author: King, President. —

text:
    Robert Earp’s Will.
    When the intention of a testator can he clearly ascertained from the 'whole, it is always the law of the case, unless such intention conflicts with certain general rules limiting the extent of testamentary power.
    If one construction manifestly tends to destroy the symmetry of the will, and to produce results inconsistent with the whole scheme of the disposition of the testator’s property as proposed by him; another harmonizes all his dispositions and accomplishes his intentions in its results ; the latter is generally found to be the true will of the testator. In giving such a construction, a Court should call to their aid the circumstances under which the will of the testator has been made, the state of his property, his family, and the like.
    When a bequest is made to a wife of an annual sum in lieu of her dower, it is a charge on the whole estate, where no particular fund is provided for its payment. A preference is given to her over all other legatees; for her election to accept the legacy places her in the situation of a purchaser for a valuable consideration of what is given her by the will.
    Where the annuity is charged on a particular fund, both the principal and interest of the fund are applicable to its payment; though other legatees may be disappointed by the diminution of the principal.
    If, however, the interest of the fund on which an annuity in lieu of dower is charged, is adequate to its payment, the principal must be left intact to respond to the other legatees over.
    Where a testator by his will gives an annuity out of á piece of land, but does not in terms make it a charge upon the rents; yet it will be so, and fall first upon the life-estate, and any deficiency will remain a charge on the fee and be raised thereout.
    The bequest of a specific sum by a testator, as a special partner in business, carrieB with it the accruing profits, if any existed, where it is a continuing partnership, and the legatee takes such interest whether enhanced in value by profits, or diminished by losses.
    Where interest is due on the public debt, and the annuitant dies before the day of payment arrives, it will go to the remainder-man, and cannot be apportioned.
    In cases of mortgage investments the rule is different, and in such cases the interest accruing between the respective days of payment has been apportioned between the tenant for life and the remainder-man. The distinction between mortgages and funded debts is clearly recognised, because interest on a mortgage becomes due from day to day, and the mortgagee may call in his money when he pleases, and the interest must be computed up to that day, as no particular time is fixed. But the law fixes the time of payment on funded debts.

      June 4.
    This case came before the Court on exceptions to the report of an auditor; various questions' were considered, which it is deemed not necessary to introduce into a statement of the case. A copy of the three several items in the will of Robert Earp, deceased, on which the Court expressed an opinion, is all which it is believed the reader will require for a clear understanding of the points decided by the Court.
    “ I give and bequeath unto my beloved wife, Mary Ann Earp, all my household furniture, silver-plate, whatsoever absolutely, to be disposed of as she may think proper, and also the annual sum of three thousand dollars, to be paid to her in four equal quarterly payments, by my said hereinafter-named executors, out of my residuary estate, during her natural life.”
    “My will and desire is, that the'business of the firm of Earp & Brink shall be continued as it now is until the 1st day of January, 1849, and no longer. And I hereby direct my said executors, in ease of my death before that period, to charge the sum of twenty thousand dollars put into the business of said firm by me as a special partner, together with the interest thereof, to be estimated semiannually to my son, George Earp, Jr., as a part of his share of my residuary estate hereinafter disposed of. And I do also hereby authorize and direct my said executors upon my decease to charge any sums of money, stocks, or loans, which I may at any tipie have advanced to my son, Robert Earp, Jr., as shall appear by my books, together with interest estimated as aforesaid, to his account, as part of his share of my residuary estate.”
    “ Tenth: I hereby give, devise, and bequeath all the rest, residue, and remainder of my estate, whatsoever and wheresoever, real and personal, unto my said hereinafter-named executors, their heirs, executors, administrators, and assigns, to and for their only proper use and behoof for ever, in trust nevertheless, to and for the following uses, interest, and purposes, viz. in trust to collect the rents, incomes, and interests, and to pay one equal fourth part thereof unto my brother, Thomas Earp, for the use and benefit of my son, Robert Earp, Jr., during his natural life ; and one equal fourth part thereof unto each of my other three children (naming them), during their natural lives respectively, and upon the decease of either of my said children, their interest as respects one equal fourth part of the principal of my said residuary estate to grant, convey, assign, and transfer the same unto such person or persons as such deceased child may direct or appoint by any last will or writing, in the nature of a last will to be by him or her executed in the presence of two or more credible witnesses; but in case of the decease of my said son Robert without regaining the use of his reason, then in trust as respects the one equal fourth of my said residuary estate, to and for the only proper use and behoof of his surviving sisters and brothers, under and subject to the trust hereby declared of and concerning the other three-fourths of my said residuary estate,” &c., &c.
    The testator died on the 17th day of November, 1848, leaving an estate valued at about $200,000.
    The cause -was argued by Mr. Randall for the exceptions, and by Mr. JE. K. Price in support of the auditor’s report.
    It was contended by Mr. Randall: 1. That the legacy of $3000 to the wife was to be paid out of the residuum or a general fund of the estate, and not out of the annua] income arising therefrom; that such was the intention of the testator. 2. That George Earp, Jr., in the legacy left to him, was entitled not only to the $20,000 put into the firm of Earp & Brink by his father as a special partner, but also to all the profits made by said firm up to its dissolution, if any had been made; and cited 2 Keen, 274; Harcourt v. Morgan, 4 You. & Ool. 312; Park v. Marchand, 1 Harper’s Reps. 124; 2 Willis on Exec. 1232-3; 3 Penna. Reps. 384. 3. That the dividends due on bank-stock and on money, and on stock in the Crane Iron Works, which had fallen due, but not paid before the death of the testator, should not go into the residuary estate; that the dividends should be apportioned. He cited 2 P. W. 502, 176; 3 Atk. 260, 502; 3 Brown, 101; 2 Yesey, Sr. 677; 1 Swanst. 349; 4 Beavan, 549. 4. That the shares in Lehigh Crane Iron Works, incorporated under the Act of the 16th of June, 1836, were real estate. That all stock held either in railroads, canals, or turnpike roads, were real estate, and the interest or property which the holders of the stock held therein was to be treated as real estate in Pennsylvania; that such was the common law upon the subject,, and we had no statute altering it.. To this point he cited 2 Yesey, Jr.' 652; 3 Peere W. 357; 2 lb. 137; Math, on Ex. 9; Law Journal, 127; 2 Conn. L. R. 567; Wells v. Cowles, 6 Dana, 167; 4 New Hamp. Rep. 480 ; 16 Wend. 328; 4 Ohio Rep. 515; 3 Paige, 302; 2 Watts, 443; 2 W. & S. 119; 4 Watts, 341; 3 Kent Com. 340, 402.
    Mr. Price, in reply,
    contended, 1. That it was clear from the will that the testator meant that the $3000 to be paid to the widow should be taken from the annual income, and not from the principal. To hold otherwise, would destroy the equality of the distribution. That in years it might exhaust the whole estate, and then there would be no fund out of which to pay the annual sum.
    2. I will not admit that dividends are ever apportioned, but when declared they go to the executors; and when so declared, are a part of the assets of the estate: Cited 2 Ashm. 524-5 ; 4 Conn. Rep. 182. Interest on loans from corporations is calculated up to the death of the testator: 3 Atk. 444.
    3. The stock in the Crane Iron Works is personal estate, and not real. It was the intention of the Act, authorizing such corporations, that it should be. It was an Act to encourage the manufacture of iron with mineral coal. The general meaning and design of the law was, that the shareholders were to have their interest as personal property. The 6th section of the statute gives authority to the executors and administrators of a deceased stockholder the right to vote, which would never have been the case if it was considered real estate. He cited Ward on Joint Stock Companies, 39 Law Lib. 288-9; top page, 171.
   The opinion of the Court was delivered by

King, President. —

The testator in the first clause of his will gives the usual direction for the prompt payment of his debts and funeral expenses. In the second item, he bequeaths all his household furniture and plate absolutely to his wife, and “ also the annual sum of $3000, to be paid to her in four quarterly payments, by his executors, out of his residuary estate, during her life.” In the third, fourth, fifth, sixth, seventh, eighth, and ninth clauses, he gives various particular bequests and directions as to other portions of his estate. In the tenth item, he bequeaths “ all the rest, residue, and remainder of his estate, whatsoever and wheresoever, to his executors in trust for the following purposes: To collect the rents, income, and interest thereof, and pay one equal fourth part to his brother, Thomas Earp, for the use of the testator’s son, Robert Earp, while he shall remain of unsound mind, or to such person as shall from time to time be his trustee or committee; but in case he shall at any time regain the use of his reason, then and thenceforth to pay the same to his said son Robert, during his natural life; and one equal fourth part to his other three children, viz. Hannah Earp, Annie Earp, and George Earp, Jr., during their natural lives respectively. And upon the death of either of his said children, as respects his or her interest in one equal fourth fart of the principal of his said residuary estate, to grant, convey, and transfer the same unto such person or persons as such .deceased child may direct or appoint by any last will. Rut in case .of the decease of his son Robert without regaining the use of his reason, then in trust, as respects the one equal fourth part of his said residuary-estate, to and for the use of his surviving brothers and sisters; under and subject to the trusts declared of and concerning the other three-fourths of his residuary estate. In case of the death of either of his said children, other than the said Robert, without making such an appointment, then in trust to grant, convey, and assign one fourth part of the principal of his residuary estate unto such person or persons as by the laws of Pennsylvania would have been entitled to the same, if the said child had been legally seised thereof in his or her right, and died intestate. In the final clause of the will a power is given to his executors to sell all or any part of his estate that they should deem expedient, and reinvest the same in certain designated public securities, or in real estate.

