Lehman Bros. v. Tallassee Manufacturing Co.

64 Ala. 567 | Ala. | 1879

BBICKELL, 0. JA

These are appeals from a decree of the Court of Chancery, rendered in the progress of a suit for marshalling and distributing the assets ol the Tallassee Manufacturing Company Number One, an insolvent corporation, disallowing priorities claimed by the several appellants as creditors. The point of contention in the first case is, whether the appellants, Lehman brothers, are the holders for a valuable consideration, and in good faith, of forty of the mortgage bonds of the corporation, entitled to the security of the mortgage.

It is ascertained, after a rigorous contest by the corporation, and by opposing creditors, that Lehman Brothers were bona fide creditors of the corporation, to an amount exceeding one hundred and twenty-three thousand dolíais. The amount was ascertained on a reference to the register, and his report of it, though excepted to because it affirmed these bonds were a collateral security for the payment of the debt, was not in any other respect made the subject of exception, and was confirmed. It is thus judicially ascertained, and the ascertainment is now conclusive on all parties to this suit, that Lehman Brothers are bona fide creditors of the corporation, to the amount reported by the register.

The authority of the corporation to issue the bonds, and to execute the mortgage as a security for their payment, is not disputed. Nor is it matter of controversy, that Micou, the president, had full authority to raise money for the corporation, either by a sale of the bonds, or by hypothecating them as security for the bills or notes of the corporation, given in raising money for its use. The use of the bonds, as collateral security to raise money to conduct the business of the corporation, was one of the purposes of issuing them, announced and concurred in by the stockholders, when authority for the issue was conferred. Nor can it be matter of controversy, that the bonds could be used, not only as collateral security for debts presently created, but that they could also be used in paying the indebtedness of the company antecedent to the time of their issue, or to the time authority for their issue was conferred. Such use is contemplated by one of the resolutions adopted by the stockholders at the time their issue was authorized.

Independent of these facts, the bonds could be employed as collateral security for antecedent debts, or in the absolute payment of such debts. The corporation was created for commercial purposes; and one of its implied powers is to deal on credit, for any proper corporate purpose, in the usual and ordinary mode of conducting its business, under the circumstances in which it may be placed. It would unnecessarily embarrass its operations to declare that these bonds could be employed in paying antecedent debts, but not in hypothecating them as security for such debts, though by the hypothecation forbearance could be obtained, and the debts paid eventually without an absolute, unconditional transfer of the bonds. This implied power is not limited or restrained by the resolution of the stockholders, authorizing the use of bonds in payment of the antecedent indebtedness of the company. Whether hypothecated as a security for such debts, or applied directly to their satisfaction, they are used in paying the debts, in relief' and ease of the corporation, and the objects of the resolution are satisfied.

A controlling object of the stockholders, expressed in the resolutions, was, that the bonds should, if possible, in the course of the business of the corporation, pass to and become the property of the stockholders. This object would more probably have been accomplished by the hypothecation of the bonds, subject to redemption by the corporation, than by their unconditional negotiation and transfer, without the right of regaining them. It does not seem to us, consequently, a matter of any practical importance, in determining the rights of Lehman Brothers to hold these bonds, and to enforce the security of the mortgage for their payment, to enter into any extended consideration of the inquiry, whether they acquired possession of the bonds as collateral security for an antecedent debt, or for a debt presently created. Whether the one or the other was the mode of acquisition, the debts being unpaid, their rights would be the same.

Good faith must, however, have attended the transaction, by which they obtained possession of the bonds ; and an absence of it would be as fatal to their right to hold and enforce them, as the want of a valuable consideration, or of power in the corporation, or of authority in the agent or officer with whom they negotiated, to make the transfer. It is good, faith in the particular transaction which is material, and not in other separate and distinct transactions. The want of it in other transactions, which may be open to criticism and censure, while it may justly excite jealousy, and arouse suspicion, compelling a diligent scrutiny of the particular transaction and all its attendant circumstances, can not impair or destroy rights which may have been acquired under it.

The legislative authority under which these bonds were issued manifestly contemplates the issue of instruments having all the qualities, elements, and characteristics of negotiable paper, which could be introduced into the commercial markets, circulating and passing as such paper circulates and passes in the usual course of business; and in this respect it differs essentially from the legislative enactment which was considered in Blackman v. Lehman, Durr & Co., at the last term. The bonds are payable absolutely, at such place as the corporation may appoint, with coupons for the annual interest attached. The bonds of railroad and other corporations created for commercial purposes, which had been introduced, and had by the usages of trade and commerce, sanctioned by judicial decision, acquired all the characteristics and qualities of bills of exchange and bank-notes, as strictly negotiable as such bills and notes, were within the legislative contemplation; and this was the instrument, though denominated a bond, it was intended the corporation should issue. The issue of another instrument, not having the capacity of negotiability, and to which the credit of commercial paper could not be attached, would not have facilitated the purpose of borrowing money — the end to be accomplished.

Whoever is found in possession of negotiable paper, is presumed to hold for value, and in good faith. The possession is the evidence of right and title, upon the faith of which business is safely conducted, and from which, whatever may be its infirmity, an indefeasible title may be derived, by a bona fide purchaser for a valuable consideration, so long as the paper is not dishonored. The presumption, arising from possession, can be repelled, only by clear, distinct allegations of a want of consideration, or of a want of good faith in its acquisition. — Bronson v. La Crosse, 2 Wall. 283. True, under our decisions, when any infirmity in the paper itself is showm, the burden of proving its acquisition for value, and in the usual course of trade, is cast on the holder who claims protection against the defense. No infirmity in these bonds is averred — no want of legal obligation in them is the subject of controversy: the contention is, that they have not been negotiated in the usual course of business, to the appellants, who are found in possession of them. The possession must have all the strength and force of evidence of right and title, which is accorded to the possession of any other species of personal property. The burden of proof cannot be shifted, except by evidence directed against the possession, and the manner of its acquisition.

Even if there was, in the course of the long dealing between the appellants and the corporation, and between them and Micou individually, much which is open to censure, and which may have provoked general, sweeping charges of fraud and collusion with Micou, in his wild and unfortunate speculations, involving himself and the corporation in financial ruin, and bringing disaster upon those who trusted him implicitly ; such allegations cannot be considered, unless it is affirmatively shown that the particular transaction, by which these bonds came to the possession of the appellants, was infested with such fraud and collusion; or the debt,for which it is claimed they are a security, is tainted with fraud. If the debt was so tainted, it ought to have been made the subject of contestation ; and it wras the matter of protracted and vigorous litigation. Erom the debt, under the decree of reference last made, every false or improper charge, entering into the account of the transactions between the appellants and the corporation, was eliminated ; and eliminating every one that was offensive to good faith and fair dealing, limiting the liability of the corporation solely to debts it had the capacity to contract, and which were contracted for its benefit, by its authorized agent, the large balance is shown and ascertained to be due the appellants. That the existence of a large debt to the appellants may not have been communicated by them to other stockholders of the corporation, is a fact directed against the existence of the debt; as'is the fact of any irregularity in the mode of keeping, or presenting the accounts. Nor can we perceive that special importance should be given the fact that appellants, as stockholders, received dividends, while the debt to them wras being contracted. Corporations of this kind must necessarily conduct business largely on credit; and it cannot be unusual for them to pay dividends, while large debts exist against them.

Besides, it is a fair inference, that appellants were under the belief that the whole indebtedness of the corporation was to them, or known to them ; and that -would not have seriously embarrassed the corporation, or have impaired its credit. The facts have not, however, in them, any element of estoppel; for, upon them it is not shown that reliance was placed by any person, who will be injured by their explanation, or by evidence which neutralizes and removes all inferences which may be drawn from them. And they have, if any, a very remote bearing upon the controlling question, the good faith of appellants in obtaining possession of the bonds, upon a valuable consideration. The presumption, which naturally and logically arises from the fact of possession, that the appellants are holders in good faith, and for value, of the bonds, must be repelled, by clearer averments, and more direct evidence, addressed to the manner of its acquisition, there are to be found in this record.

The fact is undisputed, that for a series of years the appellants had been the bankers of the corporation, advancing and loaning it money, and obtaining for it advances and loans. The amount now due them is the balance of these continuous dealings, after discarding all objectionable items of account. Nor is it a disputable fact, that originally these bonds, with sixty others, were placed in the possession of the appellants, to protect them against liabilities which they had incurred, or were expected to, and did subsequently incur, and to secure them for debts due them, and which it was supposed would be, and were subsequently, contracted with them. The rule is broadly stated, that a bank or banker has a lien on all moneys and funds of a customer, coming into his or its possession in the course of their dealings, for any balance of general account due from the customer. The lien is similar to the well-established lien of a factor, for a balance of general, account, on goods of the principal coming to his possession, and is subject to similar limitations and exceptions. — Morse on Banks, 24. In Davis v. Bowsher, 5 T. R. 492, it was ruled by Lord Kenyon, that bankers have a lien on securities in their hands, for a general balance of account, if they were not delivered under a special agreement, with which the lien would be inconsistent. In Bank of the Metropolis v. New England Bank, 1 How. (U. S.) 234, C. J. Taney, in delivering the opinion of the court, said : “ It has been long settled, that whenever a banker has advanced money to another, he has a lien on all the proper securities which are in his hands, for the amount of his general balance, unless such securities were delivered to him under a particular agreement.” By a particular agreement, the lien may be excluded; but express agreement is not essential to its origin or continuance. It is given by the law, upon the presumption that it is upon the faith of moneys and securities coming into the possession of the banker, in the course of general dealings, not especially devoted to other uses, a balance is suffered to accumulate against the customer. Independent of any express agreement that these bonds should be held by the appellants as collateral security for the general balance of account, or to protect them against liability on bills indorsed for the corporation, they have a clear legal right to retain and enforce them for the balance ascertained to be due them. Nor can we see how it can be doubted, that there was an express agreement that they should be retained as collateral security for the payment of the bills of exchange, drawn by the corporation, indorsed by the appellants, and. subsequently paid by them, which were held by Kuhn, Loeb & Co. There is positive and uncontradicted evidence of the agreement. But, in either alternative, their right is clear, and ought to have been recognized and enforced.

The funds now under the control of the court, and which are to be distributed under its decree, are derived from three distinct sources : First, from the sale of the mortgage property ; second, from the profits earned by the receivers in operating the factory under the directions of the court; third, from the proceeds of the sales of property not incumbered by the mortgage, or any other specific lien. As to the distribution of the first and third funds, there is no contention ; it being conceded the first must be applied to extinguish the mortgage debt, and that the third is for the common benefit of the creditors. The second is the subject of controversy.

There is in the mortgage no express grant of the income or profits, which may be derived from operating the factory. The grant is of the real estate, and the “ stone buildings known as the old factory and the new factory, with all the water-wheels, engines, looms, spindles, and machinery contained therein, or appertaining thereto, or in process of erection, or which may hereafter be added or erected; also, the grist-mill, saw-mill, plane-house, and foundry, with all the machinery and appliances thereto belonging, or which may be added thereto; also, all offices, dwellings, tenements, stables, and other buildings, now belonging to said company, or which it may hereafter acquire; also, all dams, canals* water-gates, or other constructions for the control of Waterpower, now completed, or which may hereafter be constructed ; also, all franchises, rights* and privileges, legal or equitable, granted by charter or otherwise to said compariy.” If there was default in the payment of the bonds, or the coupons for annual interest, continuing for thirty days, the trustees were required to take possession, and to make sale, after giving ninety days’ notice. The factory, as an operating and going concern, was conveyed, and was to be sold. Its operation by the trustees, for the benefit of the bondholders* is not contemplated ; nor was it contemplated that the profits derived from it should be specifically appropriated to pay the bonds, or the interest accruing on them. Such profits were not a fund, in the hands of the corporation, for the payment of one debt more than another.

So long as a mortgagor remains in possession, the rents and profits of right belong to him, and he may receive and apply them to his own use. This principle has been applied to mortgages of railroads, expressly embracing the tolls, rents, and profits which-would be gained from its operation, when it was contemplated that the mortgagor should remain in possession until default in the payment of the mortgage debt, taking and receiving them; and a decree of foreclosure, silent as to the rents and profits, would not change the right to them. — Gillman v. Ill. & Miss. Tel. Co., 91 U. S. 603; see, also, Galveston Railroad v. Cowdrey, 11 Wall. 459; American Bridge Co. v. Heidelbach, 94 U. S. 798; Fosdick v. Schall, 99 U. S. 253.

