source: Caselaw Access Project

author: Halsted, Chancellor.

license: Public Domain

text:
    Between William Potts, trustee, &c., Samuel R. Hamilton et al., appellants, and The Trenton Water Power Company et al., respondents.
    1. The act of 15th of February, 1844, entitled “ An act to relieve the creditors of the Trenton Delaware Falls Company,” by which the receivers who had been appointed by the court were authorized to sell the real estate, franchises, and works of the said company free and clear of all encumbrance, and providing- that nothing in the act contained should be construed to affect the rights of the creditors, or to invalidate any existing lease made by said company, or assignment thereof, is a constitutional and valid act. It was designed to be in aid of the creditors of the company, not to invalidate any contracts, but to enforce them — not to impair any securities, but to aid in obtaining the benefit of them.
    2. The assignment of a lease is properly the transfer of the interest of the tenant. The reason and spirit of the law, no less than its language, require that the assignment of leases should be construed to refer to the transfer of the rights of the tenants, and not to a mere assignment of the rent. Upon this interpretation the act is constitutional.
    3. A company authorized to draw water from a river, and owning the raceway and the land upon which it was constructed, have the right to the use of the water flowing over their land through their raceway, as incident to the ownership of the lands, as in fact a part of the land itself; and in such case, neither is the rent of the water, nor the right to receive and demand it, a franchise.
    This was a bill of interpleader filed in the Court of Chancery, on the 24th August, A. D. 1846. It alleges that complainants, Benjamin Fish et al., were, by an act of the legislature of the State of New Jersey, passed on the sixteenth day of February, in the year of our Lord one thousand eight hundred and thirty-one, incorporated -and created a body politic, with authority to cut and construct raceways, and create a water-power, in the manner specified in said act, to be used for mills and manufacturing purposes, and that, under and by virtue of said act of incorporation, the said company was organized and went into operation.
    That in and by a certain indenture of lease, bearing date on the sixteenth day of December, in the year of our Lord one thousand eight hundred and thirty-five, and made by and between the said the Trenton Delaware Falls Company, of the one part, and Benjamin Fish et al., of the other part, the said the Trenton Delaware Falls Company did demise and lease unto Benjamin Fish et al., and to their heirs and assigns, the right and privilege of cutting a sufficient opening or passage through the bank or side of the canal or main raceway belonging to said company, whereby water might be drawn from the said canal or raceway, together with the right and privilege of drawing from the said canal a certain quantity of water, in the manner and for the purposes in said lease specified, yielding and paying therefor, unto the said the Trenton Delaware Falls Company, the yearly rent or sum of five hundred dollars, in four equal quarterly payments of one hundred and twenty-five dollars each, to be paid on the first days of January, April, July and October, the first of which was to be made on the first day of January then next.
    That the said the Trenton Delaware Falls Company, in and by a certain deed of assignment, endorsed in writing upon the said indenture of lease, and bearing date on or about the nineteenth day of December, in the year of our Lord one thousand eight hundred and thirty-five, after reciting that, “ whereas, the Trenton Delaware Falls Company are indebted to Samuel E. Hamilton, Thomas J. Stryker and William Potts, of the city of Trenton, county of Hunterdon, and State of New Jersey, in the sum of five hundred dollars each; to Jasper S. Hill, of the township of Ewing, in said county and state, in the sum of five hundred dollars; to John Whittaker, of the township of Nottingham, county of Burlington, and state aforesaid, in the sum of five hundred dollars; to John McKelway, of the city of Trenton aforesaid, in the sum of two thousand dollars; to Timothy Abbott, of the city of Philadelphia, in the State of Pennsylvania, in the sum of five hundred dollars; to Nathaniel Potts, of the same place, in the sum of one thousand dollars, and to Joseph Trotter, of the same place, in the sum of three hundred dollars, amounting in the whole to the sum of six thousand three hundred dollars, for money borrowed of them by the said company to aid in completing ther water-power at and near the city of Trenton ; and are desirous to secure to the said several persons the interest due and to grow due to them, respectively, upon the said several sums of money aforesaid, until the principal thereof shall be fully paid and satisfied,” did, in consideration of the matters above set forth, and of the sum of one dollar to them paid by William Potts, of the city of Trenton aforesaid, grant, assign and set over unto the said William Potts the said indenture of lease, and all the rent and sum or sums of money due and to grow due thereon, as the same should become due and payable, to have and to hold the same, and to collect and receive the said rents, and every part and parcel thereof then due and owing, or which might thereafter become due and payable upon and by virtue of the said lease; in trust, nevertheless, in the first place, for the payment of the interest due and to become due to the said Samuel R. Hamilton, Thomas J. Stryker, William Potts, Jasper S. Hill, John Whittaker, John McKelway,-Timothy Abbott, Nathaniel' Potts and Joseph Trotter, aforesaid, upon the said several sums of money so due to them as aforesaid, as the same should become due and payable; in the second place, to pay over to the said the Trenton Delaware Falls Company, and to the treasurer thereof, the balance of moneys which should remain in his hands from time to time, as the same should be received from the lessees named in the said lease, their heirs, executors, administrators or assigns, after satisfying the interest as aforesaid ; and in the third place, upon full payment and satisfaction of the said several debts so due as aforesaid to the parties aforesaid, respectively, or to their legal representatives, by the said the Trenton Delaware Ealls Company or their successors, then forthwith to execute a re-assignment of the said deed or indenture of lease, and all the rights, powers and interests granted by the said assignment to the said company or their successors.
    That Fish and Green bought the interest of Grant and Cook; that they ever since have been and now are in the quiet and lawful possession, exercise and enjoyment of the rights and privileges demised in and by the said lease; and that they have, from time to time, since the said first day of April, eighteen hundred and thirty-eight, paid to the said William Potts, trustee as aforesaid, the said annual rents, as the same became due and payable, up to the first day of January, in the year of our Lord one thousand eight hundred and forty-five.
    That John McKelway, one of the persons named in the said deed of assignment, has received full payment and satisfaction of his said debt therein mentioned, whereby all his interest under the said assignment was extinguished, as by an endorsement in writing upon the said indenture of lease, signed by the said John McKelway, will appear.
    That the debt due from the said the Trenton Delaware Falls Company to the said Nathaniel Potts, and mentioned in the said deed of assignment, has been assigned and transferred to the said William Potts, named in the said deed of assignment, by virtue whereof all the interest of the said Nathaniel Potts in and under the said indenture of lease, and the assignment thereof as aforesaid, passed to the said William Potts.
    That the debt due from the said the Trenton Delaware Falls Company to the said Joseph Trotter, and mentioned in the said deed of assignment, was, by the said Joseph Trotter assigned and transferred to the said Timothy Abbott in the said deed of assignment named, by virtue whereof all the interest of the said Joseph Trotter in and under the said indenture of lease, and the assignment thereof, as aforesaid, passed to the said Timothy Abbott.
    That the said Timothy Abbott departed this life, having first duly made and executed his last will and testament in writing, and therein and thereby appointed Charles H. Abbott and George Abott the executors thereof; and that the said Charles H. Abbott and George Abbott have taken upon themselves the burthen of the execution of the said will.
    That the said the Trenton Delaware Falls Company, having become indebted unto one Isaac Ivins for money borrowed by said company of the said Isaac Ivins, upon the condition that a further interest in the indenture of lease hereinbefore mentioned should be assigned to the said William Potts, to secure the payment of the interest upon said debt to the said Isaac Ivins, the president of the said the Trenton Delaware Falls Company was, on or about the fourteenth day of September, eighteen hundred and thirty-eight, at a meeting of the board of managers of said company, authorized to assign to the said William Potts a further interest in the said indenture of lease, hereinbefore mentioned, for the benefit of the said Isaac Ivins, to secure to him the interest on six hundred dollars, he having advanced that sum for the use of said company.
    That the said Isaac Ivins received from time to time of the said William Potts, trustee as aforesaid, out of the annual rents paid to him, the interest upon the said sum of six hundred dollars above mentioned, and that the said Isaac Ivins claims to have an interest in and under the said indenture of lease, and the rents due and to become due thereon, to secure the payment of the interest upon his said debt.
    That on or about the ninth day of June, in the year of our Lord one thousand eight hundred and forty-three, the said the Trenton Delaware Falls Company, the lessors in the said indenture of lease named, having become insolvent, James Ewing, Philemon Dickinson and Samuel S. Stryker, esquires, were appointed by this honorable court receivers of the said the Trenton Delaware Falls Company, with full power and authority to sell, convey and dispose of the real and personal estate, franchises and works of the said company.
    That on or about the twentieth day of February, in the year of our Lord one thousand eight hundred and forty-four, the real estate, works and franchises of the said the Trenton Delaware Falls Company were, by the said receivers, sold at public sale to the highest bidder; and that after-wards, to wit, on or about the eighth day of March, in the year last aforesaid, the said receivers executed and delivered to the purchaser or purchasers thereof a deed of conveyance for the real estate, works and franchises aforesaid.
    That under and by virtue of an act of the legislature of the State of New Jersey, entitled “An act to relieve the creditors of the Trenton Delaware Falls Company,” passed the fifteenth day of February, eighteen hundred and forty-four, the purchasers of the real estate, franchises and works of the said the Trenton Delaware Falls Company, were authorized to hold the said real estate, works and franchises in the same manner that the original stockholders held the same. And in and by the said act it was also, among other things, enacted and provided that, after said purchase, the said company should be known as “ The Trenton Water Power Company,” and by that name should sue and be sued, and exercise all its corporate powers.
    That under the authority of the act of the legislature above mentioned the Trenton Water Power Company was organized and went into operation; and that the said the Trenton Water Power Company now hold, possess, occupy and enjoy the real estate, works and franchises of the said the Trenton Delaware Falls Company; and, by reason thereof, claim to be the landlords of complainants in the place of the said the Trenton Delaware Falls Company, the lessors named in the said indenture of lease, and to be entitled to collect and receive the rents due and to become due from them.

