Opinion of the Court, per FOLGER, J.

another member, for any amount paid in in excess of the share he was bound to contribute, or in excess of his proportion of the debts of the concern.

If then the appellant had notice of the true state of the facts concerning this real estate, and the interest therein of Shumway his mortgagor, his mortgage must be deferred to those held by the respondent, and must await a settlement of the partnership affairs, and an ascertainment of the interest of Shumway in the residuum, after payment of all copartnership indebtedness and an adjustment of the relative rights of the several copartners. Did he have such notice?

It is to be confessed that, though the conclusions of law of the learned referee are clear and explicit, the conclusions of fact on this branch of the case, are not beyond cavil either as to the explicitness of them, or as to their being completely sustained by the evidence. He finds that Shumway informed the appellant that he wanted a loan to aid him in paying up his proportion of the moneys he had agreed to advance toward the purchase of the property, and toward making the improvements on it; that when the mortgage was given to the appellant, the premises were occupied by this copartnership for its business, and that the appellant knew of such occupation; that he took his mortgage with notice that the premises had been purchased for copartnership purposes, and were used by them therefor. None of these findings are excepted to, and they have been General Term. We must consider them as warranted by the evidence. The most material finding is the last. If by it it is to be understood that the appellant had notice that the premises were purchased to be copartnership property, then the conclusion of law of the referee that the appellant is not a bona fide mortgagee, is sustained. And such would seem to be the most reasonable interpretation of his language. The learned referee could scarcely have drawn such a conclusion of law, from a finding of fact which meant no more than that the appellant had notice that the several copartners in their individual capacity, had bought and taken to them

ratified by the

Opinion of the Court, per FOLGER, J.

selves as tenants in common a conveyance of these premises; so that though the ownership was really in them as individuals, the property should be used for the purposes of the copartnership so long as all assented thereto. It would seem rather that, by the phrase "copartnership purposes," he must have meant to convey the idea of that which he, the referee had previously found was the fact, that the premises had been bought to be the property of the copartnership, with its funds, and by agreement of its members. In this view, which we adopt with some hesitation, the conclusion is sustained, that the appellant took his mortgage with notice of the character, which equity had placed upon the premises, of copartnership property, of assets of the firm, primarily liable for the debts of the firm, and to an adjustment of the liabilities of each of the copartners to the others, and to each of them.

On another branch of the case, there is less difficulty. It is apparent from the testimony as well as the findings, that the consideration of the appellant's mortgage was a prior indebtedness not shown to have been discharged or canceled; and that he loaned no money nor surrendered anything with a specific reliance upon the security of an undivided share of Shumway in these premises. The mortgage was executed 1st October, 1867. It was for $3,500, nominally. But the actual consideration was but $2,450 and a promise of a further advance, which advance was not made; $1,000 of the actual consideration was a precedent debt due from Shumway to his mother; $1,000 was borrowed of the appellant, 1st June, 1866; and $450 (the rest of the consideration) on 1st April, 1867. It is not pretended that the $1,000 owing to Shumway's mother, was obtained upon any promise or expectation of the mortgage being given to secure it. It was not until September, 1867, and after all the indebtedness had accrued, that there was mentioned between Shumway and the appellant, the securing of the latter by the specific manner of this mortgage, though the subject of security in general was mentioned April 1, 1867. SICKELS-VOL. IV.

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Opinion of the Court, per FOLGER, J.

So that the appellant can have no legal or equitable right under the deeds of conveyance and the mortgage from Shumway, which can override the equitable right of a creditor of the copartnership, or a member thereof. The claim of the appellant rests upon a strictly legal basis. It depends upon the terms of the deeds of conveyance at law, creating the grantees therein named of whom Shumway was one, tenants in com mon of the real property conveyed; and upon the mortgage from Shumway creating a lien in favor of the appellant, upon an undivided fourth part thereof. Such is the effect of those instruments at law. And the appellant would be entitled to repose upon their legal effect, if he were a bona fide mortgagee without notice of the facts and circumstances, which in equity have impressed upon this real property the character of partnership property and effects. As to notice to the appellant, we have above spoken. But to sustain the claim he now makes, he should have taken his mortgage, not only without notice, but bona fide. He should have parted with some valuable thing, in reliance upon the security for the return thereof, which the mortgage seemed to furnish. This he did not, so that he is to be held as taking his mortgage, subject to the equities superior to his own equity, of any and of all interested in the property. And as his equity is only to have a prior right to the share or interest of Shumway as one of the copartners, as that right or interest shall be ascertained on a settlement and adjustment of the affairs of the copartnership, with the creditors of it, and with the copartners between themselves as such, it follows that the testator of the plaintiff, he having been a creditor of the copartnership, is to be preferred as to his two mortgages, to the appellant. And in this view it matters not whether the appellant's mortgage was lawfully recorded or not. For whether or not the plaintiff's testator had from the record of it constructive notice of its existence, his equitable relations to the property, and to those interested in it, were not thereby changed.

