author: Green, C. J.

text:
    Benjamin S. Mulford, appellant, and Jonathan Bowen and others, respondents.
    (4 Holst. Ch. 751.)
    1. The rule that an executor, administrator, guardian or trustee cannot directly or indirectly become a purchaser at his own sale, is firmly established.
    2. It is uniformly held in courts of equity that the trustee will not be permitted to derive benefit from a purchase thus made, but that the deed will be avoided at the instance of the cestui que trust.

    3. It has been held in this state, not only that the deed may be avoided in equity, but that as against the cestui que trust it will be treated as void in a court of law. The rule at law, however, is not that the deed is absolutely void ; the extent of the doctrine is that the cestui que trust may avail himself of the objection at law.
    4. Admitting the doctrine of the courts of law in its fullest extent, the trustee, in case the deed be avoided, may be entitled to equitable relief. And the equities subsisting between the trustee and cestui que trust cannot depend upon the tribunal in which relief is sought. The equities of the trustee cannot be defeated by the cestui que trust resorting to law rather than equity for relief.
    -5. Where the cause was retained for the purpose of final relief in equity, and nothing could be gained by permitting the party to proceed with his action at law, the injunction was continued.
    On the twentieth of February, eighteen hundred and thirty-seven, the appellant and John S. Mulford, administrators of Mason Mulford, deceased, made sale of part of the real estate of their intestate, for the payment of the debts of the estate, by virtue of an order of the Orphans’ Court of the county of Cumberland. At the vendue the land was struck off to one Isaac Mulford, he being the highest bidder, for the sum of -eighteen hundred dollars. On the first of March, eighteen hundred and thirty-seven, a deed was made by the administrators, pursuant to the sale, to Isaac Mulford. On the same day, and for the same consideration, he re-conveyed the land t*' the complainant.

      At the July Term, eighteen hundred and forty-seven, two-of the heirs-at-law of Mason Mulford, the intestate, instituted an action of ejectment against the complainant, for the recovery of their share of the real estate thus sold and conveyed. The complainant thereupon filed his bill in equity against the plaintiffs in the action of ejectment, praying that they might be restrained by injunction from further proceeding at law, and be decreed to confirm the title of the complainant to the said real estate; or if the Chancellor should be of opinion that the title of the complainant was voidable in equity, that, they might come to an equitable account; that the complainant might have a lien upon the real estate for the amount of the purchase money and of all permanent improvements made-by him upon the real estate, over and above the rents and profits.
    An injunction issued, pursuant to the prayer of the bill-Upon hearing, the injunction was dissolved, but the bill was-retained, no -final decree having been made upon the merits. From the order of the Chancellor, dissolving the injunction,, the complainant appealed.
   The opinion of the court was delivered by

Green, C. J.

The well-settled rule in equity that an executor, administrator, guardian or trustee cannot directly or indirectly become a purchaser at his own sale, has not been called in question. The rule is firmly established. It rests upon clear principles. It is dictated by obvious considerations of policy. It is essential to guard at once the trustee-from temptation, and the cestui que trust from the consequences of fraud and injustice. It is uniformly held in courts-of equity that the trustee will not be permitted to derive-benefit from a purchase thus made, but that the deed will bo avoided at the instance of the cestui que trust. In this state it has been held not only that the deed may be avoided in equity, but that as against the cestui que trust it will be treated as void in a court of law. The doctrine obtains not only where the trustee has been guilty of actual fraud, but also in cases of construction or equitable fraud resulting from the mere purchase by the trustee of the estate of the cestui que trust, without regard to the bona fides or mala fieles of the transaction.

It was earnestly insisted upon in argument, on the part of the appellant, that the rule at law, as adopted in this state, is inconsistent, not only with the practice of courts of law elsewhere, but with sound principle. If it were so, it would not be in accordance with the practice of a court of equity, in administering relief, to proceed upon the ground that a legal principle, long established in courts of law, was erroneous; nor could such a conclusion be of any avail to the appellant in this cause. He seeks relief in equity upon the very ground that at law his deed will be avoided. This constitutes, in fact, the equity of his bill. Without it his relief would be complete at law, and he would have no standing in a court of equity. This bill must necessarily be dismissed.

Nor is it designed to intimate an opinion, that sitting even as a court of common law this court would be disposed to unsettle the rule that a deed made by an executor or trustee directly or indirectly to himself, may be avoided at law as well as in equity. No inconvenience has arisen, nor is it perceived that any will necessarily result from the practice. Sound policy requires that not the slighest encouragement should be given to the practice of trustees dealing in the estate of their cestuis que trust.

The rule at law, however, is not that the deed is absolutely void. Such expressions have no doubt been used by courts, but clearly without regard to critical accuracy. The extent of the doctrine is that the cestui que trust may avail himself of the objection at law, and is not necessarily driven to equity for relief. The deed is not absolutely void. It is good unless the cestui que trust elect to avoid it.

Admitting the doctrine of the courts of law in its fullest extent, the trustee, in case the deed be avoided, may be entitled to equitable relief. It is true that a court of law cannot adjust equities and administer relief upon equitable principles, but for that very reason the doors of a court of equity ought not to be barred against him. Courts of law never have decided that the trustee should lose the land and the purchase money also ; that the eesqui. que trust should recover the land and retain the price paid for it. They have simply avoided the purchase, and left the parties to resort to equity for relief; any other doctrine would convert a rule designed for the suppression of fraud into an instrument of fraud. In case, then, the eestuis que trust attempt at law to recover the estate purchased by the trustee, he may come into equity for relief. Whether he be or be not entitled to relief will necessarily depend upon the character and circumstances of the transaction.

Nor is the relief sought by the complainant obnoxious to the objection urged by the respondent that a court of equity will never relieve a party against his own fraudulent act. The complainant is not seeking to avoid his contract, or asking to be protected against its consequences. The eestuis que trust seek in a court of law to avoid the contract, and recover the premises conveyed to the trustee. He asks that they may be restrained from recovering the possession of the premises, until they repay the money actually advanced, and the equities between them be adjusted. In other words, he asks the relief to which he would clearly have been entitled had the eestuis que trust sought to avoid the deed in equity, and not at law. Nothing can be clearer than that the equities subsisting between the trustee and cestui que trust cannot depend upon the tribunal in which relief is sought, and that the equity of the trustee should not be defeated by the eestuis que trust resorting to law rather than equity for . relief. Though a court of law be incompetent to administer relief, the arm of a court of equity is not thereby shortened.

If the cause is retained .for the purpose of final relief in equity, nothing can be gained by permitting the party to proceed with the action at law. The question of actual fraud-cannot be tried in that suit. The jury will be instructed, in case it appear that the administrator was a purchaser at his own sale, whether he be guilty of actual fraud or not, that their verdict must be for the plaintiff. The proper mode of taking the verdict of a jury upon the question of actual fraud, if that be desirable, would be by an issue at law. The injunction, therefore, should be continued till the cause is finally settled in equity.

Ho opinion can now with propriety be expressed upon the merits of the case. The appeal is solely from that part of the decree dissolving the injunction. From the residue of the decree there is no appeal. Indeed, the merits of the case do not appear to have been at all considered — certainly not decided upon by the Chancellor. This court, therefore, cannot decide upon them.

The necessary parties, moreover, are not before the court, to warrant a final decree. Only two of the heirs are made parties to the bill.

The order dissolving the injunction must be reversed, the injunction continued till the further order of the court, and the cause remitted to the Court, of Chancery to be proceeded in according to the rules and practice of that court.

Decree accordingly.

Cited in Obert v. Obert, 2 Stockt. 103; Holcomb v. Holcomb’s Ex’r, 3 Stockt. 287; Wortman v. Skinner, 1 Beas. 390; Huston v. Cassedy, 2 Beas. 230; Howell v. Sebring, 1 McCar. 90; Booraem v. Wells, 4. C. E Gr. 97.


source: Caselaw Access Project

license: Public Domain

text:
    The Executors of John P. Quick, appellants, and Elizabeth Fisher et al., respondents.
    (The case in Chancery is reported in 4 Halst. 674; and on appeal, 4 Halst. 778.)
    1. As a general principle, a trustee has no power to change the character of the trust fund; and if he assume the power of converting real estate into personal, or personal into real, he acts at his peril.
    2. If a change in the character of -the fund be deemed necessary, or for the interest of the beneficiary, it should be made only with the permission and by the sanction of a court of equity.
    3. The rule applies not only to executors, administrators, guardians of infants and lunatics, and other trustees specially constituted by law, but to all trustees having charge of the property of others.
    4. And if a loss has been sustained from the trustee exceeding his authority by an unauthorized and illegal disposition of the trust funds in his hands, he is liable for the loss.
   The opinion of the court was delivered by.

Green, C. J.

