Court Opinion

ID: 8267268
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:11:09.80308+00
Date Added: 2024-06-11T16:43:24.178140
License: Public Domain

Williamson, C.
The only matter of interest to the parties is in reference to the validity of the ten thousand' dollar mortgage. If that is a valid and subsisting security in the hands of E. M. Davis, it absorbs all the money in court, $7638.05, and which is all the property involved in this suit.
. On the 27th of December, 1853, David C. Urquhart executed his bond to John B. Myers, conditioned to pay him $10,000 in one year from the date thereof, with interest payable half-yearly. Of the same date, Urquhart and his wife executed a mortgage on the “ Bloomfield farm,” in Delaware township, in the county of Camden, to secure the payment of the money mentioned in the bond, according to the condition of the same. The bond and mortgage were delivered to John B. Myers. On the 26th of September, 1855, John B. Myers assigned the bond and mortgage , to Edward M. Davis. On the 28th day of November, 1856, the complainants recovered a judgment against. Urquhart for $2359.45, and caused an execution to be issued, and a levy made upon the Bloomfield farm. The mortgaged property has been sold under a decree of this court, upon a bill filed on several mortgages prior in date to the ten thousand dollar mortgage, and the surplus, which I have before mentioned, has been brought into this court. The bill seeks to get the mortgage out of the way.
The gravamen of the complaint is, that the mortgage is kept on foot fraudulently. I shall examine the case in the three aspects in which it was presented on the argument. I do not feel the strongest confidence that I have reached the truth of this ease. There is no end to the evidence *517and the exhibits. This, however, is the smallest part of the difficulty. There is so much contradiction in the testimony, so many enigmas and mysteries in the exhibits, and in the transactions to which they relate, which require solution, and so many explanations attempted to be made by witnesses, which only tend to make tho confusion worse confounded, that it is very difficult to feel any degree of assurance, after a most laborious search for the truth, that you have been successful in finding it. In deciding the case, I have felt myself bound to disregard entirely the testimony of both Urquhart and Pilling, except as to facts where they are corroborated by other evidence. Their general characters for truth and veracity are impeached by a number of witnesses. But I do not reject their evidence on account of such impeachment alone. It is their evidence, in connection with their own testimony, that has driven me to the conclusion. They are men who for a number of years have been engaged in extensive mercantile transactions in the city of Philadelphia; and yet, according to their own stories, they have endeavored, by all the arts and contrivances which their ingenuity could suggest, to overreach everybody they ever dealt with, and at the same time, wherever the opportunity offered, to circumvent each other. I would not express this opinion of these witnesses were it not from the fact, that the position they occupy in the cause compels me to do so. If full credit is to be given to their evidence, the complainants must necessarily succeed. This credit I cannot give. It would have been much more agreeable to my disposition to have reconciled, if possible, the numerous contradictions and inconsistencies apparent upon the face of their testimony and from undisputed facts in the ease.
The complainants insist — first, that this mortgage was paid and satisfied, while in the hands of John B. Myers, by payment of the debt it was given to secure; second, that if the debt for which the mortgage was given was *518once paid, the mortgage could not be kept on foot to secure any other debt, and that consequently its assignment to E. M. Davis was a nullity; third, that the mortgage was kept alive for the purpose of aiding Urquhart to defraud his creditors.
Was the mortgage debt paid while the mortgage was in the hands of John B. Myers so to extinguish and make it invalid as a security ? Urquhart wished to make a loan of $10,000, and for this purpose made application to Ellis Pilling, who was a broker, to negotiate it for him. This was effected through John B. Myers, a member of the firm of Myers, Claghorn and Company. The agreement with Myers was, that he should exchange four notes of his firm, of $2500 each, payable six months after date, for Pilling’s notes of like tenor, except that they should fall due a few days before the notes advanced by Myers, so as to put him in funds to meet the notes which he had advanced, when they fell due.