It follows also, that the elder Kenyon is to be preferred to the appellant, for any amount to which he is in advance to

Statement of case.

the copartnership, more than his proportionate payment into the capital stock, or more than his proportion of the debts of the concern.

We should feel compelled to affirm the judgments of the courts below, were it not for the error as to the priority of the Kenyon mortgage. On this account the judgment must be affirmed with the modification that upon the mortgage to the, defendant Charles G. Kenyon, there shall not be applied any of the proceeds of so much of the premises as was obtained by Shumway by the deed from Cook to him and others; and that the mortgage of the defendant Phelps have preference as to those proceeds to the mortgage of the defendant Charles G. Kenyon; and without costs to either party in this court. All concur.

Judgment accordingly..

JOHN J. COCKS, Respondent, v. CHARLES BARKER et al.,

Appellants.

A recital in a bond given by one copartner to another, upon dissolution of the copartnership, setting forth as the consideration therefor the transfer and delivery by the obligee to his former partner of the assets of the firm, is a substantive part of the agreement, and cannot be varied or contradicted by parol evidence. Where a bond is delivered to the obligee or his agent, it cannot be shown by parol that it was delivered as in

escrow.

(Argued March 27, 1872; decided April 2, 1872.)

APPEAL from judgment of the General Term of the Supreme Court in the second judicial department, affirming a judgment in favor of plaintiff, entered upon the decision of the court at Special Term.

The action was brought upon a bond of which the following is a copy:

"Know all men by these presents that we, Charles Barker and Samuel P. Barker, of the city of Brooklyn, are held and

49 107 142 364

Statement of case.

firmly bound unto John J. Cocks of said city in the sum of $5,000, for which payment, well and truly to be made, we bind ourselves, our heirs, executors and administrators, jointly and severally, firmly by these presents. Sealed with our seals. Dated 17th day of January, 1868.

"Whereas, one John A. G. Barker and the said John J. Cocks entered into articles of copartnership bearing date December 31, 1866; and, whereas, said copartnership was dissolved by the mutual consent of the partners thereto on the second day of January, 1868; and, whereas, certain assets of said late firm of Barker & Cocks, consisting of book accounts and merchandise, have been transferred to said John A. G. Barker for collection and sale;

"Now, therefore, the condition of this obligation is such that, if the said John A. G. Barker shall, from time to time, pay over to the said John J. Cocks, as the same shall be collected by him, the amounts which he, the said John J. Cocks, shall be entitled to receive from the collection of said book accounts and from the sale of said merchandise; and shall, upon the final adjustment and settlement of all matters appertaining to said copartnership, render a full and true account thereof to said Cocks, and pay over to him such sums as he may be entitled to receive, then this obligation shall be void and of no effect; otherwise, to remain in full force and virtue. "CHARLES BARKER. [L. S.] "S. P. BARKER." [L. S.]

Defendants alleged that the bond was given upon the agreement of plaintiff to deliver over to his former partner the books of the firm, and not in consideration of the transfer of the firm assets.

The facts sufficiently appear in the opinion.

John H. Bergen for the appellants. It was competent to show no consideration or a different consideration for the bond. (See vol. 2, Edmonds' Ed. Rev. Stat., p. 423; Bingham v. Weidermax, 1 Coms., 509; Wilson v. Baptist Society, 10 Barb., op. at p. 312; McCrea v. Purmort, 16 Wend., 460,