Codwise v. Gelston — 10 Johns. 507

Majority

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George Codwise, jun. Peter Ludlow, James Codwise, Robert Morris, jun. James Ludlum, Jonathan Ogden, Isaac Cock, A llen Clapp, Jacob Valentine, and Michael Merrit, Appellants, against David Gels ton, Respondent. David Gelston, Appellant, against George Codwise and oth ers, Respondents.

ALBANY,

March, 1812.

Headnote

s. assigned or fund“odp! in trust to pay certain creditors, among whom was G.» a judgment creditor, and 5. having been surrendered into the custody of the sheriff by his bail, G. consented to his discharge from prison. In a bill in chancery filed by certain creditors of S. against him and others, among whom was G., it was alleged that G. had taken 8* in execution and discharged him on taking the assignment; and G. in his answer stated the manner of the discharge, and that he had not been paid, and insisted also on the assignment. It was held that the allegation in the bill as to the discharge not being true, and the discharge from prison on the surrender being no satisfaction of the debt, and G. not being bound to make an election between the judgment and the assignment, the bill, as against him, ought to be dismissed* with costa.

And where G. presented his petition to the chancellor, praying that he might be paid the amount of his judgment out of the moneys arising from the sale of the real estates of S. on which the judgment was a lien / it was held that he was entitled to the benefit of thefund, and to a priority of satisfaction before the general creditors of S.

Whether a party is entitled to relief by petition* or must apply by bill, depends on circumstances* and the sound discretion of the chancellor; where the petition is upon some collateral matter which has reference to a suit in court, he may be relieved on petition.

If a fund for the payment of debts be created by an order or decree in chancery, and creditors come in to avail themselves of it, they will be paid pari passu, or on the footing of equality. But where the law gives a priority, equity will not destroy it and especially where legal assets are created by statute, as in case of judgments, they remain such, though the creditor is obliged to go into chancery for assistance, and the legal priority will be protected and preserved ; and the regular course is, for the master taexamine and report on the priority of the several judgments; but where a creditor applies by petition and not by bill, so as to bring in the other judgment creditors, the master must determine the priority by the record, and cannot resort to proof aliunde, unless it be the voluntary confession of any prior judgment creditor that his debt has been satisfied.

THESE causes came before this court on two appeals from the court of chancery. The latter was an appeal from an order of

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tiie 12th of September, 1310, and the first was a cross appeal from a decree of that court of the 23d of September, 1809. Both appeals were argued at the same time, and considered to* gether by the court.

George Codwise, and the other appellants,

in behalf of them» selves and all others, creditors of Comfort Sands, who should be adjudged entitled so to do, and should come in and contribute to the expenses of the suit, filed their bill in the court below against Comfort Sands, who had, before that time, become a bankrupt, and against the assignee of the estate and effects of the bankrupt, and against Henry Sands, Lewis Sands, Nathaniel Prime, and several other persons, of whom David Gelston, the defendant, was one. This bill stated in substance that Sands, being a merchant largely indebted to the appellants and others, in the year 1797, stopped payment, and afterwards committed an act of bankruptcy, and that a commission of bankruptcy (under the late bankruptlaw of the United Slates) was taken out against him the 22d of June, 1891; that he was declared a bankrupt, and his property assigned, &c. and that Sands made several conveyances and dispositions of his estate, real and personal, after he stopped payment, and before he became a bankrupt, &c. which the bill charged to have been "fraudulently made, and with intent to delay and defraud his creditors, and the bill sought relief against such conveyances and assignments.

The bill, so far as it related to Gelston, the defendant, charged that Confort Sands, at the time he stopped payment, had a claim on the United States for a large sum of money, the legality and amount of which had been previously established by the award of certain arbitrators, but the money had not been paid ; and that Sands, with a view to secure some of his creditors in exclusion of the appellants and others, on the 28th of December, 1798, for the nominal consideration of five dollars, granted, sold and assigned to Nathaniel Prime, the son-in-law of Sands, all his right, title, and interest in the said demand against the United Stales, in trust, to enable the said Prime to receive the same, and to apply it to the payment of all the debts due from the said Sands to Tredwell Jackson, Nathaniel G. Ingraham, David Gelston, and several others named in the assignment, and if insufficient to pay the whole of the said debts, then-in proportion to their several demands; that- Prime had accepted the trust, but never received or paid over the moneys, or made any attempt to recover the same. That

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Sands afterwards actually paid, or otherwise satisfied, the whole of the moneys due the said persons, or the greater part of them, named in the assignment, and for whose benefit the same was made ; but that Prime, by the direction of Sands, still retained the assignment; and Sands pretended and alleged that the whole of the fund so assigned was appropriated, notwithstanding his subsequent payments as aforesaid, &c. and the appellants claimed and insisted that the said fund, or so much as was necessary for that purpose, should be applied towards the payment of their demands against the said Sands.