Peter Prall, by his last will and testament, gave and bequeathed the one-fourth part of the residue of his personal estate to his son-in-law, John P. Quick, in trust, nevertheless, for the use, benefit and support of his granddaughter, Mary Fisher, to be paid to her, the said Mary Fisher, by the said John P. Quick, as her necessities may require. Prior to the first of May, 1830, John P. Quick, the trustee, received the trust funds so bequeathed to him, amounting to two thousand one hundred and- eighty-six dollars. Of this sum, eighty-six dollars appears to have been paid to the cestui que trust, as it was received on the first of May, 1830. The balance of the fund, two thousand one hundred dollars, was invested in the purchase of real estate, by reason of which a large part of the trust fund is alleged to have been lost. On the sixth of February, 1835, Mary Fisher, the cestui que trust, died, leaving six children. After the death of Mary Fisher, the real estate was sold, and the trustee prepared an account of the trust fund, exhibiting the loss alleged to have been sustained by the investment. In accordance with this statement, a settlement was made by the trustee with four of the children of Mary Fisher; their respective shares of the alleged balance was paid to them, and their receipt taken for the amount'so paid respectively. On the twenty-ninth of December, 1845, the trustee died, the complainants, two of the children of the said Mary Fisher, then being under twenty-one years of age.

The bill is filed by two of the children of Mary Fisher, who were under age at the death of John P. Quick, the trustee, to recover against his executors their share of the trust fund.

It is admitted that the defendants are bound to accounL The only question is upon what principle the account should be stated. The trust fund consisted of money which was invested by the trustee in the purchase of real estate. The complainants claim the full amount of the fund, with interest, deducting only such payments as have been made to the beneficiary, or for her benefit. The defendants claim an allowance for losses sustained by reason of the investment of the fuud in real estate.

I deem it clear, both from the answer and from the evidence, that the trust fund was in point of fact invested in the purchase of real estate. There is no reason to doubt that the investment was made in good faith for the benefit of the beneficiary. She was the daughter of the trustee. She was the wife of a man incapable or indisposed to maintain his family. She was, moreover, the mother of a family of dependent children. The father may well have supposed, under such circumstances, that a fund especially designed for the benefit and support of his daughter would be best invested in providing a home for her and for her children. The investment was made, (if not at the instance of the daughter herself), certainly at the solicitation of her husband and of his friends. The trustee had no personal interest in making the investment, nor, so far as appears, did he derive the least pecuniary advantage from it. On the contrary, he added to the trust fund a considerable amount of his own money, in order to make the purchase and put the property in repair. The beneficiary and her children were put in possession immediately on the completion of the purchase, and they were permitted to continue in the possession and enjoyment of the property so long as the husband of the beneficiary was able to carry on his business, and'immediately upon the death of the cestui que trust the property was sold at a sacrifice. He took the deed for the property, it is true, in his own name and not as trustee, but this he may have done either because he supposed, as appears by the evidence, that he had himself an eventual interest in the trust fund, or because a part of his own property was invested in the purchase, or because he supposed he might thus most effectually control the property as well for the interest of the beneficiary as for his own. I see nothing in the transaction • to impugn in the least degree ' the character of the trustee for integrity, however much he may have erred in judgment or in the estimate of his legal rights. It appears, however, that every dollar of the trust fund received by the trustee prior to the determination to purchase the real estate was paid over as soon as received to the beneficiary, and that the whole balance of the fund with a large sum of the trustee’s individual property, was invested in the purchase of the real estate of which, as has already been said, the beneficiary and her family for years enjoyed the entire benefit. I deem this statement due in justice to the memory of the trustee and especially as the account which was prepared by him years after the death of his daughter, has received, and perhaps justly admits of, a harsh interpretation, affecting, to say the least, the liberality of the accountant. In considering the case it may be fairly assumed not only that, in point of fact, the trust money was invested in the purchase of real estate, but that the investment was made in good faith and from justifiable motives. The question remains, had the trustee the right to make such investment of the trust fund ? And if he had not, then in equity, must the loss be borne by his estate or by the trust fund ?

It is admitted as a general principle, that the trustee has no power to change the character of the trust fund, and that if he assume the power of converting real estate into personal, or personal into real, he acts at his peril.

While he will he suffered to derive no benefit from such change of investment, he will be held personally accountable for any loss which may ensue. While the beneficiary will be permitted, if it appear for his interest, to follow the fund through whatever changes it may pass, the trustee will not be permitted to compel the beneficiary to accept the property after the conversion, or to impose any loss which may result from the conversion upon the trust fund.

If a change in the character of the fund be deemed necessary, or for the interest of the beneficiary, it should be made only with the permission and by the sanction of a court of equity. The rule applies not only to executors, administrators, guardians of infants and lunatics, and other trustees specially constituted by law, but to all bare trustees, having charge of the property of others, and not specially invested with peculiar or extraordinary powers. Experience has shown that the rule is a wise and salutary one. The security of the fund is a primary consideration in the investment of the trust estate. The temptations to a trustee to tamper with a trust fund are so numerous and so powerful, the hopes of bettering the estate so often prove delusive, that the power of changing the character of the fund is most safely reposed in the discretion of judicial tribunals.

Nor is the rule prohibiting the change of character of the trust fund founded solely or mainly upon the consideration that the inheritance or succession to the estate is thereby affected. On the contrary, it is a well-settled rule in equity, that the character of the fund will be converted from personal to real or from real to personal, without regard to the succession, whenever the interests of the beneficiary require it. Matter of Salisbury, 3 J. C. R. 347.

The trustee, if the principle be correctly stated, has in this case exceeded his .authority. The loss has been sustained not by an error of judgment committed by the trustee in the management of the trust fund, but by an illegal and unauthorized disposition of 'the trust funds in his hands. He is consequently liable for the loss.

It cannot be objected that these complainants have slumbered over their rights, or that they designedly forbore to prosecute their claim uutil after the death of the trustee They were both infants at the death of the trustee, and consequently were not chargeable with laches. Nor can it be objected that they have in any wise assented to the illegal •disposition of the trust fund, or ratified, directly or indirectly, the act of the trustee. Whatever force there may be in these objections as applied to the other children of Mary Fisher, it does not apply to these complainants.

As to the objection that the husband of Mary Fisher, as her administrator, and not her children, is entitled to this fund, and therefore the children are in no contingency entitled to recover, it is enough to answer, if there be anything in the objection, that it is not a ground of appeal in the present case, and that the objection may be raised upon the final hearing in equity.

The decree should be affirmed.


text:
    Simon Brolasky, appellant, and Walters B. Miller and others, respondents.
    (4 Holst. Ch. 789.)
    1. The defence of usury in a mortgage may be set up by any one claiming under the mortgagor and in privity with him.
    2. The acts of a mortgagor in assenting to a decree pro eonfesso upon the mortgage, in declining to set up a defence, or even in an express recognition of a usurious mortgage as valid, after his title in the mortgaged premises had been divested, and vested in others, cannot affect the rights of his alienees.
    3. Where the equity of redemption had been sold by the sheriff, and no decree of foreclosure was necessary against the mortgagor, he was held to be a competent witness to prove the usury.
   The opinion of the court was delivered by

Green, C. J.

The bill in this cause was filed to foreclose a mortgage given by James Clark and wife to Simon Brolasky, the complainant. A decree pro eonfesso was taken against Clark and wife, no appearance having been entered, or answer filed by them. Miller and Ware, the other defendants, answered. By the pleadings, it appears that Miller and Ware hold a mortgage upon the premises subsequent to the complainant’s mortgage. It also appears that the interest of Clark in the mortgaged premises, was sold at sheriff’s sale, by virtue of executions at law issued upon judgments recovered against him subsequent to the registry of the mortgages, and that Miller and Ware became the purchasers. They claim title, therefore, to the premises, as mortgagees, and also as purchasers of the equity of redemption. By their answer, they set up usury as a defence to the complainant’s mortgage, and call Clark, the mortgagor, as a witness to sustain the allegations of the answer. The Chancellor sustained the defence, and by his decree dismissed the bill. From that decree the complainant appealed.

Three questions are involved in the decision of the appeal, all of which have been discussed upon the argument, viz.:

First. Can the defence of usury be set up by Miller and Ware, Clark, the mortgagor, not availing himself of that defence, but suffering a decree pro confesso to be entered against him ?

Second. Is the mortgagor a competent witness to prove the usury ?

Third. Is the usury proved with sufficient certainty to warrant the court in founding a decree upon it ?

The question whether the plea of usury is personal and peculiar to the mortgagor, or whether it may be set up as a defence to a mortgage by a subsequent mortgagee, or by a purchaser of the equity of redemption, has at various times undergone consideration in th'e courts of this state, and it may be well briefly to trace its history.

In Ward v. Plume, the bill was filed to foreclose a mortgage given by Cyrenius Beach and wife to the complainant, bearing date in 1811. In 1814, Beach and wife executed a second mortgage upon the same premises, to Anne Plume. The second mortgage had been foreclosed without making Ward, the first mortgagee, a party to the bill. The mortgaged premises had been sold by virtue of that decree, and Plume had become the purchaser. A bill being filed by Ward, the first mortgagee, to foreclose his mortgage, Plume, the purchaser at the sheriff’s sale, set up usury as a defence. Exceptions were filed to the answer, and" the master to whom the exceptions were referred, reported in favor of the mortgage. Upon exceptions filed in the report, the Chancellor (Williamson) overruled the exceptions. In concluding his opinion, the Chancellor said: “It is on the authority of De Wolf v. Johnson and others, that I decide against the exceptions to the master’s report, and which case, it appears to me, must govern the present.” An appeal having been taken from this decree, at November Term, 1830, the decree was unanimously affirmed by the Court of Appeals; Vroom, Chancellor, delivering the opinion of the court. In this opinion, too, much stress is laid upon the authority óf De Wolf v. Johnson, decided by the Supreme Court of the United States. “ The court,” says the Chancellor, are supported in their opinion by the case last cited from Wheaton. This learned and dignified tribunal there, on the same question, and in a matter directly in issue before them, held it to be perfectly established that the plea of usury, at least as far as to landed security, is personal and peculiar, and that a third person having an interest in the land cannot take advantage of the usury.”

