Case ID: sc-eq_22/html/0197-01.html
Source: Caselaw Access Project
Author: {"author": "Dunkin, Ch.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

G. V. Ancker, trustee, v. L. L. Levy et al.
    
    Where in contemplation and consideration ofmarriage, and with the view of making a settlement of her property to the sole and separate use of the intended wife, the parties about to contract the marriage, being each clear of debt, joined in a bond for a certain sum to one as trustee for the purpose, and secured the bond by a mortgage of the property, both of which were duly recorded — the Court held that the bond and mortgage were valid as a marriage settlement, and that the trustee (the marriage having been consummated and the husband become insolvent) was entitled to subject the property specifically described in the mortgage to tire payment of the antenuptial bond.
    Opinion reserved until further inquiry into the facts of the case, as to whether the trastee was entitled to go further and subject other property not specifically included in the mortgage.
    A husband having made a valid settlement of his wife’s estate in trust for her separate maintenance, was allowed by the trustee the use of the funds of the estate, which, in copartnership with another, he employed in mercantile speculations — becoming otherwise largely indebted, he gave a bond to the trustee for the payment of the borrowed funds, confessed a judgment thereon, and, to secure the same debt, gave a mortgage of his share of the-partnership assets (most of which were still unpaid for;) subsequently the copartners made a general assignment of their estate for the benefit of certain creditors &c., and soon after applied for the beneft of the United States bankrupt act of 1841.— The application of the husband was refused, on the ground that the bond and mortgage to the trustee, and a'so the assignment of the partnership estate, were fradulent under the act and void. The trustee then filed a bill praying that the said bond, mortgage &c., might be declared valid and subsisting liens &c., — The Court not only refused to sanction the attempt to subject the goods of the firm to the payment of the private debts of one of its members (more especially as the goods were unpaid for,) but held the securities and transfer of the property “ utterly void” under the act of 1841 and the judicial proceedings under it.
    
      Charleston,
    Jan'ry 1849.
    
      The extent of a party’s claim under a deed is not a matter for inquiry by the master, but for the consideration of the Court on an inspection of the instrument, and the construction thereon to be given.
    A codefendant may insist that he shall not be obliged to institute another suit for a matter that may then be adjudged between the defendants.
    