The bill further stated, that the respondent, Gelston, named as one of the persons for whose benefit the said assignment w'as made, had recovered judgment in an action at law, against Sands, for the amount of his debt, and that he took the body of Sands in execution, and afterwards voluntarily discharged him from imprisonment, which, the appellants insisted, amounted to a release and discharge of Gelston’s demand.

Gelston, in his answer to the bill, stated that Sands was justly indebted to him by a promissory note, dated 15th August, 1791, for 1,875 dollars, payable 86 days after date; and which being unpaid, he commenced an action thereon and obtained a. judgment for the amount, with interest and costs; that he issued a'cix. so, to the sheriff of Nem-York, which was returned non esi; that Sands, afterwards, was surrendered by his bail into the custody of the sheriff of Kings county; that- he was never afterwards taken on a ca. sa. at the suit of the respondent, except once when attending the' circuit court of the United Slates, as a witness, when he was immediately discharged by order of the court. That in consequence of being informed of th<e assignment made by Sands to Prime, for the benefit of the respondent and others, the respondent agreed that Sands might be released from the custody of the sheriff, to whom he had been surrendered by his bail aforesaid ; and the respondent accordingly gave directions to the sheriff of Kings county to discharge him; and that the amount of the judgment against Sands still remained wholly unpaid, and that he had no other security whatever, except the said assignment, óf which he claimed the benefit, insisting on its validity, and praying to be dismissed from the bill, with costs.

No replication having been pat in, the cause, so far as regarded, the respondent, was heard by bill and answer.

The bank of Nem-York having filed a bill against C. Sands and

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Henry Sands, and Isaac Kibbe, assignee of C. Sands, to foreclose a mortgage held by them on the estate of Sands in Brooklyn, and f°r a sale thereof, an order for the sale was made by consent of the parties, on the 2d June, 1804, by which one of the masters was ordered to sell at public auction the mortgaged premises, ih such part or parts as might be convenient, and after paying the amount due on the mortgage, out of the proceeds.of the sale, to bring the surplus, if any, into the court, to be disposed of according to the further order of the court.

The cause having been heard as to Comfort Sands, Henry Sands, Lewis Sands, JV. Prime, and others, relating to certain conveyances of property by Comfort Sands, alleged to be fraudulent, the chancellor, in February, 1806/ decreed them to be fraudulent, and directed the estate of C. Sands in Brooklyn, and certain houses in Pine and Cedar-streets, to be sold, and the money to be brought into court, to be distributed among the creditors of Comfort Saiids, directing accounts to be taken, and reserving further directions. From this decree C. Sands, H. Sands, and L. Sands, appealed to this court. Pending that appeal, in May, 1809, the respondent presented his petition to the court of chancery, entitled in the said cause, stating the judgment recovered by him against Sands,' for ‘2,098 dollars and 60 cents, docketed the 28th December,' 1799, which he alleged to be in full force and justly due, and that it was a lien on the lands, &c. of C. Sands, and that certain lands, <§*c. of C. Sands having been ordered, by a decree of the court of chancery, to be sold, and the money to be brought into court to be distributed among the creditors; the respondent, therefore, prayed that the amount of his said judgment, with interest thereon, or so much as the said moneys should be sufficienf'to pay, after payment and satisfaction of all prior encumbrances, if any, might be directed to be paid to the respondent.

In September, 1807, the chancellor made an order that the consideration of the petition should be deferred, until the fund should be brought into court.

The appeal of C., H., and L. Sands, and others, above mentioned, was heard in this court, which, on the 24th March, 1808,^[5] ma(je a decree, declaring the said conveyances of his real estate fraudulent, as against his creditors, and that they passed to his assignees; and the court directed that the costs and charges of the respondents, (the appellants in the present case,) should be reimbursed to them out of any moneys arising from any of the said

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estates brought into court. In pursuance of this decree, the court of chancery, on the 25th June, 1808, directed the moneys brought into court, proceeding from the sales of the said estates, should be paid to the assignees of Comfort Sands; and the assistant register paid to the assignees 10,642 dollars and 4 cents, and 4,010 dollars to the solicitor of the appellants, which sums bad been paid into court, the 2d June, 1804, by the master, as the balance remaining in his hands of the proceeds of the Brooklyn estate, after paying the mortgage to the bank of Neiv-York.

The cause, as far as it regarded D. Gelston, was finally heard in March, 1809, on the bill and answer, and on his petition filed in 1806, and the chancellor decreed that the bill should be dismissed, as against Gelston, with costs.

In February, 1810, Gelston presented his petition to the court of chancery, stating the said bill and answer, &c. his former petition, &c. that on the remittitur of the cause, after the decree of this court, some order was entered in the court of chancery, ex parte, and without any notice to him, and that he did not know of the payment of the moneys by the register, until a short time before presenting bis petition; and when the said petition was suspended by the chancellor until the moneys should be brought into court; and further stating, that another master had made sales of the remaining parts of the lands at Brooklyn, at the request of the assignees of Sands, the proceeds of which, amounting to 27,485 dollars, were either in the master’s hands, or had been paid into court, and that he apprehended the same would be paid to the assignees under the said order; and that the chancellor, after hearing the cause, in September, 1809, referring to his former opinion, suspending his decision until the subject was ripe for distribution, declared “ that period had arrived,” and that the appellants’ judgment “ continued a lien on the real estate of Comfort Sands, and was entitled to priority of satisfaction,” &c. but that in drawing up the decree, grounded on that opinion, the register, through inadvertence, he (G.) perceived, had omitted to insert an order or direction for the payment of the petitioner’s judgment, prior to the general creditors of Comfort Sands, and that ne notice had been taken in the decree of his former petition, or of his right of priority of satisfaction ; the decree merely going to the dismissal of the bill, as it regarded the petitioner, wtith costs; and being advised that the decree was therefore imperfect: 1st. In not ordering the petitioner’s judgment to be paid, according to its priority, nor the priorities;

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of the several liens on the moneys brought into court, to be settled 5 2d. In expressing no order or direction to allow or dismiss the said f°™er petition; and he, therefore, prayed a rehearing on these two points ; and that the assignees might pay into court the moneys received by them from the register, that the master might bring into court the proceeds of the sales of the remaining part of the estates, and that the said moneys might remain in court until a final decree, and that he should be paid the principal and interest of his judgment, according to the prayer of his former petition.

The facts of the petition were verified by affidavit, and a rehearing granted, and in September, 1810, the chancellor ordered the said petition for a rehearing to be dismissed, with costs. And from this order Gelston appealed to this court.

George Codwise and others,

the appellants in the cause first above mentioned, brought a cross appeal, as to that part of the decree of the court of -chancery, of the 23d Septem- " ber, 1809, dismissing the bill of the appellants, as against the respondent, with costs, on the grounds, that the judgment of Gelston against Sands ought to have been decreed to have been satisfied, or otherwise discharged, and no longer in force; that the decree ought to have declared what were the rights and interests of the respondent, as well as the appellants and others, in the said debt due from the United States to Sands, and assigned to Prime in trust; it being apparent that some of the debts, to secure which íhé assignment was made, had been afterwards satisfied by Sands; and that proper inquiries, in that respect, ought to have been directed; and that, if it was proper to dismiss the bill generally, as against Gelston, it ought not to have been with costs.

The reasons for his decision and order of the 12th September, 1810, were thus assigned by

The Chancellor.

(After stating the facts in the case and

the proceedings before him.) After the decision of this court, in March, .1808, that part of the decree of the court of chancery which directed a sale to be made by a master, pursuant to the order entered by consent of parties, in June, 1804, was reversed ; thus abolishing the order for a judicial sale, and making the 7 avoidance of the conveyances of Comfort Sands the limit of the decree ; and thus instead of placing the surplus money at the dis- ’ posal of the court of chancery, to be applied to the satisfaction of the different liens and charges on the Brooklyn estate, in the

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•U'dcr of priority or equality, as circumstances might require, devolving the right to the surplus on the assignees of C. Sands. That the sale was subsequently consummated, could only be owing to the order entered by consent, and by the acquiescence of the assignees to pursue that mode for converting the estate, as far as their interest extended, into money 5 hut such subsequent sale could not possibly remodify their rights. They were entitled to the surplus by the decree of this court, and they, it seems, preferred the conversion of the estate into money, in the mode prescribed, from different motives, and with totally different objects; for it was expressly decided by this court, that the estate passed to, and vested in the assignees, subject to the mortgage of the bank of Nerv* York, and thus a decided destination was given to it, which exempted it from the former decretal order of the court of chancery.

The decree of this court affirmed the assignees, as owners of the equity of redemption, entitled to receive the surplus money and accountable for its correct application. Neither the decision of the court of chancery, nor of this court, passed on the rights of ■ Gelstoii. He claimed, in his answer to the bill of the appellants, .. to be dismissed, with costs; and to that claim full effect was given by the decree of the court of chancery. His lien was preserved, unimpaired, for the proceedings of the court of chancery, as modified by the decision of this court, left it where it was found.

His remedy against the terretenants, or assignees, may be pursued without any equitable impediment, and he must, under the present circumstances, and in conformity to the decree of this court, be left to pursue it at law.

If this is a correct deduction, then the court of chancery had no further decree to make on the subject, the defendant having had the bill, as against him, dismissed with costs. The court of chancery was only to conform to the decree of this court, consider the assignees as owners of the equity of redemption, and leave such parties as were not regularly before the court, to prosecute their claims as their interests might require.

The petition of Gelston was not so assimilated with the cause as to require its dismissal, in order to perfect a decree. It was a mere collateral matter, which inevitably followed the fate of the bill, if dismissed, and was incapable of being sustained, when the bill no longer existed; and though it might afford a ground of application

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to have the petition formally dismissed, it could not so influence the decree in the cause, as to require the court to open it, for a rehearing on that ground only, for it was extrinsic to the point in issue.

por these reasons, I was of opinion that the petition for a rehearing should be dismissed, with costs.

Riggs, for the appellants,

in support of the cross appeal, conj tended, 1. That the bill ought not to have been dismissed, as against Gelston, with costs. This, however, was a point of inferior importance. An inquiry ought to have been directed as to the amount of the debt of the United States assigned to Prime in trust, the amount of the debts of the several creditors for whose benefit the assignment was made, how much had been paid to them by Sands, and the sums respectively due to them, in order to ascertain what interest each had in the fund. The chancellor ought also to have decided on the legal construction of the assignment. This cannot now be done, without filing a new bill. Equality among creditors is the policy of a court of equity, and the respondent ought to come in, pari passu, with the other creditors.

Again, the respondent, in his answer, admits that he consented to the discharge of Sands from prison. Shall he, then, after taking an assignment, as security, and discharging his debtor from custody, and insisting on the assignment, be permitted to retain his hold on the judgment, in preference to other creditors ? This surely is not equity. He ought to make his election, either to retain the assignment, or judgment, and not-to hold both; but the decree has left him as a judgment creditor, and with the full benefit of the assignment also.

2. As to the appeal of Gelston, he contended, that G. had obtained all that he asked for, and ought not now to be permitted to apply for more. The hands of the chancellor, as to the distribution of the proceeds .of the sales of the estate of Sands, among the creditors, were tied by the decree of this court, which directed the money to be paid and distributed agreeably to the bankrupt law of the United States. There were 19 judgment creditors; and the chancellor could not inquire into their claims of preference. If a creditor is obliged to come td a court of equity for relief, equity-will place him in pari passu with other creditors, or not help him

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at all.^[5] Equity knows no preference between creditors as to the distribution of the fund. If the respondent does not like this equity, let him remain as the court of chancery left him, with his legal remedy.

Again, this appeal comes up to this court on a mere petition, which is no basis on which a decree can be founded.^[6]

Pendleton and T. A. Emmet, contra.

1. The judgment was a lien on the lands of Sands ; it existed prior to the bankrupt law of the United States, of the 4th April, 1800, and it is preserved by the 63d section of that statute. This was decided, as a clear point, by this court, in Livingston v. Livingston.^[7] This lien continued to be valid, notwithstanding the prior conveyances by Sands; for those deeds were fraudulent and void, and were declared so to be by the decree of this court. They are to be regarded as mere nullities, in regard to the creditors. The respondent had a right to the lien or fund, subject to the prior encumbrance of the bank of New-York. He was not bound to make.an election between the judgment and the assignment; and by resorting to, or insisting on, the assignment, he did not waive his rights under the judgment. A creditor may take or gain as many securities as he can obtain for his debt. This is not a case of election ; that imports a right to one only of many things; but the respondent has a right to all. He can never be deemed to waive any of his securities by implication.