The case of De Wolf v. Johnson was decided by the Supreme Court of the United States, at February Term, 1825. 10 Wheat. 367. In that case, Prentiss having executed a mortgage to De Wolf to secure the payment of sixty-two thousand dollars, conveyed the mortgaged premises to William T. Barry, in trust, subject to the mortgage debt. Barry sold the premises at auction to I. Johnson and R. M. Johnson, subject to the encumbrance of any previous mortgage, and particularly the mortgage of De Wolf. Prentiss, the mortgagor, Barry, the trustee, and the Johnsons who purchased the equity of redemption, were all made defendants to the bill of foreclosure. Prentiss, the mortgagor, filed no answer, but suffered a decree pro oonfesso. Barry and Johnson set up the defence of usury. Mr. Justice Johnson, in delivering the opinion of the court, said: “It is perfectly established that the plea of usury, at least so far as to landed security, is personal and peculiar, and however a third person having an interest in the land may be affected incidentally by a usurious contract, he cannot take advantage of the usury.” And again, he said: “ Had the Johnsons purchased from Prentiss in the most absolute and general manner, and altogether without notice, actual or constructive, they still could have acquired no more than the equity of redemption, and that would not have transferred to them the right of availing themselves of the plea of usury.” This authority, clear and express, emanating from the highest judicial tribunal known to our law, and uttering the unanimous opinion of the court, naturally and properly controlled the views of our state courts. The Chancellor manifestly, and it would seem from his opinion, with some hesitation, deferred to its authority. Had the federal court adhered to its opinion, expressed in De Wolf v. Johnson, it is not probable that the question would speedily have been re-opened in the courts of our own state. But in January, 1830, five years after the decision in De Wolf v. Johnson, the question again came before the United States Supreme Court, in the case of Lloyd v. Scott, 4 Peters 205. In that case, the plaintiff brought an action of replevin to recover certain goods seized by the defendant as a distress for the rent of certain houses and lots owned by the-plaintiff in Alexandria. The defendant avowed the taking as bailiff of the owner of certain ground-rents charged on the plaintiff’s land by virtue of a deed for that purpose made prior to the conveyance of the land to the plaintiff. The defence was that the deed under which the ground-rent was claimed was void, as founded on a usurious contract, and the question was whether the purchaser of land, subject to a ground-rent, could set up against the claim for rent, usury in a contract made by a former owner of the land. The court held that the defence might be set up by the purchaser. They further held that the questión whether the purchaser of an equity of redemption can show usury in a mortgage to defeat a foreclosure was not involved in the case of De Wolf v. Johnson, and they virtually overturned the prior decision upon that point. The decision in Lloyd v. Scott was made a short time prior to the decision by the Court of Appeals of Ward v. Plume, but the case was not referred to by the court, or by counsel, upon the argument, and it probably escaped the attention of the Chancellor.

In 1833, the question was again brought before the Court of Chancery of this state, in the case of Sears v. Roberts and Ogden. The bill was filed to foreclose a mortgage given by Roberts to Sears. Roberts subsequently conveyed to Ogden, taking a mortgage on the premises for a part of the purchase money. The Chancellor (Seeley) held that upon the evidence the mortgage was not usurious, expressing no opinion upon the right of the purchaser to avail himself of the defence. From this decree Roberts and Ogden appealed. The Court of Appeals reversed the decree of the Chancellor, by a vote of ten to four, the then Chancellor (Vroom) voting for reversal, and decreed the mortgage void for usury. The question whether the purchaser of the equity of redemption could avail himself of the usury as a defence to the mortgage was fully discussed, and the authority of Lloyd v. Scott relied upon by counsel in argument, as virtually overturning the authority of De Wolf v. Johnson, and also of Ward v. Plume. In this case, Roberts, the mortgagor, after conveying the premises to Ogden, took a mortgage thereon from his vendee. He was, therefore, made a party to the bill, and joined in the defence of usury. Whether this fact operated upon the mind of the court, or whether they desired directly to overturn the case of Ward v. Plume does not appear, as , no opinion was delivered. The late Chancellor, (Halsted) who was counsel for Sears, understood the decision of the Court of Appeals in that case as establishing the principle that the purchaser of the equity of redemption may set up usury as a defence to a mortgage given by his vendor. In the recent case of Cummins v. Wire, 2 Holst. Chan. R. 88, he adopted the principle, as res adjudietata, upon the authority of Sears v. Ogden.

It is insisted, however, that the question is still an open one in this state, and the courts are called on to decide it in accordance with sound principle. The statute declares that all mortgages upon which usurious interest is reserved or taken, “ shall be utterly void.” It would seem, at first view, that a contract which the statute pronounces utterly void, cannot be available for any purpose, either against the party injured or against any other person whatever.

But it is a settled rule of law, that where a statute makes void any legal solemnities, the construction of the law is, not that the contracts shall be deemed perfect nullities, but that they are voidable by the parties prejudiced by such contracts. 5 Coke 119, Whelpdale’s Case; Buller’s N. P. 224.

In Carter v. Claycole, 1 Leonard 306, (32 and 33 Eliz.) the plaintiff, in an action of ejectment, claiming title to the premises, by virtue of a lease from the Wardens and Fellows of All Soul College’s, the jury, by a special verdict, found that the lease was made to the plaintiff, but it was not found that any rent was reserved thereupon. The statute 13 Eliz., Cap. 10, (then in force,) declared that all leases made by the master and fellows of any college, of any houses or lands belonging to the body corporate, other than for twenty-one years, whereupon the accustomed yearly rent, or more, shall be reserved, payable yearly during the term, shall be utterly void and of none effect, to all intents, constructions, and purposes. But all the justices agreed that such lease was not void as against the grantors, but against those only wlm were designed to be protected by the statute. That the lease was not void, but voidable, and to be avoided by the college or any other who claim, by it. And in that case, Mr. Justice Perriam, by way of illustration, as if stating an undoubted principle, said : “ A mortgages lands to B, upon a usurious contract for one hundred pounds, and before the day of payment, B, the mortgagee, is ousted by C, against whom B brings an action. C cannot plead the statute of usury, for he hath no title. For his estate is void against the mortgagor.”

The principle of the ancient authorities upon this point is simply this, that although the statute declares a mortgage founded on a usurious contract utterly void, it nevertheless is voidable only by the mortgagor or those claiming under him and vested with his rights. It cannot be avoided by a stranger or a mere disseizor. This principle remains unshaken at the present day, and to it nearly all the authorities, however apparently conflicting, in reality conform. It is, in fact, the touchstone by which every decision upon this subject may be tested, and its soundness determined. It results that not only the mortgagor may avail himself of the defence of usury, but that a subsequent mortgagee or grantee of the estate mortgaged, who is seized of the estate and vested with the rights of the mortgagor in the land, may in like manner avail himself of the same defence, and for the •same reason the purchaser of the mortgaged premises at a sheriff’s sale, under a subsequent mortgage, or upon an execution at law may also avail himself of the defence. He is possessed of all the rights of the mortgagor, and upon the same principle the mortgagor may divest his grantee of the right to avoid the mortgage for usury. Ho may himself waive his right of defence. He may convey the land in express terms, subject to the usurious mortgage, and in such case the purchaser does not stand quoad, hoc in the shoes of the mortgagor.

Thus in De Wolf v. Johnson, Prentiss, the mortgagor, conveyed to Barry, and Barry sold to Johnson, with an express recognition of the mortgage of Prentiss. The grantee, in fact, by the express terms of the grant, took title, only subject to that mortgage. The mortgagor recognized the validity of the mortgage, waived his right to avail himself of the defence of usury, and avoided a transfer of that right to the grantee. The decision of the court upon the facts of the ease was right, and in conformity with sound principle. The error consisted in a misstatement of the true ground of the decision.

So in Green v. Kemp, 13 Mass. 515, the morfgagor had released and quit-claimed to Kemp (the tenant) all the right in equity of redeeming which he had in the premises. There was but the one mortgage upon the premises. It was held shat a usurious mortgage is void only as against the mortgagor and those who may lawfully hold the estate under him. A purchaser of the mere equity of redemption cannot avoid ihe mortgage by plea or proof of usury.

