text:
    Ida Thommen v. Maggie A. Smith
    [Submitted January 30th, 1918.
    Determined February 2d, 1918.]
    1. A lessee’s executrix and sole devisee may enforce an option to purchase contained in a lease.
    2. A lessee may enforce specific performance of an option to purchase contained in a lease.
    3. An option to purchase contained) in a lease is not abrogated because the parties made a purchase agreement containing different terms of payment, which they later abandoned by mutual consent, when thereafter they continued to act under the terms of the lease.
    On final hearing on bill for specific performance.

      Messrs. Stackhouse & Kramer, for the complainant.

      Mr. Garfield Pancoast (with whom was associated Mr. Walter B. Carroll, of Messrs. Wilson & Carr), for the defendant.
   Leaming, V. C.

This is a suit to enforce specific performance of an option of purchase of real estate.

A lease of the property was made by defendant to complainant’s testator April 23d, 1914, for a term, of three years, with the stipulated rent for the term payable in equal monthly payments in advance.

The lease contains the following clause:

“The party of the first part [owner] agrees that at any time during the term for which said premises are let and rented, the said party of the second part [tenant] shall have an option to 'buy the said premises for the sum of seven thousand dollars.”

April 10th, 1917, complainant, who is the executrix of the lessee and devisee of his entire estate, exercised the option of purchase contained in the lease by tendering to defendant the full purchase price in cash and demanding the execution of a deed of conveyance.

The defence is based upon a claim that the option of purchase contained in the lease was rendered void or unenforceable by reason of certain transactions which occurred between defendant and the lessee in December preceding' the-expiration of the term.

In that month an agreement of sale was entered into between defendant and the lessee wherein the lessee agreed to purchase and defendant agreed to sell the leased premises for $7,000, payable as follows: One hundred dollars was to be paid at the time the agreement was signed; a mortgage of $4,000, then on the premises, was to remain; defendant was to take a second mortgage for $1,000; the balance of $1,900 was to be paid in cash at a settlement to be made January 8th, 1917. The agreement also provided that the $100 cash paid down should be forfeited by non-fulfillment by the lessee at the time named for settlement, and should be returned to the lessee in case defendant failed at that time to deliver a marketable title. The $100 was paid at the execution of the agreement, but before the time for settlement the lessee requested to be relieved from the agreement and defendant consented thereto. By mutual assent the $100 which had been paid was disposed of by defendant crediting the lessee with one month’s rent, then about due, and applying the balance to the payment of expenses which had been incurred by defendant.

Shortly after the abrogation of the agreement of sale the lessee died, and complainant, who is his executor and sole devisee, continued in possession as tenant and each month paid to defendant the monthly rental reserved by the lease.

Defendant now urges that the agreement of sale amounted to air exercise of the option contained in the lease and that its execution and subsequent abrogation amounted to such an exercise and abandonment of the option that it could not thereafter be exercised and enforced.

There is no material conflict in the testimony. Admittedly, the transactions between the parties were substantially as above stated. There is no- evidence indicating that in agreeing to abrogate the agreement of sale either of the parties at that time had any specific purpose, intent or thought as to wha,t effect the transaction had of might have upon the right of the lessee to thereafter exercise his option pursuant to the terms of the lease. The whole transaction may be embodied in the statement that the agreement of sale was made because complainant’s testator at that time wanted to buy on the terms stated in the agreement of sale, and defendant was at that time willing to sell on those terms; the agreement of sale was canceled because complainant’s testator thereafter determined that he did not want to buy at that time on those terms, and defendant was willing that the contract be abrogated and accordingly so agreed.

The sole question for determination is what effect the execution of the agreement of sale and its subsequent abrogation by mutual assent before the date specified for its performance had upon the option contained in the' lease. The diligence of counsel has discovered no adjudicated case based upon similar facts.

I understand it to be conceded by defendant that at the death of the lessee all rights which the lessee had under the lease, including the option of purchase, passed to complainant as executrix. This is expressly determined in McCormick v. Stephany, 57 N. J. Eq. 257, and in the cases there cited (at p. 263). But as complainant herein is both executrix and sole devisee of ail the estate of her testator her right to enforce the option to the same extent that her testator could if alive is beyond question.

The right of a lessee to enforce specific performance of an option of purchase contained in his lease is also well recognized. Such contracts, being in form unilateral, are specifically enforced in equity because a consideration for the option is presumed to exist. In Hawralty v. Warren, 18 N. J. Eq. 124., this is stated as follows:

“In taking a lease, a tenant may be willing to pay a high rent for a number of years, provided the landlord will give him an optional right to purchase at a fixed price. And it is to be presumed that the landlord would not agree to such a. boon, unless he had a consideration in the lease. Any sufficient consideration would make such unilateral contract binding in equity.” See, also, Ten Eyck v. Manning, 52 N. J. Eq. 47, 50. These principles appear to obtain independently of the consideration imported by the sealed instrument.

Eeturning now to the inquiry whether the agreement of sale and its subsequent cancellation by mutual assent were operative to destroy the binding force of the option contained in the lease, it should be noted that the agreement of sale did not conform to the terms of the option contract. The amount of the purchase price alone was the same. The option agreement could have been enforced only by the payment of that amount in cash. The agreement of sale was a matter of new negotiation as to the method of payment; only $3,000 in cash was required of the lessee under that agreement. It should be noted also that the agreement of sale stipulated a result to flow from a failure of the lessee to consummate the agreement on the day named for settlement. That result was the forfeiture of the $100 paid down at the execution of the agreement; no suggestion is contained in the agreement that a further result of the breach shall be a forfeiture of the lessee’s term under his lease or of the optional right contained in the lease. It should be noted also that the agreement of sale further provided the result to flow from the inability of defendant to convey a marketable title on the day named for settlement; in such case the $100 cash payment was to be returned to the lessee immediately. The clear import of these two clauses is to the effect that in the event of failure to consummate the agreement-of sale on the day named, by reason of either of the circumstances stated, the agreement should be at an end; the lessee’s failure to result in a forfeiture of the $100; defendant’s failure to result in a return of the $100.

It will be scarcely contended that the failure of defendant to make a marketable title on the day named for settlement, and the consequent return of the $100 and termination of the agreement was intended by the parties to be also operative to terminate their relations as landlord and tenant; nor can it be reasonably assumed that it was intended that the termination of the agreement by the lessee’s failure to pay on the day named and the consequent forfeiture of the $100 was to be operative to terminate the relation of the parties as landlord and tenant. I think it clear that the parties to the agreement contemplated that in the event of the agreement not being carried out at the time set for that purpose by reason of either of the causes specified, the agreement of sale should be considered at an end and the relations of the parties as landlord and tenant continued. It therefore seems impossible to treat the agreement of sale as having in itself the effect of merging or otherwise suspending the lease without doing violence to the apparent intent of the parties. That the possession of the lessee during the period between the date of the agreement of sale and the date named for settlement, Avas treated by the parties as possession as a tenant as distinguished from possession under an agreement of purchase, is further manifest by the following clause of the agreement:

“Taxes, water rent, rent and all municipal liens to be adjusted at the time of settlement.”

The agreement of sale was not terminated for either of the two causes named in it, but was terminated by mutual assent of. the parties prior to the date named for settlement. In so terminating the agreement of sale, one month’s rent, then about duo under the lease, was credited to the tenant out of tlie $100 advance purchase price payment, ■ and thereafter monthly payments of rent continued to be made pursuant to the terms of the lease. In that transaction it is apparent also that the parties considered their relations as landlord and tenant under the lease wholly uninterrupted and undisturbed by either the contract of sale or its abrogation.

Assuming, as I think it must be assumed, that the respective parties at all times treated the lease as subsisting, and as determining their respective rights and obligations as landlord and tenant, I think no justification can be found for the claim that the option contained in the lease became inoperative in the event of- the failure of the agreement of sale for either of the causes therein specified or b} mutual assent to its abrogation. The option was an integral part of the lease. The rental paid each month presumptively included a proportionate part of the consideration for the option. Although the agreement of sale embodied terms not contained in the option and was the result of independent negotiations, should it be treated as an attempted exercise of the option, no fault can be attributed to either party in its abrogation because that was by mutual assent. In that abrogation of the agreement of sale neither party manifested any purpose to modif3 in the slightest degree their duties and obligations under the lease; they simply abandoned their mutual purposes to then make a sale and purchase. Tn thus continuing their relations as landlord and tenant under the lease, the respective parties must be assumed to have intended those relations to continue in all respects as defined by the lease in tlie absence of any circumstance indicating to the contrary.

