Case ID: ny-super-ct_20/html/0020-01.html
Source: Caselaw Access Project
Author: {"author": "Robertson, J. Pierrepont, J. Woodruff, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People of the State of Michigan, Plaintiffs and Respondents v. The Phoenix Bank of the City of New York, Defendants and Appellants.
    1. Where a claim against a State, for the purpose of obtaining a decision that it is just, and of the amount thereof, is presented before a Board of Officers of said State, which Board is created by the Constitution and Laws of such State, and vested with jurisdiction to hear and determine such claim, and such claim is allowed, the decision is to he regarded as a judgment of a competent judicial tribunal; and in an action afterwards brought in a Court of Equity, in another State, to recover back the money paid by the first named State, in pursuance of such decision, it will be held conclusive, notwithstanding proofs, which show that there was no original liability to the claimant for the claim so allowed; and such decision can only be impeached by proof of fraud in procuring the same.
    2. Where the claim on the State was for an advance by the claimant (to a person assuming to. act on behalf of the State) of drafts on banks situated „ therein, holding funds of the claimant, the amount of which drafts never came to the use of the State, and the advance of which the State never authorised, (one of which was never paid, and the other was paid to a third bank;) and the claimant had allowed his agent in that behalf, (with the assent 'of one of the State officers, given with the reservation that the liability of the State should not be thereby admitted nor affected,) to receive from such banks choses in action and other property in full settlement and payment, but to be held by him for the claimant or for the State, whichsoever might assume or be charged with the debt ; of which settlement the State, through its Legislature -and _its State Officers, had full notice; the decision of the said Board, created by the State, is to be taken as conclusive that notwithstanding these facts the claimant is entitled to recover; and although prior to the trial and decision by that Board, such agent and trustee, with the assent of the claimant, has collected from such choses in action a part of the amount due thereon, and converted others into other property, and 'the claimant has settled with him, taken a transfer of a part of the property, (being that received from one of such banks,) and released him from all liability, the omission of the claimant to apprise the State of such dealings and release, and the concealment by the claimant, on presenting his claim before such Board, of such dealings and release of the agent and trustee, though such concealment be practiced in the belief that if known the claim would be disallowed, and though practiced in order to obtain the allowance of the claim, are not a fraud sufficient to impeach the decision of the Board in favor of the claimant and entitle the State to recover back the money paid in pursuance of the decision and in ignorance of the facts thus concealed. Woodruff; J., dissented.
    
      3. And although in such case the counsel for the claimant on the trial before the Board, undertook to state all the defences thereto he had ever heard hinted at, and he also omitted to state the said facts, and avowed that the claim had never been paid ¡ this further fact is not sufficient to constitute such a fraud and entitle the State to such relief.
    4. In such case knowledge by the State of the said settlements with the banks, and that the said agent and trustee held the said dioses in action and other property in trust for the purposes aforesaid, is sufficient to put the State upon inquiry as to the then situation of the trust fund ; and if by due diligence the facts might have been discovered and proved by the examination of witnesses, it is the fault of the State that the facts were not proved before the Board and the claimant by omitting to give notice thereof to the State, and failing to disclose them to the Board, (though with the intent and belief aforesaid,)violated no duty and committed no fraud which entitles the State to impeach the judgment and recover back the money paid thereon in ignorance of such facts. Woodruff, J., dissented.
    6. On such a proceeding before such a special tribunal, a State is not entitled on such a state of facts to any protection, nor to any disclosure of material facts known only to the claimant, that one natural person in a suit at law is not entitled to from the adverse party; and an intentional misleading of the special tribunal, by a known false statement of facts by the claimant, or an intentional concealment of acts of the claimant constituting a defence, are not a cause for, avoiding or annulling its decision.
    (Before Woodruee, Pierreeont and Robertson, J. J.)
    Heard March 14,
    decided June 23, 1860.
    This is an appeal by the defendants from a judgment against them, rendered November 28, 1859, on a trial had before Bosworth, Ch. J.
    This suit was brought September 4, 1855, to recover from the defendants the sum of $35,603.74, and interest thereon from December 4, 1854, which sum the plaintiffs on that day paid to the defendants-, in pursuance of á decision of the Board of State Auditors of the State of Michigan, to the effect that the defendants had a claim against that State on which there was justly and equitably due to them for principal and interest the said sum of $35,603.74.
    There had been a previous trial of-the action, when the plaintiffs recovered judgment, and on appeal to the general term that judgment was reversed and a new trial ordered. (4 Bosworth R. 363.)
    The origin of the claim in question, was an advance on the 13th of March, 1838, by the (then) Phoenix Bank, of two checks or drafts drawn by that bank, viz: one for $8,500 on the Farmers’ and Mechanics’ Bank, of Detroit, Michigan, and the other for $7,900 on the Bank of River Raisin, in the same State.
    Prior to the advance of these drafts, the State of Michigan, by a statute approved the 21st of March, 1837, had authorized the issuing and sale of its bonds to the amount of $5,000,000. This statute was amended by one approved November 15, 1837. On the 1st of May, 1837, Gov. Mason of Michigan, by letter of that date, employed John Delafield, then president of said Phoenix Bank, to negotiate the bonds, pursuant to the statute, with a copy of. which he was furnished. The statute required that the bonds should not be sold for less than their par value, and that provision be made for the transmission to the treasurer of the State of the moneys arising from the sale of the bonds. On the 1st of January, 1838, Delafield, as such agent, received $1,000,000 in amount of said bonds for sale.
    On the 10th of January, 1837, “John Norton, Jr., cashier of the Michigan State Bank was appointed fiscal agent of the Legislature” of the State of Michigan, by a joint resolution of that body.
    On and prior to the 20th of February, 1838, Norton, as such cashier, held two drafts, drawn by Governor Mason on Delafield, one for $90,000 and one for $60,000. These had been drawn in anticipation of Delafield’s negotiating enough of the State bonds to provide for their payment, but on presentment they were protested for non-acceptance. Norton went to New York to obtain payment of them, if he could. Gov. Mason gave him a letter to Delafield, dated February 24, 1838, in which the former said—“ You may, therefore, if you have repeived funds on the bonds in your possession, transfer to Mr. Norton $50,000, or $100,000, taking his certificate of deposit from John Norton, Jr., cashier of the Michigan State Bank, which will be cashed at the State Deposit Bank.”
    Mr. Delafield advanced to Norton the said two checks or drafts of $8,500 and $1,900, each of which was drawn payable to the order of John Norton, Jr., as such cashier. Delafield had not then raised any money on the State bonds,. nor negotiated any of the bonds, and he did not take from Norton any certificate of deposit, but Norton signed a paper writing, acknowledging the receipt of a letter which stated that these checks were received “ on account of advance made by this bank (the said Phoenix Bank) on Michigan bonds, deposited with John Delafield, Esq., president.” The said Phoenix Bank then charged on their books these checks, to “ J. Delafield, agent for the State of Michigan.”
    The agency of Delafield for the State ceased about June 4, 1838, and he then surrendered to Gov. Mason’s order all of the State bonds that had been entrusted to him. Before doing so he requested payment of the $16,400, and Gov. Mason in answer thereto, in his letter of that date, said, “ When I left home, according to my impression, those drafts had not been collected, but so soon as I learn that such is the case, I will cause the amount to be remitted to you.”
    The Michigan State Bank, or Norton, collected the check for $8,500, and credited it on the books of said bank to the Phoenix Bank, October 26, 1858.
    The check for $lj900 was never paid to Norton or to his order, and the Phoenix Bank, oh ascertaining that fact, by letter of March 26, 1840, directed the Bank of River Raisin not to pay the same, and stated “we shall look to you for payment.”
    By letter dated June 10,1840, the Phoenix Bank employed Charles H. Stewart, Esq., of Detroit, Michigan, to present for payment its claim against the State, for the advance of the $16,400, and authorized him “ to take all such measures as he may find expedient for procuring or securing the payment.”
    Prior to the 29th of July, 1840, Stewart presented the claim to the Auditor General of the State. By a letter of that date addressed to him, Stewart suggested to the Auditor General the expediency of taking such security from the Michigan State Bank, and the Bank of River Raisin, as could he obtained, for the benefit ,of the party ultimately entitled. Those banks were then about to fail. The Auditor General, on the 22dof September, 1840, agreed to the proposal, “but under the express understanding that by so doing he did not in any manner recognize the claim, nor give it any effect or validity against the State more than it now has, (September 22, 1840.”)
    On the 23d of September, 1840, Stewart settled with the River Raisin Bank, by taking notes and judgments against third persons, amounting to the face of the whole claim of the Phoenix Bank and interest, and gave a receipt in full as attorney and agent of the Phoenix Bank. On th.e same day he settled with the Michigan State Bank, and took a conveyance dated October 2,1840,'of 2,39l7-I%i)o' acres of land in Saginaw county, and some canal scrip estimated at $500, at an agreed value of $9,155.53, and gave a receipt in full as such agent.
    Stewart, as agent of the Phoenix Bank, presented the claim to the Legislature of the State .at the sessions of
    1841, 1842, 1843, 1844 and 1845, and stated to the committee to whom the claim was referred, the fact and nature of these settlements.
    By the 10th of February, 1842, Stewart had collected upon the securities so transferred to him, by the Bank of the River Raisin, $225.15, and by letter of that date so informed the Phoenix Bank. By a letter of November 9,
    1842, he advised a change of some of said, securities, and the Phoenix Bank, by letter of the 21st of that month, authorized him “ to make such settlements or changes of securities” as he might deem advisable.
    By the 30th of October, 1843, he had collected from the River Raisin Bank securities about $2,000 over and. above his expenses, and had substituted for the residue lands in Michigan, and by a letter of that date so informed the Phoenix Bank.
    He left the State of Michigan in 1848, but his agency for the Phoenix Bank did not cease until August 5, 1852. By a deed, dated that day he conveyed to the Phoenix Bank the lands which had been conveyed to him by the deed of October 2, 1840, in settlement with the Michigan State Bank. On the same day, and by a deed of the same date, signed by both Stewart and the Phoenix Bank, all matters connected with Stewart’s said agency were settled, and the Phoenix Bank released him “from all claims, demands, accounts and responsibilities whatever in the premises,” except as to some future services which he therein covenanted to render, in procuring the land to be freed from incumbrances.
    The State of Michigan never assented to, or had any notice prior to January, 1855, of either of the two deeds of August 5, 1852, or of Stewart’s acts in regard to the securities received by him from the River Raisin Bank, or of the said notice to that bank not to pay the said draft of $7,900.
    In the summer of 1853, the Phoenix Bank employed George Y. N. Lothrop, Esq., of Detroit, to take charge of their claim on the State, and delivered to him various letters, and paper writings relating thereto, including the deed of October 2, 1840, and the deed from Stewart of August 5, 1852.
    The defendants became incorporated about January 1, 1854, and succeeded to the assets of the aforesaid Phoenix Bank, and appointed most of the officers thereof to corresponding positions in the new one; and in purchasing the property and effects of the old bank, also bought its said claim against the State of Michigan.
    On "the 12th of May, 1854, Lothrop, by virtue of his aforesaid employment, presented said claim to the Board of State Auditors, in the form of a written communication or statement. The evidence thereby furnished, and his written allegations in support thereof, are sufficiently stated in the opinions subsequently set forth. No witness was examined orally before the Board. The Board kept the claim under advisement until the 2d of December, 1854, when it made a decision that the defendants were justly and equitably entitled, for principal and interest on said claim, to $35,603.74. This sum was paid to the defendants on the 4th of said December. The judge’s findings of fact embrace the facts above stated, aúd set forth in full all the letters, statutes, receipts and deeds heretofore referred to, and also the communication laid by Mr. Lothrop before the Board, and the parts of the Constitution and Laws of Michigan, relating to the creation of said Board and its jurisdiction, which latter may be found in 4 Bosw. R. 363.
    Mr. Lothrop in his said written communication makes the following statements,' viz: “I proceed to inquire whether there are any defenses to the claim. I will fairly and fully state every defense that I have ever heard hinted at. They are three in number :
    
      First, That Norton never credited this advance to the state;
    
      Second, That the draft on the Bank of the River Raisin was never paid, (for it is conceded that the other draft was paid.) I do not know how the facts are, nor is it at all material;
    