      That they have been informed and believe that Thomas J. Stryker, one of the persons mentioned in the said deed of assignment, and for whose benefit the same was made, has assigned and transferred all his interest in and under the said indenture of lease, and the assignment thereof as aforesaid, unto the said the Trenton Water Power Company, or to James M. Redmond, Esq., the president of the said company, for their use.
    That the said William Potts, to whom the said indenture of lease was assigned in trust as aforesaid, claims to be entitled, in behalf of himself and of the said Samuel R. Hamilton, Jasper S. Hill, John Whittaker, Isaac Ivins, and Charles H. Abbott and George Abbott, executors of the last will and testament of the said Timothy Abbott, deceased, to collect and receive the whole amount of the annual rents due and to become due upon the said lease, until they receive full payment and satisfaction of their said several debts above-mentioned, and to apply the said annual rents, when received, to the payment of the principal as well as the interest of their said debts until the same shall be fully paid and satisfied.
    That, on the other hand, the said the Trenton Water Power Company claim to be entitled to collect and receive the whole or a large part of the annual rents due and to become due upon the said lease, and insist that the said company, having purchased the real estate, works and franchises of the said the Trenton Delaware Falls Company, and that their right to have and to receive the rents due and to become due upon the said lease, is in nowise affected or impaired by the assignment of the said indenture of lease to the said William Potts, as hereinbefore set forth, and that the said assignment is not valid against or binding upon the said the Trenton Water Power Company, but that the said company are entitled to hold the said lease free and clear of the said assignment, and to receive the rents due and to become due thereon, as though said assignment had never been made ,* and the said company insist that if the said assignment is at all valid against and binding upon them, that then the said William Potts, trustee as aforesaid, is entitled, under the said assignment, to receive only so much (and no more) of the said annual rents as may be sufficient and necessary to pay the interest upon the several debts mentioned and particularly set forth in the said deed of assignment, and which have not been paid or satisfied or assigned to the said the Trenton Water Power Company ; and that the said company are entitled to receive the residue of said rents, after deducting therefrom so much as may be necessary for the payment of the interest aforesaid ; and that the said rents ought to be apportioned between the said William Potts, trustee as aforesaid, and the said the Trenton Water Power Company ; and that so much of the said rent as belongs to the said company should be paid directly to the treasurer of said company, and not to the said William Potts, trustee as aforesaid.
    That James M. Redmond, esquire, the president of the said company, has, at sundry times, informed complainants, or some of them, of the claims of the said company to the said rents, and forbid them to pay the same to the said William Potts, trustee as aforesaid.
    That the said the Trenton Delaware Falls Company, in and by the said indenture of lease, did covenant and agree that they would at all times maintain and repair their canal or raceway, and the banks thereof; and if at any time a breach should happen to be made through any part of the said banks, they would repair the same within as short a time as the nature of the case would admit, and if not repaired within thirty days, that then, after the expiration of the said thirty days, the rent reserved by the said lease should abate until the same should be repaired; and that they would be liable to no other damages for any stoppage of the water to be occasioned by their widening, clearing out, or repairing the said canal or raceway, and the works connected therewith, except the abatement of the rent after the end of the said thirty days; and if the same should altogether, in any one year, (computing the year from the first day of January,) continue more than thirty days, that there should be an abatement of rent in like manner as if the said thirty days had been at one time or in immediate succession.
    That, during the summer of eighteen hundred and forty-five, the Trenton Water Power Company were engaged about three months in widening, clearing out, and repairing the raceway of the said company, and the works connected therewith, and that, during the whole space of three months aforesaid, the water in said raceway was stopped and cut off.
    That they have paid the rent reserved upon the said lease up to the first day of January, eighteen hundred and forty-five, as hereinbefore mentioned; but that no part of the rent from the said first day of January to the first day of July, eighteen hundred and forty-six, being one and a half years, or six quarters’ rent upon the said lease, has been paid by them ; and that the said six quarters’ rent, amounting to seven hundred and fifty dollars, after deducting therefrom the said sum of eighty-three dollars and thirty-three cents, for the abatement of the rent, according to the terms of the said lease, is now due and owing from complainants upon the' said lease, and they are and at all times have been ready and willing to pay the same to whomsoever shall appear to be entitled thereto, and were in hopes they should not have been harassed with any legal proceedings in order to compel the payment of such rent; and that the said parties would have settled their disputes and adjusted their claims among themselves, as in justice and equity they ought to have done, but that the said William Potts, trustee as aforesaid, in behalf of himself and the said Samuel R. Hamilton, Jasper S. Hill, John Whittaker, Isaac Ivins, and Charles H. Abbott, and George Abbott, executors as aforesaid, threaten and intend to proceed at law against them ; and refuse to consent, although requested so to do, that complainants should pay the same to the said William Potts, trustee as aforesaid, and insist that they should pay the said rent, or a large part thereof, to the treasurer of the said company ; and, by reason that the defendants persist in their adverse claims before mentioned, complainants are unable to ascertain with certainty to which of the said parties the said rents do justly and of right belong, and are advised that they cannot with safety pay the same to any of the defendants, but that the said parties ought to interplead together touching their rights to the said rent, in order that complainants may know to whom the same ought to bo paid; and that the said defendants ought to be restrained, by the order and injunction of this honorable court, from prosecuting or commencing any action or actions at law against complainants for or in respect of the matters aforesaid.
    The Trenton Water Power Company by their answer admit that the Trenton Delaware Falls Company were incorporated at the time, in the manner and for the purpose, and that they were organized and went into operation, as in the complainants’ bill of interpleader is stated and set forth.
    Then the said the Trenton Delaware Falls Company made and executed to Benjamin Fish, Charles G. Green, William Grant and William G. Cook such lease, about the time for that purpose in the said bill of interpleader mentioned, as is therein alleged, and upon the annual rent, and payable in such manner as in said bill mentioned.
    That the said the Trenton Delaware Falls Company did assign the said lease to the said William Potts in trust, iu the first place, to secure the payment of the interest due and growing due to certain creditors of the said company; in the second place, to pay over to the said the Trenton Delaware Falls Company the balance of money which should remain in his hands from time to lime, as the same should be received from the said lessees, after satisfying the interest aforesaid; and in the third place, upon full satisfaction of the said several debts so due to the parties, then forthwith to execute a re-assignment of the said lease to the said company; but as to the date or more particular terms of the said assignment, or the amount of the debts fhe interest upon which it was intended to secure, or who were then or are now the holders of said claims, or what part thereof are' still unpaid, they have no certain knowledge, and cannot state, as to their belief or otherwise, except that they have understood and believe it to be true as stated in the complainants’ bill, that John McKelway was one of the persons named in the said assignment, and that he has received full payment and satisfaction of his debts therein mentioned; and that Thomas J. Stryker, was another of the persons mentioned in said assignment, and that he has assigned and transferred all his interest in and under the said assignment to these defendants.
    They admit it to be true, as stated in the complainants’ bill, that William Grant and William G. Cook, two of the original lessees in the said lease, on or about the time for that purpose stated in said bill, sold and transferred their interest in said lease to Benjamin Fish and Charles G. Green, and that the said Benjamin Fish and Charles G. Green sold and transferred an interest therein to George S. Green, and that the said Benjamin Fish, Charles G. Green, and George S. Green have ever since been and now are in the quiet and lawful possession, exercise and enjoyment of the rights and privileges demised in and by the said lease; but are ignorant as to the.precise amount of rent paid by them upon the said lease, or to what time the same has been paid up, and cannot state, as to their belief or otherwise, but leave the same to be proved as the court may direct.
    They neither admit nor deny that the said the Trenton Delaware Falls Company became indebted to Isaac Ivins, and that the president of said company was authorized to assign to the said William Potts a further interest in the said lease for the benefit of the said Isaac Ivins, to secure to him the interest on six hundred dollars, nor do they know whether any such assignment was ever, in fact, made, or whether said Ivins has received any, or if any, what part of the interest above mentioned, from the said William Potts; but they believe that said Ivins does claim to have an interest in said lease and the rent due and to become due, to secure the interest upon some debt alleged by him to be due him from said company.
    They admit that, about the time in said bill for that purpose mentioned, the said the Trenton Delaware Falls Company having become insolvent, James Ewing, Philemon Dickinson and Samuel S. Stryker, esquires, were appointed receivers of said company by this honorable court, with full power and authority to sell, convey and dispose of the real and personal estate, franchises and works of the said company, as in and by the bill is stated.
    They further say that, at the time of the appointment of the said receivers, the said the Trenton Delaware Falls Company were indebted to sundry persons in an amount greatly exceeding the value of their real and personal estate, franchises and works, to wit, in the sum of more than one hundred thousand dollars ; that one Robert McCall held a mortgage, duly acknowledged and recorded, upon a large part of the real estate of said company, to secure the sum of three thousand three hundred dollars, being part of the purchase money of said real estate; that the Trenton Banking Company held a mortgage, duly acknowledged and recorded, upon all the lands and raceway of said company, dated the second day of April, eighteen hundred and thirty-three, to secure the sum of four thousand dollars, and another mortgage, also duly acknowledged and recorded, «on the same, of the same date, to secure the further sum of six thousand seven hundred dollars; and that the said the Trenton Banking Company had also a judgment against the said the Trenton Delaware Falls Company, recorded in the Supreme Court of Judicature of this state, on the twenty-second day of May, eighteen hundred and thirty-four, for the sum of six thousand two hundred and thirty-seven dollars and fifty-seven cents, which was a lien on all the real and personal property of said company; that Thomas Cadwalader and others had a mortgage, duly acknowledged and recorded, upon all the real estate of the company north of the Assanpink creek, bearing date the twenty-third day of May, eighteen hundred and thirty-four, to secure the sum of fifteen thousand four hundred and ninety-one dollars and forty-seven cents, upon all which said several mortgages and judgment a very large amount of interest had accrued, and which were existing liens at the time of the alleged assignment of the said lease of the complainants to the said William Potts, trustee as aforesaid, on the real estate, raceway and property of the said company.
    That subsequent to the date of the alleged assignment of the said lease, the said the Trenton Delaware Falls Company, to wit, on the second day of June, eighteen hundred and thirty-six, made and executed a mortgage to Benjamin Fish and others, to secure the sum of nine thousand two hundred and twenty-seven dollars and ninety-seven cents, which was also duly acknowledged and recorded, and embraced a large portion of the real estate, including the raceway of the said company; that on the fourth day of the same month and year last aforesaid, the said company made and executed a mortgage to Armitage Green and others, to secure the sum of seven thousand three hundred and ninety-five dollars and forty-five cents, which was also duly acknowledged and recorded, and embraced the same property of the said company covered by the mortgage of Benjamin Fish and others; that on the third day of June, eighteen hundred and thirty-seven, the said company made and executed a mortgage to Samuel S. Stryker, trustee, &c., to secure the sum of ten thousand dollars on all the real estate of the said company which was also duly acknowledged and recorded; and that, on the twenty-first day of February, eighteen hundred and forty-three, the said Samuel S. Stryker entered up judgment on the bond accompanying said mortgage, in the Inferior Court of Common Pleas in and for the county of Mercer, for the sum of seven thousand nine hundred and thirty-five dollars and thirty cents, 'being the amount then due on the said bond; that on the twenty-third day of February, eighteen hundred and forty-three, the said company made and executed a mortgage to Richard J. Bond on all the real estate of the said company, to secure the sum of twenty thousand four hundred and fifty dollars and seventy-four cents, which mortgage was duly acknowledged and recorded; that on the twenty-eighth day of February, eighteen hundred and forty-three, three several judgments were obtained against the said company, in the Supreme Court of Judicature of this state — one in favor of Peter T. Smith, for the sum of three thousand nine hundred and thirteen dollars and three cents; one in favor of Patrick Mahan, for the sum of four hundred and seventy-eight dollars, and one in favor of Andrew Carrigan, for the sum of two thousand seven hundred and eighty dollars.
    That all the hereinbefore mentioned mortgages and judgments were existing liens upon the real estate of said company at'the time of the appointment of the receivers as aforesaid; that large arrearages of interest had accrued upon them, and that, independent of the simple contract debts not secured by mortgages or judgment liens, they amounted to a sum greatly beyond the real value of all the estate and property of said company.
    That the receivers, so appointed as aforesaid by this honorable court, having reported to this court that it was necessary that the real estate, corporate rights, and other property of the said company should be sold, and the proceeds applied to pay the debts of said company, an order or decree was made by the Chancellor, on the seventh day of November, eighteen hundred and forty-three, directing the said receivers to proceed, and make sale according to law, of all and singular the lands, tenements, hereditaments, and real estate of said company, and all the chartered rights, privileges, and franchises belonging to them and appertaining to their raceways, and all the right, title, and interest of said company of, in, and to the same; and the said receivers having represented to the legislature of this stale that the property of the said the Trenton Delaware Falls Company was encumbered for more than it would bring at public sale, that it was doubtful whether the same could be sold without legislative aid, and that the interests of the creditors of said company would be promoted by a sale of such real estate, franchises, and works, clear of all encumbrance, the said legislature, on the fifteenth day of February, eighteen hundred and forty-four, passed the act referred to in the complainants’ bill, entitled “An act to relieve the creditors of the Trenton Delaware Falls Company,” in and by which act the said receivers were not only authorized to sell the real estate, franchises, and works of the said company at public sale to the highest bidder, but were authorized to sell the same free and clear of all encumbrance, and to make to the purchaser thereof as good and sufficient a title in law as the said company had in said real estate, franchises, and works, free and clear of all mortgages, judgments, or other liens whatever, the purchasers to hold the said works, franchises, and real estate as a joint stock company, in the same manner as the original stockholders held the same; that, after said purchase, the said company should be known as “The Trenton WaterPower Company,” and by that name might sue and be sued, have a common seal, and exercise all its corporate powers; but that nothing in said act should be construed to affect the rights of the several creditors of the said the Trenton Delaware Falls Company to receive their distributive share of the proceeds of the said sale according to law, or to invalidate any existing lease made by said company, or assignment thereof, as by the said act of the legislature, now in, the possession of these defendants, reference being thereunto had, will appear.
    They admit that on or about the twentieth day of February, in the year of our Lord eighteen hundred and forty-four, the said receivers did sell all the real estate, works, and franchises of the said the Trenton Delaware Falls Company, as stated in said bill, and executed and delivered to the purchaser thereof a deed of conveyance for the same; and that the purchaser, in pursuance of the act of the legislature hereinbefore mentioned, organized himself and his associates in said purchase, into a corporation, by the name of “The Trenton Water Power Company;” and that they are the same company, and now hold, possess, occupy, and enjoy the said estate, works and franchises of the said the Trenton Delaware Falls Company, and claim to be the landlords of the said complainants, in place of the said the Trenton Delaware Falls Company, and to be entitled to collect and receive the rents due and to become due from the complainants upon the said lease.
    That the said receivers sold the said real estate, works and franchises of the said the Trenton Delaware Falls Company free and clear of all mortgages, judgments or other liens whatever, as they were directed and authorized to do; that said sale was confirmed by this honorable court, and the deed therefor, conveying said property as aforesaid, was made by order of the court, and' the purchase money paid over to said receivers on delivery of said deed, and that, by the express terms of said deed and the said act of the legislature aforesaid, these defendants hold the said property free and clear of all encumbrances created by the said the Trenton Delaware Falls Company, and subject only to the right, as they humbly submit, of the lessees of the Trenton Delaware Falls Company and the assignees of such lessees to draw water from the raceways of these defendants, in the manner prescribed by their leases, upon their paying the rents and performing the duties reserved therein to these defendants.
    That they have understood and believe, and therefore admit, that the said William Potts claims, in behalf of himself and his oestuis que trust, to be entitled to collect and receive the whole amount of the annual rents due and to become due upon the said complainants’ said lease, until they receive full payment and satisfaction of their debts, as mentioned in said bill; but humbly insist that the said William Potts, as trustee as aforesaid, is not entitled to receive the said rents or any part thereof; and they admit that they claim to be entitled to said rents which have accrued since the day of the date of their purchase aforesaid, and have given notice to the complainants of their said claim, and requested them not to pay over the said rents, or any part thereof, to the said William Potts, trustee as aforesaid.

