
    Wells, and others, v. Chapman, Gibson, Bache, and others.
    A trust estate, Being incumbered By a valid mortgage on which there was a decree of foreclosure, effected a loan of a corporation, for the security of which the mortgage and decree were assigned to the lender, who paid the mortgagee’s demand. The loan was usurious, and was illegal according to the charter of the corporation. Held, that there was no merger or payment of the mortgage* That the trustees could waive the usury and the illegality for the benefit of the estate, and having procured a transfer of the mortgage and decree from the corporation, could enforce the same. And that a purchaser of the mortgaged premises, who, before such transfer, had acquired, by judicial sale, the equity of redemption, including the title of the trust estate ; could not allege the usury or illegality in the loan from the corporation, to defeat the lien of the mortgage and decree.
    The right to avoid or affirm the transaction of the loan, was not an interest in' or attached to the equity of redemption. It was personal in those representing the trust estate ; attaching to them, as borrowers, and not as owners of the land.
    One who purchases subject to an outstanding mortgage, is precluded from setting up its invalidity in the hands of its owners, on any ground then existing.
    Where, at a master’s sale on foreclosure, (the bill having prayed a sale, subject to a mortgage,) the master put up, and sold the premises, expressing that they were subject to its incumbrance ; the purchaser is not at liberty to claim that, by the sale, he acquired a right to such mortgage.
    A sale under an order or decree of the court, transfers only the rights and interests vested in the parties, when such order or decree was made ; with such as are specifically enumerated and directed to be sold.
    After the entry of a decree, directing a sale of property, and before the sale, a parly to the suit may buy a prior lien, which is unaffected by the decree, and the sale under the decree will not impair his rights in respect of such lien.
    Where two tenants in common of lands, subject to an old mortgage, had become involved in perplexing claims, and counter claims ; a severe litigation between them had ensued, in which their joint interests had been ordered to be sold; and the same had been sold to a stranger ; it was held, that one of such co-tenants was at liberty to purchase and hold the old mortgage, for his own benefit, exclusively. And he may enforce it for its whole amount, although he bought it at a discount.
    One of two trustees, who contracted for a joint interest with the trust estate, in a purchase of a cotton mill, the title to which was taken to the trustees, and tbs trust estate was pledged for nearly the whole purchase money; after failing to perform the terms of his contract for such interest, will not be permitted to set up, as owner, any right, or claim, inconsistent with the interest and advantage of the trust estate, in dealing with the premises.
    Where on such a purchase, the trustee agreed to pay off the mortgages given on the trust inheritance for the price ; and, instead of so doing, made large advances in conducting the cotton mill, for the benefit of the trust tenants for life; held, that he could not set off, or apply, such advances, in reduction of a prior mortgage on the mill, bought in by the trustees, for the benefit of the inheritance.
    March 10, 11, 12, 13, 14, 16, 17 ;
    September 28, 1846.
    S., owning a lot, on which he presently built a cotton mill; granted to R. an adjoining lot, with the right to use, for a paper mill, water conveyed in a race-way across the lot of S.; with a covenant of R. that the water should be used for no other purpose. After this, S. mortgaged his lot; and, subsequently, both mills became vested in V., subject to the respective mortgages, who altered the paper mill into a cotton factory. On foreclosure of the mortgage of S., the title to the two lots became vested in different persons. Held, 1, that there was no merger of the condition as to the use of the water, as to S.’s mortgagee, by the ownership of J. 2. That his altering the paper mill, worked no forfeiture in favor of such mortgagee, of his right to use the water for a paper mill. 3. That the purchaser, under S.’s mortgage, was entitled to restrain the owner of the R. lot, to the use of the water for a paper mill only.
    On giving a mortgage, bearing interest, for part of an advance of money, the lender took from the borrower, an agreement to pay to the broker, an annual sum, equal to about seven'per cent., on the whole advance, until the latter was paid up ; designating the annuity as a compensation for brokerage, and for any loss , that might be sustained on merchandise, bought and sold by the borrower, for the lender’s benefit. . Held, that the mortgage was usurious.
    Form of a decree for ascertaining and settling the boundaries of two adjoining mill lots, and the erections thereon—Note at the end of the case.
    The bill in this cause was filed in July, 1834, by Thomas L. Wells, with John L. Lawrence and Murray Hoffman, receivers of The Life and Fire Insurance Company, Jacob Barker, Josiah Barker, Joshua Dyett and Jessy Ann his wife, and Henry W. Warner and Murray Hoffman, trustees of the separate estate of Mrs. Dyett; against William Chapman, Andrew Bache, Benjamin Jackson, and Isaac Gibson, Conrad W. Faber and Robert Hogan, assignees of Benjamin Jackson, and John J. Palmer; and several other persons who suffered the bill to be taken as confessed.
    Chapman put in a separate answer ; Bache and Jackson answered jointly ; as did the assignees of Jackson ; and Mr. Palmer answered alone, very briefly. Replications were filed and proofs were taken. The pleadings alone would fill five hundred pages of this volumeand the case involved the consideration of a long series of complicated transactions ; many of which, in detached portions, had been before the courts, during a period of nearly twenty-five years.
    It is believed that a very brief and general outline of the facts and documents, with the statements in the opinion itself, will render the judgment of the court sufficiently intelligible.
    In December, 1812, Samuel Slee was the owner of a tract of land, with water privileges, on Wappinger’s creek, in the town of Poughkeepsie, in the county of Dutchess. On the 23d of December, 1812, he sold and conveyed to George Reid, in fee, a part of the same, lying on the northerly side of the creek, containing nearly three acres. At the same time, Slee and Reid entered into a sealed agreement, by which Reid was allowed to erect a dam opposite Slee’s remaining land, for “ raising a head of water, for the purpose of carrying on a paper manufactory, to be erected,” on the lot that day conveyed to Reid; and to cut a race-way from the dam to that lot, across Slee’s land, to convey the water to Reid’s paper mill or manufactory, so to be erected. And it was covenanted and agreed between the parties¡ that Reid should “ not use or employ the water for any other purposes than in manufacturing paper, and such things as are necessarily connected with the manufacture thereof.” And if there were a surplus of water, beyond those purposes, in the race-way, Slee was to be at liberty to tap the race-way, and use the surplus for manufacturing on his own land. This agreement was duly recorded.
    In 1813, Reid erected a paper mill on the lot so granted, with the dam and race-way as contemplated; and carried on the manufacture of paper there, till he sold to Stephens, in April, 1822. On the 11th of November, 1820, he mortgaged his mill lot and appurtenances, to James Henderson, for one thousand dollars.
    The bill charged, that in erecting his paper mill, Reid extended beyond, and encroached on the boundary of Slee’s land, and that Reid’s water-wheel was wholly within the limits of the latter. The proofs showed that there was some encroachment, the extent of which was not clearly ascertained.
    On the 4th of April, 1822, Reid sold and conveyed his paper mill and lot, with the rights and privileges attached, to James W. Stephens, in fee, for the consideration of $5500.
    Prior to the 25th of October, 1814, Slee erected a cotton manufactory on his remaining tract at Wappinger’s creek, which will be hereafter designated as the “ Slee Factory.” On that day, he borrowed $12,000 of The Washington Insurance Company, of the city of New York, and for its security, mortgaged to the company, his factory and premises, with his farm adjoining, described as containing two hundred and twenty-five acres of land. This mortgage was recorded, November 3d, 1814.
    On the 1st of May, 1815, Slee sold and conveyed in fee to “ The Duchess Cotton Manufactory,” his cotton mill, with its appurtenances, including nearly four acres of land, for the consideration of $30,900.
    In 1817, Slee recovered a judgment against that corporation, for a large amount, on which an execution issued, and the sheriff, on the 12th of March, 1818, sold thereon the Slee factory and appurtenances, to George B. Evertson, for $102, and on the same day, conveyed the premises to Evertson. The finale of The Dutchess Cotton Manufactory, may be learned in Slee v. Bloom, 5 J. C. R. 366, 19 John. 456, and 20 ibid. 669.
    On the 17th of October, 1816, George Booth recovered a judgment agains tSIee for about six thousand dollars; and the sheriff, by virtue of an execution thereon, on the 18th of March,
    1817, sold and conveyed to Booth, for a nominal bid, the whole of the farm and premises which Slee had mortgaged to the Washington Insurance Company. On the 21st day of January,
    1818, Booth conveyed the same premises in fee to George B. Evertson.
    After March, 1818, Evertson and Stephens became jointly interested in the cotton mill, and the business there conducted, and so continued till 1822, when they divided their interests; and on the 10th day of June, 1822, Evertson conveyed to Stephens, the Slee farm, including the cotton factory and its appurtenances.
    Thus Stephens, in 1822, became seised and possessed of both the Reid paper mill or factory, and the Slee farm and factory.
    In January, 1814, Slee sold and conveyed to one Moulthrop •a quarter of an acre near Reid’s paper mill, which Moulthrop, in "June, 1830, conveyed to Reid, who mortgaged it back to M. for $1000. Reid conveyed this lot to Stephens, on the 4th April, 1822, for $2500.
    On the 10th of September, 1816, one Neilson, for $996, conveyed to Slee, a parcel of land along Wappinger’s creek, against which Reid’s mill dam butted, and including a long strip of the creek and its bank, the whole being about seven and a half acres. Slee mortgaged this parcel to Neilson for $396. The residue of the price was paid by Reid, to whom Slee, on the 26th September, 1816, quit-claimed the whole. Reid conveyed it to Stephens, when he sold the mill and Moulthrop lot; and Stephens after-wards became assignee of the mortgage given by Slee to Neilson. While Stephens owned both the Reid and Slee mills, he took down the Reid paper mill, and erected on its site a brick cotton factory, and joined it on to the end of the Slee factory, so as to make one general building of the two, in which the cotton manufacturing was subsequently conducted.
