author: Bergen* V. C.

text:
    William Nelson Goodnow v. American Writing Paper Company.
    [Submitted April 15th, 1907.
    Decided April 17th, 1907.]
    1. The owners of a number of paper mills combined and sold all of their properties to a newly-organized company, taking in exchange therefor, besides certain bonds, all of the preferred and common stock of the new company at an admitted overvaluation. The new organization was prosperous, had no debts, and earned annually large sums of money in excess of the amounts advanced to produce and sell its output. It dedared a dividend on the preferred stock, payable out of such annual earnings, and some of its stockholders sought to enjoin the payment of the dividends, upon the ground that there could be no surplus or net profits until the amount of the overvaluation had been earned and the impairment of the capital stock resulting from such overvaluation extinguished.—Held, that as between the stockholders, no fraud being charged, the agreement to issue the stock as full paid for property purchased was binding upon the company and its shareholders, and that the stock so issued is not subject to further call, either directly or indirectly, by suppression of dividends declarable from annual net profits, and that if all of the assets for which the stock was issued still remain in the possession of the company, or, if exhausted, replaced, in kind or with money, a dividend ascertained by reserving for capital the actual cost of the assets for which the stock was issued, they being still in possession, is not a dividing of the capital of the corporation.
    2. A contract between the company and its stockholders that the stock issued to them as full paid, and not subject to further call, is, in the absence of fraud affecting other shareholders, binding upon the company and its stockholders, although subject to attack by creditors.
    On bill for injunction. On demurrer.

      Mr. William H. Corbin* for the complainant.

      Mr. Richard V. Lindabury, for the defendant.
   Bergen* V. C.

The complainant seeks to enjoin the payment of a dividend on stock issued for property purchased upon the ground that the property being overvalued there can be no net profits or surplus from which dividends can be paid* unless the impairment of the capital* caused by the overvaluation* has been supplied* and until that is done the payment of dividends from “the surplus or from the net profits arising from its business*” as provided in section 30 of our Corporation act as amended (P. L. 1904 p. 275), is a division* withdrawal or payment to stockholders by the corporation of a part of its capital stock.

The bill charges that the owners of certain paper mills, twenty-eight in number* sold to the corporation their respective properties* and took in payment bonds of the defendant company for $17*000*000, preferred stock for $12*500,000 and common stock for $11,500,000* being all of the preferred and common stock issued by the company. The bill does not disclose in what manner the securities were divided among the respective vendors, but it is fair to assume from the manner of sale, and the manifest object of the parties, that the prices for the respective properties were agreed upon by all of the vendors, and distribution made accordingly, for the bill charges no fraud, concealment or misrepresentation by any of the parties to the transaction. It admits that the company has no debts; that all of its current obligations incurred in the management of its business are met at maturity; that the affairs of the defendant corporation are well managed; that it is in receipt of large profits annually over and above the advancements made for producing its products and conducting the business; that the net earnings for eighteen months prior to the 1st of July, 1906, exceeds $400,000, out of which it is proposed to distribute as dividends on the preferred stock $125,000, but charges that the amount paid for good will, patents and trade marks exceeds by $11,000,000 their -value, which it is insisted shall be made up from earnings before any dividend can be paid, although all of the parties to the original transaction knew that the stock was issued to each shareholder as full paid for property purchased. The correctness of the complainant’s contention is challenged by a demurrer, which confesses the truth of the allegation that the stock was issued for property at an overvaluation, and that the company did not receive for its stock money, or money’s worth, in other words, the stock was “watered” to the extent of $11,000,000.

As the bill admits that there are no unsecured creditors, their rights are eliminated from present consideration, and the effect upon creditors of overvaluation of property purchased will not be considered, the only question intended to be determined is, whether, under the conditions set up in the bill of complaint, the payment of the proposed dividend out of the admitted net earnings arising from the conduct of the business is, as between stockholders, a division of any part of the “capital stock paid in,” it being admitted that the corporation still owns the identical property taken for the stock, there having been no disposition of the specific property except where the value has been restored from the earnings.

The defendant insists a contract was entered into between the owners of the property and the company, under which the stock was issued as full paid in consideration of the property, with full knowledge by each of the parties of the values agreed upon as a support to the stock. I have no doubt that such a contract is binding upon the parties until set aside, because of fraud in its inception, or for some other legal reason. It does not distinctly appear whether or not the complainant was one of the original parties to the contract, but he charges no fraud or misrepresentation, as an inducement to purchase, on the part of his transferor, nor does he assert that he did not know the facts he now sets up when he became the owner of the stock.

The bill charges that the stock was all issued for property purchased, but not that the complainant acquired his stock by purchase, or otherwise than on account of property sold the corporation, and the presumption is that he received his stock with other shareholders in payment for the very property which he now claims was overvalued. He participated in the transaction, reaped its benefits, and is not in a position to claim that the good will bought, to his knowledge, with the stock of which he holds a part was overvalued. Washburn v. National Paper Co., 81 Fed. Rep. 17, 21.

That a contract between the company and its stockholder that the stock issued to him is full paid and not subject to further call, is, in the absence of fraud affecting other shareholders, binding upon the company and its stockholders, was declared by Chancellor McGill, in Hebberd v. Southwestern Land and Cattle Co., 55 N. J. Eq. (10 Dick.) 18, 31, where a stock bonus was given to purchasers of bonds of the company, the learned chancellor holding “such a contract is binding upon the company and its shareholders, but as the capital stock constitutes a trust-fund for the payment of debts, it cannot be given away from the demands of creditors.”

In 10 Cyc. 467 the rule is stated to be that a contract between the company and the shareholder, that his stock shall be issued in payment of property at air overvaluation is valid, though not binding on creditors, a conclusion which is supported by Scovill v. Thayer, 105 U. S. 143.

In Krohn v. Williamson, 62 Fed. Rep. 869, 875, there was an agreement that the completion of a bridge, the acquisition of a right of wajr, and the possession and enjojnnent of certain franchises and privileges should be considered a full payment of $1,500,000 of the capital stock justifying its issue as full-paid stock. In upholding this contract Judge Taft said: “Such an agreement as between the company and its stockholders was entirely valid, however subject to attack by creditors it might be.”

The rule seems to be established that between stockholders one cannot be legally called upon to make good any shortage in value between assets and the nominal par value of the stock, when his stock is issued under a contract with the company as full paid, whether as a bonus or for property at an overvaluation, when the issue is consented to by all the stockholders. It is a bargain between the contracting parties, which, in the absence of fraud, they cannot abrogate. They may let in one to participate in dividends, and thus reduce what they would have on that account, and decrease their share of the assets on final distribution, but they are dealing with their own property, and so long as they do not divide any part of the paid-in capital, they may contract to apportion dividends, properly payable, and also the assets, among as many as they choose, subject to the rights of creditors. The policy of our act is to preserve intact for all stockholders the actual capital assets, that a stockholder may not unknowingly exhaust his principal fund, but if with knowledge the stockholders of the company contract, even for an insufficient consideration as against creditors, that another may have an interest in its property, it is bound by its contract until it is in some lawful way set asido, and if, when they so contract they are bound, and cannot call upon a stockholder to make good his stock issued full paid in payment for property overvalued, it cannot be that it can withhold his dividend or share of the net profits of the business for such purpose, and thus accomplish by indirection what cannot be done by a direct proceeding.

Stockholders may agree as to the amount of capital to be paid in, and between them this agreement would be binding, and a further call, except in the event of insolvency, and the need of unpaid subscriptions to pay debts, could not be enforced, nor would the company be prohibited from paying dividends out of net earnings until a sinking fund had been created sufficient to supply the unpaid subscriptions. The unpaid subscriptions, under such an agreement, would not represent a debt due the corporation that could be enforced, except in aid of creditors.

A number of English eases were cited on the argument, and while none of them related to the issue of stock for property at air overvaluation, they uniformly hold that where the tangible assets with which a corporation starts business, and for which its stock was issued remain, and are in the condition they were when taken over for stock issued, neither depreciation in value nor a waste caused by mining and selling the product is a reason for holding that dividends declared out of the profits of the business, arising from the sale of a product which will ultimately exhaust the capital asset, is a distribution of the capital. Lee v. Neuchatel Asphalt Co., L. R. 41 Ch. Div. 1 (1889).

