did, in accordance 276 with its said agreement, withhold said mortgage from record, and did conceal its existence.

"And said defendant further says that said defendant thereafter, proceeding according to its said intentions as hereinbefore set out, and as it was intended by the plaintiff that it should, did proceed to renew its then existing indebtedness, the creditors holding the same consenting to do so in ignorance of the existence of said mortgage, when they would not have done so had they known of its existence; of which debts so renewed there now exists unpaid the sum of more than twenty-five thousand dollars, and more than the full value of said mortgaged property; and said corporation defendant further proceeded according to its said intention, and as was intended by plaintiff it should, to purchase large amounts of luniber and other material needed by it on credit, the sellers thereof relying upon the credit had by said defendant, and ignorant of the existence of said mortgage, when they would not have sold said lumber and other material to said defendant corporation had they known of the existence of said mortgage; that of said indebtedness for such lumber and material so purchased there now remains unpaid the sum of twentyfive thousand dollars.

"And the defendant further shows that thereafter, to wit, on the twenty-fifth day of July, 1891, said defendant, being insolvent and unable to pay its debts, and owing the various sums above set forth, did, under the provisions of the statute of the state of Indiana in such cases made and provided, execute to this defendant its indenture of assignment of all of its property for the benefit of all of its bona fide creditors, which indenture of assignment was duly recorded in the recorder's office of Laporte county, on the said twenty-fifth day of July, and delivered all of said property, including that in the said mortgage mentioned and described, to this defendant, and that this defendant accepted said trust, and within fifteen days thereafter filed with the 277 clerk of the circuit court of Laporte county his affidavit that said property had actually been delivered to him for the purposes declared in said indenture, and as to the probable value thereof, and did execute and file with said clerk his written undertaking in double the amount of the value of said property, with surety to the acceptance and approval of said clerk, conditioned that he would faithfully execute the duties of his trust, and did also file with said clerk an oath, duly subscribed by him, that

he would faithfully execute the duties of his trust, and thereupon he entered upon the execution of said duties, and thenceforward, hitherto, until now, he had been, and yet continues in the execution thereof; and that thereafter, on the 27th of July, 1891, the plaintiff caused said mortgage to be recorded in the recorder's office of Laporte county; that the total value of the assets of said Hopper Lumber and Manufacturing Company included in said indenture of said assignment, and so coming into his possession, will not exceed the sum of sixty thousand dollars; that the bona fide indebtedness of said corporation will exceed the sum of one hundred and five thousand dollars; that by the means aforesaid, and in the manner aforesaid, the plaintiff gave, and intended to give, the said Hopper Lumber and Manufacturing Company a credit to which it was not entitled, and to which plaintiff well knew it was not entitled; and the plaintiff well knew and intended that its conduct would result, as it did result, in the then existing creditors making such renewals, and in many persons selling said Hopper Lumber and Manufacturing Company goods upon credit.

"Wherefore, this defendant says that the plaintiff cannot now take advantage of its own wrongful conduct, and claim that it has any priority over the other creditors of said defendant corporation, who by such conduct it has induced to renew such indebtedness, and to make such sales to said defendant corporation. He, therefore, prays the 278 judgment of this court that the plaintiff is not entitled to a foreclosure of said mortgage.

"Paragraph 2. And for a partial answer to so much of said complaint as asked for the appointment of a receiver herein, the defendant, William B. Hutchinson, assignee of the Hopper Lumber and Manufacturing Company, says that he admits the execution of the mortgage to the plaintiff, set out and exhibited with the complaint; and that James S. Hopper, president of said Hopper Lumber and Manufacturing Company, pretended to execute what purported to be a chattel mortgage to the Sutton Manufacturing Company, upon a large amount of personal property belonging to said defendant corporation, including the machinery in said complaint mentioned and described; and that said Sutton Manufacturing Company gave notice that it intended to sell said personal property under said pretended chattel mortgage; but he denies that he has ever permitted or intended to permit said

Sutton Manufacturing Company, or any person acting in its behalf, to take possession of any of the property claimed by the plaintiff under its mortgage, or that he ever intended to permit said Sutton Manufacturing Company, or any person acting in its behalf, to sell or dispose of said property; but, on the contrary, he avers the fact to be, that before the application of the plaintiff for the appointment of the receiver herein, he had refused to permit said Sutton Manufacturing Company to take possession of any portion of the property under said chattel mortgage, which fact would have been made known to the plaintiff upon inquiry.

"And this defendant further shows that as such assignee he has filed his certain suit in equity in the United States circuit court for the district of Indiana against said Sutton Manufacturing Company to have said pretended chattel mortgage decreed null and void, and has procured from said court a restraining order enjoining and restraining said Sutton Manufacturing Company from proceeding 279 with said proposed sale; that, at all times since his acceptance of said trust, he has retained possession and control of all the property of every nature and description which has come into his hands as such trustee under such assignment, and he intends to continue to retain the possession thereof, and the same to dispose of and administer for the benefit of all of the bona fide creditors of said Hopper Lumber and Manufacturing Company according to their several and respective rights therein, as they may be decreed and determined by the proper courts having jurisdiction thereof, and at all times subject to the direction of this honorable court in the premises.