The respondent was made a party to the bill of the appellants, and in his answer he insisted on his legal rights. He did not come into the court voluntarily, but was brought there by the appellants. The maxim, therefore, that a party coming into a court of equity must do equity, does not apply to the respondent.

The money, or general fund, must still be under the control and disposition of the court of chancery; otherwise, there must have been some mistake in that court on the subject. The decree of this court did not prohibit the distribution of the fund. It merely gave operation to the bankrupt law in this respect. The assignees of the bankrupt stand in his place. They have no other or better rights than he possessed. They take the estate or fund subject to all liens. And if Sands himself could not hold this fund against the judgment of the respondent, neither could his assignees. This court declared the deeds of Sands fraudulent and void, and left his estate to be disposed of, as if no such deeds bad been made. The fund created by the sale of the Brooklyn

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property, under the mortgage to the bank of New-York, war brought into court by the consent of all parties. The surplus, after payment of all the liens, was to go to the assignees of the bankrupt.

The respondent was entitled to priority of payment.. It is a settled principle at common law, and under the statute, that judgments are to be paid in the order of their dates, or times of docketing. Judgment creditors are entitled to a priority out of an equity of redemption, and they have a legal right to redeem.^[5] When the law gives priority, equity will not destroy it.

What remedy has the respondent, if he is not to be paid out of this fund? Is he to execute his judgment against a hundred terretenants, and sell the property ? This would give rise to a multiplicity of suits, and produce enormous expense. Ejectments would be brought. The purchasers, when devested of the lands, would file their bill against the assignees of Sands, to recover back the money they have paid. The assignees, while the order of the 2d June, 1804, was in force, and it was never reversed, had no right to take the money brought into court.

It is the constant and uniform practice in chancery, where there is a fund thus brought into court, to direct the master to inquire into the priority of the demands of the different creditors on the estate.^[6] This was all the respondent asked for.

Again, the respondent is entitled to interest from the time of docketing the judgment, or at least from June, 1808, when the money was received by the assignees.^[7] He is entitled to costs also on the appeal.

Baldwin, in reply,

said that the respondent having consented to the discharge of Sands from prison, the effect was the same as if he had been discharged on a ca. sa. He could not again imprison him by an execution. It is admitted that if he had been discharged on a ca. sa. the debt would be discharged. The chancellor, at least, ought to have decided on the effect of the discharge.

The chancellor never refers to a master to inquire as to the priority of creditors, unless the creditors are before the court. And the opposite party cannot be brought into court on a mere pelition. There can be no issue. The merits of the several judgments cannot be inquired into. If on a petition, it is referred to the master to settle all questions as to priority of demands and as to

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frauds, it would make him equal to the chancellor. It appears there were 19 iudscments, 14 of which were prior in date to that of the rev z * spondent. How can it be said that the prior judgments have not exhausted the fund 1 And how investigate their respective merits, unless on a regular bill which would bring all the creditors before the court ? It cannot be done on the petition.

If the assignees of Sands had a right to his estate, they had a right to the proceeds or money. The decree of this court is conclusive on this point. If the respondent claims a preference, let him seek it against the assignees.

The respondent has no right to interest. The assignees are trustees for the creditors; and trustees do not pay interest, because they have no right to me the fund, so as to produce interest

The first question arising on the appeal of D Gelston, is, whether the judgment in his favour against Comfort Sands could at all be affected by the previous conveyance to Henry Sands 1 and if not,

Whether the subsequent acts of Gelston have operated either-as an extinguishment of the debt, or as a destruction of the lien he had in virtue of that judgment?

