text:
    De Haven Lance et al., executors of William L. Lance, v. Mary S. Bonnell, administratrix, &c., et al. The Penn Mutual Life Insurance Company v. De Haven Lance et al., executors of William L. Lance.
    [Filed May 4th, 1899.]
    1. Where a written contract upon its face vests - an absolute title, those -who assert that the subject-matter passed not absolutely, hut only by way of pledge, must carry the burden of proving their allegation.
    2. When the holder of life insurance policies on the life of another, by a ■title absolute on its face, openly and notoriously asserts his exclusive owner-ship of the policies, in hostility to others who claim the holding to be only by way of pledge, and the holder and those representing him pay all the premiums both before and after the alleged redemption of the pledge, effect loans upon the policies, and accept others in their place, and the claimants or those-under whom they claim, make no demand for the return of the policies, but suffer the payment of premiums, &c., to go on for seventeen years after the alleged redemption of the pledge, without question or suit to recover the policies, it is such laches on the part of the claimants that a court of equity will not enforce their claim to the moneys which may have come to be due on the policies.
    3. The six-year statute of limitations will be enforced in equity, in analogy to the procedure at law, where the claimants and those under whom they claim have, for more than six years after their alleged right of action accrued, brought no suit, and where the enforcement of the complainants’ claim-might, by reason of their delay, work extreme hardship to the defendants.
    On bill, answer and proofs.
    These two suits are brought to determine the ownership of two policies of life insurance, or the right to the moneys payable-thereon, and as the basis of the' claims of the representatives of William L. Lance, to both policies, is the same, the causes have-been heard together by agreement of all parties.
    The suit regarding the Mutual Benefit company policy is brought by the executors of William L. Lance, Sr., complainants, against Mary S. Bonnell, administratrix, &c., of Samuel Bonnell, deceased, and the Mutual Benefit company, defendant, and seeks-a decree that the policy on Lance’s life, held by Bonnell in his lifetime, should be paid to Lance’s executors, the complainants.
    The other suit is brought by the Penn Mutual Life Insurance Company against the executors of William L. Lance, whose life was insured, and Mary S. Bonnell, administratrix of Samuel Bonnell, deceased, who, in his lifetime, held the policy. This bill is in the nature of an interpleader, and the complainant has been dismissed by a decree in its favor, and has paid the amount due on the policy, $1,180, with interest, into this court. The answers of the defendants are taken to be their interpleadings and make the issues in that suit.
    A large number of points >of law have been presented and argued, but the case is controlled almost wholly by questions-of fact.

      The proofs and exhibits are extremely voluminous, and yet the essential facts which dispose of the causes are within quite a narrow compass.
    The policy in the Mutual Benefit Life Insurance Company of Newark is No. 61,177, and was issued directly to Samuel Bonnell on the 25th day of November, 1869, for the payment ■of $10,000 upon the life of William L. Lance, Sr. Another policy, No. 61,176, was issued at the same time on the same .application, as to which no questions are raised, and it is mentioned simply to dismiss it from the case. Mr. Bonnell was the applicant for policy No. 61,177, as a creditor of Lance, stating that he had an interest in Lance’s life to the amount of $20,000. Lance was aware that Bonnell was the applicant, and most probably knew that the policy was, on its face, issued to Bonnell .absolutely and not as collateral, for Lance made and signed the ¿required statement.as to his age, condition of health, &c. Nothing on the face of the policy or the application therefor, •indicated that Bonnell’s ownership of it was in any way qualified, or that Lance had any interest in it whatever, save •that the death of his body was to' furnish the occasion for its ■payment.
    The Penn Mutual policy for $7,000 was issued on the 10th day of April, 1869, to William L., Lance, Sr., upon his own life, ■on his own application, aiid was on the 11th day of April, 1872, .assigned by Lance to Bonnell, with- the assent of the company given on April 25th, 1872. This assignment is under seal, •expressed to be “ for value received,” and purports to transfer the policy and all moneys and advantage to come due thereon, to Bonnell, without any limitation whatever.
    These were the methods of vesting title in these policies in Bonnell in his lifetime, and they become important in fixing the ’burden of proof which must be carried by those who. assert that these transactions in their inception did not convey to Mr. Bonnell an absolute, but only a qualified ownership.
    The Penn Mutual policy was on April 8th, 1885, surrendered ■ to the company by the defendant Mrs. Bonnell, administratrix ■of Bonnell, and a new paid-up policy for $1,180 upon Lance’s life, payable to the estate of Bonnell, was issued to Mrs. Bonnell in its place. On the death of Lance, both the executor of Lance- and the administratrix of Bonnell claimed the ownership of this policy.
    The Mutual Benefit policy has been adjusted as to loans, &c.,. made upon it, and ascertained to be worth $7,442.62 which the company declares itself ready to pay to such person as this court shall direct, the executor of Lance having notified the company not to pay the amount due to the representatives of Bonnell-.
    The right of William L. Lance, Sr., to these policies is in •both suits alleged to rest upon the same series of facts arising from the dealings between Lance and his sons and Bonnell, and they may, therefore, properly be considered together.
    William L. Lance, Sr., in his lifetime resided, while the-events here in detail were happening, near Plymouth, Pennsylvania. He was the father of William L. Lance, Jr., and of Walter W. Lance, De Haven Lance, Oscar M. Lance and» Charles Lance. For some time previous to the year 1869, and for several years thereafter, William L. Lance was engaged in mining coal in Luzerne county, Pennsylvania, and had become considerably indebted to various creditors and was embarrassed by judgments. He was indebted, among others, to one-Payne Pettebone, of that state, and to Samuel Bonnell, Jr., then of Elizabeth, New Jersey. Bonnell was engaged in the coal business in New York, and was upon terms of friendship with» Lance. He had advanced money to the Lances which they were unable to repay, and from all the proofs it is apparent that he was their creditor, anxious for the payment of his claims.In the Mutual Benefit suit the bill of complaint recites that title to the “Gould tract,” a piece of coal land in Luzerne county, Pennsylvania, had been held in the name of William L.Lance, Jr., the son of William L. Lance. All of the evidence-shows, however, that both William L. Lance, Sr., and Walter W. Lance had large equitable interests in the premises. The-bill further recites that for the purpose of improving the property Bonnell had given his accommodation paper, and that to-secure him from loss by reason of his advances and the giving. of this paper, Bonnell applied to the Mutual Benefit company for the policies on the life of William L. Lance, Sr., one of which policies is No. 61,177. The bill further alleges that the policies were a.security. to Bonnell as collateral for the payment of any indebtedness of Lance to Bonnell by reason of his advances, or growing out of the business of mining and selling coal, and that when all this indebtedness was paid, including premiums, “the said policies of life insurance were to belong to William L. Lance,” and the moneys payable thereunder were to be paid to his estate and Bonnell’s interest therein was to cease. This is the complainant’s statement of the contract whereby William L. Lance came to have an interest in the Mutual Benefit policy.
    The residue of the bill is devoted to allegations asserting the payment of all indebtedness of Lance to Bonnell, and describing the method by which that result is claimed to have been accomplished, which may be thus shortly stated. The complainant insists that Bonnell obtained the title to the “Gould tract” by an agreement with the Lances and Pettebone, whereby the property was sold at sheriff’s sale under judgments against the Lances. Pettebone held title to an undivided one-half of the property and William L. Lance, Jr., to the other. The complainants claim that by the agreement of the parties named, the property was bought in by Pettebone at a nominal price, and at once conveyed to Bonnell for $162,500, upon the understanding that the whole of the Lances’ indebtedness, including premiums on the life insurance, should be paid from sales of coal mined on the premises, sales of lots, &c., and that Bonnell “should hold the title to said property as security only to protect him from loss,” and “ under an agreement to reconvey the same when the debt due him was fully paid.” The complainant further alleges that all the indebtedness, &c., owing to Bonnell was more than repaid by shipments of coal to him and by sales of lots, leases of the premises and finally by the sale of the whole property, and they pray that the Mutual Benefit company may be decreed to pay the proceeds of policy No. 61,177 to them.
    The defendant Mrs. Bonnell, administratrix of Samuel Bonnell, Jr., deceased, denies that the latter held that policy as collateral security, and asserts that he was always in his lifetime the absolute owner, and that the present defendant is now the absolute owner of that policy. She alleges that during his life Bonnell paid the premiums, and since his death in 1885 she has paid them; that Lance never paid any of them. She asserts that though "William Lance, Sr., survived Bonnell and lived until 1895, he never claimed in his lifetime to be the owner of the policy. She further denies that Bonnell held the Gould property as security, or under an agreement to reconvey, or upon any understanding that from its proceeds his claims against Lance, including the premiums on the policy, should be paid, aud that the property and policy should then belong to Lance. She insists that Bonnell was always the absolute owner of both, with no undertaking to reconvey.' The defendant also insists that the claim of the executors of Lance is stale; that by their silence and delay she has been led to spend large sums of money in payment of premiums, &e.; and she also asks the protection of the statute of limitations and of the bar of a decree limiting creditors allowed her as administratrix in the Union county orphans court, as if they had been pleaded,-and further, by way of amendment, sets up another bar that she claims arises under a decree made on a bill in equity filed in common pleas court No. 1, in Philadelphia, in 1879, in a suit brought by William L. Lance, then claiming to be entitled to the Gould tract, against Samuel Bonnell, Jr., in his lifetime, and others, for reconveyances of that tract, in which suit, after a hearing on the merits, it was decreed that Bonnell did not hold that property as mortgagee nor in trust, nor as security for loans, &c.
    In the interpleader suit as to the ownership of the Penn Mutual policy, the answers of the defendants are to be taken as their interpleadings, and the cause has been heard on this understanding.
    The executors of Lance, in that suit, state that the original policies in the Penn Mutual, No. 9,425, for $7,000, was applied for by "William L. Lance on his own life, in April, 1869, and was “ made payable to said Samuel Bonnell, Jr., under an agreement that the premiums paid by Bonnell should be charged to Lance.” The answer further alleges that the policy was held by Bonnell only as collateral security for the indebtedness of Lance to him, and upon an understanding that when'the indebtedness of Lance to Bonnell should be paid, the policy should belong to Lance. They admit the substitution of the later policy for $1,180 in place of that first issued. The answer proceeds to allege payment of the indebtedness to Bonnell in the same method above recited in the Mutual Benefit suit, and the executors of Lance claim that they are the owners of the policy substituted, and that they should be paid the amount, $1,180, deposited in court by the Penn Mutual company in this suit.
    The answer of the administratrix of Bonnell in the Penn Mutual suit makes the same denials and allegations and sets up the same defences of laches — the statute of limitations, the bar of the decree of the Union county orphans court to limit creditors and the bar of the decree in the Philadelphia equity suit, wherein it was decreed that Bonnell did not hold the Gould property as security, &c. — which are above set forth in the Mutual Benefit suit.