The first question presented to our consideration is, whether the annuity to Mrs. Earp is to be paid out of the income of the invested residue, or whether it is payable out of the principal of the estate. If payable out of the income of the estate, the annual income of each child will be diminished a sum equal to one-fourth of Mrs. Earp’s annuity. If payable out of the principal of the estate, that principal will be diminished annually $3000, for as long a period as Mrs. Earp may survive.

Our duty is to ascertain, as accurately as is practicable, what was the intention of the testator in this respect. That ascertained, gives the law of the case, when such intention does not conflict with certain general and qualifying rules, limiting the extent of testamentary power, which considerations of public policy have established. It is from the want of precision in the manner of expressing such intentions, that have arisen the almost infinity of cases that fill our law books in relation to the construction of wills. The difficulty in these cases does not so often arise from doubts existing as to the intention of the testator, looking at his will as a whole, as from the appearance of inconsistency between that whole and isolated and detached parts. When, however, from the want of accuracy and precision in the expression of a testator’s intention, in a part of his will, the mind is embarrassed with doubts as to what that intention truly was in the particular item under consideration, we can derive most valuable assistance from viewing the instrument as a whole; from comparing one part with the other; and from ascertaining which of two proposed constructions of the equivocal and disputed item will best effectuate the testator’s general intent. If one construction manifestly tends to destroy the symmetry of the will, and to produce results inconsistent with the ■whole scheme of the disposition of his property proposed to himself by the testator, while another harmonizes all his dispositions and accomplishes all his intentions, we may feel reasonably assured that in the latter is to be found the true will of the testator.

We have also the right in such inquiries to call to our aid the circumstances under which the will of the testator has been made, the state of his property, his family, and the like: Powell on Devises, vcl. 2, p. 6.

If the will of Robert Earp is tested by these clear and practical rules, there seems to be no real embarrassment in ascertaining his intention as to the fund from which the annuity to Mrs. .Earp is to be paid.

It is admitted that the estate left by Mr. Earp is ample, and that the income of the residue, after satisfying his particular bequests, is adequate to pay the annuity bequeathed to his wife, and to furnish a generous provision for all his children. Erom the Structure of this will, it is manifest that the testator had three leading objects in contemplation. The first, was the providing for his wife an adequate provision during her life. The second, the securing a similar independence to each of his children. And the third, the conservation of the principal of his estate, for distribution among his posterity, after the necessities and comforts of his immediate offspring had been duly cared for. How can these objects be best accomplished ? Surely not by giving to his children all the income of his estate, and annually abstracting from the capital a sum equal to Mrs. Earp’s annuity. Such a construction might defeat entirely, and certainly would affect some or all of the testator’s most cherished objects. Although it is not a very probable, yet it is a possible event, that the annual abstraction of Mrs. Earp’s annuity from the capital of the estate might absorb the greater portion of it, if her life should be greatly extended, and if the investments of the estate should happen to experience the deterioration which war civil or foreign, commercial convulsions, and similar national calamities have operated in other countries, and may operate in our own.

Is the exposure of Mrs. Earp’s annuity to such contingencies, remote as perhaps they may be, the way to effect the intention of her husband, in securing her a munificent provision for life? Surely not. Again, as to the children; although the payment of their mother’s annuity out of the principal of their father’s estate would, for the present, increase their revenue, yet, after her death, this revenue would be reduced in proportion to the sum of the capital withdrawn to pay the annuity; an inconvenience which would be greatly increased, if any such decrease of the aggregate of the capital should he accompanied with a deterioration in the productiveness of the securities. Was this result in the contemplation of Mr. Earp ? Ho; because he had in view the securing to each of his children an annual and adequate income, and this could only be effected by leaving the capital of the estate intact. One of the testator’s objects would certainly be affected by the proposed withdrawal annually of $3000 from the capital of his estate. That is, the direction that the one-fourth of the “principal of the residue of his estate” should be held by the trustees for the uses of the will of each of his children, or, in default of either making a will, for those of their respective representatives under the intestate laws. Every dollar withdrawn from this “principal,” diminishes the property to be received by these appointees, or representatives to whom, in terms, the principal of the fourth part of the estate bequeathed for life to each of his children, is to go when the life-estates are spent. That such an event was not within the contemplation of the testator, and is absolutely opposed to his intentions, is apparent from the bequest under which the children claim. For, after bequeathing to each of them the income of one-fourth of his residuary estate, he directs, as to each, that “ one-fourth of the principal of his residuary estate” should go to their appointees by will, or legal representatives; meaning thereby to extend his bounty beyond his own generation. How could this clear intent, thus clearly expressed, be accomplished, if the principal of the bequests, of which his children were to enjoy the usufruct only for life, could, from year to year, be diminished by abstractions for the payment of a life annuitant ?

The literal phraseology of the bequest of this annuity, if read in connexion with the whole will, does not justify the construction insisted upon by the exceptants. The annuity to Mrs. Earp is to be paid, by the terms of the bequest, out of the residue of the testator’s estate. What is meant by the residue of an estate, when the phrase is used in a will disposing of all a testator’s property ? It means the rest and remainder of the estate, after satisfying the ■ legal obligations with which it is charged, and all particular legacies. This residue in the present estate is to be held and invested by the executors as trustees, in the manner and on the terms presented by the will. It is out of this residue that Mrs. Earp’s annuity is directed to be paid, and not out of the general estate. If the direction had been to pay it out of the general estate, or the will had been silent as to the source from which payment was to be received, some plausibility would be given to tbe argument which treats the annuity as a general legacy, and the residue, that which would remain after satisfying the annuity, in common with all the other general legacies. But it is out of the residue that the annuity is to be paid, that is, out of the active fund formed from the mass of the estate, for the general purposes of his will, after the various particular legacies are first paid. In any other view of the subject, how can the residue of income divisible among the children ever be ascertained? If what is meant by the residue of the testator’s estate in this will is the balance of principal after the widow’s annuity is deducted annually from it, such residue can never be accurately ascertained during her life. Every difficulty on the subject is, however, avoided, in considering that the intention of the testator was, that after his debts and particular legacies were paid, the balance of his estate should form an active fund, out of which the annuity to his wife should first be paid, and the remaining income divided among his children in the manner directed by the will. It is conceded, that the inconvenience or absurdity of a devise is no ground for varying the construction, where the terms of it are unambiguous. But where the intention is obscured by .conflicting expressions, it is to be sought rather in a rational and consistent, than in an irrational and inconsistent purpose: 2 Powell, 7.

So far, the question has been considered simply as one of the intentions of the testator. But it may be considered in another point of view, leading to a similar and perhaps less problematic result. The bequest of this annuity to Mrs. Earp is in lieu of her dower. It is so, as well from the clear intent of the testator, as by force of our Act of Assembly, which makes all devises and bequests by a husband to his wife operate in bar of her dower, unless otherwise expressed. Mrs. Earp has accepted the bequest, and received the first quarter of her annuity. Now, on what is the bequest to a wife of an annual sum in lieu of her dower a charge, where no particular fund is provided for it ? It is a charge on the testator’s whole estate, giving her a preference over all other legatees ; for her election to accept the legaey places her in the situation of a purchaser, for a valuable consideration, of what is given to her by the will: Burridge v. Bradyell, 1 Peere Wms. 127; Blower v. Morrel, 2 Vesey, Sr. 420. When charged on a particular fund, both the principal and interest of that fund are applicable to its payment, though other legatees may be disappointed by the diminution of the principal. The fund upon which such an annual sum or annuity in lieu of dower is charged, is a surety for its payment, and chancery will most carefully conserve it for this purpose. Where, however, the interest of the fund on which an annuity in lieu of dower ‘is charged, is adequate to its payment, the principal must be left intact to respond to the legatees over. For why should they he disappointed by the useless abstraction of the principal ? If the widow receives her annuity, the source from whence it comes, whether from the principal or interest of the fund on which it is charged, is immaterial, except so far as the annual absorption of capital deteriorates the security of her annuity. In this case the progress of such deterioration would be rapid; for, in less than seventeen years, $50,000, the principal of $3000 per annum, would he abstracted from the capital of the fund. In general, the interests of the legatees over of such a fund would he against infringing on the capital. But here the residue, after paying the 'widow’s dower, is devised for life to children, and the ultimate and absolute remainder to their appointees or representatives. The interests, therefore, of those tenants for life, conflict with what will be that of those to whom the principal must ultimately belong. The payment to the widow from the principal, relieves truly the children’s portion of the interest of the residue from the charge of the widow’s annuity; hut it operates with disastrous effect on those to whom the testator intended the principal of his estate should go, after the life interests were exhausted. These are indeed not before the Court— not, perhaps, in being; but does that make it less the duty of this Court to protect those interests ? If the testator, with a provident affection for his descendants, as well as towards his immediate offspring, desired that his bounty should extend to the former, why should not his will in this respect be as sacred in the eyes of a Court as in any other ? His intention is clear; its object is lawful; and no Court should permit it to be infringed upon by this ingenious method of paying an annuity out of principal.