Counsel for defendant has pointed to a line of authorities, to the effect that where an option of purohase has been surrendered or abandoned, it cannot thereafter be exercised. Thus, in. a lease with option of renewal at the same price or at such higher price as might be offered by another, a statement l)3 the tenant to his landlord made prior to the end of the term that he will not .renew at the price contained in the offer of another which is shown to him by his landlord, may be treated by the landlord as an abandonment of the option and justify him in closing a contract with the party making the offer. But in the present case there has been no abandonment by the tenant of the option; nor has the landlord obligated himself to another nor in any way treated the option as abandoned except by the present refusal to convey to complainant.

I will advise a decree of specific performance pursuant to the prayer of the bill.


source: Caselaw Access Project

author: Lewis, V. C.

license: Public Domain

text:
    Alfred G. Stumpf v. Violet McGregor Littell et al.
    [Decided February 27th, 1918.]
    1. The use of partnership funds by one partner for an investment held not to show the engagement of the partnership in the investment, where it is established by the evidence that the partnership had a practice of drawing checks in its name, and charging the same against the partner for whose use the money was drawn.
    2. "Whether the funds were used for the partnership depends upon the intention of the parties, as manifested by all the circumstances, and the use to be made of it.
    On pleadings and proofs.

      Messrs. Freeman & Westerhoff, for the complainant.

      Messrs. Raymond, Mountain, Veen Blarcom & Marsh, for the defendants.
   Lewis, V. C.

•A bill of complaint was filed by Alfred G. Stumpf to foreclose a mortgage made by Violet McGregor Littell and husband, the defendants, for the sum of $4,000. The mortgagors thereupon filed an answer alleging that the money on said bond and mortgage was not due at the time of the filling of the bill, and at the same time filed a counter-claim alleging that on May 18th, 1909, the Littells executed a lease to Joseph Formanns, who, at the time, they say, was acting in behalf of Formanns, Stumpf & Sharpe, a partnership, in which Alfred G. Stumpf and Joseph Formanns were the only members. The lease was for a part of the premises described in the mortgage.

The counter-claim further sets forth that the entire transaction of the bond, mortgage and lease were partnership acts on the part of Joseph Formanns and Alfred G. Stumpf; that Formanns and Stumpf had committed waste on the leased premises, and that the defendants were entitled to set off the amount of such waste against the amount found to be due on the mortgage.

A supplemental bill was subsequently filed by the complainant, in which it was alleged that since the original bill had been filed, the bond and mortgage were now due. To this the defendants filed an amended counter-claim, in which they requested Formanns to be made a party to the suit, and that he and Stumpf be charged with the waste claim.

Both Stumpf and Formanns filed answers' to the counterclaim, denying the waste, and also any and all partnership interest in the transaction.

They claimed further that Formanns is the only person interested in the lease and Stumpf the only one concerned in the mortgage.

After formal proof was offered at the hearing, as to the amount due for principal and interest on the mortgage, it was suggested and agreed to by the respective parties involved that evidence be taken to ascertain the truth of the claim of the Littells as to the joint or partnership interest of Stumpf and Formanns in the transaction, before considering any other questions raised by the pleadings.

This evidence, which is not very extensive, discloses that Joseph Formanns and Alfred G. Stumpf were engaged in a large silk dyeing business in the city of Paterson for years under the firm name of Formanns, Stumpf & Sharpe; that the property under foreclosure, and also included in the lease, is located at Mt. Arlington, Lake Hopatcong, New Jersey; that the building? on the tract were used for general confectionery, ice cream business and living quarters, and the ground used for holding and repairing of motor and sail boats. The lessee was also given the right to erect a marine railway on a track which extended out into the lake to a sufficient depth of water to operate the same; and, further, to underlet any of the buildings or tract.

Formanns, in his testimony, in explaining how he became interested in the matter, said that it was through his friendship for a man named Johnson, who was a mechanic, working for his brother; that this man Johnson was sickly and he desired to aid him and put him (in business; that Littell did not regard him as a responsible party, and so he undertook to back him up, and, therefore, signed the lease. It was after this that, Formanns says, he began ,to loan money to the Littells, which resulted in the mortgage transaction.

The first loan was for $3,000, and this, subsequently, reached the sum of $4,000, when the mortgage was given which is now under foreclosure.

Both lease and mortgage offered in evidence are made to Formanns.

Formanns says that the transaction was not connected in any way with the partnership business of Formanns, Stumpf & Sharpe; and it certainly is entirely foreign in nature to the business in which this partnership was engaged. It is true, he saj^s, that the funds which he advanced on the mortgage were taken originally out of the firm’s account; but that it had been the practice in the firm to do this, and charge it eventually to their individual accounts. Stumpf corroborates Formanns on this point, and a • disinterested witness, in the person of Mrs. Jean Reynolds, formerly, and for many j'ears, the head bookkeeper for the firm, testified that it was a practice in this firm of Formanns, Stumpf & Sharpe to draw checks of the firm in their individual undertakings, and charge the same against the partner for whose use the money was drawn. She recalled the Littell transaction, and remembered drawing checks at the direction of Formanns.

The firm of Formanns, Stumpf & Sharpe had gone out of business in September, 1912, and had sold their plant to the AATidman Silk Dyeing Company^, and they were unable to produce any vouchers or book accounts showing the transactions with the Littclls; although they admit that the checks paid to the Littells for the money advanced on the mortgage were the firm checks.

It was disclosed by complainant’s’testimony, and not denied by the defendants, that no payment had been made of the principal of the mortgage; that the interest was due, and that for the tax payments on the property which had been made by the complainant, the defendants had failed to reimburse him.

The principal witness offered bj the defendants is John Mc-Gregor Littell, a member of the bar of this state and of the State of Kentucky, the son of Violet McGregor Littell and William McGregor Littell. They also produced as witnesses William Mc-Gregor Littell, the father, and William H. Young and Frederick W. AA'atson, members of the bar of this state, who had to do with the mortgage and lease transaction. Mr. Littell, the son, handled the transaction for his parents, and is certain that when he made arrangements for the lease that Mr. Formanns told him that it was for his partner and himself; and likewise in the mortgage transaction, that at the time of the signing of the papers he asked Formanns whether he was acting for himself and his partner in the transaction and that Formanns replied in the affirmative.

It does not appear from the testimony that there was, at -the time the loan was made, any special reason for the borrower to make this inquiry.

It is apparent from a perusal of the testimony of Mr. Young and Mr. AAatson that they assumed that they were acting for the ftnn of Formanns, Stumpf & Sharpe, although both the lease and the mortgage were made to Formanns individually.

On page 51 of the testimony Mr. Young says that he drew the notes which were used temporarily, when the money was advanced to Littell in the name of Formanns, Stumpf & Sharpe, under instructions, as he recalled, of Mr. Formanns; it appearing, at the time, according to his testimony, “that Littell could no! wait until we drew the $4,000 mortgage,” and that he procured an advance of from $300 to $500 until such time as the papers could be drawn.

Mr. Watson says that Formanns, when he came to the office, told him that the firm was going to advance money to Littell.

A review of the entire evidence offered by the defendants does not lead me to discredit the story of Formanns and Stumpf; and, further than this, the exhibits in the case appear to sustain their contention. Moreover, there is no evidence before the court to show that Stumpf and Formanns are not responsible parties; and it seems incredible that Formanns would tell a falsehood about the transaction — a story which would injure himself, as it would relieve Stumpf of any liability for damages under the covenants of the lease. The lease is under seal, and Formanns alone is named as the lessee. The covenants therein, on his part, are his personal covenants.

The assignment of the mortgage by Formanns to Stumpf was for a full consideration. It is shown by the evidence that a relative of Formanns occupied a property on Hamilton avenue, Paterson, New Jersey, which was owned by Stumpf, and that the latter conveyed this property to Formanns in consideration of the assignment of the Littell mortgage.

The main evidence offered by the defendants to sustain their contention that the transaction was a partnership one, was the use of the partnership checks in the advances made on the mortgage; but it seems to me to be overcome by the witnesses offered by the complainant. There is nothing in the case which indicates in what way Stumpf or Formanns are benefited by severing their relationship in the transaction.

