The trust was constituted by a deed dated the fifteenth day of December, 1873, which was made between certain parties of the first part, styled "the trustees," certain parties of the second part, called "the committee," and certain parties of the third part, called "the covenantees."

The scheme contemplated subscriptions to raise a fund for the purpose of purchasing bonds of municipalities within the United States. The bonds were to be purchased by "the committee" named in the deed, and placed in the possession of the banker of the trust by the trustees. Subscribers to the fund received certificates, payable to the bearer, which entitled the holder to participate in the distribution of the profits and proceeds of the trust investments by a drawing in a mode set out in the deed, which, in some of its features, closely resembled a lottery. The capital of the trust was fixed by the deed at £350,000. The committee of the trust purchased from Coler bonds, including those of Phillips county, valued at £217,550 12s. and 10d., for which he was paid in cash £135,000 12s. and 10d., and the remaining £82,555 was paid him in certificates of the trust, which two witnesses testify were, at the time, par or a little under. The trust was not a corporation or joint-stock company or partnership, but a trust formed by deed of settlement for the purpose of secur ing investments. The trustees were the legal owners of the trust property, and the business of the trust was managed by them and "the committee" created by the deed for the benefit of the certificate holders, who were strangers to each other, and who entered into no contract between themselves, nor with any trustee on behalf of each other, and were not, therefore, partners.

It is a question whether this trust was not obnoxious to the provisions of the English companies act, 1862, and illegal. According to the opinion of the master of the rolls in Sykes v. Beadon, Solicitors' Journal, April 12, 1879, p. 464, it was; but in Smith v. Anderson, reported in London Times, July 17, 1880, the court of appeal overrule Sykes v. Beadon.

The question is not material in this case, for in any event the certificate holders who contributed the money to purchase

and pay for the securities are in equity entitled to them, and their proceeds, to be distributed among them according to the scheme of the deed, or in some equitable mode.

The evidence shows very clearly that the bonds were purchased from Coler in good faith before their maturity, and without notice of any defect in Coler's title or authority to sell. The only witness whose testimony tends to impeach the plaintiff's title is Coler himself, who testifies that he informed one or two persons, sustaining the relation of agents or managers to the trust, that the bonds were not his property and that he had no authority to use them as he was doing. It is improbable that he made any such statement to any one when he was anxiously seeking to dispose of the bonds; and he is flatly contradicted on all points by the persons to whom he claims he made the statements, and by the members of the committee, who alone had authority to purchase bonds, and who testify they were purchased in good faith. In the written agreement entered into for the sale of the bonds to the trust, he describes himself as "a dealer in American municipal bonds," and as having the possession and control over a large number of such bonds, "which he is duly authorized to sell and dispose of," and it is not reasonable that on the eve of consummating a sale of a million and a quarter of bonds, which he had been working for months to bring about, he would make a voluntary confession of want of authority which would at once put an end to his enterprise. Besides, his conduct in the transaction is not such as to inspire confidence in his honesty or veracity. He received the bonds to sell at 60 cents, for which he was to receive 2 per cent. commission. He sold them for 85 cents, receiving nearly 60 cents of this sum in cash, and certificates of the trust for the balance, worth at the time par or a little under, and has never paid Johnson, from whom he received the bonds. for sale, a single cent. The defendants having purchased the bonds from Coler in good faith are entitled to retain them. Mr. Story says: "If an agent is entrusted with the disposal of negotiable securities or instruments, and he disposes of them by sale or pledge, or otherwise, contrary to the orders

1

of his principal, to a bona fide holder without notice, the principal cannot reclaim them. The reason is that the principal, in all such cases, holds out the agent as having an unlimited authority to dispose of and sell such instruments as he may please." Story on Agency, § 228.

The common-law rule that the purchaser of a chattel acquires no better title than his vendor passed, has no appli cation to negotiable paper. "The possession of such paper carries the title with it to the holder. The possession and title are one and inseparable.' The party who takes it before due for a valuable consideration, without knowledge of any defect of title, and in good faith, holds it by a title good against all the world. Suspicion of defect of title, or the knowledge of circumstances which would excite such suspicion in the mind of a prudent man, or gross negligence on the part of the taker at the time of the transfer, will not defeat his title. That result can be produced only by bad faith on his part. The burden of proof lies on the person who assails the right claimed by the party in possession." Murray v. Lardner, 2 Wall. 110; Hotchkiss v. National Bank, 21 Wall. 354. Tested by these settled rules the plaintiff's case fails. Injunction dissolved and bill dismissed.

