author: Stevenson, V. C.

text:
    Walter J. Harris et al. v. Leigh M. Pearsall.
    [Decided June 24th, 1914.]
    1. Where a mortgage provided that any person acquiring two thousand five hundred square feet of land covered thereby might at any time tender the money and have the benefit of the clause for release of such portion, such provision constituted a continuing covenant on the part of the mortgagee to release to any purchaser of two thousand five hundred square feet or more the amount so purchased on tendering the proportionate part of the mortgage debt.
    2. Where suit was instituted to compel specific performance of a mortgagee’s covenant to release parts of the property on tender of a proportionate amount of the mortgage debt, the bill would be regarded as a suit for specific performance and not a bill to redeem, and defendant having answered denying complainant’s right to a release, and been cast, costs would not be awarded to either party.

      Mr. Traverse A. Spraggins, for the complainants.

      Mr. Floyd Thompson, for the defendant.
   Stevenson, V. C.

(orally).

I shall dispose of this case without regard to technicalities. There are a number of technical questions which arise in the case. We have two parties suing as complainants, whose interests are entirely distinct. IsTo objection has been made to the bill on the ground of multifariousness or misjoinder, and this is the sort of a case which very conveniently can be brought in that way, although an accurate analysis of the case would disclose two separate causes of action, which do not correlate. There is no difficulty in making a decree which covers the cases of both of these parties complainant as to their respective lots.

I shall construe the bill, not as a bill to quiet title, but as a bill to redeem1, or as a bill to compel the specific performance of the covenant contained in the mortgage, and my conclusion is that this clause in the mortgage is not limited at all to any period, is permanently attached to the mortgage, and follows it as long as the mortgage exists, and that any person who acquires two thousand five hundred square feet of land covered by that mortgage may at any time before the mortgage comes due, or afterwards, come forward and tender the money and have the benefit of the clause for a release, contained in the mortgage.

This is not a new question in my mind. I have had occasion to consider it heretofore and, while there is no reported case that I know of where the question has been discussed or decided in this state, without any authority to the contrary, I think it is the duty of the court to take the language of the covenani precisely as it reads.

There is nothing in the mortgage which indicates that that covenant was to be operative only while the mortgage remained outstanding and not due. The language is general, and, in raj' judgment, creates an absolute, permanent right, and practically has the effect of distributing the mortgage through the tract, very much as if a separate mortgage was given on every two thousand five hundred square feet. Of course, that is not an accurate statement, because under the terms of this covenant a man might have three thousand five hundred square feet, and, by tendering the right amount, would be entitled to his release.

While the decree will give the complainants releases upon their payment of the amount, according to the scale fixed by the mortgage, it is very clear that they are not entitled to any costs.

They have not proved that they.made any tender.

If this is to be regarded as a bill to redeem, tiren, under the old English rule, costs have to be paid by the complainant, not by the defendant. But that rule grew out of a state of affairs which does not exist, in my judgment, in this country, and I do not think the American courts have enforced it; it has not been declared to be a rule of practice in New Jersey. Moreover, this bill is more in the nature of a bill for the specific performance of the covenant contained in the mortgage.

In my judgment, the complainant is not entitled to any costs, and if the defendant had not come in with an answer denying the -right of the complainant to a release, I think the decree should award costs to the defendant; but inasmuch as the defendant filed an answer denying the right of the complainants to any release at all, the decree will not award the defendant anjr costs. There will be no costs allowed to either party.


source: Caselaw Access Project

author: Beaming, Y. C.

license: Public Domain

text:
    A. Lincoln Myers v. John L. Kelly et al.
    [Submitted July 6th, 1914.
    Determined July 10th, 1914.]
    1. Mere tortious taking and holding of complainant’s real property will not alone afford a ground for injunctive relief, in the absence of threatened irreparable injury.
    2. Where, in a suit to restrain defendants from destroying or interfering with the plaster surface of a brick wall wholly on complainant’s property, there was no denial of complainant’s title, it was no defence that defendants’ acts with reference to the wall would not be injurious, but would rather be beneficial, and that they were able to respond in damages for injury that might arise from their proposed acts.
    On bill for injunction. Hearing at return of order to show cause.

      Mr. James H. Hayes, Jr., for the complainant.

      Messrs. Bourgeois & Coulomb, for the defendant Kelly.

      Mr. Ulysses G. Siyron, for the defendant William J. Adler.
   Beaming, Y. C.

Complainant seeks a preliminary injunction to restrain defendants from destroying or interfering with the plaster surface of a brick wall, which wall is wholly on the property of complainant.

If the affidavits presented in behalf of defendants disclosed any substantial dispute touching the title of complainant to the wall in question, or any substantial claim of right on the part of any of the defendants to remove the plaster surface of the wall, or perform the other acts here complained of, this coujrt might well hesitate to grant the relief sought in this suit until such controverted legal rights were determined by the proper courts of law. But the affidavits filed in behalf of defendants disclose no doubt touching complainant’s title to the wall or any substantial claim of right upon the part of defendants to alter or in any way interfere with that wall. The utmost that is shown in behalf of defendants is that the changes which are being made by them to complainant’s wall are not sources of injury to it, and that defendants are able to respond in damages if any damages arise from their proposed acts.

It is a well-established rule that the mere tortious taking and' holding of a complainant’s real property will not alone afford a ground for equity jurisdiction or justify preventive relief by a court of equity in the absence of threatened irreparable injury. Ballantine v. Harrison, 37 N. J. Eq. 560. But the present bill neither seeks the restoration of complainant’s possession nor restraint against the possessory acts of defendants; it seeks to maintain the integrity of complainant’s property through coercive restraint against its alteration or change by threatened wrongful acts of defendants. The relief so sought is peculiarly within the jurisdiction of this court and commands the exercise of its beneficial preventive writ in all cases in which complainant’s title is unchallenged or clear and defendant’s threatened acts axe unlawful. Hart v. Leonard, 42 N. J. Eq. 416.

It is obviously no defence to a claim for such relief to assert that the property of complainant which defendants are invading will not be damaged or even will be improved by the changes which they are wrongfully making; it is complainant’s right to maintain his property in the condition which serves his lawful purposes. The attitude of defendants is that of strangers who assume to paint a building of another against the owner’s wish and resist an appeal to a court of equity to preserve the building unchanged upon the mere claim that the paint will benefit the property.

I will advise a preliminary injunction restraining defendants from making changes to the surface of complainant’s wall in any manner other than restoring such parts of the surface of the wall as they have removed to its former condition.


author: Leaming, Y. C.

text:
    The Ocean City Land Company, a corporation, &c., v. Sarah C. Weber.
    [Submitted June 26tb, 1914.
    Determined July 16th, 1914.]
    1. A restrictive building covenant declaring that no building of any description shall at any time be erected within ten feet of the street line on which the property fronted was broten by the construction of elevated porches inclosed below in a manner to provide basements supplied with windows and doors, and also by the main bodies of approximately half the buildings on the street being extended over the porch roofs in a manner to afford bay windows or rooms within the restricted space.
    2. A covenantee may not enforce in equity a restrictive building covenant prohibiting erections within ten feet of a street, forming part of a general scheme for the development of a tract of urban property after he has failed to exercise the right for a considerable time, and many buildings have been erected contrary to the provisions of the covenant in the vicinity of the property; the covenantee’s remedy then being limited to an action at law.
    On final hearing on bill to enjoin violation of restrictive building covenant.

      Mr. Charles C. Babcock, for the complainant.

      Messrs. Bourgeois & Coulomb, for the defendant,
   Leaming, Y. C.

I am convinced that complainant’s right to the form of relief here sought cannot be said to be established with that degree of certainty which is necessary in cases of this class. Fortesque v. Carroll, 76 N. J. Eq. 583; Meaney v. Stork, 80 N. J. Eq. 60; Goater v. Ely, 80 N. J. Eq. 40.

1. The language of the restrictive building covenant which complainant seeks to enforce if not of doubtful meaning is at least calculated to mislead. The reference in the covenant to “said avenue,” following a description of lots at the corner of a block which specifically refers to “Corinthian Avenue” and “Fourth Street” as two of its boundaries, clearly suggests Corinthian avenue and carries with it the idea that the four feet restriction relates to Fourth street, whereas a careful examination of the exception which is contained within brackets and relates to the ownership of two or more contiguous lots may justify the conclusion that the “said avenue” first referred to is Fourth street. That construction of the covenant would apply the ten feet restriction to Fourth street and the four feet restriction to Corinthian avenue. If the popular construction be resorted to as evidenced by the locations of buildings which have been heretofore erected on corner lots the ten feet restriction would appear to relate to both highways.