The authorities on this subject in the books are not direct; because, except in a case circumstanced like the present, the interest of immediate legatees in remainder, and the security of the annuitant, alike would prevent the agitation of the question raised here. But still the authorities sufficiently indicate the usual and ordinary course of chancery in cases like the present.

Thus, in Swallow v. Swallow, 1 Beavan, 432, note, the sum of ¿6400 a year, payable half-yearly, was bequeathed by the testator to Elizabeth Swallow, for life, charged on his whole personal estate. By a codicil he gave her a further legacy of ¿6100 per annum, payable out of another fund. The Court ordered that the dividend on $3333.68, which had been transferred into the name of the Accountant-General, should be paid to the legatee to answer the annuity of ¿6100. And afterwards ordered that the dividends on ¿68000 Navy five per cent, annuities should be paid to her to answer the growing payments of the annuity of ¿6400. The interest on the Navy annuities having been reduced, and the revenue therefrom consequently diminished, a sufficient sum of the principal was ordered to be sold from time to time, to pay the annuity in full. The idea of paying the ¿6400 annuity out of the principal, although the whole personal estate was charged wdth it, does not seem even to have been suggested. In Hoge v. Lenen, 2 Beavan, 432, a similar order was made. In Stamper v. Pickering, 9 Simons, 176, the testator bequeathed his real estate, charged with an annuity, to his wife in lieu of dower. The land having been sold, and the income/imd produced by the sale thereof being inadequate to pay the wife’s annuity, the deficiency of income was ordered to be made up out of the capital.

In Closon v. Lawrence et al., 3 Edwards’s Rep. 48, it was ruled, that although a will that gives an annuity out of a piece of land does not in terms make it a charge upon the rents, yet it will be so, and fall first on the life-estate; and any deficiency will remain a charge on the fe.e, and be raised thereout. “ The will,” says the Yice-Chancellor, “ does not say in terms out of the rents and profits, but in such case the accruing rents and profits will be considered the primary source for the payment of the sum; and in that respect would fall on the tenant for life. If the rents and profits were sufficient, the tenant for life was bound to keep down the annuity, and if the payment wrere continued after the determination of the life-estate, it would devolve upon the remainder-man to pay it, as the whole estate generally, both for life and fee, stands charged by the will with the payment. So, if, during the existence of the life-estate, the rents and profits were insufficient to satisfy the amount, the deficiency would be a charge on the fee, to be raised by mort-1 gage or otherwise out of the capital of the estate.” This case in principle is identical with the present. The difference being, that in Closon v. Lawrence, the charge in favour of the annuitant was on specified real estate, whereas in our case, the annuity is charged in favour of the widow, on all the residue of the estate, real and personal. There are cases of frequent occurrence in the English Chancery as to how far the Court will extend the rights of annuitants on the principal of an estate charged therewith, in the event of any inadequacy of income. Such as Arundell v. Arundell, 1 Mylne & Keene, 316; Davis v. Walter, 1 Sim. & Stu. 463; Kendell v. Russell, 3 Simons, 424; Burridge v. Row, 1 You. & Coll. 183; May v. Bennett, 3 Russell, 87. From these cases useful. deductions might be drawn, illustrative of the principle now under consideration. But this judgment has already been too much extended to justify us in elaborating further on this point.

On the whole we are of opinion, that whether the will of Robert Earp is considered with regard to the intention of the testator,- or to the general rules of equity regulating the administration of such bequests, the annuity to Mrs. Earp is payable in the first, place out of the income of his estate.

The second exception to the report of the auditor arises thus: The testator, at the time of his death, was a special partner in the firm of Earp & Brink, in which business concern he had placed a capital of $20,000. In the firm, George Earp, his son, was a partner. By the eighth clause in his will he directs that the business of the firm of Earp & Brink should be continued as it then was, until the 1st of January, 1849, and no longer. And he directs his executors, in case of his death before that period, to charge the sum of $20,000, put into the business by him as a special partner, together with the interest thereof, to be estimated semi-annually to his son George Earp, as a part of his share of his residuary estate thereinafter disposed of. He died November 17, 1848, and before the time he directed the business to be closed, and of course the executors were required by the terms of the will to charge the amount placed by him in the firm to his son George. George Earp claims to consider this as a bequest by his father to him of all his interest in the firm of Earp & Brink, as special partner, and that it carries with it all the proportion of the testator’s profits in that concern, as Avell as the gross sum of capital invested by him therein. The executors of Mr. Earp claim all profits in this business that may have accrued to the testator up to the time of his death, as part of his estate, and treat the bequest to George Earp as if it were a simple bequest.of the $20,000; and in this view they have been sustained by the auditor.

In this, however, the Court do not concur. In their opinion, the bequest of the $20,000 invested by the testator in the firm of Earp & Brink to his son, was a specific bequest of his interest as special partner in that firm, and intended to advance him in business. This bequest carried with it the accruing profits, if any existed. Profits in a subsisting partnership, the accounts and affairs of which are not closed up, are quite different things from interest on invested capital. The former are merely problematical, depending on the prosperous results of the trade, which can never be absolutely ascertained until the business is closed, the debts and liabilities of 'the partnership satisfied, and accounts taken; a bequest, therefore, of an interest in a continuing partnership, carries with it to the legatee the interest such as it is, whether enhanced in value by profits, or diminished by losses. If on the final winding up of the business, which it seems has not yet actually taken place, although it appears to have been profitable, losses and not profits should appear to be the result of it, George Earp must be charged with this bequest as $20,000 advanced to him of the capital of his patrimony, and has no reclamation on the general estate to indemnify him from such loss. It is true that this bequest to George Earp is not in terms a bequest of the testator’s whole interest in the firm of Earp & Brink as special partner; yet it is a bequest of athe sum of $20,000 put into the business of the firm as special partner,” which the Court think was only another mode of expressing his entire interest therein as special partner. His claim against the firm, as a creditor thereof, is not of course embraced in this bequest. As to the question of interest on this $20,000, this sum must, from the time of the transfer of the testator’s interest to George Earp, be considered as so much of the residue of his estate, invested for benefit of the trust, and the interest accruing thereon credited to the general income account of the residue, and does not form any part of the testator’s general estate.

The next question raised on the exceptions arises thusThe testator was the owner of stock in the Miners’ Bank; of shares in the Lehigh Crane Iron Works; of loans of the Lehigh Navigation and Chesapeake and Delaware Canal Companies; and of the United States. The dividend on the Miners’ Bank stock had been declared on the 7th of November, payable after the 17th; the dividend on the Lehigh Crane Iron Works were declared on the 6th- of November, and the interest was due in September. These dividends and this interest are clearly part of the testator’s general estate. They were sums of money due to the testator, fully ascertained and liquidated. The day of payment was indeed postponed, to suit the convenience of the debtors, but they were, from the time the dividends were declared and interest became due, the fixed and vested property of the testator. If he had been a mere tenant for life of these loans and stocks, the remainder-man could not certainly have claimed these dividends and this interest, against his executor; and they equally belong to his executor, where he is the absolute proprietor of the investments: 4 Conn. Rep. 182.

The executors also claim that the dividends on the Crane Iron Works, and the interest on the Lehigh and Chesapeake and Delaware Canal loans falling due after the testator’s death, shall be apportioned, and that so much of dividend and interest as was earned between the last dividend and the testator’s death shall be decided to be part of the principal of his estate. This is resisted on behalf of the legatees, who claim all this dividend and interest as part of the income of the residuary estate, and applicable as such according to the trusts of the will. Questions of this kind most generally arise between the representatives of tenants for life of invested funds and remainder-men. The former claiming that the accruing interest should be apportioned, and paid to them up to the death of their intestate or testator ; the latter claiming the entire interest falling due after the principal fund had become their absolute property.

