author: Leaii'ing, Y. C.

text:
    Bernard Brindze v. Atlantic City Policemen's Beneficial Association.
    [Argued February 11th, 1909.
    Decided March 7th, 1909.]
    1. An assignment of revenues to be earned under a contract to conduct a circus for four days is enforceable as an equitable assignment.
    2. Under a contract to conduct a circus for four days, entitling the amusement company to draw on funds derived from advance sales of tickets when the show was “on the ground,” the show was “on the ground” when the paraphernalia arrived at the show grounds and the actors at their lodgings, and the equitable title to part of funds then vested in the company’s assignee, so as to preclude the other party, who had knowledge of the-assignment, from defeating the assignee’s rights by paying, with the company’s consent, money due the actors, who refused to perform unless paid in advance.
    3. An assignment of money due under a contract as collateral security must be treated as though not so made, where the debt exceeds the amount claimed under the assignment.
    4. A policemen’s beneficial association could make a valid contract with an amusement company to furnish show grounds, pay necessary license, and sell tickets for a four days’ circus to be conducted by the company, for an equal division of the revenue above a given sum.
    On bill to compel defendant to apply certain moneys to complainant’s claim. Heard on bill, answer, replication and proofs.
    The bill seeks a discovery of certain money which came to the hands of defendant association and a decree that complainant is entitled to the application of the money to the payment of his claim, and also an injunction against the ad interim disposition of the funds in question, and an injunction against the further prosecution by defendant association of-a pending action at law in which action an attachment has been levied on the funds. The funds in controversy arose from the sale of tickets of admission to a circus known as the Atlantic City Policemen’s Circus. The Berger Amusement Company, complainant’s assignor, entered into a written contract with the Atlantic City Policemen's Beneficial Association dated July 25th, 1908, wherein the amusement company agreed to institute and conduct at Atlantic City a circus for four days during the week beginning Monday, August 24th, 1908, and to give two performances daily, weather permitting, and to furnish the “amusement enterprise” complete at their own cost and expense. The beneficial association agreed to supply at its expense a suitable location and necessary licenses and to sell the tickets of admission. The first $5,000 derived from the sale of tickets or other revenues was to go to the amusement company; all moneys received in excess of that amount were to be divided equally between the amusement company and the beneficial association. The contract also contained the following stipulation:
    “The parties of the first part further agrees to open a bank account and deposit all money derived from the sale of tickets and any and all other sources in one of the Atlantic City banks, but it is understood that the party of the first part is not to draw out of the bank any of the above money until their show is on the ground.”
    On August 4th, 1908, the amusement company executed an assignment to complainant of the first $2,700 which should be deposited pursuant to the contract referred to. The assignment is absolute in form and contains an irrevocable power of attorney in favor of the assignee. The circus arrived at Atlantic City pursuant to the contract, but owing to a severe storm it was impossible to give a performance until Friday of the week named in the contract. Before the performance of that day the circus actors refused to act unless paid in advance, and in order to enable the show to proceed it became necessary for the beneficial association to guarantee the amounts demanded by them. The same conditions arose on the following day and the same course was adopted. The guarantee of wages referred to was made and the money was paid by the beneficial association in fulfillment of its guaranty with the consent of the amusement company, which consent was given on the day the guaranty was made. Complainant, as assignee of the first $2,700 of revenues to be received, seeks an injunction against a pending proceeding at law in attachment against the fund, and also seeks to recover from the beneficial association the frtnds on hand and such additional amount as will be necessary to satisfy the amount due to complainant under his assignment. The testimony is not in entire harmony as to whether the beneficial association received notice of the assignment prior to the time they guaranteed the application of the money to the payment of wages, but the evidence discloses that such notice was undoubtedly received by the beneficial association prior to that time.

      Messrs. Thompson cf; Cole, for the complainant.

      Mr. EH 11. Chandler, for the defendant.
   Leaii'ing, Y. C.

The assignment of the first $2,100 of the revenues to be received under the contract was an assignment of money to be earned in the future by the assignor. This court has repeatedly recognized and enforced equitable assignments of this nature. In Bank of Harlem v. Bayonne, 48 N. J. Ecq. (3 Dick.) 246, 252, it is said: “While, properly speaking, an assignment cannot be made of a subject which does not exist, such as a fund to become due on the future performance of a subsisting contract, yet equit3r, on the possible debt ripening into an enforceable specific money liability, treats the agreement as an assignment pro tanlo of the fund, and, by force thereof, vests the equitable title to the money in the assignee. * * * On notice being given to the debtor, and the sums being earned under the contract, the debtor becomes trustee or gucm-trustee for the assignee as to the amount assigned, subject to existing equities and valid prior charges thereon. * * * From this it follows that neither .payments to nor a release or discharge by the assignor, after notice of the assignment, can affect the rights of the assignee against the debtor.”

As notice of the assignment had been given to the beneficial association not only prior to the time the money in question was applied to the payment of wages, but also prior to the time that the beneficial association obligated itself to pay the wages, the controlling question in this case is whether under the contract between the amusement company and the beneficial association the money now in question had been earned by the amusement company at the time it was used by the beneficial association to pay the wages of performers. If, at that time, the-money now in question had been so earned the equitable title to it, to the amount of complainant’s claim, became vested in complainant as assignee, and defendant beneficial association could not thereafter lawfully use it for any purpose other than to pay it to complainant. If, after the money became payable under the terms of the contract, the beneficial association, with notice of the assignment, saw fit to assume obligations which the contract did not impose on it, the burden of such obligation cannot be charged against the assignee. See North Bergen v. Eager, 41 N. J. Law (12 Vr.) 184 The contract provided that the amusement company should not draw out of the bank any of the money until their show should be on the ground. All of the proceeds arising from the advance sale of tickets and all other sources were, by the terms of the contract, required to be in the bank at that time. The stipulation was, in effect, a stipulation that the amusement company could draw its share of tire proceeds when the show should be on the ground. Under that stipulation the money at that time became payable to the amusement company, and, as already stated, by reason of the assignment referred to, the equitable title to the amount assigned became vested in complainant. It becomes necessary, therefore, to ascertain whether the circus was “on the ground” within the meaning of the contract, before the time when the beneficial association applied the money in question to the payment of wages. It is contended that the show was not on the ground within the spirit of the contract until it was there with all matters arranged and provided for which were essential to a proper performance; that, in consequence, when the actors refused to perform at the beginning of the first performance for the reason that they were not secure in their wages, it was demonstrated that a show had not at that time been placed on the ground in conformity to the requirements of the contract. I am satisfied that under the evidence in this case that view cannot be properly adopted. Two witnesses of extended experience in the business of supplying shows of this nature have testified that the expression "show on the ground” has a well-recognized technical meaning in transactions of this class; that by reason of the fact that great expense is necessary to assemble a show at a given locality where a performance is to be had, it is a necessity and uniform custom of persons in the business of supplying shows to require the use of the money received from advance sales of tickets and concessions as soon as a show arrives at the locality agreed upon, and to that end the expression "show on the ground” is uniformly understood to refer to that event. That, I think, is the meaning of the expression as it is used in the present contract. The show in all its parts arrived at Atlantic City early in the week pursuant to the requirements of the contract, and was then ready to perform. By reason of a severe storm no performance could be given until the following Friday, and that delay, which was through no fault of the amusement company, occasioned all the trouble which followed. Upon the arrival of the complete paraphernalia of the show at the show grounds and the actors at their lodgings ready to perform when called upon, the money then on hand was, in my judgment, earned by and payable to the amusement company, and at that time the- equitable title to the money due to complainant as assignee vested in him under his assignment; as the beneficial association at that time had notice of the assignment they could not thereafter deprive the assignee of his right to receive his money. The assignment was made to complainant as collateral security, but the amount due to complainant from his assignor has been proven to be an amount in excess of the amount which defendant will be required to pay. Under these circumstances the assignment must be treated exactly the same as though it had not been by way of collateral security. Todd v. Meding, 56 N. J. Eq. (11. Dick.) 83.

It is also urged that defendant beneficial association was without power to make the contract. I think the contract was within its powers and was made by its authority.