It was further agreed that Pilling should deposit col-laterals with Myers to secure the former’s notes. To carry out this arrangement, the notes were exchanged, on the 14th of January, 1854, and there was placed in Myers’ hands, as collaterals, the $10,000 bond and mortgage, a mortgage of $5000, which is known throughout the cause as the $5000 Kensington mortgage, and notes against several individuals and firms, amounting in the aggregate to $8792.50. These securities all belonged to Urquhart. They were delivered by him to Pilling, and by Pilling to Myers, except the $10,000 mortgage, about which there is some dispute as to whether its delivery to Myers was by Pilling or by Urquhart himself. It is but of little consequence, however, as all parties understood that the loan was for Urquhart, and was made through Pilling, as his agent, and that all the securities were advanced by Urquhart. Myers gave his receipt to Pilling for his notes and the securities, in which it was stated that the notes advanced were for Pilling’s accommodation, and that the *519deposit of securities was made by him. But this receipt could not change the real character of the transaction. Urquhart then gave his notes to Pilling of like amount and tenor as the notes which Pilling had given to Myers, and then Pilling delivered to Urquhart the notes which the former had received of Myers. Pilling’s notes became payable on the 18th of July; the notes of Myers, Claghorn and Company fell due three days afterwards. On the 14th of July, in order to enable Pilling to meet his notes, Myers made with him an exchange of notes at five months, and dated June 17th, 1855; and as additional security to those already deposited, Pilling deposited with Myers a mortgage of five thousand dollars on lands in Camden, New Jersey, and which is designated as the brick yard mortgage, and a ground rent security of a thousand dollars. On the 15th of November, Pilling, being unable to meet his notes, which then fell due, another exchange was made of notes at four months. Three last notes of Pilling were never paid until E. M. Davis paid to Myers ten thousand five hundred dollars, and took an assignment of the $10,000 mortgage, on the 26th of September, 1855. , í
The complainants insist that this mortgage was placed with Myers as a security for Pilling’s notes, which fell due on the 13th of July, and that when the notes were paid the security was released. "We have seen how the notes were paid — that the debt was not actually paid, but its time of payment extended four months. Jf Urquhart had stood merely in the light of a security, a guarantor, and Myers had given, time to the principal without the consent of Urquhart, the latter might then, with some show of law, if not of equity, set up that his security was discharged. But Urquhart; had this money in his pocket. He had given his notep to Pilling for it. He certainly can-,pot come into a court of equity, and without showing that he has refunded that money, complain, of the .extension of time which the creditor has given for the payr *520ment of the debt, and claim a right to keep the money, and have the security also. If there is anything in the maxim, that he who claims equity must do equity, it certainly is applicable here. But I think it is proved beyond a doubt that the extension of the time of payment was made with Urquhart’s consent. His permitting his own notes to remain in Filling’s hands unprovided for, and then furnishing the two additional securities, the brick yard mortgage and the ground rent security, by which the extension of the debt was effected, with many other circumstances, furnish conclusive evidence that the several renewals of notes between Myers and Pilling were with his consent, as they certainly were for his benefit. He was transacting other business frequently with Myers, and in constant intercourse with him. He was the close companion and friend of Pilling, and in business with him daily. He never asked for the mortgage. He never complained of the transaction. There are, besides these, a great many circumstances in this transaction, which was on foot during a period of two years, which show most conclusively that whatever was done by Pilling in this business was with the knowledge and approbation of Urquhart.
But the complainants further insist, that Myers was in funds, furnished by Urquhart, when Pilling’s first notes became due. Admitting this to be so, the facts to which I have alluded are sufficient to show - that those funds, if any, were differently appropriated, and that the debt which the mortgage was given to secure was not discharged with such funds, but the debt was kept on foot, and its time of payment extended, with Urquhart’s consent. But there is no proof that Myers was in funds. The contrary is apparent. Hone of the mortgage securities were ever discharged. There remained nothing else bu.t the notes. There is no proof that, on the 18th of July, 1854, any one of these notes was paid. During the whole period they remained in Myers’ hands he received upon *521them. $2896.76. Four of them, amounting to $3181, "Urquhart says, in his testimony, he received. The rest of the notes, and the cash received upon them, were delivered to Pilling.
There is evidence enough to show that the disposition made of these collaterals was with Urquhart’s full concurrence ; and that it was not until a very late period that the thought occurred, or was suggested to Urquhart or .Pilling, that there was anything received on these collaterals to pay the mortgage debt. There is proof in abundance that at the date of the assignment to Davis the mortgage debt was unpaid. In addition to all this, on the 17th of February, 1854, Pilling gave to Myers a writing, by which he agreed that all collaterals then deposited by him with Myers, or Myers, Claghorn and Company, or that should thereafter he deposited, might be held by him and them for the payment of any indebtedness of every description then doe or thereafter to grow due: and that if at any time they should bo dissatisfied with any of said collaterals, they might, on five days’ notice to him in writing, sell the same at public or private sale, and apply the same to his indebtedness. This agreement was made with Urquhart’s consent. He is one of the subscribing witnesses to it. It is true that the mere fact of a person’s being a subscribing witness to an instrument of writing is no evidence that its contents are known to the witness. It is not prima facie evidence of such knowledge. Pilling swears that Urquhart did not know its contents. He, then, was entering into a written agreement fraudulently to use securities which were in his hands in trust for a particular purpose, and with a cunning, rarely excelled, getting the apparent consent of his cestui que trust to his use of them, by obtaining his signature as a subscribing witness to the very instrument by which he made a pledge of the securities. Myers knew the securities belonged to Urquhart, and that his consent was necessary. It is not hinted that Myers contemplated *522any fraud. Pilling confesses whatever infamy there is he must bear it all. He confesses to the twofold fraud, of betraying his trust in converting to his own use these securities, and of imposing in this artful manner upon the person with whom he pledged them. I do not know which places Pilling in the worse position, to let him stand convicted by his own testimony of a transaction so infamous, or to discharge him of the infamy by discrediting him as a witness. But Urquhart sustains him, and swears he did not know the contents of the papel’. I cannot go through all this evidence to collate the facts; his acts and declarations, oral and in writing, which go either to show he did not know the contents of this paper, or to place him in a worse position than if we disbelieve him on this point. We have a disinterested witness, and one who stands unimpeached. Charles Murphy was a subscribing witness to the paper with Urquhart. The paper is in his handwriting, and was dictated by Pilling. He says they were all together in the store when it was executed, and that it was read over and understood by the parties at the time.
