Shreve v. Shreve.

itself, the lands are not charged by such direction. 2 Jarman on Wills 523; 2 White & Tudor's L. C. in Eq. 298,

But while I cannot concur in the principle on which the specialty debt has been imposed in this case on the specific legacy and devises, I have come, on another ground, to the same result.

In the absence of any express charge by the will upon the lands devised, a specialty debt, proprio vigore, is a burden upon them to the same extent as it is upon a specific legacy. The general principle is that, on a failure of personal assets, the specific legacies and devises must abate equably in payment of creditors. This rule seems not unreasonable, and is founded in the presumed intention of the testator. As the devise and the legacy are both specific, the law deduces the fair conclusion that it was not the purpose of the testator to prefer the one to the other, and that, as they possess an equality of right, their burden should be equal. The specialty creditor can look to the land as well as the personal assets, and there seems to be no reason why, in regard to this class of debts, the one kind of property should have an immunity which the other does not possess. The leading case on this head is that of Long v. Short, 1 P. Wms. 403. The point was also elaborately discussed, and the doctrine. maintained by Vice Chancellor Bruce, in the case of Tombs v. Roch, 2 Coll. 490.

I think the decree in the Court of Chancery has properly marshaled the assets for the payment of the specialty debt. On the other point the decree should be reversed, and the case remitted with the requisite instructions.

The decree was reversed in part, as above, by the following vote:

For reversal-BEASLEY, C. J., CORNELISON, ELMER, Fort, HAINES, KENNEDY, OGDEN, VAN DYKE, VRedenburgh, WOOD. 10.

For affirmance-CLEMENT.

Hunterdon County Bank v. Nassau Bank.

THE HUNTERDON COUNTY BANK v8. THE NASSAU BANK.

The final decree in the above stated cause was made agreeably to the opinion delivered in the case of The Broadway Bank v. McElrath, 2 Beasley 24.

That decree, among other things, adjudged the Nassau Bank, who were the complainants in chancery, entitled to have two hundred and twenty-five shares of the capital stock of the Trenton Iron Company, held by them, sold, and the proceeds thereof applied to the payment of the several loans, and the balance thereof due them from Thomas McElrath. The Hunterdon County Bank have appealed from that part of said decree, for that they are entitled to have the said shares sold under, and by virtue of the attachment in the complainant's bill mentioned.

The appeal was argued by Mr. B. Vansyckel and Mr. Browning, for appellants, and Mr. E. W. Scudder and Mr. A. O. Zabriskie, for respondents.

The opinion of the court was delivered by Ogden, J., affirming the decree of the Chancellor. The reporter regrets, that after diligent search and inquiry, he has been unable to find it.

The decree was affirmed by the following vote:

For affirmance-CLEMENT, CORNELISON, ELMER, FORT, HAINES, KENNEDY, OGDEN, VAIL, Vredenburgh, Wales. 10.

For reversal-NONE.

Herbert v. Mechanics Building and Loan Association.

NOVEMBER TERM, 1864.

JOHN B. HERBERT, appellant, and THE MECHANICS BUILDING AND LOAN ASSOCIATION OF NEW BRUNSWICK and others, respondents.

1. A member of a building and loan association executed to it, as security for a loan, a mortgage, and as collateral thereto, assigned over ten shares of its stock of which he was the owner; subsequently he executed a mortgage on the same premises to H. and after that conveyed to him the mortgaged premises in fee. Judgments were then obtained against the mortgagor, and the ten shares of stock levied on. Held, that the equity which H. had acquired, as against the mortgagor and the association, to have the assets so marshaled that the debt of the association should be paid primarily out of the ten shares of stock, could not be impaired or affected by the subsequent intervention of the judgment creditors.

2. In the marshaling of assets, mere judgment creditors do not occupy the same vantage ground with bona fide purchasers for a valuable consideration, without notice.

3. The general rule is, that the right of the creditor to marshal the assets of the debtor, is absolute against the debtor himself, and cannot be taken away by the subsequent action of other creditors.

