1833. DENSTON DENSTON and another, assignees of DICKEY v. MORRIS and others, assignees of SANDS. v. MORRIS. It is a well settled rule of equity that a grantee, to whom possession has been delivered un- When surviving assignees in bankruptcy are looked upon as trustees of a fund in their The statute of limitations or a staleness of demand should be set up by plea or answer and cannot be taken advantage of by demurrer. Assignees of a bankrupt sold a lot of ground for $4,300. to 1. S. with a promise of covenants in fee and a warranty; the latter took possessionand expended money in building; the assignees then refused to give a deed with full covenants or warranty and fixed him down to take a deed with a covenant against their own acts only and took a bond and mortgage for $4,000. payable in five years, upon the understanding that if their title failed they would return the purchase money and, in the meantime, would not pass the mortgago away; the assignees, without the knowledge of I. S., were notified of an intention to con. test their title; I. S. sold to R. D. who paid off the mortgage (the assignees having, against their promise, parted with it); one J. J. brought ejectment upon a paramount title and recovered against R. D. who compromised; and R. D. failed and assigned his property to assignees who filed a bill against the assignees in bankruptcy for repayment of the amount which R. D. had sacrificed upon the compromise. The defendants put in gen ́eral demurrers: Held, that the assignees in bankruptcy not only took the mortgage in trust, but were to be considered as trustees of the money arising from it and that R. D. and those representing him were entitled to the benefit of it; and, consequently, that the demurrers must be overruled. This case came before the court upon demurrers taken by April 10th. the defendants Robert Morris, junior, John Delafield and 1833. Charles Rhind to the whole of the complainants bill. Vendor and The bill alleged, in substance, that Robert Morris junior, Purchaser. and John Mowatt, junior, assignees of the estate of Comfort Parties. Sands, a bankrupt, falsely stated to one John Sandford that Statute of Limitations. they, as such assignees, were seized in fee of and were authorized to sell and convey a lot of ground, known as Number 73 Greenwich street; and, in order to induce Sandford 1833. DENSTON V. MORRIS. to purchase, represented their title as indisputable and promised, if he would make the purchase, to give him a warrantee deed and defend the lot against the claims of all persons who should lawfully claim the same. That about the first day of April one thousand eight hundred and twelve, Sandford agreed to purchase the lot from them for four thousand three hundred dollars, which was the full value, upon the conditions above mentioned; and they put him in possession for the purpose of his making improvements-leaving the deed to be executed at a future day-and that he forthwith commenced building upon the lot. After Sandford had expended considerable monies upon the lot, and about the fifteenth day of July one thousand eight hundred and twelve, he applied to these assignees for a warrantee deed; and which they promised to give him. But, shortly afterwards, they tendered to him a deed of conveyance of the lot containing only covenants against their own acts as assignees and for such further assurance as they might, as such assignees, rightfully make whenever requested. That Sandford objected to such a deed and required them to execute a warrantee deed as promised; which they refused: assigning as an excuse, the advice of their counsel not to execute such an instrument—but again assuring him of their title, as assignees, being undoubted. And in order to induce him to accept the deed without covenants, they further proposed and agreed to require a payment of only three hundred dollars in money and to take his bond and a mortgage of the lot for four thousand dollars (being the balance of the purchase money) payable five years after date; and that they would hold the bond and mortgage in their own hands, and not assign the same to any person or claim payment of the principal, until the title of the assignees was established or made perfectly satisfactory to Sandford or his assigns. That they refused to execute any other deed; and threatened if he did not accept of the one which was proffered, to sell the lot to some other person and thereby deprive him of the monies which he had expended in building; and Sandford, relying upon their representations and assurances, finally agreed to accept the deed, and the same was accordingly executed and delivered to him. It was dated the twen ty-first day of July one thousand eight hundred and twelve; and thereby the assignees conveyed to him, in fee, all the estate, right, title and interest which Comfort Sands held at the time he became a bankrupt, and which they, as assignees, had or could convey of, in or to the said lot of ground. Simultaneous (as the bill showed) with the execution and delivery of the deed, Sandford paid to these assignees, Morris and Mowatt, the sum of three hundred dollars and gave his bond and a mortgage of the property for four thousand dollars payable on the twenty second day of July, one thousand eight hundred and seventeen with interest. That this was done upon the understanding before mentioned and upon the further stipulation and agreement of Mowatt, one of the assignees, who delivered the deed and accepted the bond and mortgage, that if the title of the assignees should fail or prove defective from any cause, the assignees would return the purchase money paid and secured by the bond and mortgage. That in violation of the promise not to part with the bond and mortgage, the assignees had, on the fifth day of March one thousand eight hundred and fifteen assigned the same to a