“Whether real estate purchased with partnership funds was purchased as partnership or individual property, depends upon the intention of the parties as manifested by all the surrounding circumstances, and the use to be made of it. * * * If it appears, however, that the real estate was acquired by a partner as his individual property, and the firm funds used by him in purchasing it were charged to his individual account, with the assent of his partners, such real estate would not be regarded as partnership assets.” 30 Cye. 428, partnership; Jenkins v. Jenkins, 81 Ark. 68; 98 S. W. Rep. 685; Bosworth v. Hopkins, 85 Wis. 50; 55 N. W. Rep. 424; Harvey v. Pennypacker, 4 Del. Ch. 445; Goodwin v. Richardson, 11 Mass. 469; Pitts v. Waugh, 4 Mass. 424.

I will advise a decree in accordance with these views.


text:
    Richard A. Motley v. Henry I. Darling et al.
    [Decided January 15th, 1918.]
    1. An endorser of notes, given pursuant to an agreement of sale, who knows that the payee is relying on such endorsement, is estopped from denying privity of contract between himself and the payee.
    2. A bill of sale of personalty conveys merely the seller’s right, title and interest in the property described therein. ■
    3. Where the endorser of the two notes endorsed a third in consideration of the destruction of the other two, the circumstances in this case were sufficient to put- him on his inquiry as to whether the notes destroyed were or were not forgeries.
    4. Being so put on his inquiry, he is, under the circumstances, liable with the buyer to the seller for the amount of the destroyed notes with interest, as they were forgeries.
    On bill for a discovery, &c. Heard on bill, answer, replication and proofs taken in open court.

      Mr. Joseph Anderson, Sr., for the complainant.

      Mr. George J. McEwan and Mr. Charles E. S. Simpson, for the defendant Henry D Darling.
   Lewis, V. C.

The bill in this cause was dismissed for want of equity and because complainant had an adequate remedy at law. An appeal was taken to the court of errors and appeals, and the decree of this court was reversed. Motley v. Darling, 86 N. J. Eq. 185.

The bill is for a discovery as to the execution oE two notes which were to have been signed by defendant Ftynh, and endorsed by defendant Darling, and were to be delivered to the complainant as the consideration for the sale and delivery by him, the complainant, of certain personal property, but which notes were not so delivered, and in view of the fraudulent destruction of the notes by the defendants, or one of them, for a decree establishing the same and directing ilie payment of the moneys payable thereunder.

The essential parts of the bill are sufficiently enumerated in the opinion rendered by the court of errors and appeals. The bill, however, alleged that the contract for the sale of the garage was between Motley as vendor, and Darling as vendee. The proofs, however, establish the fact that Flynn was the vendee. But I can draw no other conclusion from the evidence than that Motley was induced to part with his property upon the understanding that Darling would pay if Flynn did not. The evidence proves that Darling was trying to secure himself from impending loss. Darling was present at the conference when the bill of sale and the assignment of the lease from Motley to Flynn, and the notes from Flynn, endorsed by Darling, and the chattel mortgage from Flynn to Darling to secure Darling for his endorsements were drawn. He admits that he received notice that an outsider liad bought one of the notes, and yet when Flynn came to him and offered to destroy both the notes on consideration that Darling would endorse a note for $500, he agreed, and did so, and Flynn thereupon destroyed the notes made to Motley for $700 and for $500. Darling says he thought it ivas “awfully strange.”' IBs counsel, however, was present at the time, and he does not seem to have suspected that Flynn had given forged notes to Motley, so that if a skillful lawyer did not suspect the trick that Flynn had perpetrated on Motley, it is fair to assume that Mr. Darling was not guilty of any willful wrongdoing.

I am unable to reach any other conclusion than that there was a privity of contract between Motley and Darling, however; in any event, Darling’s action in endorsing the notes, in pursuance of this agreement between all the parties, in' Motley’s presence, and delivering them to Flynn to be delivered to Motley, knowing that Motley was relying thereon, would estop Darling from denying the privity of contract. The chattel mortgage to Darling was made at the same time and was a further step in the carrying out of the agreement between all the parties, and, of course, furnished the consideration to Darling for his endorsements.

Immediately after Elynn had been placed in possession of the garage, the Bocks went into bankruptcy, and tire receiver in bankruptcy held that the bill of sale given by the Bocks to Motley was only an equitable mortgage. The bill of sale from Motley to Flynn, which was the consideration for the notes, merely conveyed the right, title and interest of Motley to Flynn, and Darling, who had taken a chattel mortgage from Ffynn at the time he endorsed the notes made by Flynn to Motley, may be assumed to have been very much perturbed when he found out the condition of affairs. Flynn, ’however, bought in the title from the trustee, in bankruptcy.

A decree pro confesso has been taken against Flynn, but he is not worth anything.

Mr. Darling seems to be a rather unsophisticated man, and I have no idea that he meant to be dishonest in any way when he endorsed the note for Mr. Flynn for $500 in consideration of the destruction by Mr. Flynn of the two notes in suit. He made a mistake in backing Mr. Flynn, and there is no one to blame but himself. There can be no doubt that Darling had sufficient notice to put him on inquiry.

Darling says that when Flynn destroyed the note in his presence, he, Darling, “thought it was awfully strange.” He knew that Motley had delivered the conveyance and possession of the property to Flynn, and he obviously knew that Motley had not received the two notes which it had been agreed he should receive. He had no business, therefore, to participate in the destruction of these notes without making inquiry.

If the notes were still in existence, there can be no doubt that a decree would lie requiring the delivery of these two notes to Motley, subject to an adjustment, being made by Motley for the amount which Flynn was required to pay to the ■ trustee in bankruptcy to perfect the title which Motley had agreed to deliver to Flynn. The notes are not in existence, however, and inasmuch as the due dates thereof are long since past, it would be idle that new notes should be made to replace those which have been improperly destroyed.

If, therefore, specific performance could be decreed in case the notes were in existence, surely Darling could not avoid his obligation to pay by securing their destruction. Such a doctrine would be inequitable. He endorsed a note for $500 in order to have them destroyed, but,, to my mind, that does not help him to avoid his obligation.

Darling’s contract, by his endorsements, was to pa3 these notes if they were dishonored by Fl3mn at maturity. Darling, of course, was entitled to notice of such dishonor if it took place. Darling in fact did have notice that the amounts of these notes were not paid by Flynn to Motley at maturity, because it appears that he received notice of the protest of the two forged notes which Flynn gave to Motley instead of the originals.

I will, therefore, advise a decree against Flynn and Darling for the amount of the notes plus interest, less the amount paid by Flynn to the trustee in bankruptcy to perfect title, plus interest from the date of such payment, provided proof as to the amount so paid by Ftynn be made before me, on notice, within a reasonable time, otherwise the decree will be for the full amount of the notes and interest.


author: Backes, V. C.

text:
    Eva P. Cropsey v. Charles D. Cropsey.
    [Argued and decided April 16th, 1917.]
    1. The burden of proof of establishing fraud is upon the complainant, and the rule that in transactions between a wife and husband a presumption of fraud arises that must 'be overcome by the husband does not apply to an action by the wife to set aside a deed by her to a third person, and from the third person to the husband and wife, where it is shown that the property was purchased by their joint savings.
    2. As a rule, wliere a husband causes property to be transferred to his wife there is a rebuttable presumption that the transfer was a gift.
    3. The rule is less rigid to rebut the presumption that such transfer was a gift and to prove it was a trust, where the trust is set up in defence of a deed alleged to have been given in discharge of the trust.
    4. The evidence in this cause held not to show the alleged frapd by the husband in procuring the deeds.
    On bill, &C.
   Backes, V. C.

This bill is filed by Mrs. Cropsey against her husband, Dr. Cropsey, to set aside conveyances of their home in Rutherford; one made by Mrs. Cropsey and her husband to Cook Conkling, and the other by Conkling to Mr. and Mrs. Cropsej', dated May 29th, 1913. The cause for action is fraud imposed by the husband upon the wife, namely, that he coerced her into signing the deed by threats of abandonment, and induced her to execute it upon the fraudulent promises that he would cease attentions to another woman, mend his ways in other respects, and resume conjugal relations, all of which, it is charged, he failed to do.

The burden of establishing the fraud is upon the complainant, although in actions of a certain class, by a wife against her husband, to set aside a conveyance of her property, a presumption of fraud arises, which the husband must overcome. Eor instance, if this deed were a pure gift, by the wife to the husband of her property, the burden would be upon the husband to show that it was her voluntary act, and I incline that he would .also .be obliged to show that she had the benefit of independent 'advice, or at least, as the books lay it down, the burden would be upon him to- prove that he did not deceive or oppress her and that he dealt fairly with her and that she understood the nature of the transaction. But this is not a gift case to which the rule applies, as I understand it. Here the husband got from his wife that which in fact belonged to him.