On an appeal from the court of chancery, in relation to the conveyance of C. Sands to Henry Sands, the decision of this court is sufficiently explicit to prevent a misconstruction of their decree. By it the conveyance of the real estate situate at Brooklyn was declared void, as against the creditors of C. Sands; and the said estate, remaining in him at the time he became a bankrupt, passed to his assignee. The deed being void, and the estate declared to be in him at the time he became a bankrupt, it consequently passed to the assignee in the same manner as though the deed had never existed, thereby evidently intending to preserve prior encumbrances; so that the judgment of the appellant, Gelston, could not be affected by such deed. I can discover no possible reason why a fraudulent and void conveyance should interfere with a subsequent judgment for a bona fide debt, against a person afterwards a bankrupt. It would be as contrary to the established principles, as to the rights of creditors, and operate m a discouragement to the attentive and vigilant creditor. On the naked question (disconnected with acts which might amountrie a waiver of his lien) there can be no doubt that he retamed

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judgment. Indeed, the law of congress, securing judgments be* fore bankruptcy, is conclusive on this subject; but it is said Gelston has lost the benefit of this judgment: 1. By accepting of the assignment to Nathaniel Prime, alleged to be in lieu of it, an[j ky discharging Sands from his confinement; 2. By assenting ¡he order of the 2d of June, 1804.

The situation of Gelston as to the assignment, can be ascertained only from his answer to the bill, by which it appears that he-had no agency in procuring the assignment. It was in consequence of information of it, that he released Comfort Sands from his confinement, being in on surrender of bail; and he held no other security for the amount of the judgment of which he now claims the benefit. This recognition, or acceptance of the assignment, could not destroy the lien created by the judgment. He had a right to accept of additional, without injuring his existing security: and unless an express agreement had been entered into to accept it in satisfaction of the debt, it. cannot be so construed. The discharge from confinement, by surrender on bail, could not have that operation. The acceptance of the assignment was increasing the security for the debt. He might hold both, and was not bound to make his election between them.

Whether by the order of the 2d of June, 1804, he has not so far waived his judgment as to be placed upon a footing with the other creditors, is the next subject of inquiry. This order must have been obtained with a view of advancing the interest of all parties concerned, under a supposition that disposing of the estate at auction in small parcels at different periods, would insure a higher price than a sale of the whole in the aggregate ; and the master was directed, after paying off the mortgage to the bank of Nem-York, and deducting charges, to bring the surplus (if any) into the court of chancery, to be disposed of according to the further order of the court.

Having before shown that the acceptance of the assignment, and the release of the debtor from confinement, could not destroy the lien on this property created by the judgment, it is evident^ then, if this order had not been made, the remedy at law would have been open to the appellant, and he might have issued his execution and sold the property, subject to the mortgage and other encumbrances. But by assenting to this order he has precluded himself. The money is in the court of chancery, and, it is said, that the favourite maxim of that court is, equality among

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-¿editors ; that Gelston having obliged himself to resort to equity, he must now take in pari passu with the other creditors; and the case of Plunket v. Penson (2 Atk. 290.) is cited in support of this doctrine. That was a controversy between a bond creditor and the simple contract creditors; and the question was, whether the assets of the testator were legal or equitable, on which the preference of the bond creditor, or his taking in pari passu with the simple contract creditors, depended. The testator was a cesiuy que trust of a real estate which he mortgaged, and having the equity of redemption of a trust estate, he made a will, and devised the estate to others. The bond creditor, after his death, was forced to come into equity to seek relief out of a fund created by that court. It was decided he should take in pari passu with the simple contract creditors. The principle established by that case is, that a court of equity will never take away from a creditor a right he has at law, but having no such right, and the fund being created by the court, the creditors are placed upon the same footing; but in the present case it is otherwise.

The judgment of Gelston was a lien, and the remedy at law existed, until this order by consent was obtained, and this, in my view, was assented to, for the benefit of all parties, according to their respective rights: and shall a court of equity say to a person in this situation, u although you have assented to this order, so that the most might be made out of the estate, without intending to lose your priority, yet as by this assent you must come into this court to ask relief, yon shall be deprived of the remedy you had at law, and be placed upon a footing with the other creditors ?” It cannot be so. The judgment was a lien on the subject out of which the fund was created, and his assent, as stated, could not operate so as to prevent a court of equity from, securing it. It is true, the prosecuting creditors caused the examination into the validity of the conveyance to Henry Sands to be made, without which be never would have received the benefit now claimed; but the conduct of those creditors, in proceeding against him, has effectually prevented his interference. How far other creditors ought to have assisted, is, perhaps,, a distinct consideration. It could not be expected that Gelston would contribute to the expenses of a suit against him, in hostility to his rights. I am, therefore, of opinion, that the amount o£ the judgment must be satisfied out of the proceeds of this estate., after the payment of prior encumbrances, if sufficient remains* onto the extent of that fund.

