Pidcock v. Swift.

the 31st day of December of the same year; $865 was paid in 1886, and $336 during January, 1887. John swears that he made those payments because it was the duty of his father, James and himself, according to the arrangement under which the lands had been conveyed, to make them. James admits that he procured John to make them, and also that when he first requested John to make them, John neither objected nor expressed surprise. He also says that the reasons which induced him to procure the payments to be made were that he thought Mr. Swift had paid a good deal for the lands, not many sales had been made, and it looked to him as though Mr. Swift had paid more for the lands than he would get out of them, and he wanted to do everything he could to make himself "strong" with the Swifts for the future, and that he thought by having the payments made he would be doing something towards the accomplishment of that object. But it is manifest his principal reason is an invention, and could not have existed at the time when he says it influenced his conduct, for it will be observed, that the payments commenced almost contemporaneously with the execution of the deeds, and before any sales had been made, and long before it was possible for him to have formed a judgment as to whether or not it was probable the lands could be sold for sufficient to reimburse Mr. Swift for his outlay. The first sale was made in July, 1885—and that was made by James and not by Mr. Swift or the broker-and prior to the date of that sale four different payments of interest had been made, aggregating $586.

Mr. Swift says that these payments were made without his authority and that he had no knowledge of them until May, 1887. On the assumption that this is true, his counsel claim that he should not be bound by the officious intermeddling of John and James in his affairs. That is true. He cannot be bound by their unauthorized acts, but it is also true that he is bound by what it appears he must have known, and he must also be required to bear the consequences of his own indifference and laches. The undisputed facts show conclusively, as I think, that he either knew that these payments were being made or willfully excluded such knowledge from his mind. If he did

Pidcock v. Swift.

not know they were being made, it is because he shut his mind, so as not to perceive what he knew he would perceive if he kept it open. He knew that the lands had been conveyed subject to a mortgage debt more than double the sum he had invested in them; that the mortgages were all overdue and all bore interest payable at short intervals; that he was not himself paying the interest on them, and that, although the interest was falling due from time to time, none was demanded of him, nor were proceedings instituted to enforce its payment. So that, unless his mind was in a state of utter insensibility-and nothing of that kind is claimed-it is impossible to believe that the encumbered condition of the lands and the long silence and inaction of the mortgagees did not furnish him with knowledge, as certain and complete as could have been done by words, that some other person than himself was paying the interest. It is a principle of sound law, as well as of good morals, that a man who shuts his eyes to avoid seeing what he believes he will see if he keeps them open, shall be held to have seen what he would have seen had he not shut them.

On the 27th day of May, 1887, Mr. Swift repaid to James nearly the whole amount which John had paid for interest on the mortgages, and James credited the amount so repaid on John's account with the Newark Beef Company. This was done without consultation with John, and after John and James had had a quarrel, resulting in much bitterness and hate, and after danger had arisen that John would disclose the secret arrangement under which the lands had been conveyed.

From this series of facts, it seems to me it must be declared, as was declared in substance by the chief-justice, in pronouncing the judgment of the court of errors and appeals in Demarest v. Terhune, 3 C. E. Gr. 532, 539, that it is plainly consistent with sound reason and good sense to infer that the deeds in question were executed with an understanding, if not clearly expressed, at least tacit, that the grantee should sell the lands, and after reimbursing himself for his advances, pay over any surplus realized from them to one or more of his grantors. There are some facts in the case which go, to some extent, to warrant a harsher judg

Pidcock v. Swift.