Complainant is entitled to a decree directing defendant to pay to him $348.30 now under its control, and also to pay to complainant, in addition thereto, $1,516.57 as the amount wrongfully applied.


source: Caselaw Access Project

author: Leameng, Y. C.

license: Public Domain

text:
    Antonio Geroso et al. v. Alfred DeMaio et ux.
    [Submitted February 20th, 1909.
    Decided March 9th, 1909.]
    1. Evidence held to show that a conveyance was made in fraud of the-creditors of the grantor, precluding the grantor from obtaining a decree setting it aside on the ground that it was voluntary.
    2. A conveyance fraudulent as to the creditors of the grantor is good as between the parties.
    Bill to set aside conveyance of real estate. Heard on bill, an-SAver, replication and proofs.
    The bill seeks to set aside a conveyance of certain real estate-made by complainants to defendant, February 6th, 1891’. The-bill asserts that on the date named complainant Antonio Geroso was the owner of the property in question and was being pressed by his creditors for the payment of his debts and applied to defendant Alfred DeMaio for help; that complainants were inexperienced in business and unable to speak the English language-with fluency, and that defendant Alfred DeMaio was a person of business experience and a master of the English language, and a person to whom ignorant Italians were accustomed to apply for assistance and advice; that defendant Alfred DeMaio then assured complainants that he could and would adjust and settle-their business troubles, and then and there requested complainants to convey the premises in question to defendant Philomena DeMaio, wife of defendant Alfred DeMaio; that complainants made the conveyance as requested and have received no consideration whatever for the conveyance; that defendants have since-executed a mortgage on the premises so conveyed to secure the-payment of a debt dying by complainant Antonio Geroso, and' now refuse to reconvey the premises to said complainant and claim to own the same.

      The answer admits that at the time the conveyance was made complainant Antonio Geroso was being pressed by his creditors; but alleges that defendant Philomena DeMaio purchased the premises in question, and paid to complainant Antonio Geroso in cash the amount agreed upon as the consideration for an absolute conveyance to her.

      Mr. John W. Wescott, for the complainants.

      Mr. John Boyd Avis, for the defendants.
   Leameng, Y. C.

The testimony of the several witnesses cannot be reconciled. Complainants testify that the conveyance which they now seek to avoid was made without consideration, and though made at a time of financial embarrassment, was, in fact, made in reliance upon the promise of defendants to “fix up” the claims of creditors, and not with an intent to defraud creditors. While defendants’ answer admits that complainant Antonio Geroso applied to defendants at the time the conveyance was made for advice and help touching the claims of creditors, defendants testify that they purchased the property outright and paid for it in full in cash and knew nothing about any claims of creditors. A careful consideration of the evidence leads me to the firm conviction that neither complainants nor defendants have testified to the entire truth. The evidence forces me to the conclusion that the property in question' was conveyed by complainants to defendants without consideration and for the sole purpose of placing the property beyond the reach of the creditors of its owner. I am unable to adopt the view, which is urged, that complainants did not fully appreciate what they were doing, or that they were under the controlling influence of defendants. Although complainant Antonio Geroso speaks the English language with difficulty, he is far from being an ignorant man. When called upon to examine various letters and other documents written in Italian, I observed that he read them with entire ease and with speed, and throughout the trial he manifested a keen appreciation of the force of the various features of the case. Letters written by him ‘were offered in evidence in which he offered to sell the property in question to defendant Phiiomena DeMaio at the price which defendants say was paid. These letters, he now explains, were written by him at the time of the transfer and antedated at the request of defendants to make people believe that defendants wanted to buje After the transfer he told a justice of the peace that he had sold his farm for cash. This he explains as a “joke.” Following the transfer he left his farm and went to New York to live. This he explains by stating that defendant Alfred DeMaio told him that it was necessary to enable DeMaio to “fix up” his matters. Subsequent^, a bill was filed by his creditors to set aside the conveyance on the ground of fraud, and he made an affidavit for use in the defence of that suit in which he testifies that the sale was absolute and that he had been paid the full consideration in cash. This affidavit he explains by the statement that the affidavit was not read to him and that he did not know its contents. That statement I do not believe. These and other circumstances of the case render it impossible for me to believe that the conveyance was made by complainants without an adequate knowledge of its effect or without a defined purpose on their part to defraud the creditors then pressing for their money—one of whom was already prosecuting an action at law at the time the conveyance in question was made. As already stated, after the. conveyance was made, creditors of complainant Antonio Geroso filed a bill to set aside the conveyance as fraudulent. Defendants herein, after preparing for the defeirce of that suit, conceded its force by paying a part of the claim and executing a mortgage on the premises now in question to secure the payment of the balance. In that manner the creditors of complainant Antonio Geroso are now paid or secured. As to the testimony of defendants to the effect that defendant Phiiomena DeMaio purchased the property or paid for it, I think it sufficient here for me to simply say that I do not believe it. The letters, the telegrams, the rent receipts, the conferences and other surrounding circumstances, and the unsatisfactory character of the testimony given by defendants impel me to that conclusion. I think that a consideration of all of the circumstances of the case properly leads to the conclusion that what actually transpired was as follows: The conveyance in question was made without consideration and for the purpose of defeating the enforcement of the claims of the creditors who were then pressing for their money. In order to give the conveyance the aspect of an absolute sale and to enable the fraudulent grantee to successfully resist any attacks of creditors of the grantor, correspondence, receipts and other papers-were manufactured and the grantor left the premises and moved to New York. The real agreement was that the grantee would take title and stand off the creditors and would subsequently re-convey the property, and for that service he was to receive $20,. for which amount a note was at that time given. After suit was brought by the creditors to set aside the conveyance, defendants-herein became fearful of the insufficiency of their defence and made settlement with the creditors in the manner already stated. It was not until then that defendants, realizing the force of the-various evidences of absolute sale in their possession, determined to keep the property and to resist the demand of complainants to it.

It is manifest that under these facts this court cannot grant, relief to complainant, notwithstanding the fact that the effect of the decree will be, in effect, to enable defendants to steal' complainants’ property. The courts of this state have repeatedly and uniformly held that considerations of public policy as well as the express provisions of the statute of frarrds forbid relief against a transaction of this nature. In Marlatt v. Warwick, 19 N. J. Eq. (4 C. E. Gr.) 439, 454, Justice Depue forcefully states-the law and the reasons supporting it as follows:

“* * * Sound policy requires a- rigid adherence to the rule of law, that a conveyance, fraudulent as to creditors, is-good as between the parties. Nor should the courts be induced to-refuse to give full effect to these well-settled principles of law because of any supposed injustice in permitting a party to retain the benefit of an illegal transaction to the prejudice of his confederate. In Baldwin v. Gampfield, Chancellor Williamson says: ‘We must not be misled by any supposed hardships of the-case. The conduct of the son-in-law (the defendant) in this-transaction, must justly excite our indignation. Our sympathies are naturally with the old man whom he may have deceived and wronged, and yet we may not violate a single principle upon which law and equity are administered, to punish the one or vindicate the other.' In Den v. Shotwell, 23 N. J. Law (3 Zab.) 474, Chief-Justice Green says: ‘In dealing with illegal contracts, courts do not and cannot look to the interests of those who are parties to the illegal transaction. The law regards the welfare of society as paramount, and in enforcing the law, courts cannot impair its efficiency or cripple its operation by considerations affecting the interests of those who are particeps crvminis. Salus populi suprema lex/ In the same case in this court (Den v. Shotwell, 24 N. J. Law (4 Zab.) 791), Justice Ogden, in delivering the opinion of the court, sáys: ‘Courts will not aid a person, whose cause of action, either upon his own showing, or otherwise, appears to arise ex turpi causa, or from the transgression of positive law. We do not adopt this policy for the purpose of protecting a defendant, but from the determination not to assist such a plaintiff/ ‘It is not for the defendant’s sake,’ says Lord Mansfield, ‘that the objection is ever allowed, but it is founded on general principles of policy, which the defendant has the advantage of, contrary to the real justice between him and the plaintiff, by accident, if I may say so.’ Holman v. Johnson, 1 Cowp. 343. The objection is rather that of the public, speaking through the courts, than of the defendant as a party to the contracts. The law disallows all proceedings in respect of illegal contracts, not from any consideration of the relative position and rights of the parties, but upon grounds of public policy. Fry Spec. Perf. 309. ‘The old cases,’ says Mr. Justice Story, ‘often gave relief both at law and in equity, where the party would otherwise derive an advantage from his iniquity. But the modern doctrine has adopted a more severely just, and probably politic and moral rule, which is to leave the parties where it finds them, giving no relief and no countenance to claims of this sort.’ 1 Story Eq. Jur. § 298 note 2. It was said by the counsel of the complainant that this objection not having been set up in the answer, cannot now be taken. The nature of the transaction did not appear on the face of the bill, and the defendants in their answer deny entirely the making of any agreement with the complainant for the redemption of the property by Mm. But it is not necessary that the objection should have been taken in the answer, to enable the court, as the representative of the public, to refuse to, grant relief upon an illegal contract. So strict are the courts in adhering to the principle of not aiding in the enforcement of an illegal agreement that if the agreement as stated in the pleading does not appear to be illegal, but circumstances come out in the evidence that shorv that it is in fact tainted with illegality, the court will, on its own motion, direct an inquiry into the matter. Parken v. Whitby, 1 Turn. & R. 366; Evans v. Richardson, 3 Mer. 469.”

The quotation above given is from a dissenting opinion, but that part quoted .is in entire harmony with the majority opinion, as well as with numerous other decisions of this state both before and since. See, also, Ruckman v. Ruckman, 32 N. J. Eq. (5 Stew.) 259, 260; Schenck v. Hart, 32 N. J. Eq. (5 Stew.) 774, 781.

As I am satisfied that complainant Philomena Geroso was not ignorant of the purpose of the conveyance, I am obliged to advise a decree dismissing the bill as to both complainants.


author: Beaming, V. C.

text:
    John H. Warren et al. v. Robert D. Warren et al.
    [Submitted January 25th, 1909.
    Decided March 19th, 1909.]
    1. The general jurisdiction of equity over express private trusts in land necessarily includes the power to construe and enforce them.
    2. A person claiming no rights or duties under a trust in land, but claiming the legal title to the land, cannot invoke the aid of equity for the construction or execution of the trust.
    3. A bill to remove a cloud from complainant’s title to land will not lie, where the estate asserted is a purely legal one and defendants are in possession.

      On bill and demurrer.
    The bill seeks an ascertainment by this court whether a certain trust created by a deed of trust referred to in the bill now exists, and prays that if the trust is found to exist it may be construed and enforced. Defendants Robert D. Warren and Caroline C. Warren have demurred to the bill and specified as grounds of demurrer the existence of an adequate remedy of law and want of equitable jurisdiction over the subject-matter disclosed by the-bill.
    The deed of trust referred to in the bill bears date March 16th, 1844. By it Richard Warren, in consideration of natural love and affection for his wife, Susan D. Warren, and his children, Richard II. Warren, George W. Warren, William H. Warren, Emeline Warren, John H. Warren, Robert D. Warren and Mary Warren, and the further consideration of fifty cents, conveyed to Frederick Knighton certain real estate in trust
    “that the said Frederick Knighton-, his heirs and assigns, shall and will permit the said Susan D. Warren, Richard H. Warren, George W. Warren, Emeline Warren, John H. Warren, William W. Warren, Robert D. Warren and Mary Warren, and the survivors of them, to possess and' enjoy the same and receive the rents, issues and profits thereof and to rent the same to any tenant or tenants for their own separate use andi the use of the survivors of them.”
    After the execution of the trust the several beneficiaries named therein took possession of the real .estate, and as the beneficiaries have since, from time to time, died, the survivors have continued to possess the premises and to receive the rents, issues and profits thereof, and at this time only two of the beneficiaries named in-the trust deed are alive, viz., Robert D. Warren and Mary Warren Wright, who continue to possess and enjoy the premises.. Complainants are grandchildren of settlor, and all of the complainants are children of beneficiaries named in the deed of trust who have since died. There are no words of limitation in the-said trust deed. The settlor died February 12th, 1862. Frederick Knighton, the trustee named in the deed of trust, has since-died, and no trustee has been appointed in his place. The bill set forth:

      “That the rights of the said Bobert D. Warren and Mary Warivn Wright and of your orators and the other children of the deceased children of your orators’ grandfather, Bichard Warren, should be ascertained and determined, in order to determine what are their respective present rights and interests under the said trust deed, because the said Bobert D. Warren and Mary Warren Wright claim and pretend that a fee simple passed to them by the said trust deed, and your orators charge that the said Bobert D. Warren and Mary Warren Wright have thereunder only an estate for life in an undivided one-seventh part of said premises and that your orators as such heirs-at-law of said Bichard Warren, deceased, have now a present interest in fee in an undivided part of said premises, but that such respective interests of the several heirs of said Bichard Warren, deceased, can only be fixed and determined by your Honor construing the terms and effect of said deed of trust,” * * * “That the said Bobert D. Warren and Mary Warren Wright make various objections to your orators’ interpretation of the terms of said deed of trust and of the effect thereof and refuse to your orators the possession and enjoyment of their respective undivided interest in the premises and of the rents, issues and profits thereof, excluding them therefrom, and it is claimed by the said Bobert D. Warren and Mary Warren Wright, that they are the owners in fee of said premises, by means whereof your orators cannot get possession of their rights without assistance of this Honorable Court.”

      Mr. Charles E. Hendrickson, Jr., for the complainants.

      Mr. J. Ijefferts Conard and Mr. Cilberh Collins, for the defendants.
   Beaming, V. C.

Tlie general jurisdiction of a court of equity over express private trusts of the nature of the trust set forth in the bill necessarily includes the power to construe and enforce such trusts. See Pom. Eq. Jur. §§ 153, 158, 219. But I am unable to find any reason or authority which supports the privilege of a person who asserts no rights or duties under a trust to invoke the aid of a court of equity for either its construction or execution. Complainants assert no interests under the trust referred to in the bill either as cesbuis que tmisient or as trustees. They do not claim to have become entitled to any rights of the cestuis que trustenb as such, or to have become entitled to any rights of the deceased trustee or to have become charged with the burden of the trust which was imposed upon the deceased trustee, but allege that as heirs-at-law of Richard Warren, their grandfather, they are present owners in fee of an undivided part of the premises, and that defendants, under the claim that they are owners in fee of the entire premises, exclude complainants from possession. The real controversy thus presented involves a claim upon the part of complainants to the legal title to the premises in dispute and not the claim of a cestui que trust or trustee for the enforcement of rights under a trust or for the ascertainment of rights or duties arising from the trust. Where the jurisdiction of a court of equity to construe wills has been regarded as simply an incident of the general jurisdiction over trusts, complainants appear to have been uniformly required to assert rights or duties arising under a trust created by the will to entitle them to invoke the aid of a court of equity in the construction of a will. Torrey v. Torrey, 55 N. J. Eq. (10 Dick.) 410; Hayday v. Hayday, 39 Atl. Rep. 373; Bailey v. Briggs, 56 N. Y. 407; Chipman v. Montgomery, 63 N. Y. 221. The situation presented by the present bill is analogous.

It is also manifest that the bill cannot be maintained as a bill io remove a cloud from the title of complainants or as a statuiory bill to quiet title, fqr the estate asserted by complainants is, as already stated, a purely legal estate and defendants are in possession.

I. will advise an order sustaining the demurrer.


author: Lbaming, V. C.

text:
    Michael De Vita v. Michael Loprete and Demetrio Loprete.
    [Submitted February 22d, 1909.
    Decided March 22d, 1909.]
    1. The test usually applied to determine whether a partnership exists is to ascertain whether any time has to elapse or any act remains to be done before the right to share profits accrues.

