adjudication upon the entire issue, but it would, as has been done in form, cancel the securities and the record thereof, and it would be effectual for that purpose as between the parties to the action, and yet the securities would remain valid and subsisting as between the trustee in bankruptcy and the plaintiffs. Cook v. Lake, 50 App. Div. 92, 63 N. Y. Supp. 818; Mawhinney v. Bliss, 124 App. Div. 609, 109 N. Y. Supp. 332; Steinbach v. Prudential Ins. Company, 172 N. Y. 471, 65 N. E. 281.

I am also of opinion that the bank was a necessary party to the action, and that the appellant has no interest in the subject-matter thereof. It is not concluded by the stipulation of the defendant Bennett that he was the holder and owner of the bond and mortgage. His official position was not such that he was authorized to speak for the bank on that question, and the agency or trusteeship evidenced by his acceptance of the assignment does not give him such authority, where, as here, it appears that a formal assignment transferring the legal title to the bond and mortgage was executed by him in blank and was intended for the bank, and was delivered to and retained by it. If he had not executed such an assignment, perhaps the bank would be bound by a judgment against him, for he would be deemed to have held the bond and mortgage as agent or trustee for the bank, but that is not the case as presented by this record, for here he appears to have parted with all of his interest in the bond and mortgage. The assignment to the bank was not recorded, and this was doubtless for the same reason which led the bank to take the assignment from Squier in the name of Bennett. Of course, innocent third parties dealing with Bennett in the circumstances would be protected; but Squier knew that the bank was the real party in interest, and, when it further appeared that the legal title had passed to it, as between the parties, as well, the bank should have been made a party defendant. The case presented, therefore, shows that a judgment has been entered, canceling a bond and mortgage, and the record thereof on the service and appearance of a party who has no right, title, or interest therein, and, when it appears that there are two other known parties within the jurisdiction of the court interested, the one as the holder of the legal title as security, and the other as the owner of the equity of redemption, who have not been brought in as parties, and therefore the judgment is not binding upon either of them, and yet interferes with their property in a manner quite prejudicial to their interests.

It follows, therefore, that the judgment should be reversed and a new trial granted, with costs to the appellant to abide the event.

INGRAHAM and HOUGHTON, JJ., concur.

HOUGHTON, J. I concur in a reversal of the judgment for the reasons stated by Mr. Justice LAUGHLIN; but I am of opinion that as against the bank, which should be made a defendant as the real party in interest, the plaintiff has no cause of action whatever. The exemption of a national bank from the usury law applies to collateral given after the indebtedness is incurred as well as to original indebtedness. Schuyler Nat. Bank v. Gadsen, 191 U. S. 451, 24 Sup. Ct. 129,

48 L. Ed. 258. Therefore, if the mortgage was in fact usurious and is to be governed by the usury law of New York state, still an action to set it aside for usury will not lie. But the mortgage sought to be set aside was given upon real property in the state of Rhode Island, which has no usury law. The fact that the mortgage was negotiated in the state of New York did not render it usurious if it was not usurious in the state where the real property upon which it is a lien was situated. The contract of creating a lien on real property must be construed according to the laws of the state where such real property is located. Stumpf v. Hallahan, 101 App. Div. 383, 91 N. Y. Supp. 1062, affirmed 185 N. Y. 550, 77 N. E. 1196. It would thus appear that the plaintiff has no cause of action in any event.

MCLAUGHLIN, J. I dissent. There is ample evidence to sustain the finding of the referee that the bond and mortgage were usurious and void, but it is proposed to reverse the judgment because Squier's trustee in bankruptcy and the American Exchange National Bank were not made parties to the action. Bennett was the record holder of the title to the bond and mortgage, and the plaintiffs had a right to deal with him alone. They could have paid him the amount due and obtained the discharge of the instruments, which he alone could give, without regard for the equitable interests therein of the trustee and the bank. Likewise in this action to have the instruments canceled and discharged because of usury, Bennett, being the only person having any interest in them disclosed by the record, was the only necessary party defendant. Under the circumstances disclosed at the trial, while the trustee might properly have been joined as a party defendant, there was certainly no occasion for joining the bank. The bond and mortgage were assigned to Bennett by an instrument which was recited under seal, and, conceding that the bank was the real party in interest and that Bennett acted only as its agent or trustee, the plaintiffs could not be required to look beyond him, if indeed they could be permitted to do so.