4. The present case, upon all the other points as reported in 1 McCarter 219, affirmed.

On the 7th of July, 1856, John B. Conover executed a mortgage to the Mechanics Building and Loan Association. of New Brunswick, to secure the payment of certain moneys mentioned in the condition of a bond, bearing even date with the mortgage. Conover, at this time, was a member of the above named company, and owned ten shares of its capital stock, which, in conformity to the constitution of the association, he assigned to the company as collateral security to the mortgage debt. On the 30th of March, 1860, Conover mortgaged the same premises, with other lands, to John B. Herbert, the appellant, to secure a debt which he owed him, and on the 10th of September following, being in failing circumstances, he conveyed the mortgaged premises in fee, to Herbert, and the residue of his real estate to other parties.

Herbert v. Mechanics Building and Loan Association.

Subsequent to the mortgage and conveyance to Herbert, judgments at law were recovered against Conover, and executions being issued thereon, were levied on the ten shares of stock above mentioned. It appeared in the case that Conover was insolvent.

Mr. A. V. Schenck and Mr. J. P. Stockton, for appellant.

Mr. Strong and Mr. Leupp, for respondents.

The opinion of the court was delivered by

THE CHIEF JUSTICE. The bill in this case was exhibited by the Mechanics Building and Loan Association of New Brunswick, to foreclose a certain mortgage given to it by John B. Conover. At the time of the execution of this instrument, the mortgagor was a corporator, and in compliance with a requirement to that effect in the charter of the company, assigned to it ten shares of its capital stock, of which he was the owner, as collateral security to the mortgage debt. Subsequent to the creation of these securities, Conover executed a second mortgage on the same premises included in the first mortgage, and embracing also certain other lands, to John B. Herbert, the appellant, and, at a still later date, being in failing circumstances, he conveyed the mortgaged premises in fee, to the appellant. Several judgments having been afterwards obtained against Conover, by virtue of executions issued thereon the ten shares of stock above mentioned were levied on.

It is obvious that this conjuncture of facts presents for consideration the equitable conditions of the ten shares of stock, arising out of the claims of the appellant, Herbert, and those of the judgment creditors.

This stock is a pledge in the hands of the Mechanics Building aud Loan Association, and is collateral to their mortgage. The right of this company to resort, if necessary, for the collection of the debt due them, to both the mortgaged premises and the stock is admitted, but Herbert, as second mortgagee of the land, and owner of the equity of

Herbert v. Mechanics Building and Loan Association.

redemption, insists that the company should be compelled to exhaust the stock before going to the land. On the other hand, the judgment creditors contend that, by the established rules of equitable distribution, the converse of this should be done, and that the land, being the primary security, should be first applied.

The due settlement of this point of dissension would seem to depend entirely on the fact, whether the equitable rights of the appellant were, at the time of the rendition of the judgments, so fixed and established as not to be liable to be affected by the subsequent action of third parties. It is quite certain, that at such time the appellant had the right in equity to require the first mortgagee to look, primarily, to the stock in question. Before the judgments were entered, the relative condition of the first and second encumbrancer was clear, definite, and in every respect incontestable. The circumstances, as they then stood, presented, with entire simplicity, the ordinary case of the elder creditor possessed of two securities, only one of which was subject to the lien of the junior creditor; the right, therefore, of the latter to demand that the former should apply, in the first place, the security peculiar to himself, falls within one of the most familiar principles by which justice is dispensed in courts of equity. The sole inquiry, then, as above intimated, seems to be, did the entry of the judgments and the levy by execution on the stock disturb these equitable relations?

As introductory to all reasoning on this subject, it is proper to premise that judgment creditors do not occupy the vantage ground of bona fide purchasers for a valuable consideration, without notice. That an honest and innocent purchaser of the stock in question, after the equities of the second mortgagee had attached to it, would hold it discharged from such latent equities, I entertain no doubt. This was the ground of decision in the case of Reilly v. Mayer, 1 Beas. 55. Assuming, what perhaps is not entirely unquestionable, that the purchaser in that case acquired the property without notice, either actual or constructive, of the