2. The evidence discloses that on Fourth street covered porches of buildings heretofore erected uniformly disregard the ten feet restriction. The language of the covenant is “that no building, of any description whatever, shall at any time be erected within ten feet of the front line of said avenue.” Whether the language above quoted includes covered porches as a part of a building may be said to be within the field of doubt (Meaney v. Stork, 80 N. J. Eq. 60, 66, 67; Ogontz Land Co. v. Johnson, 168 Pa. 178; Reardon v. Murphy (Mass.), 40 N. E. Rep. 854; Supplee v. Cohen, 80 N. J. Eq. 83; affirmed, 81 N. J. Eq. 500), and any uncertainty of meaning of the covenant in that respect further contributes to render its enforcement impossible in this court. Sutcliffe v. Eisele, 62 N. J. Eq. 222, 224. But the evidence further discloses that some of these porches are elevated and enclosed underneath in a manner to provide basements supplied with windows and doors and that these rooms are used as basements, and also that the main bodies of approximately one-half of the buildings on Fourth street are extended over the porch roofs in a manner to afford bay windows or rooms within the restricted ten feet space.

These latter features are clearly in violation of the provisions of a covenant that no building of any description whatever shall be erected within ten feet of the street line. Bagnall v. Davies, 140 Mass. 76; Supplee v. Cohen, supra.

The right of the covenantee to specifically enforce a restrictive building covenant of this nature which forms a part of a general scheme for the development of the tract, cannot be exercised by such covenantee after his failure to exercise the right has resulted in the erection of so many buildings contrary to the provisions of the covenant in the vicinity of the property in question that the enforcement of the covenant in accordance with its terms may be appropriately said to have been abandoned in that locality. Covenants of this nature in the contemplation of the remedial jurisdiction of this court are to preserve the specific plan defined in the covenant, and not a plan which differs from that defined in the covenant whether that difference has arisen by popular construction of the covenant or by common consent; and when the covenantee has permitted the specific plan to be materially violated by the erection of many buildings in the locality in question which are clearly erected contrary to the terms of the covenant, this court cannot equitably enforce the covenant at the instance of such covenantee against a subsequent violation. Tire covenantee’s remedy in such cases must be sought in a court of law. Ocean City Association v. Schurch, 57 N. J. Eq. 268, 271; Ocean City Association v. Headley, 62 N. J. Eq. 322, 334; Ocean City Association v. Chalfant, 65 N. J. Eq. 156, 157; Woodbine Land and Improvement Co. v. Riener, 72 N. J. Eq. 787, 789. This view in no way conflicts with the principle that permissive violation through an erroneous construction of the covenant will not afford evidence of an abandonment.

I am obliged to advise an order denying the relief sought by complainant and dismissing the bill.


author: Leaking, Y. C.

text:
    The Cumberland Trust Company v. B. S. Ayars & Sons Company.
    [Submitted June 29th, 1914.
    Determined July 20th, 1914.]
    1. Where the entire business management of a corporation had been entrusted to A. without limitation, supervision, or restraint by the board of directors, the corporation would be bound by a trust agreement executed by him, executory in character, and operative alone on the business to be transacted under it, by which it was provided that the corporation would hold in trust and separate, for settlement of the account of petitioner, all goods unsold and all currency, open accounts, notes, liens, mortgages, or other values received by the corporation for the goods.
    2. An agreement executed by the business manager of a corporation agreeing to hold in trust and separate, for settlement of the account of petitioner, all goods unsold, currency, open accounts, and other values received by the corporation fbr the goods, made in good faith, was valid and enforceable as against the corporation’s receiver in insolvency.
    On petition to'cause receiver in insolvency to deliver certain assets to J. E. Tygert Company.

      Mr. David O. Watlcins, for the petitioner.

      Mr. James 8. Ware, for the respondent.
   Leaking, Y. C.

1. I am satisfied that the authority of Arthur D. Ayars to execute the contract in question in behalf of the corporation represented by him has been sufficiently established.

In practical operation the entire business management of the corporation appears to have been entrusted to Mr. Ayars without limitation, supervision or restraint on the part of the board; an inference of authorization eo-extensive with the scope of that management cannot be properly resisted. The instrument in question may be said to be unusual in character; but unlike a mortgage (Bennett v. Keene, 59 N. J. Eq. 634), or a warrant for confession of judgment (Stokes v. New Jersey Pottery Co., 46 N. J. Law 237), or cognovit (Raub v. Blairstown Creamery Association, 56 N. J. Law 262), it in no way fastened a lien on the property of the corporation. It rvas a purely executory contract, operative alone on the business to be transacted under it. The power of the president to execute it in the name of the corporation may be sustained under the principles defined in Murphy v. Cane, 82 N. J. Law 557.

2. It is undoubtedly true that if the real purpose of the contract was to make an effectual sale with no intent upon thd part of the parties to give effect to the trust declared, and the latter provision can be said to have been merely an empty form, to be operative only in case of disaster, petitioner cannot now enforce the trust provisions of the contract according to its terms; and a like consequence may be visited upon a waiver of the trust provisions. In re Harrington, 212 Fed. Rep. 542. But I am unable to reach the conclusion that the contract was not entered into in good faith or that its provisions have been abrogated by waiver.

The stipulation contained in tire agreement is that the corporation wall hold in trust and separate for settlement of the account of petitioner all goods unsold and all currency, open accounts, notes, liens, mortgages or other values received by the corporation for the goods. There can be no legal obstacle to such an agreement if made in good faith. Even though it should be thought to fall within the provisions of our statute touching conditional sales (2 Comp. Stat. p. 1561), it would be void only as to judgment creditors without notice and subsequent purchasers and mortgagees without notice. Smith v. Hotel Ritz Co., 74 N. J. Eq. 296. The failure of the corporation to set apart cash received for goods sold (or to set apart the amount so received through a credit being given by a creditor in a settlement), standing alone, would be fruitful of no consequences other than to render it impossible for the cestui que trust to enforce the trust against the goods so sold because of the right to sell and collect having been bestowed upon the corporation or against proceeds of sales commingled with other funds of the corporation because of inability to identify the proceeds of sale as a specific object of the trust. Assuming that either the terms of the contract or the course of dealings of the parties justifies the conclusion that payments or settlements in the manner referred to were authorized by petitioner, there is yet nothing to be found in the mere right or privilege to make such settlements to warrant the conclusion that petitioner waived the right specifically defined in the contract to have funds so received by the corporation set apart or kept separate as objects of the trust. There can be little doubt that the trust provisions of such an agreement sqiring from want of confidence in the pecuniary responsibility of the trustee, and to that extent they may be said to contemplate and provide against the danger of future financial disaster; but as the conventional relations of trustee and cestui que trust are lawful, the rights arising from that relation must be protected by this court as long as that relation in fact and in law* continues, and I am unable to conclude that the trust relation defined by the contract in question can be properly said to have been at any time terminated.

1 will advise an order pursuant to the prayer of the petition.


author: Leaking, V. C.

text:
    The Incandescent Light and Stove Company v. George E. Stevenson, administrator, et al.
    [Submitted July 20th, 1914.
    Decided July 21st, 1914.]
    1. 3 Oomp. Btat. 1910 p. 38S8 § 81, and p. 381/5 § 91/, providing for the sale of lands of a decedent to pay debts, creates a lien on the land in behalf of a creditor for one year, and thereafter until a bona fide sale of the land has been made by the heir or devisee, the expiration of the year having no effect to increase the estate or interest of the heir or devisee, but merely to protect the title of a bona fide purchaser.
    2. Since by 2 Oomp. Btat. 1910 p. 2739, an heir or devisee of real property is liable to creditors of his testator or intestate to the extent of the assets received, delay in administration is not a source of substantial injury to the heir.
    3. Since a creditor of a deceased person has a lien on his real property in the hands of the heir, prior to a sale to a bona fide purchaser for value, the creditor is entitled to enjoin the heir from selling the land to the prejudice of such lien until the orphans court has been afforded an opportunity to enforce a lien by a sale of the land to pay debts in the settlement of the estate, without reference to the creditor’s delay in causing an administration of the estate.
    On bill, &e. On motion to dismiss bill.

      Mr. John Boyd Avis, for the complainant.

      Mr. Herbert G. Bartlett, for the defendants.
   Leaking, V. C.

I am convinced that the motion to dismiss the bill must be denied.

Our statute creates a lien in behalf of a general creditor of a deceased person on the lands of the deceased for a period of one j’ear and thereafter until a bona fide sale of the land has been made by the heir or devisee. Haston v. Castner, 31 N. J. Eq. 697; Westervelt v. Voorhis, 42 N. J. Eq. 179, 180; 3 Comp. Stat. p. 3838 § 81 and p. 3845 § 94- The bill seeks to preserve Oils lien by enjoining a sale by the heir until the orphans court shall have made an order of sale of the land for the payment of the debt due complainant.

The expiration of the year in no way increases the estate or interest of the heir or devisee in the land; it merely protects the title of a bona fide purchaser. The lien of the creditor continues until the title of a bona fide purchaser intervenes to extinguish it.

The delay in administration's not a source of substantial injury to the heir, for an heir or devisee of real estate becomes liable to creditors of his testator or intestate to the extent of assets by him received. 2 Comp. Stat. p. 2789; Jordan v. Logue, 76 N. J. Eq. 471, 472.

The situation thus presented by the bill is that of a creditor with a lien who seeks a remedy attainable alone in this court to preserve the existence of the lien until the orphans court shall have had an opportunity to enforce it by a sale of lands for the payment of debts in the settlement of the estate of the deceased debtor; whereas the only objection to the relief so sought is the delay of the creditor in causing an administration of the estate, which delay cannot be properly regarded as of substantial injur3r to defendant. .