      Third, That Norton received the drafts to colléct them for the Phoenix Bank.” It also affirms that “ the Phoenix Bank has never been repaid a dollar to this day,” (May 12, 1854.)
    The judge’s findings of fact conclude thus, viz
    “ The State of Michigan, on the 4th of December, 1854, in pursuance of said decision of said Board of State Auditors, and in satisfaction of the said sum, so as aforesaid decided by said Board to be due to said Phoenix Bank from said State, paid to said Phoenix Bank, the present defendants, the said sum of $35,603.74.
    The members of said Board had not, nor had either of them, at the time said claim was presented-, or while the same was under consideration, or before the aforesaid decision thereon, or before payment by the State of said sum of $35,603.74, any actual notice, or knowledge, or suspicion, of the, settlements so as aforesaid made with the Michigan State Bank, and the River Raisin Bank, or with either of them, or of the existence of the said deed of October 2, 1840, or of the said deed of August 5, 1852, from said Stewart to the old Phoenix Bank, or the deed of settlement and release between them of last said date, or of any of the aforesaid acts of said Stewart as agent of the old Phoenix Bank.
    The allegations in the said written communications by Mr. Lothrop to said Board of State Auditors, that the debt to the Phoenix Bank never has in fact been paid, and that he would fairly and fully state to said Board every defense he had ever heard hinted at, and the statement which he did therein make in regard to the alleged or supposed defenses; and his omission, and the omission of said Phoenix Bank, to notify said Board of the said notice given by the Phoenix Bank to the River Raisin Bank, hot to pay said draft for $7,900; or of the settlements made by said Stewart with said bank, or of the said settlement made by him with the Michigan State Bank; or of the collection by said Stewart of some part of the said securities so as aforesaid received by him from said River Raisin Bank, and of his substitution.of the residue thereof for other property, with .the assent of said Phoenix Bank; or of the said deed of conveyance from Stewart to the old Phoenix Bank, of the date of August 5, 1852; or of the said deed of settlement and release between said Bpnk and- Stewart, of the date of August 5, 1852, were designed and intended to mislead the said Board of State Auditors as to the -actual facts and merits of the case relating to said claim; and that such allegations were made, and such omissions were practiced, in the full belief that if the actual facts of the case, or such notice" .thereof as would lead to inquiry, should come to the knowledge of said Board, the said claim would be rejected and disallowed as unfounded in justice or equity.
    There was no negligence on the part of the State of Michigan, or on the part of the members of the said Board of State Auditors, in not having obtained notice or knowledge, before said claim was presented to,- or while it was pending before said Board of the aforesaid acts and doings of said Stewart, with the assent of the old Phoenix Bank in respect to the securities so as aforesaid received from said River Raisin Bank, on the said settlement had with such bank; or of the said two deeds of the date of August 5, 1852, or of either of them.
    Neither the old Phoenix Bank, nor the present Phoenix Bank, ever received or was paid anything from, out of, or by reason of the property and effects taken by said Stewart on said settlements with said Michigan State Bank, and said River Raisin Bank, or with either of them, nor was any of the property so as aforesaid received by said Stewart on such settlements ever transferred, in any manner, or for any purpose, to the old Phoenix Bank,, or to the present Phoenix Bank, except that so as aforesaid conveyed by said Stewart to the old Phoenix Bank, by the said deed of August 5, 1852.
    On the 9th of May, 1855, before the commencement of the present action, the State of Michigan by the attorney general of the said State, demanded of the defendants in this action, that they should pay and refund to said State the said sum of SSdjGOS.Id, with interest thereon from the 4th day of December, 1854, which the said defendants refused to do, and the defendants have not so refunded, or paid the same to the said State, or any part thereof.”
    The judge’s conclusions of law are as follows, viz:
    “ 1st. There was never any liability in equity and good conscience on the part of the State of Michigan to the Phoenix Bank, to pay or refund to the latter the $16,400 which it advanced to John Norton, Jr., on the 13th of March, 1838, or any part thereof.
    2d. The collection by Stewart of moneys from and upon the securities which he received from the River Raisin Bank on his settlement with that Bank, and his substitution of the residue of such security with the assent of the Phoenix Bank for other property, without the assent of of notice to the State of Michigan, and the subsequent release of the 5th of August, 1852, by the Phoenix Bank of all liability of said Stewart as such agent, discharged the State of Michigan from all liability at law or in equity (if any previously existed) to repay to the Phoenix Bank any sum whatever by reason of the original advance to Norton of the said draft for $1,900.
    '3d. The conveyance on the- 5th of August, 1852, by Stewart to the Phoenix Bank, at the request of the latter, of the real estate which the Michigan State Bank conveyed to Stewart on the 2d of October, 1840, in payment and satisfaction of its liability as the recipient of the proceeds of said draft for $8,500, without the consent of, or any subsequent notice thereof, by the Phoenix Bank to the State ■ of Michigan, was an acceptance of such property by the Phoenix Bank in its own right, and on its own account, and discharged the State of Michigan from all liability at law or in equity to the Phoenix Bank (if any such liability previously existed) tb pay to the Phoenix Bank any sum whatever, by reason of its advance to Norton, on the 13th of March, 1838, of said draft for $8,500.
    4th. It was the duty of the Phoenix Bank to communicate to the Board of State Auditors, of the State of Michigan, during the pendency of said claim before said Board, information of the acts of Stewart in relation to the property received by him from the River Raisin Bank, which had been done with the assent of the Phoenix Bank; of its settlement with, and release of Stewart by the deed of August 5, 1852; and of the conveyance of the same date by Stewart to the Phoenix Bank of the property which the Michigan State Bank had conveyed to Stewart by the deed of the 2d of October, 1840.
    5th. The decision of the Board of State Auditors, made on the 2d of December, 1854, being contrary to law, equity, and good conscience; and having been procured by fraud practiced on behalf of the present defendants in the proceedings before said Board in the prosecution of said claim, and the members of said Board, and the State of Michigan being then ignorant, without any fault or negligence on their part, of the existence of either of said two deeds of the date of August 5, 1852, or of the collection by Stewart prior to the date last named of money upon some of the securities received by him from the River Raisin Bank, or of his substitution with the assent of the Phoenix Bank of the residue of such securities for other property; the said decision of the Board of State Auditors should be deemed to be and is null and void; and the plaintiffs are entitled to recover from the defendants the $35,603.14, which was paid by the former to the latter on the 4th of December, 1854, in pursuance and satisfaction of said decision, with-interest thereon from the day last named, until paid.
    6th. The plaintiffs are entitled to recover their costs of this action from the defendants.”
    And hereupon the said defendants, by their counsel, duly excepted to each and every of the findings of fact, and the conclusions of law of the said judge, separately.
    The Chief Justice filed with his decision, an opinion in the words following, viz:
    Bosworth, Ch. J. —When the cause was before the general term of this court, it was held that the decision by the Board of State Auditors of the State of Michigan, to the effect that, upon the evidence produced before the said Board, the Phoenix Bank was justly and equitably entitled to the sum of $35,603.14 as its just claim against said State, could not be impeached except upon proof that the Phoenix Bank had practiced some fraud in their proceedings to establish said claim before and to procure its allowance by said Board. .
    That decision should control my action in respect to that question upon this trial, even if I doubted its accuracy; but I think that point was correctly decided by this court at its general term in March, 1859. (4 Bosw. 363.)
    The Board of State officers were not misled as to the fact upon which the question of the original liability of the State depended and was to be determined. The same evidence substantially in respect to that question was placed before the Board of State Auditors, as has been produced on this trial. There was no misrepresentation or concealment as to any facts bearing on that question, which could mislead a discreet and cautious mind; and the Board decided that the State, in justice and equity, was originally liable to refund the sum which the Phoenix Bank advanced to Norton.
    If my opinion differed from that of the Board of State Auditors, as to that question, I should not be at liberty to declare their decision null and void for that cause alone, and order the money which the State has paid to the defendants to be refunded.
    Neither would the fact of the settlement made by Stewart, as agent of the Phoenix Bank, with the Michigan State Bank and the River Raisin Bank, considering the circumstances under which they were made; the assent given to them by the then Auditor General of the State of Michigan (though not legally binding on the State); and the further fact that such settlements were not called to the attention of the Board of State Auditors, justify me in giving judgment for the plaintiffs; if the Phoenix Bank had not subsequently done anything to vary the condition and position in which the parties were placed by those settlements, and to mislead said Board in respect to the actual facts of the case.
    That State was notified and reminded year after year, for some years subsequently thereto, of the fact and terms of such settlements; by a communication thereof, made to several of its State officers, and to its Legislature when the claim was presented to that body. A mere omission to recall the fact of these settlements to the attention of the Board of State Auditors would not, on such a state of facts, be of itself a sufficient cause for adjudging the decision of such Board to be a nullity.
    The settlement with the River Raisin Bank was made on the 23d day of September, and with the Michigan State Bank on the 2d day of October, 1840. The draft advanced to Norton, (which was drawn on the Farmers’ and Mechanics’ Bank,) had been paid to Norton, and the proceeds deposited by him in the State Bank of Michigan, to the credit of the Phoenix Bank.
    
      Although it be assumed that Stewart received as trustee whatever he took from the two banks with which he settled, yet his settlement with the banks was unconditional, as to them, and discharged them from liability; and Stewart, in discharging them from liability, was acting as the agent of the Phoenix Bank. Whatever he did with the property received from those two banks in payment of their liabilities, with the consent and approval of the Phoenix Bank, and without notice to the State of Michigan, should affect.the Phoenix’Bank, as it would be affected if it had itself taken the property, as trustee, instead of Stewart, and had subsequently done the same acts, in that respect, which Stewart did.
    Stewart informed the Phoenix Bank, by letter dated the 10th day of. February, 1842, that he had then recently received $225.15 on one of the securities transferred to him by the River Raisin Bank.
    In a letter of November 9, 1842, from Stewart to the Phoenix Bank, he advises a change of some of the securities taken from the River Raisin Bank, on the settlement made with that bank, and observes: “Will you give me your wishes on the subject of converting your securities,” &c.
    To this the Phoenix Bank replied by a letter, dated the 21st day of that month, that “ We must leave it entirely with you to make such settlements or change of securities as you may deem, under all circumstances, to be most for our interest, not doubting that you will use a prudent discretion in all such matters.”
    By a letter dated October 30, 1843, Stewart informs the Phoenix Bank that “the securities (taken from the River Raisin Bank) have all been converted into good lands in this State.” (Michigan.)
    All this was done without any notice to the State of Michigan, or to any of her principal State officers.
    Stewart testifies that he received or collected from the River Raisin Bank securities, about “two thousand dollars over and above expenses.”
    
      On the 5th day of August, 1852, Stewart, by deed, conveyed to the Phoenix Bank all the real estate which the Michigan State Bank, in satisfaction of its liability, had conveyed to Stewart on the 2d day of October, 1840.
    By a deed of settlement and release, dated the said 5th day of August, 1852, executed by both Stewart and the Phoenix Bank, the latter settled with Stewart as such agent, and thereby did “release and forever discharge Stewart of and from all claims, demands, accounts, and responsibilities whatever in the premises,” except the matters and things therein and thereby agreed to be done by said Stewart.
    Stewart did not therein and thereby agree to account for anything he had realized, or might realize from the River Raisin Bank securities, or the matters which had been substituted for them.
    Neither the State nor any of its principal State officers had any notice of these transactions, or of either of them.
    The Board of State Auditors were not informed, either of the settlements made with the Michigan State Bank, and the River Rai'sin Bank, or of the subsequent transactions in relation thereto between Stewart and the Phoenix Bank.
    On the contrary, Mr. Geo. Y. N. Lothrop, who acted as agent of the Phoenix Bank, in the proceedings before the Board of State Auditors, and had, as such agent, the entire charge thereof, in behalf of that bank, presented as a voucher, and as evidence in support of the claim, an affidavit of J. Delafield, (made the 10th day of June, 1840,) that “the debt to the Phoenix Bank never has in fact been paid.” He also presented a written communication to the Board, consisting partly of argument, partly of allegations of facts, and partly of documents and letters, in which communication he alleges that the “ advances ” constituting the claim “have never been to this day repaid,” and then proceeds to say “I "will fairly and fully state every defense that I have heard hinted at. They are three in number.”
    
      First. “ That Norton never credited this advance to the State.” *
    
      
      Second. “ That the draft on the River Raisin Bank was never paid, (for it is conceded that the other draft was paid.) * * * At any rate, it is certain that the River Raisin Bank remained solvent long after this, draft was drawn.”
    “It is also certain that the draft was never protested, or the Phoenix Bank notified of any dishonor of it. It is also certain that t’he draft was never returned by Norton, or any one else, to the Phoenix Bank. If, therefore, these funds were actually lost, it is through the fault of the fiscal agent Of the State entirely. If he chose to permit his funds to remain in the River Raisin Bank, it is no business to the Phoenix Bank.”
    
      Third. “ That Norton received the drafts to collect them for the Phoenix Bank. This is without a particle of truth.” * * * 6
    These allegations of fact were designed, as I think, to impress the Board of State Auditors with the belief that the Phoenix Bank had not interfered with the banks on which the drafts (constituting the alleged advances) were drawn, or with the Michigan State Bank, and had hot made any settlement with either of them, in respect to the drafts so advanced to Norton, and that only one of the drafts so advanced was, paid to Norton; and.that if the other was not paid, it was by reason of his negligence in omitting to present it. If relied on, they would naturally tend to.produce that belief. I think it was intended they should be relied upon, and' influence the Board of - State officers, and that they contributed to produce the. conclusion which they ultimately formed.
    '. In this aspect the omission to call the attention of the Board to the settlement which Stewart made with the Michigan State Bank and the River Raisin Bank, assumes considerable importance. Information of the fact of such settlements, and of their terms, if brought home to said Board, would naturally lead to an inquiry as to what had been done with the property received from those two banks. I think it cannot be doubted that if such inquiry had resulted (as it is just to conclude it would have done) in a disclosure of the acts of Stewart, in respect to the property received from the River Raisin Bank, with the assent of the Phoenix Bank, and of the subsequent settlement between him and the Phoenix Bank, and of the fact of the conveyance by him of the property received from the Michigan State Bank, the Phoenix Bank would not have expected any favorable action upon their said claim by the Board of State Auditors.
    I think it a just, if not an unavoidable conclusion, that the omission to inform the said Board of the settlement made with the said two banks; of the collection by Stewart of some money on some of the securities taken from the River Raisin Bank, and of his substitution of the residue for other property, with the consent of the Phoenix Bank; of their subsequent settlement with,, and release to Stewart, as such agent, and of the conveyance by him to the Phoenix Bank, of the lands which the Michigan State Bank had conveyed to him, 'was designed, and that the allegations in Mr. Lothrop’s communication to said Board were calculated to mislead the said Board.
    That the Phoenix Bank, from the position in which it stood, owed a duty to the State of Michigan which required that bank to disclose to said Board, all that "had been done by its consent, with the property ’ which its own agent, Stewart, held as trustee, for the benefit of whichever party might assume the debt.
    That the proceedings on behalf of' the Phoenix Bank, before said Board, were, in fact, fraudulent, and were designed to induce said Board to rely on the alleged facts contained in the communication laid before said Board, as true, and to induce said Board to believe that nothing had been done by the Phoenix Bank, or with its assent, to give the transaction a character, in any respect, materially different from that which the said communication represented to be its true character.
    The omission to inform said Board, or any of the principal officers of said State, after the sum decided by said Board to be due, had been paid by the State; that there was any property (whether worth much or little) to which the State was entitled, in consequence of having acknowledged and paid the claim of the Phoenix Bank, favors this view.
    The decision of the Board of State Officers was contrary to equity. Each member of the Board of State Officers was ignorant (pending the claim before said Board) of the facts so concealed from them; which facts are a full defense to the claim of the Phoenix Bank. There was no negligence or fault on the part of the members of said Board in not acquiring knowledge of such facts. The communication made to them on .behalf of the Phoenix Bank, by reason of its allegations of facts, made with a view to their being-relied and acted upon, and the omission therein of any allusion to the facts which it was the duty of that'bank to disclose, was a fraud in intent and in fact, and entitle the plaintiffs to be "relieved against the decision of said Board, and to a return of the money paid in pursuance of it. (Dobson v. Pearce, 2 Kern. R. 156, 165; Fenemore v. The U. S., 3 Dallas’ R. 357; Bateman v. Willoe, 1 Sch. & Lefroy R. 201; Foster v. Wood, 6 John. Ch. R. 87; Shedden v. Patrick, 28 Eng. L. & Eq. R. 56.)
    In my judgment there never was any liability in equity and good conscience on the part of the State of Michigan to refund to the Phoenix Bank the amount of the advance which the bank made to Norton."
    Mr. Delafield was not. authorized by the terms of Gov. Mason’s letter of the 24th day of February, 1838, to make any advance to Norton, unless he had “ received funds on the bonds” in his possession as agent of the State of Michigan. He had not received any funds. He was required, if he had received funds, and made an advance, to take a certificate of deposit from John- Norton, Jr., cashier of the Michigan State Bank.” He took no such certificate. No part of the advance was ever paid by Norton to any officer of the State of Michigan or applied to its use.' He collected the draft for $8,500 and deposited-it in the Michigan State Bank to the credit of the Phoenix Bank. The draft for $7,900 he never collected. The Phoenix Bank subsequently settled with, and discharged the River Raisin Bank from all liability by reason of its holding the moneys for and upon which the draft for $7,900 was drawn. By its consent the property received in payment has been disposed of by its agent, and such agent it has discharged from all liability as such agent.
    It also settled with the Michigan State Bank as its debt- or, and discharged such bank from all liability, and the title to the property received in payment, the Phoenix Bank (the present defendants’ assignor of the claim in question) procured to be conveyed to itself as absolute owner.
    These views (not intended as a full discussion of the questions involved, but as merely indicating generally the grounds of the present decision) entitle the plaintiffs to the relief prayed for in their complaint.
    Judgment must be entered in favor of the plaintiffs for $35,603.74 and interest thereon from December 4, 1854, to this date, with the costs of this action.
    Judgment having been entered accordingly, the defendants appealed from it to the general term.
    
