The gate, 23 N. J. Eq. 372, and the cases there! cited; to Stewart v. Stewart, 31 N. J. Eq. 399; Norris v. Clark, 10 N. J. Eq. 51; Griggs v. Veghte, 47 N. J. Eq. 179, 19 Atl. 867. provision in the codicil that his daughter shall have the proceeds of the sale of a certain house free from any legacy or claim of the widow is made to except this bequest from the effect of the general charge in the widow's favor found in the twentieth item. This provision in the twentieth item covers his whole estate, and, of itself, shows that the testator did not intend that his widow should have any other claim upon it. The proofs show that the provision by the will is much larger than would be her right as dowress, so that it is not probable that she would choose the latter. On the third question submitted, laying out of view the failure to file her dissent, I do not think the widow has made any such election as will prevent her from making her election to take dower, instead of benefits under the will. I will advise that the bill be dismissed, with costs. 1. Where vendees purchased in reliance on the vendors' representation that the house in question was "a perfectly new house," or was "as good as new," when it was in fact an old building in part, which had been put in repair by the vendors, and some of the floor beams and weatherboards of which were rotten, the transaction may be rescinded at law, if such misrepresentation was made with knowledge of its falsity. 2. Such contract may be rescinded in equity, though such misrepresentation was innocently made. 3. Complainants purchased certain real estate, paying part cash, assuming the payment of an existing mortgage, and securing the remainder of the price by a mortgage to the vendors, and about 31⁄2 years thereafter brought suit to rescind such sale on the ground that the house had been represented to be "a perfectly new house, in absolutely good condition," but was in fact "an old building, and had been put in repair and fixed up for the purpose of selling it as a new building." Though they knew of the falsity of such representations within two months after such purchase, complainants paid off their mortgage to the vendors before it was due, and also repaired the property on divers occasions, and collected the rents. The house was originally one story high, and defendants had raised it and put another story under it. They denied having represented it as a new house, and claimed that they explained to complainants what had been done, and told them merely that it was "as good as new." It was not clearly proved that the repairs made were necessitated by faulty construction, except the replacing of some of the old floor beams and weatherboards, which were found to be rotten, with new ones. Held, that complainants had ratified such purchase. Bill by Mary Eibel and another against Auguste Von Fell and others to rescind a sale of real estate. Bill dismissed. Warren Dixon, for complainants. George C. McEwan, for defendants. STEVENS, V. On October 5, 1892, Auguste Von Fell and her husband, the defendants, sold and conveyed to Mary and Jacob Eibel, the complainants, a house and lot in Griffith street, Jersey City, for $3,500. Of the consideration, $1,000 was paid in cash at or before the delivery of the deed, $2,000 was represented by a mortgage then on the property, payment of which was assumed by the vendees, and the balance ($500) by a mortgage given by the vendees to the vendors. In March, 1896, the complainants commenced this suit to rescind the sale, the bill alleging that it was represented to complainants at the time they purchased that the house was "a perfectly new house, in absolutely good condition," and that they afterwards learned that it was "an old building, and had been put in repairs and fixed up for the purpose of selling it as a new building." The bill does not show when complainants first became aware of the falsity of the representation, but at the trial it was admitted that they knew of it within two months after the sale. Notwithstanding this knowledge, they paid to the defendants, in installments, before the money was due, the whole of the principal and interest secured by the $500 mortgage, and in addition they repaired the property and collected the rents. They did not offer to reconvey until over three years after they had knowledge of the fact. It was admitted that the house, as originally built, was one story high, and that Mr. Von Fell, after he became the owner, raised it and put another stor under it. At the trial he denied having represented it as a new house. He said that he fully explained to complainants what he had done, and that he told them merely that it was "as good as new." The evidence showed that after complainants took possession they were obliged, on different occasions, to make repairs. About a year after the purchase it was found necessary to replace some of the old floor beams and weatherboards, which were found to be rotten, with new ones. The carpenter work cost $38, and there was some painting, the cost of which does not definitely appear. With this exception, it is not clearly proved that the repairs were necessitated by faulty construction. The plaintiffs now ask that the transaction be rescinded. The rule of equity applicable to this subject is well settled. So far as applicable to the facts of this case, it may be stated thus: A court of equity will rescind a transaction entered into upon the faith of a material representation, false in fact, if the person to whom it was made relied upon it, and in consequence suffered injury. There is this distinction between the rule of equity and the rule of law: At law, moral fraud must be shown to have been present in the misrepresentation. Cowley v. Smyth, 46 N. J. Law, 382. uity, the plaintiff may succeed, although the misrepresentation was innocent. Arkwright v. Newbold, 17 Ch. Div. 320; Redgrave v. Hurd, 20 Ch. Div. 1. Under these rules, if the representation was as the plaintiffs claim it In eq was, viz. that the house was a new house, they | tain the idea of questioning the transaction. would, supposing there was no obstacle arising out of their own conduct, be entitled to succeed both at law and in equity, because the statement must have been false, to the knowledge of the defendant making it. If the representation was as defendants claim it was, viz. that the house was as good as new, then I think that the plaintiffs would still be entitled to succeed in equity, because the assertion, in this form, was false in fact, even if we assume that defendant, who seems to have personally superintended the work of reconstruction, did not know that the building contained the rotten timbers. It is true that it was the assertion of an opinion, but, as it seems to me, it was the assertion of an opinion which contained within it the assertion of a fact, viz. that the materials used in rebuilding were not rotten. Opinions of this kind may afford ground for an action. Smith v. Corporation, 28 Ch. Div. 15. Although the cost of replacing this rotten material did not probably exceed, if it amounted to, $100, I cannot say that the defect was trivial. Had the real condition of the building been known to the complainants, I doubt very much whether they would have purchased for the price agreed upon. There is, however, an objection to the complainants' recovery which seems to be insuperable. They both admit that, within two months after they purchased, they knew the house was not a new house. They say that they were almost immediately obliged to repair, because of the condition in which they found it. They had the rotten timbers replaced about a year after they bought. Notwithstanding this, they continued to pay the interest on both mortgages, and to pay the principal of one of them. They continued, moreover, to lease the different floors of the property to tenants, to collect the rents, and in all respects to deal with the property as their own. They kept on doing this for nearly three years and a half after they first discovered, as they say, the falsity of the representation, and for nearly two years and a half after they had replaced the rotten timbers. I think that by this conduct and these acts they ratified the transaction. Pom. Eq. Jur. § 916. It is said that the payments of principal and interest on the $500 mortgage were made ignorantly, and under an apprehension that, if not promptly made, the mortgagees would foreclose, and thus forfeit their interest. But it appears that the payments of principal were made before they were due, and no reasonable explanation is given of those other acts, indicating an intention to affirm, to which I have alluded. The true explanation of their conduct appears to be found in the fact-not seriously controverted at the trial-that the property was really worth about what complainants paid for it; that it, for the greater part of the time, rented well, and yielded a fair return for the money invested; and that not until rents fell did complainants seriously enter Says Mr. Justice Depue in Williamson v. Railroad Co., 29 N. J. Eq. 320: "The vendor may rescind the contract of sale and reclaim the property, until, with a knowledge of the fraud, he elects to ratify and confirm the sale. * * * Delay in exercising the power of rescission is evidence of an election to treat the sale as valid, of more or less weight according to the circumstances of the case, but of itself does not operate as an estoppel unless in the meantime superior rights of third persons have intervened." In that case the vendor, the car company, got nothing of value in return for the cars which it delivered, and did no acts in respect of the worthless bonds which it received in payment indicating an intention to ratify the sale after it became aware of the fraud. In the case in hand the vendees, long after they discovered the facts, continued to treat and deal with the property as their own. Both their acts, and their delay in exercising the power of rescission, seem to me to be strong evidence of an election to treat the sale as valid. I come to this conclusion the more readily because, if the plaintiffs' contention be well founded, they may still resort to an action of deceit, in which they will recover an exact equivalent for the injury which they claim to have suffered at the hands of the defendants. The justice of this case after so much delay will be far better subserved by such a recovery than by a rescission. DALY v. NEW YORK & G. L. RY. CO. et al. (Court of Chancery of New Jersey. Aug. 21, 1897.) MORTGAGES-ASSIGNMENT-RECORDING- PRIORITY OF LIENS--AFTER-ACQUIRED PROPERTY. 1. The transfer of a bond and mortgage belonging to an estate. when made, in pursuance of an order of court, by the executor removed by the court to a new executor appointed in his place, is sufficient to convey the equitable title thereto, although the transfer, was a mere delivery, without formal assignment. 2. A mortgage on land given by the purchaser to secure the price conveys a legal title, superior to the interest acquired through previous mortgages given by the purchaser, and covering afteracquired property. 3. This superiority is not lost by neglect to record the purchase-money mortgage, for the statsubsequent mortgagees only. ute requiring recording is for the protection of Foreclosure suit by Eugene F. Daly against the New York & Greenwood Lake Railway Company and others. Heard on pleadings and proofs. Decree for complainant. The object of the bill is to foreclose a mortgage on land, given by Henry C. Spaulding to John Sands Howell, dated June 17, 1872, to secure the sum of $4,650 in four years, and further secured by the bond of the mortgagor. The complainant claims to be the assignee of this bond and mortgage. They were given as part of the consideration money of the conveyance by Howell, the mortgagee, and others, to Spaulding, of the tract covered by the mortgage, containing 10.25 acres of land, situate at Secaucus, in Hudson county. By deed of the same date (June 17, 1872), Spaulding conveyed .904 of an acre, part of the premises, to the Montclair Railway Company. This was a narrow strip, upon which it was proposed to build, and upon which a section of the railway of that company was afterwards built. The deed to Spaulding was acknowledged by a part of the grantors on the 17th of June, by another part on the 19th, and by another part on the 21st of June, 1872. The mortgage was acknowledged by Spaulding on the 28th of June, and the deed for the strip to the railway was acknowledged on the same day. The two deeds were recorded on the 2d of July, 1872. The mortgage from Spaulding to Howell, sought to be foreclosed, was not recorded until the 10th of July,-eight days after the record of the deed from Spaulding to the railway company. Spaulding was one of the directors of the railway company, was its superintendent and purchasing agent, and in the purchase acted entirely as the agent and trustee of the railway company. He held the title to the nine acres and a fraction of the whole tract not conveyed to the railway company in trust for it. The whole transaction was carried through with the full knowledge and consent, previously obtained, of all the officers of the railway company, so that the railway company had full and complete notice of the mortgage to Howell for part of the consideration money. At the time of this transaction the railway was under a first mortgage to Marcus L. Ward and Abram S. Hewitt, as trustee for certain bondholders. That mortgage was dated the 1st of September, 1870, and recorded on the 2d of September, 1870, in the book of deeds for Hudson county. The description of the premises covered by it is as follows: "All and singular, the line of railway known and to be known as the 'Montclair Railway,' as the same is being and shall be constructed from the line of the state of New York, at or near Greenwood Lake, to the Hudson river, also the branches thereof, * including all the railways, ways, rights of way, and depot grounds, or other lands, all tracks, bridges, viaducts, culverts, fences, and other structures," etc, "** and all real and personal property held or acquired, or hereafter to be held or acquired, by the said company, its successors or assigns, for use in connection with the aforesaid railway and branches of the party of the first part, or with any part thereof, or with the business of the same, * * * and also all franchises connected with or relating to the aforesaid railway and branches, or to the construction, maintenance, or use of the same. A second mortgage was given by the railway company to Mr. Hewitt alone, as trustee, using the same description of the premises as above set out, on the 1st of November, 1871, and recorded on the 15th of January, 1872, to secure another issue of bonds. The second mortgage was duly foreclosed, and the property purchased by and conveyed to Mr. Hewitt, as trustee, by master's deed dated January 7, 1875. The first mortgage was duly foreclosed and conveyed by master's deed to Marcus L. Ward and Abram S. Hewitt, trustees, September 27, 1875. Ward and Hewitt conveyed, by deed dated November 29, 1875, to the Montclair & Greenwood Lake Railway Company, a new organization; and this second railway company mortgaged to George Walker and Amzi Dodd, trustees, by deed of trust dated December 1, 1875, all its lands and property of every kind. This mortgage was foreclosed, and the property purchased by and conveyed to Abram S. Hewitt, Cyrus W. Field, and John B. Dumont by master's deed dated October 5, 1878, and Hewitt, Field, and Dumont conveyed by deed dated November 5, 1878, to the New York & Greenwood Lake Railway Company, the defendant herein. Neither Howell nor his personal representatives were made parties to either of these foreclosure proceedings. Receivers were also appointed of this railway company after the conveyance of Spaulding to it, and before the first foreclosure, and they also conveyed to Hewitt as trustee, but their conveyance did not cover any land in Hudson county; and counsel for the railway company relied entirely upon the mortgages of 1870 and 1871. The principal question is whether the foreclosure of the mortgages of 1870 and 1871 had the effect of devesting the lien of the complainant's mortgage upon the strip of .904 acre constituting a part of the railroad bed. Another question was raised as to the standing of the complainant Daly, in this court. Howell, the mortgagee, died not long after the giving of this mortgage, leaving a will, which was offered and admitted to probate in the city of New York on the 28th of January, 1873. Letters testamentary were issued by the surrogate of New York City to Henry K. Van Siclen and William Joyce, executors named therein, both of the state of New York. Subsequently, in 1879, proceedings were had to remove both these executors, with the result that both executors were removed by decree of the surrogate dated October 13, 1879, and their letters testamentary were superseded. Subsequently an order was made in the supreme court of the city and state of New York on the 17th of October, 1879, appointing Edward C. Sheehy trustee under the will of Howell, in the place and stead of Van Siclen and Joyce; and it was ordered that, upon service of a copy of the order upon Van Siclen and Joyce, they should pay over, assign, transfer, and deliver to Sheehy all the money, securities, assets, and property of every kind and description in their hands or possession belonging to the estate of Howell. Under that order, demand was made by Sheehy upon Van Siclen and Joyce for the assets of the Howell estate, and, as a part of these assets, Van Siclen and Joyce handed to Sheehy the bond and mortgage here in question, but did not execute any formal assignment of it. Sheehy then duly assigned the mortgage to the complainant, Daly. Joseph Anderson, for complainant. Cortlandt Parker, Jr., for defendant New York & G. L. Ry. Co. description of land "thereafter to be acquired." There can be no doubt that under that clause a title in equity, of greater or less value, was made to the purchasing trustees, and by them to the present defendant corporation, of this after-acquired property. The question is whether the railway company took it free and clear of the incumbrance of complainant's mortgage. That the mortgagor, the original Montclair Railway Company, took the property with full notice of complainant's mortgage, there can be no doubt. As between complainant and the first railway company, the complainant's right is indisputable. Notwithstanding that the first railway company had notice of the complainant's mortgage, it was competent for it, under our recording acts, to give a title to the premises free aud clear of complainant's mortgage. As to that portion of it (.904 of an acre) which was actually conveyed by Spaulding to the railway company by deed recorded prior to the recording of complainant's mortgage, no conveyance was made by that railway company subsequent to the making of complainant's mortgage. Such conveyance was made by mortgages prior to the date of the complainant's mortgage. Now, the language of the recording act then and still in force, which applies to the present case, is as follows: "Every deed of mortgage," etc., "which shall have been made and executed after the first day of January, 1821, or shall hereafter be made and executed, shall be void and of no effect against a subsequent judgment creditor, or bona fide purchaser or mortgagee for a valuable consideration, not having notice thereof, unless such mortgage shall be acknowledged and proved according to law," etc., "and recorded or lodged for that purposewith the clerk of the county," etc. It thus appears that the recording act operates en PITNEY, V. C. (after stating the facts). The first question is as to whether the complainant has standing in equity as the owner of this bond and mortgage. There can be no doubt that the interest in and control of them by the original executors of the mortgagee were devested and ended by the decree of the surrogate of New York superseding them. And it is equally clear that Mr. Sheehy, the new trustee, was entitled to the possession and control and vested with the equitable interest in them in trust for the beneficiaries under the will, by the decree of the New York supreme court. And it seems to be well settled at this day in New Jersey -in fact, familiar and common learning that a mere delivery of a bond and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered. This is the substance of the ruling by Mr. Justice Drake, speaking for the supreme court, in the case of Hutchings v. Low, 13 N. J. Law, 246; and in the same direction is what was said by Master Wilson in Canal Co. v. Fisher, 9 N. J. Eq. 667, at page 686. The same doctrine was declared by Chancellor Runyon in Kamena v. Huelbig, 23 N. J. Eq. 78, at page 80, where he says, "This assignment was in writing, but, had it been by the mere handing over of the bond and mortgage, it would have been sufficient." And Master Weart, in Galway v. Fullerton, 17 N. J. Eq. 389, at page 394, states the same doctrine, citing author-tirely in favor of subsequent mortgagees and ities from New York and elsewhere. Chancellor Runyon reiterates it in Harris v. Cook, 28 N. J. Eq. 345, and again in Denton v. Cole, 30 N. J. Eq. 244, citing with approval Galway v. Fullerton, supra. It has always been held that a mortgage will, in equity, follow the debt which it was given to secure, wherever that debt is well assigned or transferred, without any formal assignment of the mortgage. Green v. Hart, 1 Johns. 580, on appeal from the chancellor. I think the equitable title of the complainant in the bond and mortgage here in question is fully established. The next question is as to whether or not the present railway company's claim of title under mortgages prior in date to that of the complainant gives it the better standing in this court. It is to be observed that at the time the two mortgages under which the railway company claims, to wit, in 1870 and 1871, were executed and recorded, the title in this land had not been vested in the railway company, and it must claim under the bona fide purchasers. The case abundantly shows that the mortgages under which the defendants claim were given before the railroad was built, and presumably before all of the money was advanced upon the bonds. secured by those mortgages. The case does not show how much, if any, money was so advanced prior to the conveyance by Spaulding to the railway company, but it may be presumed that some of the bonds were negotiated prior to that time. Counsel for complainant contended with much ingenuity and strength that his mortgage must be a subsisting lien, for the simple reason that the prior mortgages were not within the terms of the recording act, and that there were no conveyances by the railway company, grantee of Spaulding, after the conveyance to it, and so there was not, and could not be, any person occupying the position, as against him, of a bona fide purchaser for value without notice. But, without relying upon that point alone, I think that, according to the first principles of justice as administered in a court of equity, the complainant's mortgage must be accorded priority over the Hewitt mortgages. The general rule seems to be that the holder of a mortgage, who claims by its terms that it is a lien upon after-acquired property, takes such property subject to all liens upon it between the parties. way company. It is familiar learning, found in & BROS. (Court of Chancery of New Jersey. Aug. 12, CLAIMS IN INSOLVENCY NOTICE TO PRESENT This was distinctly decided by the supreme court of the United States in the case of U. S. v. New Orleans & O. R. Co., 12 Wall. 362, where Mr. Justice Bradley, speaking for the court, uses this language: "This, we apprehend, is an erroneous view of the doctrine by which after-acquired property is made to serve the uses of a mortgage. That doctrine is intended. to subserve the purposes of justice, and not injustice. Such an application of it as is sought by the appellants would often result in gross injustice. A mortgage intended to cover afteracquired property can only attach itself to such property in the condition in which it comes into the mortgagor's hands. If that property is already subject to mortgages or other liens, the general mortgage does not displace them, though they may be junior to it in point of time. It only attaches to such interest as the mortgagor acquired; and, if he purchase property and give a mortgage for the purchase money, the deed which he receives and the mortgage which he gives are regarded as one transaction, and no general lien impending over him, whether in the shape of a general mortgage or judgment PATTBERG et al. v. LEWIS PATTBERG or recognizance, can displace such mortgage for purchase money. And in such cases a failure to register the mortgage for purchase money makes no difference. It does not come within the reason of the registry laws. These laws are intended for the protection of subsequent, not prior, purchasers and creditors." The doctrine of this case was adopted and applied by the court of errors and appeals in Williamson v. Railroad Co., 29 N. J. Eq. 311, at page 317, where the case last cited was cited with approval. Both of these cases I deem to be in point. In the case in 12 Wallace the railroad company had made a mortgage which covered all the company's property of every kind, with a stipulation to include all futureacquired property, and had purchased a lot of rolling stock subsequent to the date of the mortgage, and given back a consideration mortgage for it to the vendor, which had not been recorded, and the fact of its existence was unknown to the bondholders under the first mortgage. In deciding it, Mr. Justice Bradley calls attention to the distinction between that case and Railroad Co. v. Cowdrey, 11 Wall. 459, much relied upon by defendant's counsel in this cause. In Williamson v. Railroad Co., lands came to a railway company, which were subject to a mechanic's lien which had not yet been filed or recorded, so that the title of the mortgagees intervened between the time when the occurrences out of which the mechanic's lien arose took place and the time that the lien itself was filed and perfected; and it was held that the mechanic's lien prevailed over the mortgage. The legal title to these premises has never been dealt with, and never passed to the present rail 1. Certain secured bondholders of an insolvent corporation were not notified by mail, with the other creditors, of the time limited for the admission of claims against the corporation, although the order of limitation was published. The time expired, and the bondholders found their security insufficient to pay them in full, and applied to be admitted as creditors for the balance. Applicants had paid value for their bonds. Held, that the application should be granted. 2. They were also entitled to a preferential dividend to put them on equality with the other creditors, who had already received a dividend on their claims. 3. A creditor of an insolvent corporation, who tion, the security for which is insufficient to pay holds as collateral secured bonds of the corporain full either the bonds or the debt, cannot be admitted as a creditor for the balance due on the bonds as well as for the debt. Bill by Lewis Pattberg and others against Lewis Pattberg & Bros., a corporation, in which a receiver was appointed. On application of Charles Pfeiff and Louisa Austin to be admitted as creditors of the corporation. Granted. William H. Corbin, for applicants. Joseph A. McCreery, for respondent. PITNEY, V. C. The situation of the affairs of the corporation is, briefly, as follows: A receiver was appointed by this court, and it was declared insolvent, on the 31st day of December, 1894. The assets consisted in part of personal property consisting of merchandise, |