STATE OF INDIANA ex rel. RICE v. BALDWIN and others.

(Circuit Court, D. Indiana. February 24, 1881.)

1. ATTACHMENT-UNDER-FILING CREDITOR--RELEASE OF ATTACHED PROPERTY-LIABILITY OF SHERIFF-STATUTES OF INDIANA.

In the state of Indiana an under-filing creditor in an attachment proceeding, not dismissed of record, has a right of action against the sheriff and his sureties for the prior release of the attached property, without notice, under an agreement between the original parties to the attachment suit.-[ED.

Civil Action.

GRESHAM, D. J. The complaint avers that on the twentysecond day of September, 1876, Jason Wilson and Adam

Wolf began an action in attachment in the Grant circuit court against Isaac Crosslet, John B. Graves, Samuel Pugh, and Daniel Mitchell; that on the same day the writ of attachment which came into the hands of Lancaster D. Baldwin, as sheriff, was levied by him on a lot of lumber, shingles, and laths, of the value of $5,000, the property of the attachment defendants; that on the first day of February, 1877, while the suit and attachment proceeding were still pending and undisposed of, the relator, Charles Rice, filed his complaint, affidavit, and bond in attachment, under the proceeding of Wilson and Wolf, and became entitled to the benefit of the same; that on a subsequent day Wilson and Wolf appeared in open court and dismissed their action and attachment; that thereafter, to-wit, on the twentysixth day of September, 1877, Rice recovered judgment against the attachment defendants on his cause of action for $3,619.94, and at the same time obtained an order for the sale of the attached property, and an application of the proceeds to the payment of his debt; that without the authority or orders of the court Baldwin allowed the attached property to be taken from his custody and to be wasted, sold, and otherwise disposed of, and failed and refused, upon proper demand, to deliver the same to his successor in office to be sold under the order of the court; and that Baldwin and the sureties on his bond are liable to the relator for the value of the attached property.

In the ninth paragraph of their answer, after admitting the commencement of the action and proceeding in attachment by Wilson and Wolf, and the levy by Baldwin on the lumber, shingles, and laths, under the writ of attachment, as stated in the complaint, the defendants aver that before the relator filed his complaint, affidavit, and bond, and attempted to become a party to the original proceeding, Wilson and Wolf and the attachment defendants agreed that one Mitchell, the agent of the attachment defendants, should take possession of the attached property, sell the same, and apply the proceeds to the payment of Wilson and Wolf's debt; that, by direction of Wilson and Wolf and the attachment defendants, Baldwin, the

sheriff, permitted Mitchell to take possession of the attached property, sell the same, and with the proceeds, on the eleventh day of January, 1877, pay Wilson and Wolf's debt in full; that on the last-named day it was agreed by the parties, no other creditor having then become a party to the attachment proceedings, that the suit should be at once dismissed; but, by neglect, the same was not done until after the first day of February, 1877, when the relator filed his complaint, affidavit, and bond, as aforesaid, and the attached property was thus sold, the debt of Wilson and Wolf paid, and the agreement for the dismissal of the suit and attachment proceedings entered into in good faith, and without any knowledge that the relator or any other creditor intended to file thereunder.

The tenth paragraph of the answer is in substance the same as the ninth.

There is a demurrer to the ninth and tenth paragraphs of the answer.

Section 165 of the Indiana Code makes a writ of attachment a lien upon the property of the attachment defendant from the time it is delivered to the sheriff. Section 186 authorizes any creditor of the defendant, upon filing the proper affidavit and bond, to become a party to the action and attachment proceeding at any time before the final adjustment of the suit. Section 187 declares that a dismissal of the action or proceeding in attachment shall not operate as a dismissal of the action or proceeding of any subsequent attaching creditor. Section 192 declares that the money realized from the attached property, after paying all costs and expenses, shall be paid to the several creditors in proportion to the amount of their several claims.

In Shirk v. Wilson, 13 Ind. 129, it was held that the claims of other creditors filed under an attachment suit are liens from the time the original writ was placed in the hands of the sheriff.

The records in the clerk's office showed that Wilson and Wolf's suit in attachment was pending, and that the sheriff had levied on property of the attachment defendants when Rice filed his complaint, affidavit, and bond. The plaintiffs