      They further say that the whole real estate and property of the said the Trenton Delaware Falls Company was encumbered with mortgage and judgment liens, as herein-before stated, at the time they made the said assignment of the complainants’ lease to the said William Potts, as aforesaid, to an amount which, with the interest and cost accrued thereon, has exhausted the whole of the purchase money, being fifty thousand dollars, paid for said real estate and property at the receivers’ sale, and that said company, after the date of the assignment aforesaid, encumbered their real estate and property to a very large additional amount, by giving other mortgages and contracting debts upon which other judgments were obtained against them, none of which encumbrances so subsequently contracted have ever been paid, except some portion of the judgment of Peter T. Smith; and that it was in consequence of the existence of these large encumbrances, greatly exceeding the value of the work, that the legislature, upon the representations of the receivers, passed the act authorizing the sale to be made free and clear of all encumbrances whatever; and they respectfully submit that the reservation in the said act of the legislature, hereinbefore mentioned in favor of the leases of the company, and the assignment thereof, was not intended to set up the said assignment to the said William Potts, trustee as aforesaid, of the lease made to the complainants, as an encumbrance upon said real estate and property prior to all the legal encumbrances existing upon the same, and that the legislature had no constitutional right or power to do so, even if they had so intended.
    They submit that the said assignment of said lease created no legal encumbrance whatever upon the said real estate and property of the said company, and the said William Potts and those who claim under him as cestuis que trust never had any of their said claims secured by mortgage or judgment against said Trenton Delaware Falls Company, but w.ere creditors at large, and only entitled, after'the sale as aforesaid, to be paid pro rata with other creditors at large of said company, after all the mortgage and judgment creditors were satisfied out of the proceeds of said sale; and that the whole real estate and property of said company, having been sold as aforesaid, free and clear of encumbrances, and the purchase money exhausted in the satisfaction of existing liens, the said trustee and those whom he represents are not entitled to have their debts charged upon the estate so purchased in their hands, which is in effect the claim set up by the said William Potts and those who hold under him as eestuis que trust.

