SHIRRAS

υ.

Previous to this, viz. in March, 1800, Mitchel had & OTHERS by deed conveyed his third part of this property to Edwin Gairdner and John Caig, as joint tenants; and at the time of executing the mortgage (viz. December 1, 1801) Edwin Gairdner had full power and authority from James Gairdner to sell and convey his share of the property.

CAIG & MITCHEL.

with fraudu.

lently secret ing a deed who places it upon record as soon

quires.

It is not neces

Subsequent to the mortgage, viz. on the 27th of July, as the law re- 1802, Edwin Gairdner, as attorney for James Gairdner, ́ by deed conveyed to Mitchel one third of the property, sary to the va- and by his own deed of the same date, he conveyed one lidity of a mortgage that sixth of the property to Caig, who had before receivit should truly ed a conveyance of one other sixth from Mitchell.

state the debt it is intended to secure; but

it shall stand as a security for the real equitable

claims of the mortgagees, whether they

date of the

These two last deeds were proved and recorded on the 14th of September, 1802.

The mortgage was proved on the 10th, and recorded on the 17th of September, 1802.

By the law of Georgia, deeds of bargain and sale are existed at the to be recorded in 12 months-and by a law of 1768, every mortgage and deed recorded within ten days after it's execution, shall have preference of other deeds and mortgages, not recorded within that period.

mortgage, or

arose after

wards upon

the faith of

the mortgage, before notice

of the Defen

At the time of executing the mortgage, therefore, the dants equity. legal title of three sixths of the property was in Edwin. Gairdner, and according to the book entries of the several co-partnerships he was also equitably entitled to the same. The legal title of two sixths was in James Gairdner, and of the other sixth in Caig, who, according to the book entries was equitably entitled to three sixths; so that although Edwin Gairdner had a legal power to sell and transfer James Gairdner's two sixths, yet he was bound in equity to transfer them to Caig.

The complainants in their bill claim the whole. They state that Edwin Gairdner was the real bona fide owner of the property-that the book entries were made only to give a credit to the Savannah house, and were without Consideration--that the Savannah house was only to hold it in trust for Edwin Gairdner during the co-partnership. That Edwin Gairdner became bankrupt on the 3d of November, 1802, has received his certificate of discharge

v.

MITCHEL

and that two of the complainants, Blacklock and Verrees, SHIRRAS were duly appointed his assignees. That Caig and & OTHERS Mitchel, and the firm in which they are partners, are still largely indebted to Edwin Gairdner, who is also very largely indebted to the Complainants. And they pray that all conveyances, under which Caig and Mitchel claim to hold possession of the property, may be declared void and may be cancelled-that the property may be sold and the proceeds applied towards payment of the debts due to the Complainants-and for general relief.

The answers of Caig and Mitchell, the Defendants, do not admit that any thing was due by E. Gairdner to the Complainants on the 1st of December, 1801, the date of the mortgage, and suggest that if any thing was due it has since been paid off or otherwise settled. That Caig was made a party to the bond and mortgage without his authority and consent. That the bond and mortgage were carefully kept secret until the 13th of September, 1802. That it was not a regular transaction and ought not to avail against the Defendants, who are bona fide purchasers.

They set forth the several co-partnerships and entries in the books and aver that they and all the parties considered them as good transfers of the property which was always holden and considered as stock in trade. They deny all private, secret, or confidential trust for the benefit of E. Gairdner. They aver, that they believe, that at the date of the mortgage the Charleston house was indebted to the Savannah house, after allowing credit for the property in question.

In this state of the cause, the Defendants, Caig and Mitchel, filed a cross bill against the Complainants, Shirras and others, alleging secret transactions between them and E. Gairdner, and praying a discovery. They charge that the execution of the bond and mortage was an act of burry and despair, in the confusion and embarrassment of entangled circumstances, and at the eve of one of the greatest and most distressing bankruptcies. That the deeds were not signed until some weeks or months after their date. That no title papers were shown to the mortgagees, [they being all in the hands

CAIG & MITCHEL.

SHIRRAS of Caig at Savannah] nor any authority from Caig to & OTHERS convey his interest. That the mortgage was taken 0. without reflection or previous contemplation as to the security intended to be given, but as the last hope of saving or securing something from a person on the eve of insolvency. That the bond and mortgage were not executed for advances made, or money lent on the seeurity, or hope of security arising from the mortgage, but with the intent to indemnify the mortgagees for endorsements at the banks in South Carolina for E. Gairdner, and for other collateral securities entered into for him; all which were settled and discharged by the exertions of E. Gairdner, and the resources he was then enabled to bring into activity. That there is no money due on the bond, or on the consideration for which the bond was given. That all the obligees have been fully paid, satisfied and indemnified, without having recourse to the mortgaged premises, and that the mortgage is kept up for speculating purposes, and to oppress Caig and Mitchel, or to cover some transaction between E. Gairdner and one of the obligees, subsequent to the execution of the mortgage and which has no relation to the same. That the mortgage was concealed from Caig and Mitchel for fear of injuring E. Gairdner's credit, and was not delivered to the mortgagees till some time before it was recorded; and was not recorded until Caig and Mitchel had paid a valuable consideration for two-thirds of the property and were in the quiet possession thereof, with the knowledge of the mortgagees. They claim title to two-thirds of the property under the various book entries of the several firms.