In reference to accruing interest on the public debt, this question has long been settled in England in favour of the remainder-man. The earliest case seems to be Pearly v. Smith, 3 Atk. 260, decided in 1755. There one had a life interest in South Sea annuities, which he sold. He died before the Christmas dividend became due; and it was held by Lord Hardwicke, that this dividend could not be apportioned in favour of the purchaser of the life interest, treating the case like one of a common annuity payable half-yearly, where the annuitant dies before the half-year is completed. In Sherrard v. Sherrard, 3 Atk. 502 (1747), it was held by the Master of the Rolls (Eortescue), that where money is directed to be laid out in land, and in the mean time invested in government securities, though a tenant for life die in the middle of the half-year, the interest should not be apportioned, but paid over to the reversioher. The same question came again before Lord Hardwicke, in Wilson v. Harmer, 2 Ves. Jr. 672 (1755). An authority in favour of apportionment, from Viner’s Abr. tit. Apportionment, being quoted, Lord Hardwicke expressed his surprise at it, saying that he had never heard of such a rule before, and that he took it “ that these dividends go to the person to whom they were due at the time.” He, however, consulted the Accountant-General, who said that it was not the practice to make a division of the interest, and that this had been determined by his lordship in 1744. A decree was subsequently made in favour of the reversioner. In Rashleigh v. Master, 8 Brown Ch. Ca. 101 (1790), the point came before Lord Thurlow, who said that the Court would not apportion dividends ; parties consenting to lay out money in stock, must abide the consequences. In cases, however, of mortgage investments, a different rule seems to prevail; and in such, the interest accruing between the respective days of payment have been apportioned between tenants for life and remainder-man. This doctrine seems first asserted in Edwards v. Warwick, 2 Peere Wms. 171, decided by Lord Macclesfield, in 1723. The distinction is recognised by Lord Hardwicke, in Pearly v. Smith, supra, where he says, “if the security had continued a mortgage, the claimant would have been entitled to the demand he now makes, because there interest accrues every day for forbearance of the principal, though, notwithstanding, it is usual in mortgages to make it payable half-yearly.” In Sherrard v. Sherrard, the same distinction between mortgages and funded debt is recognised. In Wilson v. Harman, this distinction is again adverted to by Lord Hardwicke, who puts it on this clear and intelligible principle, that “interest on a mortgage becomes due from, day to day, and mortgagee may call in his money when he will, and then the interest must be computed up to the day; because no particular time is fixed; but by Act of Parliament, the dividends on' these anuuities are made payable on certain days, like rent.” We know, at common law, that annuities were not apportionable: Banner v. Lowe, 13 Vesey, 135, was the case of a controversy between the administrator of a tenant for life of the interest of a bond payable half-yearly, claiming an apportionment of accruing interest on the bond, up to the death of his testatrix, and the residuary legatees of the bond, claiming the entire interest since the last half-yearly payment to the tenant for life. The claim of the administrator of the life recipient of the interest was asserted on the ground that the interest of the bond accrued de*die in diem. Lord Eldon sustained this position, and decreed the apportionment, considering the stipulation for payment of interest half-yearly immaterial. It is not said whether the bond in this case was or was not due, but we may infer that it was due, as Lord Eldon decides the case on the general rule; which general rule the cases cited show to have been established in cases of mortgage loans due, where the creditor could at any time have called in the money, and where, of course, the interest accrued to him daily. Mr. Coxe, in his note to Hay v. Palmer, 2 Peere Wms. 503, denies that Edwards v. Warwick, the first of these cases, was a case of apportionment, “ since interest is, in fact, due on a mortgage from day to day. But dividends on the public funds being made payable on certain days, are like rent, and not to be apportioned.”

The executors in this case admit that these authorities establish the claim set up by the residuary legatees, so far as respects the dividends accruing from the funded debt of the United States. But as to the funded debt of the Lehigh Navigation and Chesapeake and Delaware Canal Companies, they insist that these must be regarded as analogous to debts owing by individuals on bonds or mortgages, and that interest accruing on them is consequently apportionable between tenants for life and remainder-man.

The ground upon which this difference in the rights of proprietors in different interests of government and corporation loans is supposed to rest, is on some attribute of sovereignty which requires this distinction, in order the better to facilitate the payments at the public treasury. As there is a vast amount of property held among us in the shape of loans created by the United States and our own state, those of other states, loans of municipal corporations, cities, districts, counties, and loans of private corporations, the inquiry as to the true rule by whieh the rights of the representatives of tenants for life and reversioners in such loans are to be regulated, is a practical question of real value. It certainly is not to be desired that our Court should have two rules to suit a subject; one applicable to national loans and loans created by our own state, and another as to all other funded debts created by other states, or by our own, or other municipal or private corporations. Uniformity and consistency in the rules of action in Courts of justice are things only next in importance to their absolute correctness. If, however, we follow out the principle on which Courts of Chancery have regulated the question before us for more than a hundred years, as manifested by a steady and unbroken current of authority, we shall be relieved from all embarrassment on the subject. It is a mistake to suppose that the rule in equity had any original connexion with government policy or treasury convenience. From the time of its establishment by Lord Hardwicke, in 1744, such an idea is not intimated in any decided case. And this for the very simple reason, that the treasury had no interest on the subject. The loans were personal 'property, and the interest payable to the party in whose name the stock stood, or to his personal representatives, if deceased. As to how a trustee in whose name stock stands, the interest of which is for the use of a tenant for life, and afterwards for a reversioner, should distribute the interest when received; how, or in what portions he should pay it to the representatives of life tenant and to reversioner, are questions with which the treasury has no connexion.

The true reason for the establishment of the rule is to be sought elsewhere. Funded debt is one of the contrivances of modern ingenuity — whether for good or for ill, this is not the place to discuss. When called into existence, the idea of its permanence and security naturally made it a favourite investment for money, the interest of which was applicable to a series of persons for a long time. And soon the necessity followed for a rule regulating the manner in which interest accruing on such investments should enure, where a life tenant who had an interest in them had died between the dividends. Courts of Equity adopted, as the nearest analogy to be found in past precedents, the rules of law and equity in cases where a life annuitant died before the day of the payment of the annuity had arrived. In such cases apportionment in favour of the representatives of life tenants never had been allowed, neither at law nor in equity: Roper on Leg. vol. 1, ch. 14, p. 589; Croke Eliz. 515; Manning v. Randolph, 1 South. N. J. 144; Franks v. Noble, 12 Ves. 484. This last case being an interest in the nature of an annuity, and not an annuity properly so called. There seems to have been but one exception to this rule, and that arose in annuities given for maintenance, where apportionment has been allowed. Most probably, as in cases of legacies given for maintenance, by parents to children, where interest is allowed from the testator’s death, from presumed intention of the donor: Hay v. Palmer, 2 P. Wms. 501. The rule now adopted by this Court is that which prevails in New York: Clapp v. Astor, 2 Ed. 383, which is this: “ In general cases of periodical payments becoming due at intervals, and not accruing de die in diem, there can be no apportionment. Annuities, therefore, and dividends from money in the funds, are not apportionable; but interest upon money put on bond and mortgage, notwithstanding it is expressly made payable half-yearly or quarterly, may be apportioned; although it is reserved at fixed periods, the same accrues and becomes due de die in diem for the forbearance of the principal; hence there is no difficulty in making the apportionment for a given time.”

No question has been made but that the interest of this testator’s wife and children in the residue of his estate commenced with his decease. Payments were made to each on that principle shortly after his death, and are credited to the executors in the distribution account filed by them, and have not been questioned. An annual sum given to a widow in lieu of dower, as tbe annuity to Mrs. Earp clearly is, and a proportionate sum of the income of tbe residue to children,^must be considered as immediately enuring to the benefit of tbe legatees, otherwise they might be made to want the first year, in order to add to the principal of the residue; which in such bequests can never be presumed to have been in the testator’s contemplation: Beckford v. Tobin, 1 Vesey, Sr. 308. In Cledon v. Northcote, 2 Vesey, Sr. 346, in the case of his son in a state of unsound mind, the testator cannot be supposed to have intended to leave him one moment without support from the income of his share of the residue.

The Court, for these reasons, differ from the conclusion of the auditor, and are of opinion that the interest on the investments and dividends on the stocks of the testator, falling due after his decease, are part of the income of the residue of his estate, applicable to the trusts of the will respecting the residue, and not part of the general estate.

Before the auditor, a question was made, whether the testator’s stock in the Lehigh Crane Iron Works was personal or real estate. The auditor was of opinion that the question did not properly arise in the cause, but still expressed his opinion that this stock was personal and not real estate. The Court agree with him that there is nothing in the case before us which calls for the decision of that question. But we decline expressing any other opinion on the subject. The solution of that question is of no practical value in the cause as now presented. It may never arise at all between the parties. When it does, will be the appropriate time to express our opinions upon it. The report of the auditor must be modified according to the principles of this judgment. It is proper to add, in conclusion, that this proceeding has been an amicable one, instituted to settle doubts entertained as to the true construction of Mr. Earp’s will, and to guide the executors and trustees in the future administration of the estate.


source: Caselaw Access Project

license: Public Domain

text:
    Estate of James Burke.
    After a bond fide distribution by a trustee, for creditors, of funds in his hands, under the decree of the Court having jurisdiction of the account, he is protected against third persons claiming adversely to the trust. Such adverse claimants are bound to come into the Court and assert their claim. Eor that is fully competent to determine whether the funds in the hands of the trustee are truly part and parcel of the estate or not.
    An assignment for the use of creditor's, not recorded within thirty days, according to the requisitions of the Act of the 24th of March, 1818, is not absolutely void, but only voidable at the election of the creditors. As between the assignor and assignee, and such creditors as do not elect to avoid such unrecorded assignment, it is good and effective.
    Where a creditor does an act affirming the assignment, his election is made, and he is estopped from afterwards impeaching it.
    It is a settled principle that a creditor may conclude himself from objecting to the omission of recording an assignment within the period prescribed by law. The main question in such cases is, as to what will be deemed sufficient evidence of an election to take under the assignment, and waive the objection ¡which, if taken in time, would invalidate it.
    Where a creditor suffers a long time to elapse after the assignment is made and recorded; makes no objection to its validity; and, after the assignee files his account, appears in Court and files specific objections to the correctness of the account, but complains of no omission in the recording of the assignment, but bases all his exceptions upon the regularity of the account, and the improper settlement of the affairs of the estate, and claims as a creditor of the same: this is satisfactory evidence that he has elected to claim under the assignment, and obtain the-benefits which may arise from the same.
    When an election is once made, it is irrevocable. The record of an assignment is a public record, and a creditor is bound to know whether the requisitions of the law have been complied with as to its being recorded in time.
    The Court of Common Pleas, when distributing the funds in the hands of a trustee under a voluntary assignment, are acting as a Court of Equity, and have the power to prevent a suitor bound to submit to their decrees, from vexing others with actions where the subject-matter has been fully decided.
    Where a creditor had appeared and filed exceptions to the validity of an assignee’s account, and it was referred to an auditor, and he then appeared and objected to certain portions of tlie account, but afterwards filed a petition setting forth the assignment was invalid because it was not recorded within thirty days, and alleged that he had attached the funds in the hands of the assignee, the Court dismissed the petition, and decreed that the money should be distributed.