After a careful consideration of the questions involved, I am of opinion that as between these stockholders, no actual fraud being charged, the agreement to issue the stock as full paid for property purchased, the agreement having been carried out, is binding upon the company and its shareholders, and that the stock so issued is not subject to further call, either directly or indirectly, by suppression of dividends declarable from annual net profits, and that if all of the assets for which the stock was issued still remain in the possession of the company, or such of them as may have been exhausted replaced, either in kind or with money, to the extent of their real value, a dividend ascertained by reserving for capital the actual cost of the assets for which the stock was issued, they being still in possession, is not a dividing of the capital of the corporation, forbidden by our act.

As was said by Judge Showalter, in Northern Trust Co. v. Columbia Straw Paper Co., 75 Fed. Rep. 936, 937: “Whatever may have been in fact the value of the property turned over to the company for its stock, the company agreed to take it for the stock. The persons interested were the stockholders, and there was no dissent on the part of any person concerned from what was then done. Neither any person then holding stock, nor any person who afterwards became a stockholder by assignment from one who then held stock, can now make complaint, on behalf of the corporation, as against the fairness of that transaction. This I take to be the settled law on that subject.” This case was affirmed (C. C. A.) 80 Fed. Rep. 450.

I will advise that the demurrer be sustained.


source: Caselaw Access Project

author: Bergen, Y. 0.

license: Public Domain

text:
    Orlando Wood, executor of the last will and testament of Almira L. Wood, deceased, et al., v. Maria Lembcke and Theodore Lembcke.
    [Submitted May 1st, 1907.
    Decided May 9th, 1907.]
    A testatrix, after appointing an executor, directed the payment of her debts, and then blended her real and personal estate, giving to four children each one-sixth; to another child, one-sixth, less $800, charged as an advancement, and the remainder to the executor in trust for another child.—Held, that the executor had authority to convey real estate, since to make the division and establish the trust a sale of the real estate was necessary.
    On bill for specific performance.

      Mr. Willard P. Voorhees, for the complainants.

      Mr. W. Edwin Floranoe, for the defendants.
   Bergen, Y. 0.

The last will and testament of Almira Wood, deceased, after appointing her son Orlando Wood executor, and directing that all of her debts be paid, reads as follows:

“Third. I give and bequeath unto my six children as follows: John 1Ü. AVood, Orlando Wood, Philip H. Wood and Almira M. Dunham each to have and to hold one-sixth part, equally each, of all that I may die possessed, either real or personal; as to the remainder, having advanced Ambrose Wood eight hundred dollars, he is to have one-sixth part, less the amount of eight hundred dollars, and as to the remaining one-sixth part of all I may die possessed of, I do order to be given in trust to Orlando Wood for the use of Mortimer Wood, to be paid to the said Mortimer AVood as his necessities may seem to require.”

Since the death of the testatrix the executor named in the will and all of the children and legatees of the testatrix entered into a written agreement Avith the defendants, by the terms of which they agreed to convey to the defendants certain real estate of which the testatrix died seized, and the defendants bound themselves to purchase. The defendants having refused to comply with the agreement upon the ground that the Avill did not confer upon the executor any power of sale, the bill in this cause Avas filed to compel the specific performance of the contract of sale by the defendants. The only question raised which it is necessary to determine is that the executor is not vested, either expressly or by implication, Avith a power of sale, and therefore a marketable title is not offered.

The testatrix in and by her will appoints an executor to manage and settle her estate, and then blending her real and personal possessions gwes to four of her children each a one-sixth part of the whole, to another one-sixth, less $800 charged as an advancement, and the remaining one-sixth to Orlando Wood, the executor, in trust for the use of another son. It thus appears that the testatrix intended an equal division of her entire estate, real and personal. What one-sixth Avould amount to, after the payment of debts, can only be ascertained after the executor has fulfilled the duties of his office and settled his final account, to determine Avhich there must be a sale of all the real and personal estate, for the testatrix has, by her will, blended the two kinds of property into a common fund. It is a part of the duty of the executor to make the division required by the will and to hold at least one share in trust. “If the executor is directed by the will or bound by laAv to see to the application of the proceeds of the sale, or if the proceeds, in the disposition of them, are mixed up and blended AAnth the personalty—which it is the duty of the executor to dispose of and pay over—then a poAver of sale is conferred on the executor by implication.” Lippincott's Executor v. Lippincott, 19 N. J. Eq. (4 C. E. Gr.) 121. The proceeds of this estate will, under this will, have to pass through the hands of the executor in the form of money. To make the division and establish the trust requires a sale of the land, and although a power of sale is not expressly given it arises under the circumstances existing in this ease by implication.

The result, therefore, is that the objection made by the defendants is not well founded, and there being no other reason offered why this contract should not be specifically performed, it will be so decreed.


author: Bergen, Y. C.

text:
    The George Jonas Glass Company v. The Glass Bottle Blowers’ Association of United States and Canada, William M. Doughty et al.
    [Submitted May 6th, 1907.
    Decided May 18th, 1907.]
    1. An organized attempt to induce the public to refrain from purchasing the products of a manufacturer, and to deprive him of a part of his trade market, commonly called “boycotting,” having for its object the compelling of the manufacturer to unionize his business and the submission of its conduct to the regulations of a labor union, is an irreparable injury to his property, the continuance of which a court of equity will enjoin.
    2. A combination or agreement to picket a manufacturing plant for the purpose of interfering with the free flow of labor to an employer, to whom labor is a necessity for the carrying on of his business, which, if successful, will prevent him from obtaining the means of pursuing a lawful occupation, and the sole purpose of which is to compel him to comply with the demands of an antagonistic power, is a conspiracy against the property rights of the employer,'subjecting his property to an irreparable injury, and all parties to such compact, actors as well as abettors, will be restrained from establishing and maintaining such picket service.
    3. A labor organization seeking to compel a manufacturer to unionize his plant is not such a competitor in the labor market as to justify it in enticing employes to leave the service of their master, or to induce persons seeking employment with him from so doing, when the enticer does not employ labor. The competition which the law upholds must be honest competition, and not a malicious attempt to injure another.
    On bill for injunction. Final hearing on pleadings and proofs.

      Messrs. Hampton & Fithian and Mr. John W. Harding, for the complainant.

      Mr. Louis H. Miller and Mr. John 17. 17escolt, for the defendants.
   Bergen, Y. C.

This controversy arises over an attempt of the principal defendant, the Glass Bottle Blowers’ Association of the United States and Canada, and its officers, who are also defendants, to compel the complainant to “unionize its factory.” The association is not incorporated, but a voluntary society made up of a number of persons who act as its officers, and control, through the medium of what is described as “local unions,” a certain class of workers in glass-blowing factories who are willing to join the - organization. The executive officers annually confer with the representatives of such factories as consent to be unionized, and together they hx the rate of wages to be paid and the general conduct of the manufacturers’ business for the coining-season, and the result of this conference is communicated to the local unions, who are supposed to comply therewith. It appears in this case that the association had, in 1901, succeeded in unionizing and bringing under its control the management of all factories in New Jersey doing a business similar to that of complainant, save that of the complainant and one other which is managed by the persons interested in complainant’s business.

The complainant’s factory since 1896 had been a subject of annoyance and dissatisfaction to the association, because Mr. Jonas, its president and principal owner, had persistently refused to subject his business to the management and control of this self-constituted monitor, and after an attempt to boycott the business of the complainant had failed to drive it into the union, a strike was declared at the works of the complainant located at Minotola, in the county of Atlantic in this state, on the 9th day of April, 1902, whereupon the employes of the complainant to the number of, approximately, three hundred, left the employment of the complainant, leased a lot of land in the immediate neighborhood of the factory and procured and set up a large tent in which the strikers .congregated, which was after-wards replaced, at the expense of the defendant association, by a substantial wooden structure used for the same purpose. While the officers of the association deny that they instigated the strike, they all admit that immediately upon its declaration some of them took the management and direction of the men who were engaged in it. The 'complainant charges that, by violence, threats and opprobrious epithets, the officers of the association, and the men whose actions they were directing, intimidated persons seeking employment at its factory, and prevented them from.doing so; that the strike was the culminating effort of the officers of this association to drive it to the wall, and compel it to submit to their dictation, and further that, although restrained by an order of this court, made in this cause, when the bill of complaint was filed, they have desisted from acts of physical violence, a cordon of pickets guard all the highways leading to the complainant’s factory, by.whom all persons seeking employment there were, at the time the evidence .in this cause was taken, subjected to ridicule, opprobrious epithets, and open or implied threats; that such picketing is a violation of its constitutional right to conduct its business in a legal way according to its own methods, resulting in injury to its business and the destruction of its property.