The more recent American eases, both at law and in equity, recognize and adopt the principle of the ancient authorities-A mere stranger cannot set up usury in avoidance of a mortgage to which he is neither party nor privy. Nor can the purchaser of a mere equity of redemption in premises covered by a usurious mortgage, who purchases subject to the lien of such mortgage, set up usury as a defence to the encumbrance., But the defence of usury in a mortgage may be set up by any one claiming under the mortgagor and in privity with him. Trench v. Shotwell, 5 John. C. R. 555; Pearsall v. Kingsland, 3 Edwards 195; Post v. Dart, 8 Paige 640; Shufelt v. Shufelt, 9 Paige 137, Dix v. Van Wyck, 2 Hill 522; Morris v. Floyd, 5 Barbour 130; Brooks v. Avery, 4 Comstock 225.

Conceding the principle that a usurious mortgage may only be avoided at the instance or for .the benefit of the mortgagor, it is obvious, in order to carry out the principle, that it must be voidable also at the instance of his alienee. Otherwise the usurious mortgage must operate to the prejudice of the mortgagor, and constitute a valid encumbrance on the land, inasmuch as he is virtually disabled from conveying except subject to the mortgage. So if the land subject to a usurious mortgage bo sold at sheriff’s sale, the usurious mortgage necessarily operates to the prejudice of the mortgagor, unless the purchaser may avoid the encumbrance.

Upon principle, as well as. upon authority, Miller and Ware may set up usury as a defence to the mortgage given by Clark to the complainant. Nor can the acts of Clark, in assenting to a decree pro eonfesso upon the mortgage, in declining to' set up the defence, or even in an express recognition of the usurious mortgage as valid, after his title in the-mortgaged premises had been divested and vested in others, affect the rights of his alienees.

Second. Clark, the witness, had no interest, at the time of his examination, in the mortgaged premises. The equity of redemption had been sold by the sheriff; no decree of foreclosure was necessary as against him, nor could any decree be made against him for costs. The decree against the mortgage, procured by his testimony, could not avail him in an action upon the bond. As between the complainants and the subsequent encumbrances, he stood indifferent. He was, therefore, a competent witness. Cummins v. Wire, 2 Halst Ch. R. 88; Post v. Dart, 2 Paige 640.

Third. Upon the third point I concur in reversing the decree, upon the ground that the charge of usury is not satisfactorily made out by the evidence.

Cited in Dolman v. Cook, 1 McCar. 63; Andrews v. Steele, 7 C. E. Gr. 479; Conover v. Hobart, 9 C. E. Gr. 124; Warwick v. Marlatt, 10 C. E. Gr. 192; Westerfield v. Bried, 11 C. E. Gr. 358; Warwick v. Dawes, 11 C. E. Gr. 552.

      See also Sands v. Church, 2 Selden 347.


text:
    Reuben H. Freeman and Margaret, his wife, appellants, and Isaac Staats, respondent.

      (See 4 Halst Ch. R. 814.)
    1. Where a hill is filed to avoid a conveyance on the ground of incapacity by reason of extreme intoxication at the time of making, and charges that a deed, note, and warrant of attorney were procured by fraud, covin, and misrepresentation, and the charges are fully, distinctly, and unequivocally denied by the answer, the rule of law requires that they should be clearly proved, and not left to presumption or conjecture.
    2. The circumstance that questions of fact involved in the cause have been passed upon by a jury, constitutes no insuperable objection to the interference of this court. The office of a jury in a court of equity is not definitely and finally, as in a court of law, to settle questions of fact, but simply to inform the conscience of the Chancellor where he has doubt.
    3. The fact that an issue has been awarded, and a verdict of a jury rendered in the cause upon which the decree of the Chancllor is based, does not take away or limit the control of this court over the decree.
   The opinion of the Court of Appeals was delivered by

Green, C. J.

On the 2d day of September, 1842, Isaac Staats, the complainant in this cause, conveyed, by deed duly executed, to his daughter Margaret, the wife of Beuben H. Freeman, in fee, ceriain real estate in the county of Somerset. On the same day Staats gave to his son-in-law, the said Beuben H. Freeman, his note for one thousand six hundred dollars, with a warrant of attorney to confess judgment, upon which note judgment was subsequently-entered. To avoid the conveyance and judgment thus made and entered, this bill was filed.

The bill charges that at and before the execution of the deed, the complainant was in the habit of drinking ardent spirits to intoxication. That soon after the second marriage of the complainant, the defendant and his wife insinuated to the complainant and others, that the complainant’s wife was unfaithful to her marriage vows; that her character was bad; and that she would strip the complainant of all his property. That these charges were false and unfounded, and that they were made for the purpose of inducing the complainant to convey his property to the defendant and his wife.

The bill further charges that the deed and note were executed while the complainant was in a state of gross intoxicacation, and with the idea impressed upon his mind by the defendant, that his wife would ruin him. That at the time the papers were executed, the complainant had not power of mind to comprehend their contents and effect; that they were not executed of his own notion and free will, but by the suggestions, compulsion, or contrivance of Freeman and his wife, or one of them.

The material charges of the bill are:

First. That the defendant, at the time of the deed and warrant of attorney was incapable, by reason of extreme intoxication, of making or of assenting to any conveyance.

Second. That the deed, note, and warrant of attorney, were procured by fraud, covin, and misrepresentation.

Both charges are fully, distinctly, and unequivocally denied by the answer. The proof of them rests upon the complainant. The rule of law and the dictates of justice require that they should be clearly proved, and not left to presumption or conjecture.

The case is essentially a question of fact, resting upon the weight of evidence in the cause. It is unnecessary to review if in detail. There are a few facts which are material in weighing the evidence, and which give character to the case.

First. The charge of fraud as made in the bill and as attempted to be established in evidence, rests solely on charges and insinuations made by the defendants against the character of the complainant’s wife, by which the mind of the complainant was influenced against her, and he induced to execute the deed and to give the judgment under an apprehension that his wife would ruin him. Whether these charges are true or false is not very material. There is certainly enough in the evidence to excite and justify the worst fears and suspicion of a husband. But whether true or false it is clearly proved that they originated not with the defendants; but with the complainant himself, not after, but before his marriage, and that his conviction of their truth was so strong as to induce him to charge openly the illegitimacy of the issue of his marriage.

In regard to Mrs. Freeman, the daughter of the complainant, to whom the deed was made, and for whose benefit it chiefly enures, there does not appear to be the shadow of evidence for the charge,^ preferred against her in the complainant’s bill. There is no pretence in the evidence that she ever uttered a charge against the character of Mrs. Staats, or that she participated in any way in the procure-ment of the deed. Her conduct in the painful and trying situation, in which she was placed, so far as appears in evidence, was not only free from all suspicion of fraudulent practice, but from aught inconsistent with filial respect and affection. So far as she is concerned, the charge of fraud preferred in the bill has utterly failed. There is nothing in the evidence as against her to justify a suspicion of fraud practiced or meditated.

In regard to Freeman himself, it is certain that he did not originate the chai'ges against the complainant’s wife, and that he ever repeated them for ,an improper purpose or with a corrupt xnotive, is by no means clear from the evidence. It is shown indeed that they were on one occasion reduced to writing by him; but it does not appear for what purpose that memorandum was made, nor does it even appear, except by the complainant’s own allegation, that it was ever seen by him prior to the execution of the deed. And when it is remembered that charges of the most aggravated character had previously been made by the complainant himself against his wife — that he had previously separated from her and attempted to procure a divorce from her on these very grounds — there would seem no sufficient reason to suppose that the memorandum, at the time it was made, even if seen by him, could have seriously operated upon the defendant’s mind, much loss that it should form the basis of avoiding a solemn conveyance on the ground of fraud and misrepresentation. There is no sufficient evidence to avoid the deed on the ground of fraud or misrepresentation.

Second. It is in evidence that the complainant at and before the execution of the deed was a man of very intemperate habits, and there is evidence in the cause that on the day the deed was executed he was to some extent under the influence of intoxication. In regard to the degree of his mental capacity on that day, there is some conflict in the evidence, and room for a diversity of opinion. Had the idea of the deed originated and been consummated upon that day, there would have been some ground for the charge that the defendant had not power of mind clearly to comprehend the contents and effect of the conveyance.

But the deed was not prepared or executed hastily. The complainant, long before the date of the deed, had applied to' the counsel who was in the habit of attending to his business, to prepare the deed for him. He was advised to reflect upon it. He called again upon his counsel some days before the execution of the deed, and told him that his mind was made up respecting it. A day was appointed for the transaction of the business. Early on the morning of that day he informed a friend of his purpose, and on being advised not to act hastily, replied that he had thought of it and concluded to do it. The papers were even prepared and executed at the defendant’s own house, when surrounded by his family. The deed was read and witnessed by his sister, who testifies to his capacity. The papers were all prepared by and executed under the advice of experienced counsel, who had long known the complainant well, and had been in the habit of transacting his business. The deed was acknowledged before him as a master of the Court of Chancery. Few persons had better opportunity of knowing and judging of the complainant’s mental capacity. No one was called upon so imperatively to judge respecting it. He testifies to the capacity of the complainant. The fact that the deed was executed under his direction, and acknowledged before him as an officer, afford, indeed, the clearest evidence of his estimate of the complainant’s capacity at the time of their execution.

Eight days after the deed was executed, the complainant, in accordance with an arrangement made at the time of its execution, gave directions to have it recorded.

