for a valuable consideration, who had nei- which ownership of the premises then stood, ther actual nor constructive notice. and then insisted upon the mortgage being Complainant contends that even though executed accordingly. If that had been the proper name of the mortgagors is Bor-done-and in these days no reasonably prubely, and that the name by which they mort- dent person takes title or makes a mortgage gaged the land was fictitious, yet, he being loan without a search-the brewing comthe real owner of the property, and the pany's mortgage would have been indexed mortgage having been recorded, it is notice in the same names as the owners, "Borto all subsequent purchasers and mortgagees, bely," and the building association's search citing the following cases in support of his made by Mr. McWilliams in that name would contention: Weihl, Probasco & Co. v. C. P. have disclosed the brewing company's mortRobertson et al., 97 Tenn. 458, 37 S. W. 274, gage, and the building association could then 39 L. R. A. 423; Fallon v. Kehoe, 38 Cal. 44, have taken appropriate action to protect it99 Am. Dec. 347; David v. Williamsburg self. The recording of the Borbely deed was City Fire Insurance Co., 83 N. Y. 265, 38 Am. unquestionably constructive notice to the Rep. 418. brewing company of the real names of the owners.

The case of Mackey v. Cole, 79 Wis. 426, 48 N. W. 520, 24 Am. St. Rep. 728, takes the opposite view. In this state the question does not seem to have arisen except indirectly.

I will advise a decree in accordance with these views.

FLORENCE PIPE FOUNDRY & MACHINE CO. et al. v. BURLINGTON CITY LOAN & TRUST CO. et al. (No. 45/62.)

(Court of Chancery of New Jersey. March 14, 1919.)

1. MORTGAGES

299- SATISFACTION - PERFORMANCE OF CONDITION.

[5] I am therefore of the opinion that the mortgage of the building and loan association for $1,800 is entitled to priority of payment over the mortgage of the Lembeck & Betz Eagle Brewing Company, because, at the time the building and loan association mortgage was given, the mortgage of the brewing company was not constructive notice, inasmuch as it was recorded in the names of the mortgagors in such form that a search in the real names of the owners would fail to disclose it. If the searcher is charged with the duty of searching for fictitious names, either in the chain of title, or for incumbrances in order to locate instru-gage as agreed upon with creditor, and thereby ments of record affecting the premises involved, the recording system would be a nullity, and the searcher would be helpless, because he has no means of determining what fictitious name may have been employed by a grantor or a mortgagor in a previous deed or incumbrance.

An otherwise perfect chain of title search, based upon a search in the real names of the parties as they appear of record, would not be worth the paper it was written on, because you could never tell what outstanding deeds or incumbrances might exist of record affecting the premises in fictitious names. To sustain the brewing company's mortgage as the prior lien would be to sustain the illogical and intolerable situation thus outlined, and would make ducks and drakes of the recording system in New Jersey. A search would be useless, and the result would be confusion and confusion worse confounded.

[6] Furthermore, on the pure equities of the situation, the brewing company was in an undoubted position of ability to protect itself, as well as the building association, against a situation such as has now arisen, by having a chain of title search made which would have disclosed the correct name in

In a suit to secure the surrender for can. cellation of a bond or mortgage given by one of plaintiffs to one of defendants, evidence held to show that mortgagor had formed a company liver or tender for delivery its bonds and mortand caused that company to execute and de

satisfied his personal bond and mortgage, and
was entitled to the surrender thereof.
2. PRINCIPAL AND AGENT ~92(1)—DUAL CA-
PACITY PRIVATE COUNSEL FOR CREDITOR
CORPORATION AND MEMBER OF CREDITORS'
COMMITTEE.

Where private counsel of a creditor company was also its selection as a member of the creditors' committee, his actions in the dual capacity must be regarded primarily as those of committeeman.

Action by the Florence Pipe Foundry & Machine Company and another against the Burlington City Loan & Trust Company and others. On final hearing on bill, counterclaim, and proofs. Judgment for plaintiffs ordering bond and mortgage delivered up for cancellation, counterclaim for foreclosure dismissed, and prayer of counterclaim for personal decree against the plaintiff Walter Wood and the three defendant members of creditors' committee denied.

Marshall H. Diverty, of Camden, and J. H. Brinton, of Philadelphia, Pa., for complainants.

Ernest Watts, of Burlington, for defendant Burlington City Loan & Trust Co. Collins & Corbin, of Jersey City (Gilbert

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(106 A.)

Collins and Edward A. Markley, both of committee shall lawfully do or cause to be done Jersey City, of counsel), for defendant cred- by virtue hereof." itors' committee.

Wood on the same day that they understood [ & Machine Company executed and delivered that the amount of his claim was to be rep- to the Commonwealth Title Insurance & resented in junior securities of the new Trust Company of Philadelphia, as trustee, corporation to be organized by him and

$517,000 of its bonds (the aggregate of the claims assigned to the Burlington Trust Company with interest thereon to March 15, 1917) and its mortgage or deed of trust dated on that day covering the plant to secure the payment of the bonds. The bonds, together with interest from March 15, 1917, were delivered to the committee in settlement, and were by the committee distributed among the creditors in proportion to their claims. All of them accepted the bonds and cash in satisfaction of their claims except the Sloss-Sheffield Company. Within a week before the final settlement Mr. Ramsay, of the committee, who was also the private counsel of the Sloss-Sheffield Company, was counsel not to accept the settlement, and notified by the company through its general for this reason, and it is the ground upon which the counterclaim is based: When the receiver settled with Walter Wood and delivered to him the deed for the plant and received from the Burlington Trust Company its receipt for the estimated dividends on the claims assigned to it, Mr. Wood had not perfected his program; he had not incorporated the company which was intend

bonds and execute the mortgage; and until this was done, as a makeshift, to secure the trust company in the meantime, he gave his personal bond for $500,000, payable on demand, and his mortgage on the plant to secure the bond, and on the delivery of the bond and mortgage the trust officer gave Mr. Wood a memorandum which reads as

"the said Burlington City Loan & Trust Com-ed to take over the property and issue the pany to use the claims so deposited (together with all dividends to be declared on the same) for the payment for the property of the Florence Iron Works purchased by Walter Wood at the sale made by Harold Wells, receiver, on Wednesday, June 28, 1916, upon the said Walter Wood causing to be executed a mortgage on the property purchased by him consisting of the plant of the Florence Iron Works, the dwelling houses, lots of land, and farms, for such sum as may be necessary to secure all claims against the Florence Iron Works so deposited with said trust company, said mortgage to bear 6 per cent. interest, and containing a provision that a sinking fund derived from the rents from said dwellings amounting to about $15,000 a year shall be set aside to pay the bonds given for said claims."

The assignment of the Sloss-Sheffield Com pany was sent by mail on November 14, 1916, to Mr. Ramsay by the president of the company with the advice that he had been authorized to accept Mr. Wood's terms. On the following day Mr. Ramsay forwarded the assignment to Mr. Wood. It was the last one in. On November 15, 1916, Mr. Wood settled with the receiver and obtained his deed. In the settlement the trust company gave the receiver a receipt for $185,112.71, being 75 per cent. of the estimated dividends on the claims assigned to the trust company. On February 15, 1918, Walter Wood conveyed the plant to the Florence Pipe Foundry & Machine Company, which he had caused to be incorporated for the purpose of carrying out his scheme, and on February 20th the Florence Pipe Foundry

follows:

"In connection with the settlement between Walter Wood, purchaser of the plant of the Florence Iron Works, and Harold B. Wells, receiver, certain claims of creditors of the Florence Iron Works have been assigned to the Burlington City Loan & Trust Company, trustee, with instructions to pay to Walter Wood the dividends that may be allowed on said claims from the receiver, provided that the said Walter Wood secures such claimants by bonds to be given by the party to whom he shall transfer the title of the Florence Iron Works, which bonds are to be secured by mortgage on the plant of the company purchased by him, and so to be transferred, and as the parties are not prepared at this time to execute and deliver the formal bonds and the trust mortgage securing the same, it is agreed that there shall be executed by the said Walter Wood and delivered to the said trust company as temporary security to be held by them until such time as it is necessary for the due execution of said bonds and trust mortgage a bond and mortgage on such plant in the sum of $500,000, which bond and mortgage is to be canceled and surrendered to Walter Wood at the time the bonds and the trust mortgage are executed and delivered.