      June 4.
    This ease arose on a petition in the Common Pleas, filed by James Murphy, asking that the funds in the hands of Burke’s assignee might not be distributed, for reasons fully set forth therein; but as all the facts which gave rise to the questions of law determined by the Court, are so fully set forth in the opinion delivered, it is deemed unnecessary to state them more in detail.
    The case was argued by S. V. Smith, Esq., for the petitioner, and Mr. Stille, for the assignee.
   The following opinion was delivered by

King, President. —

James Burke, on the 24th day of April, 1848, executed to William Dickson a general assignment of his estate in trust for the benefit of his creditors. This assignment was recorded on the 25th of May, 1848, the thirty-first day after its execution. The assignee took possession of the assigned estate, and reduced it by sales into money, out of which he defrayed the expenses of executing the tru'át. On the 13th of June, 1849, he filed his account in the office of the Prothonotary of this Court, notice of which was given to the creditors of the assignor, according to law. On the 7th of July, 1849, James -Murphy, a creditor of the assignor, entitled to claim under the assignment, filed a number of exceptions to the confirmation of this account, complaining of excesses of credits claimed by the assignee and insufficiency of debts charged against him. Matters so rested in this Court until the 28th of January, 1850, when the accounts were referred to an auditor, to audit, settle, and adjust, and report distribution of the balance in the hands of the assignee. On the 6th of September, 1849, two months after Murphy had filed his exceptions to the assignee’s account, and while they were still pending, he instituted an action in the District Court against Burke, the assignor, and on the 10th of the ensuing November, obtained a judgment against the latter for $1339.85. On ■ the same day this judgment was obtained against Burke, Murphy sued out his attachment execution against the latter¿ in which writ he made Dickson, the voluntary assignee, garnishee. The object of this proceeding was to take advantage of the fact that the assignment had been recorded one day too late.

On the 18th of February, 1850, the auditor met the assignee, creditors, and others interested in the estate, pursuant to notice. Among others appeared James Murphy, by his counsel; not,however, to claim a dividend of the assets in common with the other creditors, but to object to any distribution of them, while his attachment, under which he claimed the whole, was pending and undetermined. The auditor, however, proceeded to make distribution of the estate, from which James Mupphy was of course excluded, as he did not see fit to present his claim; supposing, perhaps, that he occupied a better position-, claiming against the assignment. The report of the auditor was filed on the 1st of April, 1850, to which is annexed a series of exceptions filed by Murphy, which, in effect, amount to a denial of the right of the auditor to make distribution of Burke’s estate while the attachment was pending.

On the 4th of June, 1850, Murphy filed his petition in this Court, in which he states the facts of having obtained judgment against Burke on the 10th of November, 1849; of his having that day issued his writ of attachment execution against Burke as defendant and Dickson as garnishee ; and that the property on which the attachment was levied in the hands of Dick&on as the property of Burke, was the same which it is now proposed to apportion among the creditors of Burke according to the report of our auditor. The prayer of the petition is, that this Court may stay all further proceedings in the matter of the accounts of William Dickson, assignee of James Burke, until the question of the right of Murphy to maintain his attachment is tried at law in the District Court, where it is pending, and where such proceedings have been had therein that the cause is now at issue and ready for trial.

This application seems to have arisen from the doctrine of the Supreme Court in Weber v. Samuel, 7 Barr, 500, in which that Court most correctly determined that after the bond fide distribution by a trustee for creditors, of funds in his hands, under the decree of this Court, the decree protected him against third persons claiming adverse to the trust; such adverse claimants being bound to come into this Court to assert their claim; and this Court being fully competent to determine whether the fund in-the hands of the trustee was truly part and parcel of the trust estate, or whether it properly belonged to the party claiming adverse to the trust. The manner of this Court’s procedure in this class of cases being regulated by the course of Courts of Equity.

'An assignment for the use of creditors not recorded within thirty days according to the requisitions of the Act of the 24th of March, 1818, is not absolutely void, but only voidable at the election of the creditors. As between the assignor and assignee and such creditors as do not elect to avoid such unrecorded assignment, it is good and effective to albintents and purposes. Any judgment-creditor who elects to repudiate the assignment may levy on the assigned property to the extent of satisfying his judgment. The rest of the estate, however, remains in the care of the assignee for the purposes of the trust. In a class of cases like the present, in which the creditor has not recovered a judgment before the property is actually sold and turned into money by the assignee, the creditor can undoubtedly come into this Court and claim our aid to obtain payment of his debt from money in the hands of the trustee. Or perhaps he may levy an attachment execution upon the money in the hands of the assignee: as such money only represents the property on which he could have specifically levied his execution, had such property remained in specie in the hands of the assignee. But as an unrecorded assignment is not a thing ipso facto void, but voidable only at the election of a creditor of the assignor, the creditor must take care that he does no act affirming it. If he does an act affirming it, his election is made, and he is estopped from impeaching the assignment either in this Court or elsewhere. To permit a party to first claim under such a trust, and then to change his ground and assail it, is alike contrary to natural as well as artificial equity.

The principle is clear, then, that a creditor may conclude himself from objecting to the omission to record an assignment in trust, in consequence of having elected to claim under it. The only difficulty existing in this class of cases being, as to what is to be deemed sufficient evidence of an election to take under the assignment, and to waive the objection, which, if interposed in time, might have invalidated it. In the present case, the act of election to take under the assignment is a single, but it is an unequivocal one. The petitioner, during a year after the making of the assignment, made no attempt to impeach it; and even then, when the assignee had rendered his account, the petitioner filed specific exceptions against its confirmation. Without these exceptions, or without a motion to refer the account to an auditor for adjustment, it would, according to the course of the Court, have been absolutely confirmed. If the petitioner had not meant to come in under the assignment, why should he have come into Court and placed his exceptions on the record to the confirmation of the accounts ?

These exceptions do not in any way complain of the omission to record the assignment. They are predicated on the theory that the accountant had claimed credits, that he was not entitled to demand, and omitted debts with which he was properly chargeable. What did this mean, if the exceptant did not intend to claim under the trust ? One who meant to repudiate the legal validity of the assignment would certainly not have adopted this course. It is tr-ue that when the accounts came before the auditor for adjustment, more than nine months afterwards, the exceptant appeared and claimed the funds under the attachment execution issued by him in November 1849. It is true that three months after his exceptions filed he brought his action to recover his debt against the assignor, and recovered a judgment on which his attachment of November 10th, 1849, was founded. Still, his election being once made, was irrevocable. He knew, or he was bound to know, that the assignment had not been recorded in due season, although it was in fact recorded but one day too late. The record of an assignment is a public record, and a creditor is just as much bound to know that an assignment has not been recorded within the period required by law, as an assignee is bound to know his obligation to duly record it. The case of Farnham v. Burroughs, 1 Dickens, 63, is a direct authority illustrating the principle on which this case rests. That was a decree for an account of debts, and for creditors to come in before the Master, and debts to be paid out of the personal estate and real estate devised for that purpose; if deficient, liberty to apply when the defendant, the heir-at-law, an infant, attained twenty-one, to have the deficiency raised out of legal assets descended. The defendant, who was a bond-creditor, came in under the decree, and obtained a commission to prove his debt, but finding the personal estate and equitable assets insufficient, he went no further, but when the infant attained twenty-one, he brought an action against him on the bond. The heir filed a bill for an injunction. Lord Hardwicke held that the defendant having come in under the decree in the cause, had submitted to the terms of it, and had in effect made his election to proceed in that Court, and he therefore enjoined him against proceeding at law.

The case of Adlum v. Yard, 1 Rawle, 163, rests essentially on the same principle. There an assignor made an assignment which contained provisions to delay creditors, and which was therefore void, under the statute of the 13 Eliz. Yet a creditor, having received a dividend under the assignment, was for that reason es-topped from questioning its validity in a subsequent attachment issued by him against the estate of the fraudulent assignor in the hands of his assignee. This was not, like the present, the case of a mere formal omission to record an instrument in due season, but a case in which a statute pronounced the deed void, because, in opposition to an express enactment for the suppression of frauds, “ any one,” says Chief Justice Gibson in that case, “may waive the advantage of a law introduced for his own benefit; and I cannot imagine why creditors may not ratify a contract fraudulent, only as to themselves, even in anticipation of a benefit.” “ The doctrine of election,” says he, “is more analogous to estoppel than confirmation, and an estoppel may arise as well from matter in pais as matter of record.” In the same case, the same learned Judge denies that the doctrine of election is inapplicable to creditors. It is well, perhaps, to remember, that, in the present case, the operation of adopting even a strict rule as to the effect of an election, works that which equity most delights in, viz. equality. On the other hand, the success of the petitioner’s effort is to give him all the assets to the exclusion of all the other creditors, whose claims against the assignor are equally meritorious. The decree that the law and justice of the case seems to demand of us, is, that the petition of James Murphy be dismissed, and that the account be referred back to the auditor with directions to hear and determine upon Murphy’s exceptions, and to award to him a dividend of the assets of the assignor, proportionate to that awarded to the other creditors. We are aware that the District Court may adopt a different view of the effect of Murphy’s acts, and that that Court may not regard them as amounting to an election to take under the assignment.