      Mr. D. G. Harrington (of the Philadelphia bar), for the complainants.

      Mr. John O. H. Pitney, with whom is Mr. George R. Van Dusen (of the Philadelphia bar), for the defendants.
   Grey, V. C.

There is a reference in each case, in the pleadings of the ex- ■ ecutors of Lance, to a conveyance to Bonnell in his lifetime, of a tract known as the “Gould and ’Pringle” lot, but neither the pleadings nor the proofs show any connection between this incident and the transactions touching the life insurance policies or the “Gould tract,” the proceeds from which are claimed to have discharged all the indebtedness of the Lances to Bonnell, and -thus to have released the policies. This “Gould and Pringle” lot was first dealt ;with by an agreement dated October 7th, 1869, between William L. Lance, Sr., and Samuel Bonnell, Jr. The former agreed to convey the lot in question to-the latter inconsideration of $7,500 advanced to Lance by Bonnell. Lance,, it was agreed, should “ have the same reconveyed to him at any time upon payment of amount of moneys so advanced as' above.” Bonnell was given by the contract, until he was fully repaid his advances, the privilege of purchasing one-half the-property for $6,000. Bonnell made the advance of the $7,500. On October 21st, 1869, Lance conveyed the entirety of the “Gould and Pringle” lot to Bonnell by deed of that date. There is no evidence whatever that the specific advance of the $7,500, the payment of which was by the agreement to entitleLaiice to a reconveyance, was ever paid by him to Bonnell. A deed is offered dated February 9th, 1874, made by SamuelBonnell and wife to George B. Bonnell, conveying the “Gould and Pringle” lot. This deed appears to have been delivered on-March 25th, 1876, for a letter of that date from Samuel Bonnell to George Bonnell mentions that “I send you a deed,” &c., “ which I desire you to hold in trust for Mary S. Bonnell and Mrs. Lance, they to have one-half interest in the property,” &o.. George accepted the trust and Samuel gave to William L. Lance, Sr., a memorandum of the same trust, dated July 5th, 1876, with an appended declaration by George Bonnell of his acceptance.. This declaration was assented to by William L. Lance, Sr., the-royalties from the tract were for years divided under it, and the rights of Bonnell and of Lance in this particular piece of land and its profits appear to have been adjusted between William L. Lance, Sr., and Samuel Bonnell, Jr., in their lifetime, in the year 1876, upon a basis which they and those who came after them accepted without question until the suits presently under consideration were begun in 1896. The “Gould and Pringle” property presents no side which involves any dispute between-the parties. The transactions concerning it were not involved' in the general account of the parties, but were in their origin limited to the advance by Bonnell of the $7,500 to Lance. It is extremely probable, though there is no definite proof of the-fact, that this advance was adjusted by the trust settlement securing to Mrs. Bonnell and to Mrs. Lance, to each, one-half' of the property. Mr. Bonnell, in his letter of July 5th, 1876,. produced by the Lances, does say that the consideration money was paid by Mrs. Bonnell and Mrs. Lance, and there is-some other testimony which hints at this mode of settlement. My impression is that this was effected by a novation or re-arrangement of payments, whereby Mrs. Bonnell paid Mr.Bonnell his advance of $7,500, or obtained him to discharge-Lance from that indebtedness as consideration for her half of the property, and Mrs. Lance procured her husband to allow her to receive by the declaration of trust the benefit of the other half. Whatever was in fact the ground of the trust settlement,, it was final and undisputed. It had no relation whatever to the general business transactions of Lance and Bonnell, and was totally disassociated from the life insurance policies so far as-William L. Lance, Sr., or Samuel Bonnell, Jr., dealt with them or either of them. There was some testimony which was claimed to show that Mrs. Bonnell obtained the funds wherewith to pay the premiums on the policies after Bonnell’s death, from iheroyalties paid her by the trustees of this “Gould and Pringle” lot. The proof failed to establish the fact, but in- my view, if it were indisputably shown, it would be of no significance-because Mrs. Bonnell was in her own right entitled to the royalties paid her from the “ Gould and Pringle ” lot, and William-L. Lance, Jr., and all the Lances who claim under him appear to have accepted that situation for years without question, and' she might use the royalty money as she chose.

The statement of the right of the executors of Lance to-relief by having the two policies decreed to be paid to them is based upon the claim that the policies were put in Bonnell’s name, not upon considerations which moved from him, or which were undertaken and satisfied by him solely, but that he held them as collateral security for the payment of the general* indebtedness of William L. Lance to him, upon an understanding and agreement that whenever that indebtedness should be discharged, Bonnell’s interest in them ceased, and the policies should be returned to Lance; and the further contention that the transactions incident to the taking title to the “ Gould property ” by Bonnell, the profits from the workings of the mines and sales of coal and of lots therefrom; and finally, the proceeds of the sale of the residue of the premises by Bonnell more than reimbursed him for all the indebtedness which the Lances owed to him, and thus released the two policies from any further pledge to Bonnell.

It is to be noted, touching this claim, that BonnelPs title to both the policies was by the written contract, by Lance’s consent or action, made absolute, in the origin of each transaction. Not a suggestion appears anywhere upon the application for the Mutual Benefit policy, or the assignment of the Penn Mutual, which hints at a pledge, or that indicates that Mr. Bonnell’s right was any other than what by the written contracts it is shown to be, an absolute ownership. If a title so supported is impugned, the burden of proof to overthrow it must be carried by the party alleging it to be qualified and not absolute. Vreeland v. Bramhall, 1 Stew. Eq. 85; Winters v. Earl, 7 Dick. Ch. Rep. 52, 588.

