Itor may prove, and is entitled to a dividend on, his whole debt, notwithstanding he may be holding collateral as an additional security therefor. One of the cases often cited in support of a contrary rule is Amory v. Francis, 16 Mass. 308, but the ruling in this case was largely rested upon the authority of Greenwood v. Taylor, 1 Russ. & M. 185, a case long since overruled by the English Courts, and not now considered as authority there. Referring to the Massachusetts Case, Chief Justice Fuller, in Merrill v. National Bank, supra, said: "We cannot concur in the view expressed by Chief Justice Parker in Amory v. Francis (1820) 16 Mass. 308, that 'the property pledged is, in fact, security for no more of the debt than its value will amount to, and for all the rest the creditor relies upon the personal credit of his debtor in the same manner he would for the whole if no security were taken.' We think the collateral is security for the whole debt and every part of it, and is as applicable to any balance that remains after payment from other sources as to the original amount due, and that the assumption is unreasonable that the creditor does not rely on the responsibility of his debtor according to his promise." Therefore, unless the principle approved by the English and generally by the federal and other courts of the United States is not in conflict with the determination of the precise question by the court of last resort in New Jersey, or effected by statutory enactment, we should in the interest of a consistent administration of the law endeavor to follow them, for it would be unseemly to have the administration of the assets of one of our corporations administered by the federal court in the district of New Jersey upon one principle and by the courts of New Jersey upon another.

The earliest case in this state where this question has been considered is that of State Bank v. Rec. of Bk. of New Brunswick, 3 N. J. Eq. 266. In that case the New Brunswick Bank was declared insolvent, prior to which the State Bank received in the regular course of business, and then held, bank bills of the defaulting corporation for $3,097, and as collateral security for the payment of them two drafts of $1,000 each, which matured and were paid about two months after the insolvency. The State Bank presented claims to the receiver for the full amount of $3,097, claiming a right to a dividend on that sum, which the receiver refused to admit. It appeared that one of the drafts had been specifically pledged for $900 of the bills, being all that was in the hands of the State Bank when the pledge was made. This it was determined could only be applied to the redemption of the particular debt for which it was pledged. That position was not contested, but it was insisted that $100, the difference between the amount of the draft and the debt for which it was pledged, should be set off against the balance of the debt, and in pass

ing upon this question the Chancellor inclined to the opinion that it should be allowed, first, because in his opinion the act partook largely of the character of a bankrupt law, and that, if the act be so considered, the claim to a setoff would be admissible; and, second, that the act to prevent frauds by incorporated companies did not confine itself to legal setoffs, but referred to just set-offs, and “expressly directs the receivers to allow them when they ought to be allowed according to law not only, but equity also." The next question the Chancellor stated as follows: "It remains to inquire whether the petitioners are entitled to prove their debt for the whole amount after deducting the $900 and the setoff of $100, and obtain a dividend on the whole, reserving the second draft of $1,000 to make up the deficiency, or whether they shall appropriate the draft to the payment of so much of the debt first, and prove for the balance." He held that the creditor could only prove for the balance, that this would be the course under the bankrupt laws, because the principle running through that system was "that equality is equity," but it is quite apparent that the learned Chancellor did not rest his conclusion upon the practice under the bankrupt laws, for he then proceeds to demonstrate that "the same principle has been applied to cases of insolvency where the funds are under the control of a court of equity for the benefit of all creditors," and after quoting from Greenwood v. Taylor, supra, as follows: "The rule in bankruptcy must be applied here, and the mortgagee cannot be permitted to prove for the full amount of his debt, but only for so much as the mortgaged estate will not extend to pay. This rule is not founded upon the peculiar Jurisdiction in bankruptcy, but rests upon the general principles of a court of equity in the administration of assets. The mortgagee who has two funds as against the other specialty creditors, who have but one fund, must resort first to the mortgage security, and can claim against the common fund only what the mortgaged estate is deficient to pay." He then proceeds to say: "If this principle be correctly applied to the administration of insolvent estates in equity, there is an end of the question. The security must first be applied to the payment of the claim, and then the common fund be resorted to for the balance. The justice of the rule has been so strongly felt that it has been recognized and adopted even in a court of law, as in the case of Amory v. Francis, 16 Mass. 308." Thus it appears that the Chancellor rested his determination, first, upon Greenwood v. Taylor, supra, which has since been overruled in England, and upon the Massachusetts case cited, which is not recognized an authority for the rule applied, and certainly the dictum, "For the property pledged is in fact security for no more of the debt than its value will amount to," is no longer es

teemed to be a correct statement of the law, for the security is a pledge for the whole debt, and not only to the extent of its value, for it is well settled that, in order to take up a pledge, the whole debt for which it is given must be tendered, and not only the value of the security. In the present condition of the law I am of opinion that this case, based as it was upon discredited cases, ought not to be considered a controlling authority.