Before entering upon the consideration of the case, I take occasion to say that it is not intended, by anything that may appear in this opinion, to question the right of proper organization for lawful purposes, nor the right of anyone to peaceably state his side of a controversy, provided it be what it pretends to be, and is done without threats or show of force, or in any manner or under any conditions, which may fairly indicate that a threat is intended either to person or property, yet it is not necessary that the deterrent force be threatening words; acts are sometimes more effective than words, but words or acts which, taken in connection with the surrounding circumstances, are intended to intimidate, and which naturally would deter an ordinary person from proceeding to obtain work from one entitled to employ him, are not peaceable persuasions, for they interfere with “the right of personal security, the right of personal liberty and the right of private property,” the enjoyment and pursuit of which is guaranteed to every citizen by the constitution of the state, and the law of the land.

In 1892 George Jonas established at Minotola a factory for the manufacture of glass bottles, and conducted the business as an individual until 1897, when the complaining company was incorporated under the laws of this state, and the property transferred to it. "When the plant was located no village existed, but a considerable tract of land was purchaséd, and the necessaiy manufacturing buildings put up, as well as a number of dwelling-houses, which were rented to the employes of the company, so that in April, 1902, the company had invested about $300,000 in land, machinery, merchandise and buildings, forty-seven of the latter being tenant-houses. In the year 1896 one George W. Brannin, a member of the executive committee of the defendant association, called upon Mr. Jonas, at Minotola, and had a conversation with him about unionizing the factory, without any agreement being reached. In 1899 Brannin again visited Jonas, and told him that they expected to unionize the different glass factories in South Jersey, and “they had gotten our men, some of them, to go out with them, and he thought it would be to our best interest to unionize the plant.” Brannin made no threats, and his conduct during both interviews appears to have been confined to an attempt to demonstrate to Mr. Jonas that it would be of advantage to the complainant to run its factory under the rules and regulations of the association, one of these rules being that complainant should only employ one apprentice to fifteen journeymen, while nearly all of the men then employed by it were apprentices. Shortly after this, according to the testimony of Mr. Jonas, about twenty of the men employed by the complainant left, and took employment elsewhere, one of them exhibiting to Mr. Jonas a card, signed by Mr. Hayes, the president of the association. This card, as I gather from the evidence, being a certificate of the association, that the party holding it was a member of the union, and entitled to work in any union shop. The first move made by the association to coerce the complainant into a compliance with its wishes was an attempt to induce the firm of Whittimore Brothers Company, of Boston, Massachusetts, to withdraw its patronage from the complainant. This firm, who were manufacturers of shoe polish and blacking, had entered into a contract with the complainant for. the manufacture of bottles for use in their business, amounting to about $35,000, and in October, 1901, the association issued and circulated generally in the United States and Canada a circular letter signed by Dennis A. Hayes, its president, addressed “To our Brethren in the labor movement, Greeting,” portions of which read as follows:

“The Glass Bottle Blowers’ Association of the United States and Ganada request your attention to the folio-wing statement:
“For fifteen years we have been fighting non-unionism and company stores in New' Jersey. * * * There are two non-union concerns remaining. The principal one is operated by the George Jonas Glass Company. * * * The factories at Minotola are operated almost exclusively on bottles for the Whittimore Brothers Company, Boston, Mass., manufacturers of shoe and leather dressing, and if we could secure the withdrawal of this order we might make terms with the George Jonas Glass Company. We have appealed several times to the Whittimore people, and later Mr. James Duncan, first vice-president of the American Federation of Labor, called on them a number of times in relation to the matter, but his efforts and ours were alike unavailing. The firm ignores our appeal. Thus it has been placed on the unfair list of the A. F. of L., and we hope you will bear this in mind when about to have your shoes blacked, or whenever buying shoe polish or leather dressing of any kind. We would feel under many obligations if you would appoint committees to wait on business men who handle this line of goods, and also write to the Whittimore Brothers Company, No. 237 Albany street, Boston, Mass., asking them to withdraw their patronage from the concern at Minotola. ~ * * * We want this firm to realize that organized labor is a power, and that its efforts to assist and protect the helpless and oppressed cannot be lightly turned aside.”

The response to this circular was prompt and effective, for letters were mailed from all parts of the country to the Whittimore Brothers Company, of which over one hundred and fifty have been put in evidence, the result being that 'Wlrittimore Brothers Company refused to observe their contract with the complainant, which was thus deprived of a market for its goods of great value. One of these letters, written January 3d, 1902, from Canton, Ohio, which reflects the average expression of all, reads in part as follows:

“P. S.-—We have a strong union city, and they claim that you buy your bottles from the George Jonas Glass Company, of Minotola, N. J. If such is the case, I must ask that you cancel my spring order, but as you know as well as I (or better), will you please write me a letter to hand over to committee of—labor, &c., &c., see—do not give me away. Say what there is in it. I cannot use your goods while the ‘ban’ is on. I will not try. Send letter if you wish, to be read in council. I will not use goods unless the ban is raised.”

It also appears that after the bill of complaint was filed in this cause the defendant association continued its boycott against the complainant by sending letters to its customers, notifying them that it was known they were having their bottles made at Minotola, and after stating that revelations of the most appalling character had been made regarding the working of children, and that “two mere babies, worked in open defiance of the law by the George Jonas Company, were killed in the most sickening manner,” continued “that they had decided to put three men on the road, also to establish a press 'bureau for the purpose' of giving to the public the information necessary to enable them to withhold their patronage,” from parties using the product of the complainant. In order to indicate the character of the boycott inaugurated and carried on by the defendant association, the following letter is pertinent:

“Menard Liniment Company, Boston, Mass.:
“Gentlemen—In re abuse of children by Jonas et al., some time since we wrote you calling attention to your responsibility for wrongs therein complained of. Are we to understand from your silence that you wish us to publish to the'world that you endorse and stand for the slaughter of the innocents? Very truly, E. A. Agabd.”

The evidence in this cause abundantly proves that the defendant association attempted to establish a boycott -against the goods manufactured by the complainant, and so far succeeded as to cause it a serious loss of property, for the sole purpose of compelling the complainant to unionize its factory, or in other words to submit the conduct of its business to the demands of the association. Such conduct has been declared by this court to be unlawful, a conclusion which meets my hearty approval. Martin v. McFall, 65 N. J. Eq. (20 Dick.) 91.

The next important step taken by the association to accomplish its purpose was the sending of a letter to the complainant signed by Dennis A. Iiayes, the president of the association, bearing date March 27th, 1902, in which he states that he has been requested by the workmen of complainant “to seek a conference with you, to so far as possible, correct those grievances and unionize your factory.” In ascertaining the real purpose of this letter it must be borne in mind that Hayes testifies that at this time none of the employes of the complainant were members of his association; that he then had no special interest in them, because many of them had taken the places of those who had participated in the strike, and left the complainant in 1899. The only request made in this letter on behalf of the workmen is that they should be conceded such wages and privileges as unionized factories were paying and allowing under an agreement with the association, therefore it is quite apparent that this letter was only another step looking to the compelling of the complainant to submit to the association, for the wages and privileges, the absence of which is described as a grievance, were mere incidents of the control by the association of complainant’s business, for once unionized, the other results would follow, and the conclusion is justified that under a pretence of benefiting labor these officers were seeking power and attempting to establish a monopoly that would stifle competition between workmen desiring to labor in that line, for it is not denied that the number of apprentices under union rules is restricted for the purpose of keeping to the minimum the supply of skilled labor.

The complainant refused to unionize its factory, and on April 9th, 1902, about two weeks after this letter was written, over three hundred of complainant’s workmen left its employ, and a strike was declared, which has been since maintained under the direction and management of some of the principal officers of the association, with the avowed object of compelling complainant to unionize.

The present proceeding was instituted by the complainant to have the defendants, among whom are numerous of its former workmen, enjoined from boycotting its business; inducing its employes by threats, intimidation, force, violence or the payment of money to refuse to perform their duties or leave its service, or by like methods preventing those who desire to do so from entering its employment, and also from using indecent and opprobrious epithets to its officers and employes; from collecting singly or in combination with others with the intention of picketing the public highways leading to its factory, for the purpose of inducing laborers not to take employment with it; from gathering at railroad stations at or near complainant’s works and inducing, or attempting to induce, persons arriving at such stations seeking employment at complainant’s factory from so doing, and generally from bribing or intimidating workmen to refrain from entering complainant’s employment, or inducing those who are employed to leave.