      2. An agreement among three parties provided that, if either should before a specified date be awarded a city contract for removal of garbage, he should admit the others to an equal share of the profits of the contract, and “the partnership hereby constituted” should purchase of one of the parties certain property at a price to be fixed.—Held, that a partnership among the three parties was not consummated thereby, and hence a bill by one of them for the enforcement of partnership rights would not lie.
    3. If parties became agents for each other for a sufficient consideration for the procurement of a municipal contract for removal of garbage, and one of them procured it, but conducted the business for his own benefit with his own capital and labor and at his own risk, equity would not impress a trust on the business for the benefit of the defrauded parties, and administer the trust for their use.
    4. Equity must administer equitable relief upon equitable terms, and not by way of punishment.
    On bill and demurrer.
    The bill discloses the following facts: That complainant and the two defendants wore on June 18th, 1903, mutually interested in a certain municipal contract standing in the name of Charles E. Anen, and on that date made a settlement whereby complainant and defendant Demetrio Loprete surrendered to defendant Michael Loprete their rights in that contract for $1,500 in cash, but upon the express condition that a new contract should be entered into by the parties whereby they should each have an equal interest in any contract for the removal and disposal of garbage in the city of East Orange which either of them might secure from that city at any time before August 1st, 1906. The now contract was executed in writing on that clay and a copy of it is embodied in the bill. By it complainant and the two defendants mutually agree:
    “That if at any time before August first, 1906, the parties to this agreement or either or any of them shall be awarded the contract for the removal and disposal of garbage within the limits of the city of East Orange, he or they will admit to a full one-third share of the profits of such contract the other party or parties to the agreement. It being agreed however, that the partnership hereby constituted will purchase from the said Michael Loprete and that the said Michael Loprete will sell to the partnership, any or all stock, horses, wagons or other property, necessary for carrying on the said scavenger business which may, at that time, be in his possession under the contract this day made between the said Michael Loprete and Charles E. Anen; such property to be purchased at a fair price to be determined upon by the parties hereto or, in the event of disagreement, at a price fixed by appraisers, said appraisers to be chosen as follows: one by said Michael Loprete and the other by said Demetrio Loprete and said Michael De Vita. And the said Demetrio Loprete and the said Michael De Vita hereby agree each for himself that, if they or either of them enters into the said partnership, th’ey will eacli pay to the said Michael Loprete one-third of the value of the said property, said value to be determined as above provided.”
    Before the expiration of the time specified in the agreement above quoted, defendant Michael Loprete was awarded by the municipality referred to a contract for the disposal of garbage within the limits of that city for a period of five years, which contract is still in force. A copy of the contract between East Orange and defendant Michael Loprete is annexed to the bill. By it Michael Loprete agrees for the period of five years to collect and remove “all ashes, garbage and other refuse matter,” and also to remove “all dead animals found on any of the streets, avenues, highways' or other public places in the city of East Orange,” in a manner specified in the contract, and the municipality agrees to pay for the service $61,000 in sixty equal monthly installments. The contract also provides that any failure of the contractor to comply with the contract according to its terms shall entitle the municipality to terminate it and compel the contractor to pay such loss as the municipality might suffer to procure its completion; and also provides that no transfer or assignment of the contract or any part thereof or any money due or to grow due thereon should be made without the consent of the municipality, and that any such transfer or assignment should operate to terminate the contract at the option of the municipality. Defendant Michael Loprete now refuses to admit the other two parties to share in the contract or to recognize them as having any interest therein and alleges that the terms of his contract with the municipality forbids it. Complainant and Demetrio Loprete have offered to comply with the terms of the contract of June 18th, 1903; and have, pursuant to that contract, appointed an appraiser to fix the value of the property which was to be conveyed to the partnership, but defendant Michael Loprete refuses to select an appraiser or to agree upon a price. Demetrio Loprete is made defendant by reason of his refusal to join as complainant. The bill also alleges that the profits arising from the municipal contract are large, and that defendant Michael Loprete is wasting the profits and keeping inadequate accounts. The bill asserts that complainant is entitled to share in the profits to the amount of one-third thereof and prays that an account of the profits may be taken and the share of complainaut paid to him, and that a discovery be had of the books, papers and accounts of the business, and that regular statements of the transactions of the business be rendered to complainant from time to time, and that a receiver may be appointed.
    Defendant Michael Loprete demurs upon the ground that the bill fails to disclose facts sufficient to warrant equitable relief.

      Mr. Franklin TF. Fori, for the demurrants.

      Messrs. Biker & Biker, for the complainant.
   Lbaming, V. C.

1 think that the demurrer must be sustained.

It will be observed that the agreement of June 18th, 1903, is not an agreement whereby the three parties formed a partnership and constituted themselves present partners, but is rather, an agreement contemplating the formation of a future partnership.

It is not always easy to determine when a contemplated partnership becomes a partnership in praesenti. The test usually applied to determine whether a partnership exists is by ascertaining from the terms of the agreement whether any time has to elapse or any act remains to be done before the right to share profits accrues. 1 Lind. Part. (ed. 1888) *20; McCabe v. Sinclair, 66 N. J. Eg. (21 Dick.) 24, 30; 30 Cyc. 358. The agreement set forth in the bill contemplates that before the parties shall enter upon the anticipated business certain property owned by Michael Loprete shall be purchased at a price to bo fixed, and then provides that if they (complainant and Demetrio Loprete), or either of them, enter into the said partnership, they will each pay to Michael Loprete one-tliird oE the value of the said property. I think it clear that a'partnership between the three parties cannot be said to have been consuinmated, and that the bill cannot, in consequence, be sustained as a bill filed by a partner for the enforcement of partnership rights.

It will also be observed that the bill is not filed for the specific performance of the agreement to form a partnership; it is therefore unnecessary to here determine whether a bill of that nature could he sustained under the facts stated. •

Nor is the bill filed for discovery in aid of a pending or proposed action at law for damages for breach of contract, to the end that a discovery may be had of matters peculiarly within the knowledge of defendant Michael Loprete in order that the value of the business may be more accurately ascertained and established before a court of law. See 1 Story Eq. Pl. § 311.

The right asserted by the bill is that complainant is entitled to one-third of the profits of the business now being conducted by defendant Michael Loprete. Assuming that the bill discloses a contract whereby, for a sufficient consideration, each party to the contract became the agent of the other parties for the procurement of the municipal contract, I do not think that the case falls within that class of cases where a court of equity will impress a trust upon the subject-matter for the benefit of the defrauded parties and administer the trust for their use. The subject-matter here involved is an active business which defendant Michael Loprete is conducting with his own capital and labor and at his own risk. Complainant can only attain a plane of equality with defendant Michael Loprete in that business by the contribution of a proportionate amount of capital and labor and the assumption of liability for losses. That condition, so far as liability for loss is concerned, can only be attained through specific performance, and as already stated, specific performance is not here sought. A court of equity must administer equitable relief upon equitable terms and not by way of punishment. For such damages as complainant may have sustained by reason of the breach of the contract, the law courts can afford an adequate remedy.

I am unable to discern any theory upon which equitable relief can be administered under the present bill, and will advise a decree sustaining the demurrer. '


author: Leaming, Y. C.

text:
    The New Jersey Title Guarantee and Trust Company v. Joseph M. Rector and Emily P. Rector.
    [Submitted February 8th, 1909.
    Decided March 27th, 1909.]
    1. In the absence of statute, a bailee cannot compel strangers to inter-plead with each other, where each claims the property in the hands of the bailee under absolute adverse rights, not founded in any privity of title or common contract.
    2. The act of May 7th, 1907 (P. L. 1907 p. 31/1), concerning warehouse receipts, and providing that, if more than one person claim the title or possession of the goods, the warehousemen may, either as a defence to an action for non-delivery or an original suit, require the claimants to interplead, applies only to instances in which goods have been stored with warehousemen and warehouse receipts conforming to the act have been issued therefor.
    3. A warehouse receipt issued for goods, failing to contain a statement whether the goods received would be delivered to the bearer, or to a. specified person, or to a specified person or his order, and also failing to state the rate of storage charges, did not conform to the receipt required by the act of May 7th, 1907 (P. L. 1907 p. 3J¡1), regulating ware-housemen, and was therefore insufficient to authorize the warehousemen to interplead adverse claimants under such act.
    4. The penalty imposed by the act of May 7th, 1907 (P. L. 1907 p. 31¡8 § 8), regulating the issuance of warehouse receipts, for breach of such section, relates only to negotiable receipts.
    On bill of interpleader and demurrer.
    Tbe bill filed by complainant corporation alleges that it is engaged in tbe business of warehousing goods and chattels for hire and seeks a decree to compel two adverse claimants to certain chattels heretofore deposited with complainant for storage to interplead and settle their respective rights to the chattels so deposited. Defendant Joseph M. Rector has demurred to the bill for want of facts to support equitable jurisdiction.

      Mr. Marshall W. Van Winkle, for the demurrant.

      Messrs. Collins & Corbin, for the complainant.
   Leaming, Y. C.