There is no attempt in this case to show any other written coutract or memorandum expressive of any agreement between Bonnell and Lance, whereby the former declared any trust or recognized 'that Lance had any interest in the policies. The ■effort of the complainants is to show facts which it is claimed justify an inference that the policies were held as collateral only, and not absolutely! The first policy which came to Bonnell was the Mutual Benefit in 1869. Mr. Bonnell held this policy from 1869 until his death in 1885, and the Penn Mutual policy from 1872 to 1885. William L. Lance, Sr., under whom the ■complainants claim title to these policies, was in close business relations with Mr. Bonnell until February 29th, 1878, when the latter finally sold the residue of the “Gould property” to the Lehigh and Wilkesbarre Coal Company. Great numbers of letters passed between Bonnell and the Lances, many conversations are shown, and their business relations must have been intimate, and towards the latter part of the time, say from 1874 to 1878, not always friendly, for differences had then arisen, and each was seeking to assert his own rights, yet neither letter nor conversation has been shown which justifies the acceptance of the theory that these policies were held by Bonnell in pledge.

The most plausible proof which the complainants offer, is-certain entries in Mr. Bonuell’s books, made, most of them, by his bookkeeper, but which, it is claimed, show charges of some of the premiums on these policies against the account of William L. Lance. These entries refer to but a few of the premiums paid. The entries were begun, as to the Penn Mutual policy,, before Mr. Bonnell had received his assignment of that policy,, when it still stood as issued, in Lance’s name, and when Mr.. Bonnell, who advanced the premiums for Lance, might properly have charged them against Lance’s account. They were continued by Mr. Bonnell’s bookkeeper after Mr. Bonnell had! become the owner of the policy by Lance’s assignment and had! begun to pay as owner, and the Mutual Benefit premiums were, some of them, likewise entered by the bookkeeper under Lance’s account. There was no proof of express direction by Mr. Bonnell to his bookkeeper to make these entries, and they appear to-have been first brought to his attention in 1874. He was examined, in the trial of the equity suit, in Philadelphia common pleas, 1881, and there testified touching the life insurance entries against Lance’s account — that he did not know of them until 1874; that he then told Tuthill (the bookkeeper) to take them-out, and that he would have told him before if he had known-of them. Tuthill (the bookkeeper) supports this testimony by his evidence, both in the Philadelphia equity suit and in this cause. Bonnell also testified in the Philadelphia case that the-insurance was done for his (Bonnell’s) convenience, and that Lance never paid any of the premiums. -He further testified :

I did not consider that the charge of life insurance made much difference, because, when the account was rendered, Mr. Lance would object to it as being-money which was paid by me for my convenience.”

Here was an explicit denial by Bonnell that these entries-expressed the true relations of the parties as to the life insurance. Mr. Lance was alive at that time and was the principal witness in the equity suit, and was also largely interested him-self in the success of the complainant in that suit, in which Bonnell testified. The latter’s testimony as to the life insurance •was given in response to the examination by the Lances’ counsel, obviously directed to show that these policies were held by Bonnell as collateral. His explicit denial that they were so held was a direct challenge to Mr. Lance to refute these statements if they were untrue, but nowhere in Mr. Lance’s testimony does he even attempt to dispute Mr. Bonnell’s statements, .nor did he ever afterwards, at any time during his life, set up in .any way any claim to these policies.

There is one entry of premiums charged in Mr. Bonnell’s books against Lance’s account, on the Penn Mutual policy, •which is in Mr. Bonnell’s handwriting. This was made on the ■day on which that policy was assigned to him, and before the .assignment had been approved by the company. No evidence whatever of the occasion for this entry accompanies the proof .of it. The assignment of that policy was made in terms to vest .an absolute interest in Bonnell, and it is much more reasonable •to infer that this single entry charging to Lance’s account the •premiums due at the time of the assignment, was made as part ■ of the bargain between them for the transfer of the policy to Bonnell, to the effect that Lance should be responsible for this, .the last premium falling due while he held the policy, than to •assume without proof that this entry is evidence contradictory of their expressed bargain made on the same day.

In all the great bulk of testimony submitted in the cause .there is but little reference of any kind to the life insurance .policies.

On October 31st, 1870, Bonnell wrote to Lance, “ Mr. McCorkle says your policy is good now you will have to pay up this year so as to keep it good, which I would do (at) once.” At this time Lance was the holder of the Penn Mutual policy which was issued to Lance on April 10th 1869, and afterwards .assigned by him to Bonnell on April 11th, 1872. If the mention in this letter of “your policy” has any relation to either policy now in dispute (and there is no proof that it has), it must ,be inferred that it was to the policy in the Penn Mutual then ■held by Lance, which Bonnell advises him to “ keep good.’’ This incident of proof has therefore no significance on the present issues.

William L. Lance, Jr., testifies that about 1869 or 1870 Bonnell said to him that they (the Lances) were not shipping •enough coal to reduce the debt, and “ I have no security to show this thing except the insurance on your father.” The time when this conversation took place.is not stated with enough certainty ■to make proof of much value, nor is there anything narrated which indicates that the phrase “insurance on your father” .relates to either of the policies now in dispute. The Mutual Benefit policy was the first obtained by Bonnell and came to him on November 25th, 1869, but the conversation which took place in 1869 or 1870 may have been held before he got this .policy and may refer to another insurance. The statement itself is not necessarily inconsistent with an absolute holding by the •notice of the insurance referred to, for policies which are absolutely held on the life of a debtor may be fairly described as securities. The admission of Bonnell is too dubious in its character to be of any weight.

Joseph Lance testified to a conversation which he overheard in October, 1869, between his father, William L. Lance, Sr., .and Mr. Bonnell, just after the Avondale mine disaster in September, 1869. He swears that Mr. Bonnell, in speaking of the ■dangers incident to mining, said to William L. Lance, Sr., “You should have insurance on your life; it is a good thing to have for your children,” &c. The witness was then a boy of fifteen. 'The alleged statements of Mr. Bonnell. could not possibly have referred to either of the policies now in dispute, as Mr. Bonnell •did not receive the first of them until November 25th, 1869, about two months after the alleged statement. Nothing in this conversation identified the matter talked of with the policies, the ownership of which is now under consideration.

A certificate of acknowledgment of a loan upon the Mutual Benefit policy No. 61,177, which is dated November 25th, 1871, signed “W. L. Lance, per S. Bonnell, Jr.,” for $490, in favor -of the Mutual Benefit company, is offered in evidence. This signature is Mr. Bonnell’s handwriting, but there is no proof whatever that Lance either arranged the loan, or paid it, or even knew of it, or that his name ever appeared until, on the call of the counsel of the complainant in this suit, the Mutual Benefit company produced the certificate.

Loans were made on both policies in dispute, but they were all to Bonnell and for his benefit.

The foregoing is a 'short summary of the evidence by which the complainants claim that they show that the writteii contracts-under seal which vested absolute title to the policies in question in Mr. Bonnell should be reformed, and held to have passed to him only a qualified interest by way of collateral security.

The proof on the side of the defendant, apart from the written contract which gave Bonnell absolute title, is much stronger to-show that his title was complete and not limited, than the proof offered to overcome the written contract. In point of fact there is no proof whatever that Mr. Lance ever paid any premium or asserted any ownership in these policies after they had come to Mr. Bonnell by a title absolute on its face. If the policies were-in truth held by Mr. Bonnell as collateral security for the payment of Lance’s debts, then Mr. Lance must have known that fact as to the Mutual Benefit policy since November, 1869, and as to the Penn Mutual policy since April 11th, 1872.

The claim of the executors of Lance is, that the policies were to-be held by Bonnell until the Lances paid their debt to him, but there is not even a claim that Bonnell contracted to continue payments for the Lances’ benefit after their debts were paid. Yet they say, as is hereinafter shown, that all their debts to Bonnell were paid in 1878, and they admit that they set up no claim to-the policiés when the debt was discharged, but suffered Bonnell to continue to pay the premiums, and of these payments they now claim the benefit.