On the seventh of September, five days after the execution of the deed and the giving of the warrant of attorney to confess judgment, the sheriff of the county called to levy the execution issued upon the judgment. On that day the sheriff testifies that he would have been willing to have bought or sold or transacted any ordinary business with the complainant. He showed the sheriff his property, gave it up to him, and appeared to understand perfectly what he was about. The transfer of the complainant’s property on the second of September, 1842 to his daughter and son-in-law, appears by the evidence to have been previously contemplated and deliberately resolved upon; to have been consummated with the knowledge and approbation of his own sister, by the aid of experienced counsel, and to have been subsequently recognized and approved by the complainant himself.

It appears, moreover, that the management of his affairs, and the disposition of his property, had always been in his own hands and under his own control, and that but a few months previous to the execution of the instrument now sought to be avoided, he had conveyed by a lease for ninety-nine years, a part of his real estate, in trust for the purposes of a public school.

The decided weight of evidence, as it appears before this court is that the complainant was not, at the time of the execution of the deed, incapable, by reason of intoxication or otherwise, of comprehending its contents and effect.

Circumstances have since transpired which may render it desirable that the conveyance should have been made upon other conditions and with different provisions. But subsequent events cannot affect the validity or bona ficha of the transaction. At the time of its execution, and under the circumstances in which the testator was placed, the transfer of the property was neither unnatural nor so unreasonable as to raise any presumption against its validity. The conveyance of his real estate was made to his only daughter — the only child of his first wife. It contains ample provision for his own support for life. The dower right of his present wife remains unimpaired. It may well be doubted whether if ho had retained his property under his own control, either he or the children of his second wife would have been in a better pecuniary condition than they now are. The property was placed by the act of the complainant, where the law itself would place it, beyond the reach of his own improvidence.

The circumstance that questions of fact involved in the cause have been passed upon by a jury, constitute no insuperable objection to the interference of this court. The office of a jury in a court of equity is not definitely and finally, as in a court of law, to settle questions of fact, but simply to inform the conscience of the Chancellor, where he has doubt. Hubback on Succession 56. The fact that an issue has been awarded, and the verdict of a jury rendered in the cause upon which the decree of the Chancellor is based, does not take away or limit the control of this court over the decree.

The decree of the Chancellor must be reversed, and the cause remitted to the Court of Chancery, to be proceeded in according to law and to the rules and practice of that court. In pronouncing this decree, it is not the intention of the court to preclude the Chancellor from a further investigation of the facts of the case, either by a jury or in such other mode as he may deem advisable.

Cited in O’Conner v. Rempt, 2 Stew. 156.


author: Walker, Chancellor.

text:
    William F. Barry v. William Rosenblatt et al.
    [Decided December 10th, 1918.]
    1. Section 0 of the act of March 3d, 1915 (P. L. 1915 p. 61), which provides that in all oases where any person shall die seized of any lands in his or her own right in fee-simple without devising the same, leaving him or her a widow or husband surviving, such widow or husband, as the case may be. shall take and have a life estate in one-third of such lands, is valid and constitutional, because the “object,” namely, the “descent” of land, is embraced in the title which is “An act amendatory of and supplemental to an act entitled ‘An act directing the descent of real estates,’ approved April sixteenth, eighteen hundred and forty-six.”
    2. Section 0 of the act of March 3d, 1915 (P. L. 1915 p. 61), was repealed by act of March 29th, 1917 (P. L. 1911 p. 81,1,) ; but, as complainant’s wife died intestate and without issue April 17th, 1916, while the acts was still in force, leaving her liusband, the complainant, her surviving, he took by descent a one-third interest for life in the land of which she died seized, and, his estate being vested, was not affected by the repealer.
    On exception to master’s report.

      Mr. Abe J. David, for the complainant.

      Mr. James C. Connolly, for the defendants.
   Walker, Chancellor.

The bill'in this case is one for partition. The master'has reported that the lands are so situate that a partition thereof cannot be made without great prejudice to the owners of the same and recommends a sale in lieu of actual partition.

The only question is as to whether the complainant is entitled to an interest in the premises described in the bill of complaint. His claim arises in this way: John W. Gfa3'nor died seized of the lands in question, leaving a will in which he devised the same to his three children, one of whom is Margaret Gfaynor, who, on January 26th, 1912, married the complainant. She died intestate April 17th, 1916. No child was born of this marriage. It is not out of place to remark that the estates of the other children of the testator were conveyed to the defendants Rosenblatt.

The claim of the complainant to an interest in the lands of which his late wife died seized arises under section 6 of the act of March 3d, 1915 (P. L. 1915 p. 61), section seven of which was declared unconstitutional in Reese v. Stires, 87 N. J. Eq. 32. The title of that act is:

“An act amendatory of and supplemental to an act entitled ‘An act directing the descent of real estates,’ approved April sixteenth, eighteen hundred and forty-six.”

Section 3 of the act of 1915 amends section 6 of the act of which it is amendatory, being the act directing the descent of real estates. Comp. Stat. p. 1917. The only change thus created is to eliminate from section 6 of the act which it amends the proviso that nothing contained in it shall be construed to bar or injure the rights of a husband as tenant by the curtesy or a widow’s right of dower. This was to harmonize the amendatory act with the provision contained in its section 7, abolishing estates and interests of dower and curtesy, and which provision was held by me to be unconstitutional in Reese v. Stires, as above stated.

Section 6 of the amendatory act of 1915 is a new section, and is therefore supplementary to, rather than amendatory of, the act directing the descent of real estates. It provides—

“In all eases where any person shall die seized of any lands, tenements or hereditaments, in his or her own right in fee-simple, without devising the same in due form of law, leaving him or her a widow or husband surviving, such widow or husband, as the case may be, shall take and have a life estate in one-third of such lands, tenements and hereditaments ; provided, this section shall not affect the right of such husband or widow to take such lands, tenements or hereditaments in fee-simple as provided for in section six of the act to which this is supplemental, the same being section three of this act.”

By section 3 of the act of March 29th, 1917 (P. L. 1917 p. 844), entitled

“An act amendatory of ‘An act amendatory of and supplemental to “An act directing the descent of real estates,” approved April sixteenth, eighteen hundred and forty-six,’ which amendatory act was approved March third, nineteen hundred and fifteen, and repealing certain provisions of such amendatory act of March third, nineteen hundred and fifteen, which abolish dower and curtesy and give to surviving husband or widow a life estate in one-third of all real estate of which the intestate died seized in fee-simple,”

section 6 of the amendatory act of 1915 is repealed. Therefore the provision that upon the death of a husband or wife leaving a widow or husband surviving, such widow or husband should take a life estate in one-third of the lands of which the late spouse should die seized without devising the same, existed as the law of this state for a little over two years, namely, from March 8th, 1915, to March 29th, 1917. And as the complainant’s wife died intestate without issue, leaving him surviving, during this period, namely, on April 17th, 1916, the complainant is entitled to a life estate in one-third of the share or interest of his deceased wife, if section 6 of the act of 1915 is valid.

The contention of the defendants is that the complainant is not entitled to any interest in the premises for the reason that section 6 of the act of 1915 is unconstitutional, the theory being that the provision in section 6 casting a life estate of one-third interest in lands upon a surviving spouse where there has been no devise, is not expressed in the title of the act; and Reese v. Slires, supra, is relied upon as authority for this proposition. In that case it was held:

“The act of March 3d, 1915 (P. L. 1915 p. 61), entitled ‘An act amendatory of and supplemental to “An act directing the descent of real estates,” approved April 16th, 1846/ which in terms abolishes estates and interests in dower and courtesy, violates article 4, section 7, placitum 4 of the constitution of New Jersey, which provides inter alia that ‘every law shall embrace but one object and that shall be expressed in the title/ and is therefore null and void so far as it abolishes dower and curtesy — as the single object expressed in the title concerns only the descent of real estates, and dower and curtesy do not descend.”

The question presented, therefore, is, whether the gift by law of one-third of an estate for life to the surviving husband or wife of a spouse who dies intestate, as provided for in section 6 of the act of 1915, is valid.

If the contention of the defendants is to prevail it must be held that the common law rules of descent are unalterable in this state, which is palpably not so. Such a situation could only be created by constitutional provision, and there is none such; on the contrary, that instrument in article 4, section 7, placitum 11, provides that the legislature shall not pass any private, local or special act changing the law of desceñí. This means that'the legislature may not enact a law providing• for gavelkind in Sussex county and borough-english in Cape May. That either species of tenure might be enacted for the whole state seems plain. That neither ever will be seems equally plain.

Now, it must be conceded that section 6 of the act o'f 1915, is neither private, local nor special, but is general in its scope and application. It provided that in all cases where any person shall die seized of any lands, &e. It is true that the common law does not devolve such an interest as is provided for in section 6 on any surviving husband or wife. But the common law may he altered in that regard. This was expressly decided by Chancellor Zabriskie in Fidler v. Higgins, 21 N. J. Eq. 138, where he said (at p. 147) :

“The common law of England, which is adopted in this state, especially as regards real estate, has certain clear and well-settled rules or canons of descent, which, so far as not changed by statute, our courts have always'recognized and adhered to. These canons have never been held to be repealed by doubtful words, but only by express words or necessary implication. Among these rules or canons is one, that inheritance shall lineally descend, but shall never ascend. A statute would repeal this rule, and where it directed in certain cases that a father or mother of the decedent should inherit his lands, the rule was so far repealed. But when the statute directed that in certain cases the lands should go to persons in equal degree of consanguinity to the intestate, although a grandmother is, by any rule of reckoning, kindred in the second degree, and is included in the terms of the statute, yet it was held that this rule of the common law was not repealed by such an implication as this, but that as this provision could in many cases have effec' without repealing that rule, it must be intended to have been made subject to that rule, and not in derogation of it. Such is undoubtedly the correct rule of interpretation where the statute does not in any other part indicate design to change the established rule. This is most clearly and logically shown in the opinion of the supreme court in the case of Taylor v. Bray, above referred to.”

