supposed that the acquisition of the reversion 
would vest in him the fee-simple title. This 
was the inducement for the purchase. It 
was a mistake of law. In the second case 
it was the purpose of the parties to secure 
the payment of the debt They mistakenly 
chose a power of attorney to effect their 



MISTAKE OF LAW. 



185 



object. But their purpose was defeated by 
the law which provides that the death of the 
grantor revokes a power of attorney. In 
these cases, it will be observed, the instru- 
ments were of the character intended by the 
parties. The mistakes pertained to the effect 
of the instruments upon the rights of the 
parties not contemplated by the contracts or 
provided for therein. 

But, on the other hand, when parties en- 
ter into an agreement, which, through mis- 
take of law or fact, they reduce to writing, 
and the Instrument fails to express their true 
agreement, or omits stipulations agreed up- 
on, or contains terms contrary to the inten- 
tion of the parties, equity will reform the 
writing, making it conform to the agreement 
eiitered into by the parties. 

The doctrines we have stated are familiar 
to the profession. They have ample support 
in the authorities. See Noulln v. Pyne, 47 
Iowa, 293; Hunt v. Rosemaniers, 8 Wheat. 
174, 1 Pet. 1; 1 Story, Bq. Jur. §§ 113, 116, 
et seq., and cases cited; Kerr, Fraud & M. 
(Am. Ed.) 396 et seq., and page 418 and 
cases cited; Reynolds v. Meelick, 17 Iowa, 
585. 

In the case before us the parties agreed 
that plaintiff should taKe the note without 
recourse on defendant. They mistakenly 
supposed that the form of assignment of the 
note would have that effect, being ignorant 



of the provisions of the law of commercial 
paper which makes the indorser liable in 
case of default of the maker of the note. 
This was a mistake of the law, but it per- 
tained to the instrument itself, and, by rea- 
son of it, the writing does not express the 
true agreement of the parties. Equity will 
reform it. 

Glenn v. Statlee, 42 Iowa, 107, and Moor- 
man V. Collier, 32 Iowa, 138, are not in con- 
flict with our conclusions just expressed. In 
each case the mistake was not in expressing 
the contract, but as to its legal effect. The 
parties executed an instrument expressing 
the very contract intended, but the instru- 
ments had a legal effect unknown to, and not 
intended by, the parties. 

These decisions are also distinguishable 
from the case at bar by the fact that in each 
of them the rights of persons other than 
the parties to the contracts are involved. 
They were actions upon delivery bonds. 
Creditors not parties thereto were beneficia- 
ries. The law will, in such cases, rather im- 
pose hardship upon the parties who made a 
mistake than upon one chargeable with no 
fault. 

We reach the conclusion that the circuit 
court correctly rendered a decree reforming 
the assignment indorsed upon the note, and 
dismissing plaintiff's petition. 

Aflli-med. 



186 



MISTAKE OF LAW. 



GREEN V. MORRIS & E. R. CO. 

(12 N. J. Eq. 165.) 

Court of Ei-iois aad Appeals. October Term, 

IS.jS. 

E. W. Wbelpley, for demurrer. L. A. 
Chandler and F. T. Prellnghuysen, contra. 

THE CHANCELLOR. The following are 
the material facts stated in the bill: The 
complainant is the owner of a farm in the 
county of Morris. The defendants, in the 
construction of their railroad, made an ex- 
cavation through the complainant's farm of 
about live hundi-ed feet in length, and vary- 
ing from five to tvyelve feet deep. Commis- 
sioners were called under the charter of the 
company, who assessed the complainant's 
damages at six hundred and eighty dollars. 
From this award the complainant appealed 
to the inferior court of common pleas of the 
county of Morris, in which court he was en- 
titled to review the award and to a trial by 
.lury. Before the time for hearing arrived, 
Samuel B. Halsey and Freeman Wood rep- 
resented to the complainant that they were 
acting for and on behalf of the railroad com- 
pany, and proposed to submit the matters in 
difference to three arbitrators, to be selected 
by the parties, to which the complainant as- 
sented. The arbitrators were selected, and 
the submission was reduced to writing. The 
same matters were submitted to the arbitra- 
tors as were before, and acted upon by the 
commissioners appointed under and by vir- 
tue of the charter. By the ninth section of 
the charter of the company, they are obliged 
to construct and keep in repair good and suf- 
ficient bridges or passages over or under the 
said railroad or roads, where any public or 
other road shall cross the same; and also, 
where the railroad shall intersect any farm 
or lands of any individual, to provide and 
keep in repair suitable wagonways over or 
under said road, so that he may pass the 
same; and if the company neglect to per- 
form the said duty, after giving tvrenty days' 
notice to the company, the owner of the land 
may do it himself, and recover the valuation 
by common process of law. 

The arbitrators, thus selected, proceeded 
to discharge the duties imposed upon them 
in the presence of the complainant, and of 
Halsey and Wood, who appeared and acted 
on behalf of the company. During their de- 
liberations, the complainant stated that he 
should require a suitable wagonway over the 
railroad, where it crossed his farm. This 
was assented to, but Halsey and Wood stat- 
ed that this was a matter with which the 
arbitrators had nothing to do, and was no 
part of the submission, but was an inde- 
pendent duty, imposed upon the company by 
tlieir charter. This view was acquiesced in 
by the arbitrators and by all parties, and 
it is admitted to have been a correct view. 
The arbitrators awarded that the company 
should pay to the complainant eight hundred 



dollars for his damages. In awarding this 
amount, they did not take into consideration 
the matter of bridges or crossings. Soon aft- 
er the award was completed, Halsey and 
"N^'ood went to the complainant with eight 
hundred dollars, and with a deed, prepared 
and ready for execution, from the complain- 
ant and his wife to the company. The com- 
plainant objected to signing the deed on the 
ground that it did not, in express words, re- 
serve all his rights as to a crossing or 
bridges over the railroad. Halsey and Wood 
assured him that such rights were not at all 
affected by the deed. The deed was a spe- 
cial one in its character. Mr. Halsey was a 
lawyer by profession. The complainant knew 
this, and he relied upon his integrity, as 
well as his professional learning. Upon Mr. 
Halsey's reassurances that the deed was a 
proper one, and did not compromise the 
complainant's rights to proper crossings over 
the road, he received the monej', and exe- 
cuted and delivered the deed to Halsey and 
Wood. They delivered it to the company, 
giving the officers full knowledge of all that 
had occurred. The complainant gave notice 
to the company to construct a bridge over 
their railroad where it crosses his land, and 
upon the company's neglecting to do so the 
complainant himself constructed the bridge 
at an expense exceeding seven hundred dol- 
lars. He then instituted a suit in the su- 
preme court against the company, under the 
ninth section of their charter, to recover the 
value of the work done. The company set 
up, as a plea in bar to the recovery, the deed 
given by the complainant to the company. 
This bill is brought to relieve the complain- 
ant from legal effect of that deed. The bill 
prays that the deed may be reformed, and 
that the defendants may be enjoined from 
setting up the deed in bar to the complain- 
ant's action at law. To this bill the defend- 
ants have filed a general demurrer. 

The principal ground urged in support of 
the demurrer is that the object of the bill is 
to correct a mistake of law, and that the 
maxim is that ignorance of law furnishes no 
excuse to a person either for a breach or for 
an omission of a duty, ignorantia legis nemi- 
nem excusat, and that the same principle 
applies to agreements entered into in good 
faith, but under a mistake of the law. 

Such undoubtedly is the general rule. It 
has been adhered to with great strictness by 
some authorities, while by others exceptions 
have been made to the rule altogether irrec- 
oncilable with the principles and reasons up- 
on which it has been established. Some of 
these conflicting authorities are referred to 
and commented upon in 1 Story, Eq. Jur. § 
113, etc. But that the rule has its proper 
exceptions is beyond all dispute. 

In 1 Story, Eq. Jur. §§ 113, 116, the rule is 
laid down that agreements made and acts 
done under a mistake of law are, if not oth- 
er^^ise objectionable, generally held valid 
and obligatory. The author says that he 



MISTAKE or LAW. 