The complainant has submitted no proof which is sufficiently weighty to overcome the face of the written contracts which vested absolute title to the insurance policies in question, in Mr. Bonnell.

If this view is erroneous and the complainants claiming under William L. Lance, Sr., have shown such proofs, it would still appear to be inequitable to give effect to a claim so.stale that no one ever knew it to be formulated or presented during seventeen years of hostile feeling between the parties, nor until ten years after one of the principal actors had died, and a year after the other had been called away. During all this period of quietude the title to both policies stood absolutely in the name of Mr. Bonnell or his representatives without challenge, and they spent their money upon them’, pledged them, varied them at will, without let or hindrance of the Lance claimants. Death has now removed every actor in the transactions which the complainants declare created and secured their rights, thus destroying testimony which rested (if it ever existed) wholly in parol proof. The defendant, Mrs. Bonnell, is peculiarly helpless under this attack, as she obviously never had even the observation of the matter, which enables the children of Lance to give some information of these old transactions. A review.of the facts, showing the non-action of the Lances, will illustrate this point.

The theory of the complainants is that the transactions regarding the “Gould tract,” in 1871, resulted in vesting title in that tract in Bonnell; that this title to that land and the policies here in dispute were granted to Bonnell upon an agreement that the proceeds from the products and sale of the Gould tract should pay to him all indebtedness which the Lances owed him. and that when that was accomplished the “'Gould tract” or the balance of its proceeds, and also the policies, should belong.to the Lances. The complainants insist that the sales of coal, of lots of land and finally of the residue of the tract, overpaid all the indebtedness of the Lances to Bonnell, and thus entitled them to the policies. Accepting this theory to be true for the purpose of ascertaining the duty of the Lances in the premises, to prosecute their alleged right' to the policies without laches, it must be noted that Bonnell’s final transaction touching the Gould tract, was the sale of the residue, in February, 1878, to the Lehigh and Wilkesbarre Coal Company. ' The whole of the proof shows that this was done by Bonnell openly, and as absolute owner with the full knowledge of the Lances, and without in any way recognizing their claim, the validity of which he always denied. Mr. Lance and all his sons were thus certainly as early as February, 1878, put upon notice that Bonnell’s position as to the Gould tract whatever it had been theretofore, was then asserted in his own right and in hostility to their claim. Then came the equity suit in Philadelphia brought in December, in 1879. This related wholly to the Gould land, and set up no claim to the insurance policies.

The hostility of Bonnell’s claims and conduct was recognized by this equity suit of William L. Lance, Jr., against him, brought in the Philadelphia court. William L. Lance, Jr., then claimed to hold the legal title to the Lance interest and was supported by William L. Lance, Sr., and the other sons in the prosecution of that suit against Bonnell. The Lances set up the same claims, that Bonnell took the “Gould tract” as collateral security, and that he had been fully paid, which are no# and h.ere asserted. The Lances were defeated in the Philadelphia equity suit, they now insist, solely for want of proper parties to that suit.

Their contention in this respect is not supported by the proof. It appears by the master’s report in that case, that the proper complainant parties were not all before the court, but that the complainant insisted notwithstanding that “ the cause should be decided on its merits.” The master did so decide it against the Lance claim. Exceptions were taken by them to the master’s report. The thirteenth exception is “ the master erred in finding that Samuel Bonnell, Jr., did not hold as mortgagee; ” the fourteenth is, “ the master erred in finding that no equity of redemption is vested in William L. Lance, Jr.” The court dismissed the exceptions and confirmed the master’s report. The cause was removed to the supreme court and the third and fourth assignments of error raised the same questions. The supreme court affirmed the judgment, with an intimation that it was inclined to the opinion that “Bonnell held the balance of the money raised from the sale, if any such balance there was, as trustee for the Lances.” This was in 1886. No action appears to have been, taken by the Lances on this intima■lion, and the judgment against them upon the merits of the case, ■ considered at their request, pronounced by the court below appears to have been left undisturbed.

Irrespective of any effect of this litigation to establish a ¡final judgment upon the same subject-matter between the parties here contending, the facts recited certainly brought knowledge to the Lances that Bonnell’s holding and disposition of the Gould tract were adverse to their claim then asserted, and now here again presented and prosecuted. .Acquiring this knowledge in 1878, when Bonnell finally disposed of the Gould tract without regarding their supposed rights, they were bound to prosecute with due diligence their ■ claim to the policies which they assert were freed from pledge by that disposition of the “Gould tract” and the ensuing • events of that year, or they must suffer the consequences of'■ their laches. Neither William L. Lance, Sr., in his lifetime, nor any other of the Lance family, ever took any steps even to ■ demand the return of the policies from Mr. -Bonnell in his lifetime, or from the defendant his administratrix, after his ■ death, or to prove any claim against'his estate for the alleged • overpayment of the indebtedness of the Lances to him, resulting from his disposition of the “Gould tract.”

Meanwhile Mr. Bonnell, relying upon his absolute holding of title to the policies, and the entire absence of any dispute of it or • contrary claim by the Lances, paid all the premiums upon the policies from 1878 to 1885, the time of his death, effected loans ■upon them and dealt with them as his own. By their own ■.argument, as above shown, the complainants’ claim that the ■ debt due Bonnell, which released the policies from pledge to him, was more than satisfied in 1878, they might then have demanded the return of the policies. No such demand was made. 'The proofs show that in 1881 Mr. Bonnell, in the Philadelphia equity suit, prosecuted in the interests of all the Lances, openly .asserted his absolute ownership of these policies. His assertion was not contradicted nor was any demand made for them by the Lances. Bonnell died in 1885. No debt was, by the Lances, -claimed agáinst his estate, nor were any steps taken to recover the policies. William L. Lance, who is alleged to have made-the contract pledging the policies, and under whom the complainants derive their title, was living during all this time and active in the controversy, but gave no sign that he claimed any interest in them. It was after his death that the first disclosure-was made that the Lances-asserted rights in these policies.

For more than twenty-three years, Mr. Bonnell in his lifetime and his wife since his death, have paid all- the premiums on the policies, have effected loans on them, have-surrendered the original Penn Mutual policy and accepted a. substitute, and in fact have paid out an amount of money upon the policies very nearly equal to the sum presently payable upon them. The complainants strenuously insist not only that they shall have the benefit of the policies but that no allowance shall be made either to Bonnell’s estate for any premiums-paid by him in his lifetime or to Mrs. Bonnell for those paid by her since his death. The effect of such a determination would be to give to the Lances the full benefit of the policies and of the payments of premiums by Mr. Bonnell, though these payments were made at least since 1878, under an open claim of ownership of the policies and hostile to the present claim of the Lances, and known by them to be so; and also the-benefit of Mrs. Bonnell’s payments made since Mr. Bonnell’sdeath, notwithstanding no claim or notice of claim to the policies-was- ever made or given to her in any capacity. Such neglect to take any steps to recover the policies or even to claim them, extending from 1878 to 1895, while those in possession of them-holding by a title absolute on its face, were to the knowledge of the claimants openly and irretrievably acting as absolute owners, was laches of such a character that it would be inequitable-presently to enforce the claimants’ rights.

There' is an attempt to answer this apparent assent of Mr. Lance during his whole life to the unqualified title of Mr. Bonnell to these policies, by claiming that no right in the moneys due-on the policies could be asserted-until the death of Lance. It is true that suits for the money to come due on the policies could be brought only on Lance’s death, but such litigation would be-•against the insurance companies who would on Lance’s death come to owe the money, and not against Mr. Bonnell or his representatives who claimed to own the policies. The laches ■consisted in the acquiescence in. Bonnell’s claim and action as absolute owner of the policies for a long period after it is now ■claimed by the complainants William L. Lance was entitled to have the policies delivered to him.

The statute of limitations is also set up by the defendant and ■this court is asked to apply it in analogy to the practice in the court of law. The first point to be ascertained on this contention is when did the complainant’s right of action accrue? There can be no doubt that the right of a pledgee in the thing pledged for the payment of a debt, ceases as soon as the lien is •discharged by the tender or payment of the debt. Lawrence ■v. Maxwell,. 53 N. Y. 19.

The executors of Lance claim that the pledge was under a ■parol contract, that the debt has been fully satisfied by the ■sales of coal, of lots and finally of the residue of the “ Gould tract” by Bonnell. This sale of the residue to the Lehigh and Wilkesbarre Coal Company was made in 1878 as above shown. The lieu of Mr. Bonnell on the policies as pledgee, according to the Lances’ theory of the case was, therefore, then discharged, and all his interest in the policies ended. The •right of the Lances to recover the pledge was therefore perfect in 1878 upon their own showing. The policies both stood in the name of Bonnell. A suit in equity to compel their reassignment by Bonnell to Lance has, upon this view of the cáse, been maintainable since February, 1878. Bonnell’s attitude both before and since that time has been consistently that of one claiming to be absolute owner, hostile to the Lances to their knowledge.

The suit in Philadelphia set up no claim to these policies, •though the proceedings there had show that the Lances claimed •to have- discharged ■ all their indebtedness to Mr. Bonnell, -and the prayer of the bill is for an accounting: ' A prayer •for the retransfer of the policies would have been pertinent to a showing by the accounting that the indebtedness had been dis.charged and they thereby released. The Lances contend that no-suit could be brought until, by the death of William L. Lance, Sr., the policies had become payable. This, as above shown, is true only as to a suit against the insurance companies to recover’ the money, but is no answer to justify Lance’s omission to demand and sue for the recovery of the policies claimed by him to-have been put in pledge. No such suit was brought within six years after the right of William L. Lance, Sr., had, as the Lances assert, become complete to recover the policies. No-equity is shown against the setting up of the statutory bar’ applicable in such eases in the law courts; on the contrary all the facts tend to show that the enforcement of the complainants’ ’ claim against the defendant would work an extreme hardship. If the complainants are barred of any right to recover the-pledge, they are also barred of any right to recover moneys which-■long afterwards come to be payable upon it.

■ The question to which a great part of the proofs, and most of' the argument, has been directed, was whether or not Mr. Bonnelb has in fact been repaid from sales and profits from the Gould1 property the amounts he advanced to the Lances. In my judgment, this point must take but a subordinate place in the-determination of this case, if there was no contract whereby the policies here in question were held by him in pledge for a debt and redeemable by the application of proceeds from that tract.

I have, however, examined the voluminous testimony upon this question and the arguments of counsel thereon, and the -weight of evidence does not sustain the contention of the Lances, either that Bonnell originally took the title for their benefit, or-that his receipts therefrom were to be accounted for to them.

Mr. Bonnell at all times held, with the knowledge and' assent of the Lances, the full legal title to the premises, and’ claimed to be the absolute owner. The Lances assert an equity under a parol contract which they declare enabled Mr. Bonnelb to secure the legal title. The fact is several times proven, though-nowhere stated in the pleadings, that in 1870, when the sheriif’s sale divested the Lance title, they held but an undivided one— half interest in the Grould tract. Mr. Pettebone held the other half. He was a heavy and also an exacting and grasping creditor of the Lances. They were in great financial difficulties and threatened with forced liquidation by the sheriff sales.' Pettebone was always, as to the Lances, a hostile creditor, seeking to force them -to pay. Mr. Bonnell was a friendly creditor, who desired to secure his money, but was also willing to delay a sale if that were possible. Mr. Pettebone’s urgency prevented this, and the Lances found that the property would- be forced to a judicial sale. It was so sold and was bid in by Mr. Pettebone for $21,000, who shortly afterwards conveyed it to Mr. Bonnell for $162,000.

The Lances claim that, by a parol agreement between Pettebone, Bonnell and themselves, this had been pre-arranged, and that the title was conveyed to Bonnell as security for the payment of their debt to him and for advances to be made, and that these being repaid, the property was to be reconveyed' to them. The claim that there was any such bargain was, as above shown, overthrown in the Philadelphia suit, and the title of Bonnell was adjudged to be absolute and not as security. The intimation in the opinion of the supreme court on the appeal, that Bonnell held the balance of money raised -from sales, if there was any such balance, as trustee, was not adjudicated, as the decree below in favor of Bonnell, found at Lance’s request on the merits of the case, was not modified in any way. The weight of the evidence, going to show Bonnell to have held either as security or in trust, js quite insufficient to establish the Lances’ claim. The written contracts of sale all vested absolute title, first in Pettebone and afterwards by Pettebone’s deed in Bonnell. The interest of the Lances ■was divested by the sheriff’s sale to Pettebone. If he took absolutely and without agreement to hold as security or in trust, then Bonnell’s subsequent acquirement of the title from Pettebone was equally absolute. Pettebo,ne testifies that his title was absolute; that outside of the papers reduced to writing there were no bargains., Mr. Bonnell testifies to the same thing. Mr. Tuthill, Bonnell’s bookkeeper, testifies to a statement made by Bonnell to William L. Lance, Sr., to the same effect,-which was by the laltér accepted without denial. That Mr. Bonnell was well disposed to the Lances, and willing to be generous and to deal with them liberally, is apparent' all through the proofs. It is the evidence of this ■ disposition of Mr. Bonnell which has led to this litigation. Mr. Bonnell in many ways showed his kindly feelings for the Lances. He permitted them to remain in possession to mine and ship the coal, and sell lots, for which he executed deeds, but he also turned them out without their resistance when they disobeyed his orders.

The most significant indication of this generous consideration of Bonnell for the Lances is shown in a letter which Bonnell wrote to his counsel, Mr. McClintock, shortly after he had purchased the Gould property, in January, 1871, wherein he declared that he had bought the property to secure his debt against the Lances, and that his voluntary purpose and intention is, if he can sell the property for a sum sufficient to discharge all -liens and expenses and to reimburse him with interest and compensation for his time and trouble, to give the balance to the Lances. This letter is really the basis of the Lances’ claim, and they insist it .was a recognition of a contract by which the conveyance was made to Bonnell for their benefit, and which bound him to account to them and'to reconvey when their debt to him was paid. The letter in my view had no such effect. It was written after the conveyance had been made to Mr. Bonnell, which vested the a'bsolute title in him. It does not acknowledge that he had precedeutly bought under a contract to benefit the Lances, but states his voluntary purpose as to his future action. He testified in the Philadelphia suit that the letter was written without-demand or solicitation from anybody, and his counsel, Mr. McClintock, to whom the letter was addressed ánd delivered, corroborates this statement. It was not written or sent to any of the Lances,-and they did riot even know of its existence for several years. Mr. McClintock’s testimony as to the occasion which produced the letter shows its purpose and object. He states that Mr. Bonnell had called upon him on other business, and

“after doing whatever we went to the office to do, he was about leaving, I .think the afternoon of that day, he said to me, ‘now I feel friendly to the Lances, I have bought this property and if anything should happen to me, I -desire to leave with you a memorandum of what my present voluntary intentions are/

.and then the letter was written and left with McClintock as Bonnell’s counsel. McClintock also testifies that none of the Lances ever asked for the letter, and that he had no idea that ■•they had any knowledge of it whatever. This letter was written almost coincidently with the receipt of the title of the Gould -tract by Mr. Bonnell; it was prepared at his own suggestion, without demand, was addressed and delivered not to the Lances but to his own counsel. Not only the letter itself, but the statement made by Bonnell accompanying its delivery to McClintock, .show that it was a purely voluntary declaration on Bonnell’s part originating without any contractual obligation whatever, and given in order that in case any mishap should come to him, there might be a permanent expression of his kind feeling for and purpose to help the Lances. Every fact which appears to charge Mr. Bonnell with a contractual obligation touching -the Gould tract is explicable consistently with this view, and .as the title was held by him by deeds which passed an absolute interest, it must be declared that those who assert that •they should be deemed to have conveyed but a limited estate, have failed to sustain their allegations.

