The transfer of seven-sixteenths of the ship Fortitude, to Messrs. Haven, Sheafe, and Hale, on the 15th of January, 1836, was in effect a conveyance in mortgage, with an express power of sale, and may be treated as such. The plaintiff contends that it was void, as against creditors, because, in addition to the indenture declaring the sale, and the conditions and agreements connected with it, an absolute transfer of the seven-sixteenths was taken, and registered at the custom house in Portsmouth.
If that were so, a question might arise, on the facts stated in the disclosure, whether the trustees could be held liable here, the property never having been in their possession in this state. The conveyance was made in this state, but the ship was not then put into their possession, and could not have been so. They were not trustees, on the execution of it. 8 N. H. Rep. 273, Greenleaf vs. Perrin & Tr'ee. She never returned here. The trustees took possession of her in Massachusetts, where this process did not extend. She could not have been sold there, on any execution issued in this case. Were the trustees bound to bring her here, to answer on this process, for the benefit of the plaintiff? Were they bound to bring her here, that the plaintiff might contend, when she was so brought, that their claim to her was void ?
But we do not find it necessary, in the decision of this case, to examine that question, as we are of opinion that the *113broad principle of Coburn vs. Pickering, and other cases cited, however proper it may be in the case of attachment, (and where the vender, whose claim is alleged to be fraudulent, by reason of a secret trust, appears as plaintiff, or defendant, in a litigation respecting the title to the property,) cannot be applied in a suit where the party, who contests the sale as fraudulent, summons the vendee as a trustee of the vender, and has an opportunity, if he sees fit, to examine him on oath relative to the terms, conditions, and circumstances, attending the sale.
In Hutchins vs. Sprague & Trustee, 4 N. H. Rep. 469, where the plaintiff contended that the transfer of the property was upon an express design to defraud creditors, the court held that the trustee could not be charged. The opinion seems, from the report, to have been placed, somewhat, upon the ground that there was, in case of a fraudulent transfer, a locus penitentice ; and that if the vendee assumed bona fide to pay debts of the vender, the fraud, to that extent, was thereby purged. But there was nothing in the facts of the case which could place it on that basis, all the assumption to pay having been made at the time of the alleged fraudulent transfer, and as a part of the agreement upon which the transfer was made. In order to sustain that decision, on the facts upon which it was predicated, it must be held that a transfer, with an express view to defraud creditors, could not, in a trustee process, be held to be void, so as to deprive the trustee of such equitable rights as he might have had in case the goods had been deposited, or pledged without fraud.
It is not necessary, however, to go to that extent, to decide this case, nor do we mean, at this time, to give an opinion upon a state of facts presenting conclusive evidence that the trustee held the property of the principal debtor by a transfer, not merely accompanied by a trust, which was not apparent — not under circumstances merely tending to mislead creditors, and therefore objectionable- — but where the trustee held by virtue of an express fraudulent design and *114transfer. The good faith of any part of such a transfer is not readily perceived, and the opinion in Hutchins vs. Sprague does not settle such a case, although the statement might, perhaps, have been such as fairly to present it.
In the present case no such express design is apparent. If placing upon the record an absolute conveyance of the seven sixteenths of the ship might have a tendency to mislead creditors, and if it might therefore be objectionable, on that account, in case the ship had been attached, in which case no evidence could have been derived from the vendees, in a suit by them to recover the .property — it may be true, notwithstanding, that this conveyance was taken with no design to defraud, but on a supposition that it would more effectually secure their rights.
This form of process is regarded as an equitable action ; and it would not consist with equity to deprive the party of a mortgage security, by reason of a mere mistake in the mode of taking it. 5 Pick. 32, Andrews vs. Ludlow & Tr.; 6 Pick. 474, Ripley vs. Severance & Tr. And the authorities establishing the right to set off on the part of the trustee, to which reference will be made upon another branch of this case, show the equitable rules adopted in this form of action in cases free from fraud.
The plaintiff, however, contends, that if he is not entitled to hold the mortgagees of the seven-sixteenths of the ship, for the whole value of that interest, on the ground of fraud ; he is entitled, under the statute of 1832, to charge them, subject to their right to have their demands satisfied out of the property, and that the seven-sixteenths were of much greater value than the amount of the claims of the trustees.
The statute provides that a person holding property mortgaged, or pledged, may be summoned as trustee of the mortgager, or genera] owner ; and if it appear, on disclosure, or otherwise, that the mortgager has any subsisting right, in law or equity, to redeem the same by the payment of the debt, or performance of the contract or condition, the court *115may order that on tender of the debt, or on the performance of the contract or condition by the plaintiff, within such time as the court may order, the person so summoned shall deliver over the property to the officer, to be holden by him in the same manner as if attached on mesne process; and on default thereof that he shall be charged as the trustee of the principal debtor, to the amount of such property. 2 N. H. Laws 83.
The language of the statute is that the court may make an order; but this is not to be regarded as vesting in the court any discretionary power, to be exercised, or not, at pleasure. It is undoubtedly the duty of the court, in a proper case within the statute, to make such order.
But the plaintiff does not present such a case.
By the mortgage, the trustees had a right, on the return of the ship, to take possession of the share conveyed to them, and in default of payment of the notes, according to their tenor, they had the right to sell, reimburse themselves, and pay all expenses out of the proceeds, and were to pay the balance to Cushing. The mortgage bore date January 15th, 1836, and the notes were payable in four months. The trustee process was served the first of March, before the return of the ship. The notes became due May 15th, about a month after her return. The plaintiff made no tender, and obtained no order by which she could have been delivered to the officer on payment of the money.