187 



lays down the doctrine in this guarded and 
qualified manner because there are authori- 
ties which are supposed to contradict it, or 
at least to form exceptions to it; and In the 
case of Hunt v. Eousmanier, ' 1 Pet. 17, 7 L. 
Ed. 27, a case much relied upon by the de- 
fendant's counsel, Mr. Justice Washington, 
in delivering the opinion of the court, says, 
"It is not the intention of the court, in the 
case now under consideration, to lay it down 
that there may not be cases in which a court 
of equity will relieve against a plain mistalie 
arising from ignorance of law." 

There are several considerations which in- 
duce me to consider this case as very prop- 
erly embraced within the exceptions to the 
rule. The decision of the case does not rest 
exclusively upon the mere fact of a mistake 
in law upon the part of the complainant. 
This deed does not carry out the intention of 
the parties; and it is not necessary to resort 
to parol testimony to establish this fact. It 
was executed for the sole purpose of carry- 
ing into effect the award of the arbitrators. 
By that award, the complainant's rights and 
privileges under the ninth section of the de- 
fendant's charter were not impaired, nor were 
they in any manner whatever affected by it. 
The object of the deed was to give to the 
company the same rights and privileges in 
and upon the complainant's lands as the 
award gave them, and no more. All that is 
necessary to enable the court to reform this 
deed, and to make it comply with the inten- 
tion of the parties, is to have before it the 
award which it was the design of all parties, 
by this deed, to carry into execution. The 
mistake is a mistake of the draftsman, and 
he acting as the agent of the party who now 
seeks to take advantage of the mistake. Mr. 
Halsey prepared the deed, and took it to the 
complainant to be executed. It was his mis- 
apprehension of the law that led to the mis- 
take. It was not the carelessness or igno- 
rance of the complainant, but of the defend- 
ants' agent. Mr. Justice Story, in comment- 
ing upon the case already referred to in 1 
Pet. 1, 13, 7 L. Ed. 27, 14 Story, Eq. Jur. 
§ 115, remarks: If there had been any mis- 
take in the instrmnent itself, so that it did 
not contain what the parties had agreed on, 
that would have formed a very different case, 
for where an -instrument is drawn and ex- 
ecuted which professes, or is intended, to 
carry into execution an agreement previously 
entered into, but which, by mistake of the 
draftsman, either as to fact or to law, does 
not fulfill that intention, or violates it, equity 
will correct the mistake, so as to produce a 
conformity to the instrument. Now we have 
before us an agreement in writing, the award 
of the arbitrators, to carry which into execu- 
tion the deed was executed. By a misappre- 
hension of the law on the part of all parties, 
and more particularly of the defendants' 
agent, who drew the deed, It releases valu- 
able legal rights of the complainant which are 
not afEected by that award. All the bill asks 



is that the deed may be made to conform 
to the award. 

In the case of Champlin v. Layton, 1 Edw. 
Ch. 467, it was decided that a contract en- 
tered into under a mutual misconception of 
legal rights, amounting to a mistake of law 
in the contracting parties, is as liable to be 
set aside or rescinded as a contract founded 
in mistake of matters of fact. In his opinion 
in that case the vice chancellor says: So, if 
both parties should be ignorant of a matter of 
law, and should enter into a contract for a 
particular object, the result whereof would, 
by law, be different from what they mutual- 
ly Intended, — here, on account of the surprise 
or immediate result of the mistake of both,— 
there can be no good reason why the court 
should not interfere in order to prevent the 
enforcement of the contract, and relieve from 
the unexpected consequences of it. To refuse 
would be to permit one party to take an un- 
conscientious advantage of the other, and to 
derive a benefit from a contract which neither 
of them intended it should produce. In 
Stapylton v. Scott, 13 Ves. 424, the lord chan- 
cellor says: I admit, where the contract 
has proceeded upon the mistake of both par- 
ties, that avoids the contract at law as well 
as here. In Willan v. Willan, 16 Ves. 72, 
an agreement was decreed to be given up 
upon the ground of surprise, neither party 
understanding the effect of it. This excep- 
tion to the rule is recognized in the case 
of Hunt V. Eousmanier, 8 Wheat. 174, 5 L 
Ed. 589. 

The case before the court Is entitled to 
much more favorable consideration than these 
cases, from the fact, before referred to, that 
the mutual mistake is to be attributed to the 
agent of the defendants. He prepared the 
deed, and he assured the complainant that it 
was correct. There was no want of ordinary 
prudence in the complainant's relying upon 
his judgment. He was a lawyer by profes- 
sion, and it was natural and becoming that 
the complainant should have confided in him. 

There Is ianother consideration which very 
properly enters into the case. It is a deed 
procured from the complainant, by the solici- 
tation of the defendants or their agent, which 
conveys to them valuable rights and priv- 
ileges without any consideration. The award 
giv«s to the complainant eight hundred dol- 
lars as a remuneration for his damages; but 
the legal effect of the deed is not only a re- 
lease of the damages, for which the defendant 
was compensated, but a release of rights and 
privileges more valuable to the complainant 
than the pecuniary compensation awarded to 
him. The relative situation of the parties is 
a matter of some consideration in a court of 
equity. One was a plain man, the other a 
professional man, professing skill and ex- 
perience as to the matter in which he volun- 
teered to advise. I have no doubt, if this 
deed does not comport with the award, as to 
the propriety of the court's reforming it. 

But I am embarrassed with another view 



188 



MISTAKE OF LAW. 



of the case. In my Judgment, tlie deed in 
question does not operate as a release of any 
rights the complainant may have under the 
ninth section of the defendants' charter. In 
other words, it is no legal bar to the com- 
plainant's recovery in his suit at law. The 
bill assumes that it Is a bar. The counsel 
for the defendants raised an objection that 
the fact of its being a bar to the complainant's 
recovery was not, with suflBcient directness 
and distinctness, averred in the bill; but it is 
assumed throughout the bill to be, in connec- 
tion with the use the defendant is making of 
the deed, the foundation for the complainant's 
suit. A distinct averment as to the legal 
effect of the dued is not necessary. The con- 
struction of the deed by the court could not 
at all depend upon the complainant's opin- 
ion of it, nor would the complainant be bound 
here or elsewhere by such an averment. 

The deed recites that the company, by vir- 
tue of their act of incorporation, had surveyed 
their route from Morristown to Dover over 
and upon the lands of the complainant, giving 
a description of the land by metes and 
bounds, and then proceeds as follows: "Now 
be it known that the said Thomas Green and 
his wife, in consideration of the sum of eight 
hundred dollars, to them in hand well and 
truly paid by the said the Morris and Essex 
Railroad Company, the receipt whereof is 
hereby acknowledged, have and by these pres- 
ents to grant, bargain, sell, convey, and 
confirm to the said the Morris and Essex 
Railroad Company, and to their successors 
and assigns, forever, the right, liberty, and 
privilege of erecting upon the tract of land 
above described, by its officers, agents, engi- 
neers, superintendents, contractors, workmen, 
and other persons in their employ, and to 
take possession of, hold, have, use, occupy, 
and excavate the same, and to erect embank- 
ments, bridges, and all other works neces- 
sary to lay rails, and do all other things 
which shall be suitable or necessary for the 
completion or repair of said road or roads; 
to have and to hold the said tract of land 
and premises unto the said the Morris and 
Essex Railroad Company, and to its succes- 
sors and assigns forever, for the purposes 
above mentioned, and for all the other pur- 
poses mentioned in the said act of incorpora- 
tion and the several supplements thereto. In 
witness whereof," etc. 

The seventh section of the act provides 
the mode in which the company shall pro- 
ceed, if they cannot agree with the owner 
of the land, to acquire the same by assess- 
ment. Three commissioners are to be ap- 
pointed, who are to assess the value of the 
land and the damages, upon payment of 
which the company have the right to enter 
upon and occupy the land for the purposes 
of the railroad. The provisions of the ninth 
section are wholly independent of those of 
the seventh section, and make it obligatory 
upon the' company to construct and keep in 
repair bridges or passages over or under 



the railroad, where It crosses public or pri- 
vate roads, and where it intersects lands of 
individuals. It is very manifest that the 
assessment to be made by the commissioners 
does not include any compensation for such 
bridges or passages, and that, notwithstand- 
ing such assessment, the duty still remains 
upon the company to construct such bridges 
and passages over the road. If this is not 
so, then the ninth section is superfluous. 
The company cannot take possession of the 
laud except under the provisions of the sev- 
enth section; and, if the assessment pro- 
vided for in that section includes a re- 
muneration to the land owner for bridging, 
etc., there could be no propriety in imposing 
that duty by the ninth section. The deed 
in question conveys to the defendants noth- 
ing more than the liberty of erecting upon 
the land described the necessary superstruc- 
ture for their railroad, and the necessary 
embankments, bridges, etc. This is the same 
right, and neither more nor less than they 
would have acquired by an assessment un- 
der the seventh section of the act. I do not 
see how, with any propriety, a construction 
can be put upon this deed that will release 
the company from the duties imposed by the 
ninth section. An assessment by commis- 
sioners would not have released them, and, 
in my judgment, this deed confers upon 
them no additional rights, and releases them 
from no other duties or obligations. The 
language used in the deed is the same lan- 
guage used in the sixth section of the act, 
which defines what rights the company ac- 
quire by assessment. The deed confines the 
company to the same use of the land as the 
act confines them under the assessment. 
The language in the deed is an exact copy 
of the language of the act. 

If, then, this construction of the deed is 
the correct one, there is no necessity of re- 
forming it; but the defendants contend for 
a different construction, and, upon their con- 
struction, insist that it is a bar to the com- 
plainant's recovery in his suit at law. If 
their construction is the correct one, then 
the complainant is entitled to the protec- 
tion of the court. Under such circumstan- 
ces he had a right, when the defendants, 
by a formal plea at law, contended for such 
a construction of his deed, to claim the pro- 
tection of this court. It was not safe for 
him to risk his case at law. If the court 
at law should be against him, it would then 
be too late for him to ask relief in this 
court. Would it be right, notwithstanding 
the construction this court has put upon the 
deed, to dismiss the complainant out of 
court? The court at law is not bound by 
the construction this court may put upon 
the deed. If the complainant's bill should 
be dismissed, and the court at law should 
differ from this court, the complainant will 
be without remedy. It may be asked, how 
can this court make a decree to reform the 
deed when it is of opinion that it needs no 



MISO^AKB OF LAW. 



189 



reformation? But the court need not adopt 
any such inconsistencj'. It can afford to 
the complainant adequate relief without 
making a decree to reform the deed. A de- 
cree enjoining the defendants from setting 
up the deed as a bar to the complainant's 



recoveiy in the action at law will afford him 
all the protection that Is necessary. 

I have no doubt that, under the circum- 
stances of this case as it is made by his bill, 
the complainant is entitled to relief. 

The demurrer is overruled, with costs. 



190 



MISTAKE OF LAW. 



GRISWOLD V. HAZARD et al. (four cases). 
(Nos. 50-53.) 

(11 Sup. Ct. 972, 141 U. S. 260.) 

Supreme Court of the United States. May 25, 
18!tl. 

In error to the circuit court of the United 
States for the district of Rhode Island. 

Appeals from the circuit court of the Unit- 
ed States for the district of Rhode Island. 

The first of the above suits was brought 
by Gris-svold, a citizen of New York, against 
the appellees, citizens of Rhode Island, to ob- 
tain a decree canceling or (if relief of that 
character could not be granted) reforming a 
certain bond, for the sum of $53,735, executed 
by Thomas C. Durant, as principal, and Gris- 
■wold and S. D. Bradford, as his sureties. It 
was heard upon bill, answer, and proofs, and 
the bill was dismissed. 

The action at law, No. 53, was brought by 
the appellees against Griswold upon the 
above bond in one of the courts of Rhode 
Island, and was removed, upon his petition, 
to the circuit court of the United States for 
the district of Rhode Island, where a judg- 
ment was rendered against him for the sum 
of 566,470. 

The other two cases, Nos. 51 and 52, were 
suits in equity brought by Griswold, pending 
the action at law in the circuit court, to ob- 
tain an injunction against its further prose- 
cution. The relief asked, in each of those 
suits, was denied, and the bills were dis- 
missed. 

All of the cases have their origin in a suit 
In equity brought, August 22, 1868, in the su- 
preme court of Rhode Island, by Isaac P. 
Hazard, of that state, against Thomas C. 
Durant, Oliver Ames, Benjamin E. Bates, 
John Duff, Cornelius S. Bushnell, Sidney Dil- 
lon, Henry S. McComb, the Credit Jlobilier 
of America, a Pennsylvania corporation, and 
the Union Pacific Railroad Company, a cor- 
poration created by acts of congress. Haz- 
ard sued on behalf of himself and all other 
stockholders In the first-named corporation 
who should become parties to his bill. Du- 
rant, from an early date in 1864 until May 18, 
1867, was president of the Credit Mobilier of 
America; having, it was alleged, to a great 
extent, the management of its affairs, and the 
confidence of Its directors and trustees, as 
well as the control of its finances and dis- 
bursements, and of its treasurer, clerks, and 
servants. The theory of the bill was that he 
had acquired a large amount of the stock of 
' Credit Mobilier of America upon which 
Idends had been paid in money and in the 
■|{6ck and bonds of the Union Pacific Rail- 
road Company, the amount of such bonds ex- 
ceeding, it was alleged, $700,000, and the 
amount of such stock of the last-named cor- 
poration being nearly $2,000,000; and that 
the shares of stock, bonds, and moneys, so 
received by him, belonged equitably to the 
Credit Mobilier of America and its stockhold- 



The bill alleged that Durant's pecuniary 
condition was precarious; that he was, and 
for a long time had been, largely engaged in 
hazardous speculations and financial opera- 
tions, sustaining thereby heavy losses, and li- 
able to sustain others; that any recovery 
against him, it was feared, could not be en- 
forced by execution or the ordinary process 
of law; that he was "about to depart out of 
the state, and out of the jurisdiction of this 
court;" and that the defendants, (the indi- 
vidual defendants being sued as trustees in 
a certain contract veith the Union Pacific 
Railroad Company, the profits of which be- 
longed to the Credit Mobilier of America and 
its stockholders,) "though requested so to do," 
had wholly neglected and refused to take any 
steps to compel him to account for said mon- 
eys, stocks, and bonds, so received and im- 
properly appropriated. 
. The principal relief asked was that Dm-ant 
be required to pay over and deliver to the 
Credit Mobilier of America and the plaintiff 
Hazard such sums of money and shares of 
stock as should appear upon an accounting 
to be justly due or belonging to that corpora- 
tion and to Hazard, and to make such trans- 
fer of the stock and bonds as would fully pro- 
tect its and his rights in the premises; that 
the amounts ascertained to be due be ad- 
judged a lien upon the shares in the stock of 
each of said corporations, owned or held by 
or standing in the name of Durant, as well as 
upon the above contract assigned to the de- 
fendant trustees and the dividends, earnings, 
stocks, and bonds received or to be received 
by virtue of that contract, to the extent of 
the shares to which Durant might be entitled 
under it; and that, on default in the pay- 
ment and delivery of the moneys, stocks, and 
bonds so found due, all such stocks and 
bonds be sold under the direction of the 
court, or otherwise transferred and apportion- 
ed equitably among the rightful owners and 
claimants thereof; and that such stock, 
bonds, moneys, interest, and rights, so pro- 
cured by Durant, be deemed and taken as 
the rightful property of the Credit Mobilier 
of America and its stockholders. The bill 
prayed that Durant be restrained from de- 
parting out of the state, and out 'Of the juris- 
diction of the court, by writ of ne exeat, is- 
sued under its seal and by its order. 

A writ of ne exeat was ordered to be is- 
sued, August 22, 1868, for $53,735. It was 
in these words: 

"Whereas, it is represented to our supreme 
court, sitting in equity, on the part of Isaac 
P. Hazard and others, complainants, against 
Thomas C. Durant and others, defendants, 
that said Thomas C. Durant is greatly In- 
debted to the said complainant, and designs 
quickly to go into other parts beyond this 
state, (as by oath made in that behalf ap- 
pears,) which tends to the great prejudice and 
damage of the said complainants: There- 
fore, in order to prevent this injustice, we 
hereby command you that you do, without 



MISTAKE OF LAW. 



191 



delay, cause the said Thomas 0. Durant to 
come before you and give sufficient bail or 
security, in the sum of fifty-three thousand 
seven hundred and thirty-five dollars, that he, 
said Thomas C. Durant, will not go, or at- 
tempt to go, into parts beyond this state with- 
out the leave of our said court; and, in case 
the said Thomas C. Durant shall refuse to 
give such bail or security, then you are to 
commit him, the said Durant, to our county 
jail, in your precinct, there to be kept in safe 
custody until he shall do it of his own accord; 
and when you shall have taken such security 
you are forthwith to make and return a cer- 
tificate thereof to om- said court, distinctly 
and plainly, under your hand, together with 
this writ." 

Durant was arrested under this writ on the 
night of August 22, 1868, and on the 24th he 
executed, with Griswold and Bradford, as 
his sureties, the following bond, drawn by 
one of Hazard's attorneys: 

"Know all men that we, Thomas C. Du- 
rant, as principal, and John N. A. Griswold 
and S. Dexter Bradford, as sureties, are firm- 
ly bound to Isaac P. Hazard, Rowland Haz- 
ard, Eowland 6. Hazard, Elizabeth Hazard, 
Elizabeth Hazard, trustee, Anna Hazard, 
Mary P. Hazard, Lydia Torrey, Sophia Ver- 
non, and Anna Horner in the sum of fifty- 
three thousand seven hundred and thirty-five 
dollars, to be paid said obligees, their ex- 
ecutors, administrators, or assigns; to which 
payment we bind ourselves, our several and 
respective heirs, executors, and administra- 
tors, jointly and severally, hereby. 

"Sealed with our seals and dated this 24th 
day of August, A. D. 1868. 

"The condition of this obligation is that 
said Thomas C. Durant shall on his part 
abide and perform the orders and decrees of 
the supreme court of the state of Rhode 
Island in the suit in equity of Isaac P. Haz- 
ard and others against said Thomas C. Du- 
rant and others, now pending in said court 
within and for the county of Newport." 
This is the bond above referred to. 

Under the latter date, and presumably be- 
fore the execution of that bond, the attor- 
neys of Hazard and Durant signed the follow- 
ing agreement: "In the above enti;tled case 
it is agreed that said Thomas C. Durant shall 
file a bond, with surety in the penalty mark- 
ed in the writ of ne exeat therein, to abide 
and perform the orders and decrees of the 
court in said cause, and that thereupon the 
writ of ne exeat aforesaid shall be dischar- 
ged, and that the court may enter decree ac- 
cordingly." The court, under the same date, 
entered the following order: "Thomas C. 
Durant, one of the defendants In this suit, 
having executed and filed a bond, with sure- 
ties, to abide and perform the orders and 
decrees of the court made in this suit, it is 
now, by consent, ordered that the writ of ne 
exeat heretofore issued be discharged." For 
some reason not explained, the writ of ne 
exeat was not returned to the clerk's office 



and filed until October 21, 1868. The sheriff 
made this return on the writ: "Newport, Au- 
gust 24, 1868. I caused the within-named 
Thomas C. Durant personally to come before 
me, as within commanded, on the 22d day of 
this month, and now the writ Is discharged 
by order of court." 

On the 2d day of December, 1882, more 
than 14 years after the commencement of 
Hazard's suit, it was ordered, adjudged, and 
decreed in that suit, among other things, as 
follows: 

"Second. That the defendant Thomas C. 
Dm-ant is accountable for and do, within 90 
days from the date hereof, pay the sum of 
$16,071,659.97, with interest from this date, 
the said sum, with interest thereon, to be 
deposited in the registry of this court, or be 
paid, in the first instance, to Rowland Haz- 
ard, of South Kingston, in said state, and 
Henry Martin, of Brooklyn, in the state of 
New York, who are hereby appointed special 
commissioners, with authority, jointly and 
severally, to collect and receive the same, and 
with power to take such steps to collect 'the 
same as may be necessary and according to 
law, and said fund, or so much thereof as 
may be collected by process or otherwise, is 
hereby directed to be paid and deposited in 
the registry of this court to the credit of this 
cause. 

"Third. Of the aforesaid total sum of $16,- 
071,659.97, the defendant Thomas O. Durant 
is hereby allowed and is decreed to be en- 
titled to pay and discharge $8,816,232.93, or 
any part thereof pro tanto, by transferring 
and delivering stock of the Union Pacific 
Railroad Company and first mortgage and 
sinking fund bonds of said company, as per 
Statement G, now exhibited to the court, and 
directed to be filed in this cause, with all 
dividends which may have been collected or 
received by said defendant or his assigns aft- 
er the date of this decree, together with in- 
terest on the same to the date of payment 
thereof by said defendant, the certificates of 
said stock, with transfers thereof, and the 
said bonds to be delivered to the said Row- 
land Hazard and Henry Martin, who are 
hereby appointed special commissioners to re- 
ceive the same, and who are hereby author- 
ized and directed to sell the same, or such 
portions thereof as may be delivered to them 
from time to time as they are secured, at 
public auction, and receive the proceeds there- 
of, and, after deducting the costs and charges 
of such sales, deposit the same in the registry 
of this court to the credit of this cause: pro- 
vided, however, that the said privilege herein 
granted to the said defendant Thomas 0. Du- 
rant to transfer and deliver said stocks and 
bonds in partial discharge and payment of 
the sum hereinbefore decreed to be paid by 
him be exercised by him within thirty days 
from the date of the entering this decree; and 
that, in default of such transfer and dehvery, 
or of the transfer and delivery of the entire 
amount of said stock and bonds within the 



192 



MISTAKE OF LAW. 



said thirty days, the obligation of the de- 
fendant Thomas C. Durant to pay the said 
proportion of the said sum or of the -residue 
of the same, after deducting the amount of 
such stoclis and bonds as may be delivered, 
as aforesaid, at their face value, shall be- 
come, and Is hereby declared to be, absolute: 
and provided further, nevertheless, that the 
said option or privilege of the said Thomas 
C. Durant shall not Interfere in any manner 
with any order or decree in the cause touch- 
ing the transfer, delivery, sale, or other dispo- 
sition of said stock and bonds. 

"Fourth. The defendant Thomas C. Du- 
rant is likewise ordered and directed to trans- 
fer and deliver, within thirty days from the 
date hereof, five thousand seven hundred and 
seven 45-100 (5,707 4.>-100) shares of the stock 
of the Credit Mobiller of America, (which 
stock has been found by the master to have 
been purchased with the funds of the Credit 
Mobiller, and which stock, with any divi- 
dends or profits accrued or to accrue on the 
same, is hereby declared to be the property 
of said corporation, subject to the decrees and 
orders in this cause,) with any interest, divi- 
dends, rights, benefits, and profits which may 
have accrued to the said Thomas C. Durant 
as the holder of the said 5,707 45-100 shares 
of stock, or any part thereof, and not here- 
inbefore charged against him, said transfer 
and delivery to be made to the said Rowland 
Hazard and Henry Martin, or either of them, 
as special commissioners, with power, which 
is hereby granted to said commissioners, 
forthwith to take such measures, by suit or 
suits in their own names, or otherwise, as 
they may be advised is lawful and necessary 
to enforce such transfer, collection, or de- 
livery, and said stocks to be held by said 
commissioners subject to the further order of 
the court in this cause. 

•'Fifth. All interlocutory injunctions here- 
tofore made in this cause, so far as con- 
sistent with this decree, are declared to be 
and are hereby made perpetual, and the fur- 
ther consideration of the cause, and particu- 
larly as to allowances to the complainants for 
costs, expenses, and services, and as to the 
distribution of the funds that may be depos- 
ited in the registry of the court to the credit 
of the cause, and also the consideration of 
any order or decree which may be necessary 
in the premises against the defendant Thom- 
as C. Durant, by reason of any default which 
may be made by him touching any portion of 
this decree, and also the consideration of any 
other and further decree herein against or 
concerning the defendants other than the 
said Thomas C. Durant, be, and they hereby 
are, directed to stand over, with leave to any 
party in Interest, save parties in contempt 
or parties who may appear to be for any oth- 
er cause disqualified, to apply at any time 
for further orders and directions." 

The bill in case No. 50 was filed September 
13, 1881. That suit proceeds upon these 
grounds: That the bond of August 24, 1868, 



whereby Griswold became bound, as one of 
the sureties of Durant, that the latter should 
"on his part abide and perform the orders 
and decrees of the supreme court of the 
state of Rhode Island in the suit in equity of 
Isaac P. Hazard and others against said 
Thomas C. Durant and others, now [then] 
pending in said court," was obtained by 
fraud, and by concealment from him of facts 
he was entitled to have communicated to 
him before he assumed the obligations impos- 
ed by that instrument; that he intended to 
sign, and believed, at the time, that he sign- 
ed, a bond which simply bound him for the 
appearance of Durant, so that he should be 
personally amenable to the process and or- 
ders of the court in the suit brought by Haz- 
ard; that the execution of the bond in ques- 
tion was the result of mistake; that the 
agreement whereby, upon the execution by 
Durant of a bond, the writ of ne exeat was 
to be discharged, was made without his 
knowledge or consent, as was also the order 
of court in pursuance of such agreement, and 
was in derogation of his rights; that his pur- 
pose to become surety only for Durant's ap- 
pearance to answer the process of the court 
was well known at the time to the plaintiff 
and his attorneys, who prepared, and super- 
vised the execution of, the bond; and that 
the writ of ne exeat was sued out upon the 
ground that Durant was about to depart 
from the state, when, in fact, he only contem- 
plated coming to the state. 

Protesting that the legal effect of the bond 
was that he should be responsible only for 
the appearance of Durant, so as to be subject 
to the process of the court in the Hazard 
suit, and averring his willingness to execute 
a proper ne exeat bond, he prayed that the 
bond in question be set aside as having been 
obtained by fraud, imposition, and mistake, 
or reformed, as indicated, and that the de- 
fendants be restrained by injunction from 
enforcing it in its present shape. 

The answers of the defendants put in issue 
the material allegations of the bill. The 
plaintiff filed a replication, and proofs being 
taken, and the cause heard, the bill, as al- 
ready stated, was dismissed. (C. O.) 26 Fed. 
135. 

The action at law, being case No. 53, was 
commenced March 3, 1883, in one of the 
courts of Rhode Island, and was removed, 
upon Griswold's application, to the circuit 
court of the United States. The declaration 
set out the bond of August 24, 1868, alleged 
that Bradford, one of the sureties thereon, 
was dead, and that Durant had not kept 
its condition, in that he had not performed 
the above decree of December 2, 1882, in the 
equity suit brought by Hazard; whereby the 
plaintiffs Rowland Hazard, Rowland G. Haz- 
ard, Anna Hazard, and Lydia Torrey were 
entitled to have and demand of him the 
amount of said bond, $53,735. A copy of 
that decree was made an exhibit In the dec- 
laration. The defendant Griswold filed ten 



MISTAKE OF LAW. 



193 



pleas, each of which was in bar of the ac- 
tion. One of the pleas made a copy of the 
proceedings in Hazard's suit a part of it. 
Demurrers and replications were filed to the 
pleas, those to the second, third, fourth, fifth, 
and seventh pleas being special demurrers. 
By an order entered July 1, 1884, the demur- 
rers were sustained to the second, third, 
fourth, fifth, and seventh pleas, the opinion 
of the court being delivered by Mr. Justice 
Gray. (0. C.) 21 Fed. 178. 

Pursuant to a stipulation of counsel, dated 
November 26, 1883, that the plaintifE might 
demur specially to the second, third, fourth, 
fifth, and seventh pleas, and, in case the de- 
murrers were overruled, reply to those pleas 
as if no demurrers had been filed, and that 
amended pleas, if desired, might be filed by 
the defendant, and in obedience to the order 
of court requiring the amended pleas to be 
filed on or before October 15, 1884, the de- 
fendant, on the 14th of October, 1884, filed 
amended third, fom-th, fifth, and seventh 
pleas. The case was subsequently heard on 
a motion by plaintiff, made November 19, 
1884, that the amended pleas be stricken out, 
and on the 30th of March, 1883, this order 
was made: "Plaintiff's motion to strike 
amended pleas from the files is granted." 
Certain stipulations were made between 
counsel; among others, one to the effect "that 
the plaintiffs were able to prove under the 
decree of the supreme court of Rhode Island, 
in the equity suit brought by Hazard, an 
amount of damage in excess of the pena) sum 
of the bond declared on in this suit." A jury 
having been waived in writing, the court 
gave judgment, as of February 12, 1887, 
against Griswold, for $66,470. 

The suit in equity No. 51 was brought June 
12, 1885. The bill in that case, after refer- 
ring to the suit in equity brought by Isaac 
P. Hazard in 1868, showed that, on the 17th 
of November, 1875, Rowland G, Hazard com- 
menced a suit in equity in one of the courts 
of Pennsylvania, against the Credit Mobilier 
of America and others, which was subse- 
quently removed to the circuit court of the 
United States for the eastern district of 
Pennsylvania, that being the domieile^of the 
corporation; that in such suit Oliver Ames 
was appointed receiver of all the goods, chat- 
tels, rights, and effects of the corporation, 
and was authorized by the court in Pennsyl- 
vania to deliver to Durant a deed of release 
from all actions, causes of action, suits, bills, 
bonds, writings obligatory, debts, dues, du- 
ties, reckonings, accounts, sums of money, 
judgments, executions, extents, quarrels, con- 
troversies, trespasses, damages, and demands 
whatever, both In law or equity, which the 
Credit Mobilier of America then had, or 
might at any time thereafter have, claim, 
allege, or demand, against said Durant, for 
or by reason or means of any matter, cause, 
or thing whatever; that afterwards, on the 
27th day of October, 1881, Ames, under the 
said authority, and In consideration of the 
HUTOH.& BUNK.BQ.— 13 



execution by Durant of a deed conveying the 
title to certain lands mentioned in the order 
of court authorizing the release, delivered to 
the latter a deed of release, of the kind above 
indicated, of all sums of money then due 
or owing to, or thereafter to become due to, 
said corporation; that the above equity suit 
in the supreme court of Rhode Island was, 
and had been, wholly controlled by Rowland 
G. Hazard; that, notwithstanding the deliv- 
ery of the above deed to Durant, the latter 
suit was proceeded with, and the supreme 
court of Rhode Island rendered a decree re- 
fusing to allow him to set it up as a bar to 
the entering of such decree, on the ground 
that he was in contempt of that court for 
violation of one of its decrees rendered there- 
in; and that after the delivery of the deed 
of release to Durant the plaintiff requested 
the defendants to surrender the bond of Au- 
gust 24, 1868, and to abstain from suing him 
thereon, but they refused to comply with that 
request. The relief asked was an injunction 
restraining the defendants from further pro- 
ceeding in the action at law. Upon a hearing 
before Judges Colt and Carpenter a demurrer 
to the bill was sustained, and the bill dis- 
missed, October 28, 1886, Judge Carpenter de- 
livering the opinion of the court. (0. 0.) 28 
Fed. 597. 

The bill in case No. 52 was filed June 12, 
1885. It assailed the jurisdiction of the su- 
preme court of Rhode Island over the sub- 
ject-matter of the suit in equity brought by 
Hazard, upon the ground that before bring- 
ing it neither the plaintifC therein, Isaac P. 
Hazard, nor any other stockholder of the 
Credit Mobilier of America, requested the 
managing committee of the board of direct- 
ors or the stockholders of that corporation to 
begin legal or equitable proceedings against 
Durant. The cause was heard upon demur- 
rer before Judges Colt and Carpenter. The 
demurrer was sustained, and the bill dismiss- 
ed, the opinion of the circuit court being de- 
livered by Judge Carpenter. (C. C.) 28 Fed. 
578. 