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It is said'that his priority cannot be inquired into on petition$ and as the extent of the appellant’s right cannot be ascertained without this inquiry, a bill ought to have been filed for the purpose. I can discover no reason why this is not a proper subject 0f reference f0 a master. In the cases cited from' 2 Vesey, sen. 57]. 577. the court referred it to a master to settle priorities of creditors. The chancellor, therefore, ought to have proceeded on the petition. It never could have been intended by the decree of this court, in relation to the conveyance of C. Sands to H. Sands, to interfere with the proceedings on the decree of sale, according to the bill of foreclosure of the New-York bank, on their mortgage, and prevent the speedy distribution of the fund, arising out of the sales of the property above the amount due them, by the court of chancery, according to existing liens thereon, but obligó the judgment creditor to have recourse to the assignee whose rights certainly could not extend beyond those of C. Sands himself. The proceedings, therefore, ought to be sent back to the court of chancery, with directions that the proceeds of the sales' of the Brooklyn estate be brought into that court, and to settle the priority of the liens thereon, and that the amount due the appellant, upon his judgment, be paid according to its priority, and in preference to the assignees of C. Sands. I can see no ground for the cross appeal of Codwise and others, brought to have the decree of the 23d September rectified; that ought also to be dismissed.

There are two appeals pending between these parties, one brought by Gelston from the chancellor’s order of September, 1810, and a cross appeal by Codwise and others, from the decree of September, 1809. They were argued together. '

1. As to the cross appeal of Codwise and others. The complaint here is that as to Gelston, who was made a defendant ia the original bill filed by Codwise and others against Comfort Sands and his sons, in 1801, the bill was dismissed, with costs; but I think here is no ground for complaint. The allegation in the bill that Gelston bad taken Comfort Sands in execution, arid discharged him, was not true in fact. Sands had never been taken in execution on the judgment of Gelston. Sands had been surrendered by bis bail, and Gelston had consented to his discharge from prison on such surrender. But that was no satisfaction of the debt; and Gelston. in his answer says he had not been paid, and

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insists on the benefit of the assignment to Prime of ar debt due Sands from the United States, in trust to pay him and certain other creditors. Gelston was not bound to elect between the judgment and that assignment. He was not called upon by the bill to make that election, and there was no just ground for a decree that the judgment was discharged, or that Gelston should then be put to his election. The main allegation in the bill as to him having failed, he was entitled to be dismissed with costs. Whether the chancellor ought or ought not to have made some further decree relative to the debt due Sands from the United, States, is a question that did not affect the case of Gelston. The purpose for which he had been made a defendant had failed. This decree ought, therefore, to be affirmed.

2. On the appeal by Gelston, the first question is, whether, without reference to the merits of his case, he was entitled to the relief sought by petition. It may be difficult to draw a precise line between cases in which a party may be relieved upon petition, and in which he must apply more formally by bill. Petitions are generally for things, which are matters of course, or upon some collateral matter which has reference to a suit in court. The case before us was of the latter kind, as G. asked only to be paid the amount of the moneys brought into court, and upon which he had a lien. Gelston was not a novus hospes. He had been before the court in the very cause, and his case was well known, and the court had already declared that he was entitled to priority of satisfaction in preference to the general creditors. In the case cited from 1 Ves. jun. 453. Ex parte Bromfield, the heir at law of a lunatic applied, by petition, for the money which had arisen from the sales of his estate, and been paid into court. There was no question raised about the mode of application. The merits were discussed at large, both by the counsel and the court, and on account of the great consequence of the point, the chancellor said that the case must be put into the shape of a bill. The mode of application depends very much upon the discretion of the court, and in this case I think it was well enough, and suited to the object. There is no well-founded objection to this mode, on account of any difficulty in settling the question of priority among the several judgments. The regular course is, for a master to examine and report on this point, and nothing can be more simple and easy, for he determines by matter of record. Such was the course pursued before Lord Ch. Hard wicke, in the case of Worthy v. Brickhead, (2 Ves. 571.) and

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"the toaster there went at large into the examination of priorities, because the judgment creditors were all before the court.

