author: Reed, Y. C.

text:
    Alfred B. Davis et ux. v. Thomas & Davis Company et al.
    [Filed July 10th, 1902.]
    1. Corporation directors cannot fix their own salaries for services rendered their corporation, and when they attempt to do so they will be allowed only the actual value of such services.
    2. Three directors of a wall paper corporation voted themselves salaries ■of $5,000 a year each, as president, vice-president and secretary, respectively.—Hold, on review of the evidence, that the services were not sufficient to justify the $5,000 salaries, $2,000 a year each being sufficient.

      Mr. John II. Baches, for the complainants.

      Mr. John W. Wescott, for the defendants.
   Reed, Y. C.

The purpose of this suit is to compel three directors and officers of the defendant corporation to return-to the receiver of the Thomas & Davis Company all or a portion of the salaries-which these three directors voted to themselves.

The Thomas & Davis Company was incorporated on June 23d, 1898, with an authorized capital of $100,000. The corporate-purpose was the manufacturing of wall paper. Its works are located at Newark, Delaware. The property which afterwards became that of the Thomas & Davis Company had belonged to the-Delaware Wall Paper Mills Company. There were judgments and attachments against the latter company, which judgments- and attachments Mr. Thomas purchased. On June 20th, 1898, Mr. Davis, the complainant, who had operated the Delaware-Wall Paper Mills Company’s plant, entered into an agreement with Mr. Thomas relative to the organization of a new company, namely, the Thomas & Davis Company. By the terms of this-agreement Mr. Thomas was to subscribe $3,700 and Mr. Davis-$3,000 for stock in the new company. Mr. Davis was to procure-the property of the Delaware Wall Paper Mills Company and convey it to the new company. Mr. Thomas was to have nine-hundred and thirty-three shares of the new company and its judgment note for $8,953.4-9, and Mr. Davis was to have four hundred and twenty shares of the new company. These terms-of the agreement were executed.

Afterwards Mr. Frank H. Bemein and Alois Podrasnick each-bought one-third of the interest in the corporation which Mr. Thomas held, each paying for such one-third interest $8,333.33. At the annual meeting of the stockholders, held July 27th, 1899, Mr. Remein, Mr. Podrasnick and Mr. Thomas were elected directors. Immediately afterwards they held a directors’ meeting, at which Mr. Podrasnick was elected president, and Mr. Thomas vice-president, and Mr. Remein secretary and treasurer. At this meeting it was resolved to pay each of these officers a salary of $5,000 a year. At this meeting it also seemed to have been resolved or understood that Mr. Thomas was to have, as manager, the sum of $96 a week. This was exclusive of the sum voted to him as salary. From the date of that meeting, for a year and seven months, these sums have been drawn by the three officers mentioned.

It is entirely' settled that where directors of a corporation attempt to deal with themselves, their acts are the subject of judicial inquiry and supervision. Directors cannot fix the value of their own services to the corporation. Whenever they attempt to do so, and their action is challenged by a stockholder, or other interested persons, the burden is upon them to show what they have done to merit payment, and the quantity of compensation to which they are entitled is to be graded, not by the sum voted, but by what they earn. Gardner v. Butler, 3 Stew. Eq. 702, 725; Fougeray v. Cord, 5 Dick. Ch. Rep. 185.

The question, then, is this, Did each of these directors render services to the company for which he is entitled to be paid, and if so, to what amount is he entitled ?

First, then, in respect to the merits of Mr. Thomas. He was the manager of the works. He says that previous to his engaging in the present enterprise he had received $100 a week as manager. From the inception of his engagement with the Thomas & Davis Company he had drawn $15 a week up to the meeting of the directors, already mentioned, on July 27th, 1899. In speaking of what he did, he says he managed the business, attended to the correspondence, made new designs, and, during the first year, made the sales of the products of the plant. After that date he took no part in the sales of the products. Hp to that date he had employed expensive experts, but after that date he attended to the preparation of the colors himself. The extent of the business which he managed is indicated by his statement that from June, 1898, to January, 1899, they had two machines, and after that three machines, and produced during that year one million, three hundred thousand rolls of paper. The second year after the meeting of July 27th, 1899, they made two million seven hundred thousand rolls, with, as Mr. Thomas says, three arid one-half machines.

In January, 1901, on account of the failure of the Continental Wall Paper Company in the preceding July, with which company the Thomas & Davis Company had a contract to take its output, the Thomas & Davis Company ceased business. Mr. Thomas issued executions on the judgment which he held against the concern, and he and Mr. Remein and Mr. Podrasnick, each holding a one-third interest in the judgment, bought in the stock, and leased the plant from its receiver, appointed by the court of chancery in Delaware, and proceeded to conduct business-therein.

In respect to Mr. Remein and Mr. Podrasnick, as already remarked, they became directors on July 25th, 1899. Their claim to remuneration is rested upon their services as directors. They claim thejr secured a modification of the contract which, at that time, existed between the Thomas & Davis Company and the Continental Wall Paper Company. The Continental Wall Paper Company was a central wall paper selling organization. Its purpose was to fix prices for the trade and take the products of wall paper factories. By its agreement with the Thomas & Davis Company it was to take the product of the company at cost price, and the amount of the product which they pledged themselves to take was limited by the then present capacity of the plant. It then sold to jobbers at an advanced price, about double the cost price. It got its profit in the difference between the cost price paid to the manufacturer and the advance price at which it sold to jobbers. For this profit it agreed to pay the Thomas & Davis Company $15,000 a year. The contract was existing in this shape when Remein and Podrasnick bought their interest in the stock of the Thomas & Davis Company.

These gentlemen claim that afterwards they induced the Continental Wall Paper Company to enter into á new contract, conceding to the Thomas & Davis Company much more advantageous terms than those contained in the original agreement. By the new agreement the Thomas & Davis Company were to get fifteen per cent, on the gross price of its output, with a guaranteed minimum sum of $25,000, and the payments were to be monthly. In addition to these services, Mr. Remein, Mr. Podrasnick and .Mr. Thomas met in New York, about Christmas time, and spent about a week in picking out designs for the-second year’s business. About three months after this date Mr. Remein and Mr. Podrasnick came again from Chicago, where they lived, and spent a week in selecting the different colors-that the patterns had to be made in. In the summer they came-again, when the annual stockholders’ meeting was held. In addition to these services, they claim that they sold the goods for the company, and thus saved the salaries or commissions-which otherwise would have been paid to agents for. that service. In addition to this, they claimed that they were counseling Mr. Thomas, through correspondence, in respect to the-management of the plant.

Recurring to the claim that from their efforts the original contract with the Continental Wall Paper Company was modified, it clearly appears that while the second agreement was signed in August, 1899, its terms had been agreed upon previous to the meeting of July 27th of that year. They disclaim that previous to the meeting of the board of directors on that date there had been any understanding that they should be paid for their services.

The substantial ground upon which their claim rests is that they rendered services in selling the output of the plant. In. attempting to approximate the value of such services, from the testimony in the case, it is to be remarked that up to July 1st, 1900, the sales were made through the Continental Wall Paper Company. The principal claim is that the bulk of the output of the company was sold to the Podrasnick So Remein Company, located in Chicago. This company was originated in November, 1900. Mr. Podrasnick and Mr. Remein were wall paper jobbers,, doing business individually and separately in Chicago at the time they bought an interest in the Thomas & Davis Company. The Podrasnick & Remein Company made its profits, of course,. in the advanced prices charged by it over the cost price paid by it. The Podrasnick So Remein Company bought paper from a number of factories, and Podrasnick and Remein claim that, they influenced the company to take the goods of the Thomas & Davis Company plant, they acting as members of the buying corporation in selecting the papers to be purchased.

It does not appear how much was purchased by the Podrasnielc & Eemein Company, but as it was organized in November, and the Thomas & Davis Company ceased work in January, the period covered by such transaction was very brief. Podrasnick and Eemein also claim that they sold some $42,000 worth of goods to Other parties; but when these sales were made does not appear, but it does appear that other agents were concerned in bringing about these sales.

During the period when sales were made through the Continental Wall Paper Company the Thomas & Davis Company seems to have been privileged, by the terms of the contract, to sell to parties other than jobbers, for which sale they were entitled to certain commissions; but the amount of such sales and' of the commissions arising from them is unascertainable from the testimony.

My consideration of the testimony has led me to the conclusion that while Mr. Podrasnick and Mr. Eemein were entitled to be remunerated for their services, the degree of remuneration fixed, practically by themselves, is extravagant. Conceding to them the remuneration for all their services in inducing a change in the contract with the Continental Wall Paper Company, and their trips from Chicago to the east, and such services as they rendered in selling paper, and regarding the volume of business of the corporation, I think $2,000 a year each would be ample remuneration.

As to Mr. Thomas, I do not perceive that he rendered any services as officer of the company. The services he rendered after July 27th, 1899, were no greater than, or different from, the services he rendered previous to that date as manager. In fact, from the testimony of these three gentlemen, he had, by reason of the services rendered by Mr. Podrasnick and Mr. Eemein, been relieved from much of the responsibility which he had previously assumed.

The remuneration voted to him as manager, of $96 a week, he is entitled to retain.

Nor do I think that the remuneration, at these rates, should continue later than January, 1901.