In Vanderveer v. Conover et al., 16 N. J. Law, 487, Chief Justice Hornblower, speaking of the situation of a judgment creditor, who had proved his claim under general assignment proceedings, said: "If, therefore, the plaintiff in this case, apprehending that the property actually bound by his judgment or execution, might not be sufficient to satisfy him, thought proper to come in under the assignment, he had a right to do so. By doing so, he did not waive his priority as a judgment creditor so far as respected the property bound by the judgment or execution, but he became entitled to a dividend upon any balance that might remain due to him after exhausting that property, and consequently by the very terms of the statute barred himself from ever proceeding by suit at law, or in equity against the defendant, for such balance of his debt." But, whatever may have been intended by the learned Chief Justice when he said that the judgment creditor was entitled to a dividend upon any balance remaining it is quite clear that the expression was obiter because it was not necessary to the determination of that case, for the judgment creditor with several other execution creditors had consented to the sale of the debtor's property real and personal, and the applying of the proceeds to the satisfaction of the several judgments in their order of priority, and the surplus pro rata among the creditors who should come in under the assignment. The particular creditor whose claim was under consideration by the Chief Justice had presented his claim to the assignees for the balance remaining due, and not for his whole debt. Therefore this case is not an authority supporting the principle upon which the receiver acted in the matter now under consideration. Moses v. Thomas, 26 N. J. Law, 124, a case sometimes cited in support of the claim that a debtor may only have dividends after exhausting his collateral, is not the point, for there the claim filed with the assignee was for the balance due only, and the question was not presented for determination.

The case most often cited on this subject is that of Bell v. Fleming's Ex'rs, 12 N. J. Eq. 13, but in that case the issue to be determined was the effect upon the rights of a creditor, proving his mortgage debt under an assignment for the equal benefit of creditors. The question whether the secured creditor was entitled to a dividend upon his whole debt, or only upon that part which remained unpaid after his security was exhausted, was

not seriously argued, for the Chancellor in his opinion states "that it was conceded by counsel on both sides that the creditor was entitled to a dividend upon any balance," and then proceeds: "This certainly is the most unfavorable position in which the mortgagee can be placed. It cannot be contended that because a creditor has a mortgage, or other security, for his debt, he is thereby deprived of all benefit under the assignment, or that he must abandon his security, and throw it into hotchpotch. The only question that has ever been raised as to the rights of the mortgagee in reference to his interest in the assigned property has been whether he could obtain a dividend upon his whole debt, and look to his security for the balance, or whether the security must be first appropriated, and the creditor be entitled to a dividend only upon any deficiency." He then refers to the case of Greenwood v. Taylor, of which he says: "Yet it is perfectly manifest that so far from the principle being illustrated by this case that the case was decided in violation of the rule, for the rights of the mortgagee were trenched upon, and he was prejudiced by its application." A careful reading of this case discloses that the real question raised in the present proceeding was not at issue, and everything which the case contains relating to the amount upon which a creditor with collateral is entitled to a dividend was merely incidental, and the only question necessarily determined on this branch of the case was whether the creditor, having proved his debt for which he held a mortgage as security, thereby lost the benefit of the security, and the difficulty suggested by the Chancellor at the close of his opinion with regard to adjusting the claim of a mortgage creditor is a mere suggestion of possible methods to be pursued, but not the announcement of any equitable principle. The case last referred to came before our Court of Errors and Appeals, and is reported in Bell v. Fleming, 12 N. J. Eq. 490; and Chief Justice Green, in delivering the opinion of that court, said: "But, admitting the provisions to bear a different construction, has the creditor demanded a dividend upon its mortgage debt, so as to subject him to the loss of his security? The statute expressly provides for the priority of mortgage debts. Section 1. It authorizes the assignee to redeem all mortgages and conditional contracts. The assignment does not impair the mortgage security. It is well settled at this day that the mortgage creditor is entitled to have the mortgage debt first satisfied out of the proceeds of the sale of the mortgaged premises, and, if that prove insufficient, he is entitled to come in as a general creditor for a dividend upon the balance. But unfortunately the statute has provided no mode in which that object shall be accomplished, unless the assignees see fit to redeem the mortgage. The creditor is requir ed to present his security within a limited time-too soon to allow him to foreclose the