Mrs. Grayson, without the knowledge or consent of Sandford and in bad faith towards both him and her: because they then knew or had been informed of their having no title or that it was intended to contest the title as conveyed by them to Sandford. That Sandford remained ignorant of any such defect and intention and went on to finish the buildings erected by him on the lot, consisting of a brick dwelling house and stable; and afterwards sold the same to Robert Dickey for thirteen thousand dollars and conveyed it to him in fee by deed bearing date the twenty-sixth day of February one thousand eight hundred and sixteen. The purchaser, Dickey, discharged the bond and mortgage held by Mrs. Grayson, she having required the same to be satisfied. The bill further alleged that afterwards and on or about the first day of May one thousand eight hundred and sixteen one John Jackson commenced an action of ejectment against Mr. Dickey in the Supreme Court for the recovery of the land, which action was tried at a circuit court; and in January term one thousand eight hundred and nineteen judgment was rendered thereon in favor of the plaintiff Jackson, his 1833. DENSTON D. MORRIS. 1833. DENSTON v. MORRIS. title proving to be paramount to that of Dickey as taken from the assignees of Comfort Sands. The bill then set forth the title under which Jackson claimed and recovered in the ejectment suit; and it charged how, upon the trial, it appeared that the assignees had, long previously to the purchase by Sandford, been notified of the circumstances of such title, and were informed of their having no title whatever as assignees and no right to consider the lot as the property of Comfort Sands at the time of his becoming bankrupt; and that these circumstances first came to the knowledge of Dickey and of Sandford upon the trial of the ejectment suit; and, therefore, as the bill insisted and charged, the assignees acted in bad faith and fraudulently in selling and conveying the lot of land to Sandford in the manner above mentioned. The bill also alleged, that Mr. Dickey being satisfied, from what appeared upon the trial, that the title derived from the assignees was wholly defective and he would be deprived not only of the lot but also of the buildings, and being advised by his counsel to effect a compromise, if possible, he opened a negociation and finally succeeded in obtaining a release and extinguishment of Jackson's title, by paying to him, in way of compromise, two thousand five hundred dollars-he having agreed to consider the lot vacant, which it was when he purchased. Also, that upon the trial it appeared how the wife of Comfort Sands would be entitled to dower if she survived her husband; and that a release from her was obtained by paying the further sum of three hundred and twenty-five dollars. That although, while the negociations for the compromises were going on, Mr. Dickey failed in business, yet he completed the arrangements and procured the releases to be executed to himself in the months of July and November one thousand eight hundred and twenty-still, owing to his pecuniary embarrassments, the payments were delayed until the month of February one thousand eight hundred and twentyone, when the money was paid with interest and the releases were delivered. About the same time and in pursuance of a previous understanding with his creditors, he conveyed the premises (the title to which had then been made perfect) to the complainants, in trust for the benefit of his creditors. 1833. DENSTON v. One of the trusts required the complainants to refund the amount which had been thus paid, together with the law expenses of defending the suit and procuring the confirmation of the title: Mr. Dickey having raised the money for MORRIS. those purposes by a temporary loan. Immediately upon receipt of the deed of trust, the complainants advanced, out of their own monies, the sum thus paid, amounting to three thousand two hundred and thirty-nine dollars, which, as they alleged, was necessary in order to perfect the title to the property and render it available to the creditors of Mr. Dickey. And they claimed repayment of the same with interest out of the estate of Comfort Sands in the hands of the defendants, as assignees: because, 1st., they sold the lot to Sandford, the grantor of Dickey, knowing their title to be defective or that it was intended to be impeached or contested; and, 2ndly, for even if they had no such knowledge, they had received four thousand and three hundred dollars as the consideration for the sale of a lot which they had no right to sell and to which they were not entitled. The complainants also alleged that the defendants, as such assignees, had funds in their hands growing out of the estate of the bankrupt, not yet apportioned amongst his creditors, greatly exceeding the amount paid by the complainants. That Mowatt, one of the original assignees, died in the month of May one thousand eight hundred and twenty-one, when the management of the bankrupt's estate devolved upon Morris, the surviving assignee, who had the sole charge thereof, until the month of June one thousand eight hundred and twenty-six, when the other defendants, John Delafield and Charles Rhind, were appointed assignees jointly with the defendant Morris. That frequent applications were made to Morris and Mowatt, as such assignees, and to Morris as surviving assignee, and similar applications had been made to the present assignees for repayment out of the bankrupt's estate in their hands, but without effect. That recently, at a meeting of the commissioners, creditors and assignees under the commission of bankruptcy held in the month of April, one thousand eight hundred and thirty-two, the complainants presented their claim, verified by affidavits; that the commissioners, having doubts in relation to their powers, directed |