    On the 27th October, 1821, William Chapman formed a partnership with Stephens, in that business, (S. being then in possession of the Reid property, and agreeing to bring in the Slee factory,) by which the factories were valued at $36,000, and C. was to own one-third, he advancing $7000. S. was to retain the Slee farm. This arrangement continued till April 9th, 1823, when Chapman agreed to purchase Stephens’s interest, as here-' after mentioned.
    Another branch of the case must now be stated.
    On the 21st of September, 1819, an ante-nuptial settlement was executed between Joshua Dyett and Jessy Ann Hunt, on the eve of their marriage, providing for the execution of a full settlement, when she should arrive at full age, of her real estate, known as No. 194 Broadway, in the city of New York. The marriage was duly solemnized, and in August, 1821, Mrs. Dyett having become of age, another and full deed of settlement was executed by her and her husband, reciting the former instrument, and conveying the Broadway lot to William Hamersley and Michael Dyett, as trustees ; in trust, to sell or dispose of the property, on the written request of Dyett and wife, or the survivor of them, executed in the presence of two witnesses, and to invest the proceeds, and reinvest the same; to permit Dyett to receive the rents, profits and income of the estate, for the use of him and his wife during their joint lives; if he should survive her, for his use for life, and the better to educate and maintain their issue; or if there should be no issue living, then to him in fee and absolutely; if there were issue at his death, then to the use of such issue in fee, to be divided per stirpes : If Mrs. Dyett should survive her husband, the trust was for her life, and to devolve at her death, to their children and issue, as before expressed. Dyett was restricted so that he could not sell or alien the income, and could only apply it to the common use of himself and his wife; the income could not be made liable to his debts; and if he aliened or became insolvent, the income was to become Mrs. Dyett’s, for her sole and separate use. The settlement contained provisions for substituting new trustees, whenever they resigned, or Dyett and wife desired a change. The settlement was duly recorded.
    In March, 1822, William Chapman was duly appointed tras- . tee of the marriage settlement, by Dyett and his wife, in the place of Michael Dyett, who desired to retire from the trust. Chapman continued to be the trustee, until June 30th, 1826, when Dyett and wife executed an instrument removing him and appointing John Barnes. The latter did not accept; and in June, 1832, Dyett and wife duly appointed Henry W. Warner and Murray Hoffman, to be such trustees, in the place of W. Chapman and W. Hamersley. The latter conveyed to the new trustees, in June, 1832, but Chapman declined to execute the deed.
    While Chapman was trustee, and on the 6th of May, 1822, at his instance, a loan of $9000, from The North River Insurance Company, was made on a mortgage of the trust estate No. 194 Broadway, executed by the trustees with the assent of Dyett and wife ; which money was immediately loaned by the trustees to Stephens, on a mortgage of the factory and Slee farm.
    To return to the history of the Slee Factory. The Washington Insurance Company mortgage, it was claimed, was a lien upon the machinery in the factory, which was in it when it was executed. On the 16th of April, 1822, Stephens, then being in possession as owner, executed a mortgage on the machinery together with his bond, to John Givan and George B. Evertson, to secure $11,427.
    In June, 1822, The Washington Insurance Company filed a bill to foreclose their mortgage, in which Slee, Stephens, Evert-son and others, were made parties. The suit was litigated by Stephens and Evertson, and a final decree was made by Chancellor Kent, on the 4th of June, 1823, directing the premises to be sold in the usual manner, for the payment of 815,807 51, due on the mortgage, with the costs of suit. A small parcel which had been conveyed lo J. Brash, and a parcel of thirty acres conveyed to J. H. De Graff, were excepted from the sale.
    In the spring of 1823, Chapman negotiated with Stephens for the purchase of the Slee factory, and about ten acres of land •; and an agreement was executed between Stephens and Chapman, on the 9th of April, 1823, for the sale thereof, for $60,000. Of this sum, $45,000 was assumed by C. in incumbrances and debts upon the property, and he was to give S. security for the balance.
    Chapman then procured Dyett and his wife, and Hamersley, to take the purchase for and on account of the trust estate.
    A declaration under seal, dated April 29, 1823, was executed by Dyett and wife and the trustees, reciting the purchase by the latter, and that they had cancelled Stephen’s mortgage of $9000; in so doing, leaving their mortgage for that sum on lot 194 Broadway outstanding; and that they as trustees, were to execute a second mortgage on the same lot to Stephens, for $15,000 ; and then declaring, that the whole was done on the terms and conditions; 1. That Chapman should imdemnify and save harmless, Dyett and wife and the trust estate, against those two mortgages; but his payments on the mortgages should be refunded, out of the profits of the factory, as soon as might be. 2. C. agreed to manage the financial concerns of the factory, and provide funds, conduct its sales, and keep it supplied. 3. Dyett was to reside near the factory, and superintend its active business. 4. That Chapman, keeping and fulfilling his preceding engagements, was to be held to be entitled to an equitable interest, to the extent of one-half, in his private capacity, in the factory, and in its business and profits; but the legal title to remain in the trustees, until the mortgages on 194 Broadway were discharged, and C.’s interest in the concern to be held as security for such discharge. There were some other stipulations in the instrument.
    Accordingly, on the 1st of May, 1823, Stephens conveyed to Chapman and Hamersley, as such trustees, for $28,000, the Reid and Slee factories, with the appurtenances, and about eighteen and one-half acres of land. The deed included the Dutchess Cotton Manufactory land, the Moulthrop lot, and the original Reid lot; and at the same time, Stephens quit claimed to the trustees, the Neilson parcel or lot.
    The bond and mortgage for $9000, given by Stephens to the trustees, in May, 1822, were thereupon cancelled; and a mortgage for $15,000, was executed by the trustees to Stephens, on the lot 194 Broadway. Certain notes of Stephens, to the amount of $4000, which Chapman agreed to pay in the purchase, were subsequently paid out of the business of the cotton factory.
    The Washington Insurance Company pressing their decree. Chapman applied to The Life and Fire Insurance Company of the city of New York, and obtained a loan in order to discharge the amount due the former. The Life and Fire Company, as after mentioned, paid $15,050 to the Washington Company, who thereupon, on the 4th of October, 1822, assigned to the Life and Fire Company, their decree of sale and the bond and mortgage of Slee on which it was founded, and all the money due thereon. There was due on the decree $16,234 73, and the costs were $385 44, besides; but Chapman, as trustee, had paid the company $1500 in September, 1823, and they deducted $100 more. The consideration expressed in the assignment, was $16,234 73.
    The bill charged, that Chapman acted wholly for the trust estate in the arrangement with The Life and Fire Company, the terms of which were as follows :
    The company advanced to Chapman, their bonds, so called, for $17,274 66, payable at fourteen months, with six per cent, interest, quarterly; and C. gave them his note for the same amount, at twelve months, and procured an assignment of the decree as security. He also gave them his indorsed note at nine months, for $1055 21, for the interest on the entire loan. As a further condition imposed on him, he was required to insure lives to the amount of the loan, at a premium of six per cent.; which he did on six lives in which he had no interest, and he gave his indorsed note at nine months for $1113 64, being for the premiums on such policies, the interest thereon, and the policies themselves.
    The Life and Fire bonds, issued under this arrangement, were in the form of those'discussed in the case óf The Attorney. General v. The Life and Fire Insurance Company, 9 Paige, 470.
    In disposing of them, to turn them into money, there was a discount of $624 66, which was charged by C. to the trust estate. All those bonds were paid at maturity,,as were also, tlie notes given by Chapman for the interest and premiums, which were in like manner charged to the trust estate.
    The defendants in their answers, insisted that these bonds were illegal, and the whole transaction void, as well for that cause, as on the ground of usury; and that the Life and Fire Company acquired no right or title to the Slee mortgage and decree, and could not transfer any to others.
    In the whole of this affair, Chapman acted for the trust estate, as he stated in his answer.
    In October, 1824, his note of $17,274 66, was renewed by the Life and Fire Company, on his taking a new issue of bonds for the same amount, giving his note for the sum, and paying certain exactions for interest and life insurance premiums; the loss on the bonds, &c., being again charged to the trust estate. In June, 1825, there was another renewal for six months, the particulars of which need not be stated. In all these affairs, the defendants claimed that C. acted as the agent of the trust estate, and he charged to it all payments made. They also insisted that the securities were illegal and void.
    The Life and Fire Insurance Company failed June 18th, 1826, and John L. Lawrence and Murray Hoffman were appointed receivers of its effects in August, 1826. On the 18th of July, 1826, the company assigned to Jacob Barker, certain securities, including Chapman’s and Stephens’ notes, bonds and mortgages; and for further security to him, on the 6th of August, 1826, assigned to Josiah Barker, the Washington Insurance decree. The creditors of the company, who obtained the receiver, contested in their suit, the validity of these transfers.
    Chapman being disappointed in certain matters represented and promised to him by Stephens, when he bought the factory of S., in order to raise funds to pay for certain stock on hand, not bought by the trust estate, was compelled to borrow money of Stephens, to pay for the same. An agreement was made between them in March, 1824, by which S. advanced $11,288 34, on condition íhat C. should give him a mortgage for $6000 on his interest in the cotton factory, and should execute an agreement to pay to the firm of Jones & Buck, brokers, an annual sum for the losses-and brokerage in raising the money. C. executed the mortgage accordingly, dated March 12tb, 1824, and referring to his agreement with the trust estate for an interest in the factory, with his bond for the $6000, and also executed an agreement for the annual payment, in these words:
    