    They admit that the said the Trenton Delaware Falls Company, in and by the said indenture of lease to the complainants, did covenant and agree that they would at all times maintain and repair the canal and raceway, and the banks thereof; and if at any time a breach should happen to be made through any part of the said banks, they would repair the same, as stated in said bill, and if not repaired within thirty days, then, that after the expiration of the said thirty days, the rent reserved by the said lease should abate until the same should 'be repaired, and lessors be liable to no other damage; and that any lost time over and above thirty days in the whole, in any one year, should entitle the complainants to an abatement of rent for the time so lost; and they further admit that, during the summer of the year eighteen hundred and forty-five, they were engaged in widening, clearing out, and repairing their said raceway, but they deny that they were so engaged for three months in said work, or that the water in said raceway was stopped and cut off from the complainants’ mill for that space of time; on the contrary, they say that the water was stopped or cut off from the complainants’ mill for the space of two months and fifteen days only, for which time, deducting one month, they admit that the complainants are entitled to an abatement.
    William Potts, trustee, Samuel R. Hamilton et ah, in answering, say they admit that the Trenton Delaware Falls Company were, by an act of the legislature of the State of New Jersey, incorporated and created a body politic and corporate, as in the said bill is set forth, and that the said company was organized and went into operation under said act; that on the day in the said bill mentioned, the said company, of the one part, and Benjamin Fish and Charles G. Green, together with one William Grant and one William G. Cook, of the other part, made and executed a certain lease, by which the said company did demise and lease unto the said Benjamin Fish, Charles G. Green, William Grant and William G. Cook, and to their heirs and assigns, the rights and privileges in said bill set forth and more particularly mentioned in said lease; that the said lease was duly assigned by the said company to William Potts, in trust for the persons, uses and purposes in said bill set forth ; that the said Benjamin Fish, Charles G. Green, William Grant and William G. Cook paid to the said trustee the said rent, as in said bill is stated, and that, at or about the time mentioned in the said bill, the said William Grant and William G. Cook assigned all their right, title and interest under said lease to the said Benjamin Fish and Charles G. Green, who afterwards transferred an interest therein to George S. Green; that the complainants have had lawful and quiet possession under said lease, and that they have paid the annual rent thereon up to the first day of January, eighteen hundred and forty-five.
    That they have heard and believe, and therefore admit to be true, that the interest of John McKelway in the said lease assigned as aforesaid has been extinguished; that the debt due from the said company to Nathaniel Potts,- mentioned in the said deed of assignment, has been transferred to the said William Potts, by virtue whereof all the interest of the said Nathaniel Potts in and under the said indenture of lease, and the assignment thereof, has passed to the said William Potts, and in like manner all the interest which Joseph Trotter had in said lease and deed of assignment was transferred to Timothy Abbott, who has departed this life, first having appointed, by his last will and testament duly made and executed, Charles H. Abbott and George .Abbott the executors thereof; that the said company became insolvent, and thereupon receivers were appointed bv this honorable court, with authority to sell and dispose of the real and personal estate, franchises and works of the said company; that the said real estate, works and franchises were sold, as in said bill is set forth ; they admit the passage, by the legislature of this state, of the act entitled “ An act to relieve the creditors of the Trenton Delaware Falls Companythey have heard and believe, and therefore admit, that under and by virtue of the said act of the legislature, the Trenton Water Power Company was organized, and that they now hold, possess and occupy, and enjoy, the real estate, works and franchises of the said the Trenton Delaware Falls Company ; that they have heard and believe, and therefore admit, that the said Thomas J. Stryker has transferred all his interest in the said lease and deed of assignment to the Trenton Water Power Company ; that the said deed of assignment of the said lease was executed to the said William Potts, as trustee as aforesaid, upon the consideration of the loaning by these defendants, respectively, to said the Trenton Delaware Falls Company, of the several sums in said deed of assignment mentioned, which sums were paid by these defendants to the managers of the said company, and by them expended in repairing and improving the works of the said company, as they are informed and believe, these defendants receiving no other security for the payment of the principal moneys constituting said loans, and the interest thereon, than the said lease, assigned as aforesaid ; that the said deed of assignment conveys to their said trustee the entire rent reserved in said lease, whether due or to become due, and conferred upon him full power to collect the same; and they deny that the said the Trenton Water Power Company are the landlords of the said complainants, or have any right or authority to demand the said rent of the said complainants, or any part thereof.
    They insist that the said lease was assigned to their said trustee to secure as well the principal of their said loans as the interest thereon, and that the absolute power of the said trustee to collect the whole of the said rent cannot be defeated in any other way than by full payment and satisfaction to these defendants, respectively, of the said several loans in the said assignment mentioned.
    They insist that the said complainants are bound to pay the entire rent reserved in their said lease, at the times and in the manner prescribed by said lease, to the said William Potts, as trustee, whose duty it is, as fast as he collects the same, to pay thereout the interest which shall be then due to Samuel R. Hamilton, Jasper S. Hill, John Whittaker, William Potts, both on his original loan and on that purchased by him of Nathaniel Potts, to the Trenton Water Power Company, as assignee of Thomas J. Stryker, to the executors of Timothy Abbott, deceased, both upon the original loan of the said deceased and upon that purchased by him of Joseph Trotter; and, having paid the interest upon said loans, then to pay the balance, if any remaining in his hands, towards the payment and satisfaction of the said principal sums.
    That, by the terms of the said deed of assignment, the said trustee was directed, after paying out of the proceeds of the said rent the interest on the principal sums in said deed mentioned, to pay the balance of money which shall remain in his hands from time to time, as the same shall be received from the said lessees, their heirs, executors, administrators or assigns, to the Trenton Delaware Falls Company, and to the treasurer thereof; that out of this balance the said the Trenton Delaware Falls Company made, they are informed and believe, some oral provision for the payment of said debt due by them, or the interest accruing upon some debt due by them to the said Isaac Ivins; but they insist that there was no legal assignment made to the said Ivins, and that they were not consulted in the making of said arrangement or provision, and had no knowledge thereof at the time such arrangement or provision was made, and that they are not bound thereby; but that the said the Trenton Delaware Falls Company being no longer competent by themselves or their treasurer, to receive the said balance, the same may rightly be retained by said trustee, to be applied in the payment of the principal sums in said deed of assignment named.

      That the said William Potts, as trustee as aforesaid, has fathfully performed the duties imposed upon him by said trust, and up to the time in said bill of complaint mentioned, to wit, the first day of January, eighteen hundred and forty-five, has collected the said rent to the use of the said oestuis que trust.