In the case of First National Bank of Morristown v. Bininger, 26 N. J. Eq. (11 C. E. Gr.) 345, it was determined that this court cannot, at the instance of a bailee, compel strangers to interplead with each other where the parties claim the property in the hands of tlie bailee in absolute adverse rights not founded in any privity of title or any common contract. As the present bill of interpleader discloses that the two defendants assert adverse rights, which are in no way connected by title or contract, the decision above referred to must be here regarded as conclusive against complainants right to compel defendants to interplead, unless the act of our legislature, approved May 7th, 1907, entitled “An act concerning warehouse receipts and to make uniform the law relating thereto” (P. L. 1907 p. 341), shall be found to have conferred jurisdiction on this court to entertain the present bill.

Sections .17 and 18 of the act referred to provide:

“17. If more tlian one person claim the title or possession of the goods, the warehouseman may, either'as a defence to an action brought against him for non-delivery of the goods, or as an original suit, whichever is appropriate, require all known claimants to interplead.
“18. If some one other than the depositor or person claiming under him has a claim to the title or possession of the goods and the warehouseman has information of such claim, the warehouseman shall be excused from liability for refusing to deliver the goods, either to the depositor or person claiming under him or to the adverse claimant, until the warehouseman has had a reasonable time to ascertain the validity of !lie adverse claim or to bring legal proceedings to compel all claimants to interplead.”

The language employed in the sections quoted, when literally construed, clearly confers upon a. warehouseman the right to compel adverse claimants to interplead; but it seems manifest that the language there used can only be given the precise force intended by the legislature when it is considered in connection with the general purpose and plan of the act.

The title to the act relates alone to warehouse receipts, and throughout the. act its provisions relate to rights, duties and obligations arising from deposits of goods with warehousemen in connection with the issuance of warehouse receipts therefor; and so far as the act assumes to confer rights or impose duties on warehousemen it would seem to be necessary to treat its provisions as incidental to the existence of warehouse receipts in order that its provisions may be embraced within its title. In this view it seems clear that the language of sections 17 and 18 must be understood as limited to' instances in which goods have been stored with warehousemen and warehouse receipts issued therefor.

The bill asserts that complainant is a corporation of this state, “conducting the business of running safe deposit vaults and warehousing valuable goods and chattels for hire,” and that defendant Joseph M. Rector deposited with complainant a locked tin box, with contents unknown to complainant, but which the depositor represented to contain silverware, and that complainant received the box to he stored and safely kept, and that- complainant delivered to the depositor in the regular course of its business its usual receipt in such cases. A copy of the receipt is set forth in the bill as follows:

“Safe Deposit Vaults of “The New Jersey Title Guarantee & Trust Company, “Nos. 83 & 85 Montgomery Street, Jersey City, N. J. “Certificate of Receipt for Valuables.
“No. 1749.
“Received of Dr. J. M. Rector of Jersey City, N. J., to be placed in one of the storage vaults of the company for safe keeping one (1) package, contents unknown to the company, described and valued by said J. M. Rector as follows, viz.:
“Silverware 8500
Total valuation Five Hundred Dollars on which........................Dollars has been paid for.......... storage up'to..................
“Upon re-delivery of the above mentioned package to the depositor 1he liability of the company will cease without reference to the contents thereof.
“In no event is the company to be liable for a greater sum than the above valuation. No portion of the compensation for storage is to be returned for any cause, and if the property bo not removed on or before the ■expiration of the time for which the same is paid, the storage shall stand renewed for another like term, for which a like rate shall be due, and chargeable, payable in advance.
“Jersey City. N. J., August 19, 1908.
“Schas. Soiilegel,
“For the Company.”

It will be observed that the receipt -which was by complainant given to the depositor fails to comply with the statutory requirements touching warehouse receipts. The second section of the act referred to provides that a warehouse receipt must embody within its terms certain specific features there enumerated. Two of the specific requirements are: “A statement whether the goods received will be delivered to the bearer, or to a specified person, or to a specified person or his order,” and “The rate of storage charges.” Neither of these features is embodied in tire terms of the receipt set forth in the bill. Assuming, as I have already assumed, that sections 17 and 18 of the act must be understood to refer only to a warehouseman, who has issued a warehouse receipt, the question then arises whether the receipt so issued must be a statutory receipt; that is, a receipt containing all the features which the statute says must be embodied in the written or printed terms of a warehouse receipt. The present inquiry is not whether all of the beneficial provisions of the act in favor of depositors are intended to apply only to receipts which are issued in strict conformity to the requirements of the act; but is whether one who has received goods for safekeeping and who has issued a receipt for the goods which fails to comply with the requirements of the act can invoke in his own behalf the privileges conferred by sections 17 and 18. I am convinced that until a bailee of goods has issued a warehouse receipt in conformity to the requirements of the second section of the act he has not brought himself within the privilege which the legislature has intended to confer by sections 17 and 18. Any other view would seem in effect to'nullify the legitimate force of the provisions of the second section. Some of the requirements of that section majr seem of little practical importance, but that feature must be regarded as wholly a matter of legislative concern. However unimportant the requirements may be the legislature has nevertheless imposed the duty upon a warehouseman to embody the specific features named by the statute in all warehouse receipts, and I am unwilling to adopt a rule of construction which assumes that the legislature has intended to confer the special privilege given by sections 17 and 18 upon bailees, who have failed to comply with the primary duty imposed by the second section of the act. If a bailee in possession of chattels for storage seeks, under the claim that, he is a warehouseman, to invoke the statutory power of this court to compel adverse claimants of the goods so stored to inter-plead, I think it incumbent upon such bailee to show that he has pursuant to the act issued a statutory warehouse receipt for the goods so stored. Until this is shown, I do not think that the bailee has brought himself within the spirit of the sections of the act which confer the privilege so sought.

It is urged in behalf of complainant that section 2 of the act contains its own penalty for its breach. The penalty there named relates only to negotiable receipts, and the provision might with some force be urged as an indication of legislative intent that even the beneficial provisions of the act in favor of holders of negotiable receipts may be inapplicable to receipts which do not strictly comply with the statute as to their terms. But without attributing so broad a force to the liability clause referred to, I think it plain that the title and general plan of the act require that sections 17 and 18 shall be understood as conferring the privilege there named only upon bailees who have issued statutory warehouse receipts.

My conclusion is that if a trust company owning safe deposit vaults seeks to be regarded as a warehouseman within the meaning of the act and as such entitled to the privileges conferred by sections 17 and 18, above quoted, it must first issue statutory warehouse receipts for the goods stored in its vaults, and not mere “written acknowledgments” of the nature referred to at the end of section 7 of the act. As I am unable to treat the averments of the bill as sufficient to bring complainant within the spirit of the sections referred to, I am compelled to sustain the demurrer to the bill.


author: Leaming, V. C.

text:
    Warren Herbert v. Henry S. Alvord and Mary Herbert.
    [Submitted March 31st, 1909.
    Decided April 7th, 1909.]
    1. The rule that where one purchases property and. pays the consideration, and the legal title is taken in the name of another, a trust results in favor of the person who paid the consideration, does not apply where the consideration is paid by a husband and the conveyance is made to the wife, when it will be presumed that a settlement or advancement, and not a trust, was intended.
    2. Where property conveyed to a wife was paid for by her husband, proof to overcome the presumption that a settlement or an advancement was intended, except as to acts or declarations of the party to bo charged, must be of facts antecedent to or contemporaneous with the purchase or so immediately thereafter as to form a part of the res gestee, and must be so convincing- as to leave no reasonable doubt of the intention of the party.
    3. Evidence of a conversation between a husband and his solicitor in the wife’s absence that, in case a conveyance of land purchased by the husband was made to the wife, she could not sell it without the husband’s signature, and could never drive the husband from the home, whereupon he agreed that a conveyance should be made to the wife, was inadmissible to establish the husband’s intent that the conveyance should not operate as a settlement.
    4. Where, at the time a husband purchased certain property which he caused to be conveyed to his wife, they were living- happily, and there was no reason to suppose that his earning capacity would not continue, and even increase, evidence that the property represented all the husband’s savings during his entire married life, except his household good», was insufficient to rebut the presumption that the conveyance was a settlement on the theory that it amounted to an unreasonable provision for the wife.
    On final hearing on bill to impress a trust on real estate.