      “ For value received, I promise to pay to the order of Jones & Buck, from 28th February last, $800 per annum, in equal quarterly payments, as long as I shall retain and until I Lave paid over the money borrowed of J. W. Stephens, as specified particularly in an agreement entered into with said J. W. Stephens on 12th March last, and amounting to $11,288 34. The above mentioned sum of $800 per annum, I allow in compensation for brokerage, and for any loss that may be sustained on merchandize purchased and sold for said Stephens, the avails of which are for my use.
    “New York, May 12th, 1824.”
    This mortgage and agreement, the defendants insisted, were void for usury. In May, 1824, Stephens assigned Chapman’s bond and mortgage of $6000, to the Life and Fire Company, on a loan to him of their bonds, similar to the loan before detailed, The defendants insisted this was void, and the company acquired no right or title to the bond and mortgage.
    
      In August, 1S23, Stephens assigned to the same company, the bond of Chapman and the mortgage therewith of $15,000, exe-' cuted to S. on the lot 194 Broadway, as before stated, by the trustees of Mrs. Dyett, and also a bond of C,’s, of $1500, given at the same time. The consideration, was the delivery of Life and Fire bonds loaned to Stephens to the amount of $13,750. The defendants insisted in their answer, that this arrangement was both illegal and usurious; and that neither the company, nor their assignees, ever acquired or could enforce, any right or title to the securities so transferred.
    These various obligations assigned by Stephens to the company, were transferred by the latter to Jacob Barker, as before mentioned.
    The cotton manufacturing was conducted by Chapman, Dyett and the trust estate, in the premises purchased from Stephens, from May, 1823, until the fall of 1825; on the joint account of C„ and the life tenants of the trust income. The business was disastrous to the interests of both, and was finally abandoned about the close of the year 1825 ; after the concern had become hopelessly bankrupt. The factory was run, however, after that period, on a limited scale, Chapman, while the business was in progress, made large advances, and incurred considerable liabilities for the establishment; and at the time of its failure, appeared by an account rendered by him to Dyett, in May, 1826, to be a creditor of Dyett and the estate to about $29,000, (not deducting wjiat D, had paid him on the contract of purchase next mentioned;) only three items of which account being less than $1000, were objected to at the time; and in fact, nearly all of it was due to him from the trust estate, or its life tenants, or from Dyett, representing himself and his wife.
    In September, 1825, Chapman agreed in writing to sell to Dyett, his interest in the factory, on certain terms stated in the pleadings, by which D. was to protect C. from the mortgages on the Broadway lot. The defendants insisted that in this purchase, D. acted for the trust estate, and had the sanction of Mrs. Dyett. ' .
    Dyett paid to C. on account of the sale $5,000, in notes and cash; but failed entirely to complete the purchase,
    
      Thereupon in September, 1826, Chapman filed a bill against Dyett and his wife, and Hamersley the other trustee, stating the last mentioned contract; that after crediting the $10,000 paid, there was $24,918 25, due to him from the factory; and praying for an account, and for payment of the purchase money by Dyett; and in default thereof, that the factory might be sold subject to the three mortgages, viz. the Washington Insurance Company, the Henderson mortgage, and the mortgage to Givan and Evertson ; the proceeds applied, first to the discharge of the two mortgages on lot 194 Broadway, and next to pay Chapman. An injunction was granted, restraining Dyett from meddling with the factory or its business and dues, which continued while the suit existed.
    The defendants in that suit put in answers, disputing the balance claimed by Chapman, and denying that Dyett’s purchase was authorized by Mrs. D., or bound the trust estate. The answers were voluminous, and presented a great many other questions and allegations. The cause was heard by the chancellor on pleadings and proofs in October, 1828, who on the 5th of May, 1829, made a decree, to the effect, that Hamersley and Mrs. Dyett were bound by the arrangement with Chapman in May, 1823, but were not bound by Dyett’s agreement to purchase from C. in September, 1825.
    The decree gave to them the option to take the purchase. If they did not, the $5,000 paid by D., was to be deemed paid on his account with C. An account was to be taken, but C.’s account rendered to D. as agent of the trust estate in May, 1826, was to be deemed prima facie correct, except as to three items questioned by the parties at the time.
    Dyett and his wife and Hamersley appealed from this decree, (except the part relative to the arrangement in 1823,) to the court for the correction of errors; where in December, 1830, the chancellor’s decree was reversed, and Chapman’s bill ordered to be dismissed, without prejudice to the intermediate orders.
    On the 27th July, 1829, the chancellor made an order in the Chapman suit, directing the premises known as the Dutchess Cotton Factory, and all the estate interest and demand of the respective parties to that suit, to be sold by one of the masters of the court. The order contained a provision about the machinery, which will be noticed hereafter.
    On the 26th November, 1829, a further order in the same suit, was made by the chancellor, directing that there should be included in the sale, “ every privilege and piece of land belonging to the parties in this cause or any of them, at the date of this order, which constitutes apart or parcel of the said manufacturing establishment or the site thereof.” This order was made so as to include the Neilson tract, and it directed all the parties to join with the master in the conveyance to the purchaser.
    On the 1st of April, 1830, the premises were sold in pursuance of these orders, to Andrew Bache, for §120, who bought for Benjamin Jackson.
    At the place of sale, which was on the premises, a notice was placed on the door, specifying the incumbrances on the premises, including the three mentioned in Chapman’s bill; and the master, in putting up the premises, publicly stated that they were sold subject to the incumbrances, (of which this was one specified,) the risk of which the purchaser must take.
    The master, with the parties to the suit, in pursuance of the orders and sale, executed a deed to Bache, dated April 1st, 1830; which recited the orders, and that the premises and the interest of the parties were struck off to Bache for §120, over and above all incumbrances and liens thereon; and then conveyed the Slee Factory premises and appurtenances, the machinery and the personal property in and about the factory, and all the estate interest and demand whatsoever, of the respective parties to the suit, and each of them, of, in, to and upon such property and effects. The deed was executed April 22, 1830, by the master and Hamersley, but not by Mrs. Dyett until June, 1830.
    The defendants in this suit, insisted that the deed took effect from its delivery only, and that it transferred to Bache, all the rights and interests of the trust estate, as well as of the parties to the Chapman suit, in, to and upon, all the notes, bonds, mortgages, decrees, contracts, securities; and every other matter and thing touching the factory, its purchase, its business, and the loans made in respect of either; and especially, all the effects and securities claimed by Mr. Wells, the complainant in this suit.
    Bache obtained possession under his purchase, on the 15th May, 1830, and the premises have ever since been held and possessed by or under him.
    On the 1st of May, 1823, Chapman and Dyett gave to Givan and Evertson, their bond in lieu of Stephens’s, for the $11,427, which was secured to G. and E., by the mortgage of S. on the machinery in the Slee Factory, as before mentioned. That mortgage was foreclosed in equity in the second circuit, against Dyett and wife, Chapman and Hamersley, and a decree of sale made on the 2nd of June, 1828.
    On the 24th of July, 1828, Dyett and wife and Hamersley, executed a mortgage, as collateral security to the preceding, to Givan and the executrix of Nicholas Evertson, (who had succeeded to G. B. Evertson’s interest,) for $12,540 on the machinery in the Reid Factory.
    On the 26th of January, 1832, the machinery in both factories, was sold to Givan under the decree in equity and the mortgage last stated, for $2500. Givan, in March, 1832, transferred the same to the defendant, John J. Palmer, together with Stephens’ original mortgage on the Slee machinery, and the two bonds therewith. In May, 1832, Palmer sold the whole to Bache, for $9500, (of which $4500 was for the bonds and mortgage,) P. retaining a lien thereon for a part of the purchase money.
    On the 11th of September, 1829, Stephens conveyed the Slee farm to Hamersley, as trustee of the Dyett trust; and, at the same time, released the trust estate and Dyett and wife, from all claims and demands growing out of the previous transactions.
    In April, 1827, Mrs. Dyett, with her trustee, Hamersley, filed a bill in chancery against Chapman, the receivers of the. Life and Fire Company, and Jacob Barker, praying, that if the Washington Insurance mortgage and decree were valid in the hands of the latter, Chapman might be decreed to pay it; and if it were void in his hands, that it might be cancelled. All the parties answered, insisting on their rights, and the suit was put at issue.
    