There are some incidents of proof tending to show admissiohs 'by Mr. Bonnell that he held this title only as collateral for the payment of the Lances’ debt to him, notably the testimony of Mr. Ricketts. The present narration of these admissions is given by Mr. Ricketts twenty-six years after they were alleged to have been made, and while he now ascribes them to Mr. Bonnell, yet when .a witness in the Philadelphia equity suit, in his testimony given in 1880, only nine years after the transaction, he testified, “this is the information which the Lances gave me in the absence of Mr. Bonnell and Mr. Pettebone.” Mr. Ricketts is undoubtedly fair-minded, but his memory in giving his present testimony is • evidently at fault, for his explanation of its variance from that given in 1880, to the effect that he heard these statements not only from the Lances but also from Mr. Bonnell, is directly contradictory of his evidence in 3880, when he swore touching-these matters:

“I don’t think Mr. Bonnell ever told me directly anything about the character of the transaction at that time, but the whole tenor and basis of our conversation' was that he was Mr. Lance’s friend in this transaction.”

It is unnecessary to prolong this examination of the details-of the great volume of testimony on these points or to consider the other matters disputed between the parties and argued by counsel with much force and acumen. The complainants have-failed, for the reasons above stated, to show a right to the relief they seek, and a decree should be made in the suit regarding' the Mutual Benefit policy dismissing their bill, and in the Penn-Mutual case, adjudging to the defendant, the administratrix of Mr. Bonnell, the amount paid in upon the policy.


source: Caselaw Access Project

author: Grey, V. C.

license: Public Domain

text:
    William R. Jernee v. Charles Simonson.
    [Filed May 11th, 1899.]
    1. Where one party holds title to all the property used in the conduct of a-business and has the exclusive possession and control of both the property and the business, but by an agreement contracts to share profits with another, the-agreement does not, in the absence of other proof of an intention to be partners, constitute, inter sese, a partnership. It is only a contract for sharing of profits.
    2. Where two parties contract for profit sharing in a business which is to-be carried on by one of them, and at the time of making the contract the-, property to be used in the business- is subject to a prior chattel mortgage-created by the other, a foreclosure under this prior mortgage, which divests-the property and destroys the business, necessarily ends all obligation under' the contract for profit sharing.

      On bill, answer and proofs.
    The bill alleges an agreement between the complainant and' defendant, whereby the defendant was to carry on a certain hotel business at Spring Lake, and turn over to the complainant periodically one-half of the profits; thát the business relation between the defendant and complainant was a partnership, still in force; and prays for an accounting and payment by the defendant to the complainant of one-half of the profits.
    The answer admits the agreement as stated in the bill, and that the defendant ran the business thereunder, but asserts that the agreement was fully carried out and an account rendered,, and one-half of the true profits paid over to the complainant by defendant. It denies that the agreement between the defendant and complainant was a partnership, or that the agreement was-in force since the foreclosure sale of the business hereinafter stated, and denies the complainant’s right to an accounting. The answer also alleges that the complainant, if aggrieved, has-a perfect remedy at law, and the defendant prays the same benefit as if he had demurred to the bill.
    The facts material to the issue on which this litigation arises, are these: The complainant, William R. Jernee, was the owner of certain buildings at Spring Lake, Yew Jersey, and the lessee of the lot on which they were situate, his lease expiring May 1st,. 1894; he also owned a number of goods and chattels, mostly household articles, furniture, &e., and bar fixtures. Jernee had carried on a hotel business in the property under two licenses, one for a hotel and another a wholesale liquor license, when, on January 17th, 1894, he executed and delivered to the defendant, Charles Simonson, a bill of sale, transferring to the latter all his buildings on the lot of which he was lessee (the lease giving the right of removal), and also all the goods and chattels mentioned in the schedule annexed to the bill of sale, and the lease of the premises; the buildings and the chattels being recited to be sold subject to three chattel mortgages, the first held byBallantine & Sons. Jernee and Simonson, on the same date, executed an agreement whereby Simonson undertook, in part consideration for the sale to him by Jernee of the good will and interest in his hotel business, the stock and fixtures, other personal property and the lease, to carry on the hotel business as theretofore conducted by Jernee, to keep accounts of the purchases and ■sales and expenses made and incurred in the business and of the profits arising therefrom, and to turn over to Jernee, once every three months, one-half of the profits between the parties.
    Under the bill of sale and agreement, Simonson took possession of the property and conducted the hotel business there. In addition to his agreement to run the hotel business, Simonson paid Jernee a money consideration of $566.
    On February 15th, 1894, Simonson rendered a statement to .Jernee, showing a loss in the business of $13. The next statement was made by Simonson on October 1st, 1894, and covered -receipts and disbursements of the business from January 1st, 1894, to October 1st, 1894, showing a profit of $242.18; one-half of that sum was paid and accepted by Jernee in settlement.
    Shortly afterward Ballantine & Sons foreclosed the prior mortgage which they held on the goods and chattels and the hotel business, making Jernee and Simonson defendants, and under this foreclosure the property and business were sold on March 10th, 1895, to Ballantine, neither of the defendants putting in any defence.
    On March 21st, 1895, Simonson wrote Jernee a letter notifying him of the foreclosure sale and saying, “ enclosed find statement of all the business transactions done by me since purchase ■of the place of you, of course this ends all matters between us.”
    Oh April 6th, 1895, Ballantine & Sons, the purchasers of the personalty at the mortgage sale, acquired title by deed from Bradley to the real estate on which the hotel buildings, &c., were located, and then being the owners of both land and buildings, made an agreement with Charles Simonson, the defendant, and. his brother, Ed ward Simonson, whereby the goods and chattels and business were sold to Simonson & Brother. A lease was made to them of the land, and Simonson & Brother thereafter conducted a hotel business under this arrangement with Ballantine & Sons. The money for conducting the new hotel business was supplied by Edward Simonson, brother of the defendant.

      Mr. Silas W. Grimstead, for the complainant.

      Mr. Aaron E. Johnston, for the defendant.
   Grey, V. C.

The first question in dispute to be disposed of is, what passed under the bill of sale, January, 1894, made by Jernee to Simon-son. It calls for the buildings on a certain lot, the goods and chattels described and a lease. It is a written contract and its terms are readily ascertained. It does not attempt to dispose of any hotel business or of any good will. The buildings and the goods and chattels are recited to be sold subject to three mortgages, the first of which was held by Ballantine & Sons. By the collateral written agreement of the same date as the bill of sale, Simonson, as a part of the consideration for the sale, undertook to run a hotel business in the buildings mentioned in the bill of sale. A further consideration for the bill of sale was-a payment of $566 by Simonson to Jernee. The bill of sale on its face purports to be an absolute conveyance to Simonson and was made for a valuable consideration paid by him to Jernee. Both parties treated this transfer of the goods as an absolute-conveyance. The proofs support the claim that the bill of sale-passed a complete title to Simonson. The latter held and used all the goods as though they were his own ; Jernee did not even-make any inquiry respecting them or Simonson’s disposal of them after the transfer. In April, 1895, in a proceeding against Jernee by his wife, for non-support, he swore that he-was absolutely insolvent and had no means of any sort, or property of any kind, excepting wearing apparel worth $50, &e., and an interest in a business with Simonson, which was nonproductive and worthless.

The testimony and the exhibits show that the bill of sale passed absolute title to Simonson in the buildings, goods and chattels, and the lease named in it, subject to the prior liens •existing against them. This being so, even if the Ballantine mortgage did not cover all the buildings, goods and chattels (as the bill of sale recited it did), and whether or not, .under that •chattel mortgage, all the buildings and goods and chattels named in the bill of sale were sold, Simonson cannot be called upon to .account to Jernee for the value of any of them. Jernee by the ■bill of sale parted absolutely with his interest in them.

The second question to be considered is, has the defendant, Simonson, carried out his agreement with the complainant. The agreement between the parties was, first, that Simonson should carry on the hotel business as theretofore conducted by Jernee j and, second, that he should keep an accurate account of the business and turn over to Jernee one-half of the net profits, as found upon statements between them.