      E. S. Van Winkle, Chas. O’Conor and F. B. Cutting, for Appellants.
    
      First. In respect to every “ private claim or account ” against the State of Michigan, the Board of State Auditors was, by the constitution and laws of that State, a judicial tribunal, vested with like power and authority, finally to determine the same between the State and the claimant, as may be exercised by courts of law or equity in ordinary actions within their jurisdiction, or by arbitrators duly appointed.
    I. Michigan, upon general principles, and also under the Constitution of the United States, as well as her own constitution and laws, possessed the sovereign prerogative of immunity from prosecution in any tribunal at the suit of any private person, unless by her own consent. (O'Conner v. Pittsburgh, 18 Penn. R. 189; 11th Amt. Const. U. S., 2 Dallas, 479; 1 Kent’s Com., 8th ed., side paging 350.)
    II. It is quite usual for States to divest themselves of this irresponsibility in a greater or less degree, and to permit actions against themselves in ordinary or special tribunals. Where this is not done, the legislature is always the fountain whence the State dispenses its justice to the individual claimant. (Per Blair, J., Chisholm v. Georgia, 2 Dallas, 459,460; Per Denio, J., Guilford v. Chenango, 3 Kern. 149; 3 Story’s Com. on Const. § 1672.)
    III. Michigan, by its constitution of 1857, stripped its ' legislature of all power to allow a “private claim or account,” and denuded the State of all power to do justice to its individual creditor except through means provided v by “ general ” laws.
    IV. The constitution and the statutes subsequently enacted in the same year, constituted the Board of State Auditors, with power to “examine, adjust and settle” private- claims against the State; and upon allowance of any such claim it was enacted that the claimant should “be entitled to a warrant” therefor on the State Treasurer, and payment thereof “ forthwith.”- And this was the only way in which, under the constitution and laws of Michigan, a private claim against the State could be allowed or rejected, or in any way considered or- acted upon.
    V. The intent of the constitution and laws of Michigan— ■ in organizing this Board of Auditors—to create a judicial tribunal, is manifest.
    1. It is required to record its proceedings, to act on testimony, and its judgment against the State is to be immediately executed by ministerial officers having no discretionary power, and who, should they hesitate, might be at once coerced by mandamus. (Kendall v. United States, 12 Peters; 616, 617; S. C., 626, 627, 642.)
    2. To complete its character as a judicial tribunal, nothing was necessary except that the respondent should be duly summoned. And this is expressly provided for. (Act of 1848, Case fo. 893, made applicable by Schedule to Constn. of 1851, § 1; 6 Peters’ U. S. R. 229, 242.)
    3. Here are actor, reus, and judex, due provision for testimony, for regular sittings, for summons to respondent, and for an absolutely compulsory execution of the judgment. No power in the State could stay such execution. It conforms to the advice of Tucker and Story as to the proper construction of a court of absolute authority in which the sovereign shall be effectually suable. (3 Story on Const. § 1612; 1 Tucker’s Blackstone, App. 352.)
    4. There can be no pretence that the decision was not intended to bejinal.
    
    
      a. No review is provided for.
    
      b. The execution is immediate and compulsory upon the State officers. They cannot withhold payment. (Kendall v. United States, 12 Peters’ 528, 530, 611. On this branch of that case, .the court was unanimous. U. S. Statutes at Large, Vol. 6, 665.)
    
      c. The want of power in the Board to pronounce judgment and issue execution against the claimant for an off-set or counter-claim proves nothing. Such was generally the case in courts of law until quite recently. (Bridge v. Johnson, 5 Wend. 360.)
    YI. No technical impediment to holding that the Board of Auditors exercised judicial power grows out of the particular wording of the Michigan Constitution in relation to the judicial department. (People v. Mayor, 25 Wend. 11; Morrison v. McDonald, 21 Maine, 555; State v. Wilmington City Council, 3 Harrington, 299.)
    
      Second. The decision of the Board of Auditors being a judicial determination, final in its nature between the State of Michigan on the one part, and the Phoenix Bank upon the other, it cannot be impeached or reviewed except by an original suit in equity for relief, on the ground of some fraud practiced by the successful party, in obtaining the decision. (Byers v. Surget, 19 How. U. S. R. 308; 16 Peters, 611; 16 Barb. S. C. R. 228; Wright v. Miller, 1 Sandf. V. C. R., 120.)
    
      Third. The plaintiffs, upon any construction of the evidence, wholly failed to make out a case for relief under this head of equity jurisdiction.
    I. The sovereign immunity from doing justice upon compulsion, does not exist when the State is a suitor in a civil action against an individual even in her own courts. (United States v. Ringgold, 8 Peters, 163.)
    II. New York being an independent State, no principle of reason, justice, or policy would justify our courts in treating a foreign nation, or a sister State, when prosecuting a civil action before them, as having any greater privileges than any private individual, especially where such action is against our own citizens.
    x III. If fraud or ill-faith of a character remediable in this way, was practiced in obtaining the decree, it does not follow as a consequence that the whole decree or judgment must be vacated. It is not the natural office of fraud or falsehood to taint any more than it touches. And, inasmuch as every fact affecting the original justice of the defendants’ claim, was fairly and fully presented, and the whole merits of that question fully considered and adjudged, the State of Michigan has no right to a review .thereof, merely because a certain independent defence, founded on circumstances subsequently supervening, and essentially in the nature of part payment, release, or counter-claim, was not tried. Her utmost equity is to have now, the trial of which she was deprived then, i. e., the trial of that defense.
    1. It would have been a confounding of right, and an irregular and unlawful exercise of judicial power in the Board of Auditors, to permit those subsequent circumstances to influence their judgment on the primary question as to the original validity of the claim. It is a prosumptio juris et de jure that the alleged fraud could not have affected the trial of that question.
    2. The objections to the original justice of the claim are founded on the strictum jus. They are quite of a strict and technical nature.
    IY. The circumstances which are said to have been suppressed did not constitute a bar. If presented as a defence against a claim valid in its origin, they ought to have been overruled by the auditors; and in any court acting upon principles of enlightened justice, as understood and administered in courts of law and equity, they would be rejected. They present a trap-defense, merely technical at best, that was unreasonable and unconscientious in the highest degree.
    1. When it was ascertained that the two Michigan banks which held the funds, were approximating to insolvency, the circumstances were such as to warrant the Phoenix Bank, without any concurrence or consent of Michigan, to intervene, as trustee for whom it might concern, and save what could be saved from the impending wreck.
    
      a. Michigan did not recognize the claim, refused to pass upon the question of its validity, or to unite in selecting an agent to act for either party, as the event might determine.
    
      b. She rested upon her sovereign immunity from suit at law or in equity, and she could not be coerced or quickened in any way.
    c. It was highly inequitable to leave the owner of a claim in this condition. And where the claim is ultimately established, it cannot be maintained, in equity, that the intervention of the claimant and his intermeddling with the subject of the claim, was in any other character than as agent or trustee, constituted by the necessity of the case for whom it might concern.
    
    2. The claimant intervening as the Phoenix Bank did in this case, in good faith, to save what might be saved from the wreck, was only responsible for good faith and reasonable and jxidicious management of the things dealt with in the trusteeship.
    3. Michigan perverted her sovereign power to an unequitable purpose when she compelled the Phoenix Bank to become salvor; and the attempt to make the Bank’s acts as such salvor, a bar to the claim, on the technical ground that such acts were resumptions of the property for which the claim arose, is highly inequitable.
    4. The acts of interference by the Phoenix Bank with the claims of the Michigan Banks, being- the acts of a .trustee for whom it might concern, they constituted no defense to the claim.
    5. Michigan could only claim an account of the trusteeship. The amount accruing on such account, might have constituted a set-off before the auditors; but Michigan had her election to claim it in that way or to bring a cross-action for it. The judgment of the creditors did not extinguish it, and Michigan can now claim it in a proper action. •
    6. In such action, Michigan’s set-off would not constitute a technical difficulty in the way of justice, in respect of the original claim; but would stand on its own independent merits.
    1. These considerations show that this action is brought under a wrong head of equity jurisdiction. Michigan can obtain full justice without touching the decision of the auditors.
    8. This view applies with equal force to the supposed countermand of the draft on the bank of the River Raisin. The order was a perfect assignment in equity and probably at law of the fund in question. (Mandeville v. Welch, 5 Wheat. 277.)
    
    9. The releases executed by the Phoenix Bank to the Michigan Banks and to Stewart, did not bind Michigan. And if they did it would not vary the case. They were necessary acts.
    Y. Michigan had the most ample notice of all the circumstances alleged to have been suppressed. And gross laches and negligence are imputable to her.
    yi. It never has been held except in respect to infant defendants, that a claimant prosecuting a demand before a court of arbitrators, was bound candidly to disclose all that he knew concerning facts, which might be available to the other side. A code of ethics which enjoined this duty on a plaintiff on pain of a review in equity by suit for fraud would be fraught with intolerable mischiefs. ‘ Interest reipublica ut sit finis litium.
    
    The judgment should be reversed.
    J. M. Howard, Attorney General of Michigan, and J. L. Jernegan, for Respondents.
    Insisted, that the claim of -the defendants against the State of Michigan, was illegal and fraudulent in its origin, because:
    I. The letter of Gov. Mason to Delafield, of February 24, 1838, is the sole basis of the defendants' claim against the State. But this authorized an advance to Norton, only in case that funds had been received from the negotiation -of the State bonds in the possession of Delafield. But none of these bonds had been negotiated, and, consequently, the State had no funds in Delafield’s hands, out of which the advance could be made.'
    II. This letter confers no authority whatever for creating a debt against the State. It merely authorizes the transfer of State funds in the hands of Delafield- (should any such funds be on deposit,) to the State Bank of Michigan, the legal depository of thpse funds. The direction of the letter is, that these funds be advanced on the certificate of deposit of Norton, as cashier of the State Bank. The effect of such a transaction would have» been to have made the State Bank, instead of Delafield, the debtor; in other words, its effect would have been merely to have transferred the funds from the hands of Delafield into the State Treasury. But Delafield made the advance upon the simple receipt of Norton.
    III. The advance was made in drafts of the Phoenix Bank, upon the Bank of River Raisin and the Farmers’ and Mechanics’ Bank of Michigan. But the letter contains no authority to receive drafts instead of money, and especially drafts upon banks, then in a state of suspension. That both of these banks had then (March 13, 1838) suspended, see evidence of Romeyn.
    IV. The "curt receipt of Norton, “Received of the Phoenix Bank the above letter, John Norton, Jr., Cashier,” does not even purport to bind the State, or to be given on account of the State.
    V. The letter did not authorize an advance on the security of State bonds, but simply and purely of money already realized on the sale of such bonds, if such money there were.
    VI. The Governor had no authority to pledge the bonds, or to sell them for anything but cash. That a power given to borrow money by the sale of State bonds, negatives a power to sell them on credit, and that they cannot be sold on credit without an express authority for that purpose, has already been settled in this State, in the case of Delafield v. State of Illinois, 26 Wendell, 192, 223; S. C. 2 Hill, 159, 173. The reason and principle of this decision apply with at least equal force to the pledge of bonds. Besides, it has been repeatedly decided, that an authority to sell, does not imply an authority to pledge. (Urquhart v. McIver, 4 Johns. R. 103, 111; Paterson v. Tash, 2 Strange, 1178; Newsom v. Thornton, 6 East, 17; Martini v. Coles, 1 M. and Selw. 140, 146; Laussatt v. Lippincott, 6 Serg. and R. 386.)
    The act of the Legislature which confers the authority upon the Governor, contains no power to pledge the bonds or to sell on credit. This act was a special authority, and must be strictly construed. To use the language of Chancellor Kent, in the case of Denning v. Smith, 3 Johns. Ch. R. 344, which was adopted as law by the Court of Errors, in the case of Delafield v. The State of Illinois, ubi supra, “the purchaser is presumed to know that special authority, for it is contained in the act, and if he purchases in cases in which that special authority was not pursued, he purchases at his peril.”
    
      Second. If any claim ever existed against the State, it was extinguished and satisfied by the countermand of one of the drafts, and the settlement of both made with the Michigan banks.
    I. The countermand by the Phoenix Bank of the draft on the Bank of River Raisin, and the assent of the latter thereto, was a re-transfer to the former of the fund against which the draft was drawn, and a discharge of the State.
    II. The securities received by Stewart from the Bank of River Raisin and the Michigan State Bank, were received expressly in payment and discharge of the debts due from them as drawees of the drafts. These debts were therefore extinguished, and with them the liability of the State.
    III. The consent of the Auditor General, that Stewart, the agent of the Phoenix Bank, should hold the securities as trustee, transferring them “ to the State in case they recognize their indebtedness ; if not, then to the Phoenix Bank,” with or without the reservation made by that officer, that he did not in any manner recognize the claim, did not have the effect to continue the liability of the, State, if such liability existed.
    
      а. The Auditor General had no power to create, continue, or revive a debt against the State. Like all State officers, he was an agent acting under a special authority, which must be strictly pursued. That special authority is the act creating his office and defining its duties. This does not purport to confer any authority to create a liability on the part of the State, or to change or modify such liability. To adopt the language of the Court in the case of Delafield v. State of Illinois, already cited, and which, though applied in that case to a contract for the sale of State bonds on credit, or. at less than their par value, is equally applicable to this: “ all the State officers together, including the Governor, the Auditor and the Fund Commissioners, could not legally make such a contract as this.”
    б. The arrangement with the Auditor was, that Stewart should hold the securities as trustee, transferring them to the State, “ in case they recognize their indebtedness; if not, then to the Phoenix Bank.” But the State persistently refused to recognize its indebtedness, and, in the meantime, Stewart collected or disposed of a large part of the securities, and accounted therefor to the Phoenix Bank.
    IY. The exercise by the Phoenix Bank of acts of ownership over the securities, their directions to Stewart to change and dispose of a portion-off these securities, their acceptance of a conveyance from him of the lands received from the Michigan State Bank, and the discharge of Stewart from all liability for the moneys collected by him out of these securities, amounting to about $2000, besides expenses, was an adoption of the settlements made by Stewart as a final satisfaction of the entire claim, an acknowledgment of the two Michigan hanks as the sole debtors, and a final discharge of the State. (1 Parsons on Contracts, 47, 41; Bolton v. Hillersden, 1 L. Raymond, 224; Cornwal v. Wilson, 1 Vesey Sr. 509; Farmers’ Loan Co. v. Walworth, 1 Coms. 447.)
    
      Third. The Board of Auditors were mere agents of State, and not a judicial tribunal, and their allowance of the claim does not estop the State from disputing its validity in this action, nor can that allowance have any greater effect given it than an ordinary settlement and adjustment of an account.
    
      Fourth. The allowance of the claim, therefore, and its payment by the State having been made in ignorance of material facts, and such ignorance not Jiaving been the result of any negligence on the part of the State, the money can be recovered back in this action.
    