I consider it as proved that this mortgage was pledged, with Urquhart’s consent, to secure any indebtedness of Pilling to Myers, Claghorn and Company or to Myers. It is not disputed, that at the time of the assignment to Davis, the balance of accounts between Pilling and the firm made the former their debtor for $15,223.90. Besides the agreement, there was a strong equity that the mortgage should stand as a security for this balance. It all grew out of business transactions, carried on with the firm by Urquhart through Pilling. There was a dispute between Pilling and Urquhart as to the accounts between them; but it finally was acknowledged by Urquhart that he was the debtor, to an amount exceeding $10,000. The original loan was the foundation of the debt, and there was therefore an equity, as between all the parties, independent of the agreement, that the mortgage should stand *523as a security for the debt which was owing to Myers, Claghorn and Company.
But the complainants’ counsel take another position. They insist that the debt having been paid, the mortgage thereby became satisfied and a nullity, so that it could not be made efficacious as a security for another debt, even with the consent of the mortgagor. In the first place, I think it clearly proved that the mortgage debt was not paid. But if it was actually paid, the proposition of the counsel is not correct. A. makes a mortgage to B. to secure his bond for five thousand dollars, in one year. B., instead of giving A. the money upon the bond, lends him §5000 upon his promissory note, at three months. It is insisted that the mortgagor cannot renew the rote without releasing the security, and that if the note it paid the mortgagor cannot ropledge the mortgage for another loan. To sustain such a proposition, the counsel cited a number of authorities, which show that if the debt is paid the mortgage is paid. That is all true. But this does not show that the same debt may not be kept alive by renewals of the notes which represent the debt, or that when one debt has been paid, and the mortgage having answered its purpose as respects that debt, it may not again be pledged as a security for another debt.
The mortgage is the property of the mortgagor, and there is no reason why he may not make use of it for any bona fide purpose. A debtor may deposit his title deeds to an estate with his creditor, as security for an antecedent debt or upon a fresh loan, and thereby create an equitable lien, which a court of equity will enforce. Keys v. Williams, 3 You. & Coll. 55. A question as to priority of creditors is another matter. But a mortgagor, after ho has borrowed money on the mortgage, cannot say, as between himself and his creditor, that the mortgage is invalid. It follows, if he can pledge it and re-pledge it for'his own debt, he may pledge it as a security *524for that of a third person. A mortgage is good for future advances where there is no debt actually due, but merely in contemplation. When the real mortgage debt has been actually paid off, another creditor may have the right of substitution or subrogation, and the mortgage be appropriated to pay a debt to which the mortgage, in its origin, had no reference whatever. A court of equity will keep an encumbrance alive, or consider it extinguished, as may best serve the purposes of justice and the just intent of the parties. Starr v. Ellis, 6 J. C. R. 395; Cheesebrough v. Millard, 1 J. C. R. 409; Berry v. Mut. Ins. Co., 2 J. C. R. 603; Brinkerhoff v. Marvin, 5 J. C. R. 320. In James v. Johnson, 6 J. C. R. 429, Chancellor Kent says: “In many cases, a subject pledged for a debt may be considered as a security for future loans. Cases to this point were referred to in Hendricks v. Robinson and Brinkerhoff v. Marvin, 2 J. C. R. 309, and 5 J. C. R. 326, and I see no objection to it, if no intervening right exists to prevent the justness of the application of the rule, and the plaintiff has no such intervening equity. We are to presume that further debts were created, or advances made on the credit of this original security. It was a rule of the civil law, as was well shown by the decision of the Supreme Court of Massachusetts, in Jarvis v. Rogers, 15 Mass. Rep. 389, that if the debtor pledged property to secure a debt, and afterwards another debt was contracted, the creditor might retain for both debts, provided there was nothing to negative the presumption of an implied contract that the pledge should be so applied.
If I am correct in the views I have expressed, it disposes of the two first points made for the complainants. I think this mortgage was a good security, in the hands of Myers, for the full amount of principal and interest due upon it on the 26th of September, 1855, when he made the assignment to E. M. Davis; that it was good not only against Urquhart himself, but against his creditors; and that there was nothing done by Myers, while he held *525the mortgage, which in a court of equity would give a creditor of TTrquhart a priority over the security. This mortgage, then, is good in the hands of Myers’ assignee, unless the third proposition of the complainants can be established, that the assignment was taken under a covinous agreement to use the mortgage as a cover to the mortgagor’s property against his creditors. This part of the case is not free from doubt and difficulty. There are many circumstances which throw a shade of suspicion on the bona Jides of this'assignment which have not been explained. And yet I ought, in connection with this remark, to say that many of these circumstances are of a character that could not be explained, except by these defendants themselves, and which they had not the opportunity of explaining in their answer. There are others, however, which they might have explained, if light was desirable, and of which it is to be regretted they did not give a full explanation.
It is impossible for me, in giving my views of this part of the case, to allude even to the various aspects in which it has been presented by the counsel, or to refer to all the prominent facts which are relied upon to sustain the charge of fraud. The evidence is so voluminous, and the facts and circumstances relied upon so numerous and complicated, that nothing more can be expected of me than a very general glance at the main features which give character to the transaction.
It is proper to look first at the pleadings to ascertain the specific charges which are made by one party, and the denial or explanation given by the other. The bill charges that Drquhart, being embarrassed by his debts, conceived the fraudulent design of hindering, delaying, and defeating his creditors, by placing the Bloomfield cottage farm in the hands of some confidential friend or friends; and that, for the purpose of effecting such fraudulent design, he applied to the house of E. M. Davis and Company to aid him in it, several members of the said *526firm being his confidential friends; that Jonathan P. Burton, one of the members of the said firm, purchased and procured a transfer of a judgment in favor of one John J. Smyth against Urquhart at the insufficient consideration of seven hundred dollars, the amount then due ujdou the same being upwards of $2300, by fraudulently representing that the mortgage of $10,000 was a valid and subsisting encumbrance.