When a mortgagor in possession has made default in the payment of the mortgage debt, and is insolvent, the mortgage not being an adequate security for the payment of the debt, or there is imminent danger of waste or destruction of the property, the mortgagee, instituting a suit in equity for a foreclosure, may obtain the appointment of a receiver, to take possession, and secure the rents and profits; and in this way fasten a specific lien upon the rents, to meet any deficiency of the mortgage debt. — High on Receivers, §§ 639 et seq. The appointment of a receiver is an extraordinary remedy, and, like the grant of writs of ne exeat, or of interlocutory injunctions, rests largely in the discretion of the court, and is controlled by the peculiar circumstances of each case. — High on Receivers, § 7. It is said by O. J. Waite, speaking for the Supreme Court: “ That when a Court of Chancery is asked by railroad mortgagees to appoint a receiver of railroad property, pending proceedings for foreclosure, the court, in the exercise of a sound judicial discretion, may, as a condition of issuing the necessary order, impose such terms in reference to the payment from the income, during the receivership, of outstanding debts for labor, supplies, equipment, or permanent, improvement of the mortgaged property, as may, under the circumstances of the particular case, appear to be reasonable.” — Fosdick v. Schall, 99 U. S. 251. The further observation is made, in reference to railroad mortgages, which seems to us applicable to mortgages by manufacturing and commercial corporations, generally, that they “ are comparatively new in the history of judicial proceedings. They are peculiar in their character, and affect peculiar interests. The amounts involved are generally large, and the rights of the parties oftentimes complicated and conflicting. It rarely happens that a foreclosure is carried through to the end, without some concessions by some parties from their strict legal rights, in order to secure advantages that could not otherwise be attained, and which it is supposed will operate for the general good of all who are interested. This results, almost as a matter of necessity, from the peculiar circumstances which surround such litigation.”

The receivers were originally appointed in the progress of the suit for a foreclosure of the mortgage, after the corporation had become insolvent, andhad made a general assignment of all its property, including that which was, and that which was not covered by the mortgage. The results of its insolvency, and of the assignment, were, that it was incapable of conducting its business, suspended in its functions, and for all practical purposes in a state of dissolution. There was imminent peril of waste and destruction, not only of the mortgage property, but of the other corporate property, parts of which were necessary to the operation of the factory, which could not lie idle pending the litigation, without serious deterioration in value. With the consent of the assignees, and without dissent from any of the parties in interest who were then before the court, or who subsequently came in, receivers were appointed, who were authorized to take possession of all the property of the corporation, and to operate the factory in accordance with the provisions of the assignment, subject to such directions and modifications as the court from time to time should make. Tinder this order, using such of the corporate property not mortgaged as was necessary, the receivers operated the factory, and realized the net profits now in the registry of the court. Prima fade, so much of this fund as was derived from the use of the mortgage property should be applied to the payment of the mortgage debt. There was no order of the court made when the receivers were appointed, or-at anytime during the progress of the suit, diverting it from this appropriation; and no peculiar equity in favor of other creditors is shown, which would repel the prima fade right of the mortgagees, and justify its diversion. But there is no equity in the application of the whole fund to the mortgage debt. Such an application would compel the general creditors to contribute from a fund or source of payment upon which they have equal claims with the mortgagees, to the satisfaction of the mortgage debt. Each fund the court should preserve and distribute for the benefit of the creditors having claims upon it. When the appointment of receivers was made — when it was found necessary, for a longer or shorter period, to operate the factory — in view of the temporary necessity, it was not inequitable to authorize the receivers to use, so far as was necessary, the property not covered by the mortgage. Equity requires, however, that the use should not be at the expense, and to the injury, of the general creditors, the benefits being realized solely by the mortgagees. The general creditors, represented by the assignees, then before the court, under the circumstances, could properly, for the convenience and interest of all, be required to concede the use of the property from their strict legal rights to it, and its immediate reduction to money by a sale; as the mortgagees could be required to concede from their strict legal rights, that from the earnings of the mortgage property outstanding debts for labor, supplies, &c., should be paid. True, such conditions were not incorporated in the order appointing the receivers ; but they are officers of the court; their possession is that of the court; the fund in their hands is in the custody of the court; and rights are not diminished or enlarged by the generality of the terms of their appointment. The court has the power, and can at any proper stage of the proceedings, declare the rights of the parties, and order the application as is just and equitable of the funds which have been derived by the receivers’ operations under its direction. The duty of the court is to take care that the funds are applied so as to meet the equities of the parties. There can be no confusion of them, so that one party obtains an undue advantage, and the other sustains a corresponding injury, in consequence of the receivership. The earnings of the factory — the net profits now in the registry of the court — should be apportioned, so that the general creditors shall be compensated for the property not covered by the mortgage, which was used in making them. Such compensation being made, the remainder of such profits must be applied to meet the deficiency of the mortgage debt. — Fosdick v. Schall, supra.

The second of the trusts declared by the assignment executed by the corporation, is as follows; “ To pay, as soon as, in the judgment of such trustees, it-may be safely done, the sum of money borrowed by the company on the credit of the directors and others, not to exceed the principal of $7,500.00.” It is conceded that the debt, for the payment of' which this trust was created, was that paid by Clopton, Goldthwaite and Matthews ; and it is by virtue of it that they now claim priority over other creditors, on the fund derived from other sources than the sales of the mortgage property. It is admitted the assignment is general, covering all the property of the corporation. All such assignments, under the statute (Code of 1876, § 2126), enure to the equal benefit of all creditors. All preferences created or attempted to be created by them are annulled — they are blotted out by the statute — while the validity of the assignment is preserved, and it stands as a common security for the benefit of all the creditors of the assignor. — Holt v. Bancroft, 30 Ala. 193; Price v. Mazange, 31 Ala. 701. That this preference can not be preserved and enforced against the objection of other creditors who have not assented to it, when expressed in any appropriate mode, is not doubted. One of the earliest orders made on the foreclosure bill, before the creditors were notified and called in, was, that the receivers should pay “ the amount borrowed by said company on the credit of the directors, as stated in the register’s report, whenever, in their good judgment, such payments may be made without embarrassing the operations of the company.” There was no payment made by the receivers under this order, and no action had upon it whatever. At the November term, 1878, the creditors of all classes having come in, and filed and proved their claims, and the same having been audited and allowed, the court was proceeding to settle and adjust their priorities, and to marshal and distribute the assets, when a motion was made for an order to the register, directing him to pay, from the money in court, the amount which the receivers had been directed to pay on this claim. The motion was disallowed. Some stress is placed by the argument of counsel on the order to the receivers. If the order was of any force, it was conditional, and the condition not having happened, it was without further effect. In no event, having been made when the creditors whose interests were affected by it were not before the court, having opportunity to resist it, could it embarrass the court in the final adjustment of the priorities and equities of the parties, and in the distribution of the assets according to such equities and priorities.

The principal argument, however, in support of the priority of the claimants, is, that no creditor has, by appropriate pleading, invoked the court to declare the assignment general, and annul the trust by which a preference was given the debt paid by the claimants; and that the chancellor couíd not, ex mero motu, decree that the preference was’Void, and the assignment should enure to the equal benefit of all creditors. The preference is certainly valid and operative as against the assignor, and on the trustees. Of it, no others than creditors affected by it, who are postponed and deferred in reaping and realizing the fruits of the assignment, can be heard to complain. The manner in which they can make, and'the court can entertain complaint of it, depends on the nature and character of the proceeding in which their rights, and the rights of the preferred creditor, may be involved.