      Fifth. If the decision of the Board of auditors is to be claimed to have the force of a judgment at law, then it is void, as having been obtained by fraud.
    I. There was a fraudulent suppression of the truth by the bank, in withholding from the Board of Auditors the knowledge of facts which bore directly upon the justice of the claim, which it was the right of the Board to know,' and which it was the duty of the defendants to communicate.
    
      a. The facts thus fraudulently suppressed were: the letter of countermand of the draft of $1,900 ; the settlements made by Stewart with the Bank of the River Raisin and the Michigan State Bank; the demand by the defendants from Stewart of the deed of August, 1852, and its execution to them by Stewart; the exercise by the defendants of control and ownership over the securities received by Stewart; the exchange of a portion of these securities for lands in Michigan, and the release by the defendants of Stewart from all liability to account for the $2,000 which he had collected out of the securities.
    
      b. These facts constituted a perfect defense to the claim of the defendants against the State, (see authorities cited under second point;) no honest tribunal, in the face of such facts, would ever have allowed the claim;" it was the right of the Board and of the State, not only in foro conscientice, but juris et de jure, to know them, and consequently, the duty of the defendants to disclose them. (Loomer v. Wheelright, 3 Sand. Ch. 135 ; Borden v. Fitch, 15 J. R. 121; 19 Id. 164.)
    
      c. The State and the Board of Auditors were ignorant of these facts.
    
      d. The countermand of the draft of $1,900 had never been communicated to the Legislature, or to any officer of the State, and the settlements with the Michiganbanks occurred more than ten years before, and none of the papers relating thereto were in the archives of the State.
    
      e. During the eight years preceding the allowance of the claim, while the officers of the Government were constantly changing, no communication whatever appears to have been made to any officer, and at no time whatever to the executive. To found a presumption of actual knowledge in the State at the time of the allowance and payment of the claim in 1854, on facts of this kind, would be, we submit, to overturn all the established principles which govern this subject.
    II. The concealment and suppression of these facts by the defendants was, therefore, a fraud, which renders the award of the Board of Auditors a nullity, and entitles the plaintiff to a recovery in this action. (Fenemore v. United States, 3 Dall. 357 ; Journals of Congress, vol. vii., Jan. 1, 1781, to Nov. 2, 1782, and same, vol. ix., 219; Foster v. Wood, 6 Johns. Ch. 89; Duncan v. Lyon, 3 Id. 351; Simson 
      v. Hart, 14 J. R. 63 ; Dobson v. Pearce, 2 Kern. 156; Williams v. Lee, 3 Atk. 223; Countess of Gainsborough v. Gifford, 2 Peere Wms. 424; Fermors’ case, 3 Coke, 77.)
    III. This fraud is aggravated, and the suppression of truth converted into a suggestion of falsehood, by the declaration of the defendants’ agent to the Board of Auditors, that he would “ fully and fairly state every defence that he had ever heard hinted at.”
    IY. There was also a direct suggestion of falsehood on the part of the defendants, in the statement made on their behalf to the Board, that “the Phoenix Bank had never been repaid a dollar to this [that] day.”
    
      a. This statement was false. The bank then held a deed for over 2,000 acres of land received on.account of this claim, and the value of which is probably' equal to the claim itself. Their agent had collected not less than $2,000 in cash, and had exchanged the balance- of the securities received from the Bank of the River Raisin, by their consent, for other lands in Michigan, worth at the time, as their own agent swears, the full amount of the securities.
    
      b. The defendants knew it to be false. The attorney who made the statement had then in his possession the deed to the bank for the lands, and the bank had in its possession all the correspondence with Stewart produced on the trial, showing the disposition made by him of the securities.
    c. The statement was relied upon by'the Board, and it ■was intended by the defendants that it should be relied on. The fact that the defendants withheld all evidence and all facts which would have shown their representations to be false, and that their agent promised to fairly and fully state to the Board all the facts on both sides, is conclusive evidence that they intended to induce the Board to. rely on the truth of these statements. It will hardly be contended that Stewart was released for the benefit of the State; or that lands, the description of which, and the disposition made of them, have not even yet come to light, were received or disposed of, and the results concealed by the bank for the benefit of the State of Michigan.
    
      Sixth. The defendants, having become assignees of this claim in 1854, took it cum, onere, subject to all the equities which existed at the time of the assignment, and to all the defenses which existed against the assignor. 1 Parsons on Contracts, 195, and authorities there cited.
    The judgment should be affirmed.
   Robertson, J.

—The capacity in which the Board of Auditors of the State of Michigan acted in passing upon the claim of the defendants against such State, having been fully discussed and settled in the former opinion of this Court at general term, when this case was before it on appeal, a re-examination of that question is rendered entirely unnecessary.

It was then held, that the proceedings and decisions of such Board “were as truly judicial in their nature as those of any special tribunal constituted by competent authority, to hear and decide controversies between adverse parties, not proceeding according to the course of the common law, or the mode usual in Courts of Chancery.” And it was further held, that a sum of money adjudged by such tribunal to be due upon a claim within its jurisdiction, submitted in good faith to it, in the manner prescribed by the law creating it, and paid by the State in pursuance of such adjudication, could “not be recovered back merely because the court in which a suit may be brought for the purpose, is of the opinion that such tribunal was clearly wrong in the conclusion to which it came, or because facts existed which, if proved, would have led to an adverse decision.”

But the decision of such Board of Auditors has been declared in the conclusions of law at special term in this case, to be null and void, on the ground that it was contrary to law, equity and good conscience, and procured by fraud practiced by the present defendants in their proceedings before such Board, in the prosecution of such claim, during the ignorance by the members of such Board, and the plaintiffs, of certain facts now established, such ignorance being without fault or negligence on their part. Those conclusions do not state of what such fraud consisted, but another one states it to have been the duty of the defendants to have communicated to such Board, during the pendency of such claim before it, the fact of which it was so ignorant. The origin of that duty is not distinctly stated, but it must be inferred, if it existed at all, to have grown out of relations between the defendants and either the Board or the plaintiffs, so that the fraud may be assumed to have consisted of a breach of duty, in not disclosing facts within the knowledge of the defendants, to the Board or the plaintiffs, which the relations between them obligated the former to make known. There does not seem to have been any active fraud charged, unless the written statement to such Board by the defendants’ counsel, that the defences stated by him were all he had “ ever heard hinted at ” “ and that the defendants had never been paid,” is to be considered as such. Those allegations, and the omission by both such counsel and the defendants to notify such Board of .the occurrence of certain facts, are found by the court at special term (as a fact,) to have been made in the full belief, that if the actual facts, or such notice as was sufficient to lead to inquiry, had come to the knowledge of the Board, the claim would have been rejected. Among the facts so suppressed,, however, was the countermand of a draft, which was not found by the court at special term to have' been one of those which it was the duty of the defendants to have disclosed, and whose omission therefore became part of the fraud. So too, as a receipt by either the defendants or their assignors, of any part of the moneys received upon certain settlements, was not found to be any of the facts so suppressed, which it was the duty of the defendants to have disclosed, it will hardly be claimed, that their counsel’s allegation that they had not been paid anything, constituted any part of such fraud. So that the fraud is finally reduced to an omission to state to such Board facts now established, which it was held as matter of law that it was the duty of these defendants to have communicated to the Board of State Auditors. The question of negligence on the part of the plaintiffs, in ascertaining the omitted facts, seems also to have entered somewhat into the decision at special term; but although certain facts are established in this case, tending to prove notice at least sufficient to have put the plaintiffs upon inquiry after such omitted facts, no conclusion of law is stated, whether such evidential facts did or did not operate as a notice of that kind; and this is the more remarkable, as the opinion given at the time of the former judgment at general term, holds that the "State and its officers were notified of at least one of those facts, to wit, certain settlements, and that the notification of it to such Board would have led to an inquiry, which must have resulted in a disclosure of all the other facts now established. I am induced, therefore, to think that the judgment at special term was given upon the assumption, that previous notice to the State of Michigan of facts sufficient to put 'her upon inquiry if she had been a private individual, and to have enabled her to follow up such inquiry to ultimate knowledge, ought not to disturb it.

I think, therefore, the question is plainly presented, whether there were any such relations between the defendants and plaintiffs, as to have made it the duty of the former to have presented, if known to them, every omitted fact to the Board, which could operate in favor of the latter, because if there were, it is now urged, that any want of candor in that respect was the practice of a fraud upon the Board itself even as a judicial' tribunal. It is not claimed that such suppression was accomplished by hoodwinking the present plaintiffs; by preventing them by false representations .from appearing before such Board, or being-heard or presenting testimony; no undue advantage in the form or manner of investigation is pretended, and the final decision is admitted to be free from partiality or any undue influence. The fraud is claimed to have been perpetrated upon the tribunal itself, by the violation of a supposed obligation to disclose everything known to the defendants, or of the undertaking of the defendants’ counsel to enumerate every defense that he had heard hinted at. No ground or source of such obligation has been suggested except the general moral duty of fairness. It is not pretended to arise out of any relation between a tribunal and suitors before it, and it would be difficult to suggest how a court could be so interested in the result of a case to be adjudicated by it, as to entitle it to take legal proceedings to set aside its own judgment or deprive either party of its fruits, because such party had withheld facts material to a decision of the case abstractly just; because clearly the party imposed upon must be the same party as that which has a right to relief; it is not said that the adverse party has a right to the disclosure, but the court, and of course as a court. Now the only case in which such a principle has prevailed is that of infants, where the court acts rather as a guardian making an agreement in their behalf, than an impartial tribunal. (Wright v. Miller, 1 Sandf. S. C. 119; Shedden v. Patrick, 28 Eng. L. & Eq; R. 56; Loomer v. Wheelwright, 3 Sandf. Ch. R. 159.) In Bateman v. Willoe, (1 Sch. & Lef. 209,) Ld. Redesdale well observes, that owing to the inattention of parties and other causes, exact justice can seldom be done, and if it could, it is more important to put an end to litigation; and in the same case he adds, that a court of equity cannot enter upon matters once investigated, according to the ordinary rules established by the legislature and courts. Courts can only decide upon allegations and proofs, and the annulling of their decisions because somebody ought to have brought something to their notice not previously known to them, would let in a flood of collateral litigation, and make a collateral suit more effective than an appeal, introducing into it the additional issue of knowledge by the successful party, and the judge of the withheld facts, and perhaps also want of knowledge by the former of the ignorance of the latter.

Nor can this duty spring from the official position of the members of the Board in this case, or its mode of proceeding, the evidence upon which they had a right to act, or the want of opportunity to the plaintiffs to be heard. As far as the official position of the members was concerned the defendants had most cause to complain, as they did not select one (exparte Rogers, 7 Cow. 526.) There might also be some weight in the principle, if the Board were required to guard the State's rights and act as a judge advocate; but they are only required to notify the attorney general, whose express duty it was by a State law to attend and represent the State. If exparte affidavits could have been received, and there were no means of compelling the attendance and answers of witnesses, there would be more room for scrutinizing the representations of the successful party; but in this Board the attendance of witnesses and the examination of the claimant under oath could have been compelled. If they had been obliged to dispose of the case secretly and at a single meeting it might bear on the question of fraud, but they were entitled to adjourn from time to time, as they pleased, nor could they dispose of the claim, unless with an open record of the testimony upon which they acted. And finally the ordinary force of a hostile judgment was given to their award by the compulsory remedy to which the claimant was entitled for the amount awarded to him. (See Kendall v. United States, 12 Pet. 616, 642.) I therefore am unable to find anything in either the composition of the court, the mode of its proceeding, the materials of its judgment, or the character of its decisions, to make the last an exception from the sacredness and conclusiveness which attend those of all other judicial tribunals. Would a duty be imposed upon State officers to suggest every fact favorable to a claimant, when the State was seeking to make an offset against the claimant's demand ? and if by reason of such suppression by such officers, a just demand of the claimant was diminished by an unjust set-off, would the betrayed claimant have any remedy ? Equitable rules must be wretchedly partial that do not extend equal justice to both sides; and to use the language of Lord Coke, “the State, sovereign as she is, has descended into a common arena, she is entitled to no advantage over an adversary, because her own officers keep the lists.”

Prior knowledge by the State of the suppressed facts should certainly discharge the defendants from any obligation to take charge of the case of the former before the Auditors, and communicate such facts to them, and if so, information of facts leading directly to such knowledge, ought at least to relieve the defendants from a charge of fraudulent suppression. But the difficulty in this' case is that neither ignorance nor knowledge, nor notice leading to knowledge, is among the facts found at special term, except by implication from the conclusion of law, which makes such ignorance good cause for setting aside the decision of the Board, but implying that it was only so because not culpable. We are, therefore, still in the dark, as to how far knowledge .by any or all of the officers of the State, or communications filed among its archives, or in the various departments, were sufficient in law to require the pursuit of the clue thus afforded, before relieving the State from culpability in not communicating to its own Board of State officers all the information it possessed. This obscurity is the more marked from the fact that the defendants, although equally' an artificial person with the plaintiffs, are assumed to be chargeable with notice of all the acts of their agents, all the knowledge of their officers, and by assignment, with all the like notice and knowledge of the agents and officers of their assignors, another artificial body. It is possible a State may be only chargeable with notice by positive enactment or through some special one or more State officers, but that principle is not involved in the decision at special term, so far as can be gathered from the findings of fact and conclusions of law. I do not believe it was intended to be o^ could so have been held, because the opinion which accompanies the judgment at special term, holds that information of certain settlements, “ if brought home to .the Board, would naturally lead to the inquiry as to what had been done with the property■ received from” the «two banks, and that “it was just to conclude, that such inquiry would have resulted in the disclosure ” of certain acts of the defendants, which are the very facts of whose suppression the complaint is made. And it further, after alleging “that the State was notified and reminded, year after year, of the facts and terms of such settlements, by a communication thereof made to several State officers, and to its legislature, when the claim was presented to that body,” held that “A mere omission to recall the fact of those settlements to the attention of the Board, would not on such a state of facts be of itself a sufficient cause for adjudging the decision of such Board to be a nullity.” If therefore the settlements were known to the State, and such knowledge would naturally lead to the inquiry as to what had become of the property "received on such settlement, and such inquiry would lead to the discovery of the facts whose suppression is complained of; the defendants are not to be blamed.

The language of that opinion is fully borne out by the facts of the case. The compromise by the defendants of claims which they held as security for the debt due from the State, and the trustee who held new securities in trust for both parties, was perfectly known to every officer of the State and every branch of the State government; the disposition of the securities held by such trustee, and his discharge from liability, could have been easily ascertained. The Auditor General knew of the compromise in 1840, and sanctioned it; it was communicated to the legislature of the State in 1841, and for four successive years afterwards. In that year, and in 1848, it was brought to the notice of the Auditor General; in 1840, and two following years, the Attorney General was appealed to; with such reiterated information the State could not complain that she did not know of the compromise and its terms, which leaves her simply ignorant of the exchange of securities and final discharge of the trustee. Those securities were the property of the State, if she owed and paid the original debt of the defendants, pledged for the payment of that debt; if she had been a private individual it certainly would have been an act of ordinary prudence to have ascertained whether anything had been realized from them, and to have demanded their restoration before paying- the debt. Mankind' would think but little of the caution of a person who should neglect to do so, and courts would be apt to assume that the omission to inquire was proof of knowledg-e what moneys had been collected on such securities; he . certainly could not recover back what he had overpaid', upon the ground of a fraudulent suppression by the creditor of the collection of moneys as a fact which it was his duty to disclose. The discovery by the present Attorney General of the State, of facts sufficient to enable him to make the demand, as early as May, 1855, shows the ability of the plaintiffs, with proper diligence, to have ascertained the suppressed facts. It seems to me, therefore, that the State is chargeable with knowledge of the facts which she might have ascertained, and that the facts previously communicated to her were enough to put her upon inquiry;, that the defendants had a right.to assume, 'that if the plaintiffs failed to present them before the Board of Auditors, it was from a. belief that they were immaterial, and that they themselves were at least guilty of no fraud, even if otherwise bound to make mention of such facts to such Board, when thus justified in believing that the State possessed knowledge or means of knowledge of such facts, and failed to disclose or use them as a defense to their claim.