mortgage and ascertain the value of the security. He may not sell the security, as may be done under the English bankrupt law. He cannot safely deduct the amount of the mortgage debts from his claim, for the value of his security may be doubtful, and may prove worthless. The best and safest, if not the only, course, so far as I am aware, that the creditor can adopt, is the very one pursued by the creditor in the present instance-to present his entire claim to the assignees, specifying the extent and nature of his security. The claim is thus placed in the hands of the assignees, to have the right settled agreeably to law. Whether he is entitled to a dividend upon his whole debt and to have the mortgage applied to the satisfaction of the deficiency, or whether he can only claim a dividend on the balance after exhausting the security, he virtually asks that his rights be protected."

It seems to me quite clear that the Court of Errors and Appeals in determining the question before it, as it is said in Bishop on Insolvent Debtors (3d Ed.) 533, "left the question open." It was not necessary to determine the amount upon which the dividend of a creditor holding a collateral should be based; the matter under consideration being whether a creditor holding a mortgage as collateral to his debt released it because he came in and exhibited his claim for a dividend out of the assets of his debtor who had made an assignment thereof for the general benefit of his creditors, and all that was said by the court regarding the question now under consideration was not necessary to the determination of the question then presented; the judgment of the court being "the mortgage security is neither discharged by the mode in which the claim was presented, nor by the will of the testator." I find nothing in this case establishing a principle regarding the right of a secured creditor of an insolvent debtor to a dividend, without crediting a collateral, differing from that which appeals to the judgment and reason of the great majority of the judges of courts, entitled to the most respectful consideration, and whose opinions establish that judicial authority upon which we may safely rest. In the case of Wittaker v. Amwell National Bank, 52 N. J. Eq. 400, 29 Atl. 203, Vice Chancellor Bird expressed the opinion that, while creditors with collateral might prove their debts for the whole amount due without releasing their collateral, they were only entitled, as against general creditors, to a dividend upon the balance remaining due after having received the value of the collateral, citing in support thereof the cases I have above referred to, and which in my judgment afford no support for the doctrine announced, which the Vice Chancellor said proceeded "upon the old and long established principle that, where one creditor has two securities and others only one, the former must exhaust his claim to that which is en

tirely his own before he can resort to that which they hold in common"; but in applying the principle which he thus invokes he did not observe that the doctrine of marshaling assets will never be applied, as was said by Chancellor Williamson in Bell v. Fleming's Ex'rs, supra, when it will trench upon the rights, or operate to the prejudice of the party entitled to the double fund. The collateral is for the purpose of protecting the whole debt, not a part only, and to deprive the creditor of the full advantage of his collateral trenches on his rights. The rule as I understand it to be is that, if the assets of the debtor are not sufficient to satisfy all of his debts, a creditor having a right to resort to a fund open to himself alone will not be prevented from claiming from the assets of his debtor a dividend on the full amount of his debt, and, while the total received cannot exceed the sum due, he is not limited to a dividend on the balance remaining after deducting the value of the collateral, and that marshaling will not be enforced against him if any part of his debt remains unsatisfied. The security is for his whole debt, and not for a part of it, and he cannot be required to surrender it until the whole debt is liquidated. If, after receiving his dividend, the proceeds of his collateral exceed the amount due, the general creditors are entitled, by subrogation, to the unapplied collateral.

The only other question to be considered is whether section 86 of our corporation act (P. L. 1896, p. 304) is in the nature of bankruptcy proceedings subjecting creditors to the rules applied in that court. My conclusion is that it is not, for the dissolution of a corporation and the distribution of its assets are by the act committed to the jurisdiction of the Court of Chancery, whose powers are equitable, and we must assume that the Legislature intended the distribution of the assets of an insolvent corporation according to equitable rules, as distinguished from proceedings in a bankrupt court, where the powers conferred and the methods to be pursued are the creation of a special statute for that purpose. Our act requires that "the creditors shall be paid proportionately to the amount of their respective debts, excepting mortgage and judgment creditors, when the judgment has not been by confession or for the purpose of preferring creditors"; and it does not prevent the holding of collateral, nor require its surrender, but places all creditors on the same level as to the amount of their respective debts, and there is nothing in the legislative language which in any way interferes with the right of the creditor to be paid a dividend upon the amount of his debt as it existed when the insolvency was adjudged. Admitting that the course of judicial action in the past in this state may not have been so clear and distinct upon the question presented as to leave our minds entirely free from doubt, it neverthe