    They admit that, for the stoppage of water occasioned by the widening, clearing out, or repairing the said canal or raceway, and the works connected therewith, after the, expiration of thirty days in any one year, computing the year from the first of January, the rent is to abate until the water is again supplied; but whether the water was stopped from the mill of the said complainants during the said period of thirty days in any one year since the failure on their part to pay their rent, or how longer for what purpose the said water may have been stopped in any one year, they do not know and cannot answer, but leave the said complainants to prove the same as this honorable court shall direct.
    Replications in the usual form were filed.

      Joseph C. Potts and Williamson, for complainants.

      Stacy G. Potts, for defendants.
   Halsted, Chancellor.

I see no way in which I could decree that the rents be paid to William Potts, trustee, &c., but by declaring the receivers sale void; or that it was made subject to encumbrance, and that the purchasers at the receivers sale took it subject to all encumbrances, and subject, too, to the pledge, if it be such, of the rents receivable from Fish & Green, to pay the interest of the debts named in what is called the assignment to Potts, trustee, &c., of the lease made to Fish & Green.

But the receivers sale was made free and clear of all encumbrances, and was confirmed by the court. It cannot now be disturbed by any action of this court. An appeal should have been taken from that decree of confirmation, as the only mode of correcting it, if it was wrong. I cannot now declare that, the sale was made subject to encumbrances.

From- some facts stated in argument, it would seem that, when the act for the sale free from encumbrances was applied for, it was understood by the parties applying for it that Potts, trustee, &c., should not be affected in his right to receive the rents from Fish & Green, for the purposes stated in what is called the assignment to him of the lease to Fish & Green'| and -1 can very well imagine that the language used in the proviso of that act was understood by the parties applying for the act, or by those interested in the rents derivable from that lease, to be sufficient to protect Potts, trustee, &c., in the receipt of those rents. But I do not see that the court is at liberty to inquire what any person soliciting the passage of an act, or assenting to its passage, understood to be the meaning of its language. And, again, such understanding would not affect the purchasers at the receivers’ sale, or prior or subsequent mortgages of the property.

My conclusion on the re-hearing is the same as on the first hearing — that the Water Power Company are entitled to the rents.

Order accordingly.

The opinion of the court was delivered by

Green, C. J. Two questions are presented for the consideration of the court, viz.: First, whether the act of the fifteenth of February, eighteen hundred and .forty-four, entitled “An act to relieve the creditors of the Trenton Delaware Falls Company,” is a constitutional and valid act, and if it be, then, second, whether the right of the appellant to receive the rents assigned to him by the company, is secured by the provision of the third section of the act.

1. The act is alleged to be unconstitutional, upon the ground that it impairs the obligation of contracts. The company, at the time of the passage of the act, was insolvent. Its assets were in the hands of receivers. As the law stood prior to that time, the receivers were authorized to sell the property of the corporation, subject to encumbrances. But the property being encumbered far beyond its value, no sale could be effected through the agency of the receivers. From the character of the work, and the nature of the encumbrances upon it, a sale by the ordinary process of law, upon proceedings instituted against separate portions of the work, at the instance of separate encumbrancers, if at all • practicable, would inevitably have involved loss to all parties concerned. The design and operation of the act was to effect an immediate sale of the entire work in the most advantageous manner. It effected promptly, through the agency of the receivers, what must otherwise have been accomplished at the cost of much delay and expíense, through the ordinary process of law. It left the proceeds of the sale in the hands of the Court of Chancery, to be disposed of according to the rights of the respective parties, as it would have been, had the property been sold under foreclosure. The act was designed to be in aid of the creditors of the company. Its design is not to invalidate any contracts, but to enforce them — not to impair any securities, but to aid in obtaining the benefit of them. It in no wise interferes with the obligation of any contract. It affects only the remedy.

But it is said that the interest assigned to the appellant was a franchise, which could not be sold or taken by virtue of the previous mortgage, by the ordinary process of law, and that, therefore, the act which authorized a sale of the property clear of the appellant’s interest, impaired the obligation of his contract. The first answer to the objection would seem to be, that if the encumbrance of the assignee of the rent was of a higher nature than the mortgage upon the work, or existed independent of that mortgage, the ground of complaint is not against the act, but against the order in which the assets were marshaled. The appellant was not, by the decree of the Chancellor, assigned the priority in the distribution of the fund, to which by law and by the provisions of this very act he was entitled. The relief should have been sought against that decree.

But the answer may be placed upon broader ground. The rent of the water is not a franchise, nor is the right to receive or demand it a franchise. The company being authorized to draw the water from the river, and owning the raceway and the land upon which it was constructed, had the right to the use of the water flowing over their land through their raceway, as incident to the ownership of the land — as in fact a part of the land itself.

And a conveyance or mortgage of the land would pass the right to use the water, precisely as the conveyance of all other land passes the right to the use of the water flowing over it. That the right to draw the water from the river was derived from the state will not alter its character, nor will it convert the rent derived from it, or the right to receive the rent into a franchise, any more than the right to receive rent from land purchased' from the state, is a franchise.

The charter of the Society for Establishing Useful Manufactures, (Paterson 104,) contains no power to sell or lease water privileges. They have simply a power to acquire, hold and dispose of real estate. They lease and sell water power by virtue of the ownership of the land and their right to exercise this power has been repeatedly recognized, both by the Court of Chancery and by the Supreme Court.

The entire property of the Water Power Company, its lands, its raceway and its water power was subject to encumbrances by mortgage and judgment prior not only to the assignment to the appellant, but prior to the lease itself under which he claims. Clearly, whatever the nature of the interest of the assignee of the rent may have been, legal or equitable, it was subject to prior encumbrances,, by virtue of which, not only the assignment, but the lease itself, might have been extinguished. It would seem to be totally immaterial whether the previous encumbrance be satisfied by a sale, or a sequestration of the property of the company. But if it be material, it follows from what has been already said, that the right to receive the rents would have passed with the title to the work itself. So that the prior mortgages and judgments were not only liens upon the work, and entitled the holders in equity to the rents and profits, but the mortgagees and judgment creditors had the right and the power, by the ordinary process of law, to extinguish the lease and the rights of the assignee consequent upon it.

It is said again, that the act is illegal, because it confounds the rights of encumbrancers upon the property, by uniting the entire work in one sale, and not disposing of it in distinct portions. This objection touches the policy of the act. But the difficulty of discriminating between the extent of the different encumbrances and the precise value of each in the distribution of the assets, where the validity of no contract is impaired, cannot affect the constitutionality or validity of the law. Nor is it perceived that the objection, whatever force it might have had, if urged by the mortgagees or judgment creditors, lies in the mouth of the appellant in this ease, whose interest was in no wise affected by it.

Again, it is said that the act is unconstitutional, because it reserved and protected existing leases from the operation of the sale. But the act confers no new right upon the lessee. It confers no additional validity on the lease. It simply declares that nothing in the act shall be construed to invalidate existing leases. It leaves the right of the lessees precisely as they stood before the passage of the act.

But it is said that the act itself was designed to protect, and does, in terms, protect the claim of the appellant.

The act provides that nothing therein contained shall be construed to invalidate any existing leases made by said company, or assignments thereof. It is contended that the effect of that provision is, that rents assigned remain an encumbrance upon the work, notwithstanding the sale, and that it was the design of the legislature to protect them. A lease is the conveyance of land rendering rent. The term is frequently used to designate the interest of the tenant; and when the statute speaks of the mortgage of a lease, (Rev. Stat. 89, § 9,) of the assignment of a lease, (Rev. Stat. 503, § 10,) or of the surrender of a lease, it always refers to the interest of the lessee in the contract, not the rent derivable from the lease. The assignment of a lease is properly the transfer of the interest of the tenant. This is its popular as well as its appropriate and legal meaning. But it is said that the legislature, in the act now under consideration, used the phrase in a different and broader sense, designing to include an assignment by the landlord of the rent, as well as an assignment by the tenant of his interest in the premises. If it be clear thaj; the legislature used it in such sense, it must be construed accordingly.