      Before Caldwell, Ch. at Charleston, February, 1847.
    Caldwell, Ch. The first question involved in this case is whether a marriage settlement made by Levin L. Levy, Abigail Sampson and Nathan A. Cohen, trustee, and the bond made by her and Levy to the trustee, on the 12th April, 1834, are void.
    It appears from the evidence, that Levy, at his marriage Avith Mrs. Sampson, although worth but little, owed none of the debts now pressing for payment, and that she was also free from debt, and that she owned all the property specified in the settlement and schedule, and that her stock of goods was worth $5,000. There was, therefore, no legal impediment, from the indebtedness of the parties, to their making such a contract. The marriage settlement, schedule, and bond, Avere regularly recorded within the time prescribed by law; and as there is no proof that the contract was entered into with fraudulent intentions, it is valid as to the property in the schedule that can be identified. But it has been insisted that the sum secured by these instruments (which will appear from the pleadings and exhibits) cannot be collected by the plaintiff (who has been instituted as trustee in the place of Nathan A. Cohen,) out of the property that has come into the possession of Levy, or of Levy &• Ancker, as the original goods have long since been disposed of, and others substituted in their place; and that the covenant in the settlement cannot be enforced against Levy’s interest in the property, in derogation of the rights of the New York creditors, who are entitled to a preference. These debts of Levy, and of Levy & Ancker, have been contracted long since the execution and recording of these instruments, and the claims ( of the creditors must stand on a different footing than the want of notice. Although the terms of the settlement are different from the common form of such instruments, they are intelligible, and the only dificulty is in carrying them into effect. By the settlement, Levy and Mrs. Sampson agreed, among other things, with Cohen, the trustee, as follows:■—
    “ Whereas, we, the said Abigail Sampson and L. L. Levy, are held and firmly bound unto Nathan A. Cohen, &c., by our bond bearing even date with these presents, in the sum of $10,000, — reference being thereunto had will more fully and at large appear. Now, know ye, that we, the said Abigail and Jbevin, for the better securing the payment of the said sum of $10,00(5 unto the said Nathan A. Cohen, his heirs, executors, administrators and assigns, together with such interest as may grow due thereon, have bargained and sold, and by these presents do bargain and sell, and in plain and open market deliver, unto the said Nathan A. Cohen, all that house, on leased land, known as No. 205, on East Bay street, together with the lease; also, the four negroes, Amy, Fanny, Betsey, and Adolphus, subject nevertheless, to the mortgage to secure a bond of $3,000, payable to the said Nathan A. Cohen, in trust for Abigail Sampson, the daughter of the said Abigail; also all the stock in trade of the stores of the said Abigail Sampson, on East Bay street, Charleston, and in Columbia, in this State, together with all such other stock in trade, goods, wares and merchandize, of the said Abigail and Levin, as they may now possess, or may hereafter, from time to time, purchase and substitute therefor : to have and to hold the said house, slaves, stock in trade, goods, wares, merchandize, unto the said Nathan A. Cohen, his executors, administrators and assigns forever. Provided always, nevertheless, that if the said Abigail Sampson and Levin Levy, their heirs, executors, administrators and assigns, shall and do well and truly pay or cause to be paid unto the said Nathan A. Cohen, his certain attorney, executors, administrators or assigns, the said sum of $10,000, according to the true intent and meaning of the said bond and of these presents, then this deed of bargain and sale, and every clause, article and thing therein contained, shall cease and determine, and be utterly void and of none effect, any thing herein contained to the contrary thereof, in any wise notwithstanding; and it is agreed between the parties to these presents, that until default shall happen in the payments of the said bond, the premises shall continue in the custody and possession of the said Abigail and Levin, and they shall be authorized, from time to time, to sell all or any part of the property' included in this deed, and execute good and sufficient titles thereto, substituting always the proceeds thereof, whether in money or goods, to the samé uses, and subject to the same liabilities, as is herein declared of and "concerning the land, house, lease, slaves, and stock in trade, Wares, merchandize and goods, herein represented : And it is hereby declared by and between the said parties, and the said Abigail and Levin, their executors, administrators and assigns, do covenant, promise and agree, that if default shall happen to be made of or in payment of the said sum of $10, 000, as aforesaid, on demand being therefor, according to the true intent and meaning of these presents, then, and in such case it shall be lawful” — when a general power is given to the trustee to take possession of the property, or to sell it and return the surplus, after paying the $10,000 to the parties, in the usual form of a mortgage. The settlement further states thus: “ Whereas a marriage, by God’s 'permission, is intended shortly to be had and solemnized between the said Levin L. Levy and Abigail Sampson, and whereas, it is agreed that the said bond and. obligation, together with the mortgage to secure the same, shall constitute a fund for the purposes of a suitable settlement for and on behalf of the said Abigail, for and in consideration of the marriage; and whereas, the intended marriage constitutes the consideration of the said bond or obligation and the mortgage to secure the same, it is hereby covenanted and agreed, that the said N. A- Cohen shall receive and hold the said bond and conveyance of the said house, land lease, negroes, stock in trade, goods, wares and merchandize, and he doth, for and in consideration of the intended marriage, covenant