less appears to me that the rule now generally adopted and followed by other jurisdictions, that the creditor of an insolvent corporation may prove and receive a dividend upon his whole debt as it existed when the insolvency was declared, without regard to the amount and value of the collateral held by him, has not been so decidedly repudiated by our courts as to prevent us from following it, if harmonious judicial action be wise and desirable. That it is so I have no doubt. Many corporations have come into existence under the laws of this state, and the distribution of their assets among creditors is administered by the federal courts of this district as well as by the court of chancery, and it appears to me that to have two courts with concurrent jurisdiction, sitting in the same city, administering the assets of our insolvent corporations, according to different principles, is unwise, and to be avoided, if possible. If by adopting the rule laid down by the Supreme Court of the United States, which is necessarily to be followed by all inferior federal courts, we are required to abandon, to some degree, a doubtful procedure in the interest of a uniform administration of justice, we should not hesitate to do so in a case like the present.

The conclusion I have reached is that as the dividends on the whole amount due the creditor, together with the full par value of the collateral, will not sufficiently extend to satisfy the whole of the creditor's debt, it is entitled to dividends on the whole amount of its debt as it stood on the date of insolvency, without deduction, either for the amount of the collateral in hand or the proceeds received therefrom since the insolvency, and therefore the appeal should be sustained.

WALKER v. WALKER. (Supreme Court of Rhode Island. July 1, 1907.)

1. WILLS-TESTAMENTARY CAPACITY - UNDUE

INFLUENCE.

In a will contest, evidence held insufficient to authorize submission of the issue whether testator had testamentary capacity or whether the will was the result of undue influence.

[Ed. Note. For cases in point, see Cent. Dig. vol. 49, Wills, §§ 768, 769.]

2. WITNESSES-CONTRADICTION-FORMER TES

TIMONY.

Where the former testimony of an attesting witness was offered in a will contest to contradict the evidence of the witness, but it did not tend to contradict the witness as to the material facts attending the execution of the will, it was properly excluded.

[Ed. Note. For cases in point, see Cent. Dig. vol. 50, Witnesses, § 1273.]

3. SAME-EXAMINATION-DISCRETION.

It was within the discretion of the trial court to refuse to allow counsel to examine his own witness as to what questions were not asked him at a prior trial.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 50, Witnesses, §§ 792-797.]

4. APPEAL-PREJUDICE-EXCLUSION OF EVI

DENCE.

The exclusion of evidence which is afterwards admitted is not prejudicial error. [Ed. Note.-For cases in point, see Cent. Dig. vol. 3, Appeal and Error, § 4171.]

5. SAME TRIAL-MISCONDUCT OF COUNSEL. Where, in a will contest, a verdict was directed for proponent, a statement made by proponent's counsel that he wished to refresh the recollection of a witness about certain things and that her recollection was not good, though improper, was not prejudicial to contestant.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 3, Appeal and Error, § 4135.]

6. WILLS-CONTEST-EVIDENCE.

Where a will bequeathed an allowance to contestant, evidence that the allowance had been suspended while the will was in litigation was properly disallowed.

7. SAME-IMMATERIAL EVIDENCE-OBJECTION. In a will contest, it was within the discretion of the trial judge to exclude a question asked for contestant on cross-examination of a witness for proponent as to whether witness knew of contestant finding any fault with the way testator's business was going, and how the proceeds were being divided, as immaterial.

Exceptions from Superior Court, Providence County.

Will contest by Bessie C. Walker against William Howard Walker, as executor. From a judgment allowing the will, contestant brings exceptions. Overruled.

John W. Hogan, for appellant. Edwards & Angell, Herbert A. Rice, and Frank H. Swan (Seeber Edwards, of counsel), for appellee.

PER CURIAM. A consideration of the exceptions to the direction of a verdict in favor of the will and to the exclusion of testimony offered by the appellant to show unsoundness of mind and undue influence is sufficient for a decision of the case.

