Page:Federal Reporter, 1st Series, Volume 7.djvu/850

 838 FEDBBAL BEPOBTEB. �Wagg their notes, indorsed by Joshua M. and Mary A.. �Wagg, upon which they are chargeable as joint promisors, �and which are overdue and unpaid. The holders of certain �other notes of Irving & Wagg, upon whieh Joshua M. and �Mary A. Wagg are liable as indorsers, are also made parties �defendant to this proceeding. �The assignee of Irving & Wagg appears, and in his answer �admits — �That the claimants are the holders of the " paper of Irving & Wagg, as set forth in their bill ; that a inortgage was made by them to Joshua M. and Mary A. Wagg, but that said mortgage was not recorded until August, 1881, and that at the time of its execution [as he alleges] it was fraudulentJy agreed by the parties to said mortgage that, notwithstand- ing said mortgage was to be given as aforesaid, it sbould be held secret, and should not be recorded; that Irving & Wagg might nevertheless continue manufacturing and purcbasing on credit to be obtained from parties who would be ignorant of the existence of said mortgage, and who would rely on said property as unencumbered for the payment of the debts to be so contracted, and that in the event said Irving & Wagg should at any future time become insolvent, said mortgage should be put upon record, and said future creditors thus deprived of the means of obtaining payment of their several debts ; that in pursuance of this fraud- ulent agreement the mortgage was kept secret, and Irving & Wagg con- tinued in business, purcbasing on credit from parties who gave credit to them mainly on the fact that their property was unencumbered' prop- erty." �It appears that Irving & Wagg failed July 13, 1880, owing nearly $20,000, the most, if not all, of which debts wera ineurred subsequent to the giving of the mortgage. The mortgage purports to convey all the stock, — �" Raw or in process of manufacture, now in their shop, wlth all tha machinery and furniture, and other personal property of whatever de- scription, belonging to the mortgagees, now in their shop ; also all stock and materials now on hand, or which may be hereafter purchased by us and put into said shop for the purpose of being manufactured iato boots and shoes." �The condition of the mortgage is — �•• That if said Irving & Wagg shall well and truly indemnify and sava harmiess said Joshua M. and Mary A. Wagg from and against any and all liability to which they or either of them may be subjected by reason of having indorsed a certain promissory note of even date herewlth, given by said Irving & Wagg to John W. May, for the sum of $600, pay- able in one year, with interest semi-annually at 7 per cent., and shall ��� �