and agree to and with the said Abigail and Levin, to hold the said bond and conveyance by way of mortgage aforesaid in trust to and for the uses and purposes following, to wit: in trust to permit and suffer the said Abigail Sampson to have, use, and enjoy the sum of $5,000, part and parcel of the said sum of $10,000, also the said house and negroes, or their full value, part also of the said sum of $10,000, during her natural life, free, cleared, discharged of and from all claim, right, intermeddling or demand of her said intended husband, in the same manner as if she was sole and unmarried, and not liable to his debts or contracts ; and in case the said Abigail dies leaving any other child than she has at present, then in trust to divide the said sum of $5,000, and the said house, lease, and negroes, or their value, equally, share and share alike, between all the children who shall be living at her death, the issue of any deceased child taking the parent’s share; but in case she shall leave no child or children at her death, then, in trust, to apply the said sum of $5,000, and the said house, lease and negroes, or their full value, to such uses and purposes as the said Abigail shall by any instrument in writing, in the nature of a last will and testament, duly app'oint and declare ; which said will she is at liberty to make and execute, notwithstanding her coverture. And it is hereby further nanted and agreed, by and between the said parties to these presents, that the rest, residue and remainder of the said sum of $10,000, in the said bond mentioned, after fully securing and paying the said sum of $5,000, and the house, lease and negroes, or their value in money, for the use of the said Abigail, as aforesaid, shall be held and paid by the said Nathan A. Cohen, for the sole use and behoof of the said Levin L. Levy, his heirs and assigns, forever,” &c.
    Cheves’ E. R. 29-
    stat. of S. C. 656.
    A marriage settlement may be made by giving a bond for a sum of money, as well as by conveying land and negroes, if the consideration and intention of the parties be expressed with sufficient certainty in the instrument, and it be recorded according to law. Smith, executor, v. Patterson, adminis-irator. Here not only a bond was given for $10,000, but another cotemporaneous instrument (of which the above extracts are parts) was executed, by which property was pledged for its payment, binding Levy with a double cord, for the faithful performance of his covenants; and Abigail Sampson was also bound, both by the bond and the mortgage. This contract has every quality that can characterize a marriage settlement; it was made in contemplation and consideration of marriage; it secured the pioperty of the intended wife, through a trustee, to the use of her and her issue : it exempted what was appropriated for her separate use, from the debts or contracts of her husband, and it bound him to raise the fund for that purpose; it restricted his marital rights, that would otherwise have attached on her property, and a trustee was appointed, who was a party to the contract. In addition to these circumstances, the contemplated marriage was consummated immediately after the execution of these instruments. This cannot be considered as a mere voluntary agreement, without consideration, but is the most important contract (except the marriage contract, of which it is a part) and founded on the most valuable as well as the best consideration known to the law. The terms of the Act of 1785,4 are certainly sufficiently comprehensive to include this agreement as a maridase settlement, as “ any part of the estate, real or personal,” of any person entering into such a contract, may be secured according to its provisions.
    After the plaintiff had been substituted as trustee, in the place of Nathan A. Cohen, Levy, on the 10th of March, 1842, executed a bond in the penalty of $15,528 to him, (in consideration of his liability under the instruments of the 12th of April, 1834,) and on the 1st of April, 4842, confessed a judgment on it, to Ancker, the trustee, for $7,764, (the principal and interest of $5,000, mentioned in the first bond,) which he promised to pay, with interest thereon, on or before the 14th of April, 1843. Levy, cotemporaneously with this ma(3e a mortgage (which has been recorded) to Aucker, of the slaves Titus, Sarah, Dean, and Charlotte, a house on leased land,' situated in Market-street, also the stock of goods then on hand, at the store of Levy & Ancker, and such as might be, from time to time, purchased from them — the said goods being the proceeds of the stock originally mortgaged to secure the trust of the marriage settlement. The evidence shows the reason of this confession having ‘been made; the trustee was advised to obtain it, to secure the trust estate, and it could not be considered as voluntary.— Levy did not seek (and was reluctant) to make it.
    Eailey v. Wright, John
    Cornell v. Lamb, 20 John. R. 407; Day v. Teal, 14John. 404; CranchS299; 4 Har. & McH. 482.
    2 Bacon, Grants,H. HI 132.
    In inquiring into the fraud or fairness of such a transaction, it may, with propriety, be asked, why ought not Levy have secured this amount to the trustee? His previous obligations, and his having had the use of the property for such a period, certainly constitute a sufficient consideration. But a very ingenious objection is taken to this bond, that it was an extinguishment of the former bond, and in the nature of a second settlement, and, therefore, suhject. to all the rules and restrictions applicable to post nuptial settlements. objection cannot avail the creditors; the acceptance °f an obligation of an inferior, or even of an equal degiee, does not extinguish a prior obligation. So the taking of a new bond, it seems, is no extinguishment of a prior bond, and the obligee may proceed on either; and there is certainly no reasonable ground on which the trustee of a marriage settlement should be required to record his judgments and executions against debtors of the trust estate, in the Secretary’s and Register’s offices ; he must be permitted to pursue his claims and recover his debts, as other creditors. There docs not, therefore, appear to be