The thirty-fifth exception is to the direction of a verdict in favor of the will. The proof of the formal execution of the will is undisputed. Competent evidence of want of testamentary capacity or undue influence at the time of the execution of the will is utterly lacking. We have carefully read all the testimony of the appellant's witnesses, and find absolutely no evidence worthy of the name to show mental unsoundness in the testator. It shows at the most a hesitating and uncertain opinion in the minds of witnesses, most of whom are interested or in sympathy with the appellant or hostile to the testator, that the mind of the testator had become enfeebled. A few of them, under pressure of rigid examination, are induced to declare that they believe his mind to have been unsound. When we examine the reasons upon which this opinion is said to be based, they are found to consist of the most natural actions of a man physically enfeebled by disease and age, as, for instance, that he was urgent that the time for taking his medicine should not be passed, and that he shed tears at the thought that he might not again be alive to attend a Thanksgiving

reunion of his family. A circumstance upon which many of these witnesses insisted as a clear proof of weakness of mind was that the testator, in the autumn and winter of 1903, was interested in drawing plans for a naptha launch which he intended to have built for his use the next summer. These witnesses agreed in thinking that a man so near death as they conceived him to be must be insane to busy himself with plans for outdoor sports the next summer. As a matter of fact the launch was built upon the testator's plans, and in the summer of 1904 he made use of it as he had intended. The other circumstances which these witnesses detail at great length are the trivial events of an ordinary sick room, as, on one occasion, when his appetite was rather better than usual, he said, "See how much I have eaten." On other occasions he showed disinclination to converse and at times dozed in his chair. It would be unworthy of the function of a judge to allow such evidence to go to a jury as a possible foundation for a verdict of unsoundness of mind.

The evidence relied upon by the appellant as tending to show undue influence is equally unsatisfactory. It is abundantly proved that the testator cherished a warm affection for the appellant from her infancy until the close of his life. She was the child of a deceased son, and took her father's place in his regard. It is said by several witnesses that he declared his intention of providing for her as he would have done for her father if he had lived that she should have her father's share. The will gives the appellant during the life of the testator's widow the same allowance she had during the testator's life, then for her life about one-third the income of the estate, and, after her death, to her issue a substantial portion. There is no evidence what the testator considered her "father's share" ought to be except that it may be inferred from a former will made in 1895, when he was undeniably in full vigor of body and mind, which was offered in evidence by the appellant. The difference between the two documents with reference to the appellant is slight, and furnishes no ground for supposing undue influence. If this will was not unnatural nor unreasonable in the testator's circumstances, neither was the second.

There is no direct evidence that the executor exerted any influence upon the testator for his own benefit or the benefit of his children, or of any undue influence being exerted upon the testator from any source or for any purpose relating to the disposition of his property. Considering the admitted confidence which the testator had in the executor, whom he appoints trustee, justified by long years of filial service, the conditions of the trust are not surprising, and at the most could be ground for a suspicion only that they were suggested by the executor, not that they were imposed by the younger man

upon one whose direction he had always been accustomed to follow. In short, there is no evidence either verbal or documentary which tends to show in any of the provisions of the will a substitution of the will of another person for the free will and choice of the testator which is what the law calls undue influence. On this contention, therefore, as on the first, there was no evidence in a legal sense to go to the jury in support of it.

It remains to consider the appellant's other exceptions.

The first exception is to the exclusion of former testimony of the attesting witness. The testimony offered did not tend to contraIdict the evidence of this witness as to the material facts attending the execution of the will and was therefore rightly excluded.

The third exception seems to be founded on the refusal of the court to allow the appellant's counsel to examine his own witness as to what questions were not asked him at a previous trial. The refusal was within the discretion of the court.

The fourth, fifth, and sixth exceptions are based on the rejection of evidence to show that the mother of the appellant and the testator had business with each other, implying confidential relations. In the view which we have taken of the appellant's case, no evidence of this kind could add to its strength. But this evidence was afterwards admitted.

The seventh exception is to a remark made by the counsel for the proponent, as follows: "I want to refresh her recollection about some of these things. Her recollection about these things is not very good." This comment on the testimony of the witness was premature and improper, but cannot have had any influence upon the court in weighing the evidence on behalf of the appellant.

The eighth exception is to the exclusion of evidence tending to show interest in one of the proponent's witnesses. In the view which we have taken of the case, considering only the evidence offered to impeach the will, this exception becomes immaterial.

The ninth exception is to the exclusion of evidence that the allowance directed to be paid to the appellant had been suspended while the will was in litigation. The exclusion was right. The only effect of such evidence could have been to prejudice the jury. The tenth and eleventh exceptions are expressly waived.

The fifteenth exception is to the exclusion of testimony to show the interest of one of the proponent's witnesses. This becomes immaterial for the same reason as the eighth, and the fact inquired for was afterwards admitted.

The second, twelfth, thirteenth, fourteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-third, twenty-fourth, twenty-fifth, twentysixth, twenty-seventh, twenty-eighth, twentyninth, thirtieth, and thirty-first exceptions relate to the admission of evidence offered