The bill then seeks a discovery of the day, and consideration on which the bond and mortgage were really executed; and whether the mortgagees had not notice of the claim of Caig and Mitchel. Whether the mortgagees gave notice of the mortgage to them, and requires Shirras and others to disclose the real debts, together with the particulars thereof, actually due from E Gairdner, to each of them, at the date of the mortgage. It prays that the mortgage may be decreed to be fraudulent and void as to Caig and Mitchel, and for general relief.

The separate answers of the 'several Defendants, Shirras and others, to the cross bill, set forth minuetely

T.

CAIG & MITCHEL.

their several claims against E. Gairdner, and aver that SHIRRAS the monies loaned and responsibilities incurred were & OTHERS upon the faith of the mortgage-except Wm. Blacklock, who did not know that he was included in the mortgage till some time after its date. Black in his answer produces on oath the plat referred to in the mortgage, which he says had remained with him ever since the execution of the mortgage.

They all admit that Caig and Mitchel were not notified of the mortgage, and that they knew of no authority from Caig to E. Gairdner to incumber his share of the property. They admit they did not see any title papers, and that they did not require them, having a perfect confidence in the representations and character of Edwin Gairdner. They deny that they had any knowledge of any transfer to Caig and Mitchel, except that E. Gairdner stated that Caig held one sixth. They admit that the mortgage was kept secret until the 10th September, 1802, lest it should injure the credit of the mortgagors. They aver that it was executed on the day of its date or within a very few days afterwards, and was not retained by E. Gairdner, but immediately delivered to the Defendant, Black. The testimony in the cause related mercly to the authentication of the instruments; and the entries upon the books, and to the balance of the accounts between the Charleston and the Savannah house, and tending to prove that the Savannah house was considerably indebted to the Charleston house at the date of the mortgage.

In May, 1807, the Circuit Court, consisting of Judges Johnson and Stevens, gave the following opinion.

"In the great confusion of legal and equitable interest which exist in this case, the mind can resort to no other means of making a just discrimination, but that of recurring to the original state of the interests of the several parties and following their respective portions through the several changes of property which resulted from subsequent transactions.

By the conveyance from Levi Sheftall to James Gairdner, Edwin Gairdner, and Robert Mitchel, each acquired a fee simple in one third of the property in question.

SHIRRAS

v.

MITCHEL.

In legal language they were each seized per my and & OTHERS per tout of a third part in joint tenancy. The third part of James Gairdner never was legally conveyed, until the CAIG & deed of July, 1802, by Edwin, attorney for James Gairdner, conveying it to Robert Mitchel. With regard therefore to that third, and the one sixth conveyed by Mitchel and Caig, making up a moiety of the whole, there can be no doubt that the Complainants are not entitled to recover. Both law and equity are on the side of the Defendants. The only difficulties that exist, arise in relation to the one sixth conveyed by Mitchel to Edwin Gairdner and by him conveyed to Caig, and the remaining third originally vested in Edwin Gairdner.

With regard to these propositions the Complainants are in possession of the legal right, and the question is, how far are the Defendants relieved in equity.

It is contended that this Court ought not to aid the Complainants, on several grounds.

1. Because this property ought to be considered as a part of the co-partnership funds of the first firm of Gairdner, Caig and Mitchel, and of E. Gairdner and Co. and neither co-partner is at liberty to alienate his share until the debts of those concerns are discharged, and their balances adjusted.

2. Because the amounts claimed by the several mortgagees were for loans and assumptions not existing at the time of the mortgage, but incurred afterwards, with a small exception.

3. Because by the articles of co-partnership, the property is legally pledged to the last concern of Gairdner, Caig and Mitchel, and this instrument as well as the conveyance of one sixth to Caig from E. Gairdner, are entitled to a preference to the mortgage, in consequence of the mortgagee's having neglected to record their mortgage, and thereby to put others on their guard.

On the first of these grounds we remark, there are many cases in which real property may be pursued as part of a co-partnership stock, but it is only in the hands of legal representatives in cases of descent, bankruptcy,