It is not very clear that any such order could have been entered up, had a disclosure been obtained, and a motion made for the purpose ; for the ship came into Boston, in Massachusetts, and these mortgagees had, by the mortgage of January 15th, title to only seven-sixteenths of her. Had it not been that two of them were interested in another mortgage of the other nine-sixteenths, it might well admit of doubt whether the court here could order them to bring the ship into this state, for the purpose of delivering seven-sixteenths of her to the officer, unless by the consent of the *116owners of the other nine-sixteenths, who were equally entitled to possession. And notwithstanding two of them were mortgagees, along with others, of the other nine-sixteenths, and thus had a greater interest, the question would still remain, whether the court could have ordered them to bring her here, for such purpose, against the consent of others who were interested and not summoned, and whose rights would be affected by such order.
It may be further remarked, that as mortgagees of the nine-sixteenths, these two trustees, with their co-mortgagees, had the right, on the arrival of the ship, to sell those nine-sixteenths, by the terms of that mortgage, the money being due.
But it is not necessary to settle the questions which might thus have arisen. No such order was made; the condition of the mortgage of the seven-sixteenths was broken, also, by the non-payment; and the plaintiff made no tender of the amount of the debt to the trustees, in order to preserve his rights, even if such tender might have availed without an order of court, for which, however, no express provision is made in the statute.
Under these circumstances, what duty devolved on the trustees, in relation to the plaintiff?
But for the statute of 1832, the trustee process could not have imposed on the trustees any obligation to the plaintiff, with regard to the mortgaged property, without a tender of the debt. The plaintiff had not brought his case within that statute. The condition of the mortgage was broken. The mortgagees, by the express terms of the instrument, had a right to sell, or they might hold — there was no order for payment, or any tender of payment. Was it the duty of the trustees to sell ? Certainly not, unless the trustee process imposed that duty upon them, which it did not. Two of them now swear, that they think the seven-sixteenths could not then have been sold for sufficient to pay the liabilities of that share and the mortgage upon it. If so, they must have had the right to endeavor to obtain the amount of their money, *117by holding the ship for that purpose. Was it their duty to hold her inactive, and rotting at the wharf, until the plaintiffs process should be determined ? Clearly no such duty was imposed by the process, or existed in favor of the creditors of Cushing.
It was under these circumstances, that the trustees united, with others interested, in a charter party. And upon the return of the ship, more than a year afterwards, (October 20, 1837,) she was sold at auction, for less than the amount of the demands charged upon her; the plaintiff having up to that time obtained no order and made no tender.
We cannot, on these facts, now make such order, nor charge the trustees for the value of the ship at that time, even if it had been greater than the amount of their demands, for they then owed no duty to the plaintiff. The charter party was made with the assent of Cushing, and they cannot be held to account for any sum over and above what was obtained by the charter party, and at the auction. Haven, Sheafe, and Hale, must therefore be discharged.
The remaining questions arise on the disclosure of the Piscataqua bank, and upon this many of the remarks already made are applicable.
The bank received of Cushing a conveyance of certain shares in the Portsmouth Company, in pledge, or as collateral security, and a certificate of the stock was taken out in the name of the bank, so that the bank was apparently the owner, but held in pledge. There were several demands due the bank from him, but it does not appear, from the disclosure, precisely how the pledge was originally made. At the first account we have of the shares, they were held as collateral security for a demand exceeding $ 1800. It is not shown that they were pledged for more than this at that time, although it is not said they were not. After this, and before the service of the writ, the bank discounted a note of $> 12.000 on the security of these shares. Subsequent to this, and before the service of the process, also, they discounted other *118notes of Cushing, on which third persons were sureties or indorsers.
The conveyance was not void on account of the bank having taken a certificate as if the absolute owner, for the reasons stated in relation to the ship.
The note of f>12.000 became due, and also others of the notes. The plaintiff obtained no order under the statute, if the case admitted of one. On the 20th of October, 1838, the bank sold the shares. The plaintiff forbid the sale, (except of so many of the shares as might be sufficient to pay the loan of |s 12.000,) and the application of the proceeds of any sale, except for that purpose ; but he tendered no payment.
The money having long been due, the bank had the right to sell all the shares. The evidence of ownership was contained in a single certificate of stock. Cushing made, and could make, no objection. This process could not prevent the exercise of the right, unless the statute of 1832 was pursued, or payment tendered. As suggested before, what operation a tender might have had we do not undertake to settle. It is not to be understood that it could have altered the case.
The shares having been rightfully sold, the money for them came rightfully into the possession of the bank. If it had appeared that the bank held the shares in pledge, to secure all the liabilities of Cushing, the bank would have had the right to appropriate the proceeds to the payment of all his debts contracted before the service of the trustee process. And although this does not appear, the result, on the authorities, must be the same.
A trustee has the right of set-off, or to retain for all demands due him from the principal, contracted before the service of the process, and payable at the time of the judgment; and in some cases the court interpose beyond that.
It has been contended that the bank could retain, and set off, only for debts payable at the time the process was served, but the authorities do not sustain this position. 16 Mass. *119476, Hathaway vs. Russell; 7 Pick. 166, Boston Type Foundry vs. Mortimer & Trustee; 19 Pick. 20, Smith vs. Stearns; 3 Fairf. 117, Man. Bank vs. Merrill & Trustee.
Cushing could not have prevented the bank from setting off all its claims due at the time of the disclosure ; and the plaintiff ought not to stand in any better situation, respecting debts contracted before the service of the process.
If the sureties, or indorsers, on the notes held by the bank, had not been solvent, the right to sell, with the consequent right of set-off, would have been an important security for the bank. It cannot make a difference if they were solvent, and will be relieved by the set-off. The right to set-off exists, notwithstanding there is a surety. 8 N. H. Rep. 539, Mahurin vs. Pearson. As the amount due exceeded the sum received for the shares, the bank cannot be holden.
Trustees discharged.