But no authority sustains the doctrine of a deceit practiced upon the court as" distinct from that practiced upon an opponent; the learned counsel for the plaintiffs has failed to produce any approaching such a principle, and my own research has furnished me with none. There are, it is true, cases of active fraud practiced upon the adverse litigant or third persons, but they are of a positive kind or a violation of a previous duty, arising from the relation of the parties, existing or created for the occasion, and not a word is s.aid in any of them of duty to the court; such are the cases of Gifford v. Thorn, (1 Stockt. 702;) Stevens v. Guppy, (1 Turn. & R. 178;) Dobson v. Pearce, (2 Kern. 157;) Fermor’s case, (3 Rep. 77,) and Reigal v. Wood, (1 John. Ch. R. 402.) Even in the only case in which the duties of a court most resemble those of a guardian for the State, to wit: the naturalization of aliens; fraud in the allegations upon which an applicant is admitted to citizenship, is no ground for assailing the judgment collaterally. (McCarthy v. Marsh, 1 Seld. 263.)

Any other doctrine would lead in any case to interminable litigation; the same constructive frauds might arise in every new collateral trial of the judgment in the case previously decided, and the controversy could only be ended by exhaustion of the patience or purse of the combatants.

Courts of equity have, however, in one class of cases, relieved parties from the burden of satisfying decrees or claims against conscience, when obtained without their fault, by an inevitable accident. Those are where since the trial upon which such decree was rendered the failing party has discovered both facts and their evidence, which by no diligence he could have obtained before, and whose existence make the claim unconscionable. (Adams’ Doct. of Eq. 197, point 3 and cases cited in Eng. note e and Am. note 1.) Courts of law could always grant new trials for newly discovered evidence merely, when not cumulative, if the application was made in a reasonable time, but when courts of equity interfered they required the facts themselves to be both newly discovered, and such as could not have been found by examining witnesses; thus the finding of a receipt as evidence of payment, or the discovery of facts which the cross-examination of a witness would have disclosed was not a ground for relief. (Taylor v. Sheppard, 1 Yo. & Col. Ex. R. 271.) The same principle would apply to a failure to examine witnesses known to be familiar with all the acts relating to a particular transaction. In this case, neither Messrs. Stewart, Lothrop, Delafield, Tileston, nor any other officer of the defendants, or the former Phoenix Bank, was examined by the plaintiffs before the Board of Auditors, or was applied to for information, although no difficulty was found in examining them in this action. A very natural course of inquiry suggested by the knowledge of the original settlements derived from their repeated notification to the State officers, would have reached all the facts now claimed to have been suppressed. Stewart knew the whole transaction; Lothrop could have been compelled to disclose what other defenses had been hinted at besides those met by him; the two presidents of the old and .new Phoenix Bank could have been required to tell1 every fact within their knowledge, and their correspondence could have been reached and exposed; can the omission to examine any of1 them be justified ? No respectable counsel, possessed of such knowledge as the officers of this State had, both as to facts and those who knew them, could, if he had any regard for his reputation, venture to justify the loss of his cause by the excuse that he never thought of inquiring of such witnesses, as those just mentioned, what had become of the securities taken on so well known a settlement.

But in fact the complaint lays no foundation for the interposition of such an equitable jurisdiction or even for relief founded upon any inability of the plaintiffs to have discovered, by due diligence, all the necessary facts, or the absence of such notice to them of facts, sufficient to have put them upon inquiry leading to the discovery of such ulterior and more material facts. It does indeed aver ignorance of them, but that, if the result of wilfulness or negligence, is not sufficient. ■ The whole foundation of the claim is the ignorance of the Board of Auditors, not the State, and fraudulent concealment by the defendants from them of facts which they were entitled to know, and these would remain the same, if the State had possessed all the knowledge of the defendants, unless its officers communicated it to the Board. Tet it seems to have struck the mind of the" framer, of such complaint, that some duty of inquiry was" incumbent on the State and its officers, as the removal of Mr. Stewart from Michigan is given as an excuse for not examining him, and the ignorance by the plaintiffs, both of facts claimed to be material, and circumstances leading to their knowledge, is given as a reason for not availing themselves of them before such Board. The answer too, suggests the name of another who might well be supposed to know something of the matter, who was not examined, to wit: the Attorney General of the 'State, when the claim was before the Board. So that the pleadings themselves are defective, if the obligation of the plaintiffs to inquire and consequent ability to discover the facts, which they allege would have constituted a defense to the defendants’ claim, were such as to have removed the responsibility of •disclosing them from the shoulders of the latter to their own.

But in every aspect of this case, it is essential to any ground upon which „relief could be sought, that the claim of the defendants, to retain the fruits of the decision of the Board of Auditors, is against conscience; not merely against the rules of the common or statute law of any or all States or countries, or of courts of equity, but one which shocks the moral sense; one which, if sustained by arbitrators, with all the facts before them now before this court, would leave room for no other inference but partiality or corruption; for upon such ground alone have we a right to infer that the Board of Auditors would have made a different decision had they known all such facts, as they have not stated what rules they adopted, and they were entitled to use the widest discretion; and equity equally requires similar injustice in asserting a claim to retain moneys paid according to a decision of a judicial tribunal. It is true it is difficult to define with great precision what is a claim against conscience, it is much easier to describe a claim without any foundation, or one which has been discharged or waived or otherwise terminated. In this case, the want of conscience, of which complaint is made, is not in the original claim, for the Board of Auditors passed upon that, with full knowledge of all the material facts bearing upon it. The countermand of one of the drafts has not been found in this case by the court at special term to have been one of the facts which it was the duty of the defendants to communicate to the Board of Auditors, although the omission to disclose it is found to have been designed by the defendants to mislead such Board, and to have been made in the full belief that if the actual facts of the case came to the knowledge of such Board the defendants’ claim would have been disallowed; but it is not stated what effect such omission had upon the actual decision, without which a mere design or belief is immaterial. But even if it had been known it ought not to have altered such decision, for such countermand was not issued until thirteen days after the draft had been transferred, a time within which it ought to have been presented, at the hazard of the party taking it, a ground which was urged in the argument of Mr. Lothrop addressed to the Board, nor has it ever been pretended that such countermand was the cause of the non-payment of the draft. Besides the draft itself was in equity an assignment of the fund upon-which it was drawn, (Mandeville v. Welch, 5 Wheat. 277,) at least to the extent of justifying the -holder of it in paying it over to the person in whose favor the draft was drawn. The want of conscience in the defendants’ retention of the money received by them is mainly claimed to be evinced in doing so notwithstanding their settlement with the two banks on which the drafts, which were the origin of the claim, were drawn; the exchange of some of the securities taken on such settlement for others, the collection of moneys on such securities, the discharge of such banks and the agent who collected such moneys without any payment by him; and it is urged that by such acts the defendants took the banks in question as their debtors, in place of the State, and discharged them. It does not appear in evidence, nor is it alleged in the pleadings, nor has it been found as a fact, that by any consent of the State such banks are substituted as debtors in her place; although if Norton was her fiscal agent, she became the creditor of such banks by virtue of the drafts drawn upon them and their promise to pay them; or at least the Board of Auditors must have so held in order to justify their allowance of the claim at all. The State was a debtor by-virtue of the money advanced, but one that without its own legislation could not be coerced into payment. Two banks were debtor to it for the same amount, and the defendants undertook to get from them and save as much as they could do for themselves or the State of the indebtedness of such banks; it was made part of the condition of the compromise by the latter in giving securities in discharge of their liabilities, that they should be released, and the defendants acting according to their best discretion for the interest of all concerned released them; they announced to the Auditor General of the State their intention of acting as trustee for the State in case the latter paid the debt; they never repudiated the State as a debtor, and looked to the banks as their only debtors, but only took them conditionally as debtors, in case the State would not recognize its indebtedness; I do not find in this any thing against conscience. The State which placed the defendants in the embarrassing. condition of losing the means of receiving part of their claim from persons whose responsibility was doubtful, for the sake of retaining a claim against a debtor who could not be coerced, cannot conscientiously claim that acts then done by the defendants to save what could be saved from such doubtful debtors, should be considered a bar to the claim against themselves although it might be so legally. The defendants by means of the decision in their favor by the Board of Auditors, are placed precisely in the position where they should have been.if their claim had originally been a just one; the State has allowed their full claim and thereby ratified their acts as agents for them in making settlements with the banks; or if not, their claim is still good against those banks upon the drafts in question; .or if they have lost it by lapse of time, the fault lies at their own door. None of the acts of the defendants have barred the plaintiffs from any rights. Mr. Stewart became avowedly trustee for the plaintiffs in case they allowed the defendants’ claim; his conveyance to the defendants was avowedly as such trustee, and they could not release him as such trustee so as to bar the plaintiffs^ claim, as ■ cestuis que trust, to whatever property held by the defendants as assignee of such trustee the plaintiffs may be entitled, upon filing a proper complaint for the purpose. I therefore cannot find in this conduct of' the defendants such a discharge of the debt, and repudiation of the plaintiffs as the original debtor, as to make the defense one so against conscience as to entitle the plaintiffs to be let in to litigate anew the merits of the defendants’ original claiip.

Enough has been said, perhaps, to dispose of the merits of this case, but I cannot let the opportunity pass without endeavoring to rescue from unjust obloquy the reputation of an innocent third party, whose acts or declarations as agent of the defendants have been claimed to be the acme of fraudulent dealing. The counsel for them (Mr. Lothrop), in the course of his written argument presented to the Board of Auditors, says : “I proceed to inquire whether there are any defenses to the claim. I" will fairly and fully state every defense that I have ever heard hinted at,” and then proceeds to combat three, which do not include that now set up. I do not see how this declaration from an advocate before a judicial tribunal can be tortured into such a contract with the tribunal, to disclose all he knew, as to entitle the party prejudiced to maintain an action for its violation, or how he could bind his client to disclose all that such advocate knew. It would undoubtedly tend to the advancement of morality greatly if all men could be compelled to speak the exact unqualified, and uncojored truth; but other interests require that too nice investigations into it should be avoided. If every case were to be re-tried upon the ground of mis-statements or suppression of facts by counsel, which made against his client’s case, it is doubtful whether a case could ever be finished; for a tone, a shrug, a gesture, may say as much or more than words, and the evidence as to their interpretation or character would only add to the proofs of the fallibility of human testimony. But the counsel in this case did not undertake to state all material facts, but only defenses. Is there any evidence that the facts now urged were presented to the counsel in question as a defense ? was he bound to know they were a defense ? There is no warrant for such a conclusion. The same counsel in the same argument, after stating that he has established certain other facts, enumerates as one, that “the defendants had never been repaid a dollar to this day.” The findings in this case which corresponds with such statement sustains it, even if it could be forced into a positive assertion instead of inference.

Upon the whole, therefore, I have come to the following conclusions : That the Board of Auditors acted as and had all the powers of every specially constituted judicial tribunal ; that there was no special obligation of the defendants to disclose to it facts favorable to the plaintiffs’ case, of which its members were ignorant; that if the imposition of such duty depended upon ignorance by the plaintiffs of facts material to their case, such ignorance could not have that effect, when it was rendered incumbent on the plaintiffs to acquire knowledge of such facts, by notice to them of facts sufficient to put them upon an inquiry leading to such knowledge; that knowledge and proof of any facts material to the plaintiffs’ case now set up could have been obtained by the examination of witnesses before such Board, whom the plaintiffs had every reason to believe knew them, and by the exercise of due diligence; that newly discovered evidence of such facts is not sufficient unless the facts themselves have only been recently discovered, notwithstanding the exercise of due diligence to learn them; that it is not against conscience for the defendants to claim to retain the moneys paid them according to the decision of such tribunal, notwithstanding the facts proved in this action; that the counsel of the defendants did not contract any obligation to such tribunal to disclose any matters prejudicial to the defendants; had not authority to do so, and could not so contract.

As the result of such conclusions, I can only hold that the decision of the Board of Auditors was binding—that the judgment at special term should he reversed and a new trial ordered with costs to abide the event.

Pierrepont, J.

—Two questions are presented for our consideration upon this appeal:

First. Was the Board of State Auditors of the State of Michigan a judicial tribunal, whose decisions were binding upon a claim within their jurisdiction, in the same manner as the decisions of a special court constituted by competent authority ?

Second. Can the money which the Phoenix Bank obtained from the State of Michigan, through the award of such tribunal, be recovered back in this action on account of any fraud which the case discloses ?

The first is not an open question. When this cause was before the court on the first appeal, the general term, through the chief justice, expressed its views as follows :

(Here follows the opinion, which will be found in 4th Bosw. R. 363.)

His opinion then proceeds as follows :

We consider this question then not only decided in this court, but decided in accordance with the law as previously settled.

I next proceed to consider-the question of fraud. And first, as to the justice and validity of the original claim of the Phoenix Bank against the State of Michigan; it is to be remarked, that this has already been adjudicated, and that the decision was in favor of the claim. The claim was presented to the Board of State Auditors, a tribunal which the State had created, and in which it consented to be sued. All the facts touching the justice of the original claim were before that Board, none of them were suppressed —none of them were falsified; and with full knowledge, the Board decided in favor of the claim, and it was, in accordance with that decision, paid by the State. That judgment of the Board of State Auditors has never been reversed, impeached or set aside, and there is no evidence before us that the Board of Auditors has . ever changed its mind as to the justice of the original claim of the bank against the State. The validity of the original claim then is not open for our consideration. That has been settled by a competent tribunal of the State of Michigan.

The remaining and important inquiry is, when the alleged fraud commenced, and in what did it consist ?

The original claim of the bank has been adjudged valid and just against the-State of Michigan; no part of it was ever paid to the bank by the State, until after the decision of the Board of Auditors, when it was all paid; and this payment the State now seeks to recover back. Except this payment by the State, the bank have never received any money for their claim : this is found as a fact and supported by the evidence.