And that shortly after, on or about the 21st day of August, 1855, Urquhart repaid to Burton the sum which he had advanced for the transfer of the judgment; and that, notwithstanding which repayment, the firm of E. M. Davis and Company, in order to carry out the said fraudulent design, suffered the judgment to remain unsatisfied and outstanding in the hands of Burton; that shortly anterior to this time the sheriff had advertised the farm for sale, upon executions in favor of the Smyth judgment and a judgment in favor of one Francis Lee, for upwards of $3500, both of which judgments were subsequent to the $10,000 mortgage; that the time of said sale approaching, Urquhart, the more effectually to carry out his fraudulent design, procured an assignment of the Lee judgment and execution to Charles M. Wharton, a member of the said firm, for the sum of $816, by fraudulently representing to said Lee that the $10,000 mortgage and Smyth judgment were valid encumbrances on the Bloomfield cottage farm. That Urquhart, upon consultation and advice between Davis, Wharton, and himself, procured Wharton to attend the sheriff’s sale, and bid off the farm for him, Urquhart, for the nominal sum of five dollars, and to take a deed in the name of Wharton, but for Urquhart’s benefit. The bill further charges, that Urquhart, acting in concert with his said confidential friends, on or about the 26th day of September, eighteen hundred "and- fifty-five, procured the $10,000 mortgage to be assigned by Myers 'to E. M. Davis, for a fraudulent, nomi- . naif- oi^-' insufficient' consideration," and that the firm of E. *527M. Davis and Company now fraudulently set up the mortgage and judgments as valid encumbrances.
The fraud, as charged in the bill against the individual members of the firm of E. M. Davis and Company, is certainly of a very extraordinary character. They are not charged with legal or constructive fraud, with acts although not originating in any actual design to injure the complainants, have in fact, from their natural tendency, inflicted a wrong upon them, for the consequences of which a court of equity will hold the defendants responsible; but they are charged with positive fraud, with acts done malo animo, and which injuriously affect their moral character. There is no allegation that they had any debt to secure, or that they were tempted by the prospect of any future pecuniary advantage. Ko motive whatever is assigned why three members of this firm consented to lend themselves, and the name, reputation, and influof their firm, to David C. Urquhart, to aid him in hindering, delaying, and defrauding his creditors. The charge is met by a prompt and unqualified denial by the answer, and explains how it happened that the firm of E. M. Davis and Company became involved in these transactions.
Eor the sake of convenience and brevity, while looking at the answer made to the specific charges which are relied upon as constituting the alleged fraud, I will, at the same time, refer to some portion of the evidence, both in support and denial of the allegations.
First, as to the Smyth judgment. The answer alleges that the purchase of this judgment by Burton was an individual matter of his own, with which the other members of the firm, individually or as a firm, had nothing to do. Burton explains how he came to purchase the judgment, and in explanation says, that Urquhart had assumed to pay him a debt, which the firm of Parton, ( Horter and Company owed him in his individual capacity^; of about eight thousand dollars, and in payment of 0é'-*528debt agreed to sell and convey to him a tract of land in Camden county, adjoining the Bloomfield cottage farm, containing about twenty-two and a half acres of land, free and clear of all encumbrances, and represented that the land was unencumbered, except a mortgage of $1400, and which Urquhart promised to pay and have cancelled; that Urquhart did, on the 7th of December, 1854, give him a deed for the land in payment of the debt; that afterwards, on investigating the title, he found that, in addition to the $1400 mortgage, the land was encumbered by the Smyth judgment, and that Smyth had levied on the land, and threatened to sell it; that it was under these circumstances that he went forward and purchased the Smyth judgment. He alleges that Urquhart has never paid or removed the $1400 mortgage, and denies that he ever paid him the amount he advanced on the judgment, as is alleged in the answer.
This explanation by Burton of his purchase of the Smyth judgment is sustained by the evidence, and its main features are corroborated by the testimony of Urquhart himself. Urquhart did convey to Burton a tract of land in Camden county, and contrary to the warranty of his deed and to his agreement, left it encumbered with this judgment. It was necessary for Burton to pay the judgment in order to save his land. It is not true, as alleged in the bill, that Urquhart afterwards paid or satisfied Burton the amount he paid for the assignment of this judgment. Urquhart attempts to show that, by a subsequent agreement and transfer of property, Burton agreed to hold this judgment for him; but the impression sought to be conveyed by the bill, that Urquhart repaid him the seven hundred dollars, is untrue. There is no proof that Bürton made any false representations in procuring the judgment. The plaintiffs in the judgment, who would be the first to complain of the wrong, if any was committed, express no dissatisfaction with the conduct of Burton.
