Curtis and others against Leavitt.

company's bonds, or some of them, the trustees should pay to or authorize the company to receive the interest to become due upon the bonds and mortgages assigned by the trust deed. Each deed contained the further trust, to repay to the company such surplus moneys, and to restore to it such securities as might remain in the hands of the trustees after the final payment of the bondholders; Held, First. That the deeds were not void under the statute (2 R. S., 135, § 1) declaring void conveyances, &c., of personal estate, made in trust for the use of the grantor; Second. That they were not void, as made with intent to hinder, delay or defraud creditors. The statute (2 R. S., 135, ◊ 1) applies only to conveyances, &c., wholly or primarily for the use of the grantor, and not to instruments for other and active purposes, where the reservations are incidental and partial only. The case of Goodrich v. Downs (6 Hill, 438), so far as it maintains the contrary doctrine, overruled. The subject considered at large, and the authorities reviewed, per COMSTOCK and BROWN, Js. Pp. 114-124, 143-150.'

If the statute can be applied to instruments executed for real and active purposes, such as to secure debts, or procure money on loan, it avoids only so much of the grant as is not sustained by the valid purposes for which it was made. It does not avoid the entire instrument which contains the invalid use. Per COMSTOCK, J. P. 123. In holding the said trust deeds not to be fraudulent as to creditors, and so void at the common law, or under the statute against frauds (2 R. S., 137), the court proceed on the grounds: First. Dehors the deeds, there is no evidence of any intent to delay or defraud creditors, but on the contrary the evidence proves a design and expectation of going on in business, and paying all debts as fast as they matured; and the trust deeds were made to raise money in order to enable the company thus to go on and pay its debts; Second. The reservations in the deeds, for the benefit of the company, were appropriate to such a transaction, and in themselves were innocent and lawful. Pp. 124-132, 205–208.

In every conveyance of property intended to secure a debt, or procure money on loan, the nature of the transaction implies that some interest remains in the debtor, and the instrument may, therefore, lawfully state such remaining interest, and may provide for a reversion of the fund or of the surplus, after the purposes of the conveyance are satisfied. Pp. 127, 146, 205.

But where an insolvent or failing debtor proposes to stop business and wind up his affairs, and for that purpose assigns the whole or the mass of his property, he must devote it unconditionally to the payment of his debts. He can make no reservation in his own favor, until all his creditors are satisfied. The adjudged cases on the subject go upon this principle; but the principle has no application to transactions like those now in question. P. 132. The receiver of a corporation, appointed under the statute "concerning proceedings against corporations in equity" (2 R. S., 463, 464, §§ 39-41), is the immediate representative of the corporation, taking as such the corporate title to its property and being subject to the corporate disabilities.

Curtis and others against Leavitt.

Buch a receiver, therefore, since the statute of 1850 (ch. 172), providing that "no corporation shall hereafter interpose the defence of usury," cannot set up that defence in any stage of a cause, not even at the final hearing, although such defence was alleged in pleading, and was established by proofs, before the act was passed.

That statute is in effect a repeal of the usury laws of this state, so far as the contracts of corporations are concerned. Per COMSTOCK, J. P. 85.

If the creditor of a corporation can, in any case, since that statute, set up usury in its contracts, this can only be done where he alleges usury in his own name and right, and not where he is forced to make the allegation through the corporation or its receiver. Per SELDEN, J. P. 254.

The statute of 1850 is retrospective in its operation upon the contracts of corporations; and, per BROWN, J. (citing the authorities), it is no objection to a statute repealing a penal enactment that it does so operate. P. 152. Prior to June 3, 1840, when the statute of May 14, 1840, took effect, prohibiting banks from issuing time bills and notes, the said North American Trust and Banking Company, being indebted in a large sum to Palmers & Co., bankers in London, and desiring further large advances, transmitted to that house the aforesaid million and half million issues of its bonds, under a pledge for such debt and the expected advances, with authority to sell the same, according to the original purpose for which they and the aforesaid trusts were created, and to apply the proceeds to the payment of such debt and advances. The Palmers & Co. made the further advances, and they also, after receiving the bonds, or being advised of their shipment to them, gave up other securities equal to the amount of their preëxisting debt. Held, that the bonds so called, having been executed and thus pledged to the Palmers & Co., before June 3, 1840, were not issued in violation of said statute, even if regarded as unsealed instruments, and so, in legal effect, promissory notes. And held, further, that the purchasers of so many as were sold by the Palmers & Co., whether they purchased before or after that day, took a valid title under the previous pledge and the execution by the Palmers & Co. of the power to sell.