The fact that Bennett some time thereafter executed an assignment in blank of the bond and mortgage did not change the nature of the transaction. This assignment purported to have been executed and acknowledged on the 3d day of January, 1908-the same day the bond and mortgage were assigned to Bennett by Squier, and, according to the testimony, as part of the same transaction. Yet the assignment recites that Sauier's assignment to Bennett had been recorded in Rhode Island on the 7th day of January, 1908. This blank assignment was very obviously for the protection of the bank only, and there is no warrant for the statement that the bank ever held the legal title to the bond and mortgage by reason of this instrument. The referee expressly refused so to find. Moreover, on the 19th of June, 1908, Bennett's attorneys, who were also counsel for the bank "in certain matters," as his trial counsel testified, stipulated that Bennett was the then owner and holder of the bond and mortgage, and thereafter entered into another stipulation whereby plaintiffs agreed to pay to Bennett the interest due without prejudice, and he agreed not to assign the instruments.

There is no merit in the claim that, even if the instruments were usurious, the bank could recover the principal under the provisions of the national banking act. No such defense was pleaded, and, moreover, it does not appear that the bank paid any consideration for the assignment which it took in Bennett's name. It was alleged in the defendant's bill of particulars that the bank as consideration extended the time for payment on obligations of certain corporations in which Squier was interested, but the attempt to prove such extension at the trial failed. All that was shown was that Squier assigned the bond and mortgage as additional security for his prior indebtedness to the bank. That being so, such a defense would not defeat the action, even if had been pleaded and we could now consider it.

Conceding, however, that the trustee and possibly the bank should properly have been made parties defendant, I do not think the judgment should now be reversed for failure to join them. The defect was raised neither by demurrer nor by answer. The defendant did move at the trial to dismiss the complaint on the ground that the trustee had not been made a party, but the proper practice, as suggested by the learned referee at the very commencement of the trial, would have been to move for an adjournment to the end that the other parties might be brought in. This the defendant's counsel carefully refrained from doing. So far as the defendant Bennett was concerned, therefore, the defect was waived. Code Civ. Proc. §§ 498, 499. The judgment is not a complete determination of the controversy in so far as it does not, in form, determine the rights of the trustee and the bank as between themselves, but it is a complete determination so far as the plaintiffs are concerned, and they were not bound to consider the interests of the trustee and the bank. The trustee and the assistant cashier of the bank who represented it in this transaction testified as witnesses at the trial, and therefore had notice of the action. Had they desired a complete determination of the controversy in this action, they might have taken steps to bring about such a result. The case is quite different from that of Steinbach v. Prudential Ins. Co., 172 N. Y. 471, 65 N. E. 281. There an action was brought to reform and recover upon an insurance policy. The persons to whom the policy was upon its face payable had not been made parties, and it did not appear that they had any notice or knowledge of the action. The court held that although they were not, of course, bound by the judgment, the judgment in favor of plaintiffs should be reversed, "not necessarily for the protection of the defendant, as it had neglected its rights, but for their own protection, as well as the seemly and orderly administration of justice." Here the only person who had any interest in the action so far as appeared from the record was Bennett, the owner and holder of the legal title to the bond and mortgage, and he was made a defendant as already indicated. All the parties in interest knew of the pendency of the action, and had ample opportunity to protect their rights. So far as I can see, the only possible controversy which might hereafter arise would be from the trustee. attempting to hold the bond and mortgage valid against the bank and Squier's indebtedness to it secured to that extent. But the bank could have obviated this by giving the trustee notice of the action and

calling upon him to defend, and there are many indications that it did do so. For the reasons stated, the judgment against Bennett was binding upon the bank, and, if it did not give notice to the trustee, at least that is no reason why the judgment should now be reversed.

To reverse the judgment now would be to promote and encourage the abuse pointed out in the dissenting opinion of Haight, J., in the Steinbach Case, and the case at bar does not present by any means the same reasons which controlled the majority of the court in the Steinbach Case. There has been a thorough trial of the action upon the merits. The plaintiffs never refused to join the trustee so as to make the judgment in form binding upon him, since no proper application was ever made. They should not be deprived of the relief to which, upon the record before us, they are clearly entitled, simply because the judgment may affect the rights of other parties which could properly have been determined in this action, when such other parties had notice of the action and apparently acquiesced in its trial upon the merits, and no steps were taken to have them made parties. I think the judgment should be affirmed.

BAYLEY V. LAWRENCE et al.

(Supreme Court, Appellate Division, First Department. June 18, 1909.) 1. WILLS (§ 506*)-CONSTRUCTION-BENEFICIARIES "HEIRS."

Testatrix gave all her estate to two sisters for life, with remainder to the children of the sisters and a brother, or to their heirs in case of the death of any of the children before the survivor. Held, that the word "heirs" referred only to children, and did not include the widow of a nephew dying before the surviving sister; the word "heirs" when applied to succession of personalty meaning next of kin, and, when applied to real estate, meaning persons so related to one by blood that he would take the estate in case of intestacy.