*529As to the Lee judgment, the charge that it was procured from the plaintiffs by false representations, does not depend altogether upon the fact, whether the ten thousand dollar mortgage and the Smyth judgment were satisfied. Urquhart says that he falsely represented to Lee that these encumbrances did exist, and by sucb representations induced tbe plaintiffs to take eight hundred and sixteen dollars for their judgment of upwards of §3500. How it is proved beyond all dispute that there bad been a long contest about this judgment debt. Tbe matter was compromised; judgment was entered for the full amount of §3500, and then Urquhart, with his father-in-law, gave their joint note for §816, with an agreement that if the note was paid it should be in satisfaction of tbe judgment. If tbe note was not paid then, Lee and Company bad a right to enforce their judgment for the full amount. The note was not paid, and the judgment was about being enforced. It was in this way that the sum of §816 came to be fixed as tbe amount which was paid for the judgment.
But I must say, it is not satisfactorily explained by any of these defendants why E. M. Davis and Company paid off this judgment. It is admitted, by tbe bill, that Wharton paid the money, and took the assignment for the firm. But for what object was it paid, and for whose benefit? E. M. Davis and Company held at this time the §10,000 mortgage. It was prior in date to the Lee judgment. The property, it is true, was about to be sold upon executions at law, but such sale could not affect the mortgage lien of the defendants. But, on the other hand, even if the fraud was contemplated which Urquhart alleges, that the property was to be bought in by one of tbe members of tbe firm, and held for this benefit, yet it was not necessary to pay §816 to these creditors to accomplish that object, for their judgment was subsequent to the mortgage. It was suggested, by counsel, that Lee and Company intended to contest the validity of the mortgage, and that *530to avoid this it was taken up. If they contemplated anything of the kind, and this constituted the inducement for the purchase of the judgment, it might very easily have been proved, and not been left to mere conjecture. It certainly would have been better for the defendants to have sworn to this in their answer than to have left it to be suggested by their counsel.
As to the purchase of the farm by "Wharton at the sheriff’s sale, there is nothing to excite suspicion of any unlawful design in the mere fact of the purchase, or in the price he gave for it. It has since turned out that the property was not worth enough to pay the encumbrances; and if the $10,000 mortgage should be sustained as valid, the proceeds in court will pay but little over one half the mortgage. Urquhart swears that the purchase was made by Wharton upon an agreement made with him that the property should be held for his benefit. He states a great deal that was said and done, in order to show that this was a fraudulent agreement; but in all the particulars which have a tendency to show any fraud on the part of Wharton, Urquhart is contradicted emphatically by a witness whom Urquhart swears he had just retained as his counsel, and who was acting for him. But after a most diligent examination of all the incidents connected with the sale, I am forced to a conclusion that, notwithstanding the denial of the answer, Urquhart is corroborated thus far, that Wharton made that purchase with an understanding that Urquhart might redeem the property. At the request of Urquhart, Wharton was sent over from Philadelphia, by E. M. Davis and Company, to attend the sale; at the urgent solicitation of Urquhart, he purchased the Lee judgment; it was understood that Wharton was to become the purchaser at the sale; Urquhart urged that the sale should then go on, while Wharton hesitated; Urquhart was foremost in proclaiming the encumbrances, so that the property might not be run up against his bid; the money that was paid in bringing *531about the sale was charged on E. M. Davis and Company’s books to Urquhart. I believe what Mrs. Urquhart says, that when her husband brought "Wharton out to see the farm, he was introduced to her by her husband as the gentleman that had purchased the place for them, and that it was with this understanding that Mrs. Urquhart released to Wharton her right of dower. There was no fraud in such an agreement. It was no injury to Urquhart’s creditors for "Wharton to say, “ I will purchase the properly, and will give you the privilege of redeeming it by paying the advances.” Mr. Wharton had a right to make such an agreement for the protection of the firm. They had the §10,000; the property was an inadequate security, and no creditor could be injured by any agreement as to such a future disposition of the property. The wrong does not consist in making the agreement, but in the defendants concealing it and denying it in their answer. The admission of the agreement would have helped the defendants’ case. It would have explained every feature in the transaction which now remains unexplained and casts a shade over its integrity. There is no way of explaining the particulars I have above referred to consistent with honesty, except by admitting that some such agreement was made between the parties. The ingenuity of counsel did not suggest any upon the argument.
But it is shown by the bill, and admitted on all sides, that there was no fraud in the purchase, if the §10,000 mortgage was a valid encumbrance on the property to the amount of its face. The alleged invalidity of this mortgage is the foundation of the fraud. There is nothing else for it to rest upon. If it was paid oif in the hands of Myers then it was invalid. But we have considered this view of the case, and have reached to the conclusion that it was a valid mortgage in the hands of Myers, and that his assignment would confer a good title upon his assignee. The answer alleges, and the defend*532ants prove, that when the assignment was made to E. M/ Davis, he paid to Myers ten thousand five hundred dollars. Here, then, we have the whole case made by the complainants’ bill as to the mortgage disproved. The allegation is, that the mortgage was paid off while in the hands of Myers, and was afterwards assigned to E. M. Davis, for a fraudulent, nominal, or insufficient consideration.
The defendants prove that it was not paid off while in the hands of Myers, and that the consideration they paid was $10,500.