James C. Carter, for appellants and plain- 
tiffs in error. Ellas Merwin and Sam'l'Mad- 
dox, for appellees and demandants in error. 

Mr. Justice HARI/AN, after stating the 
facts in the foregoing language, delivered the 
opinion of the court. 

These four cases are so closely connected 
in their facts, as well as in the questions of 
law presented for determination, that it is 
convenient to dispose of them by one opinion. 

Our attention will be directed first to case 
No. 50, in which a decree is sought to cancel, 
or, in the alternative, to reform, the bond 
of August 24, 1868, executed by Durant as 
principal, and by Griswold and Bradford as 
sureties, and to restrain the defendants from 
suing upon it in its present form. The grant- 
ing or refusing of such a decree depends, of 
course, upon the inquiry whether the plain- 
tiff Griswold has, by eyidence sufflciently 



194 



MISTAKE OF LAW. 



clear and convincing, manifested bis riglit to 
the relief asked. 

While in respect to some luatters there is 
a conflict among the witnesses, certain facts 
and circumstances are clearly established, 
and may be summarized as follows: Dm-ant, 
in August, 1868, was a citizen and resident of 
New York. He went to Newport for a brief 
stay, and was there on the morninu of Satur- 
day, August 22d. About noon of that day 
the suit in which the writ of ne exeat issued 
was commenced against him. He was then 
sailing, with several friends, in his yacht on 
the high seas. The yacht landed at the New- 
port wharf shortly before 11 o'clock at night. 
Upon his stepping ashore he was notified by 
two officers, who had kept continuous watch 
for him at the wharf during the afternoon, 
that they had a writ for his arrest,— meaning 
the above writ of ne exeat,— and that he 
must go to jail. He accompanied them to 
that place, one of the counsel of Hazard, Mr. 
Peckham, following on foit to the sheriff's 
office. Information of the arrest having been 
communicated to Mr. H. W. Gray, also a citi- 
zen of New York, temporarily at Newport, 
that gentleman went to Griswold, who was 
his uncle, and begged the latter to go to the 
jail and become bail for Durant's appear- 
ance. Griswold had only a slight acquaint- 
ance with Durant, never having met him un- 
til the spring of 18G8, and held no personal 
or business relations of any kind with him. 
To oblige his nephew, who was Durant's 
friend, and merely as an act of kindness and 
courtesy to a stranger, (Griswold then resid- 
ed in Newport,) he acceded to the request 
to become bail for Durant's appearance in 
court, and for that purpose only went to the 
Jail. Hazard learned, a little before 11 
o'clock, that Durant had been arrested as he 
landed from his yacht, and that owing to the 
lateness of the hour the sheriff had taken 
him directly to jail instead of his own office, 
"as had been previously arranged." He went 
immediately to the lodgings of one of his 
attorneys, Mr. Bradley, and caused him "to 
go and see what could be done to prevent 
Durant from remaining in jail over Sunday;" 
authorizing his attorney to use his name "for 
the purpose of releasing said Durant from 
jail until Monday, it being regarded as very 
doubtful whether Durant in the short time 
then remaining before Sunday would be able 
to provide the necessary bonds." 

Shortly after Griswold, accompanied by 
Gray, reached the jail, the two counsel of 
Hazard, namely, Bradley and Peckham, ar- 
rived there, and a few moments later Gov. 
Van Zandt came in obedience to a message 
from Durant, conveyed by Bradford, to act 
as his counsel. Hazard, it seems, did not 
accompany his counsel to the jail. It was 
now nearly 12 o'clock. All who were at the 
jail agree that they were there only because 
of the arrest of Durant under a writ com- 
manding the sheriff to take bail from him, in 
the sum of $5.S.73.5, that he would not go or 



attempt to go into parts beyond the state 
without the leave of the court, and. If sucli 
bail were not given, to commit him to and 
keep him in jail until he gave bail of his (iwn 
accord; and, such security being taken, the 
officer was required by the writ to return a 
certificate thereof to the court. There is no 
claim that any one present Avas ignorant of 
the terms of the writ, or of the extent of the 
authority of the officer charged with its exe- 
cution. It is further agreed by all the wit- 
nesses that there was a conversation at the 
jail between the lawyers and Durant as to 
what could be done in order to effect the lat- 
ter's release. But in this discussion or con- 
versation Griswold took no part whatever. 
That much is distinctly stated by Peckham, 
one of Hazard's attorneys who drew the 
bond, and supervised the execution of the 
writ of ne exeat, although he says that the 
sureties could not "help hearing, if they paid 
any attention." It is equally beyond dispute 
that the object of Griswold's presence at the 
jail was well known to Hazard's attorneys. 

Just here arises the difference among the 
witnesses as to what took place at the 
jail. Detailing what occtu-red according to 
his recollection at that place, Peckham says: 
"When I got to the jail I found there Judge 
Bradley, who had only preceded me there by 
a minute or two; Mr. Durant; Charles C. 
Van Zandt, his counsel; Mr. Griswold; Dex- 
ter Bradford; and a stranger, who was, I 
presume, Mr. Gray. Mr. Van Zandt and 
Judge Bradley were already talking about 
the release of Mr. Durant from custody. 
Judge Bradley said: 'That is a simple mat- 
ter. Let him give the bond called for by 
the writ.' The nature of that bond was 
briefly explained. Mr. Durant said that it 
was out oJE the question for him to give it; 
that he couldn't remain any longer in Rhode 
Island; that his presence was absolutely de- 
manded outside of the state, and forthwith; 
and that he must leave here Monday morn- 
ing. It was suggested that he might file his 
answer, and apply for the discharge of the 
writ immediately; but he said, 'I know what 
proceedings in court are, and I can't re- 
main here at all.' It was then proposed that 
he should give a bond in the same amount 
marked in the two writs in the two cases, 
conditioned to abide and perform whatever 
decrees the court might make against him in 
those suits. The nature of these proposed 
bonds was freely discussed by Judge Brad- 
ley, Mr. Van Zandt, and Mr. Durant, and 
the fact that they were bonds which would 
hold the principal and sureties liable to pay 
money in case Durant should not perform 
any decree made by the court was comment- 
ed on by Mr. Van Zandt and Mr. Durant. 
During all this interview Judge Bradley did 
all the talking for the complainants, and Mr. 
Van Zandt and Mr. Durant spoke about 
equally for their side." The same witness 
states: "Mr. Van Zandt having conferred 
with Mr. Durant, and those two having 



MISTAKE OF LAW. 



195 



conferred with the sureties, — I mean Mr. 
Grlswold and Mr. Bradford,— Mr. Van Zandt 
then announced that they would give the 
bonds proposed. As it was then very late, 
it was fiirther agreed that all should meet 
at my office on the following Monday morn- 
ing, soon after midnight, and execute the 
papers. Besides these bonds, it was also 
agreed that the respective counsel should 
sign an agreement that upon the bonds be- 
ing executed the writs of ne exeat should be 
absolutely discharged. Just at the close of 
the interview Judge Bradley addressed him- 
self to all present, isaying that he wished to 
make sure that all understood the arrange- 
ment alike, and he stated that Mr. Durant 
was to give bonds, with Mr. Griswold and 
Mr. Bradford as sureties, in the sums mark- 
ed in the writs, to abide and perform all the 
decrees of the court in the suit; that counsel 
should sign agreements for the discharge of 
the writs; that all should meet at my oflSce 
soon after midnight Monday morning and 
sign the papers; that in the meantime Mr. 
Durant w^ould go free from custody upon his 
word of honor, and he appealed to the sure- 
ties, saying: 'We rely upon you, gentlemen, 
to see that he attends.' We then separat- 
ed. I prepared the papers, and had them 
lying upon my table when We met, pursu- 
ant to the arrangement. They were read. 
Mr. Griswold took an active part at this 
meetings and. I think, read the papers for 
himself. The papers were signed without 
any objection or discussion at that time. 
Probably we were not together at my office 
more than ten minutes." Referring to the 
interview at the jail, Bradley testiiied that 
nothing was said, to the best of his recol- 
lection and belief, by any one. conveying the 
idea that the complainants were to obtain 
from the defendant only a bail-bond for his 
appearance; and that "the terms of the bond 
were expressed so as to exclude the idea 
that it was merely a bail for appearance, 
and to provide that it should be a bond to 
abide and J^erform the order of the court." 
He further said that the bond "was to be 
a security," and it was so announced. In all 
material respects his evidence was in accord 
with the recollection of Peckham. 