The legal import of the language applies to the interest of the tenant, not to that of the landlord. To warrant a different construction, the intention of the legislature should be clear and unequivocal. There is no evidence of such intention in the language of the act. It must be found, if anywhere, in the reason and spirit of the enactment. But it is difficult to perceive why the legislature should have designed to protect the claims of the landlords, while the motives for protecting the interest of the tenants are sufficiently obvious. The tenants, upon the faith of their leases or contracts with the company, had made costly erections and improvements ; some of them held by virtue of contracts prior to any encumbrance upon the work. Their priority could not be disturbed. All of them had strong claims in equity. The improvements which they had made, and the rents they were paying, constituted, in great measure, the value of the work. If the leases were made for a fair consideration, rendering a just rent, the tenants had the strongest claim in justice and equity, that the value of their improvements should not be lost, even as against prior encumbrances; but that their title should be preserved, and the rents be appropriated in satisfaction of prior claims. Protection to the original tenants, or to their assignees, who made such improvements, was equitable and just. But upon what ground should or could the legislature have protected the right of the landlords or their assignees to receive the rents? If the act protects the assignee of the landlord, it protects the landlord. If it protects the assignee of the rent, it protects the rent also. The language of the act is, that nothing in the act shall be construed to invalidate leases made by said company, or assignments thereof. If the assignment of leases means the assignment of the landlord’s interest, the lease must mean the landlord’s interest. But surely the legislature never intended to protect the rents in the hands of the landlord. That would have been most effectually to impair the validity of contracts, and to take from the encumbrancers all the value of their security. It would have sold the work, but secured its entire value and income, not to the purchaser, but to the company and to their assignees. The law will admit of no such construction. Upon such interpretation, its provisions would neither be rational nor constitutional. It would violate alike the plain dictates of justice and the letter of the constitution.

The reason and spirit of the law, no less than its language, require that the assignments of leases should be construed to refer to the transfer of the rights of the tenants, and not to a mere assignment of the rent. Upon this interpretation the act is clearly constitutional. It violates no principle of justice. If made with the assent of the prior encumbrances, it conflicts with no rule of law.

The title of the appellant to receive the rent by virtue of the assignment is not saved from the operation of the sale. The equities, if any, of the party have been, or might have been protected in the Court of Chancery upon the distribution of the assets. All equities appear to have been thus protected. The appellant and his cestuis que trust, like many other honest creditors, have lost their claim, not from any illegality or want of equity in the statute, but because their security was inadequate.

The decree must be affirmed, with costs.

Decree accordingly.

Decree of the Chancellor affirmed unanimously.

Cited in Rader v. Southeasterly Road Dist. of Town. of Union, 7 Vr. 278; Randolph v. Middleton, 11 C. E. Gr. 547; Martin v. The Somerville Co., 3 Wallace, Jr., 211.


author: The Chancellor.

text:
    Samuel Fleischman, appellant, and Charles E. Young and others, respondents.
    1. Although the general rule is that when the equity of the bill is answered, the defendant is entitled to the benefit of his answer, and the injunction should be dissolved, the rule is subject to exceptions. The motion is addressed to the sound discretion of the court, which should always be exercised with a proper regard to well-established rules, but not in such slavish obedience to them as to defeat the ends of justice.
    2. So in a case where, if the motion prevailed, the cause was virtually. decided, and the complainants would be deprived of their only remedy, and the answers showed circumstances enough for a well-founded belief that they did not give the true character of the transaction ; although they technically denied the equity of the bill, the court would not dissolve the injunction.
    3.
      Quere. Whether an order refusing to dissolve a temporary injunction pending the suit be properly the subject matter of appeal. Some of the authorities deny that the order where costs arc not allowed can be the subject of appeal, and that even where costs are allowed; the order upon appeal will be reviewed only upon the question of costs.
    The bill in this cause was filed to avoid certain judgments as fraudulent. The injunction, as modified, merely restrained the sheriff from paying over the money received by virtue of the judgment, until the final hearing of the cause. Upon the coming in of the answer the defendants moved to dissolve the injunction, on the ground that the answer was a full denial of the equity of the bill.

        See post, Att’y-Gen. v. Paterson, and ante, Att'y-Gen. and Hud. Riv. R. R. Co.—Reporter.

   The Chancellor.

The only ground upon which I am asked to dissolve the injunction in this case is, that the equity of the bill is fully answered. As far as respects the judgment of Fleischman, I am unwilling to dissolve the injunction. As to>the other judgments, let an order for dissolution be made.

The general rule undoubtedly is, as stated by counsel, that when the equity of the bill is answered, the defendant is entitled to the benefit of his answer, and the injunction .should be dissolved. But the rule is subject to exceptions; and there are many cases in the books where the court, while acknowledging the rule, have, notwithstanding, felt constrained, from the character of the case, and the effect of a dissolution, to deny the motion to dissolve. The motion is addressed to the sound discretion of the court, which should always be exercised with a proper regard to well-established rules, but not in such slavish obedience to them as to defeat the ends of .justice.

In the case of Chetwood v. Britton, 1 Green’s Ch. R. 439, the Chancellor declared the answer to be a broad denial of the equity of the bill. He expressed his entire confidence in the integrity of the answer, and his language was, “ that the equity of the bill is fully and fairly met by the answer.” He refused to dissolve the injunction. He disregarded the general rule, simply upon the ground that the complainant's only remedy was in that suit, and that if the motion to dissolve prevailed, the complainant was remediless.

In this case, if the motion prevails, the cause is virtually decided. The defendant resides out of the state. If he received the money from the sheriff, the further prosecution of this suit would be fruitless : the complainants are deprived of their only remedy. But this consideration, alone, would not induce me to deny the motion, for, if it did, the refusal should extend as well to the other judgment creditors as to Fleischman.

The impression produced upon my mind by the answer of Fleischman, and of his agent, Isaac Dittenhoeffer, is very unfavorable to the defendant. I do not mean to say that a mere vague suspicion is excited as to the honesty of the transaction, but that the answers show circumstances enough, not for a decided judgment against the bona fides of the transaction, but for a well-founded belief that the answers do not give its true character. When such an impression is produced upon the mind of the court by the answer, although it may technically deny the equity of the bill, I do not think the injunction should be dissolved ; and more especially when the consequence of such dissolution will be to leave the complainant remediless in the premises.

Zabriskie and W. Pennington, for appellants.

Bradley and Frelinghuysen, for respondents.

The property levied upon has been, by the arrangement of the parties, converted into money. The money may be invested, so that no serious loss can accrue to any one from the mere delay occcasioned by this suit.

My impression is strong, that there is a misjoinder of complainants; that a judgment and execution creditor cannot unite with a creditor at large iu a bill like this. The question was not mentioned on the argument, and I am willing to hear the parties, if they desire it. If my impression is correct, I shall give the complainants leave to amend; or if any of the complainants who appear oin the bill as creditors at large, have, since filing the bill, obtained judgments, they may bring such fact before the court. In Edgar v. Clevenger et al., 1 Green’s C. R., 258, the complainant was permitted after a decree pro oonfesso against the defendants, and an ex parte hearing upon the evidence, to file a supplemental bill, in order to incorporate in the record the facts that after the commencement of this suit in this court, the complainant obtained a judgment and sued out execution at law.

The motion, as to Fleischman’s judgment, is denied, but without costs. As to the other defendants, the motion is allowed, with costs.'

From that part of the interlocutory order which refused to dissolve the injunction which had issued against paying-to him the moneys raised upon his execution, Samuel Fleischman appealed to this court.

The opinion of the Court of Appeals was delivered by

Green, C. J. This appeal is from an order of the Chancellor, refusing to dissolve an injunction upon the coming in of the defendant’s answer. The ground of appeal is, that the answer of the defendant, sustained by the accompanying affidavits, is a full denial of the equity of the complainant’s bill. The bill was filed to avoid certain judgments as fraudulent. The injunction, as modified, merely restrains the sheriff' from paying over the money raised by virtue of the judgment, until the final hearing of the cause. The injunction is merely ancillary to the main purpose of the bill. It retains the fund under the control of the court until the question of right is finally disposed of.

Whether an order refusing to dissolve a temporary injunction pending the suit, be properly the subject matter of appeal, is a point upon which there is some diversity of opinion. Some of the authorities deny that the order where costs are not allowed, can be the subject of appeal, and that even where costs are allowed, the order upon appeal will be reviewed only upon the question of costs.

But admitting that where costs are allowed, the appeal lies — it is obvious, that the order of the Chancellor should not be interfered with except in a case entirely clear of doubt — and where some principle of law or of equity has been violated by the decision.

Believing that no principle or rule of law or equity was violated by the order of the Chancellor, and concurring in the view expressed by him, that the facts of the case warrant'the apprehension that the truth is not fully disclosed by the answer, we are of opinion that the Chancellor was right in refusing to dissolve the injunction, and that the order should be affirmed, with costs.

Decree accordingly.

The decree of the Chancellor affirmed unanimously.