But, according to Weber v. Samuel, we are now acting as a Court of Equity, and have the power to prevent a suitor bound to submit to our decree, from being vexed with other actions arising from the subject on which we adjudicate. For that purpose we can and will award an injunction, if that becomes necessary, forbidding the petitioner to further prosecute his attachment against the assignee. No evil or injustice can arise from this course. If our views of the law are right, then our decision should furnish complete indemnity to the assignee acting in obedience to it. If it is wrong, then it can be corrected, on appeal, by the Supreme Court. On the contrary, if the assignee should be subjected to the judgments of two Courts, one of which might conflict vrith the other, a state of things might readily arise not creditable to the administration of justice. Nor has the petitioner any just right to complain of this course. He has asked our action to restrain the assignee from making a dividend, which we consider the latter bound to make, the petitioner’s application to the contrary notwithstanding. It follows, of course, that the assignee should be protected in doing that which we refuse to restrain him from doing. If authority is required for so plain a proposition, it is furnished by Farnham v. Burroughs, 1 Dick. 63, where Lord Hardwicke enjoined a creditor from proceeding at law to recover against an heir, where he had previously elected to go against the legal and equitable assets of the ancestor, applicable to the payment of the debts of the latter.


author: KiNG, President. —

text:
    Palmer v. Graham.
    It is a general rule that Courts of Equity mil not entertain jurisdiction for the specific execution of agreements, respecting things merely personal in their nature. Yet this rule is limited to cases where a compensation in damages furnishes a complete and satisfactory remedy. But in cases where there exists an entire uncertainty in any calculation of the damage for the breach of a personal contract, or the measure of damages is purely conjectural, equity will entertain the ease. In such a case, the remedy at law is inadequate and inefficient.
    If a vendor sell his place of business and the good-will of his trade, and in his contract of sale, stipulate not to carry on his trade within certain defined limits; a Court of Equity will enforce the specific execution of such a contract, and at the suit of the vendee will, by injunction, restrain the vendor from carrying on his trade within the place specified in the agreement.
    So where a partner sells liis interest in the good-will of a trade or business, and, on receiving a compensation therefor, agrees not to commence a similar trade or business in the same vicinity, a Court of Equity will restrain him by injunction from prosecuting the same.
    In such cases equity entertains jurisdiction by compelling a specific performance of the contract, because the complainant can obtain complete and perfect justice.
    So where P. sold his stock and good-will in a business to G. for a specified price on credit, with an agreement that if the property was not paid for within a specified time, it should be returned to him with all the new customers whom G. should obtain in the course of his conducting the business; and G. did return the property, with the names of the old and new customers, when G. started the same business on the old route, and supplied the old and new customers thus returned to P.: The Court awarded an injunction against G. to restrain him from such improper acts, in violation of the original agreement, as he had agreed to return the property embracing the good-will in statu quo.

    But a contract for the sale of a good-will does not in itself involve any obligation on the vendor not to exercise the same trade. If the vendee of such good-will desires to protect himself from such a contingency, he should do it by an agreement.

      June 30.
    This was a bill in equity, filed by Palmer v. Graham, in which the complainant set forth, that he had a horse, wagon and harness, and cans for holding camphine oil, an article of merchandise, with which appliances he had for some time,before been in the habit of supplying persons residing in certain parts of Philadelphia, in certain streets, all mentioned in the hill; that in the course of this dealing he had obtained a number of customers, as persons who were in the habit regularly of purchasing from him their supply of the article; that by this course of trade, and his attention to the business, he had acquired a valuable property and good-will or custom to himself; that the value and profits were f350 per annum. Under these circumstances, Graham being desirous of purchasing the horse, wagon, cans, &c., and his interest in the good-will, applied to Mm therefor, when a contract in writing was made, whereby the complainant agreed to convey to the respondent, the horse, wagon, cans, &e., the route or good-will, and his right to supply the customers on the same, for the price of $ 300, which the respondent agreed to.pay ; and further agreed, that he would keep up said horse, wagon, and route, the custom or good-will, &e., and make such additions to the custom as lay in his power, for the space of twelve months, and make weekly payments for the price of the property; and in case the money was not paid within that time, he further agreed to return the horse, wagon, cans, &c., and a correct and full list of every customer on said route, and forfeit all that he should pay on the contract.
    It was stated in the bill that the complainant agreed to put the respondent into the immediate possession of the property, and that he did so ; and the respondent took the possession of the same, and made sales to customers on the route for a long time ; and that he continues to do so. That some time in October, 1849, the complainant having only received five dollars on account of the sale, and finding that Graham did not comply with his agreement, it was agreed to rescind the contract so made between the parties, when the complainant was to have back the property again, and the full enjoyment of his right to the good-will or route, and the benefit of supplying the customers on the same; and in addition, the customers that the respondent had made in pursuance of the original agreement. That the articles of property were so returned to him. But said Graham having become acquainted with the customers on said route, originally transferred to him under the agreement, and others whom he had made by reason of the transfer, he refused to re-transfer the route, good-will and custom, or the list of his customers, as he was bound to do. It -was averred that he still continues to supply the same customers in the same manner and on the same route; by reason of which the complainant was deprived of the route, good-will, custom, and advantages of said trade, as well as the price agreed to be paid therefor. A copy of the contract was attached to the bill.
    It was prayed in the bill that the respondent should make out a full and complete list of the customers in the habit of purchasing camphine from him, who lived on the route sold, and be ordered to deliver the same to the complainant, and that he should account to him for the profits which had been made by him in said business, before and since the rescission of the contract. And also that said Graham should be restrained from further carrying on said trade of siipplying the customers with camphine within the limits of the route so sold, and from supplying any customers whom he had obtained along the same in the course of his trade carried on under said contract. There was also a prayer for general relief.
    An answer was filed by the respondent, in which he admitted the contract as set forth in the bill, and that he did not comply with it, and paid but five dollars thereon, and that the same was rescinded; the horse, wagon, &c., returned, together with a list of customers on the route. It was also stated in the answer, that the respondent had before been engaged in the same business, and that since the rescission of the contract, he had been supplying some of the persons whose names were included in the schedule or list transferred to him by the complainant under the original contract, and that they live on the route so transferred under the article of agreement, and that he was now carrying on said business along the same ; but denied that under the contract he was prohibited from so doing.
    A motion was made for an injunction, and the case was argued upon the bill and answer under this application by Messrs. Morris and M’Murtrie for the plaintiff, and Mr. Doran for the defendant.
   The opinion of the Court was delivered by

KiNG, President. —

This case comes before us on bill and answer. The facts are few and simple. The plaintiff was the owner of a horse, wagon, and the necessary appliances for supplying cam-phine to persons desirous of purchasing the same. He had commenced and prosecuted the business for some time, and had obtained the custom of various persons living in the southern part of the city, whom he supplied regularly with camphine at their houses. Having established this route, he sold his horse, wagon, and appliances, together with the good-will of the route so established by him, to the defendant on a credit. It was agreed between the parties, that if the terms of the contract were not complied with, and payment made according thereto, the defendant should return to the plaintiff the horse, wagon, &c., together with the list of customers on the route, with such others as he should have in the mean time acquired. The defendant not having made the stipulated payments, returned the horse, wagon, &c., together with the list of customers, to the plaintiff, according to the terms of his contract. But he immediately recommenced the business, and continued to supply the customers on the route originally established by the plaintiff, and who were embraced in the list furnished to him by the latter, at the time of the original contract of sale. This, the plaintiff insists, is a fraud practised on him by the defendant; and he asks that the latter should be restrained, by injunction, from further supplying the customers on the route so unfairly obtained.

We can entertain no doubt as to what was the true intent and meaning of the contract between these parties. It was, that if the defendant should either pay the consideration money in the time and manner prescribed, or surrender the property contracted to be sold to him, which not only embraced the horse, wagon, and other mere appliances of the trade, but the good-will and custom of the plaintiff, on the route established originally by his enterprise and industry. It is true that the defendant did surrender the appliances of the trade, and the list of customers originally furnished him, but he retained the really valuable element of the business, the good-will. While he professed to return to the plaintiff his property in statu quo, he really abstracted from it, for ■his own benefit, that which constituted its permanent value. That the plaintiff could have maintained an action at law for this breach of good faith, cannot be doubted. But has he not also the more effective remedy in this Court, of compelling the specific execution of the contract, and of restraining the defendant by injunction from any further violation of it ? It is true, that, as a general rule, equity will not entertain jurisdiction for the specific execution of agreements, respecting things merely personal in their nature. Yet this rule is limited to cases where a compensation in damages furnishes a complete and satisfactory remedy. But in cases where, there exists an utter uncertainty in any calculation of the damages arising from the breach of a contract personal in its nature; where the measure of damages is purely conjectural, equity will intervene; because, though there may exist a remedy at law, yet that remedy is inadequate and inefficient.