"Wherefore, he says that there was no just ground for the application to this court for the appointment of a receiver herein; and such receiver having been appointed without notice to him, or opportunity afforded to him to make any showing why such receiver should not be appointed, said receiver ought now to be discharged, and all costs made upon said application, and growing out of said appointment, ought to be taxed against the plaintiff, and he prays the judgment of this court accordingly."

A demurrer was filed to each of these paragraphs of answer, and was sustained by the court. To these rulings the appellant at the time excepted, and elected to abide by his answers, and thereupon judgment was rendered in favor of appellee against the Hopper Lumber and Manufacturing Company for

the full amount of the mortgage indebtedness, and there was a decree of foreclosure and order of sale of the mortgaged realty for the payment of the judgment.

The only errors assigned in this court are, that the court below erred in each of its rulings in sustaining demurrers to the answers.

So that the only question to be considered by this court is as to the sufficiency of each of the partial answers, for 280 the purposes and to the extent to which they were respectively pleaded.

The mortgaged premises having been conveyed by the mortgagor to the appellant Hutchinson, in trust for the benefit of its creditors, he was a necessary party defendant in the suit to foreclose the mortgage. The legal title to the mortgaged premises rested in him, and it became his duty, on behalf of the creditors, to protect their rights in the foreclosure suit. He was made a defendant in the action in order that he might defend. An assignee may not only defend actious to foreclose mortgages which he deems fraudulent, but, ordinarily, is the only one who can institute actions to set aside mortgages or conveyances executed by the assignor, prior to the assignment, for fraud: Voorhees v. Carpenter, 127 Ind. 300; Cooper v. Perdue, 114 Ind. 207; Seibert v. Milligan, 110 Ind 106; Wright v. Mack, 95 Ind. 332; Lockwood v. Slevin, 26 Ind 124; Barker v. Barker's Assignee, 2 Wood. 87; In re Leland, 10 Blatchf. 503; Hildeburn v. Brown, 17 B. Mon. (Ky.) 779.

The fact that the rights of the creditors, among themselves, to the property or fund sought to be protected or recovered are not the same, is not a matter that concerns the adverse party. If the assignee represents any creditor who, if the assignment had not been made, would have had a standing in court to question the conveyance, such assignee may, as the representative of that creditor, assail such conveyance. The distribution of the proceeds recovered in such action is a matter between the assignee and the creditors he represents, to be determined by the court having jurisdiction of the trust according to the rules of equity.

It follows, that if any of the several classes of creditors mentioned in the first paragraph of answer could, if the assignment had not been executed, have successfully defended the action on account of the matter pleaded in the answer, then the demurrer should have been overruled, 281 although

such assignee may represent other creditors who would have been unable to make such defense.

We are satisfied that the creditors who did not alter their condition, after the execution of the mortgage sought to be foreclosed, do not occupy such a position as to enable them to successfully complain of its execution, or of the failure of the bank to record it within the time allowed by law. It remains to determine whether the creditors who gave credit upon new purchases, or renewed obligations, since the execution of the mortgage, occupy a more advantageous position.

The section of the statute regulating the recording of deeds and mortgages of real estate reads as follows.

Section 2931, Revised Statutes, 1881: "Every conveyance or mortgage of lands, or of any interest therein, and every lease for more than three years, shall be recorded in the recorder's office of the county where such lands shall be situated; and every conveyance or lease, not so recorded in forty-five days from the execution thereof, shall be fraudulent and void as against any subsequent purchaser, lessee, or mortgagee in good faith and for a valuable consideration": Kirkpatrick v. Caldwell's Admrs., 32 Ind. 299.

None of the creditors whose claims are represented by the assignee are either "subsequent purchasers, lessees or mortgagees," and are, therefore, not within the classes against whom the instrument is, by statute, declared to be fraudulent and void: Runyan v. McClellan, 24 Ind. 165; Kirkpatrick v. Caldwell's Admrs., 32 Ind. 299; Shirk v. Thomas, 121 Ind. 147; 16 Am. St. Rep. 381; Mann v. State, 116 Ind. 383;. Evans v. Pence, 78 Ind. 439.

We cannot extend the terms of the statute so as to include general creditors in the classes of persons, against whom unrecorded mortgages are to be deemed, as an inference of law, fraudulent and void, for that would be legislation.

It may be, and doubtless is, the policy of the law to encourage 282 the prompt recording of instruments affecting the title of real estate, and to discourage their withholding from record. The legislature has stated the consequences which result, as a matter of law, from the failure to so record them, and we can only ascertain and enforce its mandates.

It follows, that in the absence of express fraud, the mere failure of the appellee to record the mortgage in suit within the time fixed in the recording act will not, as against the AM. ST. REP., VOL. XXXVI.-85