Cited in Mayor, &c., of Jersey City v. Mor. Can. & B. Co., 1 Beas. 546; Firmstone v. DeCamp, 2 C. E. Gr. 316; Murray v. Elston, 8 C. E. Gr. 129.


text:
    Between Richard P. Thompson, attorney-general, at the relation of the Board of Chosen Freeholders of Bergen, the inhabitants of the township of Saddle River, in the county of Bergen, John S. Van Riper et al., appellants, and The President and Council of the City of Paterson, respondents.
    1. The object of a preliminary injunction is to prejvent some threatening, irreparable mischief which should be averted until opportunity is afforded for a full and deliberate investigation of the ¡case.
    2. Where it does not appear that irreparable mischief is liable to ensue from leaving a party to go on exercising a right he claims, the court never stops him before it has an opportunity of examining the question of right.
    3. The mere erection of a house intended as a poor and work-house, is, in itself, no injury to anybody; nor is the sending of paupers into a township or county illegally, or keeping them there a few months, a case of irreparable mischief.
    4. Where, at the time a preliminary injunction Was applied for, the main question in the cause, which was essentially a question of law, was pending before a court of law, the application was refused. The rule has been long established, that in such cases a court of equity does not interfere by injunction until the question of right is determined.
    5. An order of the Chancellor, refusing a preliminary injunction, is appealable where the appellants are aggrieved by it — where it touches the merits of the question in the cause — where it is the refusal of a present relief against a present mischief. So where an injunction is the primary object of the bill — where the complainants, if entitléd to any relief, are entitled to this — where upon the case made the nuisance complained of is a wrong done to them, and this is the means of restraining it — and where, if a nuisance at all, the act complained of is a present existing, continuing nuisance, the appeal is not liable to be dismissed. — By Potts, J.

      6. The granting or refusal of a temporary injunction during the pendency of the cause, was a matter of discretion with the Chancellor. It concluded no right of the parties, or of either of them. The order is in no sense a final order — costs are not adjudged. It is not an order from which an appeal will properly lie. By Green, C. J.

    The bill in this case sets out that the president and council of the city of Paterson had purchased a farm in Saddle River, and were engaged in erecting on it a poor-house, or poor and work-house, in which they intended to keep the paupers chargeable, and that should become chargeable, upon that city, and the idle and dissolute persons and vagrants of the same; and that they had removed and were keeping paupers there : and that the sending, keeping and maintaining, &c., would be a great injury and nuisance, and a public wrong, to the inhabitants of said township and county, and praying relief and an injunction.
    The bill was directed to be filed, and time given to the defendants to put in an answer.
    The answer admits the purchase of the land, and that they were erecting a building upon it, to be used as a poor-house, &c., but denying that it would be an injury, nuisance or public wrong, and claiming right under their charter to erect and maintain such poor-house, &c.

      Asa Whitehead, for complainants.

      Wm. Gledhill, for defendants.
   The Chancellor.

I do not feel myself at liberty to grant a preliminary injunction in this case. There are important principles of law, as well as important facts, involved in the issue. The object of a preliminary injunction is to prevent some threatening, irreparable mischief, which should be averted until opportunity is afforded for a full and deliberate investigation of the case. The defendants have purchased the farm, and removed the paupers, and have nearly completed an expensive building on the premises. To interrupt the progress of the defendants in completing their building, can be of no advantage to the complainants; such interference might greatly injure the defendants, in a pecuniary point of view, by interfering with their contract for buildings, and in other respects. It is not the building which the complainants regard as a nuisance, but the use to which it is to be applied. To compel the defendants to provide some other place for the accommodation of the paupers during the pendency of this suit, and until their rights are finally determined, would, necessarily, expose them to great inconvenience and expense. On the contrary, if matters are permitted to remain as they are, until final hearing, it can be, at the worst, but an inconvenience to the complainants, temporary in its character. The delay of -the complainants in not making an earlier application to thejcourt, has placed the defendants in a situation in which they should not be disturbed until their rights, which the complainants question, are finally determined. There is another reason why I do not feel myself at liberty to interfere now. It is admitted by the parties that the questions involved in this controversy are now before a court of law. The defendants have been indicted in the county of Bergen for erecting and maintaining the nuisance, which it is the object move. The questions of law and of fact are of this suit tó re-before the proper and appropriate tribunals. It is true the defendants do not interpose any objection to the jurisdiction of this court, on the ground of the pendency of this indictment. Nevertheless, the proceedings at law may be noticed by the court for its own satisfaction. If a pure question of law was involved —for instance, whether the defendants have any right under their charter to purchase and hold the farm without the territorial limits of their city — this court would not settle that question. It would have no right to settle it. It would be a proper question to be determined by a quo warranto, or in some other legal way. Attorney-General v. Utica Ins. Co., 2 J. C. R. 371. It is the special grievance to the complainants that justifies the interference of this court. Caning and others v. Lowerre, 6 J. C. R. 439. But as to the questions, both of law and of fact, the court may ask, or may wait for, the action of another tribunal. If there is difficulty as to the law involved, the court may hold the case, and send the party to a court of law to determine the legal controversy; or, if the facts are complicated and difficult, an issue may be awarded to try them. In this case there are many nice and important questions of law, as well as the one of fact, whether a nuisance or not. There appears to me, therefore, a propriety in this court’s waiting for the decision of the case at law. Should it be determined that the defendants have a right to establish a “poor-house” without their territorial limits, that terminates this controversy; for the complaint is not to the manner, but as to the right of the defendants carrying out their projects.

The injunction is refused, but without costs. The complainants may wait, and renew their application for injunction after the indictment is tried, or may proceed with this case to final hearing.

Green, C. J. The bill asks an injunction to restrain the city of Paterson from erecting a building for a poor-house, and from keeping their paupers and vagrants in any building upon a farm owned by the city in the township of Saddle Eiver, in the county of Bergen. The complainants, upon filing the bill, asked a temporary injunction. Time was allowed to the defendants to file an answer. Upon the coming in of the answer, the temporary injunction was denied, without costs. From that order the complainants have appealed.

Several important questions of law and fact are involved in the controversy, and have been ably discussed upon the argument, viz.: Whether a city or town may establish a poor-house without its own territorial limits. Whether a poor-house, established in a populous neighborhood, be in itself a nuisance. Whether this particular poor-house is so conducted as to be a nuisance.

The Chancellor decides neither of these questions. He simply declines to interfere by a temporary injunction. He intimates, indeed, that the questions of law and of fact should be settled in a court of law, before the allowance of an injunction. But his decision is simply that he will not grant a temporary injunction before the final hearing of the cause.

The granting or refusal, of the temporary injunction, during the pendency of the cause, was a matter of discretion with the Chancellor. It concluded no right of the p irties, or of either of them. The order is in no sense a final order. Costs are not adjudged. It is not an order from which an appeal will properly lie. Garr v. Hill, 1 Halst. Ch. R. 639; Trustees of Huntington v. Nicoll, 3 John. R,. 566.

Clearly, no irremediable injury can result!from a denial of the injunction, nor can the subject matter in controversy be withdrawn from the jurisdiction of the court.

No opinion whatever is designed to be expressed or intimated upon the merits of the ease. The Chancellor has expressed none. He has simply declined, in the exercise of his discretion, to use the restraining power of the court before the cause is heard upon the merits. In do perceived that he exercised his discretion un ng so, it is not wisely or injudiciously. If the case were otherwise, it is 3ot a proper case for the interference of this court. We may rot in such a case substitute our opinion for> the discretion of the Chancellor, without needlessly and wrongfully trenching' upon the rights and powers of that court.

The appeal should be dismissed.

Order accordingly.

Potts, J. The bill in this case sets out tíjiat the president' and council of the city of Paterson had purchased a farm in Saddle River, and were engaged in erecting on it a poorhouse, or poor and work-house, in which they intended to keep the paupers chargeable, and that should become chargeable, upon that city, and the idle and dissolute persons and vagrants of the same, and to put them to work and labor there, and confine them for punishment as yagrants, and to pass by-laws and rules for the regulation and government of said institution; and that they had removed and were keeping paupers, &c., there; that they claim an exemption of the said land and establishment from taxation, and that the sending, keeping, and maintaining paupers, &c., there, will be a great injury and nuisance, and a public wrong to the inhabitants of said township of Saddle River, and said county of Bergen, &c., and praying relief and an injunction, &c.

The bill was directed to be filed, and time given to the defendants to put in an answer; and an answer and affidavits were subsequently filed, admitting the purchase of the land, and that they were erecting a building on it to be used as a poor-house, &c., but denying that it would be an injury, nuisance, or public wrong, and claiming right under their charter to erect and maintain such poor-house, &c.

The Chancellor, on argument, made an order refusing a preliminary injunction, whereupon this appeal was taken to this court from said order.

Whether the city of Paterson has a legal right, under the provisions of her charter, to buy lands, and erect, maintain, and govern a poor-house thereon out of her territorial limits and within the bounds of another township and county; and whether the erection and maintenance of such an institution, at such place, and under such circumstances, is a public wrong, injury, and nuisance which the Court of Chancery has power to prevent, are questions which have been ably and elaborately argued on both sides before the court.