      2Ir. Albert B. McAllister and Mr. Walter II. Bacon, for the complainant.

      Mr. Henry 8. Alvord, for the defendants.
   Leaming, V. C.

Complainant and defendant Mary Herbert are husband and wife. While living together as such certain real estate was purchased and paid for by complainant, and by his direction the deeds of conveyance therefor were made to her. They have since separated, but complainant still remains in occupancy of one of the properties so conveyed. The wife made a lease of the property in question to defendant Alvord, and the latter brought an action at law to dispossess complainant. The present bill was filed by complainant to procure an injunction against the pending action at law and to procure a decree to the effect that the property is held by the wife in trust for complainant. As the lease has now expired no relief can be granted against it, hut it will 'be necessary to consider that part of the controversy which relates to the equitable title claimed by complainant.

Where one purchases property and pays the- consideration therefor, and the conveyance of the legal title is taken in the name of a stranger, a trust will be presumed to have arisen in virtue of the transaction in favor of the person who has paid the consideration. This principle results from- the equitable theory that the consideration draws to it the beneficial ownership. Where, however, the conveyance is not made to a stranger, but is made to a person whom the purchaser is under a legal obligation to maintain, such as a wife or child of the person who pays the price, the good consideration of blood or love and affection will support the conveyance, and no resulting trust will arise from the payment of the consideration. In such cases the presumption is that a settlement or advancement was intended. See 3 Pom. Eq. Jut. §§ 981, 1039. But these presumptions may be overcome by evidence disclosing a contrary, intention. Bepeated adjudications in this state have defined the principles already stated and have also defined the proofs necessary to overthrow a presumed or resulting trust or to rebut the presumption of a gift or settlement in the case of a child or wife. The _ proofs, except as to acts or declarations of the party to be charged, must be of facts antecedent to or contemporaneous with the purchase, or so immediately afterwards as to form a part of the res gesiae. The proofs must also be convincing and leave no reasonable doubt as to the intention of the party. Peer v. Peer, 11 N. J. Eq. (3 Stock.) 432, 439; Persons v. Persons, 25 N. J. Eq. (10 C. E. Gr.) 250, 260; Linker v. Linker, 32 N. J. Eq. (5 Stew.) 174, 177; Lister v. Lister, 35 N. J. Eq. (8 Stew.) 49, 56; S. C., 37 N. J. Eq. (10 Stew.) 331; Read v. Huff, 40 N. J. Eq. (13 Stew.) 229, 233, 234; Duvale v. Duvale, 56 N. J. Eq. (11 Dick.) 375, 382.

In the present case I think it clear that the proofs offered in behalf of complainant are insufficient to rebut the presumption arising from the conveyances. Complainant testified that during the period between the date of the contract for the purchase of the first property and the time when the deed for that property was made his wife was angry because the contract of purchase was not in her name and that she was also dissatisfied with the locality in which the property was situated, but that no agreement of any kind existed between him and his wife touching the conveyance in question. The wife also testified that no agreement existed between them touching the properties, and that complainant said to her: “I will sign them over to you so that anything—if I ever do anything that it cannot be taken away from you, and it will go to you and the daughter.” Complainant’s proofs, therefore, wholly failed to support the averment of the bill to the effect that an agreement was made between him and his wife touching the effect which should be given to the deed in question. Complainant also testified that the reason he caused the titles to be placed in the name, of his wife was as follows:

“First I was going' to put it in my daughter’s name, and the lawyer told me I couldn’t do it, she was too young, and he says, put it in your name. No, I says, I won’t do that. He says to—-I will tell you, if you put it in your wife’s name, he says, she can’t never sell it without you put your name to it, and she can’t never drive you out of your home or anything whatever will happen, and I says, all right, I says, put it in the wife’s name.”

The conversation here narrated did not occur in the presence of the wife and could not bind her on any theory of acquiescence, and I tliink it also incompetent as tending to establish the intention of complainant; but, accepting this testimony as competent, I am unable to give to it a force sufficient to rebut the presumption arising from the conveyances. Indeed, I am quite unable to believe that the possibility of the wife ever attempting to drive complainant from the property was either under discussion or contemplation.

It appeal's, however, that the property conveyed to the wife represented all of complainant’s savings during his entire married life, except, perhaps, his household goods. The question therefore arises whether that fact may not rebut the presumption of a settlement on the theory that ii would be deemed an unreasonable provision for the wife. In support of this view my attention is directed to the language used in the opinion of our court of errors and appeals in Fretz v. Roth, 70 N. J. Fq. (4 Robb.) 764 (at p. 768). The opinion referred to quotes a portion of section 1374 of 2 Story’s Fq. Jur., to the effect that if a husband conveys all of his estate to his wife the deed will not be enforced in equity, because it could in no just sense be deemed a reasonable provision for her. The section there quoted from Story’s Equity Jurisprudence is a section treating of instances in which a court of equity may sustain deeds which are void at law by reason of the legal disability of a husband and wife to contract with each other, and refers to conveyances made directly from a husband to a wife. The case of Beard v. Beard, 3 Atk. 72, referred to by the learned author in support of the text, was such a case. Although a court of equity may enforce a deed from a husband to his wife which is void at law because of the legal unity of the parties, and may possibly refuse to enforce such a deed as a settlement when it appears that the deed conveys all of the husband’s property, I am not prepared to hold that a conveyance to the wife from a third person, based on a pecuniary consideration moving from the husband to the third person and on a good consideration moving from the husband to the wife, and hence valid at law on its face, will be set aside by a court of equity because it appears that the pecuniary consideration moving from the husband to the third person included all or nearly all of the property of the husband. The preceding portion of the opinion of the court of errors and appeals in Fretz v. Both adopts the general view that a legal conveyance supported by a consideration of love and affection will stand on its own inherent strength if made voluntarily and with a full understanding of its effect. "When these conditions exist the improvidence of the gift is of little, if any, importance, for, as there stated, the law permits anyone to dispose of his property gratuitously, if he pleases, provided the rights of creditors are not injuriously affected thereby. While a transfer through an intermediary from a husband to his wife of all of his property may appear unreasonable, and may logically operate in a measure to rebut the presumption of a settlement, when it still appears that a gift was in fact intended, I can see no grounds upon which such a conveyance can be relieved against at the instance of the husband, in .the absence of any proof of incapacity, fraud or undue influence. In the present ease the property conveyed represented the savings from the husband’s wages during a period of years, but at the time the conveyances were made complainant was still employed in the same position he had occupied during the years that the savings had accumulated and was in the prime of life and in perfect health. At that time good reasons existed for him to anticipate' that his savings would continue and even increase, and no reason existed for him to anticipate the domestic troubles which later arose. In that view it may be said that the possibility of his wife excluding him from the enjoyment o£ the property conveyed may never have occurred to him, but as the entire evidence satisfies me that the conveyances in question were at the time intended by him as gifts to his wife, I am unable to discover any grounds upon which this court can properly relieve against their operation to the full extent of their terms.

I will advise a decree dismissing the bill. *


author: Nowell, V. C.

text:
    Washington National Bank v. David C. Beatty et al.
    [Submitted February 23d, 1909.
    Decided March 11th, 1909.
    1. Where a father, in expectation of being sued for libel, transferred all his property to his son for an expressed consideration of $16,500, only $5,000 of which the son claimed to have paid, and there was grave doubt as to whether he ever paid anything, there being neither change of possession of the property nor of the instruments evidencing the transfer, the son was chargeable with knowledge of the facts and as a knowing participator in the transaction.
    2. Where a father, in contemplation of being sued for libel, conveyed all his property tQ his son to prevent its seizure under any judgment recovered against him, such conveyance was subject to attack by existing creditors, including the persons whose threat to sue induced the transaction, and by subsequent creditors able to prove actual fraud.
    3. Where a father conveyed all his property to his son to prevent threatened litigation, a bank, which did not come into existence until nearly five years after the conveyance, could not sue to set the same aside and subject the property to a judgment on a debt contracted over ten years after the conveyance; it being impossible to say under such circumstances that there was intent on the father’s part to defraud the bank.
    4. Where, in a suit by a bank to set aside an alleged fraudulent conveyance, complainant did not claim that it permitted the debtor to incur the obligation on the faith of his reputed ownership of the property, it would be presumed that complainant had knowledge of the conveyance at the time the debt was incurred.
    On bill, answer, replication and proofs.

      Mr. Oscar Jeffery, for the complainant.

      Mr. Elmer King, for the defendants.
   Nowell, V. C.

David C. Beatty became obligated to the complainant about February 1st, 1905, in the sum of upwards of $300. The obligation was originally that of accommodation endorser on the commercial paper of a stranger to this suit. The obligation was renewed from time to time, until early in 1906, when the promissory note which represented it was protested for non-payment and the contingent liability which Mr. Beatty had theretofore been under' became fixed. Suit was brought on this promissory note and a judgment recovered against Mr. Beatty in the supreme court on January 15th, 1907, on which a fi. fa. was issued on the following day. This writ was returned unsatisfied by the sheriff of Morris county.

On September 2.1st, 1894, upwards of twelve years before the incurring of the obligation and the recovery of the judgment, Mr. Beatty owned a farm in Morris county containing about one hundred and eighty-nine acres. On that day he conveyed the same to his son, George M. Beatty, and at the same time transferred to him three mortgages, two of which were liens upon another farm. The deed and the assignments of- mortgages were acknowledged on September 22cl, and recorded on September 24th, 1894. In 1897, the defendant George M. Beatty foreclosed the two mortgages which were liens upon the other farm and bought in the property at the sheriff’s sale and took a sheriff’s deed therefor. He nowr holds title to both farms.

At the time of the above mentioned conveyance and transfer Mr. Beatty also transferred to his son all his personal property.

Up to this time Mr. Beatty appears to have been very prosperous ; he owned the one farm free and "clear of encumbrances, .and had money out at interest; he ovred no debts. By the transaction above stated he transferred to his son all his property, real and personal, and so stripped himself of the title to ever}f-thing that he owned. The bill in this ease is a creditors’ bill, and is filed to reach the two farms above mentioned upon the ground that in 1894 they were conveyed away by the judgment debtor for the purpose of defrauding creditors.

The fads vdiich are relied upon are these: Mr. Beatty had libeled a firm of commission merchants in New York who had threatened him with a suit for $100,000 for damages thereby caused by him to them in their business. Although no such suit ■was ever brought the threat, alarmed Mr. Beatty, and concerning it, lie frankly says that he transferred his property for the purpose of preventing the commission merchants from taking it in satisfaction of any judgment which they might recover against him. The grantor has always remained in possession of the farm and has always taken all the proceeds of it to his own use and has never accounted to 1ns son, the grantee, for any portion of them. To all outward appearances there was never any change of possession. The grantor and his wife have always, since the conveyance, continued to reside upon the farm. Neither did the grantee ever go through the formality of making a lease to the grantor for the premises. The grantee at that time 'was just entering upon the profession of civil engineer, and it was impossible for him to take and retain actual possession of the farm and at the same time practice his profession. The consideration stated in the deed for the conveyance of the real and personal property is $16,500. The utmost that the grantee claims to have paid is $5,000, and there is grave doubt as to whether he ever paid anything. In fact it is probably true that the grantee at that time was without means of his own with which to make so large and important a purchase. Again, the grantee was not present at the time the deed and assignments were made and executed. This part of the transaction, as well as the lodging of them for record in the office of the county clerk, was performed by the grantor, and not only not in the presence of the grantee, but I think without his knowledge at the time. The title deeds have never been in the possession of the grantee, but always in that of the grantor or his wife. When the grantor produced them in court he stated that he had got them that morning from his wife, who had kept them in a bureau drawer in the house on the premises where they had always lived. I think that the circumstances make the grantee chargeable with knowledge of all the facts, and that therefore he was a knowing participator in all that was done. Atwood v. Impson, 20 N. J. Eq. (5 C. E. Gr.) 150; Merchants Bank v. Northrup, 22 N. J. Eq. (7 C. E. Gr.) 58; Tantum v. Green, 21 N. J. Eq. (6 C.E. Gr.) 364.

The foregoing state of facts leads me to conclude that this conveyance was made in such a manner and under such circumstances as would have entitled a creditor of David C. Beatty, who was a creditor at the time of the conveyance, to have successfully attacked it upon the ground that it was made for the purpose of hindering and defrauding creditors. It likewise would have been vulnerable to the attack of the commission merchants whose threat to bring suit induced the transaction, because they were creditors within the meaning of the statute of frauds. Scott v. Hartman, 26 N. J. Eq. (11 C.E. Gr.) 89; Boid v. Dean, 48 N. J. Eq. (3 Dick.) 193; and because it was their claim especially that the parties to this transaction intended to hinder and delay. The real question is whether the transfer being fraudulent as to existing creditors and as to subsequent creditors as to whom there was a positive intent to defraud, it is also void as to creditors who were not and could not have been in contemplation at the time of the conveyance.

The complainant in this suit is a national banking association; it was not organized until about ten years ago, several years after the fraudulent conveyance was made. The debt which it is now seeking to charge on the lands in question was not contracted until 1905, over ten years after the making of the conveyance which is now claimed to be fraudulent, and it is in favor of a corporation creditor, which did not come into existence until nearly live years after the conveyance. The parties to the conveyance and transfer cannot therefore be said to have had the complainant or the complainant’s claim in mind at the time they were made. Creditors who became such subsequently to the execution and delivery of a voluntary conveyance, have the right under the statute of frauds to call upon the court to set aside a voluntary conveyance as well as creditors whose claims are in existence at the time, but such subsequent creditors must prove actual fraud. Carpenter v. Carpenter, 27 N. J. Eq. (12 C. E. Gr.) 502; Kinsey v. Feller, 64 N. J. Eq. (19 Dick.) 367, two cases which contain the expression of a large number of authorities in our own state. But it seems to me now, as I expressed myself at the hearing, that in this case there ought to be some evidence going to show that there was a fraudulent design which would include the particular creditor who complains. It can hardly be said that a man intends to defraud another of whom he has never heard and with whom he has no acquaintance, or that he intended to defeat a debt which might subsequently arise in favor of a person yet unborn. Such an insistment strikes me as being too nebulous and theoretical for practical use in the daily affairs of the world.

“A voluntary conveyance may have been made so long prior to the contracting of the debt that it is impossible to conceive that the conveyance could have been made with a view of contracting that particular debt, and where this is the case it is difficult to understand how it can be properly regarded as fraudulent as against this subsequent creditor, nor upon what principle he may be permitted to disaffirm it if either he had notice of it or did not permit the obligation to be contracted in the reasonable belief that his debtor was still the owner of the property; in other words, that a voluntary transfer, although made for the purpose of defrauding creditors, is not forever thereafter void as against subsequent creditors however remote the creation of their debts may have been from the execution of the conveyance.” 14 Am. St, Rep. 750, in notes.

The point was discussed by Vice-Chancellor Pitney, in the case of Gray v. Folwell, 57 N. J. Eq. (12 Dick.) 446. The bill in that case was a creditor’s bill; among other things, it attacked a conveyance of lands made by Folwell to his wife upwards of ten years before the recovery of the complainant’s judgment on the ground that it was without consideration and was made for the purpose of defrauding a certain particular creditor, who was then suing Folwell and who subsequently obtained a decree against him for some $5,000. This decree was satisfied before the creditor’s bill was filed. The vice-chancellor upheld the conveyance, and concerning the point now under consideration says: “I can find no authority for the position that where a conveyance is made for the purpose of hindering a single creditor, who is afterwards paid in full, and there were no other concurrent creditors who might have been hindered or delayed, and there was no immediate intention of engaging in hazardous business and becoming indebted, a creditor who becomes so years afterwards can set up the old fraud in avoidance of the conveyance.”

I think there is no such case in this state, and it is my opinion that the suggestion of such a doctrine is contrary to the trend of professional opinion. A creditor ought not to be permitted to take advantage of the statute to disaffirm a fraudulent transaction, which was not in some, at least, remote degree aimed at him. In the caso of one who makes a voluntary settlement, with the intent of embarking in business the case is clear. There he is held to have had in mind all the indebtedness which he might have anticipated could arise out of the conduct of the business, and this remark applies to every case in which a man places his property beyond the risks of. new ventures and speculations. The difficulty which the complainant encounters is the difficulty of assigning to the defendants an intention to defraud the particular complainant out of the particular debt and of showing that the particular complainant and the particular debt come within the intent to defraud which it states was put into operation so many years before.