This couple were married, as I recall, in 1892, and for many years, during the struggling period, got along happily. Both worked and saved money together; he as a physician and she as a singer and music-teacher. She was the treasurer; they had but one pocketbook, and this she controlled. She managed the finances and ran his books and bank accounts. With the accumulations they bought a lot and put the title in her name and out of their savings they built their home in 1905, costing some six or seven thousand dollars; and later they paid oft some of the mortgage encumbrance. The greater portion of the money came from the doctor’s practice. Somewhere in the evidence it appears that the object of putting the title in Mrs. Cropsey was to protect it from the consequences of possible lawsuits against the doctor. Later in life, and some six or seven years ago, their relations became somewhat strained, largely due, as I take it, to his persistent demands and her refusal to transfer the home to the name of the two. The ill-feeling gradually increased and they drifted further apart, and when Dr. DeBaun came into her life it reached an acute stage, which resulted in complete estrangement. After he came on the scene she was not as constant in wifely deportment, to put it mildly, as she ought to have been. For two. years Dr. DeBaun’s attentions to Mrs. Cropsey were marked, which served to intensif.y the bitterness upon the part of her husband, whose close and intimate friend Dr. DeBaun had been for many years. He was a free visitor at the house, calling almost daily, day and night, whether the doctor was' home or absent, and their conduct and escapades finally led to the divorce court, Dr. Cropsey charging his wife with adultery with Dr. DeBaun, she counter-charging him with a like offence with two women whom she named. I tried that case,, and dismissed the cross-petition because the charges were entirely unfounded, and also dismissed the doctor’s petition. I denied him a decree, not that there was not an abundance of evidence-calculated to arouse a strong suspicion of wrongdoing, but solely because the proof did not measure up to the legal requirements-to justify judging her guilty. The final separation took place in July or August of 1913, after a Mrs. Thompson disclosed to-Dr. Cropsey the misbehavior of his wife and Dr. DeBaun at her home the summer before, and the impending scandal and exposures of a threatened divorce suit was followed shortly by 'the death of Dr. DeBaun by suicide, as I understand. 1 do hot know that, in drawing upon my memory, I am referring to the testimony in this case or the testimony in tire- divorce- suit — I am unable to distinguish just now — but it does appear in the one or the other, and if it does not appear in the one I am trying, it must be disregarded.

As a rule, where a husband transfers his property to his wife,, or causes it to be transferred to her, it is presumed to be a gift, but this is a mere presumption and, like all other presumptions, may be rebutted. Looking into the circumstances of this case — - the singleness of purpose of husband and wife earning and saving in common to buy a home; his daily earnings and income contributing largely to the fund — the lifetime savings of the two, and the complete understanding that the home was to be the property of both, though title was put in the wife, and that upon the death of either it was to go to the survivor — we find there was in morals and common justice, at least, a most sacred trust; perhaps unenforceable because of the presumption of gift and the rule requiring resulting trusts to be definitely established by satisfactory and convincing proof. But the ruléis far less rigid to rebut the presumption and to prove the. trust, where the trust is set up in defence of a deed alleged to have been given in discharge of the trust.

The doctor had been insisting upon this deed for years, because, as he says, they had no children, and if his wife should die first his rights would be'lost; and, indeed, it appears from Mrs. Cropsey’s testimony that to guard against such an event she had made a will in his favor. As between himself and his wife, things were going from bad to worse. Discord reigned supreme in the household. Dr. DeBaun’s attentions and presence in the house had become so objectionable to Dr. Cropsey that he ordered him to stay away, but despite this Mrs. Cropsey entertained him. The night before the day the deed was executed De-Baun was a caller. This succeeded an occasion by two or three days when Dr. Cropsey found his wife and DeBaun in darkness in the house, and, according to his story, under most peculiar and suspicious circumstances. As I recall his testimony, her hair -was disarranged, her face flushed. On the night in question, DeBaun and Mrs. Cropsey returned home about one o’clock in the morning; the doctor says they had been drinking and that they drank after they returned, and that he saw them from upstairs caressing and kissing. True, or not, he accused them of it and put DeBaun out, with orders, to staj' away, which -were promptly disregarded by DeBaun’s return the next evening or the evening after — to apologize, it is said. The anger of the doctor and the scene that night must have impressed Mrs. Cropsey that the climax, the point of separation, was near; and just how it came about that at this time Mrs. Cropsey yielded to her husband’s longing for his share of the property, the stories of the two differ. He says that the next morning at the breakfast table she made the offer; while, on the contrarjr, she says that he threatened to leave her, and fearful that he would, and relying upon his promise to give up a named woman and that he would become fully reconciled, she agreed. At any rate, after breakfast they went to Mr. Conkling’s office, a reputable lawyer in Rutherford, and detailed to him what was wanted, and after a full explanation of the effect and consequences, they were told to return at two o’clock when the deed would be ready and when it was signed and acknowledged before a Mr. Miller, a master of this court, and left with Mr. Conkling for recording. In the meantime, Dr. Cropsey returned to his house to fetch the title deeds for the draft. Later in the day, Mrs. Cropsey telephoned to the lawyer to withhold the deed from record, but on the following Monday she retracted by a note directing that it be recorded. I cannot credit Mrs. Cropsey’s story that she signed the deed under pressure of her husband’s threat to abandon her, and that she signed it against her will, and that she told the lawyer— Conkling — that what she was about to do was against her will, and that the deed was not of her own free will, but was done to please the doctor. I doubt very much that Mr. Conkling, under such circumstances, would have consented to act as the conduit, and I am satisfied that he fully explained to her the consequences and that she acted understandingly and willingly. If there had been any connivance between him and Dr. Cropsey, he certainly would not, later on in the afternoon, when Mrs. Cropsey telephoned to him, have kept the deed from the record. I doubt not that Dr. Cropsey many times upbraided his wife because of her conduct and threatened to leave home — and he corddn’t be blamed if he had — but I have no confidence in her story that she was moved to sign the deed by his promise of future continence. Such threats, if we may believe her, had often been made before and with the same design, and she always strenuously resisted, and, therefore, why capitulate at this time ? As I review the situation, Mrs. Cropsey sensed her husband’s suspicion of her misconduct with Dr. DeBaun. His discovery of a few nights before had brought on a crisis and to appease him, to avoid an open break, to maintain her status publicly as his wife, she relinquished. This was her gain. She was impelled by motives of self-preservation, conscious that she was simply restoring to him his own and discharging the trust he put in her years before when love and affection and confidence ruled. Her attempted repudiation of the deed in the afternoon shows no more than that she regretted the step she had taken and does not argue that her action earlier in the day was unwilling; for, as I have said, Mrs. Cropsey’s jealousy of the other woman was without foundation, in fact, and her whim a mere subterfuge. That her action was deliberately considered and freely consummated, without haste or úrgeney on the part of her husband, is borne out by the fact that they first consulted counsel without taking with them their title deeds, which ordinarily would not have been the ease had her conduct been precipitate and coerced; having placed her in dire fear and deluded her by false promises, as she says was the case, we would naturally expect he would supply , himself with the means for a hurried accomplishment.

The complainant has not made out her case and the bill will be dismissed.


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    James M. Dunlap v. Emma L. Chenoweth et al.
    [Submitted November 14th, 1017.

    Decided November 17th, 1917.]

      1. A corrupt bargain to contravene the statute is essential to sustain a plea of usury — withholding of a part of the loan as a bonus, without a previous agreement to that effect, does not constitute usury.
    2. The defence of usury must be timely and strictly pleaded, and the answer must set out the particular facts and circumstances of the alleged usurious agreement.
    3. Tinder the evidence in this ease held that complainant is entitled to a decree with a reduction in the amount claimed.
    On pleadings and proofs.

      Mr. Horace F. Nixon (Messrs. Bleakly & Stockwell, of counsel), for the complainant.

      Mr. John Boyd Avis, for the defendants.
   Backes, V. C.