Simonson took possession of the buildings, goods and chattels, Ac., under the bill of sale and proceeded to conduct the hotel business therein. He took in his own name a lease on the land, •expiring May, 1894. When the lease and the wholesale and retail licenses expired in May, 1894, Simonson renewed them .and continued to run the hotel business in his own name, but always recognizing Jernee’s right to one-half of the profits, until ithe foreclosure sale by Ballantine A Sons in March, 1895. Up to the date of this sale Simonson seems to have accounted lor the business transactions and to have substantially complied with his agreement in that respect. He rendered statements which were accepted by the complainant without dispute at the ■time they were delivered. Under the statement of October 1st, 1894, showing a profit, Jernee accepted payment of one-half of •the profits stated. Upon the sale of the premises under Ballantine’s mortgage in March, 1895, Simonson claims to have .sent Jernee a statement of all transactions in the business to that •date (March 2d, 1895). Jernee admits receiving a letter which referred to an enclosed statement, but now denies having seen .any such statement. At the time of the receipt of the letter, however, Jernee seems to have raised no question as to the en.closure of the statement. The only disagreement between them us to these matters seems to be in relation to the Ballantine mortgage. Jernee claims that Simonson undertook with him to pay ■off the Ballantine mortgage by discounts on beer purchased from Ballantine & Sons. There was an agreement between ■Simonson and Ballantine & Sons, that in consideration for forbearance to foreclose that mortgage Simonson would assume it and pay it off by discounts on beer bills; but it is not shown ■that Jernee was any party to that arrangement, nor that he had .any right to the benefit of it, nor is there any sufficient evidence that discounts had been allowed which ought to have been •credited under it. Jernee was a defendant in the Ballantine foreclosure suit, but failed to make any defence thereto. If he had any right to demand that credits should have been made on that mortgage which were not allowed, he should have set it up by way of defence in that suit.

Simonson appears to have performed his agreement both in •carrying on the hotel business aud in rendering statements and paying to Jernee one-half of the profits, down to the time of the foreclosure sale. Jernee acquiesced in the management of the buisness aud accepted the statements rendered.

The question whether “or not the business association between the parties was terminated by the foreclosure sale, or still continues, remains to be considered. In this connection .it is insisted by the complainant that the relation between the parties growing out of-their agreement, constituted a partnership which has not been dissolved, and that the defendant should formally account. I am unable to concur in the view that the association between Simonson and Jernee was a partnership.

The terms of the agreement created no community of interest in the property, either in title or in use. The property was absolutely sold to and owned by Simonson. There was indeed a ■community of interest in the profits of the business to be conducted by Simonson, but that community of interest does not seem to have been created with the intention to form a partnership, but rather to have been the agreed method by which Simonson contracted to pay Jernee for the property. The language of the agreement on this point is.

“as part consideration for said sale and transfer, the said Simonson hereby agrees to carry on the hotel business as heretofore conducted by said Jernee, and in a careful and business like manner, and keep an accurate account of all purchases of stock and all expenses, etc., etc., and of the profits arising therefrom, and to turn over to the said Jernee at stated times-one-half of the net profits of the business, as the same shall be found to have accrued upon a settlement between-the parties, and the said Jernee hereby agrees to-accept said share of the profits of the said business as a part of the consideration of said sale.”

Jernee had no further relation to the business than this sharing of the profits; he was not, as between himself and Simonson, responsible for any losses; he had no part in conducting the business; he could not prevent the contracting of debts nor could he incur them. Nor was Simonson acting for himself and Jernee in carrying on the business, but for himself alone and in-his own name. He was to account and render a statement, but it was solely for the purpose of ascertaining the profits and satisfying Jernee what they amounted to when settlements were had between them. Simonson alone conducted the -whole business. The element of agency for each other in and about the business in question, which is perhaps the most conclusive evidence of the existence of a partnership (Cox v. Hickman, 8 H L. Cas. 268; Wild v. Davenport, 19 Vr. 135), does not appear in this matter.

The relations between Jernee and Simonson were created by contract between themselves; what these relations are is sought to be determined in a suit by one against the other. No claims of creditors or other outside parties interfere with the contractual relationship thus arising. The question to be determined is simply, did the parties intend by their agreement to. form a partnership ? The general rule is that if there is a community of interest in the profits, but not in the property, no partnership' is created between the parties themselves if that be contrary to their real intentions. 2 Greenl. Evid. § 482. It is generally true that a participation in the profits of a business standing alone, makes those who share to be partners as to third persons, but as between the parties to the agreement, their intention controls. In Sheridan v. Medara, 2 Stock. 477, one loaned money to another under an agreement that the lender should participate in the profits of the business carried on solely by the borrower in his owm name. The chief-justice said, “probably neither Combs or Sheridan expected there was a partnership; they did not intend to become partners; as between themselves, they were not partners.” This doctrine is recognized in Hargrave v. Conroy, 4 C. E. Gr. 283, and in Wild v. Davenport, 19 Vr. 136, in which case it was said, “ participation in profits or the right to participate in profits is cogent evidence, and standing alone, may be conclusive evidence of a partnership; but in the case of the party who has not acted as a principal in the business, and therefore is not ostensibly a partner, may be explained and overcome by other circumstances.” See also Seabury v. Bolles, 22 Vr. 107.

I cannot find any evidence in the agreement between Jernee and Simonson of an intention to create a partnership, nor did the actions of the parties preceding the time when the Ballantine mortgage was foreclosed indicate that they regarded themselves as partners. The only demand Jernee ever made upon Simon-son was for money; he wanted to inspect the books and accounts to see'if profits had not been made, so that' he could get his share. He never sought to interfere in the business, nor to have it conducted differently from the way Simonson was carrying it on. In short, Jernee only sought what the agreement gave to him, a share in the profits. The agreement on which this question of partnership is raised, is quite similar to one construed in the case of Warwick v. Stockton, 10 Dick. Ch. Rep. 65, 66. In that case Vice-Chancellor Pitney, speaking of the written agreement between the parties and their relations thereunder, says: “ These features show that the relations were not those of partners but a mere common interest in a joint adventure, in which one party took all the risk of losses and the other party had a share of the profits, if any. In my judgment the defendant continues to be at all times the legal and equitable owner of the whole plant and business, and has the full control thereof subject to the duty to account for the manner in which he conducts it, and for one-half of the profits.”

But whether Jernee and Simonson were partners or not, their association was terminated by the sale of the hotel business and personal property under the Ballantine mortgage. That mortgage was created by Jernee. Simonson took the property and the business subject to it. Nothing was stipulated as to how long the agreement between them should continue. When the licenses and lease expired in May, 1894, Simonson had them renewed for the benefit of the business, and continued it until prevented by the foreclosure of the mortgage. The complainant has failed to show any wrongful act or omission on the part of the defendant which brought about the foreclosure of that mortgage. Neither party seems to have been able to prevent it. The possibility of that foreclosure was a fact, subject to which all their arrangements were made. They must have known that a foreclosure sale would take away the business and the property concerning which they made their arrangements. It has been said that in trading enterprises, emergencies may arise which will not only justify but require the cessation of the business, and that such contingencies must have been within the contemplation of the parties in forming the contract. Wood v. Warner, 2 McCart. 87. The sale of the personal property and business under the mortgage was the happening of such an event as ended the relations between the parties growing out of their agreement. It was a disposition of the subject-matter of their agreement by a title superior to that under.which their contract was based. It was held (Renton v. Chaplain, 1 Stock. 65) that a sale of an interest in a partnership, under judgment and execution, dissolved the partnership. The same principle must apply to the relations between Simonson and Jernee.

The sale of the entire property and business 'concerning which their agreement was made, under a prior lien created by one party and recognized by both, in a proceeding to which both were defendants, must be held to have discharged their contract whether it was a partnership or merely a profit sharing.