The statute lays stress on the fraudulent intent; it declares that every conveyance which “shall be contrived in fraud, covin or collusion with intent to hinder, delay or defraud creditors,” shall be void as to such persons as are thereby defrauded. The cases are uniform that the intent of the parties is a necessary element in a suit to set aside the transaction. This intent may be expressed or it may be implied, but it must appear as one of the features of the litigation. Demarest v. Terhune, 18 N. J. Eq. (3 C. E. Gr.) 540; Tantum v. Green, 21 N. J. Eq. (6 C. E. Gr.) 364; Kalmus v. Ballin, 52 N. J. Eq. (7 Dick.) 293; Wait Fraud. Conv. § 196; May Fraud. Conv. (3d ed.) 62. I am not able to find in this case any evidence of what I consider to. be the necessary intent to defraud the complainant.

I therefore am of the opinion that the complainant must fail in Iris suit, and I will advise a decree dismissing the bill.

It should be stated that the bill is 'wholly based upon the operation of the statute of frauds on the transaction and not to any degree upon any phase of the law touching misrepresentation. In other words, the complainant does not claim that it permitted Beatty to incur the obligation to it which is now in suit on the faith of his reputed ownership of the property in question. The distinction is pointed out in Todd v. Nelson, 109 N. Y. 327. The omission toi charge the defendants on this ground leads to the conclusion that the ground did not exist ill fact, or, in other words, that the complainant had knowledge of the acts now alleged to be fraudulent, at the time the obligation was incurred.


author: Howell, Y. C.

text:
    Albert Moyer v. Flora Howard Moyer.
    [Decided March 12th, 1909.]
    In a suit by a husband against his wife for divorce on the ground of adultery, evidence held to show that defendant was not a proper person to have the custody of the parties’ child pending the proceeding.
    On petition for custody of child.

      Mr. Alfred F. Skinner, for the petitioner.

      Mr. Slierrercl Depue and Mr. Frank P. McDermott, for the defendant.
   Howell, Y. C.

The proceeding now before the court is an application made in a pending divorce suit for the custody of the only child of the marriage. This child, Margaret, is seven years and eight months of age. She is now in the custody of her mother, who is the defendant in the divorce ease, and who is therein charged with having committed adultery. The petition for divorce was filed in August of the present year. The citation was ^served upon the defendant on October 2d. The time for answering has not yet expired, and the respondent has not yet filed an answer.

The petition for custody of the child alleges the unfitness of the mother as her custodian, and prays that the custody may be given-to the petitioner, the father, pending the decision of the main question between them. The allegations of unfitness of the wife contained in this petition are supported by affidavits tending to show the truth of the allegations. On the filing of the petition on October 9th an order was made requiring the defendant to show cause on October 12th why the prayer of the petition should not be granted. On October 12th the respondent appeared by counsel and sought a continuance upon the ground that the time which had elapsed between the service of the order and the return day was so short that counsel had had no opportunity to prepare for the defence. The motion was thereupon continued until October 15th. On October 15th the respondent appeared in court with her counsel and brought with her the child. Counsel announced that they would file no answer nor submit any answering affidavits, but were ready to go to hearing on the petition alone. The petitioner sought leave to examine witnesses orally before the court for the purpose of showing the fitness and the faculties of the father and his family, consisting of his mother and his sister, for caring for the child. The facts stated in the affidavits submitted to the court are, therefore, without denial. I take it that this position of the respondent is a deliberate one and is assumed by counsel after a careful examination into the facts. The statements relate to two matters—first, the main question in the original suit, viz., infidelity of the wife, and second, her actions toward her child, which are undoubtedly meant by the petitioner to show to the court that the mother has little or no affection for the child. In the ordinary case which is contested upon the facts, that is to say upon facts adduced by the petitioner and facts in denial’ thereof adduced by the respondent, I would consider it my duty to pass by the charges of infidelity without doing more than noticing that there were such charges and recriminations, if any, and not undertake to decide this question on a collateral inquiry or allow the -judicial mind to be influenced one way or the other by them. The rule is very well expressed by Sir Creswell Creswell in the case of Ryder v. Ryder, 2 Sw. & Tr. 225, where he said: “The duty of the court was to look at all the actual circumstances of the present application^ the age of the children, the position in which, they find themselves in'relation to other members of the family, the fact that a suit is pending between the parents in which such and such charges are made on both sides, but not to attempt to ascertain the truth or falsehood of the charges.” In that case, however, there occurred the very situation of which I speak. The case was for divorce and contained cross-petitions, each party alleging that the other had committed a matrimonial offence, so that the question of guilt was necessarily an open matter before the court and could not be decided without impinging upon the function of the final hearing of the cause. How different is this case on that point. Here the allegations are without denial. The wife is accused of startling acts of infidelity and she comes in court with eminent counsel and stands mute. Can this happen in the presence of any court and the judgment of the court not be affected by it? She might have denied the allegations of the original petition by a due and formal answer in the original cause, although she was not obliged to do it until the last day for answering was about to expire. She might have denied it by a simple affidavit in response to the secondary petition, at least her counsel might have denied the allegations orally; but even then she and they would have been confronted by her letters, copies of which are annexed to the petition, which are a virtual admission of her guilt. This seems to be the present aspect of the case. The final hearing may develop other facts and other circumstances Which will conclusively show the innocence of the defendant. I am speaking only of the present application and the facts that are now put before me to influence my decision. I hesitate to place my decision of this motion upon the ground just suggested, because it may seem like a prejudication of the main cause of action. I turn to the second element that I have mentioned and I think that I find there sufficient facts to justify me in declaring this woman unfit to have the present custody of her child: It must be remembered that the time for answering in the original cause has not yet expired, that the present appearances are that the litigation between these parties will be sharp and long. If the case shall be heard in this court and reviewed in the court of errors and appeals at least a year and a half must elapse before a final decree can be entered, and considering the delays of litigation, as we all know them to be, it would not be surprising if the lapse of time would extend to two years. By that time this child will be nearly ten years of age, of sufficient years to absorb from her custodian habits of life and conversation which will last her to her grave. And it is this influence to which this susceptible child is exposed that forces itself most strongly on my mind. In 1904, when this child was between three and four years of age, occurred the first act of misconduct which is alleged in the petition. It continued into the year 1905 and caused an estrangement between the husband and wife and arose out of matters for which the wife solely, as appears by the facts set out in the petition, is responsible. In May, 1907, the defendant went abroad without her husband, leaving her child, then about six years of age, in the care of the petitioner and his family. She did not return until the month of September, 1907, and from that time until the early part of the month of December of the same year was with her child and the child’s grandmother at Newton. She made frequent trips from there to New York and sometimes stayed over night, for what purpose, of course, she does not explain, but during the first week in December she again embarked for Europe from the port of Boston in company with a man named Kip, leaving behind her her husband and her child, and traveling about Europe with this man Kip, and not returning to her husband and child until about the middle of August of the following year, 1908. At that time the child was in the custody of the father by her consent, in fact by her abandonment of it, and was specially cared for by the grandmother. From these and cognate facts appearing in the affidavits, and without at this time elaborating the repulsive details, I conclude that this defendant is not a fit person to have the custody of this child pending the final inquiry into her guilt or innocence. She appears not to have that high motive in life or that stability of character, or that idealistic affection which we attribute to true womanhood and true motherhood. She appears in fact to have very little affection for her child. No woman with any love in her heart could abandon an infant of such tender age to the care of anyone, even the father, for eight months at a stretch without some compunctions, which she does not appear to have had.

I will commit the custody o£ this child, pending the present suit, to Mrs. Charles Moyer, its grandmother. Mrs. Moyer, the grandmother, must resume her actual residence in this, the state of her domicile, and must not, under any circumstances, without the leave of the court, remove the child from this jurisdiction.

It was quite satisfactorily proved in the case that the petitioner, Mr. Moyer, was a fit and proper person to whom the custody of his child might be safely committed, but I prefer that the grandmother should be the direct representative of the court in this matter, and I therefore commit the custody of the child to her.

The order will make provision for access to the child by both the father and the mother, and unless counsel can agree upon such a provision, I will determine what it shall be at the time of the settlement of the decree.