"It is further understood between the parties

(106 A.)

that said formal bonds and trust mortgage are
to be ready for execution and delivery within
90 days from the date hereof.
"November 15, 1916."

mortgage on the plant were not forthcoming in satisfaction of the creditors' claims, as contemplated by Walter Wood's proposal of June 29, 1916, later modified, is shown con

In anticipation of this course the directors clusively by the documents hereinbefore of the trust company had passed a resolu-As to this there can be no doubt. The very quoted and by the undisputed testimony.

tion

That its second vice president "be, and he is hereby, authorized to receipt to Harold B. Wells, receiver of the Florence Iron Works, for claims assigned to this trust company upon the delivery of deed by the said Harold B. Wells, receiver, to Walter Wood, for the plant and property of the Florence Iron Works, and upon the said Walter Wood delivering to said trust officer a bond and mortgage on the plant so conveyed in the sum represented by the receipt to be given by said trust officer; it being understood and agreed that said bond and mortgage is to be held as temporary security for said amount, for the protection of this trust company, until the bonds and mortgage securing the claims have been prepared and executed and delivered to this trust company for the several parties who have assigned their said claims."

[1] The delay that ensued in perfecting the plans was in a large measure due to the efforts being put forth by Mr. Wood to liquidate the affairs of the Camden Iron Works, and was apparently acquiesced in by all the parties concerned until November, 1917, when the creditors' committee notified the Burlington Trust Company to make demand for the payment of the mortgage, which it did. This was done, obviously, and as was conceded by the committee, to hasten Mr. Wood into a conclusion of the arrangement; and this it accomplished. The Sloss Company now claims this mortgage.

terms of the bond and mortgage, for a round
sum and payable on demand, are absolutely
irreconcilable with the plan for denomina-
tional bonds, distributable proportionately
amongst the creditors, and carrying a cred-
it extending over a period of years. To re-
gard the bond and mortgage as a determina-
tion on the part of Mr. Wood to own the
property individually, and that they were
intended to be in lieu of corporate bonds,
as suggested in Mr. Ramsay's letter of Au-
gust 2, 1916, would be repugnant to the en-
tire body of proof in the case.
thing is so simple. The trust company used
the claims for the purposes for which they
had been assigned without having in hand
at the time the bonds and mortgage it had
agreed to secure before parting with the in-
terest in the claims. It trusted Wood to do

The whole

this, and when he later on formed the Florence Foundry Pipe & Machine Company, and caused that company to execute and deliver, or tender for delivery, its bonds and mortgage as agreed upon with the creditors, he satisfied his personal bond and mortgage to the trust company, and was entitled to their surrender. It may be that, had Wood declined to carry out his bargain, the bond and mortgage would have inured by subrogation to the creditors, but my judgment is that, as they were given as a personal indemnity only, the creditors would have had to look to the trust company for "Counsel for Sloss Company does not contend damages for its misfeasance. However, it is [I quote from the brief] that had Walter Wood, instead of giving his individual bond and mort- unnecessary to decide whether the bond and gage, caused a corporation to have been form- mortgage would have been ultimately benefied and had then offered the bonds of such cor- cial to the creditors if Wood had defaulted poration in payment of the claims of creditors, and refused to perform; for it appears that he would not have fulfilled his contract clearly that he discharged his undertaking obligation with Sloss Company. Counsel for Sloss Company, however, does contend that, having adopted a course in fulfillment and per-gage which Wood agreed to have executed formance of his obligation and executed and were to be for the aggregate amount of the delivered his individual bond and mortgage, his accepting creditors' claims with interest contract was then fully completed and perform- from the due date. The interest included in ed, and he could not thereafter, without the the principal of the bonds was calculated to consent of the Sloss Company, substitute in March 15, 1917 (presumably because Wood place of his bond and mortgage other securities had agreed with the trust company to have or the bond and mortgage of a corporation thereafter formed." the corporate bonds and mortgage ready for delivery within 90 days from November 15, 1916), and the bonds, and interest from that date compounded, were paid over to the creditors and tendered to the Sloss Company

to them.

The corporate bonds and mort

This contention would be compelling were it supported by the facts, but, as the evidence refutes utterly the premises, I am unable to perceive the least merit in the ar-in satisfaction of their claims. More than gument. That the bond and mortgage were given to the Burlington Trust Company, not in fulfillment and performance of the proposition, but solely as a personal indemnification, to secure it against loss or damage in the event that the corporate bonds and the

this Wood was not called upon to do, save, perhaps, strictly the interest, paid in cash, should have been calculated from February 15, 1917; but this is a trifling matter of which no point was made, and none could have been, because the limitation ran to the

trust company.