While “descent” at common law is the title acquired by one by right of representation as heir-at-law upon whom an estate is east on the death of an ancestor, nevertheless, “descent” in its broadest sense signifies an inheritance cast upon anyone capable of receiving it, whether heir at common law or not, upon the death of an individual. And while the rule of the common law was that estates always descended and never ascended, the ascent of estates by virtue of our statutes has been so long the undisputed law as to clearly indicate, if anything be wanting for that purpose, that the legislature 'has the power to designate the persons upon whom real estate shall be devolved upon the death of others, whether those estates descend or ascend, and whether they shall go to those related by consanguinity or to strangers in blood, as for instance, making husband and wife heirs to their respective spouses — the very provision under review in the ease at bar.

In State v. Engle, 21 N. J. Law) 360, it was held that it is a well settled principle that if a statute makes use of a word the meaning of which is well known and which has a definite sense at common law, it shall be received in that sense, unless from some reason it clearly appears that it was intended to use the word in a different signification; that there was nothing in the statute under review to show that the legislature intended to use the words “heir” and “lawful heir” in any other than the legal sense, per Mr. Justice Carpenter; and (at p. 368) that the words “lawful heir” must be understood to mean an heir capable of inheritipg lands under the laws of New Jersey, unless from the whole scope of the act it is clearly manifest that it was not used in that sense by the legislature, per Mr. Justice Nevius. Here is an instance in which the supreme court seemed to take it for granted that the legislature could create heirs of persons who were not such at common law. It needs no citation of authority to show that the common law may be altered by statute. It would seem useless to pursue the subject further.

As section 6 of the act of 1915 devolved upon the surviving spouse a life estate in one-third of the lands of which a husband or wife died seized, such interest passed to the survivor by way of descent by act and operation of law; not the commou law, it is true, but by statute. As the complainant’s interest was thus acquired while the sixth section of the act in question was in force, it became in him a vested estate (which is an interest clothed with a present legal and existing right of alienation, 40 Cyc. 198); and this estate was not, therefore, affected by the repeal of the section under review.

That an inheritance cast by statute upon a husband or wife is recognized as a “descent” appears from the second proviso of section 3 of the act of March 29th, 1917, supra (P. L. 1917 p. 846) — amending section 6 of the act of 1915 and restoring it to its original provisions — wherein it is provided, in a certain situation, that lands “shall descend and go to said husband or wife.”

The complainant is entitled to a decree for sale in accordance with the recommendation in that behalf contained in the master’s report.


text:
    Elizabeth Wilber, petitioner, v. Joseph Wilber, defendant.
    [Decided December 19th, 1918.]
    1. Leave to file a defensive pleading in a divorce case out of time is allowed very much as a matter of course.
    2. A solicitor who appeared and filed a pleading for a wife in a divorce suit which was beard and dismissed, will not be ordered to withdraw from a subsequent divorce suit between them in which he has appeared and filed a pleading for her husband, as any confidential information imparted by the wife to her former solicitor, now the solicitor of her husband, touching the facts of the previous cause, is not available in the later suit now pending, because the facts of the former one are res judicata and cannot be projected into the pending suit, and because the facts in the present one have arisen since the termination of the relation of solicitor and client between the present solicitor of the husband, who was the solicitor of the wife in the adjudicated cause.

      On motion ior leave to file an answer to a cross-petition in a divorce suit out of time, and to compel the husband’s solicitor to withdraw because he had formerly been the wife’s solicitor in another divorce suit between the same parties.

      Mr. Peter A. Peterson, for the motion.

      Mr. Thomas Brown, contra.

   Walker, Chancellor.

This suit is one for divorce, the petition being filed by Peter A. Peterson, Esq., as solicitor for petitioner. An answer and cross-petition was filed for the defendant by Thomas' Brown, Esq., as solicitor. Application is made on behalf of the petitioner for leave to file an answer to the cross-petition out of time, and also for an order directing defendant’s solicitor to withdraw from the case, upon the ground that the defendant, Joseph Wilber, formerly commenced an action for divorce in this court against the petitioner, Elizabeth Wilber, who says in her affidavit supporting the present motion that in the former suit she

“engaged Thomas Brown, a solicitor of this court, to defend her, and the said suit was afterwards dismissed by this court * * * ; that while said Thomas Brown was solicitor for this deponent (Mrs. Wilber) in the cause aforesaid, he obtained much valuable confidential information from this deponent which might have a tendency to damage or injure her in this cause.”

Inspection of the files of the former suit (Joseph Wilber v. Elizabeth Wilber, 34, 56) discloses the fact .that a petition for divorce was filed by Mr. Wilber against Mrs. Wilber on August 29th, 1911. The charge was desertion said to have commenced on August 25th, 1909, and which was alleged to have willfully, continuedly and obstinately persisted for more than two years then last past. On November 1st, 1911, Mrs. Wilber, by Thomas Brown, Esq., solicitor, filed an answer and cross-petition in that suit. The answer denied the desertion complained of, and, on the contrary, charged that the petitioner deserted the defendant on the 10th of August, 1909, which desertion was alleged to have willfully, continuedly and obstinately. persisted for more than two years then last past. This desertion was by the answer and cross-petition alleged to have been both actual and constructive. The isáue thus raised was referred to Vice-Chancel]or Stevens, and the last paper in the case is a designation setting down the cause for hearing on April 25th, 1912. Mr. Brown, for the present defendant, who files no papers on this motion, asserts that Vice-Chancellor Stevens denied the relief prayed for by both parties; and this coincides with the statement in Mrs. Wilber’s affidavit that the case was dismissed by the court. The suit will be considered as having been dismissed at the time of the hearing, and a decree of .dismissal may now be entered wane pro kmc as of that date. Considering the decree as entered, it is an adjudication that neither party was entitled to relief touching the matters pleaded by them; and this is res judicata. Smith v. Smith, 55 N. J. Eq. 222; Freund v. Freund, 71 N. J. Eq. 524; affirmed, 72 N. J. Eq. 943.

The petition in the present case (Elizabeth Wilber v. Joseph Wilber, 45, 181) was filed by Mrs. Wilber through Peter A. Peterson, Esq., as solicitor, on June 25th, 1918, more than six years after the termination of the former suit. It is grounded upon adultery alleged to have been committed by the defendant on June 1st, 1911, and on divers subsequent dates. To this the defendant filed an answer by Thomas Brown, Esq., solicitor, on September 26th, 1918. It denies the adultery charged, and, by way. of cross-petition, alleges that in the month of July, 1909, the petitioner deserted the defendant and that for more than two years last past the petitioner has willfully, continuedly and obstinately deserted the defendant; and he prays that the marriage between them may be dissolved for that cause. Although by force of the determination in the first case the defendant in this one will not be permitted to rely upon any part of the desertion preceding April 25th, 1912, yet, as desertion for two years only is ground for divorce, and as over six years have elapsed since the termination of the former suit, proof of desertion for the statutory period is available to the defendant without entrenching upon the time concluded by the former case.

As confidential information concerning the marital relations of these parties communicated by Mrs. Wilber to Mr. Brown in the suit in which he represented her, which was terminated in 1912, cannot be made use of in a cross-suit between the same parties on the petitioner’s cause for action which has arisen wholly since the termination of the prior suit, or on the defendant’s cause for action which must necessarily be restricted to a period subsequent to the termination of that suit, it is not perceived how anything of which Mr. Brown might have been made aware by his former client in the former proceeding could possibly be used by him to her detriment in the present proceeding — the facts of which have come into existence since the termination of the relation of solicitor and client between them. And this of itself seems to be a perfect answer to the present contention.

In Lalance & Grosjean Mfg. Co. v. Haberman Mfg. Co., 93 Fed. Rep. 197, it was held:

“Attorneys who have withdrawn from a case, believing, in good faith, that the litigation is ended, will not, in case of its continuance, be enjoined from accepting a retainer from parties having an adverse interest to their former client, or from disclosing information acquired in tlreir professional capacity from such client. In the absence of any showing to the contrary, the court will assume that such attorneys will observe all the obligations of honorable members of the bar.”

That case was much stronger against the attorneys than is this one against the solicitor who is attacked. Here the former suit is ended and there will be no opportunity for the solicitor to act upon information acquired from his former client to her detriment, as the facts in the pending cause have arisen since the ending of the former one.

