property is in typewriting shows that it was prepared in Cook's office, in Asbury Park, for there were no conveniences for typewriting where the deed was delivered; and the character of the ink in the deed shows that the date was written in after the deed was made. The deed from Andrew White and wife to Franklyn for the Main street property is on a blank different from that used by Mr. Cook, and undoubtedly came from the office of the Messrs. Stout, for it is acknowledged before Mr. Stout on the 6th of April. It had been prepared before that date, for the word "April" is written over an erasure, but the word "sixth" is in typewriting, as is all the rest of the parts usually in writing. For these reasons I conclude that all three deeds were prepared at Asbury Park, and some time prior to their date. With these three deeds (two of which were executed) Andrew and Mr. Cook on April 6th took the train for Freehold, and went to Franklyn's house. Cook went into the house. Andrew went to the farm buildings and met his brother, and after a talk with him, in Cook's absence, came into the house. Franklyn says that he asked his brother about these Hopatcong lots, and that his brother said that all he knew about them he learned from Cook, and that Cook said they were all right and valuable. Cook made the same representation to Franklyn directly, and upon that representation alone Franklyn agreed to purchase them and give them for Andrew's lot No. 2, and produced 25 $100 bills (Cook is very clear and strong in his recollection that the money was paid in $100 bills, and there was ample opportunity for this circumstance to become fixed in his mind; for he swears that he kept that very money, without exchanging it, in his possession for several months before depositing it in bank), handed them to Cook, he and his wife executed the deed to Andrew, the deeds were all formally delivered, and Cook was intrusted with the two deeds of the Hopatcong property for record. The deed to Franklyn for the Asbury Park property was recorded on that day,April 6th. The deeds for the Hopatcong property were recorded on the 21st of April.

The important questions arising on this transaction are: First, whether the money handed by Franklyn White to Cook was his own money; and, second, if it was, then whether he did not know that the object of the whole transaction was to put Andrew's property beyond the reach of his creditors. If the money handed over was not Franklyn's money, then he gave nothing for the property, and his title fails as against creditors. If it was his own money, and he knew that Andrew's object was to defraud his creditors, then his title also fails, for the reason that he aided and abetted Andrew in his unlawful purpose. With regard to the ownership of the money, Franklyn swears that it was money which he had accumulated in his house from time to time, running over a period of several years, on the sales of his prod

uce and live stock. He is represented to be a keen, shrewd farmer and stock dealer, and what is called a "quick" trader, and to have accumulated considerable property; and the court, at the start, is asked to believe that he would deliberately invest $2,500 of his own money in two building lots or villa sites on the north and least-improved side of Lake Hapatcong, in Sussex county, without ever having seen them or having any information with regard to them, except what he derived from Mr. Cook, the owner of the lots. It seems to me that the transaction is entirely inconsistent with the character of the man, as depicted to the court. It is answered to this view that the real transaction, from Franklyn's standpoint, was that he was paying $2,500 for the Main street property, and that is true: but, as we shall see directly, this does not help him, but injures him, in his attitude on the second question involved, namely, his knowledge of Andrew's fraudulent intention. But, in the next place, as to the ownership of the money, it is very difficult to believe his story with regard to the origin of the money. He kept a bank account in Asbury Park, which showed that he was in the habit not only of depositing checks, but actual cash, covering the very period during which this money was said to be accumulating in his house. Now, why would he allow so much money to accumulate in his house without depositing it in his bank? But, in the third place, it seems quite impossible to believe that if he had accumulated as much as $2,500, the result of moneys received from time to time in many different payments from as many different persons, for the sale of his produce and stock, and in the ordinary business transactions of an active, energetic farmer, stock raiser, and dealer, it would all have been in just even $100 bills, as Mr. Cook is quite sure it was. A much more probable origin for the money is this: That, when Andrew drew the $4,000 on his mother's check from the Asbury Park Rank, it was paid to him in even $100 bills. We all know that country banks like those at Asbury Park keep upon their teller's table during business hours a moderate sum of money in various denominations, to suit the convenience of persons who shall present checks to be cashed; that it is unusual to have so large a check as $4,000 presented to be paid in cash, and that for such an emergency they have the bulk of their available cash funds packed away in large bundles of even denomination$100 bills in one bundle, $500 bills (if they have any) in another bundle, $50 bills in another bundle. And the strong probability is that Mrs. White's $4,000 check was paid to Andrew mainly, if not altogether, in $100 bills, and that the whole scheme of the transfer of the South Main street lot to Franklyn, and the conveyance by Cook to Franklyn, and by Franklyn to Andrew, of the Hopatcong lots, was devised in Asbury Park between Cook, the Stouts, and Andrew White, and carried out in the manner stated, by Andrew simply handing the money to Franklyn at the private interview which they had on April 6th at the farm buildings before the transaction was completed, and by Franklyn handing the same money to Cook. So that Franklyn White actually parted with nothing, but was the mere conduit of the title of the Hopatcong lots from Cook to Andrew, and obtained the title from Andrew for the South Main street property in Asbury Park without paying one cent for it. This I believe to be the real truth of the transaction. That Mr. Stout was privy to it seems clear enough from the fact that shortly afterwards Andrew gave him a mortgage on the Sussex county lots for $1,000 to secure him for legal services.

But supposing, now, that Franklyn White did pay the $2,500 to Cook for the Hopatcong lots, and then convey them to Andrew in exchange for his Asbury Park lot; was he not cognizant of the whole scheme and its object, namely, to put Andrew's property beyond the reach of his creditors? I am entirely satisfied that he was. It is idle for him to deny that he knew of the situation, -that his brother committed suicide; that Andrew was largely indebted on his account; that he had made a mortgage on one of the Asbury Park lots to him to secure $2,000. It seems to me that the whole scheme was so transparent that he must be chargeable with knowledge of its ob ject. Then he must have known that his brother had no use for these Hopatcong lots, was entirely unacquainted in that section of the state, and could have no proper idea of their value. In his evidence he places himself in the position of a bona fide purchaser of these lots, and not that of a mere indifferent conduit of the title. But if the other be his true position, and the money was his own money, and in effect paid for the Main street property, then he is chargeable with knowledge of and participation in the peculiar features of the transaction. Why was not the consideration money in the deed from Andrew to Franklyn for the Main street property stated to be $2,500? And why was the conveyance of the Hopatcong lots made to him (Franklyn), and from him to Andrew? Why was he made a conduit of the title of those lots from Cook to his brother? These questions arise naturally out of these unusual features, and they must have pointed out to him the real object in view, namely, to help Andrew bafie his creditors, and acquire and hold this Sussex county property without their knowledge. In this connection it is to be observed that the other "valuable consideration" written as the consideration in the deed from Andrew to Louis Franklyn, consisting of a conveyance by Franklyn to Andrew of the Hopatcong lots, was never disclosed to the complainants until it came out in the evidence on the trial. The bills each call for an answer on that subject. The bills of Kinmonth, Handley, and Pittenger ask "for or upon what consideration, and to whom, when, and by whom, the same was paid." The answer of Franklyn White to the

Kinmonth and Handley bills was, "avers the fact to be that the consideration was one dollar and other valuable consideration, which consideration was one dollar and the mortgage incumbrance thereon [amounting to $3,200], and the exchanged property." No statement is made of what the "exchanged property" consisted. The answer of Franklyn White in the Pittenger case is the same, with the addition in another clause of it that there were present at different times "the said Andrew J. White, this defendant, and his agent and counsel," without naming the agent and counsel. The bills of the Asbury Park & Ocean Grove Bank and the Navesink National Bank ask, "For and upon what considerations, and, if so, to whom, when, and by whom, the same was paid, and who was present when the said conveyances were made, and when said considerations were paid, and who suggested or procured the same to be made." Franklyn White's answer thereto states that the consideration was $1 and the assumption of two mortgages and the exchange of property valued at $2,500, and that there were present at different times Andrew J. White, the defendant, and his agent and counsel. Looking at the deed from Andrew and wife to Franklyn, we find it simply says, "This conveyance is made subject to two mortgages thereon, together with the accumulation of interest, aggregating about the sum of $3,300." No words of assumption are found in it. All the answers in the cause were prepared and filed by Messrs. R. T. and W. B. Stout, or one of them, and nowhere is there any hint of the conveyance of the Ho patcong lots, or Mr. Cook's connection with the matter. For these reasons, I conclude that Franklyn's title to the Main street lot must yield to the lien of the complainants' judgments.

The next defendant into whose status I will inquire is the mother, Caroline White. She undoubtedly was a passive instrument in the hands of her son. The mortgage and deed to her were made without her knowledge, and were put on record before she paid any money whatever. She merely did what her son asked her to do. She has permitted him to live in the house ever since, free of rent, although in her answer she admits that she has received the rents and profits. But she did part with her money, and I am unable to find evidence upon which to charge her with any participation in her son's fraudulent intent. Still, under the circumstances, I think that under the rule as laid down in Withrow v. Warner, 56 N. J. Eq. 795, 35 Atl. 1057, 40 Atl. 721, the complainants must be allowed the privilege of redeeming this property. Much evidence was given as to the value of it. I doubt if it is worth very much more than the amount that was paid for it; but whatever margin there is in it belongs, in equity, as it seems to me, to the creditors, and not to Mrs. White. The conveyance was not the result of a business contract, out of which arises what is called the right of a bar

gainee to the benefit of his contract. It was, as we have seen, an unsolicited conveyance from son to mother, for the purpose on his part of putting it in a shape in which it could not be reached by his creditors, and accepted and paid for by her at his request, all unwittingly, and for no purpose of her own. It seems to me that in such a case all she is entitled to is to be made whole, and that the same rule applies in that case as in the case of a bona fide purchaser for value without notice when the remedy to the bona fide purchaser is held to be indemnity merely.

The cases of Taylor and Hurley stand on a little different footing, but I think the result in their cases must be the same. They evidently had heard and had notice of the situation of Andrew's financial affairs. They deny actual knowledge, but admit notice. They were called upon to purchase. The price was put so low in each case as to make the purchase a good bargain. In so much haste were Andrew and his advisers in dealing with Taylor that they took his note on time, without interest, on the 6th of April, when the deed was executed, and tried to get it discounted. Failing in that, they called upon Taylor on the 8th of April, and he, with great complacency, and without deducting any discount from his note, gave them his check for the amount, which was paid on that day. The same is true of Hurley, Much time was occupied in presenting evidence as to the value of the several pieces of property here in question. The three that have a frontage on South Main street extend to the line of the railroad, and have a suffi'cient depth to accommodate a certain class of business in their rears in connection with the railroad. They are all occupied by shops, factories, coal yards, etc. They are held under long leases. The lessees have made their own improvements. The valuations put upon them by experts are from $100 to $150 a front foot. The price paid by Taylor for his lot was about $80 a front foot, and by Hurley for his about $65. I think both of these were, from any point of view, good bargains for the purchasers, and were so considered by them at the time of the purchase. I will not go into a consideration of the evidence in detail, but content myself with saying that I think there was a considerable margin in each of those purchases. In both cases the amount of the face of the mortgages on the properties was deducted. Each of the purchasers was obliged afterwards to pay arrears of interest, etc., but never made any demand upon Andrew for the repayment of it, although they had his warranty deeds for the consideration money. The transactions in both cases were hurried through, as before remarked, without any search being made of the title. There are no circumstances in the case to support anything like an estoppel in favor of these purchasers. They have not changed their position in any wise or in any respect so as to render it inequitable on the part of the creditors to attack them. The

creditors have acted with due promptness. The first judgment was recovered on the 11th of April, 1898. The first bill was filed on the 9th of May, 1898, and process was served on Hurley and Taylor on the 11th of May, 1898. The other bills followed as fast as judgments could be recovered. The purchasers will lose nothing but the benefit of their contracts, and that, under the circumstances of these cases, I think they are not entitled to retain, as against the complainants, under the familiar rule whose latest expression is found in Withrow v. Warner, 56 N. J. Eq. 795, 35 Atl. 1057, 40 Atl. 721.

The attack made on the mortgages was not pressed at the hearing.

Provision will be made in the decree that the defendants account for the rents and profits, and they will receive credit for the amounts paid, with interest, and for taxes, insurance, and proper repairs, if any. Mrs. White, having voluntarily permitted her son to occupy the Loch Arbour house and lot without rent after bill filed, must account for a reasonable rent. The complainants are entitled to costs.

(60 N. J. E. 170)

FIDELITY TRUST CO. V. BAKER et al. (Court of Chancery of New Jersey. Aug. 4, 1900.)

BANKS AND BANKING - CHECKS - DEPOSIT CREDIT OBTAINED BY FRAUD-MORTGAGESPAYMENT-RIGHTS OF BONA FIDE HOLDER FOR VALUE-NOTICE.

1. T. having applied to A. for a loan with which to pay an existing mortgage on lands, the latter procured B. to make the loan; and, on the execution of a mortgage by T. to B., he paid the amount of the loan to A., who, as attorney for both parties, was to apply the fund to the payment of the old mortgage and procure its cancellation. Part of the fund so received, A. converted to his own use, but later, having procured a deposit credit with plaintiff's bank by the delivery of a forged check, he delivered to the attorney for the holder of the old mortgage a certified check against such deposit, with request that he receipt payment in full on the mortgage, and have it canceled of record. The attorney did as requested, without notice of A.'s fraud, and the certified check was duly paid. Held, in an action by the bank to reinstate the canceled mortgage as an existing security on T.'s lands prior to the mortgage to B., and to subrogate plaintiff to the rights of the mortgagee thereunder, that the surrender and discharge of the mortgage on the receipt of the certified check not only constituted the mortgagee a holder for value of the certified check, and entitled her to the payment thereof, but was also a payment of money by A. in discharge of an existing debt owing by him to T. and B., and made the latter holders for a valuable consideration of the premises, released from the prior mortgage as against plaintiff.

2. The fact that the attorney of the mortgagee, under the canceled mortgage, and B.'s husband, soon after the receipt of the certified check, and before payment, learned of A.'s conversion of the money received from B., was not sufficient to charge B. with actual notice of A.'s fraud in procuring the check.

3. B.'s employment of A. as her solicitor for the purpose of procuring the satisfaction of the prior mortgage with the funds furnished him did not charge her with constructive notice that A., having misappropriated the money thus furnished him, afterwards perpetrated a fraud on plaintiff to procure money with which to pay his debt to her.

4. The negligence of a bank in crediting the account of a depositor with the amount of a forged check for a large sum, without inquiry as to the truth of the statements of the depositor when presenting same, will not prevent the bank from following its money into the hands of one who received it with notice of the fraud.

5. The fact that both B. and T. employed A. as their attorney to attend to the discharge of the prior mortgage, and their failure to see that such mortgage was paid with the funds furnished by B., and canceled of record, was not such negligence as precluded them from retaining the benefit of a payment made on their account by A. with funds obtained by

fraud.

Action by the Fidelity Trust Company against Madeline Baker and others to reinstate the lien of a mortgage, and to be subrogated to the rights of the mortgagee thereunder. Judgment for defendants.

R. H. McCarter, for complainant. Alfred F. Skinner, for defendant Baker. C. N. Williams, for defendant Thompson.

EMERY, V. C. Complainant's case depends upon its right to follow funds procured from it by the fraud and forgery of one of the defendants, and which were paid over by this defendant to or for the benefit of the other defendants. The relevant substantial facts appearing by the pleadings and proofs are as follows: In March or April, 1897, the defendant Byram, an attorney and solicitor, received from the defendant Madeline Baker, as guardian, $5,500, for investment upon a first mortgage upon land of the defendant Thompson. This property was then incumbered by two mortgages,-a first mortgage for $1,300, and a second mortgage held by the defendant Plaut for $4,200; and the money advanced by Mrs. Baker upon the mortgage to be given by Thompson was, by agreement between Thompson and Mrs. Baker, to be used in paying off the two prior mortgages, so that her mortgage would be a first mortgage. Byram was applied to by Thompson to procure a loan for the purpose of paying off the mortgages, and he applied to Mrs. Baker, for whom he had acted as attorney in several matters. Byram acted for both Thompson and Mrs. Baker, no other solicitor being employed; and he was relied on by both parties to see that the prior mortgages were paid, and that the necessary legal formalities were complied with. Thompson gave the bond and mortgage for $5,500 to Mrs. Baker, which was duly recorded; and upon the execution of the bond and mortgage, which were left in Byram's hands, the money was paid to Byram by Mrs. Baker for the purpose of paying off the prior mortgages. The $1,300 mortgage was so paid off at the time, and an assignment by the mortgagee to Mrs. Baker was executed and delivered to Byram, who, however, did not inform Mrs. Baker of the assignment, and it remained in his possession without her knowing of it un

til October, 1898. Byram also paid off, about the time of procuring the money from Mrs. Baker, $2,000 of the Plaut mortgage, informing Mr. Weeks, the attorney of Mrs. Plaut, to whom he paid the money, that his client, Mr. Thompson, was not able to pay off the whole mortgage, as he (Byram) had previously notified Mr. Weeks he would do. Until October 26, 1898, both Mrs. Baker and Thompson supposed the entire amount of the Plaut mortgage had been paid with the money advanced by Mrs. Baker, and that the Baker mortgage was a first mortgage. No special inquiries, however, were made of Byram by either Mrs. Baker or Thompson as to the actual payment or cancellation of the prior mortgages; each of them relying upon Byram, in whom they had confidence, to protect their rights in this respect. Byram himself paid the interest on the Plaut mortgage to Mr. Weeks after April, 1897. Thompson, subsequent to the execution of the Baker mortgage, paid interest on this mortgage only; one payment being made to Byram for Mrs. Baker, and the other (by Mr. Baker's subsequent directions) to Mrs. Baker herself. Byram misappropriated the remaining $2,200 received from Mrs. Baker in March, 1897, without her knowledge that he had done so; and on October 24, 1898, Byram, by fraud and the delivery of a forged check or draft, procured a deposit credit of $15,000 from complainant, against which he was allowed to have his checks certified,-among others, a check for the money now in ques tion, for $2,255, dated October 25, 1898, and payable to the order of William R. Weeks, attorney, when it was certified. On the same day, October 25, 1898, Byram inclosed this check in a letter to Mr. Weeks, who was the attorney for Mrs. Plaut, as a payment of the balance due on her mortgage on Thompson's property, and in the letter requested him to receipt payment in full on the mortgage, and have it canceled of record, and then deliver it to Mr. Baker. Upon the receipt of the check on the morning of the 26th, Mr. Weeks, as attorney of Mrs. Plaut, indorsed the mortgage as paid, and wrote on it an authority to the register to cancel, but, considering that the cancellation was a matter for Mr. Baker to attend to, rather than himself, notified Mr. Baker at once to call at his office for the papers. Mr. Baker did so, was then first informed of the payment by Byram, and its purpose, and received the bond and mortgage from Mr. Weeks on the 26th of October, but withheld the cancellation until he could procure information in reference to the matter from Mr. Byram or Mr. Thompson. Subsequent to Mr. Baker's receipt of the mortgage, and on the same day, the certified check was presented for payment by Mr. Weeks on his behalf; but, complainant having learned of the forgery, payment was refused for that reason given. After this refusal Mr. Uzal McCarter, the president of the complainant company, had an interview with Mr. Baker, in which he notified