      Chapman being insolvent, a negotiation ensued, in 1829, which resulted in the execution of the instrument presently mentioned, between the receivers and Barker, Dyett, &c.; on the completion of which the bill was dismissed, without costs. The terms of this arrangement were essentially settled and agreed upon, in the fall of 1829; and on the 8th of January, 1830, an order of the court of chancery was obtained, authorizing the trust estate to be mortgaged to carry out the terms of such arrangement. These terms were, however, modified, in March, 1830.
    By this arrangement, Barker and the receivers agreed to assign to Thomas L. Wells, in trust, for the benefit of the trust estate of Mrs. Dyett, all the securities presently mentioned, for which they were to receive $15,000, in cash, and Life and Fire bonds for $8000. The cash to be secured by a mortgage of $7000, on lot 194 Broadway, and by a mortgage of $8000 on the Slee farm, both to be executed to Mr. Wells.
    The authority to the receivers to compromise, was obtained from the court of chancery, on the 8th of December, 1829 ; and on the 15th of April, 1830, the court made a further order, in the creditors suit against The Life and Fire Company, as well as in the matter of Mrs. Dyett and her trustee’s petition, authorizing the particular terms which were- finally carried into effect.
    On the 3d of May, 1830, in pursuance of those orders, Jacob Barker, Josiah Barker, and the receivers of the Life and Fire Company, executed an instrument, by which they assigned to Mr. Wells, the Washington Insurance Company mortgage and decree, all the securities and evidences of debt against Chapman and Stephens, which had been given or assigned to the Life and Fire Company, and the mortgage for $15,000, to Stephens, on the lot 194 Broadway ; the latter as a muniment of title merely. Mr. Wells was to transfer and deliver the whole to Hamersley as trustee, on the payment of the two mortgages of $7000 and $8000, given by the trust estate, on the compromise. Among the securities thus assigned, weré Chapman’s bond to Stephens for $1500, April 1, 1823; his bond and mortgage to S., for the $6000, March 12, 1824; his bond, given with the $15,000 mortgage ; Stephens’ bond for $7000, March 30th, 1824, and the mortgage securing the same; and numerous notes of Chapman to the Life and Fire Company.
    The mortgages of $7000 and $8000, respectively, were given to Mr. Wells, as agreed between the parties ; and the former was afterwards paid, by means of a new loan on the security of lot 194 Broadway.
    Under an order of the Chancellor, made December 23, 1831, in the Washington Insurance Company suit, the Slee farm was sold by a master under the decree in that suit, and was bought by Mr. Wells, for $3300. Mr. Wells endeavored to obtain a sale of the other premises, mortgaged under the same decree, but was resisted by Bache and Jackson, and did not succeed.
    In December, 1833, Wells sold on a foreclosure by advertisement under the statute, upon Chapman’s mortgage of $6000, to Stephens given in March, 1824; all the rights and interests thereby mortgaged; and became the purchaser at the sale, for $130.
    On the 13th of January, 1834, Jackson failed, and assigned the Slee factory and premises, with the appurtenances, machinery and privileges, to the defendants, Gibson, Faber and Hogan, in trust, for the benefit of creditors.
    It appeared that Dyett died, during the pendency of the suit, leaving Mrs. Dyett surviving, together with children of the marriage.
    The bill in this cause, claimed that there was due on the Washington Insurance Company decree, over $20,000; and it prayed that Mr. Wells’s right to the decree might be declared ; and that thereupon it should be carried into effect by a sale of the Slee factory and the premises included therein, and not already sold. It also prayed for a commission, to settle the boundaries between those premises and the Reid factory lot; and that the defendants claiming the latter, might be perpetually enjoined, from taking or using the water obtained from the creek, for any purpose other than for the use of a paper mill.
    The answers set up, among other things, and proof was made, that Bache, in trust for Jackson, had become the owner of three fourths of a debt of $1738, due from the Dyett trust estate, to
    I. and A. A. Prall; that Jackson, in 1830, was, and Bache in trust became, the holder and owner of Life and Fire Company bonds, to the amount of $7900. These were claimed as set-offs, the latter as against the company while they held the decree in question, the former against the trust estate, as claimants of the decree. It was also claimed, that Chapman’s debt against the factory concern and the trust estate, as before mentioned, which by assignment from him, in 1820, was also vested in Bache, was a proper set off.
    It was alleged by Chapman, that the mortgage to Stephens, for $15,000, on the lot 194 Broadway, was never legal or valid, because it was not executed in accordance with the marriage settlement; Mrs. Dyetl’s consent thereto, not having been executed in the presence of two witnesses. A great number of legal points were made, and positions taken in the answer, which so far as they were determined, are noticed in the opinion of the court.
    
      Murray Hoffman, for the complainants,
    first referred to the objections taken in the answers ; stating as his point, that Wells, on behalf of the other parties interested, is entitled to have the decree of the Washington Insurance Company, enforced by a sale of the premises.
    1. There was no usury in the loan from the Life and Fire Company to the trust estate.
    2. If it were usurious, the only consequence is that Chapman’s note for the loan is vicious, but the company could retain and enforce the decree. (Comyn on Usury, 294; 2 Anstr. 940 ; 1 Madd. R. 331; 3 Pick. 184 ; 7 Peters, 103, 189; Hardin’s R. 81; 2 Caines C. in E. 66, 82; 3 Edw. R. 195 ; 13 Wend. 505; 9 Paige, 483.)
    3. If wrong in this, the trust estate of Mrs. Dyett was the borrower; the estate has redeemed the decree by paying the loan. The borrower can waive the defence, and affirm the transaction, which has been done here ; and we have a decree which was never questioned, regularly transferred to Mr. Wells. 
      (2 J. C. R 182, 191.) So if the loan were voidable, by reason of the illegality of the Life and Fire bonds, no one but the borrower could take advantage of it; and if he chose to pay the loan and affirm the transaction, no one has a right to complain. (8 Watts & Serg. 36; 10 Wheat. 391; 7 Wend. 21 ; 11 Ohio R. 417 ; Com. on Cont. 120.)
    4. This case is within the decisions, to the effect, that where property is sold subject to a usurious contract, the purchaser cannot set up its illegality. Bache purchased expressly subject to the Washington Insurance mortgage and decree, as being a valid lien. (8 Paige, 640 ; 9 ibid. 137, 145; 10 Wheat. 367; 7 Conn, 413 ; 13 Mass. 515.)
    5. The objection, that Reid was not a party to the foreclosure, is a mere point of form, and is of no importance in this stage of the case.
    6. Bache, by his purchase at the master’s sale, in Chapman v, Hamersley, did not acquire the rights obtained by the trust estate, under the compromise with the Life and Fire Company and Jacob Barker. The trustees acquired none of those rights until May 3, 1830. (2 Anstruth. 420.) The sale to Bache was April 3, 1830, under an order made July 27,1829, which carried nothing acquired after its date.
    Moreover, a sale of this land, would not pass these things in action, to which the mortgage or lien was merely auxiliary, (1 John. 580 ; 5 Cowen, 506 ; 2 Gallison, 155 ; 19 John. 325 ; 2 Cowen, 231; 5 ibid. 206.)
    7. The set offs claimed, cannot be supported for one moment.
    As to the debt to Chapman, his conduct as trustee, involving and raining the trust estate for his own purposes, precludes any claim.
    His debt was incurred solely for the benefit, and on the account of the life tenants of the trust. This suit is for the benefit of those in remainder, against whom the debt does not exist.
    He agreed to indemnify the estate, against the mortgages placed upon it in the arrangements with Stephens; which he has utterly failed to do; and until that be done, no one claiming from him can ask to enforce his demands against the estate.
    