But

The Sloss Company was mained unimpaired by this incident. not justified in refusing to accept the bonds whether the committee represented the credand cash because the tender was delayed.itors and had or had not authority to close No time was stated for the fulfillment of out the final settlement are purely academic the agreement, and time was not of the es- and wholly immaterial questions. The acsence of the contract. Besides, it was a ceptance of Walter Wood's proposition of creditor and anxiously concerned in a favor- June 29, 1916, bound the Sloss-Sheffield Coinable outcome of the affairs of the Camden pany and the other creditors to take the Iron Works. Mr. Wood, who is a man of bonds in payment of their debts. Nothing great wealth, had agreed to assume person- more was to be done by them other than to al responsibility for its debts in case he receive the bonds; and the acceptance of should become the purchaser. He was en- them and of the interest by the committee deavoring by a single operation to rescue on their behalf was merely perfunctory. from financial disaster the two companies (Florence and Camden), in both of which he and his family were vitally interested; and all during the delay, due to the combined efforts, the Sloss-Sheffield Company remain- The prayer of the counterclaim for a pered quiescent. And it was not until after the sonal decree against Walter Wood and the creditors' committee became impatient and three members of the committee will be dethe screws were put to Mr. Wood, so to nied. If the court had power to assess damspeak, and as a result of which he perform-ages against Walter Wood for breach of ed, that the Sloss-Sheffield Company raised contract, or against the committeemen for its voice in protest and assumed the unten- breach of duty, which it has not, the prayer able attitude set up in its counterclaim. would be denied for want of proof of a The Sloss-Sheffield Company cannot, of breach in either case.

course, be compelled to receive the bonds and interest as prayed in the bill, but they are at their call in the hands of the committee.

[2] There was considerable discussion in

The bond and mortgage will be ordered delivered up for cancellation, and the counterclaim for foreclosure will be dismissed, with costs.

MCDONALD v. SMITH.

Jan. 7, 1919.)

68-JURISDICTION-WAIVER OF RIGHT TO DISMISSAL.

Although the court might have dismissed a suit on motion on ground that suit was erroneously begun by trustee process at any time before trial, it does not follow that such motion, made after trial, should have been granted, where the court had jurisdiction of the parties and cause of action, since the defendant could legally waive his right to have the suit dismissed.

2. PLEADING 34(6)-SUFFICIENCY-OBJECTION AFTER TRIAL-AMENDMENT.

the argument and in the briefs that, as the (Supreme Court of New Hampshire. Grafton. creditors' committee did not purchase the plant, their office, under the protective agreement, terminated, and that their nego-1. DISMISSAL AND NONSUIT tiation of the final settlement was unauthorized, and not binding upon the Sloss-Sheffield Company. Whatever may be the true construction of the protective agreement in this respect, it is nevertheless the fact that the committee acted throughout for the creditors in all of the dealings with Walter Wood, and with their concurrence. This applies to the Sloss-Sheffield Company, which, as already stated, sent its claim to Mr. Ramsay, one of the committee, for delivery to Mr. Wood. Although Mr. Ramsay was the private counsel of the company, he was also its selection as a member of the creditors' committee, and his actions in the dual capacity must be regarded primarily as those of the committeeman. It is, too, a permissible construction of the protective agreement that the committee itself had authority to accept Mr. Wood's proposal, and to assign the claims to the Burlington Trust Company; and the mere fact that, instead, the creditors, under the advice of the committee, assigned their claims direct to the trust company, did not imply that the creditors dealt directly, and that the agency was at an end. On the contrary, the fair interpretation of the later conduct of the creditors in availing themselves of the services of the committee is that its authority re

tion to the sufficiency of the pleadings, the court When a cause has been tried without objecwill not take the time necessary to investigate their technical accuracy, since, if inaccurate, they can be corrected by amendment.

3. TRIAL 121(2)—ARGUMENT OF COUNSELINFERENCES FROM EVIDENCE.

In a slander action where a witness who

heard defendant make the slanderous statements wrote to a man in the town about it and about that time plaintiff's friends living there began to avoid her, there being no other shown reason therefor, warranted counsel in asking the jury to find that defendant was responsible for the slander being "peddled" over the town.

Transferred from Superior Court, Grafton County; Marble, Judge.

Action by Daisy McDonald, by her guardian, Angus McDonald, against George Smith,

For other cases see same topic and KEY-NUMEER in all Key-Numbered Digests and Indexes