The nearest analogies to a case like the present, are to be found in bills brought to prevent a vendor from setting up a trade in the vicinity of a place, where he had formerly carried on such trade, the good-will of which he had sold, under an agreement not to establish a similar trade within certain limits defined in the agreement. In such cases equity has enforced the specific execution of the contract, by enjoining the vendor against setting up such a trade within the prescribed limits, on the ground of the inadequacy of an action at law to give the party aggrieved a full and perfect remedy for such a breach of good faith. Thus, in the case of Harrison v. Goodman, 2 Madd. Ch. Rep. 198, the Vice-Chancellor, Sir Thomas Plumer, restrained a retiring partner, who had agreed on receiving a compensation for his interest in the good-will of the trade, not to commence a similar trade in the same vicinity. Again, in Williams v. Williams, 2 Swanst. Rep. 253, a coach-master had sold his share of the business to his partner, with an undertaking not to be concerned in any coach running from Reading to London, or prejudicial to the business which he had sold. On a bill filed by the purchaser, complaining that the defendant had lately begun to run a coach from Pangbourne, about six miles beyond Reading, to London, and from London to Pangbourne through Reading, Lord Eldon awarded an injunction restraining the defendant from running any coach from London to Reading and back, and back again from Reading to London.

In each of these cases, an action at law could have been sustained for the breach of the agreements ; for, being covenants restraining the exercise of a trade in a particular place, and not covenants in general restraint of trade, they were valid. Still, however, equity entertained jurisdiction, because it was only by compelling a specific performance of the agreement that the plaintiffs in these cases could obtain complete and perfect justice. In principle, we can perceive no distinction between these cases and the present. In them, the vendor stipulated to leave the trade, in the places designated, in the undisturbed enjoyment of the purchaser of the good-will, and violated his contract by commencing the trade in the same place. In this case the purchaser, according to the true meaning of the contract, stipulated, on his non-compliance with the terms of payment, to surrender the appliances of the trade and the good-will to the vendor. And, instead of a bond fide compliance with his contract, according to its spirit, he sets up the same trade in the same place, and continues to supply the plaintiff’s former customers. In effect taking away from the latter his trade as effectively as if he had possessed himself of it by a bond fide payment of the purchase-money, according to the terms of the contract. In such a case, although an action at law might lie, yet such an action is subject to all the objections of inadequacy and inefficiency, and the measure of damages therein would be equally uncertain and conjectural as in the cases cited, where equity has given relief, because of the want of fulness in the common-law remedies.

It is important that the principle on which the Court acts should not be misconceived. We are aware that a contract for the sale of a good-will does not involve in itself any obligation on the vendor to forbear the exercise of the same trade: Shackle v. Baker, 14 Vesey, 463; Crutwell v. Lye, 17 Ib. 335; Kennedy v. Lee, 3 Merivale, 441. If the vendee of a good-will-desires to protect himself from such a contingency, he should do so by express covenant or agreement. The basis of our action is, that according to the true intent and meaning of the contract between these parties, the defendant bound himself to deliver back the thing sold him in statu quo, if he should think fit to avail himself of the locus gconitmtiee reserved when he made the bargain. In continuing to supply the plaintiff’s original customers, he has actually retained the most valuable element of the thing sold to him; and it is to compel the full and complete execution of the agreement according to its spirit, that the Court intervenes by its decree for specific performance.

It is ordered that an injunction be awarded to restrain the defendant, his servants and agents, from further furnishing eamphine to such of the persons set forth in his answer as are, by the said answer, admitted to have been customers of the plaintiff at the time of the contract entered into between the parties for the sale of the horse, wagon, and list of customers set forth in the bill; and that the defendant pay the costs.


author: King-, President. —

text:
    John Mellish’s Estate.
    It is an undoubted principle in equity, that, as between cestui que trust and trustee, in eases of direct trusts, no length of time is a bar. From the privity existing between them, the possession of the one is the possession of the other. But the trusts so protected are those technical and continuing trusts which fall within the proper and peculiar jurisdiction of equity. This doctrine does not apply to trusts arising by implication of law.
    But, although direct, continued technical trusts, which are not cognisable at law, and proper only for the jurisdiction of equity, are not affected by the statute of limitations, nor by the doctrine of the presumption of payment or satisfaction ; yet it does not follow that in such cases a Court of Equity will always interfere to grant relief. On the contrary, it has been the constant course of equity to discourage stale demands, and often to refuse their interference. •
    Nothing can call a Court of Equity into action, but the concurrence of good faith and reasonable diligence; where these are wanting, the Court is passive, and does nothing. Laches and neglect are always discountenanced.
    Where, in any particular case, peculiar circumstances exist, which account for and will excuse or justify the delay, the Court will not then refuse its aid because of mere lapse of time.
    No precise rule can be laid down when a delay will be excused or justified; each case must depend upon its own peculiar circumstances.
    A petition for a citation against an assignee to settle liis account, or trustee, must be verified on oath or affirmation, in order to authorize the issuing of a citation. It is a ground for dismissing such an application, when no affidavit is attached. Such is the rule in relation to applications for a citation against an executor, administrator, or guardian, in the Orphans’ Court.

      July 15.
    This case a,rose on a petition filed in the Court of Common Pleas by one James Gibson, alleging that he was a credit- or of one John Mellish, who made an assignment to Thomas Hulme, in 1820, of all his property, for the benefit of his creditors, and alleging that the said assignee had never filed any account of his trust, and praying for a citation in the usual form; hut there was no affidavit alleging that the facts set forth were true.
    Thomas Hulme filed his answer, and alleged many reasons why he should not he required now to file an account: one was that the petition was not sustained by an affidavit; another, and the main ground, was, that more than twenty years had rolled by since the execution of the assignment, and therefore the law presumed that the estate was fully settled.
    The cause was argued by Mr. Ingraham, for the petitioner, and Thomas I. Wharton, for the respondent.
    Mr. Wharton relied upon Ingraham v. Cox, ante, page 70, decided by this Court as conclusive; and cited Secherist v. Sechcrist, 1 Penna. R. 419; Foulk v. Brown, 2 Watts, 209; 2 Penna. R. 262.

      Mr. Ingraham contended that tbe case of Ingraham v. Cox could be distinguished from the present; that it was decided on different principles, and therefore was not conclusive on the point.
   The opinion of the Court was delivered by

King-, President. —

This case comes before us on the petition of James Gibson, setting forth that, on the 23d day of June, 1820, John Hellish, then of this city, map-maker, made a general assignment of his estate and effects, for the benefit of his creditors, to Thomas Hulme; that this assignment was accepted by said Hulme, and was that day recorded according to law; that the said Hulme, immediately upon the acceptance of the said assignment, entered upon the duties of the trust thereof, and received of said assigned estate a large amount of property; that he has never settled any account as assignee, and that the petitioner is a creditor named in the assignment, and entitled to a distributive share of the estate conveyed in trust thereby. The petition concludes with the usual prayer for an account.

The respondent in his answer sets forth various reasons why he should not account; but that upon which he most depends, and which gives rise to the essential point involved in the case, is the length of time which has elapsed since this assignment was executed ; being now upwards of thirty years. The petition assigns no reason for this extraordinary delay, either arising from the nature of the trust, the manner in which it has been executed, or the circumstances and condition of the 'petitioner. Nor has anything of this kind been interposed by way of replication to the defendant’s answer. On the contrary, the case has been argued as exhibited by the petition and answer.

The question then presented by the pleadings is, whether the Court will entertain a proceeding against an assignee in trust for creditors, to compel the settlement of an account thirty years after the date of the assignment; and where the petition for the decree for such account states no fact or circumstance explaining the reason of such delay; and where the petitioner does not even think proper to present such explanations, by way of replication to the answer, after the respondent has actually urged this great lapse of time as a reason why he should not account.

To sustain this application, therefore, we must go the length of determining that mere lapse of time affords no answer to an application made by a creditor under a general assignment, seeking to compel the assignee to settle an account. The argument of the learned counsel for the petition went fully to this extent.

It is an undoubted principle of equity, that, as between cestui que trust and trustee, in cases-of direct trust, no length of time is a bar: Beckford v. Wade, 17 Vesey, 97; Hovendon v. Lord Annesley, 2 Sch. & Lef. 633; Chalmer v. Bradley, 1 Jacob & Walker, 67; Kane v. Bloodgood, 7 Johns. Ch. Rep. 90. For, from the piivity existing between them, the possession of the one is the possession of the other. If the trustee does not perform his trust, his possession operates nothing as a bar, because his possession is according to his title. But the trusts so protected are those technical and continuing trusts which fall within the proper and peculiar jurisdiction of equity. This doctrine does not, however, apply to trusts arising by implication of law. “It is certainly true,” says Sir William Grant, in Beckford v. Wade, “that no time bars a direct trust; but if it is meant to be asserted that a Court of Equity allows a man to make out a case of constructive trust at any distance of time after the facts and circumstances happened, out of which it arises, I am not aware that there is any ground for a doctrine so fatal to the security of property as that would be; so far from it, that not only in circumstances where the length of time would render it extremely difficult to ascertain the true state of the fact, but where the true state of the fact is easily ascertained, and where it is perfectly clear that relief would originally have been given upon the ground of constructive trust, it is refused to the party who, after long acquiescence, comes into a Court of Equity to seek relief.”