Four hundred and ninety-nine bonds of the million issue were sold in England, for cash, at a discount which would render the transaction usurious (so it is assumed), both by the laws of England and of this state; Held; 1. That the bonds [they are above described ] were English contracts; 2. That they were sealed instruments by the English law, although the corporate seal was impressed directly upon the paper, without wax, wafer or other tenacious substance; 3. That their payment was not secured upon lands, but upon the bonds and mortgages assigned by the aforesaid million trust deed, which were New-York contracts, and as such, by the law of this state, chattel interests merely; 4. And, therefore, as the result of these propositions, that said four hundred and ninety-nine bonds came within the statute of 2d and 3d Victoria, which exempted them from the penalties of usury. Two banks in the city of Philadelphia agreed to loan to the North American

Trust and Banking Company (a New-York banking association), $250,000.

Curtis and others against Leavitt.

The negotiation was conducted partly in Philadelphia and partly in NewYork, and the money (less than the nominal amount of the loan) was actually advanced in New-York. The money was to be repaid at one of the banks in Philadelphia, with interest at the legal rate in Pennsylvania; Held, that this was a Pennsylvania contract, and, therefore, if usurious, that by the law of that state, it was inoperative only as to the excess over the legal interest. Pp. 91, 230, 296.

It was a part of the same agreement that the North American Trust and Banking Company, should give to the lending banks its negotiable certificates of deposit for the amount of the loan, each one for a semi-monthly instalment. Twelve certificates were given accordingly, amounting in all to $250,000, the first payable in seven, the last in twelve months from their date, with six per cent interest. Conceding these certificates to be, in legal effect, promissory notes, and as such expressly prohibited under penalties by the act of May 14, 1840, yet Held that the Philadelphia banks were not in pari delicto in the offence of issuing such notes, the prohibition and the penalties being imposed only on the corporation which issued them, and the banks which received them, being foreign corporations, not even having notice of the prohibiting statute. Pp. 94, 296.

Held, further, therefore, that the lenders were entitled to recover the money lent, it being considered that the illegality and alleged voidness of the certificates did not impair the guilty party's obligation to repay the money. That the remedy of the lenders would lie directly on the contract of loan. Although in such a case the innocent party may disaffirm, and go upon an implied assumpsit for the goods sold or the money advanced, as held in the case of Tracy v. Talmage (4 Kern., 162), he is not bound to do so, and, therefore, is not compelled to lose his collateral securities. Pp. 95, 96. The maxim "void in part void in toto" expresses no general principle of law. On the contrary, the general rule is that the good shall stand although mixed with the bad. The exceptions are: First. When a statute expressly declares a whole deed or contract void, on account of some anlawful provision in it; Second. When there is some pervading vice which infects all parts of the agreement, as fraud for example, so that no separation can be made. Per COMSTOCK, J. P. 96.

It was also a part of the agreement for the loan aforesaid, that two hundred and seventy bonds of the company, being part of the aforesaid half million issue, which had been pledged to the Palmers & Co., snould be lodged with the Philadelphia banks as a special security for such loan, and this was done accordingly. A written agreement, entered into between the company and those banks at the time of the loan, recited that the banks had loaned the company $250,000, and also recited the issuing of the said twelve certificates of deposit to the lenders. It then provided that the two hundred and seventy bonds should be held by the banks as collateral security for the payment of said certificates, and that, in case of default in paying such certificates, the bonds might be sold in order to provide for such payment, &c.; Held, although the certificates were illegal and assumed to be void,

Curtis and others against Leavitt.

that the pledge of the bonds was valid to secure the debt for the money lent, and that the Philadelphia banks, as the holders of the bonds, or their assignees, were entitled to share in the benefit of the half million trust by which the same were secured.

I seems, that in judgment of law, the pledge was annexed to the debt con tracted on the faith thereof, and not to the particular instruments given as the evidence of such debt, especially as the written agreement, although it declared the pledge to be collateral to the certificates, disclosed the debt also. The case in this court, of Leavitt v. Palmer (3 Comst., 19), examined and explained by COMSTOCK and PAIGE, JS. Pp. 101, 281. Five hundred and fifty-seven of said bonds, amounting to $557,000, part belonging to the million, and part to the half million issue, remained in the hands of the Palmers & Co., under the original pledge, and were never sold. Being creditors of the company to a still larger amount, they claimed, as pledgees and holders of said bonds, to share in both the million and half million trusts, in due proportion with other bondholders. The receiver of the company resisted their claim, on the ground that the debt arose out of transactions which were illegal and beyond the powers of the company. Their debt was the balance of the advances made by them to the amount of some millions of dollars: First. In paying time bills of exchange drawn on them by the company, and negotiated before they accepted them; Second. In paying time certificates of deposit, issued by the company, payable in sterling money at their banking house in London; Third. In taking up certain other time obligations of the company made, after the act of May 14, 1840, forbidding such paper, took effect, by its agent in London, for the purpose of borrowing money which the Palmers & Co. guaranteed and paid at maturity; Fourth. One item was the price of South Carolina state stocks, bought by the company for an unauthorized purpose, and either sold to it by Palmers & Co., or paid for by them to another vendor, at the company's request, and the price paid charged in the accounts.

As to so much of the balance as was based upon the time bills of exchange, drawn previous to June 3, 1840, it was Held, that banking associations, formed under the general law, have a right to draw bills of exchange, either foreign or domestic, as incidental to the power to buy and sell bills; and previous to June 3, 1840, such bills might be drawn, payable upon time as well as at sight, or on demand. Pp. 71–83, 172, 222, 260.

The validity of so much of their debt as was founded on the other transactions above described, and which are severally assumed to have been illegal on the part of the company, was sustained upon the doctrines of Tracy v. Talmage (4 Kern., 162), which were unanimously reaffirmed, viz: First. It is no defence to an action brought to recover the price of goods sold, that the vendor knew that they were bought for an illegal purpose, provided it is not made a part of the contract that they shall be used for that purpose; and provided, also, that the vendor has done nothing in aid or furtherance of the unlawful design, beyond the mere sale, with knowledge of the illegal intent of the purchaser; Second. Where a contract, otherwise unobjection

Curtis, Graham and Blatchford against Leavitt.

able, is prohibited by a statute which imposes a penalty upon one of the parties only, the other party is not in pari delicto, and, upon disaffirming the contract, may recover, as upon an implied assumpsit, against the party upon whom the penalty is imposed, for any money or property which has been advanced upon such contract.

ORIGINAL AND CROSS BILL. The North American Trust and Banking Company, organized in July, 1838, under the general banking act, passed in April of that year. By the articles of the association, the capital was fixed at $2,000,000, with the right of enlarging it to $50,000,000. The powers of the company were, by the same articles, vested in a board of directors and such officers and agents as they should appoint. According to the by-laws, all bonds and mortgages were to be taken in the name of the president, and he had power to assign, cancel and discharge mortgages, judgments or other instruments, with the sanction of the committee of investments and finance. That committee was constituted by the board of directors at their first meeting. Notes or bills issued for circulation, were to be signed by the presi dent or vice-president and cashier. Bills of exchange, certificates of deposit, and the bonds of the company, were to be signed by the president or vice-president, and by the cashier and second cashier. The founders of the company subscribed a capital of $2,000,000, which they designed to increase immediately to $5,000,000 and upwards. No more than $3,285,900, including the original $2,000,000, was in fact ever subscribed, the whole of which, except about $250,000, was paid by the subscribers in bonds and mortgages upon real estate, situated in the city or State of New-York. About $250,000 was paid in cash, chiefly by English subscribers.

In April, 1840, the company executed two trust deeds called the million and first half million trusts, for the purpose of securing the payment of its bonds, to be issued to those amounts respectively. The object of the original bill in this cause, was to establish those trusts, and of the cross bill to have them declared void, on various grounds hereafter to be