The claim of the Phoenix Bank had its origin as follows: S. T. Mason, governor of the State of Michigan, had deposited with Mr. John Delafield, president of the Phoenix Bank, a large amount of bonds of the State of Michigan to be negotiated for the benefit of the State. While the bonds remained in Mr. Delafield’s hands Governor Mason wrote as follows :

“Detroit, Feb. 24, 1838.
“Dear Sir—In a conversation with Mr. Norton, the ■ evening before his departure, he suggested that he would like, in addition to his $90,000 due on my draft, to command some additional funds to purchase and redeem Michigan notes in your market. Mr. Norton is a particular personal friend of mine, and is the fiscal agent of the State, and cashier of the State Deposit Bank. Tou may, therefore, if you have received funds on the bonds in your possession, transfer to Mr. Norton $50,000 (or) $100,000, taking his certificate of deposit from ‘John Norton, Jr., cashier of the Michigan State Bank,’ which will Jie cashed at the State Deposit Bank. This letter is enclosed to Mr. Norton, who will deliver it to you.
“ Respectfully, S. T. MASON.
“John Delafield, Esq.”

On receipt of Governor Mason’s letter, Mr. Ogden, cashier of the Phoenix Bank, sent to Mr. Norton, cashier of the Michigan State Bank, the following, viz :

“ Phoenix Bank, ) “New York, 13í/¿ March, 1838. )
“ J. Norton, Esq., Cashier :
“Dear Sir—Please receive herein my draft on Farmers’
and Mechanics’ Bank, Detroit.............. $8,500
do. Bank of River Raisin, Monroe...... 7,900
$16,400
“ On account of advance made by this bank on Michigan bonds, deposited with John Delafield, Esq., president.
“ Respectfully, yours,
“N. G. OGDEN.
“ Received of the Phoenix Bank the above letter.
“ John Norton, Jr., Cashier.”

These two drafts, amounting to $16,400, are the foundation of the original claim of the Phoenix Bank against the State of Michigan. When these drafts were delivered to Norton, Mr. Delafield had not received any money on the bonds entrusted to him by the governor ; and this advance of $16,400 was charged on the books of the Phoenix Bank to “ J. Delafield, agent for the State of Michigan.” Subsequently, Governor Mason, for the sake of completing other arrangements for raising money for the State, sent the following note to Mr. Delafield, viz :

“ Morris Canal Office, )
New York, June 4, 1838. )
“ John Delafield, Esq.:
“ Sir—You will deliver to Theodore Romeyn, Esq., the whole amount of Michigan bonds in your possession, (say twelve hundred thousand dollars at 6 per cent, stock.) Mr. Romeyn will hand you the amount of Prime, Ward & King’s charge, and account, for advances to the State.
“ Respectfully, your ob’t servt.,
STEVENS T. MASON.”

Mr. Delafield, at this time, requested that the $16,400, alleged to have been advanced, on behalf of the -State of Michigan, to Norton, on the 13th of March, 1838, should also be then refunded.

Governor Mason, in answer to this request and claim, wrote a note to said Delafield, in the words following, viz.:

“New Yc-rk, June 4, 1838.
“ Sir—John Norton, Esq., having received from you two drafts, one on the Farmers’ and Mechanics’ Bank, of Detroit, for $8,500, and the other on the River Raisin Bank, for $7,900; in adjusting our accounts it becomes important to state, that when I left home, according to my impression, those drafts were not collected, but so soon as I learn that such is the case, I will cause the amount to be remitted to you.
“Yours, respectfully,
“S. T. MASON.
“John Delafield, Esq.”
Upon the receipt of said last letter, Mr. Delafield surrendered all of the said State bonds held by him as such agent as aforesaid, and Governor Mason then gave a receipt therefor, reading thus:
“Received, New York, June 4, 1838, of John Delafield, Esq., the entire amount of Michigan State bonds, heretofore placed in his hands as agent.
“S. T. MASON.”

It is found as a matter of fact that “ when the two drafts (viz., one for $8,500, and one for $7,900) were delivered by the Phoenix Bank to Norteñas aforesaid, the Phoenix Bank and Delafield believed that the advance would be recognized and treated by Governor Mason as an advance made to the State of Michigan, and made said advance in actual good faith, believing that said Norton would pay to said State and on its behalf, the sum so advanced, and would be expected and required by Governor Mason so to do.

That “the cashier of the Phoenix Bank, by letters addressed to Governor Mason—one dated November 20, 1838; one dated March 22, 1839; one dated May 13, 1839 ; one dated the 15th day of July, 1839—urged him to give his attention to the matter of these two drafts, amounting to $16,400, and to remit the amount of said alleged advance and interest to- said Phoenix Bank. No reply was made to those letters, except that an interview took place between Governor Mason and Mr. Ogden, between the 15th day of May and the 15th day of July, 1839; of what was said in that interview there is no direct evidence, except that the said letter of July 15th, 1839, affirms that Governor Mason gave Mr. Ogden to understand, that the matter should receive the immediate attention of Governor Mason on his return to Detroit.

That “ the said $8,500 draft was collected by Norton or the said Michigan State Bank, and the amount thereof was credited on the books of the latter to the Phoenix Bank, on or about the 26th of October, 1838.

That “ the draft for $1,900 was never paid to Norton by the River Raisin Bank, and the Phoenix Bank on ascertaining that fact, by a letter of its cashier, dated March 26, 1840, addressed to the cashier of the River Raisin Bank, (and received by the latter on the 2d, 3d, or said 4th of April, 1840,) said •:

“If it—the draft for $1,900—has not been paid by you, you will please refuse payment of it, as we have never received value for it; and if not actually paid, prior to this notice, we shall look to you for the amount.”

That “on the 10th of June, 1840, the said Phoenix Bank employed Charles H. Stewart, Esq., a counsellorat-law, residing at Detroit aforesaid, to take charge of and present the claim of said bank against the State of Michigan, for the said $16,400, and the interest thereon, and authorized him to take all such measures as he might find expedient for procuring or securing payment thereof. Such employment was evidenced by a letter of that date, from the cashier of said bank to said Stewart, and by his written acceptance thereof, which letter”and acceptance read as follows :

‘New York, June 10, 1840.
‘ To Charles H. Stewart :
‘ Sir—You are authorized as agent for the Phoenix Bank, to' present to the State of Michigan, for payment, the claim of the bank for $16,400, advanced on the faith of the State bonds, in. March, 1838, to John Norton, as their agent, together with interest on the advance, and you will take all such measures as you may find expedient for procuring or securing the payment. You are also authorized to avail yourself of any proposition which may be made from any other quarter than the State, of securing the debt, or any part of' it, provided that you do no act to release or weaken our claim on the State, who is our proper debtor. You may exercise your own discretion in compounding for the interest, and in taking any security offered by the State, and we agree to pay you for your services ten per cent, on the sum you shall recover or secure for us, provided, however, that if you fail altogether you shall have no charge whatever against us. We will furnish any evidence within our power on demand, and shall do no act to nullify your proceedings.
‘ N. G. OGDEN, Cashier.’
‘ I agree to the terms above mentioned, and shall use my best efforts to advocate the claim of the bank.
‘ CHARLES H. STEWART.’

That “said Stewart, as such'agent, submitted said claim to the then Auditor General of the State of Michigan, prior to the 29th of July, 1840. The said Michigan State Bank and the said River Raisin Bank, were then in a precarious condition, and their failure was regarded as highly probable ; that said Stewart, and the said Auditor General deemed it for the interest of the said Phoenix Bank, and of the State of Michigan, if the latter should be held liable for, or should assume to refund the advance so as aforesaid made to said Norton, that settlements should be made with such banks by accepting from them the best securities they could be induced to give; to become eventually the property of the Phoenix Bank, or of the State of Michigan, as the latter should or should not, admit its liability to the Phoenix Bank and pay their said claim.”

That “in.order to furnish written evidence of this concurrence of views, and of the terms on which the said Auditor General assented to such a settlement and arrangement being made with said two banks, the said Stewart addressed to said Auditor General, on the 29th of July, 1840, a letter in these words, viz.:

‘Detroit, July 29, 1840.
‘ Hon. E. P. Hastings :
‘ Sir—I have submitted to you a claim made by the Phoenix Bank of New* York, .on the State, for $16,400, being for that amount advanced on the faith of the State bonds: the advance was made by drafts on the Farmers’ and Mechanics’ Bank and Bank of the River Raisin handed to John Norton as fiscal agent. The draft on the first bank was received and placed to the credit of the Phoenix Bank by the Michigan State Bank, and that institution and the River Raisin Bank now admit their indebtedness and offer security. The debt belongs either to the State or the Phoenix Bank, and the fact will be determined according to the view the next Legislature may take of the subject. You have no immediate power to settle the question, but your office makes you guardian and trustee of the State interests. I therefore submit to you whether it be not expedient to take such security as can be obtained for the benefit of the party ultimately entitled. It may not hereafter be forthcoming, and that such acceptance shall not be deemed to prejudice, or in any manner affect the ultimate settlement between the State and the Phoenix Bank, which shall be made as if no such security had been taken, and that I be at liberty to accept such security as in my judgment is the best to be had; and shall hold the same as trustee, transferring it to the State, in case they recognize their indebtedness, if not, then to the Phoenix Bank; and that I also shall be at liberty to compound the question of interest with the banks, and any settlement with them be in full discharge of their indebtedness.-11 am, sir,
‘Your most ob’t serv’t,
‘ CHARLES H. STEWART.’ ”
That “said Auditor General, on the 22d of September, 1840, wrote at the foot of said letter of the 29th of July, 1840, as follows, viz.:
‘ Concurring in the views above suggested, I agree to the proposal suggested, but under the express understanding that by so doing I do not in any manner recognize the claim nor give it any validity or effect against the State more than it now has.
‘E. P. HASTINGS,
Auditor General.’ ”
And then returned said letter to said Stewart.
That “ said Stewart, on the 23d of September, 1840, settled with said River Raisin Bank, and on the 2d of October, 1840, with said Michigan State Bank, as hereinafter stated, having no authority from the Phoenix Bank to make such settlement, except such as is conferred by said letter of June 10, 1840, and by a letter dated August 4, 1840, which last said letter reads thus, viz :
‘ Phoenix Bank, ?
‘New York, 4th August, 1840. )
‘ Charles H. Stewart, Esq., Detroit:
‘Dear Sir—I have your favor of the 19th ult. You are hereby authorized to adopt all or any such measures with regard to our claim on the State of Michigan, as in your judgment shall seem right and proper, and best calculated for the security and ultimate recovery of the same.
‘ My letter of instruction of 10th June last, was, as construed by you, intended to confer all those powers upon you as the sole agent for the bank in this matter.
‘Respectfully, yours,
‘ N. G. OGDEN, Cashier.’ ”

That “ on the 23cl of September, 1840, said Stewart settled with the said River Raisin Bank, and at that time exhibited and left with it, as his authority for making such •settlement, the said letter of August 4, 1840, and on and as such settlement, received the items of property next mentioned, and gave a receipt written under a description thereof as follows, viz.:

‘H. D. Mason, bond and mortgage, judgment
March 23d, 1840 .................... $3,680 37
Six months’interest, to September 23, 1840____ 110 25
H. Phillips’ judgment, July 22, 1839 ......... 1,279 26
One year, two months, one days’ interest, to
September 23, 1840...................... 87 74
Levi Beebe, note due September 17, 1838...... 2,800 00
Two years and six days’ interest, to September
23,1840...................:............" 395 00
Draft on the Michigan State Bank ........... 155 53
Balance due Phoenix Bank.........$7,899 55
Interest from 16th August, 1839, one year, one month, seven days, to 23d
September, 1840................ 610 60
———. $8,510 15
1 Received, September 23,1840, of the Bank of River Raisin, eight thousand five hundred and ten dollars and fifteen cents, as above, in full payment of their indebtedness to the Phoenix Bank of New York, for moneys collected on their account.
‘ CHARLES H. STEWART,
1 Attorney and Agent for the Phoenix Bank.’ ”

That “ he also exhibited to such bank, prior to said settlement, the said letter of June 10,1840, and said bank not deeming that a sufficient authority for said Stewart to act in behalf of the Phoenix Bank, in making such settlement, the said letter of August 4, 1840, was procured, presented to, and left with said River Raisin Bank, as aforesaid.” “On the 2d of October, 1840, the said Stewart settled with, the Michigan State Bank, and thereupon executed a paper, (showing the terms of such settlement,) as follows: 1 The Michigan State Bank, Detroit:

To the Phoenix Bank, N. Y. Dr.
1838, March 13.
For our draft on the Farmers’ and Mechanics’
Bank, Detroit, of this date................. $8,500 00 Interest on above compromised by agreement „ _ 500 00 Draft on River Raisin Bank on you, in favor of Charles H. Stewart, our agent.............. 155 53 $9,155 53 Or By Illinois and Michigan canal scrip _ _........ $500 00 By conveyance of 2,397-I46°o- acres of land in Saginaw county, by agreement in full........... 8,655 53 $9,155 53
1 Received the above in full discharge of the foregoing account.
‘CHARLES H. STEWART,
‘ Att’y and agent for the Phoenix Bank, N. Y.
‘Detroit, Oct. 2, 1840.’ ”

That “the said Michigan State Bank executed to said Stewart a deed, (as party of the first part thereto,) dated October 2, 1840, for the consideration (as expressed therein,) of $8,500, and also of $155, by which it conveyed to said Stewart the said two thousand three hundred and ninety-seven acres and forty one-hundredths of an acre of land (2,397-^j-,) ‘ subject, however, to the taxes and charges now (then) due and assessed upon said lands, and in trust for the Phoenix Bank of the city of New York, or.-for the Auditor General of the State of Michigan, whichever shall assume the debt thereby, settled by the party of the first part,’ the said Michigan State Bank. This deed was recorded on the 6th of October, 1840, in the proper county. When this settlement was concluded, said Stewart informed the said Auditor General’ of the terms of the settlement so as aforesaid made with that bank, and also of the one so as aforesaid made with the said River Raisin Bank.”

That “ said Stewart, as agent of the Phoenix Bank, presented said claim to the Legislature of the State of Michigan, at the sessions thereof, held in 1841,1842, 1843, 1844, and 1845, and said Stewart stated to the committees of the said Legislature, to whom said claim was by said Legislature referred, the settlements which he had so as aforesaid made with said River Raisin Bank, and the Michigan State Bank, and their nature, and argued that by virtue of those arrangements the State of Michigan would reap the benefit of the securities he held, in case the State satisfied the claim of the Phoenix Bank.”

That “ the statement of the claim, as presented to the Legislature of the State of Michigan, as aforesaid, in 1841, was in writing, and detailed the facts in which the claim had its origin, and stated that the draft on the Farmers’ and Mechanics’ Bank was paid to Norton, and credited by him to the Phoenix Bank, and not to the State, and that the draft on the River Raisin Bank was not collected by him, and also stated that the payment of the debt will not be a loss to the State, for security is now held by a trustee from the Michigan State Bank and Bank of River Raisin, for both debts, which will be turned over to the State.”

.That “ these banks were both insolvent; they were continually threatened with suits and injunctions, and receivers ; they wire parting with their assets, and existed at the precarious forbearance of creditors; experience had shown that to pass a bank into a receiver’s hands was equivalent to destruction, and it was deemed a matter of judicious precaution by the Phoenix Bank, and by the Auditor General for the State, to secure good property while it could be had for the benefit of the ultimate creditors of these banks.”