This, I think, disposes of the case of actual fraud, as it is charged by the pleadings. How the complainants change their ground. They admit that .the $10,500 was paid by Davis for the firm when he took the assignment; but they allege, that by a previous arrangement made between Jonathan M. Burton and Hrquhart, there were at the same time transferred to different members of the firm, and to others for their benefit, securities to the amount of twenty-eight thousand dollars besides the $10,000 mortgage, and that E. M. Davis and Company were to reimburse themselves out of the other securities, the $10,500 they advanced, and keep the mortgage alive for Urquhart’s benefit, so as to protect the property from his creditors. This is certainly a very different fraud from that alleged in the bill. It is true, where a bill is filed to impeach a transaction on the ground of fraud, the complainant is not obliged to specify minutely the facts and circumstances upon which he relies to establish the fraud. These are matters of evidence. But neither is a general charge of fraud sufficient. A general statement of the precise facts is often sufficient, and the circumstances which go to confirm and establish it need not be minutely charged. Story’s Eq. Pl. 252. If the circumstances are stated minutely, the complainant need not prove them all, nor is he confined to such as are stated. But a complainant cannot charge a fraud, and set out general facts to sustain it,, and when those, facts are. disproved in toios *533resort to others to sustain his charge. He cannot allege that a mortgage has been paid off by him, and was kept on foot to defraud his creditors, and that to aid him in this design, the defendant took an assignment of the mortgage for a nominal consideration, and when the defendant proves that the mortgage was not paid off in the hands of the mortgagee, and that he paid the full face of the mortgage as the consideration of the assignment, theu turn around and prove, not a fraud consisting in the fact that the defendant took an assignment of a paid off mortgage for a nominal consideration, hut that he took the assignment of a valid mortgage, paying for it a full consideration, but which consideration was furnished by the mortgagor himself. In the case of Mundy v. Knight, 8 Hare 500, the Vice Chancellor says, “ Where a hill alleges a specific case as a ground for relief, and then charges that the defendant committed fraud, the court is bound to consider the general charge of fraud with reference to the particular allegations. For that there are many authorities. But where the bill contains only general charges of fraud, and does not explain in detail what the nature of the fraud is, there is more difficulty in applying a rule.” In this bill the specific fraud is charged, and the facts and circumstances which constitute it. The charge must be considered with reference to the particular allegations.
I think I might properly dismiss this suit here, and if I consulted my convenience I would do so. I have examined the case, however, in the new aspect in which it has been presented, with a desire to do all in my power to give satisfaction to the parties.
This part of the ease depends entirely upon the testimony of Urquhart. It is said he is corroborated by several important papers, which are presented as exhibits» The papers do not corroborate him at all. In order to make them correspond with his story, he is caled upon to interpret them ; and it is only when he has thus been per» *534mitted to give them a significancy and meaning which the natural import of their language does not convey they are made to correspond with his version of the transaction.
He says, that on the 21st of August, 1855, Burton and himself entered into an agreement, by which E. M. Davis and Company were to advance to Myers, Claghorn and Company sufficient money to release certain securities which they held in their hands; that Hrquhart was then to have transferred to Burton two mortgages on property in Kensington, one of $5000 and the other of $2000; the Bloomfield mortgage of $10,000; the brick yard mortgage of $5000; two Pitfield mortgages of eight hundred and twenty-five dollars each; the Master judgment of $5000, and bills receivable of the old firm of Barton, Horter and Company, amounting in all to $38,650; that Burton, on his part, was to transfer or release all claims against Hrquhart, William R. Griers, William R. Griers and Company, Barton, Horter and Company, and Washington Horton, and to settle the judgment with Brands Lee. The Smyth and Lee judgments and the $10,000 mortgage were to be held for Urquhart’s benefit. To prove the truth of this statement, Hrquhart produces an agreement signed by himself and Burton. It is in the following words.
“ Agreement made August 21st, 1855, between D. C. Hrquhart and J. B. Burton. Hrquhart to have released or transferred to J. B. Burton the two mortgages on Kensington ground, for seven thousand dollars. Burton to transfer or release all claims against Hrquhart, William R. Griers, William R. Griers and Company, Barton, Horter and Company, and Washington Horton, also settle with Francis Lee for his claim against Hrquhart; and should it be deemed proper for securing any part of the above claims, to dispose of Brquhart’s property in New Jersey. Burton will allow him, Hrquhart, the privilege of reselling said property for his own benefit, after complying with the above terms regarding the Kensington mortgages.”
*535There is nothing unlawful on the face of this agreement, and it is only made so by the construction "Urquhart puts upon it. Urquhart says the property referred to in the agreement as the Jersey property, which he was to have the privilege of reselling ,was the Bloomfield property. Griers, who is the subscribing witness to the agreement, says he was present when it was drawn up, and heard all that was said between the parties in regard to it; that nothing was said about any other property than that mentioned in the agreement; that the Jersey property referred to is the property near Camden known as the mill property, which was then about to be sold, and for which Urquhart said he had an offer, with the nine acres adjoining. The complainants rely upon what took place subsequently as corroborative of Urquhart. On the 26th of September 1855, Myers assigned to E. M. Davis the $10,000 mortgage and the $5000 brick yard mortgage, and Davis paid him $10,500. On the same day, Myers transferred to J. P. Burton the two Kensington mortgages of $5000 and $2000. These three mortgages were deposited with Myers to secure a debt which he alleged Urquhart owed him, and he agreed to release them upon the payment of $10,500. Why were the $5000 and $2000 mortgages assigned to Burton? We have heard Urquhart’s statement, and what answer is given to it? Par-ton, Ilorter and Company were largely indebted to E. M. Davis and Company; Urquhart settled with them, and conveyed to them twelve ground'rents in Kensington. Where was this mortgage of $5000 on the property which Urquhart had concealed from E. M. Davis and Company ? He told Griers they did not know it, and that it was to be quietly removed. Urquhart was also to put up certain houses which he had contracted for, and without which the property was valueless. He said he had reserved enough of the assets of Parton, Ilorter and Company, a firm which had failed, to enable him to put up the houses. In some arrangement between E. M. *536Davis and Company and Burton the debt of Parton, Sorter and Company was charged to Burton, and he became the owner of the twelve ground rents. It was in this way that Burton became entitled to the Kensington mortgages, and they were transferred to him because they belonged to him. The evidence shows inducement enough for the advance of the $10,500. There was no other way in which Burton could get the Kensington mortgages, which stood pledged in the hands of Myers for Urquhart’s debts. As to the Pitfield mortgages, the Master judgment, and the bills receivable, which Urquhart says were to be transferred, there is no evidence that they ever were transferred to E. M. Davis and Company or any member of the firm. They were placed in the hands of Mr. Gillow, and E. M. Davis and Company have had nothing to do with them. Pilling says he received the securities from Urquhart, and deposited them with Mr. Gil-low, and that is all we have of any evidence as to how they got in Mr. Gillow’s hands.