I will advise an order denying the motion to dismiss the bill.

But defendant is entitled to a prompt final hearing on the bill and the present motion should be equitably treated as a motion to speed the cause, and no costs should be taxed.


author: Howell, V. C.

text:
    Jennie R. Adrain et al., executors, &c., v. Jean Livingston Koch et al.
    [Submitted May 1st, 1914.
    Decided June 4th, 1914.]
    1. Where the language of a -will can be read in its ordinary and natural sense, no construction is necessary, but, where it cannot be so read, it must be interpreted as a whole to make it speak, and speak intelligibly, the intention of the testator.
    2. Testator, who left him surviving a widow, two daughters, their children, and the children of a deceased son, including a daughter of one of testator’s daughters, who had been legally adopted by testator as a child, her son by her first husband, and an infant son by her second marriage, bequeathed the income of the residuary estate to his wife for life, and after her death gave the residue in trust to executors to pay over the income thereof unto “my children living at the death of my said wife,” and the issue of any deceased child who might have died leaving issue her surviving, per stirpes and not per capita, until his youngest grandchild living at testator’s death reached twenty-one years or died, and then the residue over to his children, living at the death of his wife, and to the issue of any deceased child leaving issue surviving, and gave each of his children a legacy of $12,000, and the income of a trust fund of $160,000 for life, with remainders to their issue and cross-remainders, if there should be no issue, and bequeathed the income of $50,000 for life to the adopted child referred to as “granddaughter,” with remainder to her child by her first marriage. — Beld, that the adopted daughter did not take under the residuary clause as one of the children of the testator living at the death of his wife, as he evidently did not mean that she should take one-fourth of his residuary estate.
    3. Under a will providing for the support, maintenance and education of testator’s grandchildren, they would be entitled to the interest and income of the money set apart for them from the date of the testator’s death.
    4. Under a will giving the widow the income from a residuary estate for life and, on her death, the residue to executors in trust for investment and to pay the income over to children and grandchildren until the youngest grandchild reached the age of twenty-one, the income set apart for minor grandchildren was intended to be left in the hands of the trustees, though the custody of such grandchildren might be in, and the expenditures for their benefit might be actually made by, their guardians, respectively.

      5. Where a will did not indicate how much of the income from a residuary fund in trust for minor grandchildren ought to be expended annually for their benefit, reference would be made to a master to inquire what amount should be periodically transferred by the trustees to the general guardians for that purpose.
    6. The amount to be paid from the income of a trust fund for the maintenance, support and education of minor devisees should be limited to the actual necessities of the situation, and, if there is any surplus, it should be accumulated by the trustees for their benefit until they arrive at the age when they can control their own funds.
    On final hearing on bill, answer, replication and proofs.

      Mr. John R. Hardin■, for the complainant.

      Mr. Hugh K. Gaston, for Jennie R. Rowland, guardian, &e.

      Mr. Edward M. Colie, Mr. Alan H. Strong and Mr. E. L. Myers (of the New York bar), for Jean Livingston Koch.

      Mr. Kinsley Twining and Mr. Richard V. Lmddbury, for Mrs. Grace R. Riva.

      Mr. Frank P. McDermott, guardian ad litem of the Riva children.
   Howell, V. C.

This is a bill for the construction of the will of William Rowland, late of Somerset county, who died on July 30th, 1911, leaving a will bearing date December 7th, 1910, which was admitted to probate and on which letters testamentary were issued to the complainants as executors and trustees.

Mr. Rowland left him surviving his widow Jane, his two children Mrs. Adrain and Mrs. Riva; and his grandchildren William, Charles and John, sons of the testator’s deceased son William; the two children of his daughter Mrs. Riva and the two children of Ms daughter Mrs. Adrain; the Adrain children being Robert Adrain, Jr., and Jean Livingston Koch. There were also living at the time of the testator’s death William Dorman, who was the son of Jean Livingston Koch by her first husband; also ber present husband, and an infant son of her second marriage. These parties were also all in esse at the time of the execution of the will in question. The widow died in 1911.

In the early part of 1884 proceedings were taken by the testator and his wife for the adoption by them of Jean Livingston Koch, their granddaughter. These proceedings resulted in a decree made by the orphans court of Somerset county on June iHth, 1884, whereby the adoption by Mr. and Mrs. Rowland of their grandchild as their child was accomplished. I may say at this point that some question was made at the hearing as to the legality of these proceedings. There is no allegation of their invalidity in, anjr of the pleadings. I have examined them' with considerable care and find as a matter of law that they are regular in form and in accordance with the statute, and that they therefore cannot be attacked collaterally. The results of these proceedings was embodied in a decree which seems to satisfy all the requirements of the statute and to put the validity of the adoption beyond question.

, The widow of the testator was by the terms of the will entitled to tire income from the residuary estate for the term of her natural life. Upon the falling in of her life estate the income of the residue became divisible, The trustees being in doubt as to the proper construction of the residuary clause of the will, now lay the same before the court and seek its direction as to the manner in which the distribution shall be made.

The residuary clause of the will provides that upon the death of the widow the residue shall go to the executors upon the trust

“to invest the same and keep the same invested and pay over the semiannual income thereof unto my children living at the death of my said wife, and the lawful issue of any deceased child of mine who may have died in her life time leaving lawful issue her surviving per stirpes and not per capita, until such time as my youngest grandchild living at the time of my death shall attain the age of twenty-one years, or until the death of my said youngest grandchild; upon my said youngest grandchild living at the time of my death attaining the age of twenty-one years, or in the event of the death of my said youngest grandchild before he or she attains the age of twenty-one years, then and in that event I give, devise and bequeath my said residuary estate, or so much thereof as shall then remain, unto my children living at the death of my said wife, and the lawful issue of any deceased child of mine who may have died in her life time leaving lawful issue her surviving per stirpes and not per capita.”

Under this clause two questions arise — first, whether J ean Livingston Koch, the adopted child of the testator, takes a share in the residuary fund as one of “my children living at the death of my said wife” by virtue of the decree of adoption, and second, whether the trustees are to administer the income accruing to the minor grandchildren of the testator in pursuance of the terms of the will, or whether such administration devolves upon their general guardian, and likewise whether interest runs on the legacies to the grandchildren from the date of the testator’s death.

The remarks of Lord Halsbury in the house of lords in the case of Inderwick v. Tatchell (1903), A. C. 120, 72 L. J. Ch. 393, apply with peculiar force to this case. He said: “I confess I approach the interpretation of a will with the greatest possible hesitation as to adopting any supposed fixed rule for its construction. If I can read the language of the instrument in its ordinary and natural sense I do not want any rule of construction, and, if I cannot, then I think one must read the whole instrument as well as one can, and conclude what really its effect is intended to be by looking at the instrument as a whole. By the hypothesis it does not speak for itself, but you must-arrive at some interpretation which will make it speak and make it speak intelligibly. I go so far with the contention, of the appellants here, * * * that if the testator had contemplated the particular event that has happened in this case he would have provided for it; but with that single observation I am not at liberty because air event has happened which I think has not been provided for to conjecture what the testator would have provided if he had thought of it beforehand. I am not at liberty to disregard the application of the ordinary rule of construction of every document, namely, that you must look at the whole document, and, if you ean, you must read the words according to their natural and reasonable meaning.” A comparison of particular clauses of this will leads only to confusion. Its construction requires a broad general view and a careful reading of the whole instrument in order to determine the meaning of the particular clauses. The general scheme of the whole instrument must be examined and its -meaning determined therefrom and thereby. The general plan of the will so far as relates to descendants of the testator appears to consider them in two classes determined by their nearness in blood to himself. Manifestly these classes are “children” and “grandchildren,” using the words in their natural sense and not in the artificial sense that comes from the decree of adoption above referred to. In the first of these classes he puts lus two natural daughters, Mrs. Adrain and Mrs. Biva. To those who belong in this class he gives first a money legacy of $12,000; second, her provides for each of them a trust fund of $100,000, giving the income of the fund to them for life, with remainders to their issue, and cross-remainders if there should be no issue. It is significant if the testator at the time of the execution of his will had in mind «the artificial relation which had been created between him and his granddaughter Jean Livingston Koch, that he did not make the same provision for her that he made for his two natural children, and at once the question arises whether the testator intended that his adopted daughter should belong to the class known as his “children,” or whether he intended that she should take her natural place in the next „ ‘class. The will seems to answer that question. The second class of beneficiaries includes the seven grandchildren, Mrs. Adrain’s two children Bcbert Adrain, Jr., and Jean L. Koch; William B. Bowland’s three children, William, Charles and John-; and the two Biva children, for each of whom he made substantially the same provision. The variations relate only to the Adrain family. Bobert Adrain’s devise is absolute. Jean Livingston Koch’s bequest is for life, with remainder to the child of her first marriage. To his other grandchildren, viz., the children of William B. Bowland and of Mrs. Biva, he makes bequests payable when they shall arrive at the age of thirty years respectively, but with the receipt of the income meantime. This is approximately equal treatment of the class of “grandchildren,” and it seems to me to exclude the idea that he had in mind the advancement of Mrs. Koch from the degree of granddaughter to that of child. This appears to be the scheme of the will, and to allow it to be broken in upon would in my opinion be violative of the intention of the testator.

There is in the will one other reference favoring this view. It is contained in the fourteenth clause, wherein he provides for Mrs. Koch. He there gives her the income of $50,000, with remainder to her son William Dorman, and in that connection refers to her twice as his “granddaughter.” In my opinion that fact so clearly and aptly expressed almost of itself puts the question at rest. I think it is quite apparent that when the testator gave instructions for the drafting of his will he not only forgot to inform the draftsman of the fact that he had adopted his grandchild, but had likewise dropped it entirely but temporarily from his memory.

There is another consideration which must operate against the claim of Mrs. Koch. If she is to share in the residuary estate as a “child” she will at once become invested with the title to one-fourth of the residuum in her own right, and upon the death of her mother to one-half of the trust fund, the interest on which is payable to the mother for her life; and in another contingency, very remote, perhaps, she might get a share in the trust fund set apart for Mrs. Riva. This I think would be a complete variation from the scheme of the will which Mr. Rowland had in mind, because it would give Mrs. Koch a much larger share in his estate than would be received by any of the others, and there is nothing in the will to indicate that he meant her to enjoy a larger share of his bounty than the others.

The only thing in the will which militates against this view is found in the provision for disposing of the principal of the trust funds of $160,000 each for the benefit of Mrs. Adrain and Mrs. Riva. After the death of Mrs. Adrain and Mrs. Riva respectively the trustees are directed to invest and keep invested the said trust funds of $160,000 and pay over the net semi- • annual income thereof to her children. living at the time of her said daughters respectively. It is quite apparent that upon the death of Mrs. Adrain, Mrs. Riva surviving her, the testator’s use of the word “children” would be inapt, because as it has turned out there could be only one child left. But I look upon this rather as a lapse of thought and not as an indication that the testator meant to include Mrs. Koch as a child. It will be observed that the same phrase is used in the residuary clause. .It seems to have been a form of words used by the scrivener rather than evidence of a settled determination on the part of the testator to have Mrs. Koch included as one of his children.

My conclusion therefore is that Mrs. Koch does not take under the residuary clause as one of the children of the testator living at the death of his wife, and that the testator did not mean that she should be a recipient of his bounty to the extent of one-fourth of bis residuary estate.

It is quite apparent from reading the will that the testator meant that the provisions made for his grandchildren were made for their support, maintenance and education, in which event they are entitled to the interest and income of the money set apart for them froifi the date of the death of the testator.

There remains only the question, who shall administer the income from the funds set apart for the minor grandchildren. There is no direction in the will about it, and inasmuch as the will is silent on the subject it worild seem as if the management of the fund had been intended to be left in the hands of the trustees, while the management of the minor children and the expenditures for their benefit should be actually made by their general guardians respectively, who have also charge and custody of their persons. This would make it necessary for the trustees to transfer to the general guardians respectively from time to time such funds as may be needed for the support, maintenance and education of these children. The income upon their invested funds ought to be from four to five per cent., producing an income of from $2,000 to $2,500 for each one of them. Inasmuch as there is little or nothing in the case to indicate how much of this fund ought to be expended annually at the present time or in the near future for the benefit of the minors, it will be necessary to refer tire matter to a master to inquire what, amount should be periodically transferred for the purpose by tire trustees to the general guardians. Such an inquiry was made in the case of McKnight v. Walsh, 24 N. J. Eq. 498. The principle is in cases of this class that the amount to be paid for the maintenance, support and education of the minors should be limited to the actual necessities of the situation, and if there is any surplus it should be accumulated by the trustees for the benefit of the cestuis que trust until they arrive at the age when they may control their own funds.

There are some discrepant cross-references from one paragraph to another in several places in the will, but inasmuch as counsel have agreed in relation thereto it is unnecessary that any mention should be made thereof at the present time.


author: Howell, Y. C.

text:
    William Rosenstein v. Horace B. Burr et al.
    [Decided June 13th, 1914.]
    1. Where complainant was granted specific performance of a contract to convey land, but failed to tender performance within the time limited by the decree for the payment of the purchase price, defendants are entitled to be relieved of the decree, which operated as a lien upon their land.
    2. Where complainant, • who was granted specific performance of a contract to convey land, did not tender performance within the time limited, and defendants were granted relief from the decree, the grant of relief carries with it the entire decree, and complainant, though awarded costs on the original decree, loses that right.
    On motion for relief after decree.

      Mr. William M. Seufert, for the motion.

      Mr. Thomas P. Fay, contra.

   Howell, Y. C.

On July 22d, 1907, Horace B. Burr entered into a contract with William Bosenstein for a conveyance by him to Bosenstein of a tract of land at Oceanport, together with some personal property. A copy of the agreement will he found in the case of Rosenstein v. Burr, 80 N. J. Eq. 425. Burr brought a suit to cancel his 'contract. On the hearing the bill was dismissed (Burr v. Nivison, 74 N. J. Eq. 320), and the decree was affirmed on appeal. 75 N. J. Eq. 241. Rosenstein then brought a suit to compel the specific performance of the contract. A decree was made in accordance with the prayer of the bill (Rosenstein v. Burr, 80 N. J. Eq. 424); it fixed the time within which the contract should be performed, and appointed a master under whose supervision the .title should be passed, within that limited period. The complainant-purchaser in whose favor the decree was failed to appear and take the deed and pay the purchase-money. On application of his eounáel the time was enlarged, but although the defendants were always ready there has been no performance or tender thereof on the part of Rbsenstein, the complainant. Motion is now made for relief on the part of the defendants upon the ground that their land is subject to the terms of a decree of this court which has not been performed, and that the decree rests upon the land as a cloud upon the title.

The point appears to have been first passed upon in the case of Foligno v. Martin, 16 Beav. 586; 22 L. J. Ch. 502. In that case there was a decree against a purchaser for specific performance. He made default in payment of the purchase-money. Sir John Romilly, master of the rolls, declared that the complainant was entitled to get rid of the contract unless the defendant should pa.y the purchase-money within a time limited. This was followed by Sweet v. Meredith, 4 Giff. 207; 32 L. J. Ch. 147. In that case there was a decree for specific performance which was not obeyed. Motion was made that the contract might be rescinded and all the proceedings stayed in the suit, reserving liberty to the complainant to apply to assess his damages. The decree in that case was in favor of the vendor. The vice-chancellor made the order in the terms of that made in Foligno v. Martin, supra, but added that the complainant should be at liberty to apply in respect of any damages sustained from breach of the contract. The order was made in the following terms: that the contract be rescinded and that all further proceedings in the cause be stayed except as to any application which might be made to the court to award and assess the damages which the complainant had sustained in consequence of the breach of the contract. In the next case in which the question arose (Simpson v. Terry, 34 Beav. 423), the master of the rolls‘ordered the defendant against whom the decree was to pay the amount of the purchase-money on or before a day fixed, and in default that the contract should be rescinded and all further proceedings stayed. The next case in order of time was Henty v. Schroder, 12 C. D. 666; 48 L. J. Ch. 792. In that case the decree was in favor of the vendor, and a similar motion to the one made in Sweet v. Meredith was urged before Sir George Jessel, master of the rolls, who said that he did not see how the court could rescind an agreement and at the same time give damages for its breach. He, therefore, declined to make an order similar to those in the cases above cited. The only order he would make was to direct the contract to be rescinded and the party in default to pay the costs of the action. The last ease to which attention is called is Hutchings v. Humphreys, 54 L. J. Ch. 650. Mr. Justice North, in that case, granted the order rescinding the contract and staying proceedings in the suit and giving costs of the motion for rescission, but declined to entertain the proposition that the case should be held open for the consideration of the subject of damages and rent. See, also, Watson v. Cox, 15 Eq. 219; 42 L. J. Ch. 279.

I have not been able to find that the point has been discussed in any American cases, but the English authorities above cited seem to be conclusive.

At the time of the argument of this motion there was also presented a motion on behalf of the complainant for an order for a writ of execution against the defendants to collect the costs awarded to the complainant by the decree, and which by the same decree were ordered to be paid to the complainant’s solicitor. It is true that by the decree the costs of the suit were awarded to the complainant and were directed to be paid to his solicitor, but has not the complainant’s subsequent default dis-entitled him to any such relief? If he had complied with the decree by paying the purchase-money, he would have been entitled to his costs, but I do not see how the decree can be held for one purpose and be abrogated for every other purpose. In other words, the case is similar to Sweet v. Meredith, supra, in which the master of the rolls said that he could not understand how the court could rescind an agreement and at the same time give damages for ’its breach.

I will advise a decree rescinding the contract and staying all proceedings in the suit and denying the complainant’s motion


text:
    William Bliss et al. v. Linden Cemetery Association et al.
    [Submitted June lOtb, 1914.
    Decided July 1st, 1914.]
    1. Where certain individuals conceived the idea of establishing a large cemetery, and to carry out the scheme arranged to buy the real estate, procure the consent of the township and state board of health to its establishment, and prepare all the necessary papers and documents to carry the scheme through, they were “promoters,” and, as such, bound to furnish the cemetery corporation with an independent and disinterested board of directors, and to make a full, open, and fair disclosure to such board of all the profits the promoters designed to make out of the scheme.
    2. Rural Cemetery Association act (1 Comp. Stat. 1910 p. 375 § 10), providing that at least one-half of the proceeds of all sales of cemetery lots shall be appropriated to payment for the lands acquired by the association, until the whole price shall be paid, and the residue thereof applied to the preservation, improvement, and embellishment of the cemetery grounds, &c., and to defray the incidental expenses of the establishment, and that after the payment of the purchase-money and the debts contracted therefor, &c., the proceeds of all future sales shall be devoted to improvement, and to no other purpose or object so long as the embellishment of the cemetery is incomplete, deprived a corporation organized thereunder of the power to divide the proceeds of burial lots into shares, and give to the holders thereof a pro rata lien and claim on the land-purchase fund of the association, composed of at least one-half of the proceeds of the sales of all burial lots on the grounds of the association, &c.

      3. P. L. 1911 p. 626, supplementing Rural. Oemetery Association act of April 9th, 1875 (Revision 1877, page 102), and providing that any and every contract previously entered into by any cemetery association incorporated thereunder, by the terms of which land has been or was to be purchased by the association, and the price fixed at the amount of not more than half of the proceeds of all sales of lots, all moneys remaining of the other half to be expended for the embellishment of cemeteries, and certificates evidencing interest in such purchase price and proceeds are validated, &c., applied only in cases of purchase in which the purchase price was fixed at an amount not more than one-half of the proceeds of all sales of lots or plots, and did not validate a contract in which sixty per cent, of the proceeds were pledged for the payment of the purchase price.
    4. P. L. 1913 p. 521 is entitled “An act concerning cemetery corporations and contracts made by them with respect to interests in the proceeds of sales of lots or plots,” section 3 declaring that any agreements or arrangements previously made by any cemetery corporations contained in deeds conveying lands to such associations, &c., and any certificates of interests in proceeds of sales of lots or plots, issued in pursuance thereof, not in contravention of the provisions of the act, are declared valid and affirmed, and section 5 declaring that the act shall take effect immediately, and that, if any portion thereof is invalid, it shall not affect any other portion. — Held, that, though section 3 should be held to be retrospective in operation, the statute should not be held to impair the vested right of complainants to the right to vacate an ultra vires contract dividing the proceeds of the sales of the lots of a cemetery association into shares and transferring the same, which right complainants had at the time of filing their bill for such relief.
    5. Where promoters of a cemetery corporation had not provided it with an independent board of directors, and had fraudulently induced it to enter into an ultra vires contract for the disposition of the proceeds of sales of lots for cemetery purposes, such contract could not be ratified by a resolution of a subsequent board, nor by the shareholders at a subsequent meeting, especially where it did not appear that prior to such alleged ratification they were informed of all the facts.
    6. A covenant by a cemetery corporation organized as provided by Rural Oemetery Association act (1 Comp. Stat. 1910 p. 375), obligating the corporation to pay semi-annually, in cash, to a promoter one-tenth of the gross proceeds of the sale, lease, or loan of burial plots having been obtained by the promoter deceiving his own uninterested board of directors, was fraudulent and ultra vires.

    7. A covenant by a cemetery corporation organized under Rural Oemetery Association act (1 Comp. Stat. 1910 p. 375), binding it, as to a promoter, not to divest itself of the title to any part of its lands, with certain exceptions, without the written consent of the promoter, his heirs, executors and assigns, and in every case to pay one-tenth of the gross proceeds to such promoter, was void as ultra vires and in restraint of alienation.
    8. Where a cemetery corporation covenanted with the grantor of its land, who was its chief promoter, that fifteen acres should be set aside to provide a fund for perpetual care of the cemetery grounds, the land to be selected by the grantor and three other members of the board of trustees to be appointed by him, he having died without making any appointment or selection of plots, the covenant became obsolete.
    9. A cemetery corporation, though without express power to borrow money to meet necessary expenses of its activities, has implied power to do so, and certificates of indebtedness and notes executed for money actually loaned to and received by the corporation constitute valid evidences of indebtedness against it.
    On final hearing on bill, answer, replication and proofs.

      Mr. Abram I~I. Cornish, for the receiver.

      Mr. Terry Parleer, for the defendants Henry A. Boehl et al., shareholders.

      Mr. Hugh Reed, for Walter P. Yining, Robert M. Crater and R. Judd, loan certificate holders.

      Mr. II. Theodore Borg (representing .Burnet & Cornish), for D. Frederick Burnet, guardian for Irene Smith, Elaine Smith, Marie Smith, Carlton O. Smith and Lillian O. Smith, infants.

      Mr. Borden D. Whiting, for the shareholders.

      Mr. Robert D. Reynolds, for Hedley V. Cook et al., trustees, and for the defendant Cemetery Association.
   Howell, Y. C.

The theory of the original bill was that the provisions of our Corporation act, relating to insolvent corporations, applied to corporations organized under our Rural Cemeteries act and the supplements thereto. This was found to be incorrect. Bliss v. Linden Cemetery Association, 81 N. J. Eq. 394. An amended bill was then filed whose object and purpose was the administration of the affairs and property of the defendant as a corporation holding the legal title to real estate in trust for a charitable use. The bill alleges many ultra vires and other illegal transactions and prays generally that the irregularities may be corrected and the illegal and ultra vires acts set aside.

The evidence is that in the year 1900, or thereabouts, William E: Smith and Clinton O. Smith, with possibly one or two other persons, conceived the idea of establishing a large cemetery on lands adjoining the Pennsylvania railroad in the township of Linden, in Union county. Subsequently, Rosswell D. Benedict and Yernette Prentice joined them, and these four.men thereupon became the promoters of the enterprise. Whatever was done towards carrying the scheme into operation was originated and carried on by them. They formulated the plan, arranged to buy the real estate, provided a scheme by which the purchase-money was to be raised in the first instance, procured the consent of the township of Linden and of the state board of. health to the establishment of a cemetery and prepared all the papers and documents which were necessary in order to carry it through. This series of acts constituted these four men promoters of the enterprise and subjects them to all the liabilities and responsibilities placed upon promoters by our law. Woodbury Heights Land Co. v. Loudenslager, 55 N. J. Eq. 78; affirmed, 58 N. J. Eq. 556; Plaquemines Tropical Fruit Co. v. Buck, 52 N. J. Eq. 219; Dickerman v. Northern Trust Co., 176 U. S. 181; Pittsburgh Mining Co. v. Spooner, 74 Wis. 307.

Among the other duties imposed upon promoters of an enterprise of this character is the furnishing of an independent and self-disserving board- of directors, and a full, open and fair disclosure of all the profits which the promoters design to make out of their promotion scheme. These questions were examined by me in the case of Arnold v. Searing, 78 N. J. Eq. 146, and I' call particular attention to the quotation from the opinion of Lord O’Hagan in New Sombrero Phosphate Co. v. Erlanger, 3 A. C. 1218; 48 L. J. Ch. 73, as to the independence of directors, and the remarks of Lindley, master of the rolls, In re Olympia, Ltd., L. R. 1898; 2 C. D. 153; 67 L. J. Ch. 433, as to the disclosure of intended profits.

There can be no doubt but that these four men, until the death of William E. Smith, and after that event the remaining three men. had full charge and control of the business conducted by the association. They selected the trustees and qualified them by giving to each the legal title to a cemetery lot in order that they might be ostensible lot owners, which lots they were severally required to retransfer to the corporation whenever they ceased to occupy the position of trustee. Out of the whole number of persons who occupied the position of trustees of the defendant association from 1900 until the present time only two or three, as I remember the evidence, were qualified by an absolute and bona fide ownership of cemetery lots. Early in its histor3r the vendors of the real estate, or some of them, acted as trustees, but apparently they had no interest except to see to it that the mortgages taken back by them for a portion of the purchase-money were protected and paid. It therefore appears to be' quite evident that the promoters did not furnish to this corporation an independent and self-disserving board of trustees, but, quite on the contrary thereof, so managed as that the board was continuously under their control and domination.

After the formal execution and filing of the incorporation papers, the first step toward a consummation of the plan was the actual purchase and conveyance of the real estate to be used for cemetery purposes which had some time before been bargained and arranged for by these promoters. The deed of conveyance to the association was made on January 29th, 1901. Up to’ this time there was no one interested in the project except the promoters; there were no lot holders or creditors or holders of shares in the plan that was afterwards adopted. The scheme was confined to the four promoters, and no other individual had any interest in it. The resolution for the purchase of the real estate was passed on January 16th, 1901, by the persons who had been selected by the promoters as trustees. It recited that William E. Smith had proposed to sell to the association one hundred and twenty-nine acres of land situated in Linden, Union county, for the purposes of said association, on condition that the association issue to the said William E. Smith, in exchange for bis deed conveying his equity in said land and property to the association, nine thousand shares in the purchase-money fund of said association, to be realized by contribution thereto under the laws of the State of New Jersey of one-half the proceeds arising from the sale by the association of plots in said premises. The resolution following this preamble reads as follows:

“Resolved, That the association purchase the property offered by the said William F. Smith and issue to him therefor as full consideration for Ms equity therein nine thousand shares in the purchase-money fund of this association to be made up of one-half of the proceeds from the sale or use of plots as authorized by the laws of the State of New Jersey, this association assuming any mortgage or other encumbrances on said property existing over and above the equity of said William F. Smith therein, which mortgage shall not exceed the sum of $ to be dealt with by the association in the future as this association may be advised;
“And he it further resolved, That the president and treasurer of this association be and they hereby are authorized and directed to execute a contract on the part of this association with said William F. Smith agreeing to accept from him a deed of the said property and to deliver to him in exchange for said deed nine thousand shares in the purchase-money fund of this association made up as specified in the next preceding resolution, and to execute any other contract with reference to the said deed that they may deem necessary.”

It will be observed that the only consideration agreed by this resolution to be paid by the association to William E. Smith is nine thousand shares in the purchase-money funds. At that time the situation of the property in question as to encumbrances was this: Smith paid for the property $37,500, subject to mortgages aggregating $32,000, leaving as Ms equity only $5,500.

If the letter of the resolution is to be followed the cemetery association would receive title to this small equity upon issuing to him nine thousand shares to represent the $5,500. I have been careful to state this part of the transaction in detail because, as a matter of fact, this plan was not followed in any respect, but was promptly departed from by the terms of the deed which was delivered a couple of weeks later.

On January 29th, 1901, William E. Smith conveyed to the association three tracts of land aggregating one hundred and thirty-one acres: the conveyance was stated to be in consideration of five certain covenants therein set forth and entered into by the party of the second part. The covenants are as follows:

“1. To deliver to said William F. Smith, nine thousand shares of the Linden Cemetery Association made out in the name of C. O. Smith at the ensealing and delivery to it by said first parties of this indenture, said shares giving the holders thereof their pro rata lien and claim upon the land-purchase fund of said association, composed, under the laws of New Jersey, of at least one-half of the proceeds of the sale of all burial plots in the grounds of said association conveyed to it by these presents for conversion into burial plots.
“2. To pay semi-annually in cash to said William F. Smith, his heirs, administrators, executors and assigns, one-tenth part of the gross proceeds of the sale, lease or loan of each burial plot or of any use thereof or interest therein, made by said Linden Cemetery Association, party of the second part, from the land hereinafter conveyed to said association by this indenture.
“3. To sell, lease or loan or in any other Way to divest itself of any part of its title to or possession of no portion of the lands hereinafter conveyed to it, in any other form or for any other use than as burial plots, except for the purpose of straightening its lines or conforming to some regulation imposed upon it by law, without the consent in writing of the said William F. Smith, his heirs, executors, administrators or assigns; and in every case to pay one-tenth of the gross proceeds thereof to the said William F. Smith, his heirs, assigns, executors or administrators.
“4. To set apart at least fifteen acres, under the direction and in conformity with the wishes of said William F. Smith and any three of the trustees of said association whom said Smith shall appoint to act with him in the premises, such fifteen acres not necessarily being in one solid tract, but possibly made up from various parts of the lands hereinafter conveyed, from which fifteen acres no burial plot shall be sold at less than two and one-half dollars per square foot, the proceeds from the sale of burial plots in which as they are made, after deducting the one-half thereof required by law, to be distributed among the shareholders, and the one-tenth thereof to be paid to said Smith, his heirs or assigns as hereinbefore provided, shall be lodged with some trust company to be selected by said Smith and the three trustees aforesaid, and shall remain on investment with said trust company, under a trust deed approved by said Smith and his said advisers, until the said proceeds and the accumulations thereof shall have made a fund sufficient to provide an income adequate to the perpetual maintenance of the lands hereinafter conveyed as a high class cemetery, and such income shall be applied to such maintenance when the exhaustion of burial plots shall cause to cease the fund for embellishing and maintaining such cemetery theretofore derived from forty per cent, of the proceeds of burial plots not within said fifteen acres, the purpose of this provision being to insure the perpetual care of the said cemetery and its maintenance as a park when its capacity as a burial place shall have become exhausted. If there should remain any portion of said fifteen acres unsold as burial plots at the time when such trust fund had become sufficiently large to afford an income adequate to such cemetery maintenance, then the party of the second part covenants and agrees, after paying to the shareholders 'one-half of the proceeds of future sales of burial plots from said fifteen acres, to pay over the balance thereof to the said William F. .Smith, his heirs, executors, administrators and assigns. And the party of the second part further covenants and agrees to defray from such trust fund the expenses of the removal and reburial in lots also purchased from such fund of any bodies directed by law to be removed from the said land hereinafter conveyed; if such bodies shall have remained buried in said land for the space of twenty-five years.
“5. As a fifth and final covenant and consideration for the conveyance to it of said land hereinafter described, the party of the second part agrees to assume all mortgage or other encumbrances on the land hereinafter conveyed to it and to hold the parties of the first part, their heirs, executors and administrators forever harmless therefrom.”

Inasmuch as the matters which are complained of by the complainant arise principally out of one or another of the foregoing covenants I shall take them up and discuss them seriatim.

It may not be amiss to say at this point that the most superficial examination of the deed containing the above-recited covenants as delivered discloses that it has a very slight resemblance to the document which the minute book shows was negotiated for by the association. This fact accentuates the remarks made by the eminent judge above quoted touching the independent directorate and demonstrates the actual control which the promoters had over the non-interested board..

The first covenant relates to the creation and disposition of what is known as the land-purchase shares. These are supposed to have been authorized by section 10 of the Rural Cemetery Association act. Comp. Stat. p. 375 § 10, as amended by an act found in P. L. 18S2 p. 25. This section provides that one-half at least of the proceeds of all sales of lots or plots shall be first appropriated to the payment of the purchase-money of the land acquired by the association until the whole purchase-money shall be paid; and the residue thereof to preserving, improving and embellishing the said c-emetery grounds and the avenues and roads leading thereto, and to defray the incidental expenses of the cemetery establishment; and that after the payment of the purchase-money and the debts contracted therefor and for surveying and laying out the land, the proceeds of all future sales shall be applied to the improvement, embellishment and preservation of said cemetery, and for incidental expenses, and to no other purpose or object as long as such embellishment is incomplete. ’

The shares were issued in the following form:

“This is to certify that is entitled to shares in the Linden Cemetery Association, of New Jersey, transferable only on the books of the association in person or by attorney, on surrender of this certificate.
“This certificate is a lien on the land-purchase fund of the association, which fund, under the laws of New Jersey, must be composed of at least one-half of the proceeds from the sale of burial plots in the said cemetery; and the holder hereof is entitled to have paid over to him one l/9000th part of -said fund for each share which this certificate represents; and he will be so entitled until the last burial plot in said cemetery is sold and its proceeds distributed according to law.
“In witness whereof, the said Linden Cemetery Association has caused this certificate to be signed by its president and treasurer,” &c.

A scheme of issuing share certificates quite similar to the one now before the court was dealt with by Vice-Chancellor Stevens in the case of East Ridgelawn Cemetery Co. v. Frank, 77 N. J. Eq. 36, and was pronounced by him to be entirely outside of the authority conferred by the statute abo re referred to. He held that the statute contemplated the purchase of the land for a definite price, and that consequently the shares, if shares could be issued at all by the association, must be predicated upon some definite and fixed amount. The remarks and criticisms made by the vice-chancellor in that case apply with peculiar force to this case, and I have no hesitation in saying that the scheme here entered in to is extra-statutory and cannot be carried out in accordance with the original intention of the parties. There must be an inquiry as to the fair market value of the land in question at the date of the purchase, and if the issue of shares is to be approved they must be based upon actual values at that time and not upon such values as may subsequently be reached when the cemetery lots shall have become much more valuable by reason of tire more extensive use of the burial ground. The scheme of issuing shares was one of the methods by which the promoters obtained an undisclosed profit to themselves, and in so far as it aided and assisted in this design, it is fraudulent and void. The association cannot be made chargeable with anything which it did not lawfully receive. The land-purchase fund was divided into nine thousand shares — that is to say, each shareholder was entitled to receive for each share held by him one nine thousandth part of the proceeds of the sale of all the lots which were sold by the association for burial purposes. Eive thousand of these shares were turned back by the promoters to the corporation and were sold by it to raise money with which to pay off the mortgage on the properly, and the remainder represented the secret profit made by the promoters out of the enterprise. The association must recognize a liability of some sort for the money actually received by it from the land-purchase shares or from any other source, but it cannot be made to respond to claims arising out of the issue of land-purchase shares from which it received no benefit. Therefore, the claims of so-called shareholders which brought no money to the treasury of the company are void and cannot be enforced. The so-called shares have no negotiable quality, and title does not therefore pass by delivery or endorsement. The doctrine of protection which is afforded to tona fide purchasers without notice and for value' does not apply, and every purchaser and holder of the four, thousand shares must be held to have known that they were issued without the sanction of any law. In so far as these so-called shares can be traced to the promoters, and from them to the present holders, they must be canceled.,

After the decision in East Ridgelawn Cemetery Co. v. Frank, 77 N. J. Eq. 36, it was quite evident that schemes like the present were in great danger. In 1911 and 1913 acts were passed by the legislature whose undoubted purpose was to cure any defects that there might be in this plan of financial organization; and an able argument was addressed to the court in favor of the view that the legislature had now sanctioned the plan in question, if, indeed, it had ever been open to question.

But it is doubtful whether the so-called curative acts of 1911 and 1913 (P. L. 1911 p. 626; P. L. 1.918 p. 521) have any effect whatever upon the situation developed in this case. It is quite clear that the act of 1911 does not. It applies to only one class of eases — that is, cases of purchase, in which the purchase price is fixed at the amount of not more than one-half of the proceeds of all sfjJes of lots or plots, &e., thus excluding this case, in which sixty per cent, of the proceeds of lots were pledged for the pajrment of the purchase-money. The act of 1913 is a general act and not a supplement to the Rural Cemeteries act, the first two sections of which must undoubtedly be construed to be prospective in their operation. Frelinghuysen v. Morristown, 77 N. J. Law 498. The fourth section relates only to joint agreements, so that whatever there is in the act which relates to the case in hand is found in the third section. Concerning that section there are two things to be said — first, its operation is limited by the words “not in contravention of the provisions of this act.” Just what that may mean is very difficult of solution. .Its sponsors evidently considered it to be difficult, because they put in the fifth section a provision that if any portion of the act should be held to be invalid it should not .affect any other portion; and second, if the act means what it appears to say, then it is possible for a cemetery company to pledge all its lots and all the proceeds of the sale thereof for the payment of purchase-money, and thus abrogate what has been the settled policy of our legislature since 1817. Brrt even if the third section should be found to be clearly retrospective, yet it could not affect the vested' rights of any interested person, and this act so construed would have the effect of depriving the complainants of a remedy which they had at the time of the filing of ihe bill. Any act which has the effect of impairing the obligation of a contract or of depriving the party of a remedy which existed when the contract was made, is obnoxious to the provisions of our constitution, and therefore void. Baldwin v. Newark, 38 N. J. Law 158; Maxwell v. Goetschius, 40 N. J. Law 383; Moore v. State, 43 N. J. Law 243; Presbytery of Jersey City v. First Presbyterian Church, 80 N. J. Law 577. T, therefore, conclude that the so-called curative acts have no application to the case in hand, and that the case must bo decided as ill no such legislation existed.

An attempt was made to ratify the land purchase and the form of the deed by which the land was convei^ed to the association at a meeting of the board of trustees held on January 31st, 1901. The board -which attempted this ratification was as powerless to act in the matter as was the board which passed the original resolution ; hence, ratification by it wrought no result whatever, and the situation, after January 31st, 1901, was exactly the same as the situation before that date. Besides, it is impossible to ratify a fraud and make that good which is vicious from the foundation. Neither does it appear that at the time this ratification was sought there was any disclosure made to the board of the contents of the deed in question. On this point, see Booth v. Land Filling Co., 68 N. J. Eq. 536; Siegman v. Electric Vehicle Co., 72 N. J. Eq. 409.

Still another attempt was made to procure a ratification of the deed and the issue of nine thousand shares in the land-purchase fund, and the organization, at a meeting of lot holders held on March 13th, 1901, at which it ivas resolved by them to ratify and confirm the acts of the officers and agents of the association in any way connected with the acquirement of the said property, and especially to recognize the nine thousand shares delivered as part consideration for said property, and all agreements, covenants, bargains and promises contained therein and in said deed, as their free act and deed, adopting all of tire same as fully by that resolution as if their names had been subscribed thereto and their seals thereto affixed. But it does not appear that the lot holders were informed at that time of the contents of the deed or of the general situation. It was the duty of the promoters to make such disclosures concerning their profits as would reach the persons who afterward became lot holders. Euture purchasers of lots had a right to know just what the condition was. The burden of proof on this point is on the promoters. There is not onty a deficiency of proof on their part, but quite on the contrary thereof, all the lot holders who were called to testify to this point stated that at the time they purchased their lots they knew no ihing about the ten per cent, interest or anything about the financial condition of the association. There can be no ratification without full knowledge on the part of him who ratifies, and all these attempts lack one essential element, viz., a full and complete disclosure of all the facts concerning which the ratification is asked.

I, therefore, conclude that there has been no efficient ratification by any competent authority to sustain the acts which are now complained of.

The second covenant, which creates what was called in the case the “10 per cent, interest,” rests upon a much less secure foundation even than does the so-called shares. There is absolutely no statutory or other authority for the making of such a covenant. It is not mentioned in the resolution by virtue of which the lands wore purchased, and no display of it appears ever to have been made by the promoters. By virtue of this covenant the association is claimed to have bound itself to pay "William E. Smith, the grantor, one-tenth of the gross proceeds of the sale, lease or loan of burial plots in the cemetery. In forcing this deed and this covenant on the cemetery association, Smith seems to have deceived even his own board of uninterested directors. That ten per cent, interest, early in the history of the cemetery association, was divided into four shares, which are now distributed as follows: One-fourth to William P. Smith, now held by his personal representatives; one-fourth to Dorothy A- Baymond, who subsequently married Boswrell E. Benedict; one-fourth to Clinton O. Smith, a son of William E. Smith, and one-fourth to Yernette E. Prentice. Hot only should this covenant be wholly disallowed upon the ground that it was fraudulent in fact, but also upon the further ground that it was a means by which a secret profit wras obtained by the promoters of the enterprise, and not only should the covenant be set aside on these grounds, but the promoters, if they have received any benefit thereunder, should account to the cemetery association therefor.

The third covenant binds the cemetery association uot to divest itself of the title to any part of the lands in question (with negligible exceptions) without the consent in writing of William E. Smith, his heirs, executors, administrators and assigns, and in every case the association to pay one-tenth of the gross proceeds thereof to the said Smith. This provision is not authorized by the statute, is not mentioned in the original resolution for the purchase of the land, and is a restraint upon alienation, and is therefore void. Magie v. German Evan. Church, 13 N. J. Eq. 77; affirmed, 15 N. J. Eq. 500.

The fourth covenant relates to setting aside of fifteen acres of the cemetery land for the purpose of providing a fund for the perpetual care of the cemetery grounds. This land is to be selected by Smith in conjunction with any three members of the board of trustees of the association whom Smith shall appoint to act with him in the premises. Inasmuch as Smith, the grantor, has died without making any appointments of trustees or selection of plots for the purposes of the covenant, it would seem as if the provisions of the covenant have become obsolete, there being now no one who can appoint the trustees, and there being no trustees to make the selection. In my opinion, nothing can be done on behalf of either the grantor or grantee with relation to this covenant.

The fifth and last covenant is an assumption by the cemetery association of the mortgages then on the -land amounting to $32,000 of principal. Inasmuch as these mortgages have been paid off and discharged of record there seems to be nothing in this covenant for the consideration of the court.

During the ten years or thereabouts that this cemetery association lias been in operation it has been subjected to a continual loss, for the reason that the regular income from the sale of lots after deducting sixty per cent, thereof for the land-purchase shares and the ten per cent, interest, was insufficient to meet the necessary expenses of conducting the business. The board of trustees, therefore, authorized the borrowing of money on what is known as loan certificates issued in denominations of $100, $500, $750 and $1,000, whereby the association promised to pay, upon a -certain date expressed in each certificate, the face value thereof, with six per cent, interest, semi-annually, it reserving the right to redeem the same on any interest day at one hundred and two and interest; there were three issues authorized, one in 1902, another in 1906, and still another in 1910, the aggregate amount authorized being $100,000, only $84,900 of which have been issued. These certificates represent actual cash loaned and paid to the cemetery association, with the exception that certain of the certificates were issued to certain of the trustees at a discount of ten per cent. It was argued that inasmuch as there appeared to be no express power granted to cemetery associations to borrow money, such borrowing could not take place lawfully, ■ and if it did take place, it was ultra vires} and therefore void. This contention, however, is not in accordance with the authorities. The right to borrow money to carry on the objects and purposes of the corporation is implied from the authority to do business as a corporation. It was supposed on the argument that there was a difference between tlio ordinary business corporation and a cemetery corporation in this respect; but no difference is recognized in the leading case decided by our court of errors and appeals in 1886. Fifth Ward Savings Bank v. First National Bank, 48 N. J. Law 513. There Mr. Justice Depue holds that every corporation created for transacting business, unless restrained by its charter, or some statute, has, as a necessary incident, the power of incurring debts in the • course of its legitimate business, and of making and endorsing negotiable paper in payment of such debt. See, also, Lucas v. Pitney, 27 N. J. Law 221; National Bank v. Young, 41 N. J. Eq. 531; Hackettstown v. Swackhammer, 37 N. J. Law 191. So long as the borrowing of money is for the legitimate purposes of the association the act is mtra vires, and therefore valid, but the argument against these certificates is foreclosed by the Cemetery act itself, which recognizes the fact that a cemetery company may contract debts, and in section 16 it provides a drastic method by which such a corporation can be compelled to pay debts contracted by it out of its profits. If it could not contract debts there would be no need of any method of collecting debts from it because there could be none to collect. The implication of power, therefore, seems to be complete. These certificates must stand as debts or obligations of the association for the amounts respectively advanced thereon by the original purchasers thereof. Not being negotiable instruments, a defect in the original issue will affect them in the hands of the present owners.

It likewise appears that the association owned promissory notes to the amount of $39,813. In so far as these notes represent money actually loaned to and received by the association, they must be held to be its lawful obligations, and inquiry should be made by a master to ascertain the amounts due upon these various kinds of obligations; if, however, the notes which were testified to include the notes given by the company to the shareholders in lieu of the distribution of cash, such notes should be canceled; otherwise, the amount will stand as a double liability of the association.

These views lead to the following results:

■ (1) The four thousand shares taken by the promoters as a secret profit, in so far as they can be traced and recognized, must be canceled in the hands of their present owners.

(2) The five thousand shares which were donated to and sold for the benefit of the association must stand as five thousand shares in the actual value of the land at the time of its purchase, each of the four thousand shares being entitled to one nine-thousandth part of the proceeds of the sale of the lots; there will be a reference to a master to ascertain this actual value.

(3) The so-called ten per cent, interest will be canceled absolutely.

(4) There will be a reference to ascertain the amount actually owing by the association on the loan certificates and promissory notes. This amount when so ascertained shall be recognized as indebtedness of the association.

(5) The.receiver will be requested and authorized to report to the court a scheme for the resettlement of the trust fund and the readjustment of the association’s affairs.

If there are any other questions which need to be decided now they can be mentioned at the time of the settlement of the decree.


author: Howell, Y. O.

text:
    Rubber and Celluloid Harness Trimming Company v. Rubber-Bound Brush Company et al.
    [Decided July 18th, 1914.]
    1. Complainant was incorporated under the General Corporation act (P. L. 1849 p. 800), January 23d, 1873, its franchise to terminate January 1st, 1900. In'1874 the legislature passed a special act (P. L. 1814 p. 1011) to extend and amend its corporate powers and privileges, section 11 of which provided that the corporation should not, from the date of the act, be bound or affected by the act of 1849, under which it was incorporated, or its supplements, except as prescribed by the act of 1874.- — Meld, that complainant’s corporate existence under the act of 1874 continued indefinitely, and did not therefore terminate in accordance with its original articles.
    2. Act March 17th, 1874 (P. L. 1814 P- 1011), is entitled “An act to extend, amend, and increase the corporate powers and privileges of the Celluloid Harness Trimming Company,” and section 11 of the act provides that the company shall not, from the date of the approval of the act, be bound, controlled, or in anywise affected by the General Corporation act of 1849 (P. L. 1849 p. 800), under which it was organized, or any provisions thereof not incorporated in the act of 1874. — Meld, that such act is not invalid as containing an object not expressed in its title.
    3. Where the date of the alleged expiration of a corporation’s charter appeared from the public records, the fact that its corporate life had expired at the time it brought suit against defendant for unlawful competition could not be said to constitute newly-discovered evidence sufficient to sustain a bill to review a judgment against defendant.
    On motion for leave to file a bill of review.

      Mr. Carl V. Vogt, for tbe motion.

      Mr. Thomas M. Kays and Mr. Alfred F. Skinner, contra.

   Howell, Y. O.

In 1911 the Rubber and Celluloid Harness Trimming Company filed its bill in this court against the Rubber-Bound Brush Company and others, to restrain the defendants from the commission of certain acts which it was alleged amounted to unfair trade and unfair competition on the part of the defendants, and such proceedings were had therein that on December 6th, 1912, a final decree was entered therein against the defendants in accordance with the prayer of the bill. 81 N. J. Eq. 419. The decree was affirmed on appeal. 81 N. J. Eq. 519.

The defendants now seek to review the decree in that case and set the same aside upon the ground that at the time of the filing of the bill and of the making of the decree and of the affirmance on appeal there was no such corporation as the Bubber and Celluloid Harness Trimming Company, its franchise to be a corporation having expired on the first day of January, 1900. They allege that they did hot discover the fact until after the affirmance, and they allege, therefore, that the fact is a newly-discovered fact and amounts to newly-discovered evidence within the rules touching the filing of bills of review.

The facts are these: The complainant was incorporated under the general corporation laws of this state on January 23d, 1873, by virtue of an act of the legislature entitled "An act to authorize the establishment and to prescribe the duties of companies for manufacturing and other purposes,” approved' March 2d, 1849. The incorporation papers provided that the .company would commence its existence on February 8th, 1873, and terminate on January 1st, 1900.

In 1874 the legislature passed an act entitled “An act to extend, amend and increase the corporate powers and privileges of the Celluloid Harness Trimming Company;” it was approved on March 17th, 1874. P. L. 1871+ p. 1071. This act recited the organization of the company under the act of 1849, and ratified and confirmed the incorporation and the election of directors, and further constituted the company a body corporate in fact and in law by the name which it had chosen, for the purpose of manufacturing and selling celluloid harness trimmings and articles used therewith and for carrying on any business incident thereto in this state. The eleventh section of that act -provided that the company should not from the date of the approval of the act be bound, controlled or" in anywise affected by the said act of 1849 or any of its provisions or any supplements thereto, except as is in the act of 1874 prescribed. On November 29th, 1877, the name of the company was changed to Rubber and Celluloid Harness Trimming Company, that being the name now used by it in the prosecution of its business.

From these facts the defendants conceived that the company ceased to exist on January 1st, 1900, and that therefore the decree in this suit should not and in fact could not have been made in its favor, there being no legal entity bearing the name assumed by the complainants in whose favor the decree could be made.

I think the motion should be denied upon the ground that the act of 1874 continued the existence of the complainant corporation indefinitely', and that by the plainest construction. After reciting the incorporation of the company under the act of 1849 and the election of directors and the completion of the organization thereunder, it proceeds to ratify all -that had been done in the past with regard to those matters, and to reincorpórate it (section 1), and then it provides in the eleventh section that after the approval of the act of 1874 the company should cease to be bound, controlled or in anywise affected by the act of 1849 or by any of its provisions or by any supplements thereto except as is prescribed in the act of 1874. I do not see how words could make it plainer that it was the intention of the legislature to withdraw the corporation from the operation of the general corporation laws and place it under the supervision of the act of 1874. .

It is claimed, however, that this act is unconstitutional, for the reason that it violates a provision of the constitution then in force which required that every law should embrace but one object, and that such object should be expressed in the title. Particularly' is this objection urged to section 11. On this point the facts are quite similar to those in the case of State, ex rel. Walter, v. Town of Union, 83 N. J. Law 350. There the act complained of was entitled “An act to amend an act to incorporate the Town of Union in the township of Union in the county of Hudson, approved March 29th, 1864.” This act validated an ordinance passed by the Town of Union, but passed irregularly', for the construction of a sewer in the Hackensack plank road. It is claimed that this purpose was not expressed in the title. The supreme court, however, held the contrary. The opinion says: “The unity of the object must be sought in the end which the legislative act purposes to accomplish, and not in the details provided to reach that end. The degree of particularity which must be used in the title of an act rests in the legislative discretion, and is not defined by the constitution. There are many cases where the object might with great propriety be more specifically stated, yet the generality of the title will not be fatal to the act if by fair intendment it can be connected with it.” And it holds the general title which was given to the act be in accordance with the provisions of the constitution. To the same effect is State, ex rel. Doyle, v. Newark, 34 N. J. Law 236, also a case in the supreme court. The same rule was announced by the court of errors and appeals in Newark v. Mount Pleasant Cemetery Co., 58 N. J. Law 168, and by Chancellor McGill in this court in Stockton v. Central Railroad, 50 N. J. Eq. 52, 69; Sawter v. Shoenthal, 81 N. J. Law 197; Shullise v. O’Neill, 85 N. J. Law 15. Following these authorities I must conclude that the act is constitutional.

There is another reason udiy this motion cannot prevail. It is claimed that the evidence of the non-existence of this corporation consists of certain public records to which every person has free access. The evidence so called was as accessible to the defendant at the time this suit was brought as it is to-day. The public offices in which it resides remain to-day as they were then, and, so far as I can see, the only possible reason for calling the evidence newly-discovered evidence is that it was not searched for at the time wffien it should have been set up by proper pleading in the cause. The whole subject of newly-discovered evidence, so far as it applies to bills of review, was discussed by Vice-Chancellor Garrison in Richards v. Shaw, 77 N. J. Eq. 399. Quoting from earlier eases, he says: “When application is made to file a bill of review upon the discovery of new matter, the rule is that the matter must not only be new but must be such that the party by the use of reasonable diligence could not have known of it. If there be any laches or negligence in that respect that destroys the title to the relief.” Such a bill (of review) must rest upon some new matter which has been discovered after the decree and could not possibly have been used when the decree was made. In my opinion, the evidence -which is now claimed to be newly discovered is* not such in any sense whatever. It cannot be called newly-discovered evidence for the purpose of a bill of review, because it did not occur to the defendant to make a search for it.

The motion must be denied.