In 6 C. J. 620, speaking of the rule that an attorney who has acted as such for one side may not render services professionally to the other side, it is said:

“The rule does not mean, however, that an attorney having once been employed by a client shall never thereafter appear 'in any matter against him; it merely forbids his appearance or acting against him where he can use to the detriment of such client, the information and confidences acquired during the existence of their relation as attorney and client.”

It may be that the defendant in the pending cause should amend his cross-petition and allege a date for the commencement of the desertion which is said to have continued for two years before the filing of that pleading, averring it to have been some time subsequent to the termination of the prior suit, as desertion must be proved for the whole period between its commencement and the filing of the petition. Orens v. Orens, 88 N. J. Eq. 29. In contested causes amendments are liberally allowed. Biddle’s N. J. Div. Prac. (2d ed.) 136. And even after hearing. Miller v. Miller, 40 N. J. Eq. 475.

The application to file an answer to the cross-petition out of time will be allowed very much as a matter of course. Grant v. Grant, 84 N. J. Eq. 81. The application to compel the defendant’s solicitor to withdraw from the case will be denied.


author: Stevens, V. C.

text:
    William E. Wright et al. v. Thorold W. Pell et al.
    [Decided October 22d, 1918.]
    1. A wife’s deed in which the husband was not made a party, did not convey the husband’s right of curtesy, although he was a subscribing witness to it.
    2. Where a husband did not join in a wife’s deed, the grantee did not receive a legal title to the land, but merely an equitable pledge.

      3. Where the. mortgagee had merely an equitable title to the land, the husband of the mortgagor not. having joined in the conveyance, a decree foreclosing the husband’s equity of redemption does not give the mortgagee a legal title to the land, and has no effect upon the husband’s curtesy, although the bill alleged joinder of the husband in the conveyance, which allegation the husband admitted by permitting a decree pro confesso to be taken against him.
    4. Such admission, in a suit for strict foreclosure, does not serve to give the mortgagee legal title to the premises upon entry of a decree foreclosing the right of redemption therein.
    On bill, &c.

      Mr. Frank Benjamin, for the complainants.

      Mr. Arthur T. Vanderbilt, for the defendants.
   Stevens, V. C.

This is a bill for the specific performance of a contract to convey land. The defence is defective title. The title stands thus: Emily J. Smith, by deed, in form a warranty deed, conveyed the land in question to James N. Wright to secure a loan of $1,050. He gave her an agreement of defeasance. Her husband, Thomas, was not a party io the deed but he. subscribed it. Not being a party to it, the deed did not convey his right of curtesy (Jason v. Johnson, 74 N. J. Law 530), and did not vest in the grantee more than an equitable interest. By bill of strict foreclosure, Wright sought to foreclose the interest of the heirs of the grantor, she being dead, and of her husband and certain of her husband’s creditors. Following a decree pro confesso, there was a decree “that the deed and agreement of defeasance be decreed to be a mortgage upon the land and premises described therein,” and there was a reference to a master to ascertain the amount due. The final order was “that the defendants do from henceforth stand absolutely debarred and foreclosed of and from all equity of redemption of, in and to the said mortgaged premises.”

The objections to the decree for specific performance are: (1) That Mr. Wright cannot convey the legal as distinct from the equitable title, and (2) that the estate by the curtesy of Thomas C. Smith (Mrs. Smith having died) has not been foreclosed. Both of these objections seem to me to be well taken. What Mr. Wright got from Mrs. Smith was not a legal title (her husband not having joined in the deed) but an equitable pledge. Schickhaus v. Sandford, 83 N. J. Eq. 454; Phelps v. Morrison, 25 N. J. Eq. 538. I am at a loss to understand how the decree of strict foreclosure could operate to give Mr. Wright more than Mrs. Smith gave him — that is, an equitable interest in contradistinction to a legal one. It is her equity of redemption in what she gave him that is cut off, and what she gave him was an equitable and not a legal right. The present situation of the title seems to be an irredeemable equitable estate vested in Wright and a bare legal title outstanding in Mrs. Smith’s heirs, conveyance of which may, of course, be compelled.

In the second place, there is nothing to indicate that Mr. Smith has lost his curtesy. It is self-evident that he did not part with it by deed, because he did not make a deed. Counsel’s contention that the effect of the strict foreclosure was to deprive him of it, is based and based only on the opening paragraph of the bill praying strict foreclosure. The allegation, contrary to the admitted fact, is as follows: “That Emily J. Smith being indebted to your orator (James N. AVright) in the sum of $1,050 with her husband, Thomas G. Smith, conveyed by warranty deed,” &c. This allegation, counsel argues, was admitted when Smith permitted a decree pro confesso to be taken against him. It was, undoubtedly, admitted for the purposes of that suit, and had it been decreed therein that Smith had conveyed, the decree would have bound him, although founded on an erroneous conception of the evidence and of the law. But the chancellor made no such decree. He only decreed strict foreclosure of such equity of redemption as the several defendants had: Smith had no equity of redemption; he had a curtesy. There is therefore no decree to operate by wav of estoppel. Is, then, the allegation, in itself, an estoppel in a subsequent and independent proceeding, not because Smith himself made the admission, but because he allowed the foreclosure bill to be taken as confessed against him? The case is at best one of implied admission— prima facie proof — but an admission which an inspection of the deed would show to have heeu contrary to the fact. It is doubtful, however, whether it could be held to be an admission at all. It is stated in Taylor on Evidence §§ 859, 1753, that bills in chancery are not admissible as proof of the admissions they contain, “since the facts stated therein are regarded as nothing more than the mere suggestions of counsel.” The reason given applies with peculiar force to the case in hand.

Eor these reasons I think that defendant cannot be compelled to take the title.


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    The Mayor and Aldermen of Jersey City v. The Jersey City Water Supply Company.
    [Decided November 7th, 1918.]
    1. A provision in a contract for constructing water works, requiring the water to be pure and wholesome was complied with if the water was pure and wholesome at the time the water works were delivered, to the city according to the tests then known.
    2. Statutes of limitations do not apply to courts of equity, for the reason that the words of the statute apply only to particular remedies, but proceedings in equity to enforce a .legal right are within the spirit and meaning of the statutes and have always been so considered.
    3. In this case the city’s cause of action on account of the impurity of the water accrued at the latest when the city took over the water works and paid for them.
    4. Where the city obtained a deere.e directing .the water works contractor to convey the works to the city, an application for a bill of review on the ground of newly-discovered evidence, where the relief sought is money decreed for breach of the contract, not covered by the prayer of the original bill, the cause of action for which accrued after the entry of the original decree, is within the statute of limitations.
    5. Where the city recovered a decree directing the contractor to convey the water works to the city, and afterwards filed application for a bill of review on the ground of newly-discovered evidence to recover for breach of contract, an appeal will lie from the court’s denial of the application, as the city is a “party aggrieved.”

      On bill, &c.

      Mr. Albert C. Wall, for the applicant.

      Mr. John- B. Humphreys and Mr. Gilbert Collins, for the defendant.
   Stevens, V. C.

This is an application to file a bill of review.

On August 1st, 1905, Jersey City filed its bill against Patrick H. Elynn and the Jersey City Water Supply Company praying that they might be decreed to convey to it the water works conducted bj' them upon payment of such part of the consideration as might be ascertained to be due. A decree directing a conveyance was made in accordance with the opinion reported in 74 N. J. Eq. 104 (affirmed with a slight modification, 76 N. J. Eq. 607). There was a reference to the late Chancellor Magie, as master, and his findings were approved in 79 N. J. Eq. 212.

Pursuant to the decrees made, the works were transferred and delivered to Jersey City in 1911, and Jersey City paid so much of the contract price as was found to be then due. It has continued to operate and use the works ever since. It now applies for permission to file a bill of review on the ground of newly-discovered evidence. This evidence is that since the trial, bacteriologists have discovered'that- a bacillus known as B. Welchii, if present in water in considerable numbers, is productive of intestinal disorders; that this bacillus has recently been found in the Jersey City water, and that it is probable that being present now, it was present in 1911 when the works were delivered to Jersey City. The relief sought is a money decree for a sum representing the cost of intercepting sewers.

The affidavits filed show that since 1911 conditions have changed for the worse, and that there is greater pollution in the Roekaway river now than there was then. The deterioration in the quality of the water appears to have been due to the gradual increase of population on the watershed and to the fact that the gravelly soil underlying Dover, and perhaps other smaller towns, has become so permeated with polluted matter that it is no longer capable of acting as a filter, and that, consequently, the water used by the inhabitants and the contents of cesspools find their way into the river unpurified.

The principal question is whether assuming complainant’s affidavits to state the facts correctly, they show a breach of contract on the part of the contractor. His contract was “to construct a new system of water works for Jersey City and to supply said city therefrom with pure and wholesome water,” * * * the water to be furnished to be “pure and wholesome for drinking and domestic purposes.” In the opinion filed in Jersey City v. Flynn, 74 N. J. Eq. 104, it was said: “Contracts must have a reasonable construction and must be read in the light of the surrounding circumstances. The evidence shows that before the contract in question was executed, the city authorities visited the watershed and actually saw what the conditions were. They knew that the river flowed through a thickly populated region and that some pollution at the points,where the population was thickest was inevitable. I think it is quite plain that the contention of counsel for the city that because it is provided that the supply is to be free from pollution, and because the river is a part of that supply, therefore the river must be free from pollution from its source to the point where it flows into the Boonton reservoir is untenable. In view of the evidence the city would be demanding an impossibility. I think the contract means that tire supply at the time it reaches Jersey City and is delivered into the reservoir or pipes there must be free from pollution. Eor example, if after the water should leave the Boonton reservoir, but partially purified, it should be subjected to the action of a filter plant, established at any point along the route, and be there freed from pollution, I have no doubt tire terms of the contract would be fully complied with.”