The principal officers of the defendant association have been called, and they all deny that they instigated the strike; but such denials have little weight when considered in connection with their previous and subsequent conduct, for it is quite clear from the evidence that months before the strike occurred they had been engaged in an effort to bend complainant to the will of their association, and employed all the resources of a rich, powerful and well-organized society to deprive the complainant of a market for its goods, and to accomplish the destruction of its business in default of its submission to their will, when, failing in such efforts this strike was declared, a strike which the officers of this association are immediately found to be directing and controlling, and in furtherance of which the association for a long period, if not to the present time, has paid the wages not only of the men who left the factory, but of strangers brought from other places to lead and direct the strikers. The first demonstration after the strike was declared was a parade led by the defendant Doughty, the vice-president of the association, preceded by a band of music, and Mr. Hayes, the president of the association, was so promptly on the ground that the suspicion is justified that he had knowledge of what was coming. The testimony of the witness Edward C. Rush shows that some time prior to this strike meetings of the workmen were held at Yineland, which he attended, and that the defendants Doughty and Launer, another officer of the association, were present at different times and addressed the meetings, advising the men to organize and keep still about it, and that “they would take care of them and pay them good wages if they went out.” I am satisfied from the evidence that this strike was promoted by the officers of this association, in pursuance of their conceived scheme to compel the complainant to unionize its factory. I believe that Mr. Hayes told the truth when he testified that he had no interest in the workmen before the strike, because they had taken the places of other strikers, and am satisfied that he used these men as a means to accomplish his long-cherished purpose; that it was a war of conquest, not for the relief of the downtrodden as he now seeks to convince us, and that the officers of this association are as directly responsible for the acts of violence and unlawful conduct of these men as if they had actually participated in each of them. I give little credit to, and have no respect for, men who inaugurate a movement which they know they cannot control, and then seek to excuse themselves because they have advised, as they say, a body of men, many of them ignorant Italians, against the doing of unlawful acts, when common sense and ordinary experience teaches that a body of idle workmen, called together at a common rendezvous, such as this association provided, pay no attention to moral precepts communicated for the purpose of being used as a defence when called upon to respond for the acts of a disorderly mob. If these men had been advised to return to their homes and act as orderly, law-abiding citizens, simply exercising their right to quit work, a different situation would have been presented, but, on the contrary, they were gathered at a place provided by the officers of the defendant association, for no possible reason except to make a show of force, the known effect of which would be to arouse the fears of others desiring to remain at work, or to take the places of those who had left, and whose continued employment would endanger the success of the result sought to be accomplished. The parties who start a conflagration are, and should be, responsible for its consequences.

The testimony in this case is too voluminous to permit of a particular analysis; it is enough to say that I find that acts of violence were committed; that terror reigned in this village for several days; that peaceable citizens seeking to obtain work were met on the public highways by large bodies of these strikers and turned back; that persons seeking to move into the town were stopped on the public highway and only permitted to proceed through the interference of a peace officer; that private dwellings were visited by bands of men for the purpose of deterring persons desiring to continue work from doing so; that one of the employes who returned to work was assassinated, all attempts to discover the perpetrator being futile, because of the conditions existing, and all of this done, it is claimed, in the interest of organized labor, a claim which, in my judgment, no class of men will be more swift to repudiate than the fair-minded members of the labor organizations of the country.

A part of the argument submitted by counsel relates to the question whether the laborers were justified in striking. AVith that question I conceive the court has nothing to do. Men have a right to cease-work whenever they choose, with or without a reason. If they violate a contract the master has his legal remedy in damages, and so long as workmen abandoning work disperse and behave as quiet orderly citizens they are only exercising their rights, but when by force or intimidation they undertake to deter those who are willing to work from so doing they violate the law of the land. On the argument counsel for the defendants admitted that violence, intimidation and all unlawful interference with persons seeking emplojunent with the complainant was an illegal infringement of its property rights, and rested their defence on this branch of the case upon a denial that the conditions which I have found to exist did exist, and I have no hesitation in déclaring that such conduct should be restrained.

There is still another branch of this case to be considered, and that is the placing of men, two or three in number, on the highways leading into Minotola, for the alleged purpose of peaceably persuading laborers from seeking employment with the complainant. After very carefully considering this question I am of opinion that the complainant is entitled to have the defendants restrained from establishing or' continuing such picketing, for the only purpose to be served is to intercept persons coming to seek employment with the complainant, and a court should judge of the right to maintain that sort of surveillance over a complainant’s business, according to its evident intent and purpose. In its mildest form it is a nuisance, and to compel a manufacturer to have the natural flow of labor to his employment sifted by a self-constituted antagonistic committee, whose very presence upon the highway for .such purpose is deterrent, is just as destructive of his property as is a boycott which prevents the sale 'of his product. As was well said by Judge McPherson, speaking for the United States circuit court: “There is and can be no such thing as peaceful picketing, any more than there can be chaste vulgarity, or peaceful mobbing, or lawful lynching.” Atchison, Topeka and Santa Fe Railway Co. v. Gee, 139 Fed. Rep. 582, 584.

The single object sought to be obtained by picketing is to prevent the complainant from continuing its business by depriving it of one of its essential necessities, namely, labor, for if the picketing has not that object the reason for maintaining pickets would not exist. That a person who has left his employer may approach another and, if he is willing to listen, tell him the truth regarding the conditions existing, does not meet the qr*estion being considered, because in this case there is a well-defined scheme in which a number of persons have joined to prevent the complainant from carrying on his business. It is not a case where the individual on his own behalf is taking his grievance to a willing listener, but a combination of men, backed by great wealth, conspiring to deprive the complainant of the means of carrying on its business, with the hope that it will ultimately be compelled to yield and surrender its property to the control of strangers, and any picketing which deprives a citizen of Ms property rights, which it is manifest the acts complained of in this case are intended to accomplish, is subversive of all law and order, and if permitted to continue will in the end destroy the prosperity and happiness of society. The defendants frankly admit that the purpose of picketing is to induce every person intending to seek employment with the complainant to refrain from doing so, and attempt to justify it upon the ground that they are competitors of the complainant in the labor market, and being such, have the right to take from it all laborers that they can persuade to leave it or refrain from entering its employ.

Honest competition is what every business man must submit to, but it must be competition and not a malicious intention to injure. Inducing the employes of a person to leave their employment, or others not to accept his employment, for the purpose of crippling his business, where the organization offering the inducement is not engaged in any business competitive or otherwise, and which has no need of the labor, and no reason for'interfering beyond the avowed purpose of overthrowing the complainant, in the stand which it has taken against the demand of the organization, that it shall unionize its factory, is not the competition which the law recognizes or upholds, for “the result which they seek to obtain cannot come directly from anything they do within the regular line of their business as workers competing in the labor market. It can only come from action outside of the province of workingmen intended directly to injure another.” Berry v. Donovan, 188 Mass. 353.

It was urged on the argument that the proofs did not show that every defendant was guilty of some act of violence. It, however, appears that all of the defendants were a part of the combination to compel the complainant to unionize its factory. They did not leave their work and go to their homes, but congregated in large crowds, some participating in one act of violence, some in another, and it is impossible, in any ordinary way, to positively identify each member making up a mob of two or three hundred men. They were all at the headquarters provided by the association for the strikers, were all paid out of the funds of the association, and the strikers were under a written contract' with the complainant to serve for a definite period, and all joined together in a body to disregard their written obligations. These acts show that a conspiracy was entered into by all of the defendants to compel the complainant to conduct its business under rules and regulations, to which it was unwilling to submit, and the overt acts of some of the defendants in carrying out the object of the combination, having caused irreparable injury to complainant’s property, all those who aided and abetted are equally responsible, and all should be enjoined, for the injunction can work no hardship, as it affects no right of property or restrains the doing of any lawful act.

The complainant is entitled to an injunction against the defendant association and its officers, particularly the defendants Hayes and Agard, restraining it and them from persuading or inducing persons or corporations not to deal with it because it employs non-union workmen, or refuses to be unionized, and against all of the defendants according to the prayer of the bill, except so much thereof as relates to the paying of money to the employes of the complainant, who have left or may voluntarily leave its service.


author: Garrison, V. C.

text:
    Joseph Schmitt v. Henry Traphagen.
    [Decided November 27th, 1906.]
    In a suit to quiet title, a motion for a new trial of an issue directed to be tried at law will be denied by the court of chancery without examining into the merits of the decision, since an appeal can be taken as well from the judgment directed by the justice of the supreme court, as from any judgment upon the same question emanating from this court.

      Messrs. Russ & Fleppenheimer and Mr. Maximilian T. Rosenberg, for the complainant.

      Messrs. Collins & Corbin and Mr. Augustus A. Rich, for the defendant.
   Garrison, V. C.