When the foreclosure bill, and the bill of the receivers, were consolidated, the objects and purposes of the suit were materially enlarged. It was converted into a suit having for its controlling purpose the administration of all the assets and property of the insolvent and suspended corporation. The creditors of all classes, secured and unsecured, were notified and called in to establish, not only their own claims, but to contest the claims, and any alleged liens or priorities of rival creditors. They were not made parties formally, by being introduced as such into either bill, nor by the service of process upon them. When, however, they came in upon notice, filed their claims, and made proof of them, they submitted to the jurisdiction of the court, and became quasi parties. No formal intervention on their part, no cross-bill, or petition asserting their rights, or opposing the rights or claims of others, was necessary. Unless some independent relief was sought, which would not fall within that the court must necessarily award in marshalling and distributing the assets — relief which could not be obtained by proceedings before the register in ascertaining the priorities, or liens, or justice and extent of the several claims of the creditors, there can be no reason for compelling them to the introduction of cross-bills, or petitions, multiplying the expenses, and delaying the final termination of the litigation. It is a general rule of chancery practice, that a defendant, seeking affirmative relief, must file a cross-bill; or, if there are opposite interests between co-defendants, the determination of which is necessary to a complete final decree upon the subject-matter of the suit, a cross-bill must be filed; and the court will stay proceedings, and direct it to filed. — 2 Dan. Ch. Pr. 1550 (last Ed.) These rules have but a narrow and limited application to suits for the marshalling and distribution of assets, when creditors, having conflicting claims, are not introduced as formal parties, but come in under the decree of the court, and submit to its jurisdiction, that their rights in the administration of the assets may be protected and enforced. The court must mould and adapt its practice and course of proceeding to the rights and equities of the parties; as they are plainly shown in the course of procedure they have been invited and compelled to adopt. Every general, and every secured creditor, was called before the court, because the court proposed and intended to inquire into, and, when ascertained, to protect and enforce his rights and equities, and to afford him the opportunity of confronting and contesting all rival and conflicting claims. The scope of the suit before the court was broad enough to open the door for the assertion of their rights, and for their controversies with-all who claimed priority or equality. No fact or circumstance was shown, which hindered the court from proceeding to determine how far they were equal, or how far priorities existed. The whole matter was within the jurisdiction of the court, and a complete decree could not have been rendered, without determining it, in. all its length and breadth. The court was bound to determine — it could not abstain from determining, when it came to decree- the payment of a particular debt, whether it should be paid in preference, or upon an equality with other debts; and if in preference, upon which of the funds it had preference. The decree would have been'incomplete — it would not have satisfied the purposes of the suit — it would not have measured out the relief promised when all creditors were called in to attend the administration of the assets — if it had not adjudged the respective equities and priorities of the creditors. No assent that such equities and priorities should be postponed, no waiver of legal or equitable rights, is shown or intimated. Each creditor stood before the court with these, as defined and declared by the law, submitted for determination, as if each, in some independent suit, having only their rivals before the court, had averred them, and they had been litigated, and the facts were as shown from the evidence given in support of them on the proceedings before the register.

It is said, however, the assignment declares and recites that the creditors assented to it. It "is declared primarily, that the stockholders, in convention assembled, had resolved, that it was expedient to secure the payment of all corporate debts, that all corporate property should be transferred to trustees. This declaration, doubtless, proceeded from abundant caution, to avoid any impeachment of the assignment, because made otherwise than with the concurrence of the stockholders. The succeeding recital is, that the stockholders, in convention, had resolved that the conveyance, as it is termed, should be made by the president of the corporation, and that the creditors and stockholders had selected certain trustees, and that the creditors had assented to the terms herein stated. There is not a word here written, which indicates the presence of any creditor, who was not a stockholder, or that any other had the opportunity of assenting to, or dissenting from the preference claimed by the appellants. Such generalities can not obscure or embarrass well-defined legal rights, unless by evidence they are applied to particular creditors. The assignment on its face, and in its legal operation, is no more than the act of the assignor; by no declaration or recital in it, can he conclude others, who do not give assent to them. The mere declaration he may make in it, can by no contrivance be converted into evidence against those who do not join in, or assent to it; nor can it cast on those who are to be injuriously affected by it the burden of averring or proving its untruth. It is no more than a mere narrative by the assignor, which affects him only. If others assent to its truth, and claim benefits from it, the burden of allegation and proof rests upon them, and they can not shift it to others, who stand upon their fixed legal rights and equities.

The claim of Stone & Clopton is for services as solicitors of the corporation, rendered in the course of the present litigation. The burden of the service was, in the contest of claims, preferred against the corporation.- The courts of this State have long recognized, and summarily enforced, the lien of attorneys and solicitors for fees, or, rather, reasonable compensation for services rendered by them in obtaining judgments or decrees for their clients, or for bringing a fund into court, which the court has power to control. The jurisdiction of the court depends upon the lien, and that necessarily implies the existence of a subject to which the lien attaches, as between counsel and client.- — Guinn v. Nelson, 1 Turn. Ch. 614; Hunt v. McClanahan, 1 Heisk. (Tenn.) 503; Stewart v. Flowers, 44 Miss. 513. It is enough, in the present case, to say there was no judgment or decree obtained by the solicitors, and no fund brought into the court by them, to which a lien attached; and the court had not jurisdiction to create and enforce for them a priority over other general creditors.

The decree of the chancellor in the first case must be reversed, and the cause remanded for further proceedings in conformity to this opinion; and in the other cases, must be affirmed.

Stone, J., not sitting.