Amounts drawn in excess of these rates must be accounted for by these three defendants.


source: Caselaw Access Project

author: Reed, V. C.

license: Public Domain

text:
    William Bettle, commissioner of banking and insurance of the State of New Jersey, v. The Republic Savings and Loan Association.
    [Filed August 15th, 1902.]
    1. The ordinary shareholders of a building and loan association are not creditors, at least until withdrawal claims have been filed, and in computing the liabilities of the company they should be considered as entitled to what they have paid in, without deducting their proportion of the expenses.
    2. Though the insolvency alone of a building and loan association will not in all cases justify the winding up of its business under P. L. of 1S99 p. '366, providing that an injunction may bo granted and a receiver appointed where such an association is insolvent, or exceeding its powers, or violating the law, or where its continuation or methods of business will render its further operation hazardous to the public or to those having funds in its custody, yet where it appears that an association which has been running- eight and a half years is not only insolvent, but that the withdrawals have been large, its expenses extravagant and its investments carelessly made, and that there is no probability of maturing the shares of the persistent members within a reasonable time, an injunction will be granted and a receiver appointed.
    On bill for the appointment of a receiver.

      Mr. Thomas N. McCarter, attorney-general, for the complainant.

      Messrs. Lindabury, Depue & FaulJcs, for the defendant.
   Reed, V. C.

The defendant is a corporation organized under “An act to encourage the establishment of mutual loan and building associations." Gen. Siat. p. SSI.

By an act passed in 1899 (P. L. of 1899 p. 836) every such corporation is subjected to the inspection and supervision of the department of banking and insurance. By this act it is provided that if it shall appear to the commissioner of banking and insurance, from any examination, that an association is insolvent, or exceeding its powers, or violating the law, or that its condition or methods of business are such as to render the continuation of its operation hazardous to the public or to those having funds in its custody, he shall have authority to apply to the chancellor for an injunction restraining said association from the transaction of further business, and for the appointment of a receiver.

This application is made by the commissioner to restrain the defendant, and for the appointment of a receiver, under the third section of the act just mentioned.

The defendant filed its certificate of incorporation on November 2d, 1893. By article 7, section 3, of its original articles of association, it is provided that short-term stock may be issued, on which the monthly dues shall be fifty cents per share; when $50 shall have been paid on a share, no further payments will be required, and the holder will be entitled to receive thereafter cash dividends of $1.50 every six months until maturity of such shares. Section 4 provides that long-term stock will be issued, on which the monthly dues shall be twenty-five cents per share; when $36 shall have been paid on a share, no further payments will" be required, and the holder will be entitled to receive thereafter cash dividends of $1.08 every six months until maturity of such share.

Section 5 provides that the board of directors shall have power to issue, in the name of the corporation, other kinds of stock, to be covered by such regulations as the board of directors may direct.

In addition to the stock on the purely installment plan, the company has issued stock upon payment of a lump sum less than the par value of the certificate. It has also issued stock on which only dividends of six per cent, and eight per cent., respectively, are paid in lieu of further participation in the profits.

The examiners appointed by-the commissioner, by authority of the third section of the act of 1899, made a report, dated May 14th, 1902, from which it appeared that the total assets of the defendant were $625,695.’l9 and its total liability $695,166.68.

The answer of the defendant denies the accuracy of these figures,- and asserts that its assets are sufficient to pay its liabilities. ■

The books of the company show that the association has received from its members, payments oh account of dues and installments, exclusive of entrance fees, the sum of $973,822.48,

It has received as profits on account of interest
and premiums, the sum of.............. $170,103 56
And on account of rents................... 52,801.15
Making a total of..........:.....;.. $222,904 71

In addition, it has received from the members on account of fines and membership fees, additional to the first monthly dues, redemption fees on the payment of loans and miscellaneous expenses returned, the sum of $13,336.15, which, with the previous total, makes the entire sum received on account of profits-$236,240.86. .

Its expenses have been as follows:

On account of salaries......................$207,117 76
Oommissions on collections................. 12,086 88
Agents’ commissions in addition to first
monthly dues......................... 40,523 37
For legal expenses......................... 14,565 08
For furniture............................ . 2,293 68
The total amount of these expenses is.. $276,586 77
In addition to these expenses, it has paid in-
terest upon mortgages on property owned
by the association and interest upon money
borrowed by it, to the amount of........ $34,647 31
It has paid for taxes....................... 32,323 92
And for improvements placed upon the real
estate ............................... 14,902 00
These three items amount to........-.. $81,873 23

The total amount of its expenses foot up to $358,460.10. There has also been paid as profits to members the sum of $58,739.80. This sum, as I take it, is made up partly of interest paid upon the six per cent, and eight per cent, interest-bearing certificates.

The expenses in excess of the profits during the life of- the association up to the time of filing the report are $122,219.24, exclusive of the amount paid for profits; and including that amount, namely, $58,739.80, .the expenses exceed the profits to the amount of $170,959.04.

This amount, therefore, of $170,959.-04 has been taken from the money actually paid in by members of the association— money paid in without including the -entrance fees also paid by the members, which went to the expense account of the association.

It appears that the association has paid to withdrawing members the sum of $397,277.75. This deducted from the amount actually paid in by members, exclusive of the entrance fees, leaves $576,544.73, but out of this has also been paid for expenses in excess of profits $170,959.04, which leaves of the amount paid, in by members, in the hands of the association, the sum of $405,787.93.

This amount of money, therefore, is supposed to be represented by property purchased with it or other property into which such property purchased has been transmuted.

Assuming that this sum has been expended, directly or indirectly by the association, in the acquisition of property, and the property so held is worth its cost, is it sufficient to pay the liabilities of the association?

The -liabilities of the association, as found by the' examiners and stated in the affidavits of the complainant, excluding the amount due for principal and interest on account of mortgages upon the real estate of the association, and exclusive of the item $11,180 payment due on the property, but'which'the defendant says has since been paid, leaves the amount of liabilities, according to the examiners’ report, $411,375.66. ' ■ ;

The first item on this list of liabilities is for the amount due, installment shareholders, put at $382,961.69. This liability is stated by the defendant at $404,600.98. The defendant states that the liabilities of the association at the close of business on April 8th, 1902, exclusive of mortgages assumed and interest thereon, to be $432,741.35.

Taking either estimate of liabilities, it is apparent that if the property owned by the association is worth no more than it cost, the available assets are insufficient to pay those liabilities.

I will now turn to the statement of the assets, concerning the value of which the complainant and defendant differ. The first item consists of first mortgages amounting to $117,762.70. The next item consists of mortgages other than first liens amounting to $31,328. The next item consists of real estate acquired by the association under foreclosure of its mortgages. This item is put in by the complainant at $163,249.61 and by the defendant at $194,818.96. The next item consists of real estate purchased by the association. This property is valued, clear of mortgages, by the complainant at $267,000 and by the defendant at $314,297.74. There are slight differences in the valuation of other property held by the association, but the items already mentioned are those respecting which consideration is important.

The complainant does not challenge the valuation of the first mortgages. In respect to the mortgages other than first liens, their real value does not appear.

Turning to the real estate, it is perceived that this property, up to the valué put upon it by the defendant, namely, $194,818.96, was acquired by the act of the association in purchasing it, as mortgagee,' to secure themselves against loss. These properties are put in as assets, in the language of the answer, “for what they cost.” What is meant by this language is not quite clear.

Of the five pieces so acquired since January 1st, 1901—the pieces mentioned in the report of the examiners—it seems that the Lewis tract and the Hirst tract are put in at the amount at which they were carried on the books of the association. The Kowues tract is put in as an asset at $1,492.65 and was carried on the books of the association at $1,322.66, while the Poole tract, carried at $2,986, is put in as an asset of the value of $1,418.69.

During the same period fivé pieces of real estate were sold by tbe association at a loss of $1,291.97. Now, it seems to me that the fact that $194,818.96 worth of property has been taken in by the association, under its foreclosure proceedings, is a significant circumstance in the management of this company. It indicates injudicious investments. The testimony of officers of the association, relative to their carefulness in having appraisements made of property submitted for loans, and relative to the practice of limiting mortgage loans to two-thirds of the appraised valuation of the property, goes for little in the face of the fact that the association has been compelled to purchase property to save itself against loss oh account of these loans, amounting to more than its present holding of first mortgage securities.

It also means that this property is not an available asset to the value at which it is put in by the association.

This is true whether it is put in at the amount of the mortgage debt, or the mortgage debt together with the costs of the foreclosure, or at the sum actually bid for the property at the foreclosure sale.

The other real estate purchased includes seven five-story tenement-houses on East Seventy-third street, New York City. It is subject to mortgages for $112,000, and $38,810.87 was paid by the association for the equity of redemption. This property is put in by the association as worth $151,810.87.

The next property consists of three five-story brick apartment-houses, Nos. 762, 764 and 766 First avenue, New York City, subject to mortgages aggregating $64,000. The defendant paid for the equity of redemption $22,277.94. This property is put in at a valuation of $84,277.94.

The remaining two New York properties were bought during the last year, one No. 1760 First avenue, and the other No. 174 West One Hundred and Thirty-fifth street. These properties were subject to mortgages of $40,000, and $57,000 was paid for the equity of redemption. This purchase was made after the commissioner of banking had intimated his disapproval of further investments in real estate, while $86,000 of withdrawal claims were awaiting payment.

The defendant’s account of the circumstances under which these properties were acquired is as follows: That for $19,500 of the $39,000 paid for the equity in the Seventy-third street-property it worked off mortgages which it held, several of which were in arrears, and upon property which had depreciated in value. That of the $22,000 paid for the equity in' the properties Nos. 762, 764 and 766 First avenue $5,500 was paid by exchange of a mortgage held by the defendant. Of the amount paid for the equity in the last two properties purchased $10,000 was by exchange of real estate and a mortgage.

The defendant claims that of $74,800, representing the total equity in all the properties, it exchanged for $37,500 mortgages and real estate which had become of doubtful value.

The affidavits and the report of the examiners show that the expenses, including repairs and interest upon the mortgages upon the Bast Seventy-third street properties, exceeded the income by over $1,000, and besides, the interest on the amount paid for the equity of redemption is lost. There has also been a loss on the houses Nos'. 762, 764 and 766 First avenue of $901.21, besides the loss of the interest on the amount paid for the equity of redemption.