any thing either irregular, improper, or fraudulent, in the proceeding of the trustee against Levy, and he appears to have done no more than prudence and justice dictated and his counsel advised, in securing the debt, by the confession of judgment and mortgage that Levy made to him. Levy’s covenant in the settlement bound him to substitute whatever goods might be bought with the proceeds of the original stock, if there had been never so many changes by. selling and purchasing, and his giving these securities was coming as near the performance of his contract his circumstances, probably, permitted. Although it is a principle of law that one cannot grant or mortgage property of which he has neither the title or possession, yet he may grant personal property of which he is potentially, although not actually, possessed. Thus lie may grant all the wool that shall grow on his sheep that he owns at the time, but not the wool which may grow on sheep not his, but which he may afterwards buy. So a parson of a church may grant his tithes, or a tenant his growing crop; and there seems tobe no good reason why one may not mortgage his stock in trade, and grant the goods that are bought with the proceeds.— When the mortgagee gives the mortgagor the power to sell the stock of goods, and to purchase other goods and substitute them in the place of the former goods, here the mortgagor may be considered as the agent of the mortgagee, and the after acquired goods as potentially in the mortgagor’s possession; but here it is not necessary to decide whether such a grant or mortgage would be good between but merely whether such a contract as was made between Levy and the trustee, was founded on a sufficient consideration, so as to make the confession of judgment valid. There is no evidence to raise even a slight presumption that the marriage settlement was fraudulent; nor is there any proof that Levy had made any payment to the trustee or provision to effectuate the objects of the settlement, although he had been deriving the benefit of it for so many years, and it may be inferred from all the circumstances that there was not only a valuable consideration for the settlement, but an adequate consideration received for the amount of the last bond and mortgage, and the confession. The plaintiff’s claim is much stronger against these creditors in their present condition, than if they were second mortgagees. The creditors of Levy & Ancker are represented by the assignee in bankruptcy, and the result of all the ancient and modern cases is, that the assignee can only take such rights and interests as the bankrupt had or could claim and establish at the time of his bankruptcy, and, therefore, is affected with ail the eqnities which would bind the bankrupt himself, if he were pros-editing those rights and interests.
    Cannon j0hnston Watson & Co. Goodwin, 20 Maine 208; as Winslow et al. at Portland, c. Law Reptr 347.
    Cooke on Bank 265; Cooper H, 320; Owen 239; C. Law 352.
    Brown v. Jones, 1 Atk. 190; Prac. in Ch. 101; 2 Ves Sr. 309; Colville v. Parker, Croke jac. 158; Griffin v. Stanhope H. 454; Atberly on M. ‘156 ‘
    In England a post nuptial settlement will be good when expressed to be made in consideration of a portion to be agreed to be paid, provided the portion is afterwards paid; and it seems that a settlement after marriage will valid, if made in consideration of a portion only vesting in security, if there be no fraud. Here the settlement was made before marriage. Levy was worth but little, and her friends might, with great propriety, have insisted that the whole of her estate should be secured to her sole and separate use, and the use of her issue ; and surely the agreement that he should have possession of the property and derive a benefit from it, and the provision made for him after the $5,000 and interest were secured to the wile and her issue, was a sufficient consideration for him to give the second bond and mortgage, which was only securing the first. In 1st Cooke’s Bankrupt Law, 265, it is laid down “ if a person give a bond for a sum of money, as a marriage portion, and the marriage takes effect, it is a good consideration for the bond, and the assignees carmot be relieved against it.”
    , pon™ 742 Coolie on Bank. 242-3.
    As to the slaves that were purchased with the trust fund, (as Levy alleges in his answer,) there has been some difficulty in ascertaining the circumstances from the evidence; it appears that there was a sum1 of $798 in cash, which Cohen, thfi former trustee, considered as trust property, and which he stopped from going into Levy’s hands. The trustee kept it for a year, and paid interest on it, which made it nearly amount to the sum of $870, which Smith testified was paid for Dean, Charlotte, Nanny, Tom, Footman and Handy, (about 16th February, 1841;) two slaves, Dean and Charlotte, are mentioned in the mortgage, but the witness’s want of personal acquaintance with the slaves, except Footman, left the facts in some doubt. There, however, appears to be sufficient proof to render it probable that these slaves were purchased with the funds, and the subsequent dealings between Levy and the plaintiff would seem to be in confirmation of it; but if it be considered as only cumulative proof of the fairness of Levy’s giving the second bond and mortgage, and confessing the judgment, it would go to strengthen the plaintiff’s' claim generally,- and will be sufficient to bind the property, whether bought with the trust “fund or not. The parties probably considered the first bond for the payment of the $5,000 and interest, to the trustee, for the use of Abigail Sampson and her issue, as the extent of the provision by the settlement, and by their subsequent contracts they have conformed to this construction of it, although their construction may not be correct, and is, therefore, a subject proper for further enquiry. The trustees, Ancker and Levy, have been partners, and the very property that was mortgaged to secure the performance of the covenants of the latter, has been used by them, as partners, in trade; and anomalous as the proceedings of these persons have been, if they transpired in good faith, there is great difficulty in their