■ Further on I say (at p. 138) : “There is one other remark that, in order to avoid misapprehension, I wish to make before considering the evidence.- The company is not bound to provide against that which may arise in the future; in other words, against future conditions. Jersey City will have to provide against them, as occasion may require. For example, if the present population of the watershed does not create a situation calling for the installation of a filter plant, the- company is - not obliged to furnish it, merely because when the population increases such a plant may be a necessity.”

These quotations indicate the rule to be applied on this application.

It was strenuously contended on behalf of the contractor that the newly-discovered evidence must be evidence of fact and not of opinion; and that evidence of opinion based on discoveries made since the trial is more objectionable than ordinary opinion evidence. I should be unwilling now to hold that such opinion evidence might not, under some circumstances, be ground for a new trial. I do not think the point calls for decision. The fundamental question is whether the affidavits show that the contractor has failed to perform his contract. The tests, chemical and'bacteriological, in use when the works were delivered indicated that the water was pure and wholesome, after subjection to the treatment approved by the late Chancellor Magie. But if it stood these tests then, and the test of actual user beside, it was pure and wholesome within the meaning of the contract. It is absurd to suppose that the parties contracted for such water only as would stand the tests that might- be applied by future generations, in the light of future discoveries. The contract was to be completely performed at a time designated. It was the standards of the time and not the standards of the future that were to determine whether full performance hád been made. The contract was not to furnish water free from every mineral and other impurity, but only from such impurities as were then regarded as detrimental to health. Water absolutely pure is to be had only in the laboratory. If the court found, as it did, that the water was pure and wholesome, according to the tests then known, and if it adjudged performance on that basis, and if the contractor delivered the works on that basis, there is no ground for asserting that he did not discharge his contract obligations.

There is nothing in the proof to indicate that the water was not pure and wholesome according to the then opinion. The case was tried by able counsel with the greatest care and elaboration. It is not pretended that any witness speaking only with reference to the then scientific knowledge on the subject could have testified in such a way as to have changed the result. It is not impossible that bacteriologists will, in the future, as counsel suggest, discover, in addition to the B. Welcldi, other germs or impurities that communicate disease — impurities that may have to be eliminated before, in the estimation of the scientific opinion of coming times, the water is entirely fit to drink; but is the contract to remain open until the last discoveiy is made ?

There is another objection io the relief sought which seems to me to be fatal. It is a well-known rule that, in the language of Chief-Justice Depue, in Colton v. Depew, 60 N. J. Eq. 454 “the statutes of limitation do not apply to courts of equity, for the reason that the words of the statute apply only to }3articular legal remedies, but proceedings in equity lo enforce a legal right are within the spirit and meaning of the statutes and have always been so considered.”

Now, what is the right sought in this case. Plainfy, a legal right. Complainant does not ask that the decree be o.pened, in order that it may return the plant. The right insisted on is a right to a money decree, adjudging damages for breach of contract; the measure of damages being, it is said, the cost of the intercepting sewers, which it proposes to build. This cause of action, accrued at latest in 1911, when it took the works and paid the price, for it was then, if at all, that the breach occurred. The present petition was not filed until 1918. Had it sued at law for damages it would have been barred bv limitation. It is true that in form this is an application to file a bill of review to enable complainant to put in additional evidence, but,-in substance, the evidence when put in will be used as the basis of a money decree — a decree founded on a cause of action occurring after the original decree was made. No part of the prayer of the original bill would meet the case. A new prayer would be necessáiy and this ¡Drayer would be grounded on a new cause of action not commenced and sued within six years next after it accrued. The case is plainly one within the spirit and meaning of the statute, if not within its letter; and none the less so because it is presented under the form of a bill of review. The end sought is, and is only, damages — damages that would have been the subject of a legal action but for the presence of the decree.

There are no equities that stand in the way of applying the statute. If there be any, they are rather with the defendant who, after affirmance of the decree by the court of errors and appeals, distributed the price, or the greater part of it, among its creditors and stockholders.

The application is denied, but as the denial is, no doubt, appealable, no injustice will be done, if the views here expressed are erroneous. The test of the right to appeal is whether the party be aggrieved, and Jersey City is certainly aggrieved if it has a legal right to recover damages in this court and an opportunity to vindicate that right is denied. Day v. Allaire, 31 N. J. Eq. 303; Reed v. Patterson, 44 N. J. Eq. 211.


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    Regina Roth v. Samuel Roth.
    [Decided December 6th, 1918.]
    Where the law provides that officers whose duty it is to make a return to any writ shall put their own names thereto, and be amerced in damages for failure so to do, a constable serving a writ of ne exeat who made such return cannot, more than a year later and after his authority has expired, secure an order permitting amendment by changing the date of service, and make m a former sheriff’s name a return the truth of which is controverted.
    On bill, &c.

      Mr. Samuel Koestler, for the applicant.

      Messrs. King S Vogt, contra.

   Stevens, V. C.

This is an application for leave to endorse upon the writ of ne exeat issued., served and now on file in the clerk’s office, “a true and proper return of service of'said writ, and in connection therewith to file and annex to said writ an affidavit of the true date of service.”

The application is made not on behalf of the sheriff, who may properly make it (Browning v. Flanagin, 22 N. J. Law 567; Lowenthal v. Wagner, 68 N. J. Law 214), but by Thomas Carey, a constable, who was deputized by that officer to serve the writ. The writ bears date July 7th, 1917, and commands the sheriff, in the usual form, to cause the defendant to give bail and, in case of refusal, to commit him to the common jail of his county there to be kept in safe custody, Sac. The arrest was made by Carey, and the defendant was committed to the Morris county jail. The only return made, if return it can be called, is Carey’s affidavit endorsed on tire ne exeat, in which he swears that on the 8th day of July, 1917, “he served the writ upon Samuel Roth * * * by taking the body of the said Samuel Roth and delivering him to the county jail of the county of Morris.” In his present application Carey swears that the date of service was July 7th and not July 8th. At the time the writ was served, W. H. Thompson was sheriff; at the present time Edwin W. Orr is, and the latter not only fails to join in the application, but makes an affidavit in opposition.

The whole controversy centers on the date of.arrest, the applicant’s contention being that it was made on Saturday, July 7th, just before midnight, and the defendant’s contention being that it was made on Sunday, July 8th, just after midnight. The materiality of the fact one way or the other lies in the circumstance that it may be claimed that it is illegal to execute a writ of ne exeat on Sunday.

Section 5 of the Chancery act (Comp. Stat. p. 411) directs the sheriff to malm return of all writs; and section 17 of the Sheriff’s act (Comp. Stat. p. 4843) directs

“that sheriffs and other officers whose duty it is or shall be to make return of any writ or process shall put their own names to the return of such writ or process * * * and any sheriff or other officer who shall not sign such return shall be amerced and also answer damages to the party.”

The usual form of return where defendant is arrested and fails to give bail (the case in hand) is:

“I certify that I have caused the within named S. R. personally to come before me, and he having refused to give the bail or security mentioned in the within writ, I have his body in the common jail of the county of M. under my custody.”

These statutes accord with the practice as stated by Daniel. He says: “The sheriff after he has executed the writ ought to return it, endorsing upon it a proper return of what he has done” (2 Dan. Ch. Pr. 1711), and, speaking specifically of writs of ne exeat, he says:

“All processes against any person directed to the sheriff ought to be duly and truly executed and returned into the courts out of which they issued, and all returns, although made by the under sheriff, yet must be made in the name of the high sheriff, and his name must be put thereto or the return is void.” Dan. Ch. Pr. 469.

Tested by these rules the writ in question is without return. It has endorsed upon it nothing but the constable’s affidavit; an affidavit which might serve as a guide to the sheriff for making the appropriate endorsement, but which does not state all that the endorsement should contain.

• Now, as has been said, neither the ex-sheriff, Thompson, nor the present sheriff, Orr, asks permission to make a return. The present sheriff was at the time of the arrest deputy sheriff and helped to make it. He says it was made on July 8th. Of course, the court cannot compel him to make a return that he characterizes as false. Ex-sheriff Thompson appears to stand passive in the matter. He does not ask anything. I know of no authority or principle which would justify the court, after the lapse of more than a year and long after all authority conferred upon the agent, Carey, had expired, in letting Carey make, in Thompson’s name, a return whose truth -is controverted, and which if it should be adjudged to be false might subject him to legal liability.

Carey asks permission not only to endorse a proper return but to annex to the writ now on file an affidavit of the true date of service. If he were permitted to do so, the writ would contain two affidavits, one contradicting the other, and neither would be a return. How he would be benefited thereby is not obvious. It is enough to say that no such practice exists or ought to be allowed.