But although, strictly speaking, direct, continued technical trusts, which are not cognisable at law, but fall within the proper and peculiar jurisdiction of equity, are not affected by the statute of limitations, nor by the ordinary doctrine of presumption of satisfaction from lapse of time; yet it does not follow that in all such eases equity will interfere, where a party has slept on his rights for a great length of time, being at the same time conusant of them, and capable of asserting them. On the contrary, it has been the constant course of Courts of Equity to discourage stale demands. Even in frauds, in which, if recent, there would have been no doubt, lapse of time has induced the Courts to refuse their interference: Atty. Genl. v. The Mayor of Exeter, 1 Jacobs, 443. It is because of the great public or private inconvenience that would follow from such intervention, that the Court refuses to act. The principle which regulates a Court of Equity in all this class of cases, is that expressed by Lord Camden in Smith v. Clay, 3 Bro. Ch. Rep. 639 (note). “ A Court of Equity,” says he, “which is never active in relief against conscience or public convenience, has always refused aid to stale demands, where the party slept upon his rights, and acquiesced for a great length of time. Nothing can call this Court into activity, but the conscience, good faith; and reasonable diligence; where these are wanting, the Court is passive, and does nothing. Laches and neglect are always discountenanced, and therefore, from the beginning of the jurisdiction, there was always a limitation to suits in this Court.” To what extent and under what circumstances this doctrine of non-intervention has- been adopted and carried, and how far it embraces a case like the present, is best shown by a recurrence to some of the leading decisions on the subject. Huet v. Fletcher, 1 Atkyns, 467-8, arose on a bill for an account brought by a son forty years after the death of his father, against the executors of his mother, for an account of the personal estate of the father, which had come into her hands as his administrator. The bill was dismissed with costs, Lord Hardwicke considering that this was of the sort of bills that deserved the utmost discouragement from the Court. In Wood v. Briant, 2 Atkyns, 521, the same Chancellor refused to decree an account against an executor after more than twenty years subsequent to the death of the testator, though the executor and the residuary legatee who demanded the account were both living. Pearson v. Belcher, 4 Vesey, Jr. 628, was a bill filed on the part of several of the officers and seamen of a company of adventurers in a privateering expedition against the principal managers, praying for an account of the proceeds which had come into their hands from prizes captured by the company. The bill was dismissed by Lord Alvanley, upon the ground of the impo-licy of entertaining the suit after so great a lapse of time. The case of Ex parte Heathfield, 8 Taunt. 403, resembles that before the Court in many of its principal features. Under an act for the relief of insolvent debtors, an assignee was appointed to the estate of an insolvent. After a succession of removals and appointments, in 1779 one M. was appointed assignee under a rule of the Common Pleas. It appeared that the assignee had obtained possession of the insolvent’s estate and disposed of some parts of it, but that he afterwards died without making distribution, leaving N. his heir and personal representative. In 1818, forty years after the appointment of the assignee, the administrator of the insolvent applied for a rule against N. to show cause why a new assignee should not be appointed, and an account be taken of such part of the insolvent’s estate as had come to the hands of M. or N. But the Court of Common Pleas, on the sole ground of the unreasonable length of time which had been suffered to elapse since M.’s appointment, rejected the application.

The case of Chalmers v. Bradley, 1 Jacob & Walker, 62, although the plaintiff’s hill in that ease was not rejected absolutely, exemplifies the true principle on which equity acts when its aid is sought to unravel ancient accounts, even between trustee and cestui que trust. The bill was brought for an account against a trustee under a will, forty-five years after the testator’s death, alleging the recent discovery of the facts out of which the plaintiff’s equity arose. Sir Thomas Plumeiyon the hearing, directed a special inquiry to ascertain whether the plaintiff had notice of these circumstances, reserving all further action on the bill until the coming in of the Master’s report. “ The reason,” says he, “ that I direct these inquiries is, that, though I am impressed with the impolicy of permitting stale demands to be brought forward; though I know that on the principles stated in Smith v. Clay, a Court of Equity is not to be called into action by those who are not vigilant in support of their rights, and am aware of the monstrous inconveniences that would result if at some period the door were not shut upon litigation; yet I fall in entirely with the opinion expressed by Lord Alvanley in Pickering v. Stamford. There the suit was commenced after a lapse of thirty-five years, ly persons who declared themselves ignorant of their rights. Lord Alvanley, under the circumstances of' that case, could not be sure that they were not ignorant; and therefore, stating strongly his opinion in favour of the general principle that a party ought to be barred by length of time, and lamenting that he could not in that instance follow it, he directed similar inquiries, stating at the same time, that if he were then to decide it, he would decide it against the plaintiffs, and that by the inquiries he did not decide one way or the other, and would afterwards consider whether there was sufficient equity in the bill.” The cases of Hervey v. Dinwoody, 2 Ves. Jr. 87, Shipbrook v. Henchenbrook, 13 Vesey, 337, Brownell v. Brownell, 2 Brown’s Ch. Rep. 62, are cases resting on analogous principles, as do the cases of Ellison v. Maffet, 1 Johns. Ch. Rep. 47, Executors of Arden v. Arden, Ib. 313, Raynor v. Pearsall, 3 Johns. Ch. Rep. 579, and Grest’s Heirs v. Cattel’s Heirs, 4 Dessau. 706.

It follows from what has been already said, that where in any particular case peculiar circumstances exist, excusing or justifying the delay, the Court will not refuse its aid because of lapse of time; Lop-dell v. Creigh, 1 Bligh (N. S.), 255. It would be difficult, if not impracticable, and certainly not wise, to define what are the circumstances which will be deemed sufficient, in a Court of Equity, to justify or excuse protracted delay in seeking relief. Each case must depend on the exercise of a sound discretion, arising out of its particular circumstances. The cases of Pickering v. Stamford and Chalmers v. Bradley show that ignorance of rights or recent discovery of facts, out of which the plaintiff's equity arises, sufficiently accounts for a delay in asking a remedy, otherwise inexcusable. In Wedderburne v. Wedderburne, 4 M. & C. 52, the delay of the claim being attributable to the trustee not having given that information to his cestui que trust to which he was entitled, this was deemed sufficient to justify the supposed laches of the latter. Many other instances of such exceptions to the effect of laches, and lapse of time, in equity, might be enumerated, hut, as has been said, they all would arrange themselves under this category: that whenever the circumstances of a given case, arising between trustee and cestui que, exhibit such reasons for apparent delay in the assertion of a claim by the latter, as satisfactorily accounts for the same to the Court exercising a sound discretion, such an explained delay will not affect a right otherwise perfect: Rayner v. Pearsall, 3 John. Ch. Rep. 579.

In the present case no attempt at explanation of the plaintiff’s delay has been made, either in the original petition, or, as admissible in the practice of this Court, under the Act of Assembly regulating assignees in a replication to the defendant’s answer, setting up this delay as a reason for not accounting. The case therefore presents to us the simple and unmixed proposition, whether this Court will entertain an application to compel an assignee in trust for creditors to file an account of his trust, as of course, on the application of a creditor, thirty years after the creation of the trust, although no part of the plaintiff’s proceedings assigns any cause or reason for such a delay, and although the respondent interposes length of time, as an equitable bar to the plaintiff’s demand for an account. And to such a proposition our answer must, on principle and precedent, he an unhesitating negative. If, however, the plaintiff can assign any sufficient reason for his apparent procrastination, we are disposed to permit him still to do so, according to our practice, by way of replication to the defendant’s answer. If he avails himself of this permission, and presents his reasons for this delay, we will then consider their effect; and should we deem them sufficient if proved, we will inquire into their truth in fact, by the usual reference to a Master, as was done in Pickering v. Stamford and Chalmers v. Bradley.

It is objected in the defendant’s answer that the petition in this case is defective, because it is not supported by the oath or affirmation of the plaintiff. This objection we consider well taken. The 33d section of the Act relating to assignees for the benefit of creditors, and other trustees,” declares that the manner of obtaining the appearance of persons amenable to the jurisdiction of this Court in cases of trusts, and to compel obedience to our decrees and orders, shall be the same as is now by law vested in and provided for the several Orphans’ Courts. The manner of proceedings in the Orphans’ Courts is, by the 57th section of the “Act relating to Orphans’ Courts,” directed to be by petition in writing to the Court, of any person interested, setting forth facts necessary to give the Court jurisdiction; the specific nature of the complaint; and the relief desired, supported by oath or affirmation. The petition 'filed in this instance is not under oath, and consequently defective. But as this objection can, if sustained, only lead to renewed litigation, we are disposed to permit the plaintiff in this instance to amend his petition by making the required oath. If this is done, and a replication is filed by him in conformity with the principles expressed, on or before the first day of the next term, the cause may be again presented for further direction. Otherwise we will order the proceedings to be dismissed, with costs.