author: Howell, Y. C.

text:
    John N. Vargo et al. v. Alexander Vajo et al.
    [Submitted April —, 1909.
    Decided May 20th, 1909.]
    1. Evidence, in a proceeding to prevent the property of a religious society from being diverted from its original use, held to show that a meeting of the society, called to determine whether the society should continue to affiliate with the church organization with which it had formerly affiliated, or should connect itself with another society, was regularly called, and that all the proceedings which took place at such meeting were regular and in accordance with the course and practice of the society.
    2. Where a meeting of a religious society is held to determine whether the society shall longer affiliate with the branch of the church with which it had formerly affiliated, or shall connect itself with another, and it is unanimously decided at that meeting to connect itself with another society, and no appeal is taken from such action to any higher judicatory of the church, such action is final, and a subsequent meeting of 'the society cannot disturb the decision.
    3. Evidence, in a proceeding to prevent the diversion of church property from its original use, held to show that the Hungarian Evangelical Reformed Congregation of Trenton is only subject to the supervision of higher church authority in ecclesiastical matters, and that it has full control over its property, and cannot be restrained from reincorporating as the Magyar Reformed Church of Trenton, and transferring its property to the latter church and loaning money and placing a mortgage on such property.

      4. Where a meeting of a church society is regularly called and conducted, and the society determines at such meeting to terminate its connection with its superior ■ church body and affiliate with another church, there being nothing to prevent such action in its charter, members of the society who do not agree with the majority lose any right which they may possess to bring an action to prevent the society from carrying out its resolution by failing promptly to commence an action, as laches will prevent them from securing favorable consideration in a court of equity.
    On final hearing on bill, answer, replication and proofs.

      Messrs. Bird & Blackman, for the complainants.

      Mr. Alfred F. Skinner and Mr. Morris Cukor (of the New York bar), for the defendants Yajo and others.

      Mr. Foster M. Voorhees, for the Magyar Altalanos Hitelbank of Bnda Pesth.
   Howell, Y. C.

The bill in this case is filed for the purpose of obtaining relief against a religious society incorporated by the name of The Magyar Reformed Church of Trenton, and against its officers, with respect to certain real estate and personal property which the complainants claim have been diverted from their original uses. The facts are voluminous. Some time prior to 1896 a number of Hungarians who resided at Trenton formed a voluntary society for the purpose of religious worship. This society was incorporated in that year by the name of the Hungarian Evangelical Reformed Congregation of Trenton, New Jersey, by the usual certificate signed by five trustees, duly acknowledged and recorded in the office of the county clerk of Mercer county. It was thereby certified that on the 26th day of April, 1896, the Hungarian Evangelical Reformed Church of Trenton, New Jersey, a congregation of Christians of the denomination known as the Reformed Church in the United States, assembled at their house of public worship and elected trustees with a view of becoming incorporated according to law. Eor the first few years its affairs seem to have been satisfactorily conducted. It had some difficulty when there was a vacancy in procuring regularly-ordained clergymen who were competent to fill the pastorate and at the same time speak the Hungarian language. This class of clergymen could not be found in this country; they had to be brought over from the mother land. Tet the congregation prospered to such an extent that about two years after its incorporation it purchased two tracts of land by two deeds, of which the following are general descriptions. The first deed,was made on June 23d, 1898, by Edward Connelly and wife to

“The Trustees of the Hungarian Evangelical Reformed Congregation of the city of Trenton in the county of Mercer and State of New Jersey, a body corporate created and existing under and by virtue of the laws of the State of New Jersey, and being part of and connected with the Reformed Church in the United States.”

The other deed was dated on June 25th, 1898, and was made by John Watson and wife to

“The Trustees of the Hungarian Evangelical Reformed Congregation of