creditors reaching the property in Levy’s possession, until the claim of the trustee is satisfied; but if Levy has acted fraudulently, and the trustee has co-operated with him, and has mingled his own property with what was mortgaged to secure the provision for his cestui que trust and her issue, so that there are no means of identifying the re-purchased property with that originally held by him as trustee, and has thereby given a false credit to Levy, it may become an enqniry whether he has not waived or forfeited his rights to the property, and entitled the other creditors to the preference; but as these questions cannot be reached from the evidence heretofore offered, and must depend upon the circumstances connected with their accounts and dealings, it is proper no decision should now be made upon them. It is very clear that property vested in one as trustee, does not devolve to his assignees upon his becoming a bankrupt, and the bankrupt, therefore, retains his character as trustee, until another be appointed, on application, in his place. The trust property may be followed in the hands of a bankrupt or insolvent trustee, if it be of a tangible nature, or capable of being identified, and.it has been held to be immaterial that the trust property is wit h other property of the same nature belonging beneficially to the trustee. Also, when the trust estate or fund has changed or converted into other property, it will be equally protected against the effects of bankruptcy ; for the product or substitute of the original property must follow the nature of the thing from which it proceeded; but if the property possessed by the bankrupt, as trustee, has become so amalgamated with his general property that it can no longer identified, the representative of the trust has, then, no other remedy but to come in as a general creditor, and prove for the amount of the loss. The:e has been one remarkable case where the trust money had got into the general fund, it was held, under the peculiar circumstances of the case, that it had subsequently got out again. Whether such a pie can be applied in this case, must depend upon the state of the accounts. Where the trust is constructive and there is only a doubtful equity, the legal property passes to the assignees ; but, even then, the cestui que trusts may have the same relief in equity against the assignees as they would be entitled to against the bankrupt himself.
    Hill on Trustees 269 Lewin on Trusts, Cooke on Bank 128-9.
    Pinket v. Wright 2 Hare>129>
    Taylor v. Plumer, 3 M. & s" 525; Scott v." Swan, Willis,
    Ex parte Say-Ws.169.
    Lewin on Trusts, 257.
    As to the unsuccessful application of Levy for the benefit of the bankrupt act, his failure cannot affect the claim of the plaintiff. A judgment of that kind can only bind parties and privies. There are many acts which will deprive a debtor of the benefit of the bankrupt or insolvent laws ; and yet the rights of such creditors as are not parties to the proceedings, will not be affected. The case of a trustee, or one acting in any other fiduciary capacity, does not come within the purview of the Act of 1841, as that class of debtors is expressly excepted. As far, therefore, as the plaintiff is concerned, his assignment cannot affect the rights of the cestui que trust; and if Levy, under the circumstances of his dealings with the property mortgaged to secure the performance of his covenants in the settlement, be considered as coming within the exception of the Act, it may remove some of the difficulties that are connected with the case. It is, therefore, ordered and decreed that the bond and instrument executed by the parties on the 12th of April, 1834, constitute a valid marriage settlement — that the bond and mortgage given by L. L. Levy on the 10th of March, 1842, and the confession of judgment made by him to the plaintiff, on the 1st of April following, are also valid, and that the plaintiff is entitled to have his claim, as trustee, satisfied out of such of the property mortgaged as is of a tangible nature, and capable of being identified ; and to have the same applied to his judgment and execution against L. L. Levy, in preference to the claims of the other creditors. It is ordered that it be referred to one of the Masters to ascertain whether the plaintiff’s claim is to be restricted to the said sum of five thousand dollars and interest, or shall include the house and slaves, or their value, and report thereon ; and that he do take the accounts connected with the business of the said L. L. Levy, from his intermarriage, both before and during his partnership with the plaintiff; and that the Master do ascertain and report what property L. L. Levy brought into the business— how the books were kept — what became of the property mortgaged, and the proceeds of it — what property or sums of money he received of the trustees, Cohen or Ancker — how he disposed of them — what investments he made — whether he acted as agent of either of them, or whether he assumed to act as a trustee in relation to the property mortgaged, or its proceeds — also, to ascertain and report the debts of the creditors represented by the different assignees — and any special matter. Parties to be allowed to apply for any special orders that may be necessary to carry out this decree.— The costs heretofore incurred in this case to be paid out of the property and funds in litigation.
    The assignee in bankruptcy appealed, on the following grounds:
    1st. That the bond and mortgage of 1834 are void as to creditors.
    2d. That the bond of the 10th March, 1842, and the mortgage and judgment of 1st April, 1842, are void, as to creditors.
    3d. That the proceeds of the property with which the firm of Levy & Ancker carried on business, ought first to be applied to the payment of the debts of that firm.
    4th. That it was not proved that the slaves Dean, Charlotte, Nanny, Tom, Footman, and Hardy, were purchased with trust funds, and they, therefore, pass to the assignee in bankruptcy.
    5th. That the assignment to B. F. Hunt, Esq. being in fraud of the bankrupt Act, and so decided by the Court of Bankrupcy, he ought to account to the assignee in bankruptcy.
    