ment; which indeed go, to some extent, to prove that the deeds were executed with an actual intent on the part of both parties to defraud the creditors of the grantors. For example, the form of the conveyances being absolute, though not so in fact under the secret arrangement, enabled the grantors to represent to their creditors, with convincing force, that they were without means, and by this means induce the great body of them to accept a smaller percentage of their debts than they would have accepted had they known the truth. It also appears that James E. Bathgate, the father, at the time of his death, held a mortgage for $3,000 on real estate in the city of New York. Early in 1887 the mortgagor had an opportunity to sell the mortgaged premises, but could not complete the sale until this mortgage was canceled. He proposed to John and James to execute a new mortgage, on other real estate, in the place of the one their father had held. They consented, and directed that the new mortgage should be made to Mr. Swift. It was so made, and after its execution it was sent by James to Mr. Swift to hold. He accepted it and held it without inquiry as to why it was made to him, or for what purpose he was to hold it. His conduct manifestly laid some foundation for the belief that he was willing to assist John and James in concealing property which should be applied to the payment of their debts or to those of their father. But the conclusion that Mr. Swift accepted the deeds under consideration with an actual intent to assist the grantors in defrauding their creditors, is, in my judgment, after a careful review of all the evidence, less in consonance with the real truth of the case than that he accepted them as security for his advances. The latter will be adopted as the conclusion which is best supported by the great weight of the evidence and most in accord with the real right of the case.

The facts which must control the decision of the question, whether or not the complainant's judgment was assigned to Mr. Swift for the benefit of James, and on a consideration proceeding from James, have already been narrated. They show that the money used in paying for the assignment was James'. The money was advanced by Mr. Swift in April, 1886. Shortly

Pidcock v. Swift.

afterwards it was paid to the complainant, and, on the 1st day of January following, James gave Mr. Swift his note for it, with interest added from the date when the money was advanced. Mr. Swift accepted the note, and has since then received several partial payments on it, and he has, in addition, at James' request, signed a satisfaction-piece directing that the judgment. be satisfied of record. These facts show, beyond all question, that the money used in the purchase of the judgment was the property of James. Mr. Swift and James have, by their own acts, put all question on that subject at rest forever.

The complainant is entitled to a decree adjudging and directing as follows: That the assignment made by him of this judgment is void; that the four deeds made to Mr. Swift were executed to secure advances, including the $12,600 advanced in April, 1886; that an account shall be taken to ascertain the amount remaining due to Mr. Swift, in which he must be charged with whatever he has realized from the lands by sale or otherwise, and also with the $1,000 received by him on the reconveyance of James' homestead; that an account shall also be taken of the amount remaining due to the complainant on his judgment, in which the judgment debtors must be credited with the money received by the complainant on the assignment of his judgment; that the amount which shall be found to be due to Mr. Swift shall be declared to be a first lien, as between the parties to this suit, on all the lands which were conveyed to him, and to which he still retains the title, including James' homestead; and that the lands last designated, including James' homestead, shall be sold, and out of the proceeds the amount remaining due to Mr. Swift shall be first paid, and then so much of the residue as may be necessary for that purpose shall be applied to the payment of the amount remaining due to the complainant on his judgment, together with his taxed costs of

this suit.

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Gray v. Case.

GEORGE R. GRAY, treasurer of the State of New Jersey,

V.

WILLIAM R. CASE and others.

If in proceedings by a railroad company to condemn lands under its charter it fails to give notice to a mortgagee, and such mortgagee surrenders his mortgage and accepts another from the owner of the premises for a larger sum, which he has recorded pending the proceedings to condemn, but before the award is filed in the office of the clerk, the condemnation proceedings are subject to such new mortgage, and the distribution of the moneys awarded to the owner will not bar the mortgagee from recovering the whole amount of said award and interest, or so much as may be necessary to pay the balance due after the sale of the lands covered by the mortgage and not included in the condemnation. In such case interest is to be computed on the award from the time when the balance due is ascertained. In such case, also, the mortgagee is not chargeable with neglect if he files his bill at any time within the statutory period.

On bill to foreclose.

Mr. William Y. Johnson, for the complainant.

Messrs. McCarter, Williamson & McCarter, for the defendants.

BIRD, V. C.

The facts upon which this case is to be determined have been agreed upon by counsel, and are in substance as follows: Adair was the owner of the mortgaged premises in fee simple on the 2d day of March, 1868; on that day he made application to the commissioners of the sinking fund for a loan of $6,000; on March 20th, 1868, he executed a bond for $6,000, and delivered it to said commissioners, and also a mortgage upon the premises mentioned in the bill of complaint, to secure the payment of said bond, which said mortgage was recorded on the 28th day of March, 1868, in the clerk's office in the county where the said lands lie; Adair conveyed said lands to Henry Westcott by deed dated November 17th, 1870, subject to the