      His claims and interests were all mortgaged to Stephens, in 1824, and became vested in the complainant, Wells, by assignment of the mortgage and the Life and Fire bonds held by the defendants, being void, never were the ground of a set off against the company or any one else. The chancellor has decided, that all those bonds were illegal and void.
    • As to the Givan and Evertson bond against the estate, it was for Stephens’ indemnity, and he has never been injured. The trust estate did not assume the mortgage on the machinery. They purchased subject to it merely, which imposed no liability. (1 Hoff. Ch. R. 477; Reed v. Halsey, 10 Paige.)
    Finally, no debt or demand in favor of Chapman, by reason of his advances for the use of the factory; or by reason of the reception of any profits by Dyett and his wife, or Hamersley, or of moneys which ought to have been paid to Chapman; can be enforced against any other estate than that of Mrs. Dyett, as his survivor, in these premises ; Dyett having died, leaving issue.
    The sale under which Bache claims, was founded on a petition of Mrs. Dyett, which in no sense conformed to the requirement in her marriage settlement; and without strict conformity, the trust estate could not be affected. (8 Simons, 86 ; 3 Hill, 366 ; 1 Curteis, 110 ; 8 Bligh, 568 ; 1 Madd. R. 517 ; 17 Ves. 454; 6 Taunt. 402. See also North American Coal Co. v. Dyett, on this very instrument, 2 Edw. 115; 7 Paige, 1, and 20 Wend, in the C. of Errors. Also, 1 Hill’s Ch. R., So. Car. 228.)
    The complainants are entitled to a decree, declaring either that the defendants have no right whatever to the use of the race-way over the land covered by the Washington Insurance Company mortgage, or to enter upon the land to preserve or use such race-way, or any right to the water conveyed in and by such race-way; or else that the defendants be perpetually enjoined from using any of the water conveyed by such race-way, or such race-way, until they erect a paper mill, or convert the present building into a paper factory or mill.
    1. The covenant was broken by the alteration of the Reid mill into a cotton factory. (Cro. Jac. 181, S. C. Moor, 877; 4 Coke, 87 a ; 9 B. & C. 376.)
    2. If it were a covenant running with the land, it does not run after it is once broken. (5 Coke, 16 ; 1 Modern, 25; 1 Salk. 109, 199 ; 2 John. 1; 1 Pennington, 407; 3 Burr. 1271 ; 1 W. Black. 351; 2 John. Cas. 24.)
    3. This covenant, being a right in the nature of an easement, was extinguished by the union of both tenements in Stephens, as owner. (3 Term R. 393; Yelv. 19 ; Comyn’s R. 333 ; 2 Ridg. Parl. Cas. 405.)
    4. If not extinct, we are entitled to a perpetual injunction against its use for any purpose except a paper mill. (9 Simons, 196.)
    The complainants are entitled to a declaration in the decree, that Bache took and acquired under the deed executed to him by Master Cod wise and others, the 1st day of April, 1830, no other and greater interest in the property sold, or any part thereof, than the right, title and interest, of Dyett and his wife, sold by the master; being the life estate or interest of Mr. and Mrs. Dyett, and each of them; and did and could acquire and take, no estate or right in and to the corpus, capital or fee in such estate.
    S'. A. Foot, argued the following points, on the part of the defendants.
    
      First. The bond and mortgage given to the Washington Insurance Company, and the decretal order thereon, cannot be enforced by the complainants, or any of them ; or in favor of any estate, corporation, person, or persons, whom they do, or claim to represent, against the defendant Chapman, or his assigns, or against the defendant Bache, and his cestui que trust, the defendant Jackson, and his assigns, Gibson, Faber and Hogan; for the following, among other reasons :
    1. The amount of the bond, mortgage, and decretal order, was paid in full to the Washington Insurance Company, by the defendant, Chapman, on the 4th of October, 1823.
    2. The assignment of the bond, mortgage, and decretal order, made by the Washington Insurance Company to the Life and Fire Insurance Company, at the request of the defendant, Chapr man, was made on and in pursuance of an usurious contract between Chapman and the latter company, and is therefore void. (1 Hall, 480; 19 John. 294; 5 J. C. R. 122, 136; 13 Wend. 511; 24 ibid. 230 ; 1 Peters, 37, 43 ; 2 Conn. 175; 1 T. R. 154; Ord on Usury, 110.)
    3. The assignment was given, on and in pursuance of a transaction, which the Life and Fire Insurance Company was not authorized by its charter to make, and is for that reason void. (2 Cowen, 678, 699 to 701, 708; 3 Wend. 342; 7 ibid. 31; 1 Hall, 480.)
    4. The assignment was made, on and in pursuance of a transaction, which was one of a series of banking operations, which the Life and Fire Insurance Company, had no authority to carry on ; and was therefore void. (2 R. L. 234, § 2 ; 1 R. S. 708; 19 John. 1; 8 Cowen, 709, 20 ; 3 Wend. 296 ; 4 ibid. 632; 7 ibid. 276 ; 20 ibid. 390 ; 25 ibid. 648 ; 9 Paige, 470.)
    5. The defendant, Bache, and his cestui que trust, Jackson, and his assignees, Gibson, Faber, and Hogan, have a right to object to the legality of the assignment of the bond and mortgage, and decretal order, to the Life and Fire Insurance Company. (14 John. 435 ; 8 Paige, 640 ; 9 ibid. 137 ; 10 ibid. 583, 591 and 595 ; 4 Peters, 205, 230 ; 2 Hill, 522.) The assignment in this case was absolutely void, and incapable of confirmation. It was against the restraining acts ; and void as contrary to the powers of the corporation. (See Co. Litt. 295 ; 8 Cowen, 543, 588.)
    
      Second. If the assignment of the bond, mortgage and .decretal order to the Life and Fire Insurance Company is valid, the decretal order cannot be enforced against Bache, and those whose interests he represents, at the instance of the Life and Fire Insurance Company, or its assigns, the Messrs. Barker’s, as that company and the Messrs. Barker’s have been paid the whole amount which they agreed to accept, and such decretal order cannot be enforced against Bache, and those whose interests he represents, for the benefit of the trust estate of Joshua and Jessy Ann Dyett, for the following reasons :
    1. Bache acquired title, by his purchase and deed, to the whole interest of Joshua Dyett and Jessy Ann his wife, of their trustee, and of their trust estate, in the mortgage and decretal order in question, as such interest existed both before and after the assignment to Wells.
    2. It is inequitable for the trust estate, or any one acting on its behalf, or on behalf of the parties interested therein, to attempt to disturb the title of Bache, by means of the arrangement before mentioned ; and this court ought not to permit his title to be thus disturbed and defeated, he having acquired the same under and upon the faith of the orders of the court.
    3. The trust estate and Chapman, being equitable owners, in moieties, of the manufacturing establishment, and Bache having acquired by his purchase the interest of each, and certainly that of Chapman ; either did acquire the whole interest of both, or by acquiring that of Chapman, stood in the relation of a tenant in common with the trust estate—and it is inequitable for the trust estate, independent of the respect due to the orders of the court, to attempt to defeat the title of its own grantee, or of its co-tenant, by acquiring a title to, or obtaining the control of outstanding claims against the common property ; and the court will not aid such an attempt, and especially not without first adjusting and settling the equities between the parties; and having settled them, will not permit the outstanding title or claim to be used, except for enforcing satisfaction of a balance due, or right belonging to the party acquiring such title or claim. (5 J. C. R. 388, 407.)
    4. The order entered by consent on the 23d day of December, 1831, was and is, matter of contract, and thereby the said bond, mortgage and decretal order, and all rights and liabilities effected by them, became matter of contract, and ought to be treated as contracts in general, and enforced only on principles applicable to them.
    5. Since the entry of the decretal order, new rights and liabilities have arisen under it, and new parties have become interested in, and are affected by it, and it ought not to be enforced irrespective of those rights and liabilities, and without first adjusting and settling them, and should then be enforced only for such balance as may be found due.
    
      Third. The change of the paper mill, erected on the Reid lot, into a cotton mill, by Stephens, as stated in the pleadings, did not affect the water right attached to the Reid lot. (4 Coke, 86, 87; 7 Paige, 544.)
    
      M. Hoffman, in reply.
    Upon the point suggested by the court, how far the question of a redemption of the pledged security by the borrower, is affected by Chapman’s rights in the property, he submitted :
    1. The trust estate, not Chapman, became the owner of the Washington Company bond and mortgage and decretal order, and assigned them to the Life and Fire Company. Chapman so states the transaction, charges the amount he paid, credits the avails of the bonds.
    
      2. This acquisition, or right, of and to the securities, existed wholly independently of the right of the ownership of the land. As the right to the mortgage was in the Washington Insurance Company distinct from the ownership of the land, so it was in the trust estate, distinct and separate. The doctrine of merger would not apply, even supposing an assignment, first to the trust estate; because the purpose of such assignment, and the immediate transfer to the Life and Fire Company, showed it was to be kept alive.
    3. The right to redeem the pledged security was then in the trust estate, not as owners of the land, but as owners of the pledge. Such right was in the trust estate exclusively.
    4. It results, it must be admitted, from this view, that Chapman’s account for payments in the Life and Fire transactions, must be allowed him as an item of demand. The balance due him for these is $2039 02.
    5. Following out this view, the demand and claim of Chapman, did not pass to Bache by the deed of 1st April, 1830 ; for it was a naked pecuniary demand ; but it did pass to Taiman by the assignment of Chapman in 1828, and did, we will suppose, pass to Bache by Talman’s assignment in 1832.
    6. For the reasons stated in the opening, it is assumed that the deed from Stephens to Hamersley and Chapman, trustees, conveyed a fee, and conveyed it so as to place it under the marriage settlement; whether the $15,000 morlgage bound the fee of the house in Broadway, or only Mr. and Mrs. Dyett’s life interest therein.
    
      7. Keeping in view steadily the trust estate through the trustees in the purchase, it is obvious that it advanced $24,000; viz, the new mortgage of $15,000, and the relinquishment of the $9000 mortgage on the Slee farm. The title in fee goes to the trustees. And Chapman, on paying this $24,000, was to have one half of it in fee. It was, therefore, impossible for Chapman to have the fee in half, until he paid the $24,000 ; or the equitable fee in his half, stood charged with that sum. And whether the mortgage of $15,000 was on the fee or the life interest, is immaterial. Chapman’s title was subject to this mortgage or lien.
    8. Bache took Chapman’s equitable fee, with this mortgage or lien upon it. Hence the complainants are entitled to a declaration to that effect, and the amount is $9000 with interest from 29th April, 1823 ; as to save an account, we are willing to agree that Chapman’s six notes of $1250 each, be deemed paid at once. To the interest, Mrs. Dyett is entitled ; the children to the capital.
    9. And against Mrs. Dyett’s amount of interest, Chapman’s demands for the balance of his accounts and profits, if any, are a proper offset; and the decree should thus limit such demand.
    10. However, it may be that the right of Mrs. Dyett to this interest, passed to Bache under her deed of 1830. Then Chapman or Bache would remain her creditor as to the balance of the account rendered to Dyett; the same as the N. A. Coal Company did.
   The Assistant Vice-Chancellor.

When the mortgage to the Washington Insurance Company was assigned to the Life and Fire Insurance Company, in October, 1823, it was indisputably a valid lien, and the first lien,, on the Dutchess Cotton Factory, and the lands appendant to it. This mortgage has never been intentionally paid off or in any way discharged,, and the trustees of Mrs. Dyett’s marriage settlement claim that it belongs to the trust estate ; while the defendants insist that it has either been actually paid, or has lodged, in a position where it never can be enforced, or that the right to enforce it passed to Bache upon the master’s sale in 1830, and is now vested in them.

The mortgage was transferred to the Life and Fire Company, as security for a loan and advance made by that company to the trust estate. Chapman applied for the loan as one of the trustees, and as the agent of that estate. The object was to present a sacrifice of the trust property under the decree obtained on the mortgage; and the loan was made upon the security of Chapman’s note, and of the assignment of the mortgage and decree, which at the agent’s instance, was executed by the Washington Insurance Company to the Life and Fire Company. The former received their debt, but there was no intention in any quarter to discharge the mortgage. On the contrary, all concurred to keep it on foot. It was the security on which the Life and Fire Company made their advance, and with the assent of all, it was assigned directly to them for that purpose. There was no merger, nor any payment or satisfaction" of the mortgage.

The contract of loan was clearly usurious, and the transaction as to taking the note by the Life and Fire Company was illegal, as was also the issue of the notes or bonds of that Company, in which the advance was made to the trust estate.

But the mortgage and decree remained valid. They were neither extinguished nor merged; and were totally unaffected by the usury and illegality of the contract upon which they were assigned.

What then was the situation of the parties, in reference to these securities? Were they so utterly beyond recovery in the hands of the Life and Fire Company, that they could not be affirmed or made good by the borrowers ?

I am satisfied that they were not.

Suppose that in 1824, the trust estate, not choosing to plead usury, or to repudiate the loan, had applied to the North River Insurance Company for an advance sufficient to redeem the mortgage and decree, upon the security of a transfer; and a loan had been made accordingly, upon which the Life and Fire Company had received their principal and interest, and had then assigned the mortgage, and decree to the North River Insurance Company; there is no doubt that the title of the latter would have been perfectly good, nor that the Life and Fire Company could have retained their whole principal originally advanced, whether in money or bonds, and the legal interest on the amount.

This usurious and illegal contract, was therefore capable of affirmance by the trust estate, as the borrowers from the Life and Fire Company. This right of affirmance, and to redeem the security pledged, was not an interest in the land mortgaged. It was wholly distinct from the land, and was the same precisely as if, when the loan was made, the trust estate had been the mortgagees and the lands had been owned by Stephens or a stranger. The application of the money loaned to the exoneration of the land, does not make the borrower’s right to redeem the security pledged for the loan, an incident to the land.

But it is said that Bache and those claiming under him, may object to the legality of the assignment to the Life and Fire Company, independent of their having succeeded to the rights of the trust estate, which is another point.

As purchasers of the estate incumbered by the mortgage, (and it is not claimed in their behalf as strangers,) they have no right to object to the transfer of the mortgage, or the title of the Life and Fire Company, on the ground of the usury. This would have been the same, if the Life and Fire Company were attempting to enforce the decree. Such is the law, as established by the court for the correction of errors, in respect of privies in estate, in the case of Post v. The Bank of Utica, December, 1844, reversing the decision of the chancellor which was made on the same grounds as were stated by him in Cole v. Savage, 10 Paige, 583.

And as purchasers subject to the Washington Insurance Company mortgage, which I will presently advert to more at large, they are precluded from setting up its invalidity on any ground, in the hands of its owners or their assignees.

Another objection to Bache and the defendants attacking the assignment is, that the trust estate, and the trustees representing it, having a right to redeem the security, have obtained it, and it is valid in their hands. It was never invalid in itself, and their affirmance of the transfer to the Life and Fire, and virtually redeeming it, has purged it of all the sins through which that company were vested with it.

II. Next it is insisted by the defendants, that if the assignments were valid, the mortgage and decree cannot be enforced against the mortgaged premises, for several reasons.

. 1. Because it is said, Bache acquired the whole interest of the trust estate, by his purchase in April, 1830, under the decretal orders made in Chapman’s suit against Hamersley and the Dyett’s, and by their conveyance to him in conjunction with the master who made the sale; and that there was no right left in the trust estate, to affirm or set up any claim under the mortgage or decree.

■ Considering all the circumstances of this case, (I have not time to enumerate them;) this is an extraordinary proposition. Chapman’s bill proceeded on the assumption that this mortgage was outstanding, and a valid lien. He did not seek to displace or affect it. On the contrary, the bill prayed for a sale subject to three mortgages, of which, confessedly, this is one. The orders for sale made in 1829, directing a sale of all the estate, interest and demand of the parties in, to and upon the property, are to be construed in reference to the bill. But if the decree were to be regarded, irrespective of the bill, the sale itself, and the deed of the master, cannot be overlooked. Chapman’s solicitor made a special application to the master to sell subject to all the incumbrances and liens. The master put up the property in that form, and a list of the liens, including not only this mortgage, but the Stephens mortgage of $6000, hereafter mentioned, the Evertson and Givan mortgage of $11,000, and others, was publicly exhibited and declared at the sale. And the master-struck off the property, subject to all liens and incumbrances thereon.

The deed of the master, in which the parties joined, declares that the premises were struck off to Bache for $120, “ over and above all incumbrances and liens thereon.” This shows either that he was to have a clear title, or that he bought subject to all the liens and incumbrances outstanding. Not subject to them, in the sense that he thereby assumed and became personally liable to pay them ; but that he took the title, subject to the lien and charge of such incumbrances. The idea of Bache’s purchasing for $120, when the litigation in Chapman v. Hamersley> was at its most fervent stage, a cotton manufactory in full operation, free from incumbrances, which seven years before was sold to those parties for $60,000; is too monstrous to be listened to for a moment. And I can perceive no alternative between that proposition, and the one that he bought subject to all the outstanding incumbrances. And by the combined action of the parties to those orders, the master executing them, and the purchaser himself, the latter appears to be in the situation of one buying expressly subject to a usurious mortgage, who cannot after-wards question its validity. (Shufelt v. Shufelt, 9 Paige, 137.)

Now as to Bache’s having acquired the right of the trust estate to obtain and set up the Washington Insurance Company’s mortgage and decree. The execution of the deed by the parties with the master, conveyed no other or greater interests than were expressed in the orders of sale. It was done in pursuance of the orders, and for the sole purpose of giving to them full and entire effect. No person bidding at the sale, could reasonably suppose, that he was buying any interest or right which was not vested in the parties when the orders were entered ; and no other interest could be affected by the master’s sale.

The utmost latitude that could be given to the effect of a deed, executed as this was under an order, would be to pass interests which were acquired prior to its date; and it is clear that the interest which the trust estate asserts in this suit, was not acquired till after the sale.

There was a negotiation in respect of that interest, after the orders were made and prior to the sale, and the terms were mainly agreed upon, but they were not fully ratified ; nor was there any instrument executed, by which any of the parties were bound, until after the sale and after the date of the deed, and its actual execution by most of the parties.

If therefore the right in question were to be deemed an interest or demand in or upon the premises, it dates after the sale to Bache.

But in my judgment, as I have before stated, the affirmance of the assignment of the mortgage and the right to reclaim the security itself, were attached to the trust estate, as a borrower from the Life and Fire Company, and not as the owner of the Dutchess cotton factory.

Entertaining these views, it is needless for me to examine here, another grave difficulty which is said to be in the way of Bache’s position, that by the purchase at the master’s sale he acquired the whole interest of the trust estate in the property. The chief interest in the trust estate was at that time vested in the children of Mrs. Dyett, and it is argued with great force, that those children were indispensable parties to a proceeding, by which one of their trustees sought to charge upon the trust estate, such a load of debt; the debt growing out of acts in which he was the prime mover, and which if not of questionable validity, were certainly improvident. And further, that the deed itself, and the prior proceedings, were totally defective to impair or charge the reversionary trust estate, because there was but one subscribing witness; when by the express terms of the marriage settlement, two witnesses were required to an instrument approving the disposition or alienation intended. That this objection is the more cogent, because the whole scope of the suit, was only the life estate of Mrs. Dyett and her husband. These points present very serious and important questions, which it is not necessary for me to determine.

