
    
      Wotherspoon et al. vs. The Bank of the State of South Carolina.
    
    1. Complainant, W., and others, were the managing committee of certain persons, who had subscribed to the building of a Theatre, to whom a site for the purpose had been conveyed, by deed, but the amount of subscriptions proving insufficient, the Trustees, on the 24th of May, 1837, executed a note for a loan of $6000, to the Bank of the State of South Carolina, endorsed by the Treasurer of the company, and at the same time mortgaged the Theatre to the Bank, to secure the payment, as well of that note, as of any other notes which might be discounted by the Bank, for the use of the Charleston New Theatre Company. On the 26th of June, 1837, it was resolved, by the subscribers, “that the Trustees are fully authorized to adopt all such measures as may be deemed by them requisite to put the building under roof, and advance the construction of the same.” Subsequent loans were obtained from the Rank, and on the 20th of December, 1837, the subscribers were incorporated under the style of the Charleston New Theatre Company, but no change was made in the style of the company, or the management, W. continuing to act as chairman of the Trustees. The Thea-tre being damaged by fire, on the 28th of April, 1838, the chairman of the Trustees applied to the Bank for the benefit of the Fire Loan Act, (6 Stat. at Large, 156;) the title being referred to the Attorney General, he certified that there was a judgment against the Theatre — that the title was in the Trustees — that the Bank should receive money to pay the judgment, and Called their attention to the fact, that the mortgage from complainants to the Bank, was not marked satisfied. On the 16th September, 1839, com» plainants conveyed the premises to the Charleston New Theatre company, and a valuation of the property having been previously made, on the 19th November, 1839, the chairman of the trustees executed a deed under the corporate seal of the company, by which the company mortgaged the The» atre to the Bank, to secure the payment of $6,500, and interest, the amount, the same day, being carried to the credit of the Charleston New Theatre. The loan was applied to the payment of the judgment, and the residue to the payment of the notes of the Trustees. For the balance of the notes, a renew» al was received in February, 1840, and again, in June following, after which the note last received was protested, and suit brought on it. The Bank also filed a bill for the sale of the property and payment of the fire loan. The complainants, by their bill, sought to restrain the action at law, contending that the mortgage of May, 1837, must be paid out of the pro» ceeds of the sale, before any part could be applied to the fire loan. When the loan was applied for, the President of the Bank was one of the Trustees — ‘the necessity of some arrangement as to the prior mortgage had been pointed out to him, and the Cashier testified that he had received instructions that the first mortgage was to be postponed — that after paying the judgment, the balance was to be applied to reduce it; and, further, that in conversation with the; President of the Bank, it was understood that the fire loan was to have the preference; and that hebelieved complainant, W., was present when the subject was discussed.
    