Now the only thing suspicious, and which was dAvelt upon very much by the complainants, and with much force, is the concealment, in the ausAver, of the fact of the transfer to Burton of the Kensington mortgages at the same time of the transfer to E. M. Davis of the $10,000 mortgage. It would seem to furnish a very satisfactory reason for E. M. Davis and Company’s taking out of their business $10,500 to advance for the Bloomfield mortgage. The fact, that the defendants did not disclose in their an-SAver the simultaneous assignments to Davis and Burton, and give the reason for the advance of the $10,500 which I have suggested, or some other satisfactory one, makes me distrust somewhat the view I have taken of the evidence. Why did Davis and Company advance $10,500 upon the two mortgages? They prove the brick yard mortgage to be worth only about $2000. Urquhart gave only $2100 for the property. The securities were certainly a very scanty security for the money advanced upon them; *537and it was but a reasonable expectation that the defendants, when they had the opportunity, should have given some reason, if they had any consistent with honesty, for adventuring so largo a sum in so unprofitable a speculation, and for such a man as they have endeavored to prove Urquhart to be.
There are suspicious circumstances about this transaction which cast a shade upon it. There is some propriety in the remark of counsel, that the answer looks very much as if it had been drawn rather with a view of dissolving the injunction than with the expectation of further investigation. Without declaring myself perfectly satisfied that there is no ground for the bill, I will content myself with the conclusion, that the complainants have not proved their case.
If the Bloomfield cottage farm had not been sold, and the title was still in Urquhart, I should feel myself justified in making a decree, that the complainants might redeem by paying to the defendants the advances which they had made. When a deed is sought to be set aside as voluntary and fraudulent against creditors, and there is not sufficient evidence of fraud to induce the court to avoid it absolutely, but there are suspicious circumstances as to the adequacy of the consideration and fairness of the transaction, the court will not set aside the conveyance altogether, but will permit it to stand as security for the sum actually paid. Boyd v. Dunlap, 1 J. C. R. 478. But the property in controversy is not such as to justify such a decree.
The real estate has been sold under prior encumbrances. The surplus is in court, and is not sufficient to pay the defendants the advances they have paid. If the complainants, however, are willing to pay the defendants the difference between the amount of money in court and the principal and interest on §10,500, from the time the defendants advanced that money, I will make a decree to give the complainants the benefit of the §5000 brick yard *538mortgage. This would be right upon the plainest principles of equity. The defendants say, in their answer, that they advanced $10,500 for the assignments of the Bloomfield and brick yard mortgages. They hold them merely as security for the debt. If the debt is paid, the complainants have no further interest in the mortgages, and the creditors of Urquhart are entitled to them. I presume the complainants do not desire such a decree, as it is evident the two mortgages will not more than pay the defendants’ debt.
P. L. Voorhees and A. Browning, for appellants.
T. H. Dudley and Attorney General, for respondents.
• I shall therefore decree that the bill be dismissed, and that the taxed costs of the suit be paid out of the fund in court, and the balance to the defendants, E. M. Davis and Company. I think it is right that the fund should pay the costs. The answer provoked further litigation. It is not as full as it should have been. It does not give the true character of the transaction connected with the assignment. It conceals the fact of the assignment to Burton ; the complainants were entitled to that fact, and the reason for it. The answer does not give a satisfactory reason for the purchase of the Lee judgment, and there is no satisfactory explanation by the proofs taken. The purchase by Wharton was made with an understanding implied, if not expressed. The charges in their books are not altogether consistent with their defence. In looking at the evidence, I cannot consider the defendants free from fault.
The opinion of the court was read by
Haines, J.
The controversy is about the surplus money remaining after the payment of the amounts due upon the mortgages of Mr. Hale and of Captain Mickle, and ás that surplus is less than the amount due on the mort*539gage made to Myers, the only question necessary to be considered on the merits is the validity of that mortgage.
It is admitted that the mortgage was executed for a lawful purpose, and used as collateral security for the payment of the notes of Pilling, which he had given to Myers, Claghorn and Company in exchange for their notes, on which he raised money for Urquhart. Other collaterals were also delivered to Myers and Company by Pilling, but they were all furnished by Urquhart, so that, excepting the notes of Pilling, Urquhart furnished all the securities.