This is a suit under the act to quiet title, and is a motion in such suit for a new trial of an issue directed by this court to be tried at law in accordance with the provisions of the statute.

It appears from the state of the case submitted to this court that at the trial'in the supreme court the justice of the supreme court presiding thereat conceived that the sole question was one of law, and therefore directed a verdict in favor of Schmitt upon the issues tried before him.

I have not myself examined the question which was passed upon at the trial in the supreme court, and for the reason which I am about to state: The question, if it was one of legal title, was eminently one to be passed upon by the courts of law. It was conceived to be such a question by the eminent jurist presiding. Any independent investigation that I could make would result either in concurring in his judgment or in disagreeing with it, and in the latter event, if I granted a new trial, the justice of the court sitting at such new trial would probably consider that he was bound by the same view of the law taken by the justice of the supreme court sitting at the first trial. It appears to me that the best solution of this question is to have an appeal taken as promptly as possible to the court of ultimate decision, and this can be as well done from the judgment directed by the justice of the supreme court as from any judgment upon the same question emanating from this court.

I have therefore determined to adopt the view of the law enunciated by Mr. Justice Dixon, at the trial, as my view, and to refuse a new trial.


author: Garrison, Y. C.

text:
    Charles S. Brown et al., executors, &c., v. Charles S. Brown, individually, et al.
    [Decided January 23d, 1907.]
    1. The court will not, in advance, advise executors authorized to compromise debts due to the testator how they shall exercise the power, but they must, at their peril, exercise their own judgment with respect thereto.
    2. Where a testator declared that no advancements should be charged against his children unless advances or charges should be made on his books against his children, a charge against a son, found on the books, must be treated as an advancement.
    3. Where a testator set aside a certain sum for his wife for life, and provided that on her death two-tenths were to be paid to a son, and directed that two-tenths of the residue of his estate should be held in trust for the son for life, and, on his death, to his issue surviving, and the son was indebted to the testator, the son’s indebtedness must be charged against the bequests made to him.
    4. A testator provided that advances made to his children should not be considered unless the advances should be made on his books. On the books of the testator appeared a charge against a son, followed by the statement that same should not bear interest.—Held, that the indebtedness due to the estate from the son did not draw interest.
    5. A testator directed that of the residue of his estate one-tenth should go to his daughter, and that the executors, on the written request of the daughter, should set apart to her the residence of the testator, on request therefor prior to the-sale thereof, at a specified sum. The executors made a partial distribution of the estate, and set aside personalty to the daughter. Subsequently she requested the executors to set aside for her the premises mentioned.—Held, that if the daughter returned to the estate the personalty set aside to her, and the executors gave her the premises, no one could complain.
    6. A testator gave the residue of his estate to his executors to take possession thereof, collect the rents, pay taxes, assessments and liens, and directed that the executors should set apart a specified sum for a trust fund, divide the residue into equal shares, some of which were given absolutely and others in trust. The testator left real estate unimproved, against which municipal assessments had been levied. The executors had not divided the residuary estate.—Held, that as to the assessment for municipal improvements there must be an equitable apportionment between the tenants for life and the remaindermen, by the payment of the whole sum out of the principal, and providing that each year interest should be calculated on the amount paid, and deducted from the income.
    7. Where a testator leaving real estate died June 30th, and the estate was subject to assessment for taxes as of May 20th in the name of the owner thereof at that date, the executors were required to pay the taxes out of the estate and charge the same against the principal.
    8. A testator owned stock in a corporation, which, - after his death, increased the authorized stock, and gave to the shareholders the right to subscribe to the increased issue. This right the executors sold for a substantial sum.—Held, that the sum thus received became principal, and did not go to the life tenants of the stock.
    9. A testator owned a specified number of shares in a trust company, and after his death the stock of the company was increased and allotted to the shareholders. At the same time the company declared a dividend, and provided that the right to subscribe to the new stock and the right to receive the dividend should accrue simultaneously. The executors paid for the stock with the dividends.-—Held, that the stock so purchased must be held to be a dividend as between life tenants and remaindermen.
    10. Where a testator bequeathed stocks and bonds, which passed into the possession of the executors and trustees of his will, the executors and trustees, if continuing to hold the same in the exercise of good faith, will be protected from any losses by virtue of P. L. p. 236, providing that, when bonds and stocks come into the hands of executors or trustees under the will of a testator owning them, they shall not be accountable for any loss by reason of continuing to hold them, provided they exercise good faith and reasonable discretion.
    11. Where a testator vested his executors and trustees with power to invest in improved and productive real estate, or in sound, productive securities, as they might deem best, the executors were not exonerated on investing money in stocks which depreciated and thereby caused a loss to the estate, as the authority conferred did not merely bind them to the exercise of good faith and reasonable judgment.
    12. Where executors empowered to sell real estate of the testator employ real estate agents to procure purchasers of real estate, the commissions paid to such agents are payable out of the principal of the estate, and not out of the income.
    Heard on bill, answer, replication and proofs in open eonrt.
    The complainants are executors and trustees under the will of Lewis B. Brown, deceased. The defendants are the persons interested in the estate of the testator.
    The bill is filed to obtain a construction of the will in -various respects, and to procure directions to the trustees concerning various matter s_ respecting their trust.

      The will was dated November 22d, 1898. Lewis B. Brown died on the 28th of June, 1900. The various questions 'will be dealt with under separate heads.

      Mr. Edmund W. Wahelee, and Mr. Wendell J. Wright and Mr. Edward V. Thornall (of the New York bar), for the complainants.

      Messrs. Mabie & Maidment, for the defendants.
   Garrison, Y. C.

I.

Lewis M. Brown was the son of the decedent and owed money to his father. He is also a beneficiary under the will. It is necessary to construe the will and refer to the facts so as to arrive at the proper determination of the duty of the complainants in the premises.

The fifth paragraph of the will is as follows:

“To divide the rest, residue and remainder of my estate into ten equal parts or shares, and [to pay over certain of such parts or shares to named persons, &c.] to set apart two such equal parts or shares of my residuary estate, hold the same in trust, invest the same, and to receive the rents, issues and profits thereof, and to pay the net profits and income thei’eof to my son, Lewis M. Brown, during his natural life, and on his death, or if he should die before me, I direct the executors and trustees of this my will to transfer and pay over the whole of such two equal parts or shares of my residuai’y estate, with any unexpended income thereof, to the lawful issue of my said son, Lewis M. Brown, surviving him, per stirpes, and not per capita, as their own forever.”

The fifteenth clause of the will is as follows:

“X hereby direct and declare it to be my will that no advances which have been made by me to any of my children 9 9 9 during my lifetime shall be charged against them, or either of them, or in any manner be considered as a part of the provisions hereinbefore made for them, or either of them, but that each of my said children * * 9 shall receive and enjoy the provisions hereinbefore made for them in all respects, as if such advances had not been made; provided, nevertheless, that if any security or written acknowledgment for any advances to, or payments in behalf of, any of said children * * 9 shall be held by me uncancelled at the time of my decease, or if any advances or charges shall be made upon my books of account against said child, * * * the above provision shall not apply to the extent of such advances or charges, but such advances or charges shall be charged against, and be deducted from, the share of such child or grandchild in my estate.”

Upon the books of the testator there was found a charge against his son, Lewis M. Brown, amounting to $35,616.08.

Lewis M. Brown is insolvent and nothing can be collected from him.

The fourteenth paragraph of the will is as follows:

“I authorize and empower my said executors, or such of them as shall qualify, and the survivors and survivor of them, to compromise, compound and discharge any debt or debts due to me at the time of my decease upon such terms as they shall deem best, and I hereby expressly direct and declare that my said executors shall not be held personally liable in any manner for any debt or debts so compromised or discharged.”

The complainants desire to be instructed as to their duties in respect to this matter.

First, they ask whether, under the fourteenth paragraph of the will, they are empowered to discharge the debt due by Lewis M. Brown to the estate.

While executors have the power to compromise, compound or release claims against the estate at common law, and in many jurisdictions by statute, and while the power may be conferred as in this case, by will, I am of opinion that the court should not, in advance, advise them how they should exercise their discretion, and would, when it had been exercised, approve or disapprove of their conduct, after considering all the facts, making the test whether their action was for the best interest of the estate or not.

The general principles and the authorities will be found collected in 11 Am. & Eng. Encycl. L. (2d ed.) 926-929, inclusive.

The court, in the matter of giving instructions or directions to trustees under a will, exercises its discretion as to whether it will advise or direct upon the matters submitted to it, and I do not think it would be discreet for the court to advise these complainants to make a compromise or to release Lewis M. Brown from whatever obligation he is under to the estate. I think the complainants, at their own peril, must use their own judgment with respect to the power to compromise, compound and release. In the event of their not exercising their power, and of their refusing to compromise, compound or 'release the obligations of Lewis. M. Brown to the estate, it becomes necessary to deal with the other provisions of the will above quoted.

I am of opinion that, by reason of the charge found on the books of the testator against Lewis M. Brown, that sum must be dealt with in accordance with the provisions of the fifteenth clause of the will above quoted. That clause provides that any such advance or charge "shall be charged against and deducted from the share of the child so charged.” It becomes, therefore, necessary to determine what share Lewis M. Brown has in the estate of Lewis B. Brown, deceased. Under the fourth clause of the will $60,000 was set aside for the wife of 'the testator, of which she was to have the income for life, and upon her death the principal was to be divided into ten equal parts or shares, of which two were to be paid to Lew-is M. Brown. The wife of Lewis B. Brown is dead, and Lewis M. Brown therefore is entitled to $12,000 under this provision.

I am of opinion that the amount charged on the books of the testator against Lewis M. Brown must be charged against or deducted from this sum. Since the charge is larger than this sum by $24,000, it is necessary to determine what other share Lewis M. Brown has in this estate. Such other share arises under subdivision C of paragraph 5 of the will, which has been quoted above. Thereunder Lewis M. Brown has the income for life of two-tenths parts or shares of the residuary estate. The income upon such parts or shares is given to him for life, vesting in his lawful issue.

I am. of the opinion, therefore, that against such share the remainder of the amount of the advancement to Lewis M. Brown must be charged. I reach this conclusion because I cannot find any other part or share of the estate that is left to Lewis M. Brown. Under the clause just mentioned he was not left the two-tenths of the residuary estate. These two-tenths were left to his lawful issue. That which was left to him was the income thereof, and that, in my view, constitutes his share of the estate under that clause.

I am of opinion that the amount appearing on the books as charged against Lewis M. Brown does not bear interest, because in said books the testator had written that the charges therein contained against his children were not to bear interest. Whether or not interest is collectible is a matter of agreement or intention, and the intention clearly appears here that no interest is to be charged.

II.

Another matter upon which instructions are asked arises under the eleventh paragraph of the will, which reads as follows:

“Whereas, I now own the house and lot now known by the number seventy-three West Fifty-fifth street, in the city of New York, borough of Manhattan; and whereas, the same is now occupied by my daughter, Helen B. Coles, the executors and trustees of this my will, the survivors and survivor of them, shall, upon the written request of my daughter, Helen B. Coles, acknowledged in the same manner as deeds are required to be acknowledged, set aside and include in the one-third share of the two-tenths part of my residuary estate hereinbefore directed to be held in trust during the lifetime of my said daughter, Helen B. Coles, and as a part of said share, the said house, number seventy-three West Fifty-fifth street, provided such request is made prior to a sale of such house and lot by my said executors and trustees, such house and lot to be taken and valued at twenty-five thousand dollars.”

The complainants, acting under the authority of the will, on the 10th of August, 1900, made a partial distribution of the estate, and set aside as part of the share above mentioned of Helen B. Cole’s forty shares of stock in the Consolidated Gas Company of New York at the inventoried value of $6,960, and thereafter received, as trustees, the dividends thereon, amounting in all to $720. On December 31st, 1902, the house not having been 'sold, Helen B. Coles, complying in every particular with the paragraph of the will just quoted, requested the complainants to set aside and include in the share to be held for her the house and lot above nientioned. ■ It being uncertain whether or not the share to be set aside would exceed the $25,000 at which the house was to be valued, the complainants refused to comply with the request unless Helen B. Coles should return the dividends received by her on the gas stock, and should authorize the complainants to return to the general estate the gas stock which had been set apart as part of her share and should also pay whatever had been expended by the complainants upon the real estate by way of taxes, water rents, &c. They set out that the authorization to them to return the gas stock to the general estate, or rather to take it out of the share set aside for Mrs. Coles, was given by everybody then in esse, and that since that time a child has been born to one of the beneficiaries, and there is a possibility of other children being born who will have interests, and they therefore seek a ratification of their action.

I cannot see how the court can do any more than say that if the share to be set aside for Mrs. Coles exceeded $25,000 the executors have no choice but to 'comply with her request, and if, previous to her making such request, something else had been set aside for her share, and she returns to the estate all that she received upon that something else so set aside, no one can be heard to complain.

III.

Instructions are sought with respect to the payment of taxes upon real estate of which the decedent died seized, assessments for municipal improvements levied against said premises since the decease of the testator, and fencing required to be placed around certain of the property by the board of health of the city of New York.

The will, after making certain bequests, in the tenth clause provides as follows:

“X give, devise and bequeath all the rest, residue and remainder of my estate, both real, personal and mixed, and wheresoever situated, of which X shall die seized or possessed, or to which I may be entitled in any manner at the time of my decease, to my executors and trustees * * * for the following purposes:
“1. To enter into and take possession of my said estate, real, personal and mixed, and to collect and receive the rents, income, issues and profits thereof, and to pay and discharge all mortgages, taxes, assessments, and all other liens and encumbrances upon the same whensoever the same become due.
“2. To sell, at public or private sale, at such times and in such parcels, and ior such price and upon such terms of cash or credit as they shall deem for the best interest of my estate, such of my real estate and such of my personal property as they shall deem proper to dispose of, and for that purpose, and for the purposes of carrying out the provisions of this will, I hereby give said executors and trustees * * * full power of sale and disposal of the same.”

Power of investment and reinvestment is then given. The trustees are then required to sat apart $60,000 for a certain trust-fund, and by the fifth subdivision of this paragraph are required “to divide the rest, residue and remainder of m37 estate -into ten equal parts or shares.” Some of these tenths are given abso- ] utel37 and others are to be held in trust.

The executors have not made an actual division of the residuary7 estate into tenths, having 011I37 set apart certain stocks, and have otherwise held the residuary estate as a whole.

The decedent left a large estate, and part of the same consisted of vacant lots of land in the city of New York, unimproved in any way and unproductive of income. Municipal assessments for improvements of various kinds have been levied upon this property since the death of the testator. Taxes have also fallen due upon the said property. The board of health of New York required certain of the lots to be fenced in. The executors have paid all of the above imposts, and now seek directions as to how to charge the same in their accounts.

Since the residuary estate is not divided and is held by the trustees awaiting favorable opportunity to convert it in divisible property, it must be dealt with as a whole. Holcombe v. Holcombe, 29 N. J. Eq. (2 Stew.) 597 (Court of Errors and Appeals, 1878); Outcall v. Appleby, 36 N. J. Eq. (9 Stew.) 73 (at p. 89) (Chancellor Runyon, 1882); Brearley v. Molton, 62 N. J. Eq. (17 Dick.) 345 (at p. 351) (Chancellor Magie, 1901), and the ordinary taxes and expenses of upkeep are to be paid out of the income derived from the estate. Howard v. Francis, 30 N. J. Eq. (3 Stew.) 444 (Chancellor Runyon, 1879); Murch v. Smith Manufacturing Co., 47 N. J. Eq. (2 Dick.) 193 (Vice-Chancellor Green, 1894); see cases supra.

With respect to the assessments for municipal improvements there should be an equitable apportionment between the tenants for life and the remaindermen. Holcombe v. Holcombe, supra; Outcalt v. Appleby, supra; Pratt v. Douglas, 38 N. J. Eq. (11 Stew.) 516 (at p. 542) (Court of Errors and Appeals, 1884).

The court of errors and appeals, in the case of Jonas v. Hunt, 40 N. J. Eq. (13 Stew.) 660 (1885), held that the proper apportionment was interest on the amount invested by way of assessment, to be paid by the life tenant during his tenure. Therefore the whole sum should be paid out of principal, and each year interest should be calculated upon the amount paid, and the sum thus arrived at should be deducted from the income.

With respect to the fencing, I think a similar rule should be adopted; that being an impost required by the government, and presumably for the benefit of the estate, and not being of any present benefit to the life tenant any more than to the remainder-man, I think the same rule should apply.

IY.

The next matter upon which instructions are sought concerns taxes for the period 1899-1900 assessed against the decedent upon lands owned by him at the time of the assessment.

There were such lands in the State of New York and also in the State of New Jersey. The decedent, as before stated, died on the 28th day of June, 1900.

In New Jersey the assessment is as of the 20th of May. State v. Hardin, 34 N. J. Law (5 Vr.) 79 (at p. 80) (Supreme Court, 1869); State v. Town of Union, 36 N. J. Law (7 Vr.) 309 (at p. 311) (Supreme, Court, 1873); State v. Shute, 43 N. J. Law (14 Vr.) 414 (at p. 416) (Supreme Court, 1881).

The land is required to be assessed in the name of the owner thereof on that date. State v. Hardin, supra.

If not assessed in the name of anyone, the assessment is invalid. State v. Vanderbilt, 33 N. J. Law (4 Vr.) 38 (Supreme Court, 1868).

If assessed in the name of the person who subsequently became the owner after the period within which the assessment could be made, it is invalid as against this last-named person. State v. Hardin, supra.

The provision requiring the assessment to be made in the name of the owner has been by the supreme court stated to be in pursuance of the “intention of the law that the person or persons who owned the real estate on the day when by law the assessment is to commence shall be made personally responsible for the tax.” State v. Vanderbilt, supra.

While it has been held that the tax on real estate is not, properly speaking, a debt, and cannot be enforced by action of debt, and can only be collected in the mode prescribed by statute (Camden v. Allen, 26 N. J. Law (2 Dutch.) 398 (Supreme Court, 1857), it is, I think, clear from the citations above that the said tax must be held to be a liability of the owner to which ire inust respond in the manner prescribed by statute.

One such manner is by a distress upon his goods and chattels. Gen. Stat. p. 3284 § 18; Present Stat., P. L. 1903 p. 422 § 43.

' I am of opinion, therefore, that the decedent was liable for the tax for the year 1899-1900 assessed against the real estate owned by him on the 20th of May, 1900, and that his executors must pay the same out of the estate, and it will, of course, therefore, be charged against principal and not income.

The court of appeals of New York has taken this view of the law, and also holds that in New York City taxes on real estate are assessed as of the second Monday of January in each year. Matter of Babcock, 115 N. Y. 450.

It is stated as a general principle that taxes.on real estate which accrue during the lifetime of the owner are payable by the personal representatives. 11 Am. & Eng. Encycl. L. (2d ed.) 946; cases in note 3; 2 Supp. 840 note 3.

Therefore the executors must also pay from the estate and charge to principal the taxes assessed upon the real estate owned by the decedent in the city of New York on the second Monday of January, 1900.

V.

The next head upon which instruction is sought is with respect to various instances in which the testator had stock in corporations, which corporations, after his death, increased the authorized capital stock of the company and gave to the shareholders the right to subscribe to the increased issue, which rights were sold by the executors for substantial sums of money, and the question in each case is whether the money realized from the sale of these rights becomes principal or goes to the life tenants.

Under the cases of Eisner’s Appeal, 175 Pa. St. 143 and Matter of Kernochan, 104 N. Y. 618, 630, it should go to principal.

VI.

The next matter concerning which instructions are sought is with respect to dividends upon shares of stock owned by the testator at the time of his decease. The proofs show various shares of stock held by the testator upon which dividends were declared and paid after the decease of the testator. The proofs also show the following facts with respect to the stock of one of such companies: The testator owned twenty-five shares of the capital stock of the Title Guaranty and Trust Company. On September 16th, 1902, the stock of this company was increased and the increase was allotted to the shareholders, each being given the right to subscribe to sixty per cent, of the number of shares, held. At the same time the company declared a dividend of sixty per cent, and provided that the right to subscribe to the new stock and the right to receive the dividend should accrue simultaneously. The complainants took the stock and paid for it with the dividend. I think that this must be held to be a dividend and the new stock must be held a,s if it were a dividend.

The rule to be applied, as between life tenants and remainder-men, with respect to dividends, has been' settled in this state by the case of Lang v. Lang’s Executors, 57 N. J. Eq. (12 Dick.) 325 (Court of Errors and Appeals, 1898), followed in this court by Lister v. Weeks, 60 N. J. Eq. (15 Dick.) 215 (Vice-Chancellor Stevens, 1900) (at p. 225); affirmed, 61 N. J. Eq. (16 Dick.) 675.

In the ease first cited the court (at p. 327) says: “The underlying principle applicable * * * is that no corporate dividend declared after the right to the income has become severed from the ultimate ownership of the stock upon which such dividend is declared belongs in equity to the person entitled to income except so far as it is derived from the earning of the stock after such severance.”

After alluding to the distinction which had been made in previous authorities between extraordinary dividends and ordinary or current dividends with respect to apportionment of those of the first class and not of the others, the court (at p. 328) says that it cannot “assent to the idea that some dividends should stand on a different footing from others,” and points out that to hold that “where a life estate begins one day before a dividend is declared the entire dividend shall go to the life tenant may be convenient, but certainly is unjust.”

At p. 329 the court applies the principle. That principle, as before stated, requires apportionment.

There must, however, be evidence before the court of the period for which the dividends were declared, the time of the previous dividend, the source from which it is derived, whether earnings currently made or surplus wholly earned before the decease of the stockholder, and other like matters. There will have to be a reference to a master to take this testimony and report thereon.

VII.

The next matter concerning which instructions arc sought concerns investments.

These are of two characters—first, those stocks and bonds of corporations which were owned by the testator and passed into the possession of the executors and trustees. With respect to these the act of March 23d, 1899 ( P. L. 1899 p. 236), applies, and protects tlie executors and trustees if they continue to hold the same in the exercise of good faith and reasonable discretion. Coddington v. Stone, 36 N. J. Eq. (9 Stew.) 362 (Chancellor Runyon, 1883); Parker v. Glover, 42 N. J. Eq. (15 Stew.) 559 (Chancellor Runyon, 1887).

The will in the case in hand vests the executors and trustees with power

“to invest all moneys left by me and the proceeds of the sales of my estate in improved and productive real estate, or in sound, productive securities, such as they may deem best, or in both real estate and securities. The authority to sell and reinvest shall apply to all investments made by them as my executors and trustees.”

While I am personally inclined to the belief that it was the intention of the testator in this case to clothe his executors and trustees with discretion in the exercise of which they might invest the moneys in stocks or securities not authorized by law, and be only held to the exercise of good faith and reasonable judgment, I cannot, in view of the decisions of our courts, safely hold that the complainants in this case are thus protected. In the case of Ward v. Kitchen, 30 N. J. Eq. (8 Stew.) 31 (Chancellor Runyon, 1878), the court held that a provision that “my executor to invest in productive funds upon good securities” would be construed (p. 86) “to moan investment on such securities, and on such securities only, as arc regarded by the court as proper for the investment of trust funds.” See, also, Woodruff v. Ward, 35 N. J. Eq. (8 Stew.) 467 (at p. 471) (Ordinary Runyon, 1882).

While it is true that in each of the cases cited the court finds from the will evidence that the testator did not include in his designation of securities in which his funds might be invested stocks of companies, yet I think it unsafe to hold, in view of these decisions, that general language of this sort is sufficiently indicative of intention to exonerate the executor or trustee if he does invest moneys in stocks which depreciate and cause a loss to the estate.

If the complainants desire an affirmative authorization by this court for their investments they must appeal to the court in this or some proceeding and lay all the facts before the court.

I do not decide, because it is not now necessary, whether this court can or will authorize investments in stocks of companies. The act of 1899 (p. 236, heretofore cited) specifies the securities in which trastees may invest, but provides that the act shall not apply where a court having jurisdiction of the matter specially directs the manner in which trust funds shall be invested.

I cannot, in the present state of the proofs in this case, make any special direction, whatever power to do so I may have. Provision may be made in the decree for further application to the court, and under such permission this matter may be again brought to the attention of the court.

VIII.

Another matter concerning which instructions are sought is, with respect to commissions, paid by the complainants to real estate agents and others for procuring purchasers of real estate of the trust sold by the complainants.

I am of opinion that these commissions are payable out of principal.

IX.

Instructions are also asked concerning the costs, expenses, &e., of this proceeding.

That will be settled in the decree, and it is not necessary to refer to the matter in this opinion.

X.

Another head is with respect to a small item paid annually by the executors for the care and maintenance of the plot in which the decedent is buried in Greenwood cemetery.

There is no evidence before the court as to whether this was an obligation undertaken by the decedent, and, as such a debt of hip, or whether it is a liability incurred by the executors themselves, or what the fact is. If there was no obligation undertaken by the testator in this respect, and the executors have expended this small sum annually for the care of the plot, I do not see how it can be charged against the estate. However, this matter may also go to the master to take the proofs.

The decree will provide that the account of these trustees shall be taken and stated in this court, and a master will be appointed to take and state the same, and to said master will also be referred the various questions alluded to in the course of the opinion upon which further proofs are to be taken.