But there was other evidence which pre- 
cludes our accepting the version of the af- 
fair given by those gentlemen. Gray, Gris- 
wold, Durant, and "Van Zandt, with more or 
less distinctness, but all emphatically, state 
that neither at the jail Saturday night, nor 
at the meeting before daylight on Monday 
morning, was there a hint, suggestion, or 
proposition, in any form, that Durant should 
give bond, vrith sureties, conditioned that he 
would abide and' perform the decrees that 
might be rendered in the Hazard suit, or 
that any bond was talked of except one that 
would make the sureties responsible simply 
for his appearance in the state, so as to be 
subject to the orders and process of the 
■court. Gov. Van Zandt testifies, touching 



the meeting at the jail: "It was proposed 
by Judge Bradley that Dr. Durant should 
give bond, with two sureties, which should 
be substituted for the writ and the writ 
withdrawn. I then understood from the con- 
versation that the bond was in the nature of 
a bail-bond, and that when the sureties de- 
livered Dr. Durant into the custody of the 
court, to either perform its orders and de- 
crees personally, or to suffer such penalties 
personally as the court might impose, they 
would comply with the conditions of the 
bond. Nothing was said in my presence by 
any person inconsistent with these views." 
Again, referring to what took place at the 
time the bond was actually signed, the same 
witness says: "A bond, prepared by Messrs. 
Peckham and Bradley, was handed to me 
as counsel for Mr. Durant; there was some 
little discussion as to whether it should be 
made to the sheriff of Nevsrport county, or 
to the complainants in the then suit. Judge 
Bradley preferred the latter, and it was so 
done. I told Mr. Durant that, in my opinion, 
it was a proper bond to secure his appear- 
ance in the suit, and the bond was then ex- 
ecuted. a= * * I heard nothing said by 
Judge Bradley or ftlr. Peckham, except what 
I have already stated; I myself told Mr. 
Durant that, in my opinion, the instrument 
was, in effect, a bail-bond." Further: 
"There was nothing said or intimated by 
any person in my presence or hearing on 
that occasion to indicate that the bond was 
a security instead of a surety." The state- 
ments of Gov. Van Zandt are fully sustained 
by the depositions of Gray, Griswold, and 
Durant. 

In view of this great preponderance of 
evidence upon the side of the plaintiff, as 
to what occurred at the jail before the sep- 
aration of the parties to meet Monday morn- 
ing for the consummation of the business, 
the court is not at liberty to accept the ac- 
count given by the defendants' attorneys of 
the interview of Saturday night. And we 
have a strong conviction that the recollection 
of Griswold, Gray, Dmant, and Van Zandt 
as to that interview, is sustained by all thf, 
inherent probabilities of the case. And In 
saying this we would not be understood as 
reflecting upon the integrity of Hazard's at 
torneys. The difference in the recollection of 
gentlemen, in respect to transactions in 
which they took part, often happens, with- 
out any reason to suspect that any of them 
would intentionally deviate from the line 
of absolute truth. Such differences existing, 
the court can only be guided by the weight 
of the evidence, where the witnesses are in- 
telligent, of equal credibility, and had equal 
opportunities to know what occmred. In 
the first place, it is not at all probable that 
Griswold would have executed the bond in 
question, as surety, if he had been informed, 
or believed, that it bound him absolutely, 
within the amount specified in such bond, 
for the payment of any sum adjudged 



196 



MISTAKE OF LAW. 



against Diiiant,— almost an entire sti-anger 
to him. In the next place, we cannot sup- 
pose that the -counsel who went to the jail to 
represent the interests of Hazard, had any 
other purpose In going there except to see 
that that was, substantially, accomplished 
which the writ of ne exeat authorized, name- 
ly, the obtaining of bail that would prevent 
Durant's departure from the state without 
the leave of the court, and thus have him, 
at all times, pending Hazard's suit, subject 
to its rightful power in respect to any decree 
to be rendered. That was evidently Brad- 
ley's purpose, for, according to Peckham's 
evidence, he suggested that Durant could 
effect his release by executing the bond speci- 
fied in the vsrrit. But when the nature of 
such a bond was explained, and it appeared 
that the necessity for Durant's being out of 
the state on Monday rendered that course 
entirely impracticable, the latter was then 
inforroed — according to the evidence of Peck- 
ham— fhat he could file an answer and apply 
for the discharge of the writ immediately. 
What was meant by this suggestion? It 
could have meant but one thing, namely, 
that it was in the power of Durant to ob- 
tain, without objection, if not of right, a 
discharge of the writ, after answering, by 
executing a bond of some kind. A party ar- 
rested upon ne exeat may obtain the dis- 
charge of the writ, upon motion or petition, 
and after notice, and according to some au- 
thorities, "it is a matter of coui'se to order 
the ne exeat to be discharged, upon the de- 
fendant's giving security to answer the com- 
plainant's bill, and to render himself amena- 
ble to the process of the court pending the 
litigation, and to such process as may be is- 
sued to compel a performance of the final 
decree. * * * Or, where the defendant 
cannot procure such security as will satisfy 
the sheriff, or if he wishes to leave the state 
before the termination of the suit, he may 
apply to the court to discharge the ne exeat 
upon his giving proper security to answer and 
be amenable to process; and upon such ap- 
plication the court will take such security 
as it may deem suflBcient, and will discharge 
the sheriff from liability." 2 Barb. Ch. Prac. 
655, 656; Mitchell v. Bunch, 2 Paige, 606, 
(!21; Bray ton v. Smith, 6 Paige, 489, 491; 
McNamara v. Dwyer, 7 Paige, 239, 244. 
See, also, Jae. Law Diet. tit. "Ne Exeat 
Regno;" Johnson v. Clendenin, 5 Gill & J. 
463, 481. In He Griswold, 13 R. I. 126, 
determined September 20, 1880, Griswold, 
by petition, sought to be discharged from the 
bond in question on his principal's placing 
himself within the jurisdiction of the court, 
and subject to its orders and decrees. He 
seems to have proceeded, in that case, up- 
on the ground that he was entitled, of right, 
to the order of discharge asked. But the 
supreme court of Rhode Island did not ac- 
cept that view, observing that it could not 
regard "a bond to abide and perform the de- 
cree as equivalent merely to a bond to abide 



the event of the suit." To du so, the court 
said, would be to ignore wholly the word 
"perform" contained In the bond, which, 
upon its face, appeared to be given by agree- 
ment of the parties. While it was there 
said, and properly, that the court may re- 
quu-e as a condition of the discharge of a 
writ of ne exeat that the respondent give 
security to perform the decree,— citing Rob- 
ertson r. Wilkie, Amb. 177, and Atkinson v. 
Leonard, 3 Brown, Oh. 218,— it was conceded 
that "courts will generally discharge a writ 
of ne exeat upon the respondents giving secu- 
rity to abide the decree on the hearing of 
the suit." If Durant had remained in New- 
port, and, upon filing his answer, had applied 
for the discharge of the writ of ne exeat up- 
on his giving bond with security simply to 
abide the decree, and place himself, when 
required, within the jurisdiction of the court, 
it is inconceivable that the state court would, 
under the circumstances, have denied his 
application. But it was further said in that 
case— and this is quite significant in its bear- 
ing upon another question to be presently 
adverted to— that, "even if the bond in ques- 
tion was to be considered as having no other 
effect than a bond to abide the decree made 
upon hearing the cause, the petition could 
not be granted in the present stage of the 
proceedings. No final decree in the cause 
has yet been reached." 