When the notes of Pilling became due they were paid by the avails of other notes made by Myers and Company, and delivered to him in exchange for other notes made by him. Again, when the second set of notes matured, they were paid, in like manner, by another exchange of notes of Myers and Company for those of Pilling. The money advanced by Myers and Company was not paid by Pilling or Urquhart, nor does it appear that it was realized out of any of the collaterals. The notes given for it were renewed, but as between those parties, were never paid. The debt, which is the principal, was still subsisting; the bond and mortgage which were hold as collateral, and which are incident, were not discharged. In the hands of John 13. Myers, who held them for the the benefit of Myers and Company, they were good, and remained as a valid and subsisting lien on the property.
.On the 26th September, 1855, some six months after the notes given by Pilling became due, and while they were yet unpaid, Edward M. Davis advanced to Myers $10,500, and took an assignment of the bond and mortgage ; and it is insisted that this assignment to Davis was unlawful, and that the mortgage could not be continued to secure a debt to another person.
To this objection it may be answered — first, that a mortgage valid and subsisting in the hands of a mortgagee may be assigned, and continue valid in the hands of *540the assignee. The consideration of the assignment may pay to the mortgagee the money he had advanced, but that cannot release the mortgagor, who still withholds the money he received.
Again, it is well settled that a mortgagor may repledge the securities for any lawful purpose. If he is to pay the debt for which they were given, and if there be no intervening encumbrance, he may use them again, and pledge them for another debt; and if he do use them, he cannot complain that he is required to pay the debt for which they are so repledged. Nor, in the absence of fraud, has an encumbrancer by mortgage or judgment, obtained after such repledging, any cause of complaint.
The assignment of the bond and mortgage by Myers to Davis was made with the knowledge and consent of Urquhart, as is admitted by him in his certificate, dated October 3d, 1855.
In that certificate he acknowledges that no part of the principal or interest secured by that mortgage had been theretofore paid, but that the whole amount thereof was then yet due and payable.
If the mortgage was valid in the hands of Myers, and was by him assigned for a valuable consideration, as has been shown, and if it was so assigned by the consent of Urquhart, as his certificate proves, it must be held to be a good and subsisting claim in the hands of Davis; and against such evidence the testimony of Urquhart and Pilling, given in the cause, can and ought to have po weight. Their testimony in so contradictory to their own statements, verbal and written, and to the statements of each other, and so directly in conflict with that of other witnesses, and they are, upon their own admissions, so reckless of truth, and so wholly devoid of integrity, that no reliance can be placed on w'hat they say. As such assignee of the mortgage, Davis had a right to retain it as a lien on the property until the debt for which it was pledged was paid. He and the firm for whom he held it *541are not to be prejudiced by anything that Pilling or Urquhart, without their acquiescence, could do or say to delay or defraud creditors or to cheapen the property at the first sale.
There is no evidence that the mortgage was fraudulently kept on foot, nor of any motive or reason why Davis and Company, who had paid for it in cash, §10,500, should collude with Urquhart to defraud his creditors, and thereby put in jeopardy their own securities.
If the mortgage was a valid lieu on the property, there was sufficient inducement for Smyth and Lee to sell their judgment at a large discount; and the result of the sheriff’s sale under the original mortgage shows their prudence in so doing; and the creditors of Urquhart were not prejudiced by the fact of Burton and Wharton becoming the purchasers of those judgments.
Nor can any evidence of fraud be gathered from the fact of the purchase of the equity of redemption by Wharton at the first sheriff’s sale; nor from his taking a release of the right of dower of Mrs. Urquhart; nor yet from any arrangement to afford Urquhart an opportunity to redeem. These were all lawful acts, and do not of themselves, or in connection with any other facts in the case, show any fraud or collusion.
The decree refusing to declare the mortgage and the judgment void and dismissing the bill was correct, and should be affirmed.
But Davis and Company have also appealed, and thereby questioned that part of the decree which ordered the costs to he paid out of the fund. That appeal is properly here. It was duly filed, and the usual deposit for costs made. Davis and others, it is true, did not print the case, but the other party did; and no application was made to the court for any order respecting the printing, or for any apportionment of the expense of it. We must therefore consider the matter which is the subject of this appeal fairly before us.
*542The answer is not as Ml and explicit as it might and should have been; and the defendants omitted, or did not satisfactorily explain, several matters connected with the assignment of the securities and the purchase of the Lee judgment. Por such omission they are censurable. But the penalty of the payment of the whole costs on both sides is too severe. It will be a sufficient punishment if they are required to pay their own costs in the court below. That part of the decree, therefore, which directs the costs to be paid out of the fund is erroneous, and must be reversed, leaving each party to pay their own costs below.
But that part of the decree which refused to declare the mortgage and the judgment void, and dismissed the bill, must be affirmed, and the costs of both appeals be paid by the appellants, Bobinson and Parsons.
The court affirmed the decree of the Chancellor (except as to the part relating to the costs below, which was reversed) by the following vote:
For affirmance — Chief Justice, Judges Combs, Claw-son, Haines, Swain, Vreeenburgh, Cornelison, Ouden, Whelpley, "Wood.
For affirmance in toto — Judges Valentine, Van Dyke.
For reversal — None.