      Walker & King, for the motion.
    -, contra.
   Curia, per

Dunkin, Ch.

This Court concur with the Chancellor, that the instruments bearing date 12th April, 1834, are valid as a marriage settlement, and that the complainant is entitled to subject the property specifically described in the mortgage to the payment of the ante-nuptial bond, executed by the defendant, L. L. Levy. It is insisted, however, that the complainant is entitled to go furrher, and to subject other property, not specifically included in the mortgage, to the payment of the mortgage debt. On that point this Court desires to reserve the expression of any opinion, until a more full examination of the facts has been made under the inquiry directed by the Chancellor, in relation to what became of the mortgaged property and the proceeds of it, &c.

The circuit decree intimates an opinion that the original claim of the plaintiff was only for the sum of five thousand dollars and interest, and should not include, in addition thereto, the house and slaves, or their value ; and the Chancellor rather infers that such was the understanding of the parties ; but on this subject he concludes nothing, and directs an inquiry by the Master, whether the claim should or should not be so restricted. We are of opinion that this is matter not for inquiry by the Master, but for the consideration of the Court, on an inspection of the instruments and the construction thereon to be given.

The ante-nuptial bond has no penalty, but is in the nature of a single bill for the payment of ten thousand dollars.— The mortgage is to be void on the payment of the ten thousand dollars. “It is subsequently declared that Abigail Sampson is to have the sum of five thousand dollars, part and parcel of the said sum of ten thousand dollars, also the said house and negroes, or their full value, part also of the said sum of ten thousand dollars, during her natural life,” with certain limitations set forth in. the deed. It is finally provided that the rest, residue and remainder of the said sum of ten thousand dollars, in the said bond mentioned, after fully securing and paying the said sum of five thousand dollars, and the house, lease and negroes, or their value in money, for the use of the said Abigail as aforesaid, shall be held and paid by the said Nathan A. Cohen, for the sole use and behoof of the said Levin L. Levy, his heirs and assigns.”