But it is very clear that this court cannot, in this collateral way, undertake to decide the whole merits of this case, as presented in the bill, answer, and affidavits. The Court of Chancery has not done so. The cause was not before that court upon final hearing. The testimony was not taken; the cause was not ready for hearing. The motion argued before the Chancellor was a motion for a preliminary injunction pending the suit. That motion alone was decided; and the only question with which we have now to deal is, whether the order refusing a preliminary injunction was erroneous ; for to warrant a reversal upon appeal from chancery, some definite rule of law or equity must appear to have been violated. Garr v. Hill, 1 Hal. Ch. R. 639; Rogers v. Hosack’s Ex’rs, 18 Wendell 329.

Indeed, so narrow is the question that usually comes up by appeals from interlocutory orders of the Court of Chancery, so exclusively is the appellate court confined to the simple merits of the order itself, that repeated efforts have been made to define with precision the exact lir e between orders that are appealable, and orders that are not appealable. This is no easy task, nor has it been entirely accomplished. The statute (Rev. S. 921, § 80,) says that all persons aggrieved by any order, &c., may appeal. But this language must have a legal construction; and hence this court held, in the first case above cited, that the party must, in a legal sense, be aggrieved. The order must be one which touches the merits of the question in the cause, and affects'the rights or interests of the party. And so it has been hell that orders relating merely to questions of practice, as an order for the examination of a witness, saving all just exceptions, is not appealable, Huntington v. Nichol, 3 Johns', R. 566; or for an attachment to answer touching an alleged contempt, Bruce v. Street, 9 Johns. R. 442; nor does an appeal lie from a decree made upon a default at the hearing, Sands v. Hildreth, 12 Johns. R. 493. In Bruce v. Street, Chancellor Kent, delivering the unanimous opinion of |the Court of Errors of New York, said : “It has been frequently admitted in this court, that there is a class of orders i i chancery which are not objects of appeal. But there never has been any precise and definite line drawn between that class of orders which are, and that class which are not, the ground of appeal. Every person of sense and reflection will at once perceive that such a distinction does, and must exist. Orders of one kind or other arise upon every material step taken in the progress of a suit in chancery; and they become very frequent and numerous in a cause that is much litigated. Many of these orders relate to the process and practice of the court, and to allow an appeal from every order would not only be absurd but intolerably oppressive/ It never was contemplated, he says, to allow an appeal from any decree or order which did not involve a decision upon some matter touching the merits of the controversy. And so it has also been held that an appeal does not lie upon a question as to interlocutory costs merely, or from a decree for costs, which rests in the discretion of the court. Winslow v. Collins, 3 Paige 88; Hunt v. Wallace, 6 Paige 371; Travis v. Waters, 12 Johns. R. 500; Rogers v. Hally, 18 Wendell 350.

Of course this rule does not apply in a case where the allowance or refusal of costs is governed by statute or a standing rule of court, or is a matter of strict right. Buloid v. Miller, 4 Paige 473.

It is, perhaps, impossible to run the discriminating line through the whole class of interlocutory orders, so as to establish a permanent and inflexible rule, but by applying to each case the principles referred to as settled, an approximation may be made to it.

As to the question whether orders granting, refusing, continuing and dissolving injunctions, are properly within the class of appealable orders, Mr. Justice Bronson, in the case of Rowley v. Benthuysen, 16 Wendell 373, said, “I cannot admit that this power of injunction is, in all eases, a discretionary power, unless it can be maintained that the whole jurisdiction of the Court of Chancery is of that character. The means of administering preventive justice by the writ of injunction constitute a large and most valuable part of the power of the court. Bills are often filed for no other purpose than that of obtaining the benefit of this writ; and in other cases the granting or refusing it may be equivalent in its consequences to a direct decision upon the whole merits of the litigation. Indeed, the motion to grant or dissolve an injunction, except in cases of culpable default, is always made upon the merits of the cause, as they are disclosed in the pleadings between the parties. The question certainly is not addressed to the arbitrary or unlimited discretion of the Chancellor, but depends in general upon settled and well-defined principles- — principles which have been established by a long course of adjudication in courts of equity — and the Chancellor in awarding or dissolving an injunction is no more at liberty to depart from approved precedents than is the judge who presides on the final decision in a court of-law.”

to be correct, it refusing, continu- ' But admitting these general principles does not follow that every order granting, ing or dissolving an injunction is appealable; For the rule applies to this as well as to any other class of orders, that to constitute a ground of appeal the paijty appellant must, in a legal sense, be aggrieved by the order — it must be an order which touches the merits of the question in the cause, and affects the rights or interests of the; party. In cases within this rule, this court has, I believe, uniformly entertained these appeals, and either affirmed or reversed the order appealed from; and where the order brought up has not been cpnsidered as coming within the rule, the appeals have been dismissed. Att’y-Gen’l v. Paterson and Hud. Riv. R. R. Co., (not reported); Mulford v. Mirick, (not reported); Carr v. Hill, (before cited). The first question then is, whether the order made, refusing a preliminary injunction in this case, is appealable. Are the appellants aggrieved in a legal sense by it? Does ijt touch the merits of the question in the cause? Are the rights and interests of the appellants affected by it ? An primary object of the bill. If the complainants are entitled to any relief, they are entitled to this. injunction is the If, upon the case made, the erection and maintenance of this poor-house is a wrong done to them, this is the redress to which they are entitled — the remedy for the wrong. The mischief must be restrained, and this is the meats of restraining it with which the Court, of Chancery is armed. It is not merely the building of a house in Saddle River that is complained of, but the keeping of paupers there — and this, if a nuisance at all, is a present, existing, continuing nuisance. The refusal of a preliminary injunction, then, does touch the merits of the cause; it is the refusal of a present relief against a present mischief; and the appeal is not liable to' be dismissed.

Then, the remaining question is, wheth jr the order of the Chancellor refusing a preliminary injunction was erroneous. And here we must recur again to the narrow limits of the question presented by this appeal. It is not whether the complainants are right or wrong upon the questions involved in the case made upon bill and answer — not whether Paterson has a right to establish and maintain her poor-house in Saddle River- — nor whether it is a nuisance; but whether the Chancellor, in the decision he has made refusing this order, has violated any well-settled and established rule of equity.

I think it very clear that he has not.

First. Because, upon the ease before him in the bill, answer, and affidavits, no case of threatening, irreparable mischief is made out.. That was the only question he had to decide upon the motion for a preliminary injunction — in advance of the hearing of the cause, and before the case was in a situation to be decided upon the merits. Where it does not appear that irreparable mischief is liable to ensue from leaving a party to go on exercising a right he claims, the court never stops him before it has an opportunity of examining the question of right. To do so would be unnecessarily to prejudge the case before a full hearing on its merits— and so are the authorities. 2 Story’s Eq. Jur., § 924 ; Earl of Ripon v. Hobart, 3 Mylne & Keene 169; Kane v. Vanderburgh, 1 John. Ch. R. 12; Jerome v. Ross, 7 John. Ch. R. 315, 336; Columbia Steamboat Co. v. Wildrin, Hal. Dig. 532, § 2; Quackenbush v. Van Riper, 2 Green's Ch. R. 350; West v. Walker, 2 Green's Ch. R. 279; Van Winkle v. Curtis, 2 Green’s Ch. R. 422; Morris Canal and Ranking Co. v. Soc’y for Est. U. M., 1 Hal. Ch. R. 203. The mere erection of a house intended as a poor or poor and work-house is, in itself, no injury to anybody, if the intention be never carried out. Nor is the sending of paupers into a township or county illegally, or keeping them there a few months, a case of irreparable mischief.

Second. In the second place, it appeared in this case, before the Court of Chancery, that the questions involved were, at the time the preliminary injunction was applied for, pending before a court of law. The maiD question in the cause is essentially a question of law. And the rule has been long established, that in such cases ja court of equity does not interfere by injunction until the question of right is 2 determined. Att’y-Gen. v. Nichols, 16 Ves. 338; Att’y-Gen. v. N. J. R. R. Co., 2 Ves v. Clever, 18 Ves. 211; Att’y-Gen. v. N. Green’s Ch. R. 140. Upon both these grounds the order refusing the injunction was right, and the order of the Chancellor should be affirmed. j

Decree of Chancellor affirmed unanimously.

Cited in Coryell, Ex., v. Holcombe, 1 Stockt. 650; In the matter of Anderson, 2 C. E. Gr. 538; Camden and Amboy R. R. Co. v. Stewart, 6 C. E. Gr. 486; Morgan v. Rose, 7 C. E. Gr. 594; Black v. Del. & Rar. Can. Co., 9 C. E. Gr. 489 ; Citizens’ Coach Co. v. Camden H. R. R. Co., 2 Stew. 304.