As, therefore, Durant could have filed 
his answer, and, conformably to the gen- 
eral rule, have obtained a discharge of the 
writ upon giving bond, with surety, that 
he would be amenable to the orders and 
process of the court; as he could not, con- 
sistently with his engagements, remain in 
Rhode Island long enough to have an an- 
swer prepared, and to move for the dis- 
charge of the writ, upon sufficient bond to 
be by him given; and as Hazard and his 
counsel expressed a desire that Durant 
should not be held in custody over Sun- 
day, — what more natural and equitable than 
that the parties should, by consent, bring 
about that which Durant must have under- 
stood from Bradley that he could accom- 
plish, through the orders of the court, name- 
ly, h^ve a bond executed with surety com- 
pelling his presence in the state when re- 
quired by the orders of the court, or subject- 
ing his sureties to personal liability If he did 
not render himself amenable to Its process. 
If the suggestion that Durant could file his 
answer and apply to the court for the dis- 
charge of the writ (of course, upon bond 
securing his amenability to the process of 
the court) had been adopted, the plaintiff 
would not have obtained a bond making the 
surety absolutely responsible, within the 
penal sum named in the writ and bond, for a 
money decree against Durant. It is there- 
fore unreasonable to suppose that the parties 
separated Saturday night under an agree- 
ment that Hazard should have from Durant 
a bond that would subject Ms sureties to a 



MISTAKE OP LAW. 



197 



larger responsibility than was involved in 
the suggestion made that Durant could ob- 
tain an order of court for the discharge of 
the writ. On the contrary, it is more rea- 
sonable to suppose that the bond which, on 
Saturday night, was agreed to be executed 
on the next Monday morning, was cue that 
would accomplish, by agreement of parties, 
precisely what Hazard's attorney sliggested 
that Durant might accomplish by an order 
of court. The agreement of the parties 
was thus made to take the place of an order 
of court, because Durant assured Hazard's 
attorneys that he could not remain in New- 
port long enough to make a formal applica- 
tion for the discharge of the writ upon a 
proper bond. 

We are of opinion that, although the con- 
dition of the bond in question was that Du- 
rant should "abide and perform the orders 
and decrees" of the coui-t in suit in which 
it was given, all the parties, according to the 
decided preponderance of evidence, intended 
to, at the time, as an instrument binding the 
sureties for the appearance of the principal 
so as to be amenable to the process and de- 
crees of the court, upon default in which, 
and not before, were they to be liable to 
pay the penalty. If the bond means, in law, 
more than that,— and counsel in this court 
agree that it does,— the case is one of a 
mutual mistake, clearly established, as to 
the legal efCect of the instrument. There 
was no mistake as to the mere words of the 
bond; for it was drawn by one of Hazard's 
attorneys, and was read by Griswold before 
signing it. But, according to the great 
weight of the evidence, there was a mistake, 
on both sides, as to the legal import of the 
terms employed to give effect to the mutual 
agreement. In short, the instrument does 
not express the thought and intention which 
the parties had at the time of its execution. 
And this mistake was attended by circum- 
stances that render it inequitable for the 
obligees in the bond to take advantage of it. 
The instrument was drawn by one of Haz- 
ard's attorneys, and was presented and ac- 
cepted as embodying tise agreement previ- 
ously reached. Griswold was unskilled in 
the law, and took the word "perform" as 
implying performance in the sense of Du- 
rant's becoming amenable to the process of 
the court. He had no reason — unless the 
recollection of Gray, Durant, Van Zandt, and 
himself as to what occurred is wholly at 
fault— to doubt that the bond expressed the 
real agreement; especially if he heard Van 
Zandt's statement to Durant, when the latter 
was about to sign the bond, that it "was, in 
effect, a bail-bond." A court of equity 
ought not to allow that mistake, satisfactori- 
ly established and thus caused, to stand 
uncorrected, and thereby subject a surety to 
liability he did not intend to assume, and 
which, according to the decided preponder- 
ance of the evidence, there was at the time 
no purpose to impose upon him. While it is 



laid down that "a mere mistake of law, 
stripped of all other circumstances, consti- 
tutes no ground for the reformation of writ- 
ten contracts," yet "the rule that an admit- 
ted or clearly established misapprehension 
of the law does create a basis for the inter- 
ference of courts of equity, resting on dis- 
cretion and to be exercised only in the most 
unquestionable and flagrant cases, is cer- 
tainly more in consonance with the best-con- 
sidered and best-reasoned cases upon this 
point both Enghsh and American." Snell v. 
Insurance Co., 98 U. S. 85, 90, 92, 25 L. Ed. 
52; 1 Story, Eq. Jur. (Redf. Ed.) §§ ISSe, 
138f; Stockbridge Iron Co. v. Hudson Iron 
Co., 102 Mass. 45, 48; Underwood v. Brock- 
man, 4 Dana, 309, 316; Jones v. Clifford, 3 
Ch. Div. 779, 791, 792; Canedy v. Marey, 13 
Gray, 373, 377; Green v. Railroad Co., 12 
N. J. Eq. 165, 170; Beardsley v. Knight, 10 
Vt. 185, 190; State v. Paup, 13 Ark. 129; 
2 Lead. Cas. Eq. pt. 1, 979-984; 2 Pom. Eq. 
Jur. §§ 843-847. 

The conclusion reached upon this branch 
of the case is the only one consistent with 
fair dealing towards those who were will- 
ing to become sureties for the appearance 
of Durant. If it be not justified upon the 
ground of mistake as to the mutual agree- 
ment, superinduced by the conduct of the 
party seeking now to take advantage of it, 
there could be no escape from the conclusion 
that the taking of a bond that made Gris- 
wold absolutely liable as surety, for any 
amount adjudged to be due from Durant, 
and not greater than the penal sum named, 
was, under all the circumstances disclosed, 
a fraud in law upon him. If the attorneys 
of .Hazard intended to obtain, by means of a 
bond, more than he was entitled to by such 
a bond as the writ of ne exeat called for, 
and more than the court would ordinarily 
have given them, upon Durant's application 
to discharge the writ; If they intended to 
secure a bond that would make Griswold 
personally liable, within the penal sum, for 
any money decree passed against Durant, 
then a fraud was perpetrated upon him, 
which entitles him to relief; for, according 
to the decided preponderance of the evi- 
dence it must be assumed that Hazard's at- 
torneys knew that he signed the bond in the 
belief that, pursuant to the previous tmder- 
standing, it was one to secm-e Durant's ap- 
pearance, nothing more, and yet they failed 
to inform him, at the tim:e, that it was 
drawn so as to impose upon him a much 
larger responsibility. Their silence upon 
that question was, under the circumstances, 
equivalent to a direct affirmation that the 
bond meant what Griswold supposed it did. 
In view of what passed at the jail on Sat- 
urday night, their duty was, by sufficient 
explanation, to correct the misapprehension 
under which he evidently labored. Besides, 
there can be no doubt, under the evidence, 
that the agreement to discliarge the writ 
was reached without consultation with Gris- 



198 



MISTAKE OF LAW. 



wold. No one of tbe witnesses states that 
lie was consulted about that matter, or tliat 
he was informed as to the legal result of 
an agreement or order to discharge the writ. 
He testifies that he knew nothing of any 
such agreement. So that while Hazard's at- 
torney, according to his evidence, was pre- 
paring a bond that would bind Griswokl 
absolutely to pay any decree, not in excess 
of t$53,735, that might be rendered against 
one who was almost a stranger to him, and 
who, Hazard stated in his bill, was then 
engaged in hazardous speculations, and was 
in a precarious condition pecuniarily, he was, 
as the representative of Hazard, under an 
agreement with Duraut, of which Griswold 
had no knowledge, that the writ of ne exeat 
should be discharged; thus compelling the 
surety to risk the insolvency of the principal, 
and putting it out of his power, for his own 
protection, to surrender the principal, and 
obtain the cancellation of the bond, as, in 
that case, the surety might have done, if 
the bond had been, as he supposed it was, 
one simply for the appearance of Durant. 
The