Taking these papers together, the Court is unable to give them any other construction than that Levy was to pay five thousand dollars to the trustee for the sole and separate use of his intended wife, and was to be responsible for the house and negroes, or their value, to be held also to her separate use, &c.

If the house and negroes were not forthcoming, he (L. L. Levy) was to account for their value. But if the value was less than five thousand dollars, so also would be the limit of his accountability, as the residue of the five thousand dollars was expressly reserved to himself absolutely.

The bond of the 10th March, 1842, is, substantially, an (acknowledgment that the first part of the conditions of the mortgage .had been complied with. The condition of the mortgage is specially recited, and the substitution of the plaintiff in the place of the original trustee, and then that “ I, the said L. L. Levy, by the assent of the said trustee, did receive and employedjhe said sum of five thousand dollars so as above settled, &c. and am justly indebted to the said trustee in the full and just sum of fiv.e thousand dollars?' with interest from 12th April, 1834, ■ being now seven thousand seven hundred and sixty-four dollars for cash, so as aforesaid-borrowed from the said, Nathan A. Cohen as trustee; prior to his resignation of his said trust, and since, of the said Gustavus Y. Ancker,” (the plaintiff,) and then provides for. the payment of the aggregate sum of séverr thousand seven hundred and sixty-four dollars with interest, on the 14th April, 18'43. To refund the sum of five thousand dollars, thus borrowed from the trustee, the parties entered' into this new arrangement of March, 1842, the éffect of which will be hereafter considered; The only object of adverting to it at this time, is to show that by the acknowledgment of the parties, the five thousand dollars, part and parcel of the ten thousand dollars, had been received by the trustees, had .been loaned to the defendant, Levy, and for the repayment of this the trustee had resorted to a new security. The bond and mortgage of April, 1834, though satisfied as to the five thousand dollars, part and parcel of the said sum of ten thousand dollars, were still, however, of force to secure to the uses of the settlement, “ the house and negroes' or their full value, part also of the said sum of ten thousand dollars.” But, beyond that, we are of opinion that the complainant has now no claim under those instruments. How far he may be able to enforce that lien for this purpose, upon property, not specifically described in the mortgage, under the special equities set forth in the bill, must depend, as before stated, upon such facts as.the complainant maybe able to establish, and .which have not yet been satisfactorily developed to the Court/