That “ the statement of said claim, presented to the Legislature in 1843, offered to compromise the claim, on the principle that the State should repay the draft actually paid to Mr. Norton, and in that event the Phoenix Bank would 1 abide the other at their own risk, though by so doing ’ (as said statement declares) ‘ they are turned over to a number of alleged securities, which, in the course of events, not here necessary to state, have taken the place of the River Raisin Bank, as debtors.’ ”

That “ beside the oral and written communication so made by Mr. Stewart, to the committees of the Legislature, to whom said claim was referred, he also informed Mr. Hastings, in 1840 and 1841 (he then being Auditor General of said State,) of these settlements, also Charles G. Hammond, his successor in that office, and Mr. Belle, in 1848, who was then Auditor General. He also in 1840, 1841, and 1842, informed Peter Moray (then Attorney General of said State,) of said settlements, and Zephaniah Platt, his successor in that office.”

That “ Stewart, by a letter addressed to the Phoenix Bank, dated February 10, 1842, informed said bank that he had then recently received $225.75, on one of the securities transferred to him on his said settlement with the River Raisin Bank.”

That “Stewart, by a subsequent letter, addressed to said Phoenix Bank, dated November 9, 1842, advises a change of some of the securities so as aforesaid taken from said River Raisin Bank, and remarks ‘ will you please give me your wishes on the subject of converting your securities.’ ”

That “ to this the said Phoenix Bank replied by a letter to said Stewart, dated the twenty-first of that month, that we must leave it entirely with you to make such settlements, or change of securities, as you may deem, under all circumstances, to be most for our interest, not doubting that you will use a prudent discretion in all such matters.”

That “Stewart, by the 30th of October, 1843, had collected, in all, from the said River Raisin Bank securities, about $2,000 over and above his expenses, and had substituted the residue of. such securities for lands in the State of Michigan; and in and by a letter to the said Phoenix Bank, dated on the day last named, informed said bank 1 that the securities ’ (so as aforesaid taken by him from said River Raisin Bank) 1 have all been converted into good lands in this State ’ (Michigan.)” ‘

That “said Stewart left the State of Michigan in 1848, but did not cease to be connected with said claim as agent of the Phoenix Bank,.until the 5th of August, 1852.”

That “by a deed, dated and delivered on the day last named, said Stewart conveyed to the Phoenix Bank the lands which said Michigan State Bank had conveyed to Stewart by the deed of October 2, 1840.”

That “ the actual motive of the Phoenix Bank in taking said deed of August 5, 1852, at. the time it was taken, was to place itself in a condition to be able to transfer the property (thereby conveyed) to the State of Michigan, on the allowance and payment by the latter of the said claim of the Phoenix Bank.”

That “the said Phoenix Bank, on the same 5th of August, 1852, executed a deed of settlement and release between said bank and said Stewart, which was also executed by said Stewart, and delivered on the day of its date, and reads thus, viz.:

, 1 This agreement, made the 5th day of August, A. D. 1852, between the president, directors, and company of the Phoenix Bank, of the city of New York, of the first part, and Charles H. Stewart, formerly of Detroit, but now of Washington city, of the second part, witnesseth: Whereas, on the 10th day of June, A. D. 1840, the said bank employed the party of the second part .as its agent to prosecute a certain claim for $16,400 against the State of Michigan, with a contingent interest of ten," afterwards increased to twenty per cent., and certain powers to said agent; the said claim consisting of an advance by the bank to John Norton, Jr., cashier of the' State Bank of Michigan, for the State.

‘And whereas, the said advance was made by the order of the Phoenix Bank on the Farmers’ and Mechanics’ Bank and the Bank of River Raisin, the order on the first being paid, and the second unpaid.

‘And whereas, the party of the second part was subsequently authorized by the said Phoenix Bank, and the Auditor General of the State of Michigan, to take any securities in his discretion, from either of the ultimate debtors in the matter, and to hold the same for the Phoenix Bank or the State of Michigan, whichever would assume the debt. And pursuant thereto, the said party of the second part did subsequently take some securities from the said parties, and among them the land hereinafter mentioned, of all which, and of his proceedings in the matter, the party of the second part duly informed the said Phoenix Bank from time to time, reference being here made to his letters. And whereas, the said bank now desires the cancelment of the interest and rights of the party of the second pari, and possession of all the papers in the case, including those which were acquired by the said party, with his arguments and facts. And the said parties have finally concluded all their former, relations, and all questions between them, as follows:

‘ Now, therefore, this agreement witnesseth: That the said party of the second part, for the considerations after mentioned, herewith transfers and delivers to the party of the first part all the papers in his possession pertaining to the aforesaid claim, including his legal argument and the result of his researches in the matter, the particulars being specified in a separate inventory and' receipt.

‘And doth hereby also' covenant, promise, and agree to and with the party of the first part, that he, the party of the second part, shall and will convey to the party of the first part, or their president for them, all the lands and premises conveyed to him by deed bearing date the second day of October, A. D. 1840, executed by George S. Porter, president of the State Bank of Michigan, and recorded in the Register’s office, in Saginaw county, on the 6th day of October, A. D. 1840, in deed book B, on pages 321 and 322, as fully as the same were so conveyed, and free from all incumbrances by him, the party of the second part, except taxes : and as to them, the said party covenants and agrees that he will procure the said lands to be cleared from all tax incumbrance, and from the title of any alleged tax purchasers without charge for his own services, the party of the first part doing as after mentioned on their part, and will also give any requisite explanation in the premises. And the party of the second part, in consideration of the payment, release, and agreements hereinafter mentioned, releases, remises, and forever discharges the party of the first part from all claim or demand whatever in the premises, either for professional service, money spent, and interest in the claim or control of the proceedings or otherwise, however. And the party of the first part, in consideration of the covenants, services, transfer, and release aforesaid, agrees to pay the party of the second part, on execution hereof, the sum of five hundred and twenty-five dollars, and to pay on demand all money which the party of the second part may find to be necessary for clearing the tax-titles and taxes aforesaid, including any charges made by others for local services, and any expenses actually incurred by the party of the first part for the considerations above, hereby remise, release, and forever discharge the party of the second part, of and from all claims, demands, accounts, and responsibilities whatever in the premises, except the matters and things herein and hereby agreed to be done, and for all other demands whatsoever.

1 In witness whereof, the party of the first part hath caused its president to execute these presents, and attached hereto its corporate seal, and the party of the second part hath set his hand and seal, the day and year first in these presents written.

‘ T. TILESTON, [n. s.]
1President.
1 CHAELES H. STEWAET. [l. s.]
‘ Witness—
‘ John Parker, [l. s.]’
“The State of Michigan never assented to, or had any' notice prior to January 1, 1855, of the execution of either of said deeds of August 5, 1852; of the said acts and doings of said Stewart in respect to the securities so as aforesaid received by him on his said settlement with the said River Raisin Bank; or of the notice so as aforesaid given by said Phoenix Bank to the River Raisin Bank, not to pay the said draft for $7,900, so as aforesaid advanced to said Norton.”

' The above findings of fact are clearly supported by the evidence.

The two drafts were given to the agents of the State in good faith, and in firm reliance upon the credit of the State. The draft of $8,500 was duly paid and the money went into the hands of the agents of the State; the other draft of $7,900 upon the Bank of the River Raisin, in which were the funds of the Phoenix Bank with which to pay it, was not protested or returned to the Phoenix Bank. The State withdrew all its securities from the hands of Mr. Delafield and neglected to pay the amount of these drafts. Some two years after the State securities had all been withdrawn from the hands of Mr. Delafield, the Phoenix Bank, not yet having been paid by the State of Michigan, and learning that the funds in the River Raisin Bank, against which the draft óf $7,900 had been drawn, were still in the River Raisin Bank, the cashier of the Phoenix Bank wrote to the cashier of the River Raisin Bank as follows, viz.:

“Phoenix Bank, l
New York, 26th March, 1840. j “N. R. Haskell, Esq., Cashier, Monroe:
“Dear Sir—-Your favor of the 17th ult. was duly received, with account which agrees with our books.
“The draft to which you allude was for $7,900, and was dated 29th March, 1838. If it has not been paid by you, you will please refuse payment of it, as we have never received value for it; and if not actually paid, prior to this notice, we shall look to you for the amount.
“ Respectfully yours,
“ N. G. OGDEN, Cashier.”

It does not appear that the State lost any rights in consequence of this notice ; and it does appear that the money remained on deposit for some two years, ready to meet the draft when presented, and that it was never paid over by the Bank of the River Raisin to the Phoenix Bank, and that through the negligence of the fiscal agent of the State the draft was not collected, so that it is quite clear that the original claim of the Phoenix Bank was not inequitable. I think it also clear that if the State had paid this claim while it was in the hands of Stewart, and had taken a transfer from him of all the securities which he had received from the two banks, the State would have had no just cause of complaint, (although ignorant of the aforesaid notice,) and that, in such case, this action could not have been maintained. Upon this branch of the case I adopt the views and the felicitous language of the learned chief justice who tried the caxise : • •

“When the cause was before the general term of this court, it was held that the decision by the Board of State Auditors of the State of Michigan, to the effect that, upon the evidence produced before the said Board, the Phoenix Bank was justly and equitably entitled to the sum of $35,603.14 as its just claim against said State, could not be impeached except upon proof that the Phoenix Bank had practiced some fraud in their proceedings to establish said claim before and to procure its allowance by said Board.

“That decision should conti’ol my action in respect to that question upon this trial, even if I doubted its accuracy ; but I think that point was correctly decided by this coux’t at its general term in March, 1859.

“ The board of State officers were not misled as to the facts upon which the question of the original liability of the State depended and was to be determined. The same evidence, substantially, in respect to that question, was placed before the Board of State Auditors, as has been ■ produced on this trial. There was no misrepresentation or concealment as to any facts bearing on that question, which could mislead a discreet and cautious mind; and the Board decided that the State, in justice and equity, was originally liable to refund the sum which the Phoenix Bank advanced to Norton. t

“ If my opinion differed from that of the Board of State Auditors, as to that question, I should not be at liberty to declare their decision null and void for that cause alone, and order the money which the State has paid to the defendants to be refunded.

“Neither would the fact of the settlement made by Stewart, as agent of the Phoenix Bank, with the Michigan State Bank and the River Raisin Bank, considering the circumstances under which they were made; the assent given to them by the then Auditor General of the State of Michigan (though not legally binding on the State); and the further fact that such settlements were not called to the attention of the Board of State Auditors, justify me in giving judgment for the plaintiffs; if the Phoenix Bank had not subsequently done anything to vary the condition and position in which the parties were placed by those settlements, and to mislead said Board in respect to the actual facts of the case.

“ The State was notified and reminded, year after year, for some years subsequently thereto, of the facts and terms of such settlements; by a communication thereof, made to several of its State officers, and to its Legislature when the claim was presented to that body. A mere omission to recall the fact of these settlements to the attention of the Board of State Auditors would not, on such a state of facts, be of itself a sufficient .cause for adjudging the decision of such Board to be a nullity.”'

The views of the counsel for the State of Michigan, touching the fraud, are stated in their fifth proposition, as follows:

Fifth. - If the decision of the Board of Auditors is to be claimed to have the force of a judgment at law, then it is void, as having been obtained by fraud.

I. There was a fraudulent suppression of the truth by the bank, in withholding from the Board of Auditors the knowledge of facts which bore directly upon the justice of the claim, which it was the right of the Board to know, and which it was the duty of the defendants to communicate.

a. The facts thus fraudulently suppressed were: the let- ■ ter of countermand of the draft of $7,900; the settlements made by Stewart with the Bank of the River Itaisin and the Michigan State Bank; the demand by the defendants from Stewart of the deed of August, 1852, and its execution to them by Stewart; the exercise by the defendants of control and ownership over the securities received by Stewart; the exchange of a portion of these securities for lands in Michigan,, and the release by the defendants of Stewart from all liability to account for the $2,000 which he had collected out of the securities.”

Let us test this proposition by practical examples. A., living in Detroit, owes B., a resident of New York, and with intent to pay his debt draws a sight draft upon 0., his hanker in Wall street, where he has funds. B. receives the draft in New York, on the eve of starting upon a trip of pleasure; having full confidence in the drawer of the bill, and also in the banker upon whom it is drawn. B. puts the draft in his pocket and goes to Newport. The banker remains solvent for two months after, and then fails. B. hearing of the failure, presents the draft, and has it protested ; and then sues the drawer in the courts of Michigan. A., the drawer, pleads the general issue. When the cause is called in its order for trial no one appears for the defendant, and the .plaintiff’s counsel states to the court his cause of action, and promises to state every defense of which he has any knowledge, or which he has heard “hinted at;” but in the statement which he makes no mention is made of the plaintiff’s negligence in presenting the draft, while the banker upon whoni it was drawn was solvent, and by which negligence the money was lost. Judgment being obtained, A. pays it, and B. returns with the money to New York. Subsequently A. learns of B.’s negligence in presenting the draft—of the statement made to the court by the counsel of B.; and that the counsel was at the time aware of the negligence. A. then sues in this court to recover back the money which B. had recovered of him by a regular judgment in the courts of Michigan; and rests his right to recover on the ground of fraud, the fraud consisting in the suppression of facts by plaintiff’s counsel, which if disclosed, would have defeated his case. If this proposition is sound, I see not why money paid upon any judgment, however regular, recovered by default in another State, may not be recovered back by suit in this State, on proof that the counsel who obtained the judgment told the court that he would state every defense to the action of which he was aware, and yet failed to state one defense of which he had knowledge, and which being stated, the court would not have rendered judgment for the plaintiff," and the money having thus been recovered back, the party last paying it might, on the like grounds of fraud, again recover it in some other State, and so the money might be tossed from A. to B., and from B. to A. without end.

The State of Michigan has no advantage in a court of justice over the Bank of Michigan. Suppose the Bank of Michigan should sue the Phoenix Bank in this court to recover fifty thousand dollars of money paid for the defendants, at their request; that the attornies of the respective parties should stipulate, that on the trial the defendants might interpose such answer as they might be advised; that upon calling the cause, the defendants’ attorney not appearing, the plaintiffs’ attorney should state to the court that he would mention frankly and fairly every defense that “ he had ever heard hinted at,” and that while making this profession of fairness he was well aware that the statute of limitations was an absolute bar to the claim, and which, if known to the court, would defeat the suit; and yet, that he carefully and intentionally concealed that fact from the court,'took judgment on his proofs offered, and afterwards obtained the money and satisfied the judgment; could the Phoenix Bank recover it back in the courts of Michigan on the gtound that it was obtained by fraud ? I am clearly of opinion that no such precedent can be found, and that the very able arguments of the counsel for the State of Michigan, and the authorities cited in support of those arguments do not apply to a case of this kind; they apply with great force and effect to a case in which one party has by false statements or by dishonest suppressions of the truth, induced another to part with his money or his goods.