This is the usual foreclosure bill and the defence is usury. The bond and mortgage were made by the defendant Emma L. Chenoweth to Horace E. Nixon, a member of the Camden bar, who evidently deals extensively in mortgage investments. According to his own statement, he has negotiated loans for more than nine million dollars, mostly in small sums. Mrs. Chenoweth, sorely pressed by creditors, applied to him for a loan of $12,000 on lier home in Woodbury, and agreed to pay him $240 to procure it. The mortgage was to be for one, two or three years at five per cent., if possible; if not, at five and a half or six per cent. Apparently unable to find a lender as quickly as her circumstances demanded, Mr. Nixon advanced the money himself. He liquidated the fixed liabilities upon the mortgaged property and gave to Mrs. Chenoweth his check in payment of the difference, after deducting -a brocage of two per cent., the alleged usury. The bond was written at six per cent., with the understanding that Mr. Nixon was to place the loan at five per cent., if possible. He sold the mortgage to the complainant, Dunlap,-giving himt his written guarantee for the prompt payment of the principal and interest, for a commission of one per cent., a practice that was quite common with him. Although the defendant is in arrears since August, 1914, Mr. Nixon has regularly paid the interest at the rate of five per cent. His dealings with the complainant and through them his ability to reap, for a time, one per cent, on the loan, were not disclosed by Mr. Nixon to his client, Mrs. Chenoweth. Now, advised by counsel of the consequences of this lapse of duty and moved perhaps by the intimations in a memorandum opinion filed in this suit by another judge, he has, in open court and in the brief submitted, offered restitution and reduction of interest. That closes the incident.

The defence of usury, which involves forfeiture of interest and costs of suit, even if it were timely and properly pleaded, is not made out by the proofs. Mr. Nixon was hired to secure a lender, and if successful, he was to receive the remuneration agreed upon. He was not, and there that particular bargain ended. Hnder the new arrangement, and when Mr. Nixon himself advanced the money, there was no agreement between him and Mrs. Chenoweth that he should have a commission of two per cent, out of his loan. Such a bargain executed would be clearly usurious. In making the settlement, Mr. Nixon arbitrarily withheld $240 for his compensation, to which Mrs. Chenoweth, at the time, submitted. That this was the true situation was affirmed by Mrs. Chenoweth, as well on the stand as by her original answer, in which she asserted that “the charge of fee or commission' was without any previous agreement and was simply deducted from the proceeds of the mortgage loan by the said Horace F. Nixon.” A corrupt bargain to contravene the statute is essential to sustain the plea of usury. Withholding of a part of the loan as a bonus, without a previous agreement to that effect, does not constitute usury. Howell v. Auten, 2 N. J. Eq. 44; Ware v. Thompson, 13 N. J. Eq. 66; Muir v. Newark, 16 N. J. Eq. 537; Auble v. Trimmer, 17 N. J. Eq. 242; Kase v. Bennett, 54 N. J. Eq. 97. The remedy for the wrongful detention is to correct the settlement and not to forfeit the interest, if there was no contract to evade the statute. United States Mortgage Co. v. Sperry, 138 U. S. 313.

Mr. Nixon’s subsequent success in placing the mortgage at five per cent., as lie had promised to do, entitles him to his brocage of one-half of one per cent., the maximum rate under the fifth section of “An act against usury.” Comp. Stat. p. 5706. It is insisted that the loan from Mr. Dunlap to the defendant was for a term of five years, and hence the charge of $240 was within tire statute. I can find nothing in the record justifying this claim. The mortgage was drawn for one year and there was no binding obligation to extend the time.

Now, as to the pleadings — the defence of usury must be timely and strictly pleaded, otherwise it will be indulged only' to promote the equities of the cause. Richards v. Weingarten, 58 N. J. Eq. 206; Vandeveer v. Holcomb, 22 N. J. Eq. 555. The first answer, filed within time, on January 6th, 1916, set up, as already stated, that the two per cent, was charged for services without previous agreement, and a deduction was prayed. After notice of motion to strike it out, an order was entered February 14th allowing an amendment. On February 24th, by way of counter-claim (?), the charge and deduction of $240 commission was again set up, substantially in the language of the original answer, but characterized as usury, and allowance was prayed. The cause came on for hearing on April 4th, when counsel associated with Mr. Nixon applied for a continuance and consented to a further amendment setting iyp usury in proper form. This consent was withdrawn the following day on the ground that it had been given under a misapprehension. At the final hearing the defendant filed an amended counter-claim in form hereinafter stated. This amendment will be permitted to stand as an answer to abate the principal debt but not to plead the defence of usury. It is out of time. There is no order allowing it, and the consent to its filing, which was hastily given and promptly withdrawn, ought not to prejudice the complainant. Had the application to amend been made to the court it would have been denied upon terms. Richards v. Weingarten, supra.

The amendment does not allege usury as required by the rules of pleading. After setting up the facts and circumstances of making the loan, as hereinbefore related, the answer continues

■‘unci in making settlement therefor the said Horace F. Nixon deducted and retained from said principal sum the sum of «$240 which these defendants by their acquiescence at that time agreed to pay to said Horace F. Nixon for the loan and use of said sum of $12,000 in addition to interest at the rate of six per cent, per annum upon the loan or forebearance thereof.”

This is argumentative. It disclosed no corrupt bargain for the loan of the money and is no more than an averment that in making the settlement Mr. Nixon retained $240 for his compensation, to which for the time being the defendant’s attitude was passive. One of the four essential allegations of the defence of usury is that the contract for the loan of money was made between the parties, with the intent to violate or evade the statute against usury. Kase v. Bennett, supra. The further allegation

“that the said bond or obligation made upon, the contract as aforesaid, between the said Horace F. Nixon and these defendants, for the loan of money and the bond' and mortgage set forth in the said bill of complaint were given in pursuance of the agreement above set forth, with corrupt intent to violate and evade the statute against usury,”

was intended to supply another required averment, viz., that the bond and mortgage were given in pursuance of the corrupt intent that influenced the contract for the loan. This, too, is faulty, because it assimilates the infirmities of the previous insufficient allegation of a corrupt bargain upon which it is predicated. Combined, the allegations do not supply the deficiencies. In setting up a defence of usury in a suit in chancery, the defendant must in his answer, as in a plea of usury in an action at law, set out the particular facts and circumstances of the supposed usurious agreement, that the court may see that the agreement was in violation of the statute. Taylor v. Morris, 22 N. J. Eq. 606.

The complainant is entitled to a decree for the amount of principal less $180 (the difference between the brocage, charged and allowed), with interest at six per cent, to the date the complainant purchased the mortgage (September 27th, 1912). He paid fox it in three installments. Interest will be calculated at the same rate to the date of final payment, December 7th, 1912, on the unpaid portions, and after that date at five per cent. Credit is to be given for all payments made on account of interest. Under the circumstances, no costs will be allowed. Mr. Nixon is the real prosecutor of the suit, upon whom the costs should fall, and, as the complainant has his guarantee, and has been paid his interest in full, an adjustment can readily be made.


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    Asa D. Phillips v. Adrian Vermeule et al.
    [Submitted November 13th, 1917.
    Decided December 15th, 1917.]
    1. The statute of New Jersey executing simple trusts (2 Comp. Stut. p. 1586 § 7) does not execute a trust to convey.
    2. Where complainant has been in possession for thirty-five years and the right of action has existed for fifty years, the right to charge the property with a trust ex maleficio is barred by laches and the statute of limitations.
    3. Under the evidence in this case, the answer that a will had disappeared in 1856 and was not found until just before this suit was commenced, is insufficient to overcome laches.
    4. A formal averment in a pleading is nugatory when, refuted, by the specific facts pleaded.
    5. The presumption that trustees had conveyed the property as directed by the will prevails where' the right to an accounting was lost by laches, and limitations.

      On bill, &c.

      Mr. Josiah Stryker, for the complainant.

      Mr. Adrian Vermeule, for the defendants.
   Backes, V. C.

This bill is to quiet the title to “Long Brook Farm” and a strip of land used as a roadway, known as “Hard Scrapple,” in Franklin township, Somerset county. Motion is made to strike out the answer because it sets up no estate or interest in the defendants.

The answer discloses that Miles Smith was the owner in fee at the time of his death in 1838. By his will, proved before the ordinary, he devised the premises to his four sons, as joint tenants, in fee-simple, in trust, to occupy them and to receive the rents, issues and profits and pay the net income to his daughter Henrietta during her lifetime, thence to her surviving husband during his lifetime, and upon their death to convey them in equal shares to the children of Henrietta and the issue of any deceased child per stirpes. Henrietta occupied the farm during her lifetime. She married Reni A. de Russy and survived him, dying in 1882, leaving four children, under whom, by mesne conveyances, the complainant holds, and from them down his ■ chain of title is perfect. He and his lessors have always been in peaceable possession.

