Leavitt v. Pell

By the Court, Sutherland, J. As to the objection of the defendant, Mary Anna Pell, and of the guardian ad litem of her infant children, to the mortgage executed by her, her husband, Ferris Pell, and Dudley Selden to Mr. Beers, as president of the “ Forth American Banking and Trust Company,” that they had no power or authority to execute the same, so as to bind the lands described therein, I think the question is precisely the same as if the mortgaged premises had been a portion of the real estate of Mrs. Pell conveyed by her to Mr. Clinton in trust, by the marriage settlement of 1827, made in anticipation of her marriage with Ferris Pell, and by such marriage settlement papers she had expressly reserved the same right and power to mortgage the premises in question that she did in and by. the deed or instrument executed between her, her husband Ferris Pell, and her trustee, Dudley Selden, in 1834, by which she revoked the trusts upon which Selden then held the premises in question, and — 331 — declared the new trusts upon which he should thereafter hold them, and expressly reserved the power to mortgage, with the consent of her husband if living, or alone if he .were dead, “ for the payment of any sum and sums of money, to be paid at any time or times, to any person or persons.” The premises in question were purchased with her money, after her marriage with Ferrris Pell, and conveyed to Dudley Selden, her trustee, who had been appointed such trustee by the court of chancery in the place of De Witt Clinton, after the death of the latter; and were at the time of the execution of the deed between her, her husband and Selden, in 1834, held by Selden upon the same trusts and subject to the same right and power of revocation and disposition as a feme sole Which she had declared and reserved in and by the marriage settlement of 1827. By the marriage settlement in 1827, Mrs. Pell in effect reserved the right and power to sell and dispose of her real estate included in the settlement as she should think proper, and as if she were a feme sole, and to revoke the uses and trusts contained therein, and to declare new uses and trusts by deed under the hands and seals of herself and husband. The deed or instrument executed by and between herself^ her husband and Selden, in 1834, was a disposition and revocation within the meaning of the marriage Settlement of 1827, as to the premises in question; and by it, and as part of such disposition and revocation, she reserved the power to mortgage the premises in question, with the consent of her husband. His consent is shown by his execution of the mortgage, and the legal title is covered by Selclen’,s execution. As to the power, therefore, of Mrs. Pell and her husband and Selden to execute the mortgage, so as to bind her ' estate in the lands, the only question there can be is this: Can a married woman execute a mortgage of her own estate, under a power reserved by her before her marriage, and while she was a feme sole ? — 332 — If the trust deeds under which the property mortgaged was held for Mrs. Pelfs benefit, would not, previous to the revised statutes, have authorized the execution of the power' by her, on account of the common law disability of coverture, yet it has been held in Wright v. Tallmadge, (15 N. Y. Rep. 307,) that section 110 of the article in the revised statutes relating to powers, (1 R. S. 735,) has completely removed the disability of coverture in respect to the execution of powers. I think in the execution of the mortgage in question, the power was well executed and so as to pass her interest in the land. If Mrs. Pelfs children had any vested rights under the trust deeds, such rights vested subject to the execution of the power. In protecting married women in the exercise of powers over their own property, reserved before marriage, the statute and the court do protect the rights of married women. It is also insisted in behalf of Mrs. Pell and her children, that the $15,000 mortgage is void for usury. The “North American Trust and Banking Company” was an association of certain persons, named in the complaint in this action, organized in July, 1838, under the general banking act, passed in April, 1838. The capital stock of the association was two millions, divided into twenty thousand shares of $100 each, with power to increase the same to fifty millions, as provided in the articles of association. There were twenty orignal subscribers for one thousand shares of stock, each. Thomas L. Servoss was one of the original subscribers. It appears from the deposition of Servoss, and from other proofs in this case, that when he subscribed for his one thousand shares, he subscribed upon the express understanding, with the other subscribers, that he was not to be bound absolutely to take the shares, or to pay or to secure the payment of his subscription, but that the stock for which he subscribed, and then standing in his name on the books of the company, should be issued by the company to parties afterwards offering bonds and mortgages for stock—that accordingly he afterwards transferred eight — 333 — hundred shares of his original subscription to a Mr. Burckle, without consideration; to whom the company issued