The case of Dobson v. Pearce, (2 Kern. 156,) was an action in this court upon a judgment which one Olney had recovered in the same court against Pearce, and which Olney had assigned to Dobson. Pearce was a resident of Connecticut, and while casually in New York, Olney sued him upon a claim which had no just or legal foundation. After the capias was served, Olney assured the defendant that no further proceedings would be taken, and Pearce relied upon the assurance; afterwards Olney, fraudulently, and without the knowledge of the defendant, procured judgment to be entered in the suit, and upon a false and unfounded claim, known to be so by Olney at ifche time. Subsequently Olney commenced suit upon this judgment against Pearce in Connecticut, and Pearce, the defendant, thereupon commenced suit against Olney in chancery before the same court, Olney appearing in that action. Pearce obtained a decree against Olney declaring the judgment fraudulent, and enjoining Olney from further prosecution of the action upon it. This was, however, upon the ground that the judgment had no honest basis, and was obtained by fraud ; fraud upon the party—direct and clear; not fraud upon the court, perpetrated by some statement of an attorney upon the trial of the cause.

The case of Foster v. Wood, (6 John. Ch. 87,) which the plaintiffs cite, so far as it bears upon this case, seems to me quite against the position which the plaintiffs take.

The case of Shedden v. Patrick, (28 Eng. L. & Eq. 56,) was heard in the House of Lords in 1854. This was an attempt to set aside a decree on the ground that it had been obtained by the fraudulent collusion of both parties, in order, by means of that decree, to defraud an infant who was a nominal party. The plaintiff was unsuccessful, but the House of Lords recognized the right to annul the decree on proof of the fraudulent collusions; a doctrine which, I think, no one will question.

The case of Fenemore v. The United States, (3 Dallas, 357,) was where a certificate of stock in the public funds had been obtained from the United States upon a false and fraudulent account, supported by false and fraudulent vouchers; and it was held that, in an action on the case for fraud the United States might recover as damages the value of the certificate of stock; a decision most manifestly just. Indeed, after careful examination of the cases upon which the counsel for the State of Michigan relied, and after diligent investigation of many other cases, I am not able to find a single authority which can support the plaintiffs’ judgment in this case.

»In the case now before us, the Phoenix Bank employed Mr. Lothrop, a counsellor-at-law, residing in Detroit, to prosecute their claim against the State of Michigan. Mr. Lothrop proceeded in a tribunal of competent jurisdiction to collect this claim. The State was duly notified, and its proper officer, the Attorney General, was duly advised of the proceedings. The counsel for the Phoenix Bank stated his case to this special court in writing, presented his proofs, obtained a decision in his favor, and the money thus recovered was afterwards paid over by direction of the Attorney General of the State. When this claim was thus prosecuted before the'tribunal which the State had created for that and other like purposes, the State knew, or ought to have known, that Stewart had received securities from tlio two aforesaid banks to be held in trust as security for this claim of the Phoenix Bank. It was thus clearly the duty of the State to examine into this matter, and to see what Stewart had done as trustee, and to make any offsets against the claim of the Phoenix Bank, if the State desired to make any such offsets at that time. The State were not compelled to make any claim of offset before the Board of Auditors—they might pay the demand of the bank and then call upon Stewart to account. for the securities which he held as trustee, if they preferred that course. But the State has no ground for pleading ignorance of the fact that Stewart received property from the two banks in trust for the State of Michigan, provided the State should pay the claim of the Phoenix Bank. The fact that, the tribunal which passed upon the claim of the Phoenix. Bank was ignorant of certain defenses which .the State might have interposed, is a matter of no especial moment. The State was fairly impleaded, and it was its duty to present defenses to the claim if it wished there to make them; it was not the business of the counsel for the plaintiff prosecuting the claim to seek for defenses to it. The great error of .this case seems to be, that the Board of State Auditors are treated as the State, and not as a court, in which to try claims against the State. This Board no more represented the State than the Supreme Court represented the State. It was bound to regard the rights of the Phoenix Bank with equal zeal as those of the State of Michigan—it was a tribunal—a court, in which plaintiff and defendant met on equal terms, and where they were entitled to. equal protection. For this reason, it seems to me, that the entire structure, built upon the theory that this money can be recovered back as obtained by fraud, falls to the ground. What was the fraud and how perpetrated ? The Phoenix Bank sued the State of Michigan,, and presented before the court a claim not inequitable in its origin, and which that tribunal deemed to be just. The State may have had defenses which it might have successfully interposed. The State neglected to make those defenses; suffered judgment, and paid the money. On what principle known to the law can it be said that this money was obtained by fraud ? So far as the original demand of the Phoenix Bank is concerned, there is no pretence that the Board of Auditors were in any manner deceived—they declared the claim just—the State paid it in full without making any claim of offset. The Phoenix Bank are, therefore, bound to account to the State of Mich igan for any property which they have received from, any source whatever, as security for, or on account of the claim, thus paid by the State. But I am not aware of any precedent, or any principle, upon which the State of Michigan can recover back the money which the bank received, on the ground of an j fraud which this case discloses. When once established that the original claim was just, and that the Board of Auditors were a judicial tribunal with full jurisdiction of the parties and of the subject, it follows, that the plaintiffs cannot recover back the money on the ground of fraud. Some recovery may no doubt be had, but not on the ground .offraud. The judgment should be set aside and a new trial granted, with costs to abide the event.

Woodruff, J.

—It is settled in this court, by the former determination made herein at General term, that the decision of the Board of State Auditors of the State of Michigan that the Phoenix Bank was justly and equitably entitled to the sum of $35,603.74 from the State, could not be impeached, nor the said sum paid on that decision be recovered back, except upon proof that the Phoenix Bank had practiced some fraud in their proceedings to establish the said claim and procure its allowance by the said Board.

And with this proposition before my mind, I concur in the views expressed in the opinion pronounced at the Special term on the last trial of the action:

That the Board of State officers were not misled as to the facts upon which the question of the original liability of the State depended or was to be determined;

That the fact of the settlements thereafter made by Stewart," as agent of the Phoenix Bank, with the Michigan State Bank and the Eiver Eaisin Bank—made with the assent of the Auditor General, and notified to the State from year to year for several years, through its Legislature and State officers, prior to the trial before the Board of Auditors—does not justify any inquiry into the validity of the decision;

That the omission of the Phoenix Bank, or its attorney, to call the attention of the Board, on the trial, to the fact that such settlements were made, is no cause for avoiding the decision of such Board. The State, having knowledge of the fact, had an opportunity to present it for consideration if it deemed it material;—

• And that, thereford, if the Phoenix Bank had not, subsequently to those settlements, done any thing to vary the condition and position in which the parties were placed by those settlements and tq mislead the said Board in respect to the actual facts of the case, there would be no ground whatever for impeaching the decision of the Board, or for requiring the repayment of the money received by the-defendants in pursuance of that decision.

But after those settlements, Stewart, the agent of the Phoenix Bank, even in the view of the subject most favorable to the defendants—and the view which must have been taken by the Board of Auditors—occupied a new arid confidential relation to the State of Michigan. He held the -securities and property received from the banks as security for the debt which the Phoenix Bank claimed from the State, and in the event of the payment of that debt, the State was entitled to claim those securities and property for its own reimbursement or indemnification^ and any dealing between Stewart and the Phoenix Bank which impaired those securities or property, or operated to deprive the State of their right or opportunity to obtain the full benefit thereof, was a fraud upon the State—a fraud which could work no injury so long as the State paid nothing, but which would be fully consummated by concealing the facts from the State and prosecuting the claim to a recovery of the moneys. To my mind the idea that the State failed in any diligence through which the facts might have been discovered previously to the trial before the State Auditors, is answered by the considerations that Stewart had long previously removed from the State; that he held a confidential relation to both parties, and nothing had occurred which ought to have created distrust on the part of the State; and that, the State having knowledge that a fund had been created by the settlement with the Michigan banks, which was held by a trustee for the benefit of whichsoever of the two parties might become entitled thereto by assuming or bearing the debt, there was nothing to put the State upon further inquiry pending the determination of the question between the parties; there was nothing to create a doubt that the securities and property remained in the hands of the trustee unimpaired, awaiting that determination. The State was not bound to suspect that the trust fund or the responsibility of the trustee had been in any manner altered prejudicially to them and to make an investigation suggested by that suspicion. . The trust having been created in mutual confidence, the State had a right to repose in that confidence, (nothing being brought to its notice calculated to impair it,) while the defendants were bringing their claim to the original cause, or alleged cause of action, to a decision; and it is not now for the defendants (who had dealt with the trustee and released him, and given up a portion of the securities and property, knowing that $2,000 had been realized by the trustee,) who pursued their claim to the entire amount, knowing that the State was in ignorance of what had been done, to say that the State ought to have distrusted the trustee chosen by the bank, and their agent in fact, and distrusted them also, and made inquiry whether there may not have been a breach of confidence and of trust.

Stewart, though trustee under the arrangement upon which he made the settlement with the Michigan banks, was the paid agent of the Phoenix Bank; nay more, he was, if they elected so to treat him, under their control; they had a right, as between themselves and Stewart, to take the property, securities and. money, which came to his hands, and treat it as satisfaction of their claim; and the State of Michigan, having paid nothing, could not complain of'that arrangement, and in this view the loss or conversion of the property by StewTart, with the assent .of the Phoenix Bank, should affect the latter to the same extent in favor of the State of Michigan, as if these were the acts of the Phoenix Bank itself.

I am, therefore, constrained to dissent from some of the views of my brethren on this appeal.

I am of opinion, upon an examination of all the evidence, that the finding of the court at special term that the judgment was obtained by what in a court of equity should be deemed fraud, is sustained by the evidence ;

That the Phoenix Bank, from the position in which they stood, owed a duty to the State of Michigan" in relation to the, trust fund with which they had been dealing, which bound them to apprise the State that $2,000 had been collected, and that all the securities and property received from the River Raisin Bank had been relinquished, and Stewart released by themselves from all liability, the lands, &c., received from the Michigan State Bank alone being saved " from the trust fund for the ultimate indemnity of the State;. facts, all of them material, unknown to the State—known to be so—concealed by the Phoenix Bank (as proved and properly found upon the evidence,) with design and intent to mislead, and with a conscious belief that if disclosed their recovery would be defeated ;

That the suggestion that the State of Michigan has not been prejudiced, but have still full recourse to Stewart, the trustee, will not avail the defendants, for two reasons: 1. If the facts had been disclosed the State would (if Stewart be regarded as mere trustee, alike under the control of either party and not capable of being effectually discharged by either,) have had an option to charge Stewart, as trustee, notwithstanding the release by the defendants, or to charge the defendants with the trust fund so lost or converted by their assent in exoneration pro tanto of the responsibility of the State. 2. The relations of the Phoenix Bank to Stewart, their agent, who had been constituted trustee, were such (not only as pi’incipals but as creditors and parties beneficially interested,) that they had power (as between him and them,) to settle with him ■ and discharge him from his trust ;

That by their settlement with him and their release of him, they have voluntarily deprived the State of Michigan of any recourse to him in respect of the security and property held for the debt originally due by the Bank of the River Raisin and the $2,000 collected by him from the same, and such settlement operated as between the State of Michigan and the Phoenix Bank as a satisfaction of that debt and an extinguishment of all claim against thé State on account thereof, as effectually as if Stewart had collected the whole of it and paid the amount to the Phoenix Bank. And if it were even conceded that Stewart might be liable to the State, notwithstanding such release, the State have nevertheless the right to regard the transaction as it was intended by the Phoenix Bank to operate as to Stewart, viz.: as a release, and then the result is as before; it is as to the Phoenix Bank satisfaction of the debt due by the Bank of the River Raisin and fro tanto an extinguishment of the claim upon the State. And it was the clear duty of the Phoenix Bank, who thus assumed to deal with the trustee and the trust property, to disclose such dealing and the settlement so made, to the State of Michigan. The situation of the Phoenix Bank was analogous to, or perhaps identical with, that of a creditor for whose benefit a mortgage is held by a third person (his agent,) as collateral security, but which the debtor will be entitled to have and collect for his own use on payment of the debt, and the creditor, without the knowledge of the debtor, obtains an assignment of the mortgage from his agent (the trustee,) and releases or cancels it, and concealing the facts from his debtor obtains judgment against him for the original debt, which by the appropriation and conversion of the security had in equity been satisfied. Can it be doubted that, on making discovery of the facts, such debtor could obtain relief in equity against the judgment ? I think not. The court would not entertain the suggestion from such creditor to the debtor: “You ought to have suspected my fraud and found it out before judgment.” On the contrary, such debtor had a right to rest in confidence that the trust would be faithfully observed.

So that, assuming the award of the Board of State Auditors to have been correct upon all the other facts, and to be conclusive as a final determination of a competent judicial tribunal, and that by it all inquiry into the origin and primary validity of the claim against the State is precluded, still the withholding from the State of all knowledge of the settlement with Stewart was a breach of the duty of the bank and a fraud upon the State of Michigan, which entitled the latter to be relieved in equity from that judgment so far as that settlement affected the State to its prejudice, and that is to the extent of the debt originally due from the Bank of the River Raisin.

But the relief to be granted does not, in my opinion, extend beyond the amount of the debt last named. In relieving against fraud it is unnecessary to go further than to redress the injury which was effected by the fraud, and the fraud complained .of should be material and have manifestly affected the judgment. If a judgment were recovered against the endorser or the administrator of the maker of two notes, and it is afterwards shown by the debtor to a court of equity that one of the notes had been paid, but that by such a fraud as justified the interference of that court the creditor had succeeded in so deceiving his adversary that the judgment" was recovered upon both, the interposition of the court would be confined to the amount of the note so paid. That is all that the debtor could equitably ask, and as to the amount of the other note the judgment and payment thereof should stand. So here, in respect of the claim of the Phoenix Bank to the amount originally due from the Michigan State Bank, the State of Michigan has not been injured; it has not only suffered no prejudice but presumptively has been benefited. It was not the settlement with Stewart alone, but the concealment of that settlement that constituted the injurious fraud in obtaining the judgment in question. The act of the Phoenix Bank, in making that settlement, and obtaining from him the conveyance of the property held as security for the debt of the Michigan State Bank, was, upon the evidence, discreet, and was done with proper motives and in the belief that it was for the best interests of all parties. The security last named is still (so far as the proof in this case discloses, and so far as it was conveyed by Stewart to the bank,) within the control of the bank and subject to the call of the State. The conveyance was taken by the bank as a measure of safety and precaution, and the mere fact that the property was thus taken out of the hands of an absent trustee, who had removed from the jurisdiction of the two States (New York and Michigan,) should furnish no reason for charging the Phoenix Bank, against their assent or intention, with satisfaction of that debt. It would not only, in my opinion, be inequitable, but would be giving effect to the concealment of this fact which is not warranted. So far as relates to this debt, the concealment of the transfer to the bank, as a precautionary measure, was an immaterial concealment. It is not agreeable to good sense nor just views of equity to suppose that had this fact been known to the Board of Auditors it could have affected their decision, and the fraud, which alone can justify the impeachment of a judgment, must be one without which it appears the judgment would not have been rendered. The State of Michigan is entitled to the security so transferred to the Phoenix Bank but have been in no wise prejudiced by the transfer.

In my opinion, therefore, the State of Michigan is entitled to their judgment to the amount of the claim against the Bank of the River Raisin but to no greater amount, and that as to the excess the judgment should be reversed.

New trial ordered, with costs to abide the event.