The other question discussed and decided by. the decree, relates to the bond of 10th March, 1842, and the confession of judgment thereon in April, 1842, and a mortgage to secure the same debt. In order to understand the points raised by the grounds of appeal, it may be necessary to remark that, sometime in 1841, the complainant, G. Y. Ancker, and the defendant, L. L. Levy, entered into copartnership, under the fian of Leyy & Ancker. It is not stated at what time of the year the copartnership was formed, but that, between the months of September, 1841, and May, 1842, they purchased goods on credit in the city of New York,' at various periods, and for various amounts, for which they gave their promis-soiy notes, and that the notes had not run to maturity on the 1st March, 1842. The bond of that date, from Levy to Ancker as trustee, under the settlement, is in the penal sum of fifteen thousand five hundred and twenty-eight dollars, and purports to be for the principal sum of five thousand dollars due on the bond of April, 1834, and the accruing interest. To secure this new bond of the 10th March, 1842, Levy mortgages not only the house on leased land, included in the original mortgage of 1834, but also certain slaves and “ the stock of goods, then on hand, at the store of Levy and Ancker.” On the 7th of July, 1842, Levy and Ancker made a general assignment of their estate to Benjamin F. Hunt, Esq. for the benefit of such of their creditors as should, within thirty days after notice thereof, execute to them a release and discharge of their respective claims, and, after payment of the same, the surplus, if any, for the benefit of their creditors generally. Wm. B. Smith was afterwards appointed agent for the creditors to act with the assignee. On the 10th Aug. 1842, L. L. Levy and G. Y. Ancker filed a petition in the United States Court for the benefit of the Bankrupt Act which had been passed 19th August, 1841. The application of Levy was resisted by the New York creditors, on the ground that the mortgage and confession of judgment, of March and April, 1842, to the trustee, Ancker, and the assignment of 7th July, 1842, were fraudulent under the Act of Congress, which prohibits undue preferences to the creditors of the petitioner. The objection of the New York creditors was sustained by the decree of the district Judge, who refused the certificate, and, on an appeal by the petitioner to a jury, as authorised by the Act of Congress, the verdict of the jury was in conformity with the opinion which had been expressed by the Judge. The second section of the Act of Congress, to which these transactions were pronounced obnoxious, provides that “ all payments, securities, conveyances or transfers of property, or agreements made or given by any bankrupt in contemplation of bankruptcy, and for the purpose of giving any creditor, indorser, surety, or other person, any preference or priority over the general creditors of such bankrupt, &c. shall be deemed utterly void, and a fraud upon this Act; and the assignee, under the bankruptcy, shall be entitled to claim, sue for, recover, and receive the same as part of the assets of bankruptcy, and the person making such unlawful preferences and payments, shall receive no discharge under the provisions of this Act.” The certificate of discharge was accordingly refused, and James M. Walker, Esq. one of the defendants, was appointed assignee in bankruptcy. This bill is preferred on the part of the complainant as trustee, and prays, among other things, that the bond and mortgage of 10th March, 1842, and the confession of judgment of 1st April, 1842, may be declared valid and subsisting liens, and that B. F. Hunt, Esq. and W. B. Smith may account for the proceeds of sales of the stock of Levy and Ancker, and the debts collected, and that James M. Walker Esq. the assignee in bankruptcy, may be declared to have no interest, and be perpetually enjoined from prosecuting his pretended claim, &>c. There can be no doubt of the general proposition, that copartnership assets must be first applied to the payment of the creditors of the copartnership. The attempt, therefore, to subject the goods in the store of Levy and Ancker, more especially if those goods were yet unpaid for, to the payment of the private creditor of L. L. Levy, could receive no sanction in this Court. But we are further of opinion, that the Act of Congress, and the judicial proceedings under it, are conclusive upon the subject. The securities given to the trustee, (the complainant,) in March and April, 1842, and the assignment of 7th July, 1842, by which those creditors who released within thirty days were entitled to the assets, were manifestly violations of the Act of Congress, and have been so judicially declared. The consequences are, also, pronounced by the Act, and can neither be misinterpreted nor avoided. The securities and transfers of property are declared to be “ utterly void,” and that the assignee in bankruptcy shall be entitled to sue for and recover the same as part of the assets of the bankrupt.

1 Rich. Eq. R, 294.

2 Sch. and Lef. 718.

It is true, as was insisted in the argument, the assignee in bankruptcy might be required to file a cross-bill before his co-defendants should be required to account to him. But cui bono ? The rule on this subject is stated by Chancellor Harper, delivering the judgment of the Court, in Bank v. Rose, “Wherever, in the progress of a cause, a defendant entitled himself to a decree, either against the complainant or against a co-defendant, and the dismissal would put him to the expense and trouble of bringing a new suit, and making his proofs anew, such dismissal will not be permitted.” And he cites the authority of Lord Eldon, in Charily v. Latouche, that a “ co-defendant may insist that he shall not be obliged to institute another suit for a matter that may then be adjusted between the defendants.”

It is ordered and decreed that the decree of the Circuit Court be reformed according to the principles herein declared, that it be referred to one of the Masters to take an account of the amount due to the complainant as trustee, under the bond of the 12th April, 1834, according to the construction herein declared, and that the complainant be at liberty to show whether any of the property included in the mortgage of that date, has been disposed of by the mortgagor, and under what circumstances, and that the Master report any special matter in relation to the same. It is further ordered and decreed that the assignee and agent, under the assignment of the 7th July, 1842, account before the Master for the assets transferred to them under that deed ; any final order in relation to these matters, being reserved until the hearing of the Master’s report thereon to the Circuit Court.

JohNstoN, Caldwell and Dargan, CC. concurred.

Decree modified.