      2. Under these circumstances, held that the deed of the 16th September, 1839, being executed by all of the complainants, their several note being signed by all, and reduced by the fire loan, they must be presumed to have known of that loan, and of the conditions Upon which alone it couldbc made— that having received the benefit of the greater part of the loan, they could not now insist thatthe entry of satisfaction, by the Bank, on the prior mortgage, which might have been made at any time, or their refusal to proceed on it, worked any injury to their just rights.
    Robert Wotlierspoon, James Rose, William A. Carson, Henry Gourdin, and Richard W. Cogdell, were managing committee of certain persons who had subscribed to the building of a theatre. The site of the theatre was conveyed to them by deed, bearing date the 10th July, 1835, and contracts for building were entered into, with the expectation of an increase of subscribers, but these expectations were not fulfilled, and as the cost of the ground and improvements exceeded the amount of subscriptions, the managing committee, or trustees, as they were called, had recourse to loans. On 24th May, 1837, a note of the trustees, for 6000 dollars, endorsed by Mr. Logan, the treasurer of the company, was discounted by the bank of the State of South Carolina, and the money placed to the credit of George W. Logan, treasurer of the Charleston New Thea-tre Company. On the same day, the trustees, by deed, mortgaged the theatre to the bank, to secure the payment of that note, and any other similar notes which might be ¡afterwards discounted by the said bank, for the use of the trustees of the Charleston New Theatre company. The State of the accounts was laid before the subscribers at a meeting on the 26th June, 1837, whereupon it Was resolved, “that the trustees are fully authorized to adopt all such measures as may be deemed by them requisite to put the building under roof and advance the construction of the same.” At the same time it Was determined that application should be made to the Legislature for an Act of incorporation. Loans were from time to time obtained from the bank, upon the security of the mortgage, and the notes of the trustees, endorsed by the treasurer; by which means the completion of the Work was prosecuted, and the thea-tre, in the winter of 1837, was opened to dramatic performances. By 29th section of the Act to incorporate certaih societies, passed on 20th December, 1837, the subscribers were incorporated under the style of the Charleston New Theatre Company, and the Act was accepted by the company ; but no change was made in the style of the company, or the management, Mr. Wotherspoon continuing to act as chairman of the trustees.
    The theatre was damaged by the fire of 28th April, 1838, and Mr. Wotherspoon applied for the benefit of the fire loan to the bank of the State! The title was referred to the Attorney General, who certified that there was a judgment of one Walker against the theatre, and that the title to the property was in the trustees; that Walker’s judgment would have to be paid out of the proceeds of the loan, and the trustees would be required to convey to the corporation, and called the attention of the bank to the mortgage of the same property already made to them by the trustees, as not being satisfied; On the 16th September, 1839, the trustees conveyed the premises to the Charleston New Theatre Company, and on the 19th November, 1839, R. Wotherspoon, as chairman of the trustees of the Charleston new theatre, executed a deed under the corporate seal of the company, by which the company mortgaged the the-atre to the bank, to secure the payment of $6500 and interest ; and on the same day the amount of the loan was carried to the credit of the Charleston new theatre. There was then due to the bank of the State, upon the notes of the trustees, endorsed by the treasurer of the company, and secured by the mortgage of the 24th May, 1837, $18,950. The 6,500 dollars were applied as follows, viz: $1,838 19, to pay off the judgment of Walker, and the residue, $4,661 18, to the payment of the note of 18,950; and for the balance of that note, say $15,158, a renewal was received on the 21st February, 1840, and the same note was renewed on the 29th June, 1840, for $15,000, which last note was protested for non payment.
    The bank filed a bill against the Charleston new thea-tre, for the sale of the property, and the payment of the fire loan, and brought an action against the trustees to recover the note of $15,000.
    This bill was filed by the trustees, to restrain the bank from proceeding with the action at law, until the mortgage was exhausted, insisting that the mortgage of 24th May, 1837, is to be paid out of the sale ol the property, and the debt of the complainants thereby extinguished, before any part of the proceeds can be applied to the fire loán.
    Defendants, by their answer, insist that it was a condition of the fire loan that all incumbrances on the property should be removed, a condition the bank had no right to dispense with; that Mr. Wotherspoon applied for'the loan, as chairman of the trustees of the Charleston new theatre, and that Mr. Rose, one of the trustees, was then president of the bank, and that it was agreed at the time that the mortgage for the fire loan should have precedence of the other mortgage.
    The cause came to be heard on the 23d June.
    Mr. Bailey, the Attorney General, gave evidence.
    He communicated with Mr. Rose, and pointed out to him that the loan could not be granted until some arrangement was made respecting the mortgage of 24th May 1837.
    Mr. Furman. He received instructions that the first mortgage was to be postponed, and that the balance left by Walker’s judgment was to be applied to reduce that debt. He had conversations with Mr. Rose, and it was understood that the matter had been arranged, and that the fire loan was to have the preference, and believes that Mr, Wotherspoon was present when the subject was discussed, and it was mentioned that unless the first mortgage was postponed to the second the loan could not be had.
    His Honor Chancellor Dunkin, who heard the cause, delivered the following decree:
    Dunkin, Ch. This case can be properly understood only by an examination of the pleadings and the evidence. The complainants insist on an equity to restrain the suit at law instituted by the Bank, until they have first foreclosed the mortgage held by them to secure the same debt. Various grounds of objection are assumed by the Bank, but the principal position is, that if this equity ever existed, it has been waived by the complainants. By the terms of the Fire Doan Act it is provided, that when an application is made for the benefit of this Act, the President and Directors of the Bank shall first be satisfied with the title of the real estate proposed to be mortgaged, and that it is free from incumbrances- — A valuation is then directed to be made by the commissioners, and on their certificate the Bank are authorised and instructed to loan to the applicant one half of the appraised value. [6 Coop.
    On the 14th August, 1839, when the letter of Robert Wotherspoon, one of the complainants, was written, the title to the land was in the complainants, and was under mortgage to the Bank of the State for eighteen thousand dollars. This letter of application for the benefit of the Fire Loan Act purports to be on behalf of the Charleston New Theatre Company, and is signed by R. Wotherspoon as Chairman of the Trustees. The letter of application, with the abstract of title, was referred to the Attorney General, who recommended that in order to warrant the loan, it was necessary that the complainants should execute a conveyance to the Theatre Company, that the Bank should receive money to pay Walker’s judgment, and called their attention to the fact that the mortgage from the complainants to the Bank was not marked satisfied in the Register’s certificate.
    On the 16th September, 1839, the complainants executed a conveyance of the premises to the Charleston New Theatre Company. The valuation had been already made by the commissioners on the 21st August 1839, and was fixed at thirteen thousand dollars, thereby entitling the applicant, on complying with the other requisitions of the Act, to a loan of six thousand five hundred dollars. One of the complainants, Mr. Rose, was at the time President of the Bank. The testimony of Mr. Furman, the Cashier, accompanies this decree, and contains a statement of what passed between the President and himself in relation to this loan. On the 19th Nov. 1839, the loan [$6500] was carried to the credit of the New Theatre Company in the books of the Bank. Mr. Furman stated, among other things, that he would not, in this case, have been author-ised to give the credit without instructions to that effect from the President — that he believes Mr. Wotherspoon was present at the time the credit was given — Of this loan the sum of $4661 was, under a check of Mr. Wotherspoon of the same date, carried to the credit of the one now given by the complainants to the Bank, which thus reduced their debt to about $15,150, for which a new note was subsequently given by them, on a renewal of which last mentioned note the suit at law is now pending. The balance of the loan was appropriated, under a check of Mr. Wotherspoon of the same date, to the payment of Walker’s judgment. Under the provisions of the Act it was the duty of the Bank to see that the mortgage executed to them by the complainants was removed as an incumbrance, before the loan was carried to the credit of the Theatre Company. The power to remove that incumbrance was in the Bank. It was only necessary for the President, under the instructions of the Board, to go to the Register’s Office and enter satisfaction. He might have done so at any time. The President of the Institution may do so now. Any creditor or incumbrancer may do so without danger or responsibility, unless to a person assuming to occupy the position of a surety, who can make it appear that such act on the part of the creditor was unnecessary and improper. [1 Story Eq. 477; Hays vs. Ward, 4 J. C. R. 130.] Otherwise this Court will regard that as done which ought to have been done. The necessity and propriety of the act, in order to have the loan effected, has been demonstrated. So far as the proceeds of the loan have been appropriated to the reduction of the complainants’s debt, it would seem they have no cause of dissatisfaction.
    But the Court is of opinion that by (he deed executed by all of the complainants on the 16th September 1839, and their renewal note, signed by all, for the debt, reduced $4661 by this loan, connected with the other circumstances detailed in the testimony, they must be presumed to have known of the loan, and of the conditions on which alone it could have been made by the Bank, and that having themselves received the greater part of the benefit of the loan, they are not now at liberty to insist that the entry of satisfaction by the Bank, or the refusal of the bank to proceed on the mortgage, works any injury to the just rights of the complainants.
    It is ordered and decreed that the bill be dismissed.
    Fom this decree the complainants appealed, on the grounds,
    1. That the bill ought not to have been dismissed, because even if the security for the Fire Loan have all the effect claimed for it, and the agreement on which- the bank relies be fully proved, the mortgage of 24th May 1837, is not extinguished, but only postponed; and the complainants should have been relieved to the extent of having the mortgaged premises sold, and the proceeds applied to the satisfaction of the liens upon it, in their order.
    2d. That there is no release of the first mortgage, and the evidence shews rather an intention to make an arrangement, than any arrangement actually made, for postponing it to the Fire Loan.
    
      
      Petigru & Lesesne, for appellants!
    Bailey, Atl'y. Gen., contra-.
   Curia, per Dunkin, Ch.

Whether the mortgage of the 24th May, 1837, should be considered satisfied, is a question which this court do not deem it necessary to determine, nor do they regard that inquiry as necessarily involved in the pleadings.

The complainants’s equity, as they insist in their bill, was to restrain proceedings at law against them, until the proceeds of the mortgaged premises had been applied to the extinguishment of the debt secured by the mortgage of May, 1837, “ before any part of the proceeds should be applied to the Fire Loan.”

The defendants allege that it Was a condition of the Fire Loan Act, that the mortgage to secufe that, should have precedence of the other mortgage, and that sucii was the agreement of the complainants.

In the view which the Chancellor took of the testimony, this agreement was fully established; and from his conclusion on that matter, no appeal has been taken.

This disposed of the complainants’s claim to the interference of this court, and the decree is affirmed.

Johnson and Harper, Chancellors, concurred!

Johnston, Ch., absent from indisposition!  