With respect to the merits of Gelston’s claim, as set forth in his petition, I think he was entitled to the benefit of the fund. His judgment had not been paid or discharged, nor had he lost the lien .on the moneys resulting from his judgment. He had done nothing under the assignment which ought to prejudice him, or to be deemed a waiver of his judgment; and his priority remained good, notwithstanding the sale of the Brooklyn estate under the order, by consent, of June, 1804. The court of chancery was bound to give his claim its legal priority. If a fund for the payment of debts be created under an order or decree in chancery, and the creditors come in to avail themselves of it, the rule of equity then is, that they shall be paid in pari passu, or upon a footing of equality. But when the law gives priority, equity will not destroy it, and especially where legal assets are created by statute (as the judgment lien was here) they remain so, though the creditors be obliged to go into equity for assistance. (2 Fonb. 403, 404.) The legal priority will be protected and preserved in chancery.

Instead, then, of dismissing his second petition, the court ought to have made provision for the payment of Gelsion’s judgment out of the funds arising from the sales, under the order of June, 1804, in preference to the general " creditors of Sands. The moneys arising on those sales remain subject to the same liens that the lands did before the sales, and the court, by reference to a master, should have ascertained and settled the priority of the liens, and decreed distribution accordingly. There was nothing in the decree of this fcoúrf, in March, 1808, which prevented such dis-, tribution from being made.

I am of opinion, therefore, that the decree of September, 1810, ought so far to be corrected as to allow the appellant the amount of his judgment, to be paid according to its priority, and in preference to the assignees of Sands, out of the proceeds of the sales of the Brooklyn estate. But as the appellant applies by petition only, and does not by bill bring in the other judgment creditors, the master must determine the priority of the liens by the record., and he cannot resort to proof aliunde, unless it be the voluntary eonfession of any prior judgment creditor that his debt is satisfied.

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This being the unanimous opinion of the court, the following decree was pronounced in the cause.^[1]

, “ Having heard counsel, as well on the part of the appellant, David Gelston, as on the part of the respondents, George Cod-wise and others, and also on the matter of the cross appeal, and considering the decree of the court of chancery of the 23d of ° . . , September, 1809, is not erroneous in the particulars and tor the reasons in the cross petition of appeal mentioned; it is, therefore, ordered, adjudged and Decreed, that the said cross petition of appeal be dismissed, and the decree complained of be affirmed ; and that the appellants, on the said cross appeal, pay to the respondent, for the costs of such cross appeal, the sum of one hundred dollars.

“ And this court further considering that the moneys arising from the real estate formerly of Comfort Sands, situate in Brooklyn, in the pleadings mentioned, and which are now in the said court of chancery, or may hereafter be brought therein, ought (after, in the first place, reimbursing, paying, and indemnifying the said George Codwise and others, the complainants in the court of chancery, the costs and charges which they have paid, or are or may become liable to pay, in the prosecution of that suit, or which have or may take place therein, according to the order, judgment and decree of this court of the 24th of March, 1808, and the order, judgment, and decree of the court of chancery of the 25th of June founded thereon) to be applied to the payment and satisfaction of the judgment creditors of the said Comfort Sands, whose judgments were docketed previously to the bankruptcy of the said Comfort Sands, according to the priority of the time of docketing, in preference to the other creditors of the said Comfort Sands: It is, therefore, ordered, adjudged and decreed, that the order of the court of chancery of the 12th September, 1810, in the petition of the appeal of the said David Gelston mentioned, be, and the same is hereby reversed: and it is further ordered that the cause be remanded to the court of chancery, to the end that the said court may direct an inquiry what the said complainants, George Codwise and others, have expended and paid, or are or may become liable to expend and pay, as aforesaid; and also what judgments remain open, unsatisfied of record, against the said Comfort Sands, and which were docketed previous to his becoming a bankrupt, and the amount thereof respectively, and the order, in point of time, in which they were docketed,

* March 24, 1812.

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and that the court of chancery, after deducting the costs, charges and expenses already paid by the said George Codwise and others, complainants, or which they are or may become liable to pay as aforesaid, and also the amount due on all the judgments standing open and unsatisfied of record against the said Comfort Sands, and which were docketed prior, in point of time, to the judgment obtained by the said David Gelston, shall cause the residue, if any, to be applied to the satisfaction of the said judgment in favour of the said David Gelston, together with the interest on such judgment.

“ And it is further ordered, that on the inquiry as to the judgments against the said Comfort Sands, docketed previous to the judgment in favour of the said David Gelston, which may be directed by the said court of chancery, the fact of the said prior judgments remaining open and unsatisfied of record, and satisfaction not voluntarily confessed before the master, shall be conclusive against the said David Gelston, as to the amount to be retained,, in preference to the satisfaction of his judgment, and that the record be remitted,” &c.