Passing this by, I come to the next objection of the defendants, viz. that it is inequitable for the trust estate to attempt to disturb Bache’s title derived under the sale in April, 1830, upon the faith of the orders of the court.

I do not perceive any thing inequitable in this particular. Aside from the express notice at the sale, Bache was bound to know what title he was obtaining, before he received t,he deed; and if he had investigated the matter, he would have seen that he was buying subject to the Washington Insurance mortgage and decree. Under the circumstances, it would be 'far more inequitable to permit him, after buying the property for a nominal bid, subject to this mortgage, to avoid it in the hands of a holder in good faith. There was nothing covert in the transaction of the trustees in procuring the mortgage, or unfair towards the proceedings in Chapman’s suit. Any party to a foreclosure, may after a decree of sale, buy a prior lien which is unaffected by the decree, and the subsequent sale will not impair his rights in respect of such lien.

Akin to this, is the point that at all events, Bache succeeded to Chapman’s right and interest as equitable tenant in common of one moiety of the property, and it was inequitable for the trust estate to acquire an outstanding claim or title against the common property, in order to defeat the title of its co-tenant; and the court will not aid such attempt, especially it will not, without first adjusting all the equities between the parties ; and then will not suffer the outstanding claim to be enforced, beyond the balance due, or beyond the right and interest of the tenant in common acquiring such claim.

The case of Van Horne v. Fonda, 5 J. C. R. 388, 407, was cited in support of this objection. The dictum of the learned chancellor in the case, applies only to a continuing community of interest in the subject matter, or in the property affected by the outstanding claim, where both tenants in common are in possession under an imperfect title jointly acquired. The principle does not apply to the facts before me, because the parties had become emphatically antagonistic to each other in their claims and interests, and a sale of the whole joint interests had been ordered, before the negotiation for the purchase of the claim commenced; and before the purchase was completed, Bache, a stranger to both parties, had become the owner of all the interests of both in the real estate affected by the lien. There was thus, no duty or obligation whatever, remaining on the part of the trust estate towards Bache, at the time of the purchase of the mortgage and decree. It may, perhaps, be contended, that Chapman is to be deemed a joint and equal borrower with the trust estate, from the Life and Fire Insurance Company, and thus equally entitled to affirm the contract, or to insist on its avoidance, and that Bache succeeded to his right in that behalf. There are several answers to this, if it should be urged. First, if Chapman were so entitled, it was a personal right, and not one running with, or attached to, the title to the property. It therefore did not pass to Bache by the master’s sale. Secondly, Chapman has taken care throughout, to hold forth the trust estate as the borrower, and the sole borrower, from the Life and Fire Company. He charged against the trust estate in his accounts, all the sums paid towards the loan, and all the losses incurred by it. And finally, the defendants contended at the hearing, that the trust estate, as between itself and Chapman, was bound to discharge this mortgage and decree. Therefore, in no point of view, can Chapman be regarded as a borrower, having an equal right with the trust estate, to affirm or to avoid the illegal loan.

This appears to be a sufficient answer to the objection founded upon the community of interest. But I choose to pursue the inquiry farther in that direction, because I think it will elucidate some of the remaining points of the case.

Chapman, after contracting with Stephens in his own name for the factory, including the Reid property, arranged with himself and Hamersley as trustees of the separate estate of Mrs. Dyett, to become the joint owners of the whole property. Considering his situation as trustee, the mode in which this was carried out, was quite extraordinary. The premises were conveyed by Stephens to the trustees, subject to mortgages to the amount of $40,500. One of these, was Stephens’ mortgage to the trustees themselves, for $9000, executed a year before; in order to furnish which sum to Stephens, thereby accommodating Chapman, the trustees had, in 1822, mortgaged the trust property, consisting of the house and lot 194 Broadway. The mortgage of Stephens for $9000, was cancelled by the purchase ; but the one given by the trustees remained. For the balance of the price, the trustees gave a mortgage of $15,000 to Stephens on 194 Broadway, and the parties assumed and paid, from the proceeds of the factory, $4000 of Stephens’ notes then outstanding. Thus, leaving the notes out of view for this purpose, the trust estate was made to pay the whole consideration which .was paid to Stephens, by means of mortgaging, to the amount of $24,000, the valuable lot in Broadway which Mrs. Dyett had by inheritance, and which was vested in the trustees in order to preserve it for her and her children.

After subjecting the trust property, directly and indirectly, to the whole perils of the purchase ; Chapman agreed with himself and Hamersleyas trustees, to become the owner of an undivided half part, and to conduct the business of manufacturing on joint account. The agreement executed on that occasion, provided for the payment by Chapman individually, of the two mortgages of $9000 and $15,000, placed upon the Broadway lot; and it was thereby declared, that Mrs. Dyett had consented to the whole scheme, on the express condition, that Chapman should keep her and her heirs and representatives, and the trust estate, harmless and completely indemnified from and against those mortgages, and from and against any loss or damage to arise or accrue to the trust estate, by reason of the purchase of the factory. This was the positive agreement, and it was the least that equity would have required of a trustee, thus speculating for his own benefit, upon the credit acquired by mortgaging the trust estate. And the trustee, having not only failed to pay the two mortgages, but having signally failed to save the estate harmless from them; and having in truth, involved the trust fund in endless perplexities and grievous losses, by means of thm* unwarrantable adventure in which he enlisted it; can expect no less than that equity will hold him to the terms of his contract, and not suffer him now to escape the forfeiture of its benefits which he has incurred, in order to enable him to detract from the little pittance which the subsequent trustees have succeeded in saving from the wreck of Mrs. Dyett’s separate estate.

I speak of the transaction as I cannot help regarding it, notwithstanding the prominence which Chapman gives to Dyett in all these affairs. No man can fail to see, looking at this whole history, that Chapman throughout, was acting zealously for his own interests. Where those were coincident with the interest of the trust, he was equally zealous for the latter; but where they conflicted, and it was unavoidable that they should, sometimes conflict, no one can doubt whose interests would suffer, Chapman himself controlling both. If it were true, that Dyett’s importunities led him into the purchase for the trust and the subsequent mishaps, I can only answer, that he should have resisted them with firmness, even to the point of being removed from the trust. They cannot excuse him to the beneficiaries of the trust, who have suffered by his conduct; whether it was the consequence of weakness or cupidity.

But, to proceed another step in Chapman’s favor, if there should be no forfeiture of his claim to be regarded as a purchaser of one half of the property; there is no doubt of the right of the trust estate to acquire this mortgage and decree, for its own protection against the losses to which it has been subjected in its capital, by means of the purchase of the cotton factory. And it will be time enough for Chapman, or for Bache, if the latter now have his rights, to repudiate and avoid the Life and Fire loan, and the half part of the mortgage and decree pledged thereupon, when he has complied with the terms of his contract with the trustees on the purchase of the factory.

As it is perfectly obvious, that it will require more money to fulfil and make good those terms, than the amount of half of the mortgage and decree; it is useless to consider the point farther.

wv-Nor would this result be changed, if the sum paid by Bache for the machinery, in consequence of the foreclosure of the Evertson and Givan mortgage, were thrown into the scale, in favor of Chapman and Bache. And the same may be said of the Henderson mortgage.

I say this without expressing an opinion as to the propriety of charging upon the trust estate exclusively, the payment of those mortgages. I am aware that Chapman insists, the trust estate was bound to pay the whole of the Washington Insurance mortgage and decree, and it is said the estate so agreed with Stephens. As to this, in the first instance Chapman made such an agreement with Stephens. Then in the deed executed by Stephens, the trustees agreed to pay up the mortgage. But neither of these agreements affect the question, which is this; who, as between Chapman and the trust estate, was to pay the mortgage, on their becoming joint owners of the property? I find no answer to this question in the proofs. An inference may be drawn, that the estate was to pay a part of it, from Chapman’s stipulation to pay the mortgages on lot 194 Broadway. But a more probable inference from the proofs, is that there was no express agreement on the subject; it being supposed that the mortgages would all be paid, in time, out of the profits of the factory.

I should have noticed before, an argument that the $15,000 mortgage, on lot 194 Broadway, was invalid against the trust estate, and therefore its payment, in whole or in part, was a voluntary act, with the consequences of which the defendants are not to be charged. To this 1 need only say, that it Would be a bold proposition, in the mouth of Chapman, who executed it; and as to Bache and the other defendants, equally so, if they claim Chapman’s right to repudiate it. As strangers to it, they have nothing to say in the matter. Therefore, I need not inquire how far the trustees, after keeping and consuming the property, for the purchase money of which it was given, could be permitted to avoid the mortgage for defects in its execution ; still less is it necessary to examine the grave and momentous questions arising upon such alleged defects.

As to the validity of that mortgage, after it went into the Life and Fire Company, what I have said already, shows that Ste-, phens could affirm the company’s title to it, and make i,ts transfer to a stranger, valid.

It remains for me to examine, in connection with this head of the cause, the set offs claimed in favor of the defendants.