[Ed. Note. For other cases, see Wills, Cent. Dig. & 1090-1099; Dec. Dig. § 506.*

For other definitions, see Words and Phrases, vol. 4, pp. 3241-3264; vol. 8, pp. 7677, 7678.]

2. WILLS (§ 506*)-CONSTRUCTION-ESTATES DEVISED.

Testatrix gave all her property to her two sisters for life, with remainder to the children of the sisters and a brother, or to the heirs of any of the children in case of death before the survivor. Held, that the widow of a nephew dying before the surviving sister took no title to the realty, because that title never vested in the nephew indefeasibly, because his title was divested by his death.

[Ed. Note. For other cases, see Wills, Dec. Dig. § 506.*]

3. WILLS (§ 525*)-CONSTRUCTION-RELATIONSHIP OF BENEFICIARIES.

Where the beneficiaries in a will are of different degrees of relationship, the presumption ordinarily is that the two classes should not be benefited equally, unless the intention to do so can be clearly gathered from the will.

[Ed. Note. For other cases, see Wills, Cent. Dig. §§ 1129-1139; Dec. Dig. § 525.*]

4. WILLS (§ 533*)-CONSTRUCTION-BENEFICIARIES.

Testatrix gave all her property to her two sisters for life, with a remainder, on the death of the survivor, to the children then living of the *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

sisters and their brother, "or to the heirs of either or any of them in case they or either or any of the said children should die before such survivor," to be equally divided per capita. The quoted words were added by the draftsman after the will had been engrossed. At the time of the execution of the will, testatrix had two sisters and a brother, and nephews and nieces, but no grandnephews or grandnieces. Held, that the distribution per capita referred to a distribution among the nieces and nephews only, with a substitutional gift of the share of any deceased nephew or niece to his or her issue.

[Ed. Note.-For other cases, see Wills, Dec. Dig. § 533.*]

Appeal from Special Term, New York County.

Action by Sarah Bayley against Richard Lawrence and others for the construction of the will of Mary E. Bayley, deceased. From a judgment construing the will, defendants appeal. Affirmed.

The following is the opinion of Mr. Justice Dowling in the court below:

Mary E. Bayley died in the city of New York on the 27th day of December, 1889, leaving a will executed July 20, 1867, with a codicil thereto executed April 27, 1868, which were duly admitted to probate by the surrogate of the county of New York March 13, 1890. She left her surviving two sisters, one brother, and certain nephews, nieces, grandnephews, and grandnieces. At the time of the execution of the will and codicil her next of kin consisted of two sisters, a brother, two nephews, and a niece. This action is brought to obtain a construction of the decedent's will upon two specific points, and the paragraph of the will which calls for construction is one which was altered after the engrossing thereof and before its execution. This paragraph is as follows; the words inserted being underscored: "I do hereby give, devise and bequeath to my sisters, Magdalena Bayley and Anna B. Bayley, all my estate, real and personal, of which I shall die seized or possessed, or to which I may be entitled or in which I may be interested at the time of my death, to have to hold to them for and during their joint lives, share and share alike; and upon the death of either of them I do hereby give, devise and bequeath all my said estate, real and personal, to the survivor of them for and during her natural life, and upon the death of such survivor I do hereby give, devise and bequeath all my said estate, real and personal, to the children who may then be living of my sisters, Josephine Bayley Lawrence and Ellen Eliza Halsey, and of my brother, Joseph Bayley, or to the heirs of either or any of them in case they or either or any of the said children should die before such survivor to have and to hold to them, their heirs and assigns forever and to be equally divided between them, share and share alike, per capita and not per stirpes."

The questions to which the opinion of the court is sought are: (1) Who are included in the word "heirs," used in the portion of the will quoted, and, more specifically, does Elizabeth W. Lawrence, the surviving wife of Joseph Bayley Lawrence, a deceased nephew of testatrix, take any interest in her property under the gift to the "heirs" of said Joseph Bayley Lawrence? (2) Do the "heirs" of the deceased children of the Josephine Bayley Lawrence, Ellen Eliza Halsey, and Joseph Bayley, referred to in the will of Mary E. Bayley, take each a share equal to the shares of the surviving children of the parties named, or do the "heirs" of deceased children of the persons named take only the shares that their father or mother would have taken if they had survived Anna B. Bayley, the surviving life tenant under the will of Mary E. Bayley? More specifically, inasmuch as only two of the nephews and nieces of the testatrix to whom interests were given under the will have died (that is, Joseph Bayley Lawrence and Joseph B. Halsey), the question is whether the children of Joseph B. Halsey and Joseph Bayley Lawrence, who survived Anna B. Bayley, the surviving life tenant, will each take a share in the estate of their grandaunt, Mary E. Bayley, equal to the share taken by Isabella L. Beekman and the other surviving nephews and nieces of the testatrix. As to the first •For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes