text:
    Board of Education of the Borough of Riverton, in the County of Burlington, v. Peter Tait et al.
    [Submitted April 6th, 1912.
    Determined April 25th, 1912.]
    1. Liens perfected by stop-notices, served under Mechanics’ Lien act (3 Comp. Stat. 1910 p. 3290 § 8), are payable in the order of priority of service of notice, and not pro rata.

    2. Orders made by the contractor of a public school building and filed with the board of education of the municipality, and claims under notices served pursuant to Municipal Liens act (8 Comp. Stat. 1910 p. 3815) were entitled to priority in payment from the public building fund over a claim under a stop-notice subsequently served pursuant to the Mechanics’ Lien act (8 Comp. Stat. 1910 p. 3290 § 8), especially where the stop-notice was not served until after the maturity date of the. final payment under the contract.
    3. Where a stop-notice under Mechanics’ Lien act (8 Comp. Stat. 1910 p. 3290 § 8) was not served until after the building was completed and accepted, and the architect’s certificate given, nor until after the date upon which the final installment fell due according to the contract, it was not served until the maturity date of the final payment, though the contractor had not complied with his contract obligation to furnish evidence that all bills had been paid before he demanded his final payment.
    Final hearing on bill'of interpleader, &c.
    The present controversy is to determine the order in- which certain claims against a fund shall be paid. The fund has been deposited with this court by the board of education of the borough of Riverton.under a bill of interpleader.
    The fund in controversy is the last installment of a contract made by Peter Tait, as building contractor, with the board of education of the borough of Riverton for the erection of a school house, and is, in amount $5,389.50. A copy of the contract was filed in the clerk’s office of Burlington county. By the terms of the contract this installment became due December 31st, 1910, the building having been completed and accepted on that date.

      Tlie several claims against tlie fund are as follows:

      First. Claim of William D. Lynch for $1,000.
    This claim is under a written order made by the contractor on the board of education in favor of Lynch.
    The order bears date September 7th, 1910, and was filed with the board September 16th, 1910.

      Second. Claim of J. S. Collins & Sons for $3,000.
    This claim is under a written order made by the contractor on the board of education in favor of Collins & Sons. The order bears date September 9th, 1910, and was filed with the board September loth, 1910.

      Third. Claim of Keystone Fireproofing Company for $360. 1
    This claim is made by claimant as a materialman under the lerovisions of the act popularly called the Municipal Liens act (8 Comp. Stat. p. 8815).

    Notice of claim of lien was duly served November 26th, 1910.

      Fourth. Claim of Chas. Stockholm Lumber Company for $181.11.
    This claim is similar to the preceding -one. Notice of claim of lien was duly served December 7th, 1910.

      Fifth. Claim of John F. Eobinson & Son for $907.12.
    This claim is similar to the two preceding claims.
    Notice of claim of lien was duly served December 10th, 1910.

      Sixth. Claim of Arthur McCarty for $750.
    This claim is under a stop-notice served March 20th, 1911, pursuant to the provisions of section 3 of the Mechanics’ Lien act {Comp. Stat. p. 3390).

    Total claims, $6,198.23.
    At the time the bill of interpleader was filed each of the three claimants above named who had served notices pursuant to the Municipal Liens act (claimants above numbered three, four and five), had filed bills for the enforcement of-their claims pursuant to the procedure specified in that act for that purpose and had fully complied with all of the requirements of that act.

      Mr. Joseph L. Thomas, for J. S. Collins & Son.

      Mr. Francis I). Weaver, for Peter Tait.

      Mr. William T. Boyle, for Keystone Eireproofing Company.

      Mr. Dnvis Starr, for Charles Stockholm Lumber Company.

      Mr. Francis J. Smith, for John E. Bobinson & Son.

      Mr. Joseph Beck Tyler, for Arthur McCarty.

      Mr. Mahlon Ymi Booskirk, for Pensauken Art & B. Company.
   Leaming, V. C.

It will be observed that three classes of claims are here involved : 1. Claims under orders issued by the contractor on the owner; these are first in date of issuance and service. 2. Claims filed under the Municipal Liens act; these are second in date of service. 3. A claim under the stop-notice provisions of the Mechanics' Lien act. This is last in date of service.

It is conceded by the three claimants who claim under the Municipal Liens act that the two claimants who hold orders are entitled to be paid from the fund before their claims can participate. This concession is in accordance with the decisions in Somers Brick Co. v. Souder, 70 N. J. Eq. (4 Robb.) 388, 394; S. C., 71 N. J. Eq. (1 Buch.) 759, 762; and Cope v. C. B. Walton Co., 77 N. J. Eq. (7 Buch.) 512, 517. The ground of these decisions is that the Municipal Liens act confers no inchoate lien on the fund in favor of laborers or materialmen prior to the service of a riotice of claim of lien pursuant to the act; an order by the contractor on the owner is therefore operative as an equitable assignment of the money due or to grow due under the contract to the amount specified in the order as against claims subsequently filed under the act.

It is also conceded by counsel representing the stop-notice claim under the Mechanics' Lien act that the three claims under notices served pursuant to the Municipal Liens act are entitled to be paid from the fund before his stop-notice claim. He claims, however, that his stop-notice entitles him to payment from the fund before the two orders are paid. It is manifestly impossible to give the orders precedence over the municipal liens claims and to give the latter claims, precedence over the stop-notice claim, and at the same time give the stop-notice claim precedence over the orders. The concession referred to as made by the claimant under the stop-notice appears to be necessary. If it be conceded that the stop-notice provisions of the Mechanics’ Lien act can be enforced against public building contracts, it will be observed that in Slingerland v. Binns, 56 N. J. Eq. (11 Dick.) 413, 415, it is held that the fifth section of that act is operative to create an inchoate lien in favor of laborers and materialmen on the liability of the owner under the contract; but such inchoate lien as there defined is clearly operative, at most, as against advance payments by the owner or orders or assignments made by the contractor. It is not operative against stop-notices of tire same class first served (Bayonne v. Williams, 59 N. J. Eq. (14 Dick.) 617), and there seems to be no foundation for a claim that it would be operative against a prior notice served under the provisions of the Municipal Liens act, for such prior notice under the act last named is effective to create a statutory lien as of its date of service, and it would seem that any lien arising from a subsequent stop-notice would necessarily be subject to the prior consummated statutory lien created by the prior notice. A distribution in full recognition of the rights of the three classes of claims would thus seem to be rendered impossible. A would become entitled to payment before B, and B before G, and C before A.

I am not aware that our court of last resort has been called upon to determine whether the stop-notice provisions of the Mechanics’ Lien act are applicable to a contract for the construction of a public building, or whether, if so applicable, such provisions have been superseded and in effect repealed as to public building contracts by the subsequent enactment of the Municipal Liens act. In Frank v. Freeholders of Hudson County, 39 N. J. Law (10 Vr.) 347, it was held by our supreme court that while a public building could not be subjected to a lien for labor or materials supplied in its construction, the provisions of the third section of the Mechanics’ Lien act touching stop-notices were operative to afford the remedy there given, if the contract should be filed by the municipality pursuant to the provisions of the act. It must be conceded, however, that the dissenting opinion of Mr. Justice Dixon, filed in that case, measurably weakens the value of the case as a precedent, especially to one who finds it difficult to adopt the views expressed in the majority opinion. Subsequent to the decision in Frank v. Freeholders, supra, our legislature passed the Municipal Liens act, and in Arzonico v. Board of Education of West New York, 75 N. J. Law (46 Vr.) 21, our supreme court held that the latter act was not operative to repeal the remedy afforded by the third section of the Mechanics’ Lien act against public buildings. The opinion filed in that case is based upon the view that the continuation of the remedy afforded by the third section of the Mechanics’ Lien act against public building contracts is not inconsistent with the enjoyment of the remedies created by the later act. It has been herein already pointed out that in the present case the rights secured to the claimant under the provisions of the Mechanics’ Lien act, if enforced, are operative to render it impossible to. award to the claimants under the Municipal Liens act the rights bestowed upon them by the provisions of that act. This circumstance appropriately occasions the observation that Arzonico v. Board of Education, supra, did not determine that the stop-notice provisions of the Mechanics’ Lien act were not superseded by the Municipal Liens act in eases of public improvement in so far as it should be found that the provisions of the former act were in fact inconsistent with the rights conferred by the latter act. Additional force is given to this observation by reference to the original repealing clause of the Municipal Liens act; that clause expressly repealed all inconsistent former legislation, but exempted from the operation of its repealing clause any claim of lien that at that time existed against moneys due under ¿municipal contracts, as did also the unconstitutional similar statute of the preceding year which it replaced.

But conceding, for present purposes, that the stop-notice provisions of the Mechanics’ Lien act were originally operative against public building contracts, and that the subsequent enactment of the Municipal Liens act was not operative to supersede or repeal such stop-notice provisions in their application to public building contracts, even though the rights arising under the stop-notices, if enforced, should be found operative to supersede or defeat the liens > afforded by the Municipal Liens act, a circumstance yet- exists in the present case which appears to give to the orders and municipal lien notices the right of priority of payment over the stop-notice. That circumstance is the fact that the stop-notice in this case was served after the maturity date of the final payment under the contract. It has been repeatedly held that the inchoate lien which the provisions of section 5 of the Mechanics’ Lien act imparts to stop-notices under that act extends only to the time the liability of the owner matures according to the terms of the contract. Slingerland v. Binns, 56 N. J. Eq. (11 Dick.) 413, 415; Donnelly v. Johnes, 58 N. J. Eq. (13 Dick.) 442, 445; Flaherty v. Atlantic Lumber Co., 58 N. J. Eq. (13 Dick.) 467, 469; Smith v. Dodge & Bliss Co., 59 N. J. Eq. (14 Dick.) 584, 585; Person v. Herring, 63 N. J. Law (34 Vr.) 599, 603; Taylor v. Reed, 68 N. J. Law (39 Vr.) 178; Edge v. McClay, 72 N. J. Eq. {2 Buch.) 216; Keulper v. Reeve, 79 N. J. Eq. (9 Buch.) 483; S. C., Ib. 651. It-is contended, however, that the last clause of section 6 of the Mechanics’ Lien act, which clause was added by the revision of 1898, is operative to extend the inchoate lien of laborers and materialmen beyond the time the last payment matures and thus afford a preference in favor of a stop-notice served after the maturity of an installment over an order of assignment given at an earlier date. That view is presented with great force in Luce Mech. L. (1910 ed.) 70, 75; but to adopt that view at this time, Taylor v. Reed, supra; Edge v. McClay, supra, and Keulper v. Reeve, supra, all decided since the adoption of the provisions of the statute referred to, must he overruled upon the assumption that section 6 of the Mechanics’ Lien act, as amended, was not considered because not discussed in the opinion filed. I cannot think it proper for this court to base so drastic an action upon that uncertain assumption.

But whatever may be the force of the provisions of section 6 of the Mechanics’ Lien act, as amended by the revision of 1898, I am unable to reach the conclusion that the section can in any view be deemed effective to give such stop-notice precedence over a prior notice given by a materialman pursuant to the terms of the Municipal Liens act for material supplied to a public improvement. In 1909 the Municipal Improvement act was amended and the final section as amended was made to read that “all acts and parts of acts inconsistent with the terms of this act are hereby repealed.” It has been already pointed out that to give the stop-notice here in question priority of payment over the prior orders, it must be also given priority of payment over the prior notices served under the Municipal Liens act and thus wholly prevent any payment to the holders of the municipal lien notices. To give stop-notices that effect in this case is, therefore, to render the beneficial provisions of the Municipal Liens act ineffective so far as the claim under the stop-notice is concerned; any provision of the Mechanics’ Lien act so operative would, in my judgment, be clearly inconsistent with the provisions of the Municipal Liens act, and so far as inconsistent be repealed by the repealing clause of the latter act. As already suggested, this view is not in conflict with Arzonico v. Board of Education, heretofore referred to. That decision arose on a demurrer to a declaration in an action against the owner, and the single question was whether the stop-notice provisions of the Mechanics’ Lien act were wholly repealed as to public improvement contracts by the provisions of the Municipal Liens act. Ho conflict of claims under the two acts existed in that ease. The concluding words of the opinion expressed the extent of the decision as follows: “We find nothing in the remedy provided by the act of 1892 (Municipal Liens act) inconsistent with that given by the third section of the Mechanics’ Lien law in cases like the present.” The court was not in that case called upon to determine, and did not determine, whether any provision of the Mechanics’ Lien act which should be • operative, if enforced, to defeat the beneficial operation of the Municipal Liens act, and which should be, to that extent, inconsistent with the provisions of the later act, was repealed.

It is also contended in behalf of the stop-notice claimant that the last installment was not due when the stop-notice was served because of a clause in the contract which obligated the contractor to furnish evidence that all bills had' been paid before he could demand his final payment. The building was completed and accepted and the architect’s certificate given January '31st, 1910. The contract clearly treated the final installment as falling due at that time. The mere fact that the contractor could not enforce payment of the installment which then became due until he had supplied certain evidence cannot be regarded as postponing the due date of the contract. But whatever view might be taken as to the due date of the contract the views above expressed touching the provisions of the Mechanics’ Lien act in so far as they conflict with the provisions of the Municipal Liens act are controlling.

I am also unable to adopt the views urged in behalf of the stop-notice claimant that a certain letter of recall written by tire owner was operative to impair the rights of the holders of one of the orders or that the other order was subject to a condition which destroyed its effect as an equitable assignment, pro tmto, of the fund.

I will advise an order directing distribution of the" fund by payment of the orders as first in priority, and the notices under the Municipal Liens act in the order of their dates as second. These payments will exhaust the fund.


source: Caselaw Access Project

author: Howell, V. C.

license: Public Domain

text:
    Richard O’Gorman et al., executors, &c., v. Mary Crowly et al.
    [Submitted April 1st, 1912.
    Decided April 25th, 1912.]
    1. The second paragraph of a will gave to testator’s executors $25,000, in trust to pay the income to testator’s son during his natural life, but further provided that said executors could terminate “said trust and to pay to my said Son the said sum of $25,000 whenever in the opinion of my executors his mental and physical condition is such that he is competent to attend to affairs,” but that if the son die during the continuance of the trust, and before the payment of such sum to him, that it be paid to his issue; and the fourth clause gave the residue to testator’s niece, and, in case she he not living at testator’s death, then to her issue, and if there be no issue then living to testator’s son.—Held, that the authority to pay the $25,000 to testator’s son was a mere naked power resting in the executors’ discretion, and not a power coupled with a trust, so that the executors could not be compelled to pay it to the son, upon a showing that the son was competent to attend to his affairs.
    2. A mere discretion in the trustees is a mere power; but an imperative discretion implies a trust.
    3. If one had no control during his lifetime over the corpus of a trust fund held in trust for him, he could not dispose of it by will.
    On final hearing on bill, answer, replication and proofs.

      Mr. John Bigelow, for the complainants.

      Mr. Thomas A. Davis, for the defendant Mary Crowly.

      Mr, Edward 0. Stanley, Jr., and Mr. John P. Hill (of the Maryland bar), for Stella Lawson and others.
   Howell, V. C.

On July 28th, 1901, David Ledwith died, leaving a son, James H. Ledwith, and leaving a will, which was admitted to probate by the surrogate of Essex county. It contains the following provisions, which are brought in question in this suit:

“Second. I give and bequeath to my executors hereinafter named the sum of twenty-five thousand dollars in trust to keep the same safely invested and to pay the income therefrom to my son, James Herbert Led-with during the term of his natural life, but I authorize and empower my said executors to terminate said trust and to pay to my said son the said sum of twenty-five thousand dollars whenever in the opinion of my executors his mental and physical condition is such that he is competent to attend to affairs. If, however, my said son shall die during the continuance of said trust and prior to the payment to him of said twenty-five thousand dollars, I direct that said sum of twenty-five thousand dollars shall be paid to his issue then living, and if there be no issue of my said son, then living, said sum of twenty-five thousand dollars shall fall back into and become part and parcel of my residuary estate and shall be disposed of as directed in the fourth clause, of this my will.”
“Fourth. All the rest, residue and remainder of my estate, whether real, personal or mixed, and wheresoever situate, I give, devise and bequeath unto my niece Mary Crowly, daughter of my sister Mary, and now residing in Jefferson street, Orange, New Jersey. In case my said niece be not living at the time of my death, then I give, devise and bequeath my said residuary estate to her issue, and if, no issue of hers be then living, I give, devise and bequeath the same to my son James Herbert Ledwith, or if he be then dead, .to his issue then living, and if no issue of his be then living I direct that my said residuary estate shall be distributed according to the laws of the State of New Jersey in case of intestacy.”

By the will he named Richard O’Gorman and John T. Brennan as executors thereof, and'they now file their bill for the purpose of obtaining directions as to the distribution of the estate.

James H. Ledwith died without issue on August 16th, 1910; he was then a resident of New York; he left a will which was admitted to probate in that state by which he devised all his estate to his executors in trust, to pay to a Mrs. Eiker the sum of $1,200 per annum as long as she might live, in equal quarterly payments, out of the income derived therefrom, and to pay the balance to the defendants, Mary Lawson, Stella Lawson, Rosa Lawson and Noble Lawson, who were his cousins, or to such of them as might be living, in equal shares, at the death of Mrs. Eiker. The residuary legatee under David Ledwith’s will and the residuary legatees under James H. Ledwith’s will'are made defendants. All have answered except Noble Lawson; Mary Crowly claiming the fund as the residue of David Ledwith’s estate upon the ground that there was a direct devise of the sum to her by his will in case the complainants should not have paid the principal of the trust fund to James H. Ledwith in his lifetime, and the Lawsons claiming as residuary legatees of James H. Ledwith upon the ground that it was the duty of the executors under the circumstances to have paid the principal sum of the trust fund to James JEL Ledwith in his lifetime, and under the circumstances James H. Ledwith had the equitable title thereto which passed to them under his will at the time of his death. This question involves a construction of the'second paragraph of David Ledwith’s will, and a determination' of the inquiry whether it ever became the duty of the executors to transfer to the life tenant the principal of the trust fund; and this involves the further inquiry whether the authority given to the executors was a mere naked power resting in their uncontrolled discretion, or whether it was a power coupled with a trust which made it their imperative duty to have distributed the fund to James H. Ledwith upon the ascertainment of the fact of his competency "to attend to affairs.” It must be conceded that if the direction given in that behalf to the executors rested wholly in their discretion, this court can have no jurisdiction to compel its exercise. If, on the other hand, the provision is a power joined to a trust, so that an imperative direction can be found in the will, then under certain circumstances this court might compel the exercise of the power, or exercise it itself in favor of the cestui que trust. If this be found to be the case, then the further question arises whether it must have been compelled in his lifetime, or whether his residuary legatees, the Lawsons, after his death, can be permitted to bring a suit for that purpose.

It may be said generally that a mere discretion is a mere power, but that an imperative discretion implies a trust. The general rules on the subject are found in 1 Perry Trusts (6th ed.) § 248, under the title "Trusts that arise by construction from powers.” They have likewise received considerable illustration in this state.- In Read v. Patterson, 44 N. J. Eq. (17 Stew.) 211, Mr. Justice Depue, speaking for the court of errors and appeals, stated the rule as follows: "Where the power given to trustees is wholly discretionary to do or not to do a particular thing in their discretion, the court has no jurisdiction to lay a command or prohibition upon the trustees as to the exercise of that power, provided their conduct be Iona fide and their determination is not influenced by improper motives. Where the power is coupled with a trust or duty the court will enforce a proper and timely exercise of the power, but if it be given upon a trust to be executed in the discretion or upon the judgment of the trustee, the court will not interfere with.the trustee’s discretion in executing the trust, unless he has exercised his discretion mala fide.” In that cáse there was a clear expression of the intention of the testator of an imperative direction to pay out a portion of the trust funds for particular purposes in his discretion; that is to say, he was required to make the payment; but the amount and the manner and the times and the other circumstances attending it were diseretionary with him. And concerning this branch of the case Mr. Justice Depue says further: “A court of equity will examine into the conduct of a trustee in the execution of his discretionary powers and will assume control, over the trustee’s conduct, and if need be will take upon itself the execution of the trust; but the court will exercise this prerogative with great caution and will not displace the trustee from exercising his functions unless upon a consideration of the reasons and grounds upon which he has acted it appears that he has abused his trust and that his acts in the premises have not been within the limits of a sound and honest execution of the trust.” I understand this case to decide that this court will never interfere with the discretion of a trustee where it is a matter of pure discretion on his part whether he will or will not do a certain thing; but where the doing of this specified thing appears to be imperative, but the methods or details are discretionary with him, then and in such case the court will exercise a control over his discretion, but that only in a ease where he has acted mala fide or has abused his trust. In some cases the court will go so far as to execute the trust itself on equitable principles.

In Larkin v. Wikoff, 75 N. J. Eq. (5 Buch.) 462; affirmed, 77 N. J. Eq. (7 Buch.) 589, the opinion written by Vice-Chancellor, now Chancellor, Walker, illustrates the doctrine quite fully. There the controversy arose out of a deed of trust by which the donor conveyed real estate and gave personal property upon a trust to maintain a house of worship. It contained this provision: “Whenever from any cause it shall seem to the said trustees clearly expedient to discontinue the plan of holding the said property for said use as aforesaid, they, the said trustees, being the judges and fully authorized to decide such discontinuance upon all or any case whatever, then in such case of non-user, abandonment or discontinuance the said trustees shall hold the said land and all buildings thereon as the property of the said trustees for the use of the. First Presbyterian Church/’ &c. They decided to discontinue the use of the property for religious purposes and to sell the same, and the question was whether this action was within their uncontrolled discretion or not. The vice-chancellor collects all the cases and holds that where a power is given to trustees to do or not to do a particular tiling at their discretion the court has no jurisdiction to lay a command or a prohibition upon them as- to the exercise of that power, provided their conduct be bona fide, and their determination is not influenced by improper motives. One of the cases referred to is Talbott v. Marshfield, 2 Dr. & Sm. 285, decided by Vice-Chancellor Kindersley, in which it appeared that it was the intention of the testator. that if a certain exigency arose the trustees should, if they saw fit in the exercise of their discretion, notwithstanding the gift in remainder, hand over the corpus of the fund to the persons entitled for life; he held that the court would not interfere with the honest exercise of such discretion, and that the mere exercise of such a power would afford no reason why the money should not be paid into court, and that inasmuch as the power- might never be exercised, the bringing of the monej»' into court would not in the slightest degree prevent its being exercised..

On behalf of the residuary legatees under James H. Led-with’s will (the Lawsons) three cases were cited which I am constrained to hold have little or ho application to the question in hand. They are Weiland v. Townsend, 33 N. J. Eq. (6 Stew.) 393; Pedrick v. Pedrick, 48 N. J. Eq. (3 Dick.) 313, and Dillingham v. Martin, 61 N. J. Eq. (16 Dick.) 276, all cases in this court. In Weiland v. Townsend there was an imperative duty cast upon the trustees to provide for the support of members of the testator’s immediate family, but the amount was necessarily left to the discretion of the executor. It was there held in accordance with the rule which I have attempted to state that in cases of the failure of the trustee to act the court would execute the trust through a successor to be appointed by substituting equitable rules in place» of the arbitrary power. In Pedrick v. Pedrick there was a direction for the payment to the complainant (a son) by the executor of one-third of the residue of the estate at such times and in such sums as the executor should deem most for the legatee’s good, and giving further directions about the manner in which the executor should act in case the son did not make proper use of his money. Here was likewise an imperative trust, the manner of its execution alone being discretionary with the trustee. It was held that this was a sort of trust which the court would take jurisdiction over. In Dillingham v. Martin the real question decided was whether a substituted trustee had the right to perform all the acts which tire will of the testator authorized the original trustees to perform. There the succeeding trustee was appointed by the orphans court, and it was held that under the peculiar terms of the will, and of the Orphans Court act, the succeeding trustee did not have the right and could not in his own discretion and on his own judgment make the advances which the original trustee had the authority to make at his discretion in accordance with the terms of the will; yet the chancellor says that it does not follow that the court would not superintend the execution of the trust under equitable rules, and require the substituted trustee to distribute the fund in accordance therewith upon a proper presentation of facts for that purpose. It is quite clear upon reading the provisions of the will in that case that there was an imperative duty cast upon the original trustee, and that the trust belonged to that class which the court will superintend.

In view of the rules laid down in Read v. Patterson, let us examine the provision of the will to ascertain what the duty of the executors was. They were—first, to set apart $35,000 and keep the same safely invested, and second', to pay the income therefrom to James H. Ledwith during the term of his natural life. These requirements were scrupulously complied with by them. Having created this situation, he next authorized his executors to terminate it and pay the corpus of the estate to the life tenant “whenever in the opinion of my executors his mental and physical condition is-such that he is competent to attend to affairs.” I find in this no* imperative direction io pay the principal sum' to* the life tenant. There is no construction of these words which could lead to that conelusion. The executors held a fund which they were authorized to pay in a certain way, but where are the words which indicate that it was the intention of the testator that they should be bound to make the payment? The testator had created a situation which the executors might change in their discretion, but where do we find in this will'any expressions which require them to do so? There is nothing to indicate that the testator had any such, positive and absolute direction in his mind, nor is there anything in the situation as developed by the evidence which could lead to any such conclusion. The fact that the life tenant never made any demand upon the executors for payment of the money to him indicates his satisfaction with the conditions, and it may be said perhaps that his acquiescence might be all the warrant that the executors would need for their non-action.

I must therefore hold that the discretion given by this will to the executors was a mere power to be exercised at their own will over which neither the life tenant nor this court could have exercised any authority; that there is no imperative trust for the breach of which an appeal could be had to this court, and that this court has no jurisdiction whatever in that matter.

Having decided in favor of the residuary legatee under the David Ledwith will, I do not feel it necessary to decide the question whether the Lawsons are in a position to lay claim to the fund or not. In their answer they claim that the trust under the David Ledwith will was terminated during the life of James II. Ledwith, and that before his death he became entitled to receive from the complainants as his absolute property the principal of the trust fund. The argument to support this view is that there came a time in the life of James II. Ledwith when as a matter of fact, and without reference to the thought of the executors on the subject, his mental and physical condition was such that he was competent "to attend to affairs,” whatever that may mean. It will be readily observed from, the views which have been already expressed that this provision of David Ledwith’s will was not automatic or self-executing. The trust could not determine itself; neither could James II. Led-with put an end to it by his will or by any other act. It required the authority and power of the executors, who might act or not, as they saw fit. If James H. Ledwith was not invested with title to or control overdhis property in his lifetime, and he certainly had no such power or control, I do not see how he could dispose of it by will or authorize anyone to intermeddle.

My conclusion is that the executors must transfer the funds in their hands to the defendant Mary Orowly.


text:
    Oscar Barnett Foundry Company v. Paul L. Crowe.
    [Decided December 13th, 1909.]
    1. It is a well-known principle in contempt proceedings that a respondent shall not be adjudged guilty of contempt if there is a reasonable doubt on the facts and on the law as to liis guilt.
    2. On motion to adjudge a respondent guilty of contempt in violating an injunction, evidence examinedi, and'—Held, that it was extremely doubtful whether the act that was being done by ihim was by strict construction included in the restraint, and hence he would not be held guilty of contempt.
    On motion to adjudge respondent of contempt.

      Mr. Egbert J. Tamblyn and Mr. Ralph E. Lum, for the motion.

      Mr. Boyd McLean and Mr. Charles W. Fuller, for the respondent.
   Howell, V. C.

On August 31st, 1909, the complainant on filing his bill herein took an order requiring the defendant to show cause why an injunction should not issue pursuant to the prayer thereof with a provision in the order restraining the defendant “from manufacturing for and selling to the Commercial Trust Company of Jersey City any mechanical chain grate stoker embodying the features set forth in the patent,” &c. On the return day of this order the court ordered that the same be made absolute and that an injunction should issue according to the prayer of the bill. An injunction was issued directing the defendant to “refrain from manufacturing and selling to the Commercial Trust Company of Jersey City a mechanical chain grate stoker embodying the features set forth in the patent,” &c., which injunction was duly served on the defendant. The complainant now moves for an adjudication that the defendant has contemned the restraining order, and.for an order punishing him therefor. The allegations are that after service of the restraining order, and before the issue of the writ, Frank S. Barnett, who is connected with the complainant corporation, was standing facing the premises of the Commercial Trust Company at the reár entrance of its building, and that he could there observe the boilers in the boiler room of the building; that on that occasion he saw the defendant “per-, forming certain mason work in connection with the installation of a mechanical chain grate stoker erected in said boiler room.” The affiant states also that this stoker embodied certain-features of the patent, &c. It is likewise alleged in the affidavit of Mr. Lum that on one occasion when the parties were before this court the defendant’s counsel openly stated that the defendant, notwithstanding the injunctive order, was then proceeding with the manufacture and construction of a mechanical chain grate stoker for the Commercial Trust Company. This last statement is denied by the affidavit of counsel for the defendant, and as to it therefore I am obliged to conclude that the charge made against the defendant as to statements made in open court are not proved; and this leaves as the only question for consideration the statement that the defendant was seen by Mr. Barnett doing certain mason work in connection with the installation of a stoker in the Commercial Trust Company building. It is a well-known principle in contempt proceedings that a respondent shall not be adjuged guilty of contempt if there is a reasonable doubt on the facts and on the law as to liis gnilt. The proceeding is quasi-criminal, and in so far as it is so, it must carry with it the usual and ordinary presumptions that would a££ect the proceeding if it were being conducted in the criminal court. The injunctive order restrained the defendant from manufacturing for and selling to the Commercial Trust Company of Jersey City any mechanical chain grate stoker embodying the features set forth in a certain jDatent. If now appears that the defendant had long before the filing of the bill-manufactured and sold and delivered to the trust company a mechanical chain grate stoker, and it is therefore a fact that the defendant has not violated the order by manufacturing and selling j but it is claimed that the violation consists in doing certain mason work connected with the installation of one of these machines, and the court is asked to distinguish between the manufacture and sale on one hand and the installation on the other hand of the machine in question. The affidavit making the complaint is very general. There is no statement from which the court can be informed as to the character and quantity of the mason work that Mr. Barnett saw. it may well be that the defendant was engaged in merely patching up the brick work or in finishing up the installation or in repairing some of the work that had already been installed. All these suppositions are consistent with the statement in Mr. Barnett’s affidavit, and for none of them would the court be willing to punish the defendant. The proceeding is one of the strictest right, and the right to punish must.be clear upon the law and the facts. There will be no presumption of guilt. It must rest in proof. I am constrained to say that it is extremely doubtful whether the act that was being-done by the defendant was by strict construction included in the restraint, and, this being my view, I must decline to hold that the defendant is guilty of contempt.


author: Howell, V. C. (orally).

text:
    The Oscar Barnett Foundry Company v. Paul L. Crowe.
    [Decided July 13th, 1910.]
    1. When a defendant sets himself up as an inventor, and for a valuable consideration induces another party to take a license under his so-called invention, or to buy his patents, it does not lie in his mouth to say that the patent is bad, or that the application is for a thing for which letters patent are not allowable, or, in' other words, having represented that he has a patentable invention on which he based the contract which furnished him with money, it does not lie in his mouth to say that the so-called invention is not a patentable thing; and when he gives another man the exclusive right to use the thing which he says is patentable, he has no right whatever to enter into the manufacture of that very same article in competition with the man with whom he has made such a contract, upon a good consideration.
    2. An agreement in writing made between the complainant and the defendant, after reciting that the defendant had patentable inventions, for a valuable consideration expressed in the contract, gave to the complainant the exclusive right to use those patentable inventions in the manufacture of mechanical chain grate stokers. In a suit by the complainant as licensee against the defendant as licensor to restrain him from infringement—Held, (1) that the validity of the patent or patents is not involved; and (2) that it does not lie in the defendant’s mouth to say that they were not patentable, nor to say that the agreement did not mean to include applications which had been filed at the -time the agreement was made but on which no patents had yet been issued; and the defendant’s action in building a mechanical chain grate stoker for another party was a gross violation of -his contract, and is a subject-matter over which this court has jurisdiction.
    3. The court will retain jurisdiction over the cause of action in this suit, but decline to issue an injunction to prevent the defendant from violating the covenants made by him in the agreement, for the reason that it does not appear but that the infringing machine was finished and set up and sold and ready for operation at the time the bill was filed.
    4. Upon amendment of the hill an accounting may be had for the profits made by the defendant in the construction of the infringing machine.
    On final hearing on hill, answer, replication and proofs.

      Mr. Egbert J. Tamblyn, for the complainant.

      Mr. Boyd McLean, for the defendant.
   Howell, V. C. (orally).

I do not care to hear you any further, Mr. Tamblyn.

This case, as I have repeatedly said during its progress through the court, is not a case in which the validity of a patent or patents is involved. If it were,, the court would he without jurisdiction; but it is a case in which the rights of the parties are governed by a contract which was entered into between them on the 29th daj7 of January, 1908. This court may, however, look into the letters patent hereinafter mentioned far enough to identify the subject-matter of tlie litigation. At that time, and before, the defendant, Paul L. Crowe, claimed to be the inventor and owner of certain improvements in mechanical stokers for the smokeless burning of bituminous and anthracite coal for use in connection with steam-boilers and other furnaces; the contract with the complainant is with relation thereto. That contract recites that, he, Crowe, is the inventor and owner of certain improvements in mechanical stokers for smokeless burning of bituminous and anthracite coal for use in connection with boilers and other furnaces; and that the party of the first part, that is, the complainant, was desirous of manufacturing stokers containing said improvements. With that recital the contract proceeds to give to the complainant the sole- and absolute license to manufacture and sell chain grate mechanical stokers under protection guaranteed and to be guaranteed by the United States patent office to the party of the first part on two patents which appear to have been pending, and a third which was in contemplation. A royalty was provided for the use of the invention and the license was an exclusive one for the State of New Jersey and for some other states. There was also in the agreement a license to the complainant to manufacture and sell a grate bar in accordance with letters patent which had been issued to the defendant by the patent office, and made also in accordance with claims in the former-mentioned applications for patents; and also in all applications thereafter made by the party of the first part, for improvements thereon, and that is repeated in another paragraph of the agreement. Now, I construe that .agreement, taken altogether, to give to the Barnett company, the complainant, the right to manufacture mechanical. chain grate stokers in accordance with the letters patent and the improvements which might thereafter be made by the defendant on the appliances described in those letters patent, and that the complainant had the exclusive right so far as the State of New Jersey was concerned. But you need not go further than this for the purpose of this case; the complainant has the right to manufacture chain grate stokers in accordance with those inventions which are claimed to have been made by the complainant.

Now, I do not care whether patents were.granted on all these applications or not; I don’t think it makes any difference. I think when Mr. Crowe sets himself up as an inventor, and for a valuable consideration induces another party to take a license under his so-called invention, or to buy his patents, it does not.lie in his month to say that the patent is bad, or that the application is for a thing for which letters patent are not allowable, or, in other words, having represented that he has a patentable Invention on which he based the contract which furnished him with money, it does not lie in his mouth to say that the so-called invention is not a patentable thing; and when he gives another man the exclusive right to use the thing which he says is patentable, he has no right whatever to enter into the manufacture of that very same article in competition with the man with whom he has made such a contract, upon a good consideration. Now, that, I think, is the long and short of this case.

Mr. Crowe represented to the complainants that he had patentable inventions, and for a valuable'consideration, which is expressed in the contract, he gave to the complainant the exclusive right to use those patentable inventions in the manufacture of mechanical chain grate stokers. Now, I do not think it lies in his mouth to say they were not patentable; neither do I think it lies in his mouth to say that the agreement did not' mean to include applications which had been filed at the time the agreement was made, but on which no patents had yet been issued, because he does make an attempt to get out of the results of his actions by attempting to show that the inventions which he used in the mechanical chain grate stoker which he erected in Jersey City were covered by applications for letters patent which had been made before the signing of the contract with the Barnett company and which were not by special words therein included. Yow, I think, they were included; I think that he meant to license the Barnett company", and I think the Barnett company meant to get a license from him to use all the- patents and all the inventions and all the improvements that are mentioned in this contract anywhere. Yoav, if that is so, then the action of Mr. Crowe in building a mechanical chain grate stoker for the Commercial Trust Company in Jersey City was a gross violation of his contract, and it is a subject-matter over which the court of chancery has jurisdiction.

I have no doubt about what the result ought to be. At the'time the bill was filed an application was made for an injunction to prevent the use by the defendant of these inventions. An injunction was granted, but that was on the ground that it did not clearly appear at the time, what is still somewhat doubtful, but perhaps appears a little better than it did then, viz., that the stoker was not finished at the time of the filing of the bill. The bill was filed on the 3Íst day of August, 1909. It is now claimed on the part of the defendant it was finished at that time, and that the injunction which was prayed for therefore cannot now go, for the reason that it would not be of any benefit or advantage to the complainant. That, however, does not interfere with the jurisdiction of the court over the cause of action. The court has jurisdiction over the cause of action; it has jurisdiction to prevent the defendant from violating the covenants made by him in this agreement; it undoubtedly has that jurisdiction; but in this case should the injunction issue? I think, Mr. Tamblyn, that it is not entirely" clear that your bill was filed before the work was finished in Jersey City. Of course, I know what your view of it is and what the view of the other side is, but the matter rests in my mind in very grave doubt. I do not think there is any testimony that can be absolutely relied upon that will go to show either the one thing or the other, in which event I do not see how I can grant an injunction, although I hold to the jurisdiction of the court over the cause of action. I think I am prevented from granting an injunction in accordance with my views of the merits of the controversy, by reason of the rule that an injunction cannot issue in a case where it can be of no use. If the machinery was done, finished, delivered, set up and ready to operate at the time you filed your bill, then your injunction comes too late, and I hold that in this case; I retain the jurisdiction of the court over the cause of action, but decline to issue an injunction for the reason that it does not appear but that the machine was finished and set up and sold and ready for operation at the time the bill was filed. "Now, Mr. Tamblyn, that leaves the complainant practically without remedy in this cause unless it can have an accounting against the defendant for the profits made by him in the construction of this machine. You have not prayed for an accounting, and the question is whether you may have an accounting which you ask for now orally, without an amendment to the bill. I clo not think you can. I think if you want to compel Mr. Crowe to account for the profits made by him you will have to make application to the court for leave to amend the prayer of your bill, and perhaps the stating part of the bill also to some extent, in order to lay a foundation for an accounting. I see no reason why an accounting should not be had in this case as was had by the complainant in the case of Clark Thread Co. v. The William Clark Co., 55 N. J. Eq. (10 Dick.) 658, and in the case of Vulcan Detinning Co. v. American Can Co., 75 N. J. Eq. (5 Buch.) 542. They seem to me to be cases involving the same principle exactly.

Yow, I think that decides all the questions that have arisen in this case; you may take time to consider, Mr. Tamblyn, whether you desire to amend or not.


author: Walker, V. C.

text:
    Bennet Van Syckel, surviving executor, &c., et al., v. William Johnson et al., trustees.
    [Decided August 13th, 1908.]
    By a codicil to his will testator gave to his executors $6,000, in trust, to be invested and the interest to be applied to keeping in good repair and condition that part of the graveyard attached to a certain church wherein his family were buried, also the rest of the graveyard; and if the church should fail to make up the salary of the pasto.r the balance of the interest or so much as necessary should go toward the salary.— Held, that the entire bequest is void because it includes an object of charity, that is, a contribution toward the salary of the pastor of a church, which is a good bequest, and an object not charitable, that is, a provision for keeping a graveyard in order, which is void as a perpetuity, and, the gift being indivisible, the whole is bad for uncertainty.
    Ou bill for construction of will. Heard on bill and proofs taken ex parte.

      Mr. Paul A. Queen and Mr. Bennet Van Syckel, for the complainants.
   Walker, V. C.

This bill was filed by the surviving executor and trustee under the will and codicil of the late Aaron Van Syckel, and by other persons beneficially interested in the estate of the testator as residuary legatees, for the construction of the second codicil to the testator’s will, and for direction as to the distribution of the trust fund therein created, in case that provision of the codicil shall be held to be invalid. So much of the codicil as is perti-nent to this inquiry reads as follows :

“Second. I give and bequeath to my Executors or the survivors or survivor of them, the sum of Six Thousand Dollars in trust nevertheless, that they.or the survivors or survivor of them will invest the sum, either in good Bail Boad securities or good and sufficient Bond and Mortgage on Beal Estate as in their judgment they may think best, and pay the interest accruing thereon annually, first to keeping up in good repair and condition, that part of the graveyard attached to the Bethlehem Baptist Church where my family are buried; Second to keeping up in good condition and repair the rest of said grave yard; Third if said Baptist Church shall fail to make up the Salary of the Pastor of said Church, that then and in that case the balance of said interest, or so much of it as is necessary shall go towards making up the Salary of said Pastor; and in case the balance of said interest shall be more than is necessary for that purpose, then the balance of said interest remaining, after the payment of the said Salary, shall be added to the fund of Six Thousand Dollars from year to year, and the interest arising from such fund shall be appropriated and invested as is hereinbefore directed: the said several sums to be paid by my Executors, or the survivors or survivor ox them, either to the persons entitled to receive the same, or to the Trustees or Trustee of said Church, as they shall think proper, and the receipt of the person or persons entitled to receive said interest, or the receipt of the said Trustees, or any one of them shall be a sufiicient voucher for the same. And in case the said Baptist Church shall go down, or there shall be no regula'r Baptist Church service held in that place, then, after keeping the said graveyard in condition and repair as aforesaid, the balance of said interest shall be divided as X have directed the residue of my estate to be divided in my said will to which this is a Codicil; and in case both Church and grave yard, shall go down and become extinct, then it is my will and I do order and direct that the whole sum of Six Thousand Dollars with whatever additions may have been made thereto', shall revert, and go back, and be considered as part of my estate, and be divided as the residue of my estate is ordered to be divided by said will, to which this is a Codicil.”

The defendants are the trustees of the Bethlehem Baptist Church and also those residuary legatees under the testator’s will who are not complainants in the cause. None of the defendants answered and the bill was taken as confessed, to the end that such decree might be made as the'chancellor should think equitable and just.

The cause was brought on for hearing by the complainants ex pwrie, and two of the defendants, Daniel Johnson and William E. Johnson, trustees of the Bethlehem Baptist Church, were examined as witnesses. They testified that David Beers, the other trustee who. was made a defendant, was npt a member of the church, having taken his letter and joined another church; that there were formerly five trustees, but the others have not acted for four or five years, the last election being held about six years ago; that there were about fort3r-five members scattered through a farming community; that the last meeting of the board was held five or six years ago; that they have had no regular pastor since the spring of 1904, after which time they procured a supply, who preached every two weeks until the fall, of that year (1904), since which time they were without a pastor or any services until the summer of 1907; 'that during the month of July (1907) they arranged with a pastor for preaching every two weeks in the afternoon of Sundays, at no stated salary, but whatever they could afford to pay; that on August 18th, 1907; the members extended the supply pastor a call, no- salary being-fixed and he accepted and was to preach Sunday afternoons every two weeks, but he has not been paid for the reason that they have not had funds wherewith to pay him; that the graveyard is in good shape having been taken care of by some one other than the trustees, in fact by one of the Van Syckel family, but not out of the fund in question; that they have no regular sexton; that the woodwork of the church, a stone one, has not.been painted for about fifty years; that what work has been done to the fences has been done by the Van Syckel family; that without the income from the trust fund they cannot run the church, there not being people of sufficient means (members or not members) to do it, and very little money can be raised; that they are desirous of keeping up the church, but cannot do so without the aid of the fund for the reason that without its aid the pastor preaching every two weeks will leave, as they cannot raise sufficient moneys to pay him; that other churches have been built (in the vicinity, presumably), and members have moved away and died since the raising of the trust fund by the late Mr. Van Syckel, leaving the church in question in a weak condition.-

It is not necessary to decide whether, within the meaning of the codicil, the church has gone down, or that there are no regular Baptist church services held there, so that after keeping the graveyard in condition and repair, the balance of interest, arising from the fund, may be divided as the testator directed concerning the distribution of his residuary estate; or whether both the church and graveyard have gone down and become extinct so that the whole of the trust fund with its additions, if any, shall revert to and be considered a part of the estate of the testator to be divided as provided for the disposition of his residuary estate, because, in my j udgment, the bequest is void as a perpetuity.

In Hartson v. Elden, 50 N. J. Eq. (5 Dick.) 522, Chancellor McGill held, that a provision by a testator that the interest of a certain portion of his estate should be used to keep in repair the grave of his wife and himself and that the remainder of the interest should be employed in the general improvement of the cemetery were void under the rule against perpetuities, because neither trust was for a public charity, which ordinarily is not within the rule referred to, for the trusts under consideration extended no farther than the establishment, preservation and improvement of private property. To the same effect is Corle’s Case, 61 N. J. Eq. (16 Dick.) 409, in which Vice-Chancellor Beed held, that a gift by a testator to his executor of a certain sum to apply'the interest in keeping his burial lot in good order and any surplus remaining to be used to repair fences around the graveyard was void as an attempt to create a perpetuity, being neither a charitable bequest nor a gift to a cemetery association under Gen. Stat. p. 531 § 14.

It will be noticed that the bequest under consideration is not only for the keeping of graves in condition and repair, which is not a charitable use, but also to be applied toward the payment of the salary of the pastor of the church if the church shall fail to make up the salary of the pastor. This is a gift for the maintenance of religious services and is undoubtedly a charity, and, therefore, not subject to the rule against perpetuities (Mills v. Davison, 54 N. J. Eq. (9 Dick.) 659); but, there is here a mixing of charitable uses with objects not charitable, and it is therefore void. Thomson’s Executors v. Norris, 20 N. J. Eq. (5 C. E. Gr.) 489.

In DeCamp v. Dobbins, 31 N. J. Eq. (4 Stew.) 671, a trust to a church to aid the missionary, educational and benevolent enterprises to which the church was in the habit of contributing was upheld only because it was shown that the enterprises referred to were legal charities. Chief-Justice Beasley, who delivered the opinion of the court of errors and appeals,, remarking (at p. 694):

"It is urged that this entire trust cannot be said to be charitable, within the legal signification of that term, inasmuch as the word ‘benevolent/ by its natural force, taires in objects and purposes that are not charities. That this term has this latitudinarian meaning, was, upon full consideration, decided by this court in the case of Norris v. Thomson’s Executors, 5 C. E. Gr. 489. That exposition went on the ground of the intrinsic meaning, and the unchecked form, of the term, for on that occasion it was considered that there was nothing present tending to hem in or narrow its import.”

And (at p. 696) :

“It appears in the case, by the proofs, that this church has been in the habit of making donation's to certain enterprises and objects, such as the foreign and domestic missions, the bible society, &c., all of which enterprises are charities in the legal sense of the term. When, therefore, this will declares the trust, and directs the property to be used ‘to aid the missionary, educational and benevolent enterprises to which the said church is in the habit of contributing/ the will itself provides a standard by which the word ‘benevolent’ is to be measured. The fund is not to be used to aid any benevolent enterprise, but only benevolent enterprises of a certain defined character, and they are charities. The word benevolent’ is thus, by the context and the subject-matter, cut down into legal dimensions. From the first, I have seen no difficulty on this point.”

Like the trust which was held bad in Thomson’s Executors v. Norris, 20 N. J. Eq. (5 C. E. Gr.) 489, the trust in this case is for purposes charitable and not charitable, and, therefore, the bequest is bad for uncertainty.

When an unascertainable part of a fund is given upon a void trust and the residue upon a valid trust, the whole fails. Kelly v. Nichols, 17 R. I. 306; affirmed, S. C., 18 R. I. 62.

A deliverance precisely in point is that of the supreme court of errors of Connecticut in Coit v. Comstock, 51 Conn. 852, in which the court held that bequests to two ecclesiastical societies to be invested as a permanent fund, and the income so far as necessary to be applied in keeping certain burial lots in order, and the remainder to religious services in the societies, was void, remarking (at p. 386) :

“But the bequests as they are, although some portion of the income is to be devoted to a charitable purpose, cannot be supported. If it were otherwise it would be in the power of an individual to make a perpetuity of property to any extent, by devoting some small portion of the undivided income thereof to some charitable purpose. A little charity, in such a case, cannot preserve the entire bequest.”

There will be a decree declaring the codicil to the will of the late Aaron Yan Syekel to be null and void, and that the trust fund raised by- the codicil be distributed as the residue of the decedent’s estate is ordered to be divided by his will. As the proofs show the amount in the hands of Judge Yan Syekel, the surviving executor, the decree to be entered in conformity with these views may ascertain the exact amount distributable.