First. The payments made by Chapman to the Life and Fire Company, were charged to the trust estate in the factory accounts, and are not to be deemed applicable to his contract of purchase of the one-half of the property, in any greater degree than those accounts in general. Then, in regard to such an application of any of those accounts; it is clearly inadmissible. His contract was to discharge the $24,000 of mortgages, which as trustee, he had placed on the capital or corpus of the trust fund. His performance, in this view of it, consisted in running up a huge account; which, so far as there was any benefit from it, enured to the benefit exclusively of the life tenants of the income, Mrs. Dyett and her husband, (almost wholly to the latter ;) while the mortgages on 194 Broadway, were left to eat out all that was valuable of the trust capital. The statement of the facts is sufficient, without dwelling upon their force.

Regarded as a set off to the Washington Insurance mortgage and decree, how does the matter stand? These securities are, beyond doubt, to be deemed, a part of the capital, the body, of the trust estate. As such, they are in no wise liable for any debts or charges of Mrs. Dyett, or of Joshua Dyett in his life time. Now, the set-offs set up, consist exclusively of such debts and charges. The whole factory concern, out of which they grew, was carried on, not to enlarge the trust capital for the benefit of the beneficiaries in remainder, but to swell the income, for the immediate benefit of those entitled to the current rents and profits. There is no pretence that the debt to Chapman, or that to the Prali’s, was contracted by the trustees, for the benefit of the estate in remainder. (See North American Coal Company v. Dyett, 7 Paige, 9.) And as to the balance to Chapman, if such pretence had been made, and it were made out that a benefit to the capital was intended, I do not perceive hovv equity could sanction the claims in his favor; he being the trustee, and it appearing that no benefit ensued.

Indeed, from the decision cited, it maybe doubted whether the balance due to Chapman, prior to 1827, could, after that time, be charged upon the income of the trust property. However, the right to charge it upon the income was not contested by the complainants; and to the extent of the value of Mrs. Dyett’s net income for her life, the account of Chapman and the Prall debt, in the hands of Bache as assignee, may be deemed a valid set off against the mortgage and decree. There must also be deducted, the balance paid by Chapman to the Life and Fire Company, and to the Washington Insurance Company, over and above what was released by the Life and Fire loan. The value of the life interest in the income, may be ascertained on the principle of life annuities; and as Chapman’s account confessedly exceeds the value, no reference as to that account is required. The crediting in favor of the estate, of the $5000 paid to Chapman by Dyett, out of the factory, on Dyett’s attempt to purchase his interest, in 1825, which sum. is justly chargeable to Chapman, would not affect this result.

The set-off of the Life and Fire bonds, cannot be allowed for even the sum paid, as they were void; and they are not connected with this transaction in such a way as to give Bache any equitable claim.

The bond and mortgage for $6000, by Chapman to Stephens, dated March 12th, 1824, are void for usury as against Chapman. He was to pay interest quarterly on that sum, and Stephens took an agreement from Chapman, in the name of Jones and Buck, for the payment of $800 more, each year, in quarterly payments, in respect of his whole advance of $11,288 34, which included the $6000.

But Bache, the purchaser of Chapman’s title, at a sale under a decree, has no right, according to the decision in Post v. The Bank of Utica, before cited, to object to the legality of this mortgage on the ground of usury. As to the further objection, growing out of the unlawful transactions by which the Life and Fire Company acquired the $6000 mortgage from Stephens, the case stands in this position: If the assignment transmitted any title to the Life and Fire Company, such title became vested in Mr, Wells, by the indenture of May 3d, 1830. If the Life and Fire Company acquired no right or title, then Stephens continued to be the owner of the bond and mortgage, and it passed, in that event, to the trust estate, in September, 1830, by the assignment set up in the answer.

Thus, in either view of the matter, the trust estate became entitled to the bond and mortgage, and the foreclosure thereon cut off all Chapman’s interest as purchaser under the agreement in 1823, which passed to Bache by the master’s sale.

This result has been rendered comparatively unimportant, by my previous conclusions in respect of the interest which Bache acquired at that sale.

This mortgage debt is also urged as a claim against Chapman’s account, to the extent of the $6000 and interest, under the assignment in September, 1830, even if the bond and mortgage were invalid; because there was a precedent debt untainted by usury, which was transferred by that assignment, In this view, there could be no set off, for the reason, that before the trust estate acquired the debt, Chapman had assigned his claim against the trust estate, to Taiman.

On the other hand, there is no good reason for holding, that the trust estate, in any mode in which they may make the bond, mortgage or debt of $6000, available ; should be restricted to the sum which was paid for its transfer.

As to the binding force of the order of December 23d, 1831; 1 am not aware that any advantage can be derived to the defendant’s, by adhering to the terms of that order, which has not been given to them in this suit. If there be any other, I will hear the parties on the subject, when they appear to settle the draft of the decree. The Moulthrop lot, which is excepted in that order, will of course be excepted now; it being conceded, that it was never subject to the Washington Insurance Company mortgage.

As to the Reid factory and lot; on the one side, it is claimed that when Stephens became the owner of those and of the Slee Factory also, the grant of the use of the water executed by Slee to Reid, became merged in the estate out of which the grant issued ; and if that were not the result, then the grant itself is forfeited, by the perversion of the water to the use of a cotton mill, instead of a paper mill to which it was restricted. On the other side, it is contended that there has been no substantial change made in the use of the water power; and if there have been, it was effected by Stephens, under whom the complainants claim, and who was in effect Bache’s grantor, and the complainants cannot be permitted to raise the question, All these propositions, except that as to a forfeiture, are susceptible of a brief and common answer. The complainants now represent the Washington Insurance Company, whose title by mortgage, was paramount to Stephens, and vested them with the right to insist on the restricted use of the water, while it subjected them to permit its use for a paper mill by those deriving title from Reid prior to their mortgage. The defendants represent the latter right, as well as Stephens’ title to the Slee factory; while the complainants, in 1830, were deprived of all their estate derived from Stephens, Now, in 1822, when Stephens owned both factories, though there might have been a merger as to him and his equity of redemption in both, there was none as to the mortgagees respectively. The Henderson mortgage held the water power granted for the use of the paper mill, and the Washington Insurance mortgage in like manner held the right to restrict its use to that object.

The complainants as assignees of that mortgage have the same right now.

I do not think that the perversion of the water, effected a forfeiture of the whole privilege. There is nothing in the grant to require so strict a construction, and the circumstance of the change being made by one who owned both establishments, would make the application of a forfeiture, very harsh and severe, if one were required by the contract.

But the complainants have a clear right to restrict the use of the water to the terms of the grant; and they may have a perpetual injunction, restraining the defendants and those claiming the Reid lot under them, from applying the water to any hydraulic purpose other than the use of a paper mill.

They are also entitled to a reference, to ascertain the boundaries of these properties respectively, in order that the purchaser of the Slee factory and premises under the decree, may know their extent, and be quieted in his possession.

As it is made a distinct point, I ought to notice more at large, the argument that the trust estate should not be permitted to enforce the Washington Insurance decree, for any more than its cost to the estate.

There is no good ground for this, in my judgment. The trustees, when they purchased the decree, (as I have before had occasion to observe,) stood in no relation of trust or confidence, or duty, to Bache or those whom he represents. They had the same right to buy it, that any stranger had; and the same right to make all they could out of the property which it incumbered.

In consequence of Mrs. Dyett’s life interest in the mortgage and decree being absorbed by the set-off of Chapman’s debt, the whole amount recovered under the decree in this suit, will belong to the capital of the trust fund, and to her children, excluding her from its benefit.

The complainants are entitled to a decree on these principles, for a sale of the mortgaged premises, after ascertaining the boundaries, and the amount due for principal and interest upon the former decree. They will receive such amount, with the costs of the suit, out of the proceeds of the sale. 
      
       Now reported in 7 Hill, 391.
     
      
      
         See note on next page.
      
        (a) The portion of the decree for settling the boundaries of the respective factory lots, was as follows:
      “ And it is further ordered and decreed, that such master do ascertain the true and definite boundaries, of the premises and parcels of the lands mentioned in the pleadings as conveyed by Samuel Slee to George Reid, and to distinguish and set out the same by proper metes and bounds, and whether the building and factory known as the Reid factory, and built and erected by the said George Reid, is wholly within the parcel of land conveyed by the said Samuel Slee to the said George Reid, as mentioned in the pleadings ; and whether some, and what part thereof, or of the wheels or erections connected therewith, are not beyond and without such boundaries, and where and upon what parcel of land or premises any part of such factory, building, wheels or erections are or stand. And for such purpose, the parties respectively are to deliver to such master, all deeds, instruments, surveys or plans, in their possession or under their control, and the defendants, or such of them as are in possession of the said premises, are to grant and allow, free and reasonable access, to and upon such premises, from time to time, as may be required, to the complainants, their solicitors, surveyors or agents, for the purpose of inspecting, surveying and examining into the premises. And that such master be authorized to employ a suitable surveyor for such purpose, and to cause to be made all proper maps and plans of the premises. And he may make a separate report thereupon if required by either of the parties in the cause who have appeared and answered.”
     