The question is not to whom the merchants- supposed they were giving credit, but whose in truth was the business. The answer to this question depends, not upon the belief of merchants in respect to whom they gave credit, but upon the conduct and intention of the correspondents Maag. If their design was unlawful as against Maag's prior creditors, the belief or intention of merchants of whom goods were obtained could not affect the character of the business, though it might afford reason for so framing the decree as to protect their interests. It is clear enough, however, that whatever credit was ob.. tained, in so far as it rested upon any personal trust or confidence, was given to him. The bill is framed upon the theory that the complainants are entitled to reach op.ly whatever surplus there may be after paying the demands of the creditors of this enterprise; and the master has reported the surplus to be ten thousand to fifteen thousand dollars. The property consists of goods in stock, and real estate worth, over incumbrances, $2,000. Considering the probable expenses of a disposition of the property by a receiver, the court estimates the net surplus at $7,500; and if this sum, or the real estate and $5,500, shall be turned_ over or secured to the complainants within 10 days, it will be deemed a discharge of the complainants' demands, as against the property sought to be reached in this case, and a receiver will not be appointed; but in default thereof a receiver will be appointed; and in the mean time the defendants are enjoined from incumbering, disposing of, or selling any of the property, except in the ordinary course of sales at retail, at fair and customary prices, the proceeds of sales to be deposited in bank, from day to day, and kept there until the further order of the court.
and others, by their Next Friend,
and another. l
w: D. Michigan, No D.
The rule that proof and :pleadings must correspond is to be applied equitably, and not rigidly, espeCIally when the party claiming its benefit is in full possession of the facts, and therefore not misled by a pleading which although inaccurate in some details, yet contains sufficient averments to support the relief prayed for. A deed with covenants of seizin and general warranty of land, to which the grantor has no title, is good in equity as a contract for a conveyance. and title afterwards acquired by the grantor inures to the benefit of the grantee or his hflirs.
COVENANT-COVENANTS 011' SEIZIN AND GENERAL WARRANTY.
FRAUDULENT CONVEYANCE-CASE STATED.
lReported by J. C. Harper, Esq., of the Cincinnati bar.
eRAWFORD 11. MOORE.
purchase money. There was an understanding between K. and A. that the latter should have an interest in the lands for his services, but there was no formal or written contract,-nothing upon which specific performance could have been decreed. Subsequently, at A.'s request, and in consideration of said services. K. conveyed a one-third interest in the lands to B., A.'s wife. She had full notice of the deed to Z., and the conveyance was made to her because of the deed to Z.· and to avoid trouble on account of it. Held, that such conveyance was in fraud of Z.'s rights, and that B. must convey the undivided one-sixth interest to Z.'s heirs.
WITNESS-INCOMPETENCy-STATE AND FEDERAL STATUTES.
Defendant, under the state statutes, would be incompetent to testify, the complainants claiming under a deceased person; but held, that the federal courts are controlled by section 858, Rev. St. U. S., under which he is competent. Under the facts disclosed by the proof, the court held that no contract of rescission of the sale by A. to Z. had been proved.
PRINCIPAL AND AGENT-SURRENDER OF NOTE-R4-TIFICATION.
An unauthorized surrender of a note to its maker does not relieve him from liability to pay it; and the payee cannot ratify the surrender because the parties making it had no authorIty to make the surrender, and did not in making it even profess to act for the payee.
In Equity. C. B. Grant and 1'. L. Chadbonrne, for complainantfl. Ball cf H,ln8com, for defendants.
SAGE, J. The bill is filed to compel the conveyance to the complainants, the widow and minor children of John Monroe, deceased, of the one nndivided sixth part of 160 acres of mineral lands situate in Ontonagon county, Michigan, and located and entered by the respondent Nathaniel D. Moore, upon whose application the patent was issued from the state land·office at Lansing, in January, 1875, to James H. McDonald and John McKay, who furnished the purchase money under an arrangement or understanding that Moore was to have an undivided interest in consideration of his services in exploring the land, and discovering upon it indications of iron are. This arrangEment was altogether oral. One witness testifies that it was reduced to writing, and signed, but that is denied by the parties to it, and his testimony does not contain any definite statement of the contents of the writing. The arrangement was so loose and indefinite in its terms that, aside from any objection resting upon the statute of frauds, it would not have warranted a decree for specific performance. Whether Moore was to have one-third or one-fourth interest in the lands does not clearly appear. There seems to have been nothing more than a mutual understanding that McDonald and McKay would do "what was right;" having reference to a recognized custom to give to "explorers" one-fourth, one-third, or, in some cases, one-half, interest, in the lands located by them. On the eighteenth day of October, 1875, Moore, who was then unmarried, executed and delivered to John Monroe a deed in fee.simple, with covenants of seizin, against incumbrances, and of general war·
ranty, for an undivided one-sixth interest in said lands, and the deed was duly recorded December 20, 1875. 'l'he consideration for this deed was $250, of which Monroe paid $10 in cash, and for the resi. due gave his promissory note to Moore, payable olle year after its date. At the time of the execution of this deed Moore told Monroe that he had not received his deed from McDonald and McKay, but expected to l'eceive it, and that it was probably made ont then. In 1875 or 1876, at what precise date does not appear, a deed from McDonald and McKay and their wives to Moore, for an undivided one-third interest in the land, was drawn, signed by McKay, and left by him with a Mr. Viele, under instructions not to deliver it to Moore without orders from him, (McRay.) This deed was not signed by Mrs. McKay, and it is not clear that it was executed by McDonald and 'wife, although the fair inference is that it was; but McDonald directed McKay not to deliver the deed to Moore until he heard further from him. No further directions were ever given. Moore was indebted to McDonald, whose intention it was to keep back the deed until he was paid. He had no knowledge of the drawing of the deed, nor of its partial execution. It was never delivered to him; and the testimony is that it has been lost, or, rather, that Viele (who is not a .witness) stated that he had lost it. In December, 1880, McDonald and McKay conveyed an undivided one-third interest in the land to the respondent Helen Moore, wife of the respondent Nathaniel D. Moore. This conveyance was made at Moore's request, in discharge or understanding; no consideration, exof the original cepting one dollar, passing at the time. Mrs. Moore was not present at the time of the execution of this deed, but she had been informed by her husband that it was to be made to her, and had full notice of his deed to Monroe. Moore did not have the deed made to himself, because of his deed to Monroe, who died intestate, in Colorado, in August, 1878; and because he had learned that that deed had been recorded, and, as he himself testifies, he expected that Mrs. Monroe would make trouble. The complainants aver in the bill that McDonald and McKay held the legal title to the land,-one undivided third thereof in trust for Moore under an arrangement made by and between them and Moore at or before the time when they acquired their title; and that, in order to execute said trust, and vest the title to his third in Moore, they, with their wives, at some time between January, 1875, and March, 1881, executed and delivered to him, at his request, a deed of conveyance therefor; that said deed was suppressed or destroyed by Moore and wife, who also procured the deed to Mrs. Moore for the purpose of cutting out complainants' title to said one undivided sixth of said land. The prayer of the bill is that Mrs. Moore be compelled to convey to them the one undivided sixth of said lands, in the proportion to which they are entitled as heirs of Monroe, and for such other and further relief as may seem meet and proper.
CRAWFORD tJ. MOORlll.
By amendment the complainants allege and eharge that said eonve.yance by McDonald and McKay and their wives to Mrs. Moore was made at the instigation of Moore, with intent and purpose to defraud complainants out of the estate conveyed by Moore to Monroe, by lodging the apparent legal title in her, but for his benefit or use. They charge that, in equity and good conscience, the transaction is as if the conveyance had been made direct to Moore, and that he and his wife are estopped by his conveyance to Monroe from asserting or claiming any title to said one undivided sixth, the title to which is in them by virtne of the premises. They further allege that Moore was unmarried when he made his conveyance to Monroe, and that Mrs. Moore took the conveyance to her, for which she paid no consideration, with full notice and knowledge of complainants' rights under the deed from Moore to Monroe. Counsel for respondents insist that the complainants have failed to make out the case stated in the bill, whieh they contend rests upon the averments of a trust in McDonald and McKay in favor of Moore; execution by making and delivering to him a deed, afterwards suppressed or destroyed, whereby, and by reason of Moore's deed to Monroe, the legal title to an undivided one-sixth interest passed to the complainants; and that, inasmuch as the proof negatives these averments, the bill must be dismissed for want of averments to support the case attempted to be made from the proofs at the hearing. 'rhe rule that the proof and the pleading must correspond, is a familiar one, but it is to be applied equitably, and not rigidly; especially when it is appealed to on behalf of a party having all the time of the progress of the cause the facts in full possession, and therefore not misled by a pleading which, although inaccurate or mistaken as to Bome of the details, yet contains averments sufficient to support 8 claim for the relief prayed for. Texas v. Hardenberg, 10 Wall. 68, cited by defendant's counsel, is in point. There it was asserted on behalf of the defendant that, upon the bill, which was for an injunction to restrain the defendant from asking payment of certain bonds of the United States belonging to the complainant, but in the possesaion of the defendant, he could in no event be held to acconnt for the proceeds of the bonds; the prayer of the bill being only for relief by injunction against receiving payment of the bonds or con po us, and by decree for deli very of them, specifically, to the complainant. Chief JU3tice CHASE, in his opinion, said it was plain enough that the principal object. of the bill was to prevent the collection of the bonds by the defendants, and to compel the surrender of them to the state of Texas; but tbat there were averments and interrogatories looking to the proceeds as well as to the bonds themselves. Admitting that the allegations and interrogatories did not assert the right of the complainant to the proceeds with absolute directness and distinctness, he adds: "The bill might have been better drawn; but we think it wonld savor of extreme technicality to refuse to see in the bill enough,
in relation to the proceeds of the bonds, to warrant relief in this respect, under the general prayer." So, in this case, the main object of the bill is to enforce the alleged trust by compelling a conveyance from the fraudulent grantee of the trustees; but there is enough in the bill and the amendment to warrant relief, without reference to the trust, if the averments are sustained by the evidence. It is next urged on behalf of the defendants that Moore's deed to Monroe did not vest in him any equitable interest in the land for the following reasons: 1. Because of the failure to prove a written agreement between Moore and McDonald and McKay for Moore's interest, and therefore Moore had no equity which he could convey to Monroe. Section 6179, How. St. Mich., provides that no trust or power over or concerning lands, or in any manner relating thereto, shall be "created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring the same, or by some person thereunto by him lawfully authorized by writing." This proposition of law is undoubtedly correct. 2. Because section 5569 of Howell's St:atntes provides that no trusts shall result from the payment of the consideration by one person for a grant made to another. But independent of the statute, and under the general doctrine of resulting trusts, no trust resulted in favor of Moore from the fact of his purchasing the land, and taking the title in the name of McDonald and McKay. Aside from the consideration suggested, that he waived his equity, if he had any, by himself causing the patent to be issued to them, his services in exploring the land formed no part of the consideration of the deed from the state. That was exclusively a money consideration, wholly furnished by the grantees. Moore had nothing but an oral agreement for an interest in the land in consideration for his services. Even conceding that his communication to McDonald and McKay of his discovery of indications of are was part performance, the agreement, as has been stated, was too indefinite to be enforced. 3. That if Monroe acquired no equities in the land by his deed, if McDonald and McKay held the land free from all eqnities and incumbrances, their grantee, Mrs. Moore, will so hold it, regardless of notice or want of consideration; that the fact of her being married, and being the wife of Moore, does not affect her title. Conceding that she paid nothing for the land, that she was fully advised of all the contract relations existing between her husband and Monroe, and that she took the title at her husband's request, her position is as secure, and her title as free and perfect, as though she were a bona fide purchaser for value; that, construed in the most favorable light for complainants, Mrs. Mooore has simply been substituted in the place of McDonald (ind McKay, and can be held to no other or different trust than that of her grantors.