certificates for the same bonds and mortgages, and afterwards gave Mr. Tylee, (2d cashier,) a power of attorney to transfer to Ferris Pell 150 additional shares ; which was transferred to Pell on tne books of the company the same day; and certificates for the same were issued to Pell by the company for his bond, and the mortgage for $15,000 in question. The other original subscriptions for stock, or many of them, it would appear, were made upon the same terms, and were followed by similar transfers and issues of stock for bonds and mortgages. Indeed, it would appear from the proofs in this case, that this company was one of those John Law magnificent schemes of substituting credit for capital, which every now and then rises up with fascinating brilliancy, and fastens itself on the eye of the public, and soon ends by depleting their pockets and patience for the benefit of lawyers, and their managers. , It is true the entry on the books of the company is, that Ferris Pell, Dec. 3d, 1838, applied for a loan of $20,000; but it also appears from the same entry, that his application was approved for $15,000 of stoclc; and the stock was issued to him the 4th January, 1839, on the fictitious transfer by Tylee of the 150 shares, and the delivery of the bond and mortgage for $15,000. It is very clear that in entering these applications for stoclc for bonds and mortgages, as applications for loans, the officers of the company merely adopted a figure of speech, calculated to carry out the flattering idea that the original subscription of two millions of capital had been actually bona fide subscribed for and paid in, or secured; and thus calculated to satisfy their own consciences, the public and the law, at the same time. But, poetry aside, the fact is, Ferris. Pell’s application was for stoclc to be issued by the company for his bond; and the mortgage for $15,000, executed by his wife, himself and Selden, was executed ‘to secure the payment of the bond. The application was not for a — 334 — loan, either of stock or money, hut for an issue of stock to him as a substitute for an original subscriber. Although the market value of the stock did not exceed 98 per cent when the mortgage, &c. was delivered and stock issued, January 4, 1839, and the mortgage is dated, and bears interest from, December 3d, 1838, when Pell’s application was passed on by the committee, yet no usurious agreement can be inferred from these facts, because there was no loan. It is also insisted that the fact found by the judge at special term, that the company had power to issue the 150 shares of stock for the bonds and mortgages of Pell, is contrary to evidence; that they could only loan money upon real security, and had no power to issue stock for bonds and mortgages. Were this action brought by the company, for its own benefit, and not by the receiver for the benefit of creditors and third parties, as it appears to be, I should certainly look at the authorities very closely, before I should say that thé organization of the company was regular, and its mode of getting the mortgage in question, and other mortgages, and of going into operation, legitimate and authorized; and that Mrs. Pell was estopped from setting up any such irregularity or want of authority. From the articles of association and the proofs, it certainly does appear that the whole scheme was to make the payment of the whole capital in bonds and mortgages operate as an investment of the whole capital, and thus make short work of it. The capital was to be paid in bonds and mortgages, and then these bonds and mortgages were to be pledged to raise money to loan and operate with. But as the company has been decreed to be insolvent, and unable to pay its debts, and this suit is brought for the benefit of creditors and innocent third parties, Pell himself, as the substitute for an original subscriber, could not set up any irregularity or want of authority in the mode of procuring the bond and mortgage, and Mrs. Pell cannot be, as I can see, in any better position. (Sagory v. Du Bois, 3 Sandf. Ch. R. 466. Palmer v. Lawrence, 3 Sandf. S. C. R. 161. — 335 — S. C. 1 Selden, 389. McFarlan v. Triton Insurance Co., 4 Denio, 392.) [New York General Term, May 3, 1858. Davies, Clerke and Sutherland, Justices.] It is also insisted that the matter in controversy is res adjudicata. I think not. There was no adjudication in the court of appeals, on the merits, upon the appeal from the decree of the supreme court; but the decree of the supreme court was reversed, and both the original and supplemental bills were dismissed by the court of appeals, on the ground that the assignment of the bonds and mortgages to the commissioners, &c. of Ohio by the company was illegal and unauthorized. The court of appeals did not pass upon the merits, and there is no judgment of the supreme court on the merits. Although the Bancker bond and mortgage was paid, as between Pell and Bancker’s executor, yet I do not see why it was not properly assigned to the company for the protection of the title, &c. It was expressly agreed. by Pell that it should be so assigned, and the plaintiff only claims the amount due on the $15,000 mortgage. The judgment of the special term must be affirmed, with costs.