I will advise a decree as above indicated.


text:
    Alpin J. Cameron, executor, &c., v. Mary Jane Crowley et al.
    [Decided February 4th, 1907.]
    A will authorizing the testator’s daughter by her will “to dispose of” a fund “to and among” his grandchildren “in such shares and in- such manner as she shall think right and proper,” gave her a non-exclusive power of appointment, and hence the provision of her will, excluding two grandchildren in a per capita distribution of the fund, was invalid.
    Heard on bill and answers.
    This is a bill filed by Alpin J. Cameron. He is the surviving executor of the will of Alexander J. Cameron, and also the executor of the will of Alice E. Cameron. The defendants are the grandchildren of Alexander J. Cameron.
    The object of the bill is to. procure instructions concerning the complainant’s duty as executor with respect to a matter arising under the wills of the two persons above named.

      The will of Alexander J. Cameron contained a provision as follows:
    “I direct that my said daughter, Alice B. Cameron, shall have power, and I hereby authorize and empower her, by her last will and testament, or writing in the nature thereof, to dispose of all the rest, residue and remainder of the said fund and proceeds of my share of said firm assets to and among my grandchildren, in such shares and proportions and in such manner as she shall think right and proper, as I have full confidence in her discretion and fairness.”
    The will of Alice E. Cameron contains a provision as follows:
    “As my father, the late Alexander James Cameron, of Ridgewood, New Jersey, in his will stated that in case of my death that ten thousand dollars of the money he left should go to my sister, Mary Jane Crowley, I consider that her children, Mary Catherine Crowley and Daniel Cameron Crowley, are provided for, and would have their share in the estate of my father, the late Alexander James Cameron, and as the power has been given to me to divide the remainder of this said estate among the grandchildren as I might think proper and at my discretion, I think it right and just to make an equal division among the grandchildren now mentioned.”
    She named all of the grandchildren of Alexander J. Cameron except the children of Mary Jane Crowley, which latter are named Mary Catherine Crowley and Daniel Cameron Crowley.
    The $10,000 referred to by Alice E. Cameron in her will is referred to in the will of Alexander J. Cameron as follows:
    “Upon the death of my daughter Alice B. Cameron, I direct that my said trustee shall pay to my said daughter Mary Jane Crowley the sum of ten thousand dollars, and upon such payment her said annuity shall cease.”
    His will also provided that
    “in case my daughter Mary Jane Crowley should die before my daughter Ai.ce, then her said legacy of ten thousand dollars shall lapse, and shall not be payable to her children, but in such event shall go to my daughter Alice, then her said legacy of ten thousand dollars shall lapse, and shall children as aforesaid.”
    The will of Alexander J. Cameron further provided, with respect to the power of appointment given to Alice E. Cameron, that

      “in case of her death without having disposed of it by her will or writing as aforesaid, 1 direct that it shall go and belong to my grandchildren, equally and per capita.”

    Answers are filed on behalf of all the defendants, the grandchildren aforesaid, excepting Alpin W. Cameron, who is a son of Alpin J. Cameron, the complainant, and a grandson of Alexander J. Cameron, the donor of the power, concerning whom the bill states that
    “said Alpin W. Cameron has relinquished and surrendered his right, title and interest of said distributive share of said fund, and has instructed your orator to distribute the same among the other grandchildren.”
    The contention on behalf of.' Mary Catherine Crowley and Daniel Cameron Crowley, the children of Mary Jane Crowley, is that they, being grandchildren of Alexander J. Cameron, are within the class among the members of which the fund in question was to be distributed, and that since they are omitted from such distribution by the appointment contained in the will of Alice E. Cameron, such appointment is not a valid execution of the power vested in said Alice E. Cameron by Alexander J. Cameron, and therefore the said fund, in default of a valid appointment, must go in accordance with the will of Alexander J. Cameron and be distributed equally per capita among all of his grandchildren.
    The answer'of the other grandchildren is that the power of appointment was validly exercised, their contention being that the power was an exclusive one, and that Alice E. Cameron was vested with the right to exclude any of the grandchildren whom she might see fit to exclude.

      Mr. Cornelius Doremus, for the complainant.

      Mr. William Pennington, for the defendants Mary Catherine Crowley and Daniel Cameron Crowley.

      Mr. Marshall Van Winkle, for the defendants Carrie L. Gray-don and others, grandchildren of Alexander J. Cameron.
   Garrison, V. C.

(after stating facts).

The sole question is whether, under the language of the will of Alexander J. Cameron vesting power in his daughter Alice E. Cameron,

“to dispose of the fund in question to and among my grandchildren, in such shares and proportions 'and in such manner as she shall think right and proper, as X have full confidence in her discretion and fairness,”

an exclusive or non-exclusive power of appointment was vested in Alice E. Cameron.

The industry of the various counsel in this case has resulted in briefs citing cases from many jurisdictions concerning this subject-matter. I do not find it necessary, however, to consider any other than those in our own courts. It has been well settled in this court by the previous decisions thereof that such a power as is contained in the language just quoted is non-exclusive. Lippincolt v. Ridgway, 10 N. J. Eq. (2 Stock.) 164 (Chancellor Williamson, 1854); Wright v. Wright, 41 N. J. Eq. (14 Stew.) 382 (Chancellor Runyon, 1886); Inglis v. McCook, 68 N. J. Eq. (2 Robb.) 27 (Chancellor Magie, 1904); see, also, Den v. Crawford, 8 N. J. Law (3 Halst.) 90 (at p. 98) (Supreme Court, 1825).

In Lippincott v. Ridgway, supra, the language “unto such of the brothers and sisters,” &c., was held to give to the donee of the power discretion to select which of the said persons should have the fund, but in the same will the language “that my said daughter shall in such case have power to dispose of the same among her brothers and sisters and their children in such proportions as she may think fit” was construed to confer a nonexclusive power, and it was held that each of the brothers and sisters was entitled to a portion of the fund.

In Wright v. Wright, supra, the power “to dispose of the same between my children and grandchildren as she may think proper,” was held to be a non-exclusive power.

And these cases were cited and approved in Inglis v. McCook, supra, in which it was held that the power to divide the same among the lawful issue of the donor as the donee should direct was a non-exclusive power.

I cannot perceive any difference between the language of the various wills construed above and the language of the will under consideration in any substantial particular.

The power under consideration is to dispose of the fund to and among the grandchildren. It must, therefore, to satisfy this-language, go to the said grandchildren and be disposed of among them. If one is omitted it has not gone to the grandchildren. I think, therefore, both upon authority and reason, that this must be held to be a non-exclusive power.

It is suggested that the use of the word “manner” by the donor implies the power of selection. The will provides that it shall go “to and among” the grandchildren “in such shares and proportions and in such manner” as the donee shall think right and proper. I cannot accede to this argument. The donor clearly indicates to whom it shall go, but leaves to the donee the power to determine the proportions and manner in which it shall go. The “manner” has reference to the way in which it shall be enjoyed, whether directly or in trust, immediately or at a postponed date, and other like matters.

If authority is needed for such construction of the word “manner,” the following cases may be consulted: White v. Wilson, 1 Drewry 298; Seibels v. Whateley, 2 Hill Eq. 605 (S. C., 1837); Cowles v. Brown, 4 Call 477 (Va., 1803); Hill v. Jones, 65 Ala. 214 (1880); Maitland v. Baldwin, 70 Hun 267; 24 N. Y. Supp. 29 (N. Y., 1893); Boyle’s Estate, 5 W. N. C. 363 (Penna., 1878).

It is also suggested that the fact that the donor recited in the clause granting the power that he had full confidence in the fairness and discretion of the donee is indicative of intention to vest in her the power of selection. I do not think this argument is sound. I think it does show that he intended to confide in her discretion and fairness as to the shares and proportions, and as to the manner in which the fund should be distributed. I do not think that it in any way indicates that because of his confidence he confided in her discretion the power of selection as to the persons. I may remark, in passing, that this whole matter has been set at rest in England by statute. Powers of Appointment Act, 37 and 38 Vic. c. 37 (1874).

I conclude in this case that the power vested in Alice E. Cameron was not validly exercised by her, and therefore there is a failure thereof, and as a consequence the fund goes as is directed by the will of the donor of the power, and is distributable among all of his grandchildren equally, par capita.

Whether Alpin W. Cameron, the son of the complainant, who is a grandchild of the donor, has disentitled himself to a share by reason of the instrument referred to by the complainant in the bill I do not determine, since the instrument is not before me and the said Alpin W. Cameron is not a party.

I will advise a decree as above indicated.