The defendant insists that, in arriving at the results, expenses for repairs are charged for what were really permanent improvements; and also insists that, on May 1st, the properties were yielding rentals in excess of fixed charges, a total of $5,300.33.

The purchase of these New York properties was, obviously, a speculative enterprise. No one would have thought of purchasing them as an investment of money held in trust for any purpose. ' Indeed, the only excuse offered for the deal is that it afforded a way of disposing of other mortgages, worth less than the amount loaned, and other real estate worth less than the amount for which it was carried. Being purchased in this way, it would be strange if these New York properties are worth what they nominally cost.' The property is tenement property, still out"of repair, notwithstanding the charges in the items of expenses for permanent improvements. I doubt if the property would.realize to-day the amount which the complainant concedes it to be worth. Its value in excess of this must depend upon the increase in the value of property in the neighborhood some time in the f-uture. I am convinced that now it is not a profit-producing investment, and will not be for some time.

My consideration of the affidavits produced by the complainant and defendant has convinced me that the assets of the association are not merely inadequate, but greatly insufficient to liquidate the liabilities of the association. It is insisted, however, that, in arriving at the liabilities of the company, the present shareholders are not entitled, under their contract with the association, to an amount of money equal to what they have paid in, either-with or without profits; but are only entitled to such an amount as they have paid in after deducting their proportion of the expenses.

But the members are not withdrawing shareholders, and, in fact, are not creditors. A corporation of this kind is sui generis. The ordinary shareholders are not creditors, at least until withdrawal claims have been filed. The ordinary debts are those which have accrued for salaries, commissions, rents, stationery and other current expenses.

In solving the question of the insolvency of an association of this kind, the ordinary rule applied to corporations is inapplicable. Insolvency has been judicially said to be predicable ■of these associations when the assets are insufficient to repay the amount of money which the shareholders have actually paid in. End. Build. Asso. § 511; Thomp. Build. Asso. § 289; Towle v. Building and Loan Association, 61 Fed. Rep. 446; Chapman v. Young, 65 Ill. App. 131; Commonwealth v. Pennsylvania Building and Loan Association, 20 Pa. Co. Ct. Rep. 589.

I do not think, as a universal rule, such a condition will, in all cases, justify the appointment of a receiver. As was pointed ■out in Weir v. Granite State Provident Association, 11 Dick. Ch. Rep. 234, 241, risk of loss by mismanagement is inherent in the ■character of the scheme, and the winding up .by a receiver entails injury upon the non-borrowing class of shareholders. '

If, in the earlier stages of its existence, a building loan association should, by a loss which does not result from inexcusable mismanagement, have its assets reduced below the aggregate amount paid in by the shareholders, but it nevertheless seems probable that while the life of its shares may be prolonged they can be matured, I would not appoint a receiver. But in this instance the association has been running for eight and one-half years. The withdrawals, whatever the cause, have been unsually large. Interest at four per cent, is accumulating upon the amounts due the unpaid withdrawing shareholders. The expenses of the association have been extravagant. The investments have been carelessly made. In my judgment there is no probability of maturing the shares of the persistent members within a reasonable time, or by the assistance of any profits.

I think, within the meaning of the term as applied to these associations, the defendant is to be regarded as insolvent. But, regardless of that, its condition and methods of business are such as to render the continuation of its operations hazardous to the public and those having funds in its custody—hazardous to those who may be induced to become members and to those present members now depending upon the assets of the association for the payment of their shares.

I will allow an injunction and appoint a receiver.


text:
    Samuel J. Margarum v. Walter E. Moon et al.
    [Filed October 10th, 1902.]
    1. Where a: creditor and debtor are both citizens and residents of the same state and the creditor institutes attachment in another state to reach credits due the debtor there, which would have been exempt from attachment or judicial process under the laws of the state where both parties were domiciled, the creditor may be enjoined from further prosecuting his-action in the foreign state.
    2. An attachment in New Jersey for wages can only issue against an absconding debtor, and wages cannot be reached, under the act of 1901 (P. L. of 1901 p. 372), upon an execution, except upon an order that such installment of said wages as a judicial officer shall determine shall be paid! from time to time.

      3. In a suit against one .wlio has been made a garnishee of plaintiff in another state, the action will not be abated by plea of the other action, but it may be stayed until the foreign action is discontinued.
    4. A debtor residing in New Jersey sued for an injunction to restrain his creditor, also a resident ot New Jersey, from attaching in another state a sum due the debtor, and which, under the laws of New Jersey, was exempt from attachment. Defendants’ sworn statement was that he had assigned the claim absolutely to the one prosecuting in the other state, and that under the assignment the assignor was to receive half of any recovery.—Hold, that the injunction would not lie, inasmuch as on the showing the assignor had no control over the foreign proceedings.
    5. A creditor residing in New Jersey assigned his claim against the debtor, also a resident of New Jersey, to one in another state, who there attached a sum due the debtor, which sum was exempt from execution under the laws of New Jersey.—Held, that an injunction would not issue, restraining the creditor from receiving any part of the money collected, since the effect of such an injunction would be to leave the money in the hands of the assignee, and would be of no avail to the debtor. ■ >
    6. In a suit by a debtor for an injunction restraining attachment proceedings in a foreign state, it appeared that the debt amounted to $31, and it was contended that the New Jersey court had no jurisdiction, the debt being below the $50 limit.—Held, that the amount attached being over $50 and it not appearing that the debt, interest and costs would not amount to more than $50, there was jurisdiction.
    On order to show cause why an injunction should not issue-restraining the defendant from prosecuting an attachment in the courts of West Virginia.

      Mr. John A. Montgomery and Mr. William M. Lanning, for the complainant.

      Mr. W. Holt Apgar and Mr. Woodbury D. Holt, for the defendants.
   Reed, V. C.

Margarían, the complainant, resides in Trenton, is married,, living with and supporting a family, and not owning $200 worth of personal property. He is a -servant of the Pennsylvania Railroad Company, which company owes him for wages the sum of $100.

Walter E. Moon, the defendant, is also a resident of this state. Margarían owes Moon the sum of $66.61. According to the affidavits Moon has assigned his claim against Margarían to-George 0. Smith, attorney for the Delaware Mercantile Company, of Harrisburg. The assignee has attached, in the courts of West Virginia, the wages due to Margarum from the railroad •company. The assignment is, in terms, absolute, the consideration for the same being that Moon was to receive one-half of any amount recovered by the assignee.

It is obvious that the purpose of the assignee, in obtaining the assignment, was to evade the statute of this state, which exempts property of a debtor from execution to an amount up to the value of $300.

Mr. Moon, in his affidavit, disclaims any knowledge that attachment suits have been begun in the courts of West Virginia, or that he has any control over such suits. He denies that he has combined with the company, or with Smith, for the purpose •of evading the statute laws of the State of New Jersey, or of depriving Margarum of his wages.

The jurisdiction of courts of equity to act in personam, upon persons within their jurisdictions, by restraining them from using the courts of another state to execute an inequitable purpose, must be regarded as settled. 1 High Inj. § 103.

;-The injunction is not directed to the foreign tribunal, but to the party within the jurisdiction of the equity court. This judicial power was exercised in the case of Cunningham v. Butler, 142 Mass. 47. In that case a citizen of Massachusetts, with knowledge that his debtor residing there had stopped payment, and anticipating proceedings in insolvency against him, made .an assignment of his claim to a citizen of New York, without consideration; and the latter, before proceedings in insolvenejr were begun, brought an action upon the claim in New York, and attached property of the debtor there. The Massachusetts court, on a bill filed in equity by the assignee in insolvency, restrained the creditor from prosecuting the action to judgment, the court having found that the creditors still had control over such action.

The exercise of the injunctive power in this case was held to be constitutional when the case came before the supreme court of the United States. Sub nom. Cole v. Cunningham, 133 U. S. 107.

In Keyser v. Rice, 47 Md. 203, an injunction was supported restraining a creditor, residing in Maryland, from further prosecuting in Piedmont, West Virginia, an attachment by which he sought to recover wages due to his debtor, also residing in Maryland, from the Baltimore and Ohio Railroad Company. In Snook v. Snetzer, 25 Ohio St. 516, a similar exertion of theinjunctive power by a court of equity was approved by the supreme court of Ohio. Creditor and debtor were residents of the State of Ohio. The debtor was the head of a family, and wages due him from the Baltimore and Ohio Railroad Company were garnished in West Virginia. In both cases the proceedings-in the foreign jurisdiction were instituted to evade the Exemption law of the state in which creditor and debtor were domiciled..

Mr. High states the doctrine to be that where a creditor and debtor are both citizens and residents in the same state, and the-creditor institutes an action of attachment or garnishee proceedings in another state, to reach credits due the debtor there, which would have been exempt from attachment or judicial process under the laws of the state where both parties were domiciled,, the creditor may be enjoined from further prosecuting his action, in the foreign state, it being regarded as an effort to evade the laws of the state of his domicile. High Inj. § 106. The cases in which the exertion of this injunctive power has been exercised to restrain such proceedings in the foreign jurisdiction, under-such conditions, are cited by Mr. High (High Inj. § 105) and by Mr. Waples. Wapl. Att. § 713.

Therefore, where it appears that the resident creditor is prosecuting a proceeding in another state for the purpose of depriving a resident debtor of the benefit of the exemption provided by the-law of their domicile, the power of this court to restrain such proceeding seems to be plenary.

But it is said on the part of the creditor that, under attachment suits in this state, wages are not exempt; that only in proceedings to make a debt upon execution issued upon a judgment is the debtor entitled to an exemption of personal property of all kinds to the value of $200. But the fact that the debtor’s wages might be attachable in this state, is no answer to the-debtor’s right to an injunction; for the only way his property could be reached in this state would be upon an execution, as no attachment can issue against him so long as he remains a non-absconding resident in this state. Nor can the wages be reached, under the act of 1901 (P. Li of 1901 p. 372), upon an execution, except upon an order that such installment of said wages as a judicial officer shall determine shall be paid from time to time. This judicial discretion is vested in the judge, so that not all the wages shall be garnished and the debtor be at once deprived of his wages, but that, in ease of the debtor and his family, only such portion of the debt shall be paid, from time to time, as will leave the debtor’s family unimpoverished. This scheme is quite variant from the one put in operation in West Virginia.

It is also insisted that the complainant is not injured by the attachment, because he can, notwithstanding the pendency of that proceeding, recover his wages from the garnishee.

The point is made that such an action here is not subject to a plea in abatement becarise of the pendency of* such foreign suit.

While an action here will not be abated by the plea of the pendency of an action between the same parties for the same cause of action in another state, yet the domestic action may be stayed or suspended until the foreign action is discontinued. Kerr v. Willilts, 19 Vr. 79. Where a defendant- in such a suit has been subjected to garnishee process, it would be strange if the court would not take cognizance of a proceeding which had already ñxed the debt in favor of the attaching creditor. Wallace v. McConnell, 13 Pet. 136, 150.

The same objection against the injunctions which have been allowed in the cited cases could have been interposed in those cases, but were not; and if they had been, they would have been properly overruled as utterly unsubstantial.

While I have found no answer to the complainant’s prayer for injunction in the points already cited, nevertheless I am unable to see how a writ can go, in view of the defendant’s sworn statement that he has made an absolute assignment of his claim and has no control over the attachment proceedings being prosecuted in West Virginia.

As this injunction is aimed at the resident creditor, and would direct him to arrest the prosecution of the foreign action, it follows that it should appear that the prosecution of these proceedings is still under his control. In each case I have examined, where an injunction has been decreed, such was the condition of affairs.

The assignment sworn to in this case seems to confer upon the assignee entire control over the attachment suit. It is, indeed, insisted that the consideration of this assignment, which is set out in the affidavit, shows that it is not really an assignment, but merely a power to collect. Even so, it seems to be a power of attorney, coupled with an interest, which is irrevocable, by the creditor at least, to the extent of the agent’s interest in the claim. Therefore, as it presently appears that the defendant sought to be enjoined is powerless to control or arrest the attachment proceedings, no writ commanding him to do so can go.

There is, however, also a prayer that the defendant may be enjoined from receiving any of the money collected in the West Yirgina suit.

I am unable to .see how an injunction, in these terms, will aid the complainant, unless the restraining order goes further and directs the defendant to assign over to the complainant his right to receive the one-half of what may be collected in the said suit. The restraining order asked for would not prevent a recovery in the attachment proceedings of the whole amount due. A recovery in West Virginia would be a complete bar to another action by the defendant to recover his bill. The injunction restraining him from receiving his share of the money would merely leave the whole, instead of one-half, of the amount collected in the hands of the assignee. And if an order should be made that the one-half should be assigned to the complainant, the defendant would be, apparently, forever stripped of his right to recover any portion of his claim, and thus would be punished for his act of assigning by the entire loss of his credit. An injunction in this case, is refused.

In connection with the above case there were tried six other cases, namely, Hogan v. Crooks et al., Murfit v. Robbins, Has- son v. Roche et al., Cappell v. Shadinger et al., Prest v. White and Ayers v. Holtz et al.

In the first five of these eases the facts are similar to those in Margarum v. Moon, and a decree in each of them will be advised similar to that in the decided case.

In the last case, that of Ayres v. Holt et al., the facts are unlike the other cases, in the important particular that the answering affidavit of Mrs. Holz.does not deny, but admits, that the'defendant’s claim was placed in the hands of the Delaware Mercantile Company for collection, and says that she never made any assignment, or pretended assignment, to anyone of the said claim.

The facts in this case bring it within the class of cases in which the remedy prayed for by the complainant has been granted. I think an injunction should go, unless there is substance in the point brought to the attention of the court, that inasmuch as the debt amounts to only $31.40, and so is below the $50 limit, this court will not entertain jurisdiction of the action. But the matter to be enjoined is the garnishment of the wages due to-the complainant. Those wages amount to $60, and the inference is that this sum has been impounded, by garnishee process, to-await the final judgment of the court in the attachment proceedings. The amount involved, therefore, is over $50. And if the amount of the judgment to be obtained in the attachment proceedings is to be the standard of jurisdiction, there is nothing to show that the debt, interest and costs in the suit will not amount to more than $50.

In this case an injunction will be granted.


author: Stevens, Y. C.

text:
    William I. Barker v. Ellen Barker.
    [Filed August 14th, 1902.]
    1. Where a suit for a divorce for adultery is not brought until twenty-five years after discovery of the infidelity, the delay is fatal, in the absence of some satisfactory excuse.
    2. Where a husband delays bringing suit for divorce for adultery for twenty-five years after discovery of the wife’s infidelity, the fact that she had been residing abroad and he in the United States during such time was no excuse for the delay.
    3. Gen. Stat. p. J¡.05 § TV&, requires that when a defendant is not within the state, a copy of the notice of the order to appear shall be mailed “prepaid.”—Held, that where it does not appear from the papers in the cause that the defendant has received notice, and the affidavit of substituted service does not show prepayment, the service is insufficient.
    4. Chancery Rule 59 requires inquiry for residence of a defendant to be made of defendant’s nearest relatives, if known.—Held, that where the affidavit, as to service, only shows inquiry of complainant’s relatives and it does not appear whether defendant had notice in fact, the service is insufficient.
    On exceptions.
   Stevens, Y. C.

This is a suit for divorce on tbe ground of tbe adultery of tbe wife. Tbe master reports tbat while there is some proof that she committed adultery in tbe year 1875, tbe complainant bas lost his remedy by reason of bis delay in prosecuting bis suit, be having known of tbe adultery in tbe years 1875 or 1876. Tbe relevant facts are, shortly, these:

Tbe marriage took place in England in 1867. In 1869 the complainant came to this country. His wife followed shortly afterwards. According to complainant’s account they lived together in Brooklyn for two years, and then bis wife returned to England; be remained in this country. Tbe defendant gave birth, to a child in November, 1875, at Belpar, in Derbyshire. The register describes it as complainant’s child. He says that, hearing of the birth, partly for business reasons and partly to learn the truth of the report, he went to England in 1875 or 1876, and that while there his wife admitted to him her guilt. This admission was made not later than 1876, and the suit was not begun until July, 1901, or twenty-five years after he was fully apprised of the wrong that had been done to him. I think this delay is fatal. Williamson v. Williamson, 1 Johns. Ch. 488; Cummins v. Cummins, 2 McCart. 138; Castleden v. Castleden, 9 H. L. Gas. 186. The cases make a distinction between the degree of diligence required of a husband and that required of a wife. Cummins v. Cummins, supra. The former is required to be more diligent than the latter.

In the absence of express statute, it is indeed held that the delay may be explained, but then the explanation must be satisfactory. In Mortimer v. Mortimer, 2 Hagg. Cons. 310, 313, Lord Stowell uses the following language:

“The first thing which the court looks to, when a charge of adultery is preferred, is the date of the charge relatively to the date of the criminal fact charged and known by the party, because if the interval be very long between the date and the knowledge of the facts and the exhibition of them to this court, it will be indisposed to relieve a party who appears to have slumbered in sufficient comfort over them, and it will be inclined to infer either an insincerity in the complaint or. an acquiescence in the injury, whether real or supposed, or a condonation of it. It therefore demands a full and satisfactory explanation of the delay in order to take it out of the reach of such interpretation.”

In the case in hand it is true that defendant has been living in England and complainant in this country. But he knew where her residence was in 1876, and he has known, or could easily have ascertained, where she has been living ever since, and he was just as able to commence suit by publication then as now. The statute of limitations has no direct application, but if the statutory analogy is of any value, it is against, rather than in favor of, complainant’s contention on this point, for while in the case of personal actions which require service of process upon defendant the period of non-residence is not counted, in the1 case of actions of ejectment, where it may be dispensed with, it is.

It is said that the complainant was, by reason of poverty, unable to institute his suit sooner. But it appears, by affidavit on file relative to his wife’s residence, that he began suit against her for desertion before he commenced this suit,'r and that, upon her putting in an answer, he discontinued it. It also appears that he had enough money to take a trip to England in 1876, and it cannot be doubted that out of his earnings he could easily have saved enough years ago to institute these proceedings had he been so inclined. He does not, therefore, give a full and satisfactory explanation of his delay. Short v. Short, L. R. 3 Prob. & Div. 193.

I may say that I agree with the master in thinking that the evidence in proof of the adultery is not very strong or satisfactory. It rests almost altogether in the wife’s alleged confession. I may also add'that the requirements of the statute and rules as to publication do not, affirmatively, appear to have been complied with in two particulars:

First. Section 173 of the Chancery act (Gen. Stat. p. ¡¡.OS) requires a copy of the notice of the order to appear to be mailed “prepaid.” The affidavit does not show prepayment. ■ ,

Second. Rule 59 requires the inquiry for residence to be made' of the nearest relatives of the defendant, if known. The affidavit only shows inquiry of complainant’s relatives. It does not appear from the papers whether the defendant has, in fact, received notice.

I think the exceptions to the master’s report should be overruled.


author: Stevens, V. C.

text:
    Willoughby W. Sharp et al. v. John Stalker et ux.
    [Filed September 6th, 1902.]
    1. In a suit to subject to a judgment land conveyed by the judgment debtor to his wife, she, not having been a party to the action in which the judgment was rendered, may make the defence that the judgment was founded on a gaming transaction.
    2. In determining whether transactions in stocks are lawful or merely gaming transactions, that the transactions between the broker and those of whom he bought or to whom he sold are real, is not decisive, but the question is whether, as between broker and customer, the dealings are really dealings in differences.

      Mr. Alan TL. Strong, for the complainants.

      Mr. Willard P. Voorhees, for the defendants.
   Stevens, V. C.

This is a suit brought to set aside a fraudulent conveyance "made by John Stalker to his wife. On July 26th, 1894, the complainants recovered judgment against the defendant John Stalker for $2,071.64. The judgment is based upon two promissory notes, for $1,000 each, made by Stalker to complainants, dated November 1st, 1893. On November 3d of that year Stalker conveyed certain real estate in New Brunswick to Charles B. Herbert, and on November 4th, 1893, Herbert conveyed it to' Margaret I. Stalker, wife of John Stalker. In each deed the consideration is stated to be $1. Without discussing the evidence, I may say that I think it shows that the conveyances were fraudulent as against the complainants, and that complainants could avoid them if they held a judgment enforceable as against Mrs. Stalker. In the words of the court of appeals, in Minzesheimer v. Doolittle, 15 Dick. Ch. Rep. 397, although the judgment fixes, as against all the world, the status of the plaintiffs as judgment creditors of the defendant, it does not prevent defendant’s wife, who was not a party thereto, and who has had, for the first time in this cause, an opportunity to raise the defence; from showing the real character of the debt. It is contended by Mrs. Stalker that the debt arose out of a stock gambling transaction; that the facts are substantially the same as those proved in Minzesheimer v. Doolittle, and that relief must be refused complainants on the grounds there indicated. I think that this contention is correct.

It appears from the correspondence that, on July 2d, 1888, an account, for purposes of speculation, was opened by Stalker with the firm of W. H. Calhoun & Company, who were stock brokers in New York City, and that $1,000 were deposited with them as a margin. This firm, of which the complainant Sharp was a member, dealt with Stalker until July, 1891, when it. was succeeded by the present firm of Sharp & Bryan. The account with the latter was continued until the close of the year 1893 or the early part of 1894. During all this time stocks were bought and sold for the account of Stalker. The purchases were at times very large—far beyond the ability of Stalker to pay. In September, 1891 (the month in which the purchases were the largest), they amounted to over $600,000. The money to buy was, in every case, supplied by the brokers. During the five years of their dealings nothing was ever called for but a margin. The contention of counsel for complainants is that, inasmuch as the evidence does not show affirmatively that there were to be no deliveries as between broker and customer, the transaction was not proved to be a dealing in differences, and therefore a gambling transaction.

In order to test the soundness of this contention, I will state the legal effect of the transaction as I understand it. It is beyond question that, as between the brokers and those of whom they bought or to whom the3r sold, the purchases and sales were real purchases and sales. When the transaction was a “long” transaction, the stocks were bought and paid for by the brokers out of their own moneys and there was an actual delivery of the stock certificates. When the transaction was a “short” one, although the brokers did not have the stock when they sold it, they would be able to borrow it, and so make an actual delivery at the time stipulated. They received the price of the stock so sold, and they, presumably, used the money received in the purchase of other stock, sufficient to replace that borrowed. I say, therefore, that as between the brokers and those with whom they dealt, the transactions were real transactions, and not dealings in differences. And if the complainants stood simply in the position of agents of Stalker, buying and selling only on his behalf, the transaction could not be regarded as unlawful. This was the view taken of it by the English courts, in Thacker v. Hardy, 4 Q. B. Div. 685, and is the view held by the New York courts. It is not the view taken by our court of appeals. Flagg v. Baldwin, 11 Stew. Eq. 219, is the leading case. It is there held that where a broker is, ostensibly, engaged in buying and selling stock for a customer, he is not necessarily the agent of that customer. He may stand towards him in the character of principal, and therefore the mere fact that the transactions, as between the broker and those of whom he buys stocks, or to whom he sells stocks, are real transactions, is not decisive. To determine the true character of 'the transaction, as between broker and customer, we must look elsewhere. As between them, are they merely dealing in differences, or are they purchases and sales really made on behalf of the customer? There are, obviously, two guides to the determination of this matter—first, the agreement between the parties made at the beginning of the transaction, and second, their subsequent correspondence and acts. Our court of last resort holds that the ostensible agreement of the parties, even when reduced to writing, is not necessarily controlling, because it may be a mere cover. Hence it follows that, in cases of this character, the acts and correspondence of the parties are of more importance than their formal declarations. If from these acts and that correspondence it is seen that the transaction is, in reality, a dealing in differences, then the name or color given to it is of no consequence. If it be shown that the customer has furnished the broker with the money to buy the stock, and that the stock has been- actually delivered to the customer, then it would appear that the transaction was not a gambling transaction. In such a ease the broker has acted simply as agent. But if, on the other hand, it be proved that the broker has furnished the money and taken the stock certificate in his own name; that he has subsequently sold, with or without communication with the customer, to whom he announced the purchase and sale, and that the customer has only put up a margin to protect the broker against a possible fall in price, then it would at least be doubtful whether, as between broker and customer, the transaction was anything more than a dealing in differences. If, in a great multitude of instances, extending through a considerable period of time, the transaction had al-. ways been of this character, and if the only remittances ever made by the broker to his customer had been profits derived from sales, where the transaction had been a “long” one, and from purchases, where it had been a “short” one, and if the only remittances made by the customer to the broker had been remittances to keep up the margin, then the only reasonable inference that could be made from this mode of dealing would be that the parties were really dealing in differences; and this being so, it would be reasonable to conclude that they, as intelligent men, intended to do what, in point of fact, they did. Now, if it were proved that, on one occasion out of a multitude of instances covering a long period of time, the customer had received from the broker a single certificate of stock, which he had actually paid for, it would seem to me that this proved, not that all the other transactions were not dealings in differences, but that, on this one occasion, the broker and his customer had deviated from their usual course of dealing, and had taken another course.

In this exposition of the matter, I may seem, in the words of Disraeli, “to be illustrating the obvious and explaining the evident.” What I have been saying has, however, a direct bearing upon the case at bar. No written agreement was made, no explicit verbal agreement is shown. The beginning of the transaction is to be found in the letter of July 2d, 1888, in which Calhoun & Company write to Stalker, as follows:

“Dear Sir.—In accordance with your understanding with Mr. Sharp we have this day transferred your account to his firm, Messrs. W. H. Calhoun & Co., giving them $1,000 received from you.”

The understanding referred to was that Stalker had $1,000; that he came to speculate with it, and that Sharp would receive his account; that “the margin had to be kept up,” and that, failing that, the stocks would be put upon the market and sold. The agreement of the parties, bej’ond this general understanding, can only be inferred from their acts, from the accounts rendered and from the correspondence; and these all indicate a' dealing in differences. Indeed Mr. Sharp himself so testifies. This is his evidence:

“Q. Did you ever have any stocks registered in Mr. Stalker’s name?
“A. They were never paid for outright, so that they were never registered in his name.
“Q. So that all his dealings with you were limited to a settlement of differences arising out of the fluctuation in the prices of the stock dealt in?
“A. Well it might or might not have been at all times. He may have had money enough to pay for some outright, and, on second thoughts, 1 think he did.
“Q. But what I have just stated is the general character of the transactions?
“A. Tes, sir; I suppose so.
“Q. (By the Court.)—He didn’t invest his money in stock?
“A. No sir.”

Mr. Stalker says that he never, except on one occasion, paid for any stock, and that, with this exception, no certificates were ever delivered to him. There is attempt to contradict this statement. Counsel argues that because in this one instance it is shown that Mr. Stalker took the stock, the court ought to infer that it was the agreement that all the stock should be taken, and if it was not taken at other times, it is to be inferred that it was not, not because he was not under a legal obligation to take it, but because, by mutual consent, it was left with Mr. Sharp. This one instances proves, he says, that it was not the agreement that there should be no deliveries. But, he contends, if it be not shown affirmatively that there were to be no deliveries, then it is not proved that the agreement is illegal. To sustain this view he relies upon Pratt v. Boody, 10 Dick. Ch. Rep. 175; S. C., 11 Dick. Ch. Rep. 429. There the customer sometimes took and paid for the stock purchased and sometimes left it in the broker’s hands. It was held that the transaction was not shown to be illegal.

The distinction between that case and this is obvious. If the customer orders the broker to buy two stocks and gives him enough money to pay for one, and the broker buys both, no reasonable inference can be made that the entire transaction, or any part of it, is a dealing in differences. It might just as reasonably, or more reasonably, be inferred that the broker had made a bona ficle advance of money to his principal. The character of the transaction being in doubt, the law would not assume it to be unlawful; for the presumption is always in favor of its legality, when capable of a construction that would make it lawful. And if, in the course of a great number of purchases by the broker for the account of his customer, it appears that the customer sometimes pays for and takes the stock and sometimes leaves it in the broker’s hands, until the broker sells it, the transaction is still capable of a twofold construction, and the presumption of law in its favor still obtains. This I understand to be the rationale of the decision of Pratt v. Boody. But the inference to be made in this class of eases is not an artificial one. It is such an inference as a reasonable man would make from all the facts. If the purchases and sales are very numerous, and they have occurred through a long period of time, and all, with a single exception, point in one direction, it seems to me that the only reasonable inference that can be made is that the parties have been dealing in differences; and that they intended to deal in differences, except in the one case in which they, for some special reason, agreed otherwise. If this be so, the case in hand comes within the decision in Minzesheimer v. Doolittle, and not within the decision in Pratt v. Boody. I think there should be a decree for the defendants.


author: Stévens, V. C.

text:
    Thomas Collins v. John Collins.
    [Filed September 6th, 1902.]
    1. Where, at the time of executing a voluntary deed from a father to his son it was understood that another son was to have the rents of the property for life, but no reservation to this effect was made in the deed,, such omission was fatal, and the deed should be set aside.
    2. A father, about eighty years old and infirm, conveyed all his property to a son for a nominal consideration, reserving only a life estate. The property was originally purchased with the earnings of the father and his sons, another son having furnished most of the price. It appears that the conveyance was drawn by a solicitor who was to derive a pecuniary benefit from the consummation of the transaction; that the deed was the product of temporary irritation on the part of the grantor; that the conveyance was unfair in itself and so regarded by the grantee at the time, and that the act was improvident.-—Held, that the conveyance should be permitted to stand only as security for the money paid by the grantee to the solicitor as part of the consideration.
    On final hearing.

      Mr. Alan IT. Strong, for the complainant.

      Mr. Charles T. Cowenhoven, for the defendant.
   Stévens, V. C.

The bill in this case was filed to set aside, as constructively fraudulent, two conveyances, the first made by Thomas Collins [o his son John Collins, on December 9th, 1898, of a house and lot in Hamilton street, and the second, by the same grantor to the same grantee, on August 13th, 1901, of a house and three lots in Division street.

The grantor is seventy-nine or eighty years old. He is an Irishman by birth, and he came to this country in the year 1865 or 1866. He worked at first as a day laborer and afterwards made a living by selling milk, butter and eggs. He had three sons, John, Thomas and James. James died several years ago, leaving one son. The above properties were bought with money earned by Thomas Collins, Sr., and % his three sons. The evidence would seem to indicate that Thomas had contributed most toward the purchase-money, James gave but little. The title to the above lots and another lot of small value, in Bethune street, was taken in the father’s name. It has never been seriously asserted by the sons that he was not the real owner.

Thomas Collins, Sr., was, apparently, of a quarrelsome disposition. Several years ago he ejected John from a part of the property, and in July, 1901, he ejected Thomas. He is old and infirm. His head troubles him. His speech is so thick that it was with difficulty that he could be understood on the witness-stand.

The deed to John for the Hamilton street property was a pure gift. It is expressed to be for the sum of $1. It was understood at the time that Thomas was to have the rents of the property for his life, and he has, in fact, been permitted to take them. But no reservation to this effect was made in the deed. This is fatal to it. Mulock v. Mulock, 4 Stew. Eq. 594; Martling v. Martling, 2 Dick. Ch. Rep. 122; White v. White, 15 Dick. Ch. Rep. 104.

As to the conveyance of the Division street lots, it is doubtful, on the testimony, whether it was intended as a gift or whether it was made for a consideration confessedly inadequate. Both John and his father, who, of course, are on opposite sides in. this case, testify to facts showing that it was, if anything, a gift. John swears repeatedly and in the most explicit manner that it was a gift, and not a purchase, while Mr. Cowenhoven, the solicitor who prepared the deed, swears that it was made for the consideration expressed in it, viz., $500. Yiewed in either light, it seems to me that it cannot stand. It was substantially a conveyance of everything that Thomas Collins had. Although the deed is, in terms, “subject to the life estate of the said Thomas Collins,” it practically leaves him almost destitute. It is testified to by Thomas Collins, Sr., that the house would not rent for more than $8 or $10 a month. As the taxes amount to nearly $50, and as the insurance and repairs have to be provided for, there would be very little left. It is admitted that Thomas, the son, contributed out of his earnings to a considerable part of the money which went to pay for the property. To disinherit him would be most unfair. The conveyance was made in a moment of extreme, and, as appears in the sequel, temporary, irritation, and just after Thomas had been ejected.

John, the grantee, testifies “all he wanted was to take the place away from his son [Thomas] and his wife, and if I didn’t take it, he was going to deed it over to his nephew.” He further sajrs, “I told him (my father) he was not doing right by my brother when he done so.” The grantor does not appear to have been advised of the improvidence of his act. Mr. Cowenhoven did, no doubt, as he testifies, explain the contents of the paper, but he did not tell the grantor that he was doing an improvident thing, and he did not explain the possible consequence of that improvidence. He put no power of revocation in the deed.-

If the transaction is to be regarded as one founded on a money consideration, that consideration was very inadequate, and, such as it was, one-half of it was to go, not to the grantor, but to Mr. Cowenhoven, in payment for legal services. This was, according to Mr. Cowenhoven’s testimony, part of the bargain. He says:

“I then spoke as to the consideration to be named in the deed; there was about $240, I think, then due me. * * * Then I said there is some back money—I will find out precisely what that sum of money is in a few days-—-that John was to pay me and that the balance was to be paid as John and his father had agreed.”

The legal situation was that John got the property for a trifling sum (the life estate being necessarily of very short duration), and Mr. Cowenhoven got a benefit from the transaction in having his bill paid; the father has not even received the inconsiderable residue that was, according to Mr. Cowenhoven, to come to him. In this aspect of the matter we have, therefore, both an inadequate consideration and the following elements of inequality—first, a deed prepared'by a gentleman of such high character and standing that I would not for a moment think of imputing to him any wrong motives, but nevertheless by a gentleman who was to derive a pecuniary benefit from the consummation of the transaction; second, a deed the product of temporary irritation on the part of the grantor; third, a conveyance unfair in itself, and so regarded at the time, even by the grantee, and fourth, an utterly improvident act. If there had been before any difficulty in procuring a loan because of the similarity of name and because Thomas, the son, was in possession, that difficulty was at an end. The judgment in ejectment had vindicated the father’s ownership and the son had been deprived of his possession. In no aspect of the case can John be looked upon as an innocent or bona fide purchaser for value. Indeed, he expressly repudiates that character, and denies that he became under any legal obligation to pay any consideration whatever, and has, in fact, in addition to the small .loans he advanced before the deed was made, only paid the solicitor. Since the decision in the ease of Coffey v. Sullivan, 18 Dick. Ch. Rep. 296, it is impossible to sustain the transaction. It presents a much more inequitable ease than was there presented.

As, however, the money actually advanced by John was nearly all of it advanced because of his getting this conveyance, and as he who asks equity should do equity, the deed should, I think, stand security for the money paid. Under the circumstances of the case neither party should have costs against the other.


text:
    Henry W. Doremus et al. v. The Mayor and Aldermen of the City of Paterson.
    [Filed September 8th, 1902.]
    1. In an action by the owners of a dam and water-power for compensation for the pollution of the water by the sewage of a city, where the dam has been maintained at its present height for forty years, so that adverse claimants are barred, and was built at a point where its construction was or might have been lawful, it cannot be assumed, in the absence of evidence, that the dam is unlawful.
    2. A water-power company was authorized by the legislature to buy and hold land and water-power for manufacturing purposes, and to sell, let or otherwise dispose thereof as it should deem proper. It constructed a dam and executed leases of mill power, granting to each lessee the right to draw a specified amount of water from the nearest raceway or canal.— .Mold, that the water rights acquired by such lessees were property of which they could not constitutionally be deprived without compensation, whether they were owners or lessees of lands bordering on the stream or not.
    3. Where the owner of a dam and water-power executed leases, granting to each lessee the right to draw a specified quantity of water from the nearest raceway or canal, so long as the water in the main reservoir should stand at a specified height, and providing that if the water should fall below such height, the gates of the lessees should be shut off in the reverse order of their numbers until the height of the water was restored—Meld, that lessor and lessee were properly joined' as parties complainant on a bill filed against the city.
    On demurrer.

      Mr. Sherrerd Depue, for the complainants.

      Mr. George S. Hilton, for the defendants.
   Stevens, Y. C.

This is a demurrer to a bill filed by the complainants, who are either riparian owners of land on the Passaic river, above the ebb and flow of the tide, or lessees of riparian owners. The complainants pray for an injunction restraining the pollution of the river by sewage, unless the city will make “such compensation for the diminution in the value of their land and property rights as shall be ascertained by this honorable court to be just.” The bill, though a new one, is practically a continuation of the case of Simmons v. Paterson, 13 Dick. Ch. Rep. 1; on appeal, 15 Dick. Oh. Rep. S85, and is based upon the complainants’ view of the scope of the decision of the court of appeals in that case.

As several of the causes of demurrer have been disposed of by that decision, only two seem to me to require discussion at this time.

It is said that the Dundee company and those who hold under it are not entitled to the relief prayed for, because the company’s dam is an unlawful structure, and its continuance as such gives rise to the very evils which are made the basis of complaint. It is only necessary to say, in answer to this, that it does not appear from the allegations of the bill that it is an unlawful structure. The dam was erected shortly after the year 1832. In 1858 it was raised to a height of fourteen feet above the river bed, and it has been maintained at that height ever since. Even if it could be inferred from the allegation of the bill that it was built upon lands which did not belong to the company, and there is nothing in the, bill from which such an inference can be made, it has stood at its present height for over forty years—a period of time more than sufficient to legalize it as against adverse claimants. It was constructed at a point where the title to the bed of the stream was, or might have been, in the company, and where the construction was, or might have been, lawful. I cannot assume, in the absence of evidence, that it was unlawful.

The other cause of demurrer requiring present consideration is that some of the complainants are not riparian owners, and therefore not entitled to damage or an injunction. Stockport Water Works Co. v. Potter, 3 Hurlst. & C. 300, is relied upon. The bill includes three classes of persons—first, those who are, in the fullest sense, riparian owners above the ebb and flow of the tide; second, those whose lands adjoin, not the river, but the artificially constructed canal whose waters are drawn from the river; third, those who are neither owners nor lessees of lands fronting on the river or on the canal, but who are lessees of a certain amount of “mill power,” which is used in their respective factories, either for driving the machinery or for scouring, dyeing, &e.

As to the first class, there can be no doubt that its members are entitled to an injunction or damages, under the decision in Simmons v. Paterson.

The second and third classes resemble each other in this respect, viz., that they both lease mill power.

Mill power is, in the leases, defined to be

“the right to draw from the nearest raceway or canal of the lessors through the land to be demised and to be used thereon eight and one-half cubic feet of water per second so long as the water in the main reservoir at the dam shall stand within twelve inches below the level of the top of said dam with a free flow therefrom and the main canal or raceway, all the inlet gates to the same being open, with a fall not exceeding a point 23 feet below the level of the top of the dam.”

There is a restriction that, in case the water in the main reservoir shall fall below the point designated as twelve inches below the level of the top of the dam, the lessors shall shut down the gates of the lessees, in the reverse order of their numbers, sufficient to maintain the water in the main reservoir at the said point.

It will be unnecessary, for the purposes of this discussion, to differentiate the second of the above classes from the third, because I think that, under the law of this state, as I understand it, both classes may, because they are lessees of mill power, directly or indirectly, participate in the benefit of this suit.

In Stockport Water Works Co. v. Potter, supra, it was held, by a divided court, that where a riparian proprietor conveys land not abutting on a stream and grants water rights to be used thereon,.the grant of water rights, though valid as against the grantor, creates no rights for the interruption of which the grantee can sue a third party. This case was considered by the supreme court, in Butler Rubber Co. v. Newark, 32 Vr. 32, and there distinguished. It was held that on the assumption that the grantee of the right to take water for the purpose of its mill was not, under its deed, a riparian proprietor, still it was entitled to compensation for the damages it sustained by the taking of-the water of the Pequannock, for the benefit of the city of Newark, under proceedings to condemn. Mr. Justice Depue said: “The right the plaintiffs obtained to the use of the waters of the stream, in virtue of the grant from the Newbrough company, is undeniably property. As such, under-our constitution, they cannot be deprived of it, except on compensation made. This principle applies whether the water taken or the injury done to the mill property by diverting the waters from the mill be considered. The destruction of private property, either total or partial, or the diminution of its value, by the act of the governments directly and not merely inei■dentally affecting it, is-a taking, within the constitutional provision, which can be effected only under the right of eminent domain, subject 'to the constitutional limitation of making just compensation.”

In Kensit v. Great Eastern Railroad Co., 27 Ch. Div. 136, Lord-Justice Lindley, speaking of the Stochport Water Worhs Co. Case, says: “It simply decides'that the grantee, if a riparian proprietor, must take the water as he finds it. If it is dirty when it comes to the mouth of his pipe, ho cannot complain of those who have dirtied it. He has not the right of a riparian proprietor. The case does not decide that the licensee or grantee of a riparian proprietor cannot take some water from the stream if he hurts nobody. * * * The argument cannot be maintained unless we say that a riparian proprietor cannot allow anybody to take any water out of a stream whether anybody is injured or not. It seems to me it would be monstrous to decide anything of the sort.” Even in the Stochport Water Worhs Co. Case it is admitted that the non-riparian grantee can acquire water rights good as against the grantor, “but not so as to sue other persons, in his own name, for the infringement of them.”

Now, what is the status of the present case ? It is, in form, a suit in the alternative for an injunction or the just compensation guaranteed by the constitution. But, in Simmons v. Paterson, 15 Dick. Ch. Rep. 393, it was held by the court of appeals that the complainants were, by reason of their continued acquiescence, not entitled to an injunction if relief could be otherwise afforded, and that relief could be afforded by making to them “such Compensation for the diminution of the value of their lands as should be ascertained to be just.” The suit is therefore, substantially, a suit for compensation for property taken, and the question is have the lessees of water-power a property right therein. If they have such a right, and it is diminished in value by the act of the city of Paterson, that is' a taking, within the meaning of the constitutional provision, and they are entitled to damages. I think they have such a right.

The clam, as I have said, is, so far as appears, a lawful structure. It was erected by the Dundee Manufacturing Company shortly after the year 1832. By its charter, granted in that year and amended in the year following, the legislature authorized’ the company to buy, rent and hold lands, tenements and waterpower necessary and useful for the purpose of manufacturing iron, cotton, wool and other articles, and the same “to sell, let or otherwise dispose of as they should deem proper.’’ Again, in 1872, the legislature enacted that the reorganized company might establish an office in the city of New Tork, “for the letting of ils power or the disposal of its lands or for any other purpose.” Here, then, was an express authorization, by the legislature, to let power. Now, of course, the legislature did not intend to authorize, and could not have authorized, the letting of power in such manner as to deprive the lower riparian owners of their right to the flow of the stream. What that right is, is clearly stated in a passage, often quoted, from a judgment of Lord Kingsdown in Minor v. Gilmour, 12 Moo. P. C. C. 156. He says: “By the general law applicable to running streams every riparian proprietor has a right to what may be called the ordinary use of water flowing past his land; for instance, to the reasonable use of the water for domestic purposes and for his cattle, and this without regard to the effect which such use may have, in case of a deficiency, upon proprietors lower down the stream. But further, he has the right to the use of it for any purposes or what may be deemed the extraordinary use of it, provided he does not thereby interfere with the right of other proprietors either above or below him. Subject to this condition, he may dam up a stream for the purpose of a mill or divert the water for the purpose of irrigation. But he has no right to intercept the regular flow of the stream, if he thereby interferes with the lawful use of the water by other proprietors and inflicts upon them a sensible injury.” This I understand to be the doctrine of Higgins v. Flemington Water Works Co., 9 Stew. Eq. 538.

The Dundee company, in virtue of its riparian ownership, had, as it appears from this passage, the right to dam, and the further right to use the water of the river for milling purposes, if such did not interfere with its lawful use by other proprietors. It might, by adverse possession, or by contract with lower proprietors, have acquired a greater right. Holsman v. Boiling Springs Bleaching Co., 1 McCart. 336.

But the Dundee company, by legislative enactment, had this further right, viz., a right to let water-power—not a right to let more water-power than it could lawfully use itself, but, I take it, as much as it could lawfully use. The right to thus let was not, in terms, a restricted right—a right to let to those only who were or might become riparian owners. It was a general right. Being general, some reason for cutting it down must be shown. But, in point of fact, the public is benefited by the full utilization of one of nature’s forces, and, because of the limitation mentioned in the judgment of Lord Kingsdown, no other person’s right is or can be interfered with. Assuming, then, that the law as it was declared in the Stockport Water Works Co. Case is the law of this state, that ease cannot be regarded as controlling, for the ease at bar has been taken out of its operation. Certainly it will not be asserted that the legislature may not authorize the transfer of rights in gross to water-power, even if, at common law, such transfer, though valid and enforceable in some respect, is not so in others. The legislature has made choses in action and transfers of estates in expectancy assignable. It has enabled grantees of reversions and lessees to avail themselves of covenants and conditions in leases, and I can see no reason why, if water rights in gross cannot, by the rules of the common law, be effectually assigned, the legislature could not have made them assignable. It would seem, therefore, to be quite inadmissible to assert that when the legislature declared that the company might let and rent water-power, they did not intend to vest in the lessee the right of the lessor to the extent that he possessed and conferred it.

Now, I cannot imagine that when the legislature authorized a letting, it intended that the lessee of the thing demised should have every other right of property in it except the right to prevent its pollution—that is, its partial or complete destruction for all the beneficial purposes of the lease. Says Mr. Justice Van Syckel, in Simmons v. Paterson, supra: “The higher owners cannot lawfully combine and, by construction-of artificial conduits, collect foul matter and pour it, in mass, into the stream. Such a scheme, when put into operation, constitutes the taking of private property, which the legislature cannot authorize,' except upon just compensation to the. party injured.”

We have, then, this situation': A legislative grant to the Dundee company of a right to acquire and use power; a legislative grant of a further right to let and rent power; an adjudication in the Butler Rubber Co. Case that a right in gross to water is-a' property right, for which, if taken for municipal use, compensation must be made; and a declaration in the Simmons Case that pollution is such an injury as constitutes a taking, within the meaning of the constitution. This grant and these decisions seem to me to take the case out of the operation of the Stockport Water Works Co. Case, if that case be law here.

The further 'point is made that the lessees of power cannot be joined in the same bill with riparian owners properly so’ denominated: 'This objection seems to be without substance. Assuming that Rule 132 does not apply, it seems clear that the present case comes within 'the reason of the late chancellor’s opinion, with the decisions cited and commented on by him, in. the Simmons Gase, reported under the name of Attorney-General v. Paterson, 13 Dick. Ch. Rep. 1. No disapproval of his views in that respect is tó be found in the opinion delivered on behalf of the court of review. I may add that, as the bill now stands, Rule 130 clearly applies to those who are riparian owners. If it does not apply to lessees of water-power, because such lessees do not own or possess “distinct tenements,” it would seem, from the clauses of the leases, to which I have already referred, that: there is, to a certain extent, a community of interest or obligation ' among the several lessees when the water is low, which makes it at least desirable that both lessor and lessees should participate ih'an ássessmenf-of 'damages.


text:
    Arthur R. Denman v. John M. Mentz et al.
    [Filed September 17th, 1902.]
    1. An easement of light is an encumbrance.
    2. Where the owner of two lots conveyed the northerly one with a covenant against encumbrances and there was on the southerly lot a building with a garret window facing north, the covenant negatives the reservation by implication of an easement of light and air, in the absence of a “necessity” for such easement, and such necessity must be absolute.

      Mr. James E. Howell, for the complainant.

      Mr. Henry Young, for the defendants Mentz and Mahlman.

      Mr. Chandler W. Rilcer, for the defendant Lesehiner.
   Stevens, Y. C.

This is a bill to rescind, on the ground of fraud, a contract to convey land. It appears that Mentz and Mahlman held title, as trustees,'to the premises known as 855 Broad • street. By a written contract, dated July 31st, 1901, they agreed to sell the property to one Lesehiner for $43,000. On the same day Lesehiner, by a written contract, agreed to sell -to Bippart and Weber. On August 9th, 1901, the legal title being still in the trustees, Bippart and Weber, by written contract, agreed, for the sum of $50,000, to sell to the complainant. The bill alleges that Lesehiner, acting as the agent of Bippart and Weber, made certain representations which were false in fact, though it does not allege that they were known by Lesehiner to be false at the time he made them.

The bill states three such representations—first, that there was erected upon the premises a substantial brick building; second, that the premises were free and clear of all encumbrances, except taxes; third, that there was derived from the property an annual rental of $1,800.

Mr. Denman, in his evidence, only testifies to two. He says (1) that Leschiner told him there was “a nice brick house” on the property, or, as he puts it in another part of his evidence, “that the building was a good brick building,” and (2) that Leschiner told him that the property was bringing in $1,800 a year.

Mr. Leschiner’s testimony is not very different. He says that he told Mr. Denman that there was a good; substantial building on the property and that it rented for $1,800 a year, and that there'was a lease on it for $1,800 a year until May, 1894.

There is no proof whatever that the house was not “a nice” or “good brick building.” It appears that in 1849 James N. Quimby owned the lot in question and a lot adjoining on the south. On the former stood a one-story structure and on the latter a three-story dwelling-house. This dwelling has stood there for seventy years or more. The one-story, structure was raised, probably thirty or forty years ago, and converted into a three-story building, such as it is to-day. As I understand the evidence, its lower timbers must have been fitted into the north wall of the adjoining three-story dwelling-house, while both lots were owned by the same person, and it was conveyed in that .condition. When, after the severance of title, it was raised, it must have been by agreement with the then owner, Mrs. Seton, for it was built up in the same way. This method of construction was highly beneficial, for, the lot being very narrow—only fifteen feet and one inch in yddth—additional store space was thus gained. It stands on the business portion of Broad street, where land and frontage are very valuable. The complainant called Mrs. Seton as a witness on other points. He did not question her as to the defendants’ right to have the timbers inserted in her wall. He makes no claim that any part of the structure is not rightfully there. It seems to me, therefore, that the proof is very far indeed from showing the representation as to the house being a nice or good house to be false. Besides, Mr. Denman, who is a lawyer of experience, practicing in Newark, had ample opportunity, if he had chosen, to judge of the character of the building for himself.

The next representation concerns the rent. It is conceded that there was a written lease for $1,800. As a matter of grace, however, the landlord had verbally consented to accept $1,500, until the tenant “had the place started.” Of this the agent had no knowledge. He communicated what he knew and his communication accorded with the legal rights of the parties. That what Mr. Denman learned subsequently was not the cause of his unwillingness to fulfill his agreement, is apparent from the fact that when he stated, as an objection to taking title, that the tenant was only paying $1,500, he was informed that the $300 would, if he desired, be made good to him, or, if he preferred, deducted from the contract price.

It is alleged, in the bill, that it was represented that the property was free and clear of encumbrance. No such representation is proved. If the complainant is entitled to any relief in this regard, it must be because of the provisions of his written contract. This contract provides, in the usual terms, that

“the party of the first part will convey or cause to be conveyed to the said party of the second part by deed of warranty free and clear of all encumbrances as per agreement of J. M. Mentz et al., trustee with S. Lesehiner,”

the lot in question. The complainant, in his bill, alleges, not that the defendants refused to consummate the contract, but that he himself rescinded it on discovering the alleged fraud.'

On this branch of the case one of plaintiff’s contentions is that the property is encumbered by certain old mortgages, given, as the record shows, over one hundred years ago, and, so far as appears by the record, uncanceled. The proof is plenary that these mortgages have long since ceased to be liens.

Complainant’s main contention, however, is based-upon the following facts: When, in 1849, James M. Quimby was the owner of both the lots to which I. have referred, the north sidewall of the larger structure contained an attic window, overlooking the lot' in question. On Decémber 16th, 1862, Quimby> by deed containing full covenants of seizin, of warranty and against encumbrances, conveyed the lot in question to Francis Goken, through whom the defendants Mentz and Mahlman derive title. On January 1st, 1853, Quimby conveyed the premises adjoining on the south to one Seton. The argument is that, notwithstanding the warranty contained in the Quimby deed, the lot in controversy is burdened with an easement of light and air in favor of the garret window, which, it is said, cannot be obstructed or closed by the 'adjoining proprietor.

There are several answers to this contention. Iar the first place, as the proof stands, there was no representation whatever—much less a fraudulent representation—that the property was not encumbered. All that the contract provides is that the grantors will convey free of encumbrance. Before they had an opportunity of doing, or offering-to do, so, the complainant gave notice that he would rescind. Even if this alleged easement were1 really an encumbrance, there is no proof that the defendants might not have complied with their contract by procuring a release of it. This in itself would be sufficient to defeat complainant’s present claim, for the foundation on which it rests, viz., fraud, is utterly wanting. It must be remembered that this is not a suit for specific performance, but for rescission.

But if this difficulty were out,of the way, there is another. The agreement is to convey free of encumbrance. The claim is that an easement of light is an encumbrance, and so, I think, is the weight of authority. Huyck v. Andrews, 113 N. Y. 84. If it is, then when Quimby, in 1849, conveyed the -lots in question free of encumbrance, one of two things must have happened—either his covenant against encumbrances negatived the implied reservation of the easement, or it was broken as soon as made.

The decisions in this state on the general subject are quite numerous. It has been established that an easement of light and air, supplied to the windows of one person from the premises of another, cannot be acquired by a mere user for twenty years under a claim of right. It has also been held, in this court at least, that, in the language of Vice-Chancellor Pitney, in Toothe v. Bryce, 5 Dick. Ch. Rep. 607, “in cases of apparent and continuous easement, upon the severance of the tenement, a reservation of a quasi easement will take place on a conveyance of the servient part whenever it would pass by way of grant, on the conveyance of the dominant part.” I quite agree with Vice-Chancellor Pitney in thinking that this doctrine of mutuality is not founded on solid ground, and that .there is a substantial difference between the grant of the dominant part, in terms that are absolute, and the grant of the servient, in similar .terms. As to the latter, there -is great force in the following observations of Lord Westbury, in Suffield v. Brown, 4 De G. J. & S. 185. Pie says: “I cannot agree that the grantor can -derogate from his own absolute grant, so - as to .claim rights over the thing granted, even if they were, at the time of the grant, continuous, and apparent easements enjoyed by an adjoining tenement which remains the property of the grantor. Consider the easements, as if they were rights, members and appurtenances of the adjoining tenement. They still admit of being aliened or released, and the absolute sale and grant of the land on or over which they are claimed is inconsistent with the continuance of anything abridging the complete enjoyment of the thing granted, which is separable from the tenement retained and can be aliened or released by the owner.” The cases-in our own reports are, nearly all of them, cases in which the dominant tenement was first conveyed. In that class of cases there is nothing unreasonable in holding that it is granted with all its appurtenances;— with everything necessary to its convenient and beneficial enjoyment. It is quite different in the other class.. Violence is done to plain words by reserving what, in terms at least, is given. I do not, however, pursue the subject. It is exhaustively considered in Toothe v. Bryce, supra, and I have only quoted the passage from the judgment of Lord Westbury because of its direct bearing upon the case at bar.

The conveyance of the lot in controversy was made, as I have said, while Quimby was the owner of both lots, and was first made. Now, if there be an existing easement, that easement arose, not out of long-continued- enjoyment, because,, as has been shown, long-continued enjoyment in this class of'cases does not of itself, in this state, give rise to a right, but only of the implied reservation contained in the Quimby deed. While the Quimby deed is absolute in its terms, and while it purports to convey every interest which he had in the land granted, a reservation would,, nevertheless, be implied, assuming that the light was “necessary” in the very lax sense in which that word has been used, were it not for the covenant against encumbrances, and Quimby’s grantee would not be permitted to build upon this narrow lot in such manner as to obstruct the passage of light. In other words, as the land is situated, he would not be permitted to utilize a part of the lot for the purposes for which he undoubtedly bought it. But this reservation is, on plaintiff’s contention, a breach of the covenant against encumbrances, and so, the moment Quimby conveyed, he became, if the argument be sound, liable, on his covenant, to substantial damages. I cannot imagine that the law would countenance any such absurdity. The presence of the covenant against encumbrance would seem to me to negative the implication of a reservation and narrow the necessity to absolute necessity—e. g., to the case of a way of necessity, given by the policy of the law, that no land may be made inaccessible or useless. But if, notwithstanding this covenant, it should be held that there was an implied reservation in the Quimby deed, the court, to prevent an absurd consequence, would be constrained to hold that the covenant did not extend to the reservation; in other words, that it only extends to what was actually conveyed, viz., the land, minus the thing reserved. But if this were so, the consequence would be that when the present defendants agreed, under seal, and hence covenanted, to convey the same lot free from encumbrance, they could perform their agreement by conveying the lot in the situation in which they held it. It would be a manifest absurdity to hold that Quimby’s covenant meant one thing and that the defendants’ covenant, conceived in the same terms, meant another. The whole difficulty is obviated by holding that the covenant against encumbrances negatives the idea of reservation by implication, except where the necessity is, as I have said, ■absolute.

I think there is still another ground on which, as the proofs stand, the bill might be dismissed, viz., that the window is not ' shown to be “necessary,” under any definition of that word found in the books; but I say this in the absence of the owner and oh the proofs as they now stand, and without any intention of prejudicing her in showing the contrary.

I think, in any view of the case, the bill should be dismissed.