After making other devisees, not necessary to be mentioned here, the testator gave $5,000 to his four sons in trust for the widow of a deceased brother for life, over to her four children for life, principal to fall into the residue of the estate. The residue of his personal estate he bequeathed to his four sons and four daughters in equal shares, the daughters’ shares to be held in trust by two sons, Miles and Hatfield, in- default, by his two other sons, Franklin and Digby, as substituted trustees, the interest whereof was to be paid to them during life, with remainder to their lawful issue, and on failure of issue alive at their death to his surviving children, and to the issue of deceased children per stirpes. The testator died possessed of personal property of upwards of $100,000, and intestate of a tract of land in New York state of the value of $24,000. Miles Smith, the testator’s oldest son, was the active trustee until 1856, when, overtaken hv misfortune, he, by various means, diverted what remained of the trust estates into the hands of Reni de Russy, the husband of Henrietta. About the same time Reni de Russy acquired, through mesne conveyances from the heirs-at-law of the testator, title to the land in New York state. Reni de Russy died intestate in 1867. Letters of administration were granted to his son Thomas, to whom passed the remnants of the trust estate and later was distributed among Reni de Russy’s widow and her four children. The farm in New Yoxxk also descended to them as heirs-at-law. The trustees refused to convey “Long Brook Farm” to them, as directed by the will, because they failed to account for the trust fund. Thx*ee daughters axxd three sons of the testator died unmarried. The defendants are his great grandchildren, descendants of his son Hatfield, their immediate progenitors being Osceola, who died in 1915, and Harriet, soxx and daughter of Hatfield. Oixe of them, Miles Smith, soxx of Osceola, is the comxxxon law heir of the surviving trustee.

The theory, upon which the defendants build their claim is that the legal title to the lands in controversy is ixx the heir (prixnogeniture) of the surviving trustee, upon special trust unexecuted; that he cannot be called upon to execute the trxxst because the cesiuis que trust have refused to account for the trust funds, and that because of this, the title, legal axxd ecjxxitable, is in the trustee for the benefit of the will. As agaixxst this the complainant contends that upon the death of Henrietta, the trust, which up to that time had been active, became a sixnpie xxse which the statute (Comp. Stat. p. 1536 § 7) executed ixx the cestui que trust, and therefore the equities set up. by the defexxdants cannot impair the legal title thus vested in them. I apprehend that this is not admissible, in view of the legal construction to be accorded to the language creating the trust. The devise is to the trustees as joint tenants in fee-sixnple, to occupy and to collect axxd pay over the net income, axid upoxx axi event, certain, to convey. The use was executed in the trustees to enable tlxexn to discharge these' duties, and the trust comes within the third rule of construction, excepting trusts to convey from the operation of the statute of uses. Lew. Trusts (Flint) 299; Ferry Trusts (6th ed.) 520. To vest the legal estate in the cestuis que trust requires a conveyance which a court of equity may decree in execution of the trust. Lew. Trusts 921; Perry Trusts 576. The reason for the rule in its application to trusts like the present one is so narrow and technical and unappealing as to strongly tempt one to resort to circumvention or to entirely ignore it. The difference between a trust to convey and a trust to the use, seems almost evanescent, but the distinction is recognized by text-writers, upon the authority of eminent judges, and cannot be disregarded. Garth v. Baldwin, 2 Ves. Sen. 647; 28 English Reprint 412; Mott v. Buxton, 7 Ves. Jr. 201; 32 English Reprint 81; Doe v. Scott, 4 Bing. 505; 130 English Reprint 862; Doe v. Field, 2 B. & Ad. 564; 109 English Reprint 1252; Doe v. Edlin, 4 Ad. & E. 582; 111 English Reprint 906.

On the death of the life use, the legal and equitable estates were in the trustees and the cestms que trust, respectively, and if, even at that time, the trustees were in position to have enforced the equities here asserted, it is not to be assumed that the right is still intact and the remedy available, for it must be evident that at this remote period the determination of the controversy admits of other considerations. The defendants and those under whom they claim have slept so long upon their rights that they must be charged with' gross laches as well as barred by the statute of limitations. It was before the civil war that Keni de Fussy became chargeable with the trust ex maleficio, and fifty years have elapsed since the right of action against his children accrued, and the complainant and his lessors have been in possession of the farm for thirty-five years. During all of that time the defendants, and those whom they succeeded, stood complacently by without the slightest protest or complaint. They cannot now be heard to revive their stale claim. Both the statute and the doctrine of laches confront them. Dean v. Dean, 9 N. J. Eq. 425; McClane v. Shepherd, 21 N. J. Eq. 76; Hendrickson v. Hendrickson, 42 N. J. Eq. 657; Dyer v. Waters, 46 N. J. Eq. 484; Condit v. Bigalow, 64 N. J. Eq. 504; Quairoli v. Italian Beneficial Society, 64 N. J. Eq. 205; Van Houten v. Van Winkle, 46 N. J. Eq. 380; Heinisch v. Pennington, 73 N. J. Eq. 456; affirmed, 75 N. J. Eq. 606. Apt is this language of Mr. Justice Dixon in Hendrickson v. Hendrickson: “The case she presents is one of implied constructive trust only. 3 Pom. Eq., §§ 1030, 1044. In eases of this nature, relief is refus'ed to a party who comes into a court of equity after long acquiescence, and that not only in circumstances where the length of time would render it extremely difficult to ascertain the true state of the fact, but also where the true state of the fact is easily ascertained, and where it is perfectly clear that relief would originally have been given upon the ground of constructive trust. Beck-ford v. Wade, 17 Ves. 88, 97. What that reasonable time is, within which a constructive trust can be enforced, depends on the circumstances of the case. Generally speaking, where a party has been guilty of such laches in prosecuting his equitable title as would bar him if his title were solely at law, he will be barred in equity, from a wise consideration of tire paramount importance of quieting men’s titles, and upon the principle, 'Expedit reipublicai vt sit finis litium;’ and there can be few cases where relief will be granted after twenty years’ peaceable possession by the person who claims in his own right, but whoso acts have made him a trustee by implication.”

In a paragraph of the answer^the defendants set up that prior to April 12th, 1856, the will of the testator disappeared from the files of the prerogative court, and that neither the original nor a provable copy could be found “until shortly before the bringing of this suit and some time subsequent to the several transactions through which the complainant is seeking to establish his bill for.relief.” This, evidently, was intended to explain and excuse the delay, although there is no averment to that effect. It is not alleged that the defendants, or those under whom they claim, were not fully advised of their rights or that by reason of the loss of the will they were unable to assert and establish them seasonably; and if- it is meant that these results are to be inferred, then the averment is bad, because it is indefinite and argumentative. That the original will could not be found “until shortly before the bringing of this suit, and some time subsequent to the several transactions through which the complainant is seeking to establish his bill for relief,” may mean one year or twenty-five years ago, when we consider the relation to the years that have elapsed since 1856 (as a fact the will was restored to the files in 1870). Furthermore, the averment that during all of this time no provable copy could be found, appears to be untrue from other statements in the answer. It appears by the answer that in December, 1859, one John Terhune, a creditor of the testator, filed a bill in this court against the surviving executors and Reni de Russy to reach the trust estate as in the latter’s hands in fraud of creditors. The manner in which the bill and answer thereto are set up and referred to, bring them within the pleadings in this case, and may be looked into on this motion. Upon examination I find annexed to the bill a copy of the will of the testator, which Reni de Russy, in his sworn answer, admits to be a true copy. Osceola Smith and Harriet Smith, the parents of the defendants, were parties to that suit and charged with notice. A formal averment refuted by the facts set up is nugatory. Redmond v. Dickerson, 9 N. J. Eq. 507, 516.

With the right to an accounting lost to the defendants, the allegation that conveyance of the legal title had not been made by the trustees, is reduced to a mere conclusion and impotent against the presumption that the trustees had executed their trust and conveyed as directed by the will. The presumption predominates in law and in equity unless facts alleged exclude its operation. Here there are none. The complainant could maintain an action in ejectment against the trustees, and the jury would be controlled by the presumption in spite of proof to the contrary. In, Baxter v. Baxter, 43 N. J. Eq. 82, involving a somewhat similar devise in trust, Vice-Chancellor Van Fleet said: “The rule is well settled that where lands are conveyed or devised to a trustee, to be held until the cestui que trust reaches a certain age, and then to be conveyed to him, if the trustee fails to pass the legal title at the time when the cestui que trust is, by the terms of the trust, entitled to it, and his right to the possession of the lands is resisted, he may recover possession by ejectment, on the presumption that the trustee has done his duty and made over the legal title to him. Courts of law are now at liberty whenever it appears that the trusts upon which the lands were held have been fulfilled, so that it has become the duty oí the trustee to transfer the legal title to his cestui que trust, to presume, following the rule in equity, that that shall be considered as done which ought to have been done — that the trustee has conveyed the legal title to his cestui que trust. Such presumption is .made in order to prevent a just title from being defeated by a mere matter of form.” Citing Obert v. Bordine, 20 N. J. Law 394; Brown ads. Combs, 29 N. J. Law 36. See, also, Commissioners v. Johnson, 36 N. J. Eq. 211; Jason v. Johnson, 74 N. J. Law 529.

Now, if upon a trial of the issue it is to be presumed as a matter of law.that the trustees performed their duty, tlie presumption necessarily must prevail on demurrer or motion to strike out, when no additional matters are pleaded justifying the withholding of the title, notwithstanding allegations to the contrary and the rule that all relevant matters well pleaded are admitted as true. Olden v. Hubbard, 34 N. J. Eq. 85.

The answer will be stricken out, with costs, and the complainant may take a decree.


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    Delaware River Quarry and Construction Company v. The Board of Chosen Freeholders of the County of Mercer et al.
    [Submitted November 7th, 1917.
    Decided January 15th, 1918.]
    11 The furnishing of automobile trucks and drivers to a contractor does not give a claim for “labor” within the terms of the Municipal Mechanics' Lien law. They are mere instrumentalities.
    2. The act gives a lien only to subcontractors and persons who labor for, or furnish material to, the contractor or subcontractor. ■

      3. The provision of the act that a notice of lien should state the “terms, ■ time given, conditions” of the contract, is not applicable to cases of simple contract of purchase on orders from day to day. Agnew v. Paterson Board of Education, 83 N. J. Eq. 49, followed.
    4. A notice of pendency of- suit served on the day the hill was filed is sufficient, although subpoenas were not actually issued until four days later.
    Oil bill, &C.

      Mr. Scott Scammell and Mr. Charles De F. Besore, for the complainant.

      Mr. Harry Heher, for the defendant trustee in bankruptcy.

      Mr. Alvin, W. Sykes and Messrs. Church & Harrison, for the defendant Holbrook Cabot & Rollins Corporation.
   Backes, V. C.

This bill is to enforce municipal mechanics’ liens. Comp. Stat. p. 3315. The Newton Paving Company paved Nottingham Way under contract with the board of freeholders of Mercer county. The lienors, Delaware River Quarry and Construction Company, furnished material and the Holbrook Cabot & Rollins Corporation claims to have 'performed labor in the execution of the contract. The Newton company has been declared a bankrupt and the trustee in bankruptcy resists the claims to liens; the Holbrook corporation because its debt is not protected by the act and both claims on the common ground that the lienors failed to perfect their liens in the maimer prescribed by the statute. Section 1 gives a lien to any person who shall in conformity with the terms of any contract for any public improvement, made between any person and any municipality, perform any labor or furnish any material towards the performance or completion of any such contract, on complying, with the provisions of the act. Section 2 prescribes the manner of giving notice of liens and defines what it shall contain, among which is that the claimant shall state “the terms, time given, conditions of his contract.” Section 4 provides that the lien shall not be binding unless within ninety days from the filing of the same action be commeneed and notice of the pendency of the suit be filed with the financial officer of the municipality. Other features of-the act need not be mentioned.

The Holbrook corporation hired automobile trucks with drivers, which were used by the contractor in hauling material from its plant to the work. During the operation tire trucks and drivers were under the exclusive management and control of the latter. The claimant had no hand in the work, nor did it undertake to perform anjr part of the contract. The furnishing of instrumentalities to a contractor and used by him in the performance of a contract, does not constitute “labor” within the scope and purview of the statute. Troy Public Works Co. v. City of Yonkers, 207 N. Y. 81; Post & McCord v. City of New York, 148 N. Y. Supp. 568; affirmed, 152 N. Y. Supp. 1138. But counsel contends that having furnished drivers to operate the auto trucks the claimant performed labor, arguing that the trucks were merely incidental to the labor of the drivers, and citing Post & McCord v. City of New York. That ease does not support the' position taken. There the claimant, Johnsons, labored with wagons and drivers. Here the contractor did the work with claimant’s trucks and drivers. .The undertaking of Holbrook corporation did not involve the performance of any part of the municipal contract. It was in no sense a sub-contractor. Its drivers, like the trucks, were instrumentalities furnished to the contractor. There is a marked distinction between a charge for rental of instrumentalities used by the contractor and a claim for labor performed by the lienor by means of instrumentalities. In the latter instance^ as remarked in the last-cited case, the claimant “is entitled to a lien for the value of the labor so performed and this value is merely increased by the instrumentalities used in this labor.” The nature of the engagement is the controlling element.

The view strenuously urged by the trustee that only those who personally labor are within the protection of the statute, is too narrow, and the cases cited are not authority for the proposition. Tod v. Kentucky Union Railway Co., 52 Fed. Rep. 241; Vane v. Newcombe, 132 U. S. 220; State v. Rusk, 55 Wis. 465; Adams v. Goodrich, 55 Ga. 233; Lehigh Coal and Navigation Co. v. Central Railroad of New Jersey, 29 N.J. Eq. 252; Little Rock H. S. & T. R. R. Co. v. Spencer & Maney, 65 Ark. 183. It seems to me that had the claimant contracted to carry the material from the contractor’s plant to the work by means of its trucks and drivers, there could be no doubt that its claim would have-been within the provisions of the act. The language of the statute in this respect is broad and comprehensive and the legislative intent manifestly was to afford protection to all, within the statutory category, who contribute labor towards the performance of public contracts, whether it be rendered personally or through agencies. Davis v. Mial, 86 N. J. Law 167. In this connection it is to be observed that the act is not inclusive of all labor, even though it be manual and personal, but extends to such only as is engaged by the contractor or sub-contractor, and it would therefore appear that the drivers of the claimant would not have been entitled to liens, although admittedly they performed labor towards the completion of the contract.

The attack upon the claim of the Delaware River Quarry and Construction Company is purely technical and is twofold— first, because the notice of liens does not state the “terms, time-given, conditions” of its contract, and secondly, because of a defect in the service of the notice of the pendency of the suit. The claim is for the price of various sizes of crushed stone, furnished from time to time on request, subject to a previous quotation of prices which stipulated that “settlement for stone to be made on the 15th of each month for all stone shipped in the previous-month.” The quotation was general, applying to all shipments, and was not made with special reference to the purchases for Nottingham Way, the stone for which was delivered at the contractor’s plant where some of it was made up into paving material and all carted to tire work and used. The debt is admitted and it is conceded to be the appropriate subject of a lien. The-notice of lien is perfected save for the omission of meaningless and utterly useless statement of “terms, time given, conditions”' of the contract, and to invalidate it for this harmless non-compliance has not been the inclination of our courts. The New York courts have held lienors tó a strict compliance with their mechanics’ lien acts and have rejected claims for failure to state in the notice when the first item of work was clone, although, as remarked by the judge writing the opinion for the court of appeals, “the particular advantage or object of requiring this fact to be stated is not readily apjoarent.” Mahley v. German Bank, 174 N. Y. 499. In Bradley v. Huber Company, 131 N. Y. Supp. 388, and in Post & McCord v. City of New York, supra, liens were disallowed because the notices failed to state when the debt became due; “though,” as the court observed, “absolutely no harm is done to any party by the failure of the notice of lien to contain such a statement.” And it may be that if the claim under consideration were one to which this wholly irrelevant provision of our statute applied conclusively, I would be constrained to follow the rule of construction adopted in those cases and for the reason there given that the statute had expressly required it. Bert our courts have decided that the statement is not required in cases of simple contracts of purchase on orders from day to day. In Agnew Company v. Paterson Board of Education, 83 N. J. Eq. 49; affirmed, 83 N. J. Eq. 339, the situation was similar in all respects to the present, with a single exception, to which I will immediately allude. Yiee-Chancellor Stevenson in overruling the objection to the notice of lien that it was imperfect because of failure to state the terms, &c., sa3s: “I think there are grounds for holding that the statute did not intend to require a claimant, perhaps a business man acting for himself when drawing a notice of lien, to spell out accurately the exact legal contract into which he entered, by means of letters and conversations, and under which his material was furnished,” and on p. 61 of his opinion he says that “rather than to adopt a construction of this Municipal Improvements Lien act, which would render a notice of lien like that of the John Agnew Company inoperative, because of a purely technical objection like the one made in this case, the view might be adopted that the phraseoIog3 of the statute, ‘a statement of the terms, time given, condition of his contract/ refers only to cases where the labor has been done or the materials have been furnished in pursuance of a written contract, or at least a definite and complete oral contract altogether different from the implied contracts under which labor and materials are generally furnished, which implied contracts embrace ancl adopt any definite matters which may have been agreed upon by letters, or otherwise, such as a scale of prices.” The only thing in this case, which was absent there, is, that accompanying the quotation of prices, periods for settlements were fixed, but this additional and incidental feature of the quotation, evidently for the convenience of trade, even though it be regarded as stating terms or giving time, does not distinguish the contract so as to include it within the requirements of the statute, and for the reason pointed out by the learned vice-chancellor that there was no definite and complete contract between the lienor and the contractor, on the part of the one to furnish and the •other to purchase the material, the terms whereof were to be stated.

The objection that notice of the pendency of the suit was prematurely given cannot prevail. The bill was filed on January 20th, 1917, and on the same day notice of the suit was served upon the proper financial officer of the county. Subpoenas were not issued and served until four days later, but all was done within ninety days of the filing of the lien. Suits in chancery are commenced by the issuance and service of subpoena or the making of a bona ficle attempt to serve it after the bill has been filed (Haughwout v. Murphy, 22 N. J. Eq. 531; Hermann v. Mexican Petroleum Corporation, 85 N. J. Eq. 367; Haupt Company v. Board of Education of Edgewater, 100 Atl. Rep. 337); and a notice filed under the Lis Pendens act (Comp. Stat. p. 3175) before the action is thus commenced, is ineffectual, as suits in equity were before the act was passed; innocent purchasers being charged with constructive notice of the pendency of tire suit only by the filing of the bill and the service of the subpcena. A reason for this rule of practice may be found in the hardship imposed on innocent third parties by the doctrine of lis pendens, but no such reason can be advanced for its application to the Municipal Mechanics’ Lien act where no innocent parties are .involved. Here the notice is actual, not constructive, and it serves an entirety different purpose. The financial officer must keep’ the fund intact for ninety days after the lien is filed, during which time the action must be commenced and the officer notified of its commencement, so as to further impound the fund to abide the decree. While at the time of the service of the notice this suit was not technically commenced, the first step in the proceedings had actually been taken; the bill was on file, and in the popular sense, at least, the action had been begun. The bill and notice of suit furnished the financial officer with all of the information the statute intended should be .conveyed to him. Our files would not have disclosed more had process been taken out, and, besides, with these subsequent proceedings, the official at that time had no concern. The notice was not invalid, but was merely inoperative and came into full force and effect on the issuing of subpoenas and their service or attempted service within the time allowed for the bringing of the suit. In Tate v. Jordan, 3 Abb. Pr. 392, the complaint and notice of pendency of the action were filed on May 10th, 1856, but the summons was not served on any defendant until May 21st following. Objection was made to tire validity of the Us pendens notice on the ground that no action was pending when it was filed, and the court held that the notice was not a nullity but was merely ineffectual until service of the subpoena, and then became effective. The text in Oyc. is that “the notice of the pendency of the action may be filed before the summons is served. It does not become operative except where the statute otherwise provides, until service of the summons.” 25 Cyc. 1467. See, also, Benn. Lis Pend. 376; Waring v. Waring, 7 Abb. Pr. 472; Benson v. Sayre, 7 Abb. Pr. *472. All of the practical and legally essential requirements of the act having been substantially complied with and within the time limited, the complainant will be awarded the amount of its lien.

The complainant’s bill to enforce another lien for materials furnished to the same contractor for the paving of the River road, in Mercer county, is controlled by tire foregoing and will be allowed. The complainant is entitled to costs.


text:
    Burris Snyder et al. v. Joseph Taylor et al.
    [Submitted February 10th, 1918.
    Decided February 16th, 1918.]
    1. Formerly tlie court of chancery would not construe a will except as an incident to some relief to be afforded by a decree. ‘But, under the supplement to the Chancery act (P. L. 1915 p. 15h) “any person claiming a right cognizable in a court of equity under a deed, will or other written instrument” may have it construed. Following In re Ungaro’s Will, 88 N. J. Bq. 25.

    2. An absolute bequest to testator’s children, followed 'by directions that if any child should die without issue, its share should, go to the surviving children — Held, to mean death without issue at the period of distribution ; in this case, at the death of the testator.
    On bill, &e.

      Mr. George H. Large, for the complainants.

      Mr. William G. Gebhardt, for the defendants.
   Backes, V. C.

This bill is filed by the executors of William Taylor, deceased, to obtain a construction of the fifth item of the will of Joseph Taylor, the father of William, which reads as follows:

"Item ó. I order and it is my will that my personal estate be sold as soon after my decease as can conveniently be done and my real estate except what I have heretofore bequeathed within one year after my decease and the proceeds together with all my estate except what I have otherwise Sequeathed and one hundred dollars to him (my Executor) for settling my estate and no more to be equally divided among my children hereafter named, viz.: Peter M. Taylor, William Taylor, George W. Taylor, and Matilda Green (wife of Henry Green) share and share alike should any of my children die without issue then in that case the amount of property they get from my estate to revert back to my other-children if living and if not living to their children if they have any.”

Joseph Taylor’s estate was settled in 1882, the four children receiving $3,394 each as their respective shares. William, the complainant’s testator, recently died, leaving his two brothers, George AY., mentioned in the fifth item, and Joseph Taylor, Jr., who claim AYilliam’s legacy under his father’s will, because he died childless. The complainants are about to close the estate in the orphans court and seek advice as to whether they should pay over the amount of the legacy out of funds in their hands, and if so, whether to the survivor under the residuary clause (George AY.), or to all of the surviving children of Joseph, which would include Joseph, Jr. ^ The defendants join in the prayer for the construction of the will, and were it not for this the court would not entertain the bill, and if objections were made the court would not have jurisdiction. The bill is not to construct the will of the complainant’s testator and to obtain instruction respecting their duties thereunder, but it is simply to advise them whether they are liable for moneys in their hands which the defendants claitii. That question would have to be settled by suit in the usual course. The trust estate is not before the court, and it has no control over it and no-decree could be made that would bind either the complainants or tire defendants. The bill involves nothing of an equitable nature, and no equitable relief is sought. Hoagland v. Cooper, 66 N. J. Eq. 407, is controlling. There Chancellor Magie said that “in no case has it been asserted that the court may be asked and compelled to construe a will except-as incident to some relief which may be afforded by a decree. It has been expressly held that the court will not construe wills for the sake of giving counsel and advice to 'the parties, but only for the purpose of giving positive directions for the action of the trustee.” The complainants’ insistence that the bill is maintainable under the provisions of section 7 of the supplement to the Chancery act (P. L. 1915 p. 154) is without merit. The section reads:

“Subject to rules, any person claiming a right cognizable in a court of equity, under a deed, will, or other written instrument, may apply for the determination of any question of construction thereof, in so far as the same affects such right, and for a declaration of the rights of the ■persons interested.”

It will be observed that the complainants do not claim any right — a right cognizable in equity. Whatever right their testator had under the will is now in full possession and enjoyment of his executors, and manifestly the section is not applicable.

The defendants, however, are clearly within the purview of the act, according to a recent construction placed upon it by the chancellor In re Ungaro's Will (ante p. 25). Their claim to the legacy is of a right cognizable in a court of equity, and having admitted the allegations of the bill and joined in the prayer for the construction of the will, thereby submitting themselves and the subject-matter to the jurisdiction of the court, the mooted question will be decided as on their behalf, and they will be bound by the decree.

The estate bequeathed by the residuary clause above quoted, vested in the four children of the testator therein named absolutely at his death, and the words, “should' any of my children die without issue'-' are to be construed as meaning death before the testator, and in the event of the death of any child before that period without issue, then the remaining children are to take the share by way of substitution. This rule of construction is laid down by text-writers and has been adopted and applied by the courts of this state in cases where the language was substantially the same as in the will under consideration. Baldwin v. Taylor, 37 N. J. Eq. 78; Denise v. Denise, 37 N. J. Eq. 163; Barrell v. Barrell, 38 N. J. Eq. 60; affirmed, 39 N. J. Eq. 603. The point is definitely settled by these authorities, and the opinions are so explicit and lucid as to dissipate all doubt the litigants-ever entertained as to their respective rights.

A decree will be entered declaring that the defendants are not entitled to the legacy and have no claim therefor against the complainants. No costs.