The complainant insists that Jernee should account for the Hotel Windsor as to its furniture and fixtures which were not covered by the Ballantine mortgage. The personal property named in the bill of .sale, located at the Hotel Windsor, was sold .absolutely to Simonson for a valuable consideration paid, and he is under no obligation to account for it. Jernee had used the Hotel Windsor as a sort of adjunct to his hotel business carried on at the corner of Passaic and Railroad avenues. The business •done at the Hotel Windsor was entirely subservient to and dependent upon the main hotel, and had no separate existence. Upon the sale of the main hotel at the corner of Passaic and .Railroad- avenues, the business done at the so-called Hotel Windsor was ended. It no longer had.any relation to the hotel •business named in the agreement between the parties, consequently their can be no obligation upon Simonson to account for a business which terminated with the foreclosure sale and .had no existence afterwards.

The complainant has entirely failed to show- any wrongful or -fraudulent acts or contrivances on the part of the defendant, bringing about the purchase of the property by the Ballantines under his mortgage, which entirely divested the interest of both .Simonson and Jernee. When Simonson subsequently took the property from the Ballantines he purchased -their superior title, .and there was neither agreement nor obligation on his part to .account to Jernee for profits on the business thus acquired.

There should be a decree that the bill of complaint be dismissed, with costs.


author: Emery, V. C.

text:
    The Congregational Home Missionary Society v. Henry Van Arsdale et al.
    [Filed March 18th, 1899.]
    1. A legacy was given “to the Home Missionary Society of America.”— Held, to be a good legacy to “the Congregational Home Missionary Society.”
    2. Under a gift to a legatee by an erroneous name, without any descriptive words, parol evidence is admissible to prove whom the testator intended to (take.

      Heard on bill, answer, replication and proofs.

      Mr. Gortlandt Parker, Jr., for the complainant.

      Mr. Arthur Denman, for the defendant Presbyterian Board of Home Missions.
   Emery, V. C.

The testatrix, Mrs. Julia Van Arsdale Jones, bequeathed" $3,000 “to the Home Missionary Society of America.” There-is no corporate body with this precise title, and the question in this case is whether the complainant is the legatee intended by this description, or whether the corporate defendant is. No other object of bounty is suggested. The complainant, in the year 1871, was incorporated under the laws of New York by the name of “ The American Home Missionary Society,” for the purpose of assisting feeble congregations and of sending the-gospel and the means of Christian education to the destitute-within the United States. Previous to the incorporation and from the year 1826, an unincorporated body with the same title-had carried on missionary work of the same character. Originally this association had been composed of representatives, or members, of four church bodies, viz., the Congregational, Dutch Reformed, Presbyterian and Associate Reformed, but in 1837 the Presbyterian Church divided into two branches known as-Old and New School, and only the New School branch continued the connection with the mission work carried on by the American Home Missionary Society. Mrs. Yan Arsdale Jones, the testatrix, then Mrs. Yan Arsdale, united with the First Presbyterian Church of Newark, a New School body, in 1857. She ceased residing in Newark about 1864, when her husband, Jacob Yan Arsdale, died, and in 1879 married Mr. Jones, with whom she lived in Maryland until his death in 1886, after which she lived in Princeton, N. J., until the fall of 1895, when she returned to reside in Newark, where she died in May, 1896. Her will' was executed in February, 1896, and revoked all previous wills,, one of them now produced being a will dated December 14th, 1892, in which she gave and bequeathed $5,000 to the Home-Missionary Society of America,” and the draughtsman of this will (A. Pennington Whitehead, Esq., of the New Jersey bar), says that he obtained this language in substance from Mrs. Jones, the testatrix.' He had drawn several previous wills for Mrs. Jones and one about 1887, for which she gave him a written memorandum made by herself, now produced, in which three legacies, among others, were marked :

“55,000 Home Missionary Society.
“53,000 Bible Society.
“52,000 Tract Society.”

In the will of 1892 the Home Missionary Society was described as “ the Home Missionary Society of America,” the Bible Society as “ the American Bible Society,” and the Tract Society as “ the American Tract Society.” There are no legacies to the two latter societies in the will of 1896, but in the will of 1892, as well as that of 1896, there is a legacy to another missionary society not mentioned in the memorandum, viz., $1,000 “to the Women’s Union Missionary Society of America for Heathen Lands, incorporated in New York, in 1861.” No other bequests to missionary societies appear either on the memorandum for the will of 1887 or the wills of 1892 or 1896. During Mrs. Jones’ early connection with the First Presbyterian Church and up to 1861, three years before she left Newark, this church contributed regularly to the American Home Missionary Society, and after that time subscriptions to this society (apparently individual) were received irregularly from the church; In 1861 the New School Presbyterians formed a body called a board or committee of home missions for their own mission .work, and from 1863 the Newark church seems to have contributed to this board regularly down to 1870, when the two bodies, old and new school, united.

In April, 1872, the home missionary boards of the old and new school, which had been respectively incorporated under the name of “ The Trustees of the Board of Domestic Missions of the General Assembly of the Presbyterian Church in the United States of America,” and “The Presbyterian Board of Home Missions,” were merged into the present corporation, under the corporate name of “ The Board of Home Missions of the Presbyterian Church'in the United’States of America,” which was at the date of the will, and is now, the name of the corporate defendant. The corporate name of complainant was, in August, 1893, and after Mrs. Jones’ legacy in the will of 1892, changed from “The American Home Missionary Society” to its present name, “ The Congregational Society of America,” by an order of the supreme court of New York, and this change was legalized by act of the legislature on May 11th, 1896, three months after the execution of the will now in question, and a few days before Mrs. Jones’ death. It does not appear that the testatrix knew of this change in the name of the complainant after the execution of her will in 1892, and in view of the fact that the will of 1896 was, in respect to the name of the legatee, an exact copy of the will of 1892, and the will of 1892 was, as the draughtsman says, used in drawing the will of 1896, I think there can be no reasonable doubt that the complainant (under its former name of “ The American Home Missionary Society ”) was the legatee intended by the will of 1896, if it was the legatee intended by the will of 1892, as “ The Home Missionary Society of America.” While it appears that there is no corporate body of the precise latter name, the substantial similarity of the description with that of the complainant’s former name, is so close that when taken in connection with the fact that the church with which deceased first united continued its mission work with the complainant altogether up to 1861,- and to some extent by individual members up to 1864, the time' deceased left Newark, the intention to designate complainant in the will of 1892 would seem to be clear. The defendant’s claim to the legacy rests not on the substantial similarity or identity of corporate title, but upon parol proof of testatrix’s declarations and acts subsequent to the time of her leaving Newark, which are claimed to show that the testatrix by the legacy intended the defendant the Presbyterian Board of Home Missions. Without going over the evidence in detail, I will merely state that it does not in my mind establish this contention or go any further than to show that Mrs. Jones, after she left Newark in 1864, retained to •some extent her interest in a Ladies’ Missionary Society connected with the First Presbyterian Church of Newark. "While ■she still retained her membership in the church, she attended regularly the churches of other denominations while away from Newark. She contributed to some extent (how much does not appear) towards this Ladies’ or Women’s Home Missionary .Society connected with the Newark church, which society sent, money and supplies of clothing in mission work, some of it ■entirely independent of the church board of missions and directly to the persons to be benefited, and some of the funds to the women’s board or committee on home missions in New York, a department or branch of the Presbyterian Church Board of Missions which was first created, so far as I can make out from the ■evidence, after 1872.

None of the money contributed to this ladies’ society of the Newark church went directly to the board of missions from the Newark society, nor does it appear that the testatrix knew that any of it ultimately went there, or that she ever made any other •contributions through the church, or directly or indirectly to the Presbyterian Board of Home Missions. A lady who was (up to 1892 at least, when she left her $1,000 by. her will) a friend of the testatrix, was actively-interested in the work of the church society, and I find nothing in the evidence to establish that the ■corporate defendant itself was ever a supposed direct object of the bounty of the testatrix, either during her life or by her will. The evidence of this lady that Mrs. "Van Arsdale told her that ■she was going to leave in her will money for the Home Missionary Society, that they should have her aid after she was gone, is clearly ineffective for the purpose of making the present legacy a legacy to the corporate defendant, even if admissible at all on the question of identity. Upon all the evidence in the cause I reach the conclusion the defendant corporation was not the legatee intended by testatrix as the Home Missionary Society of America, and that the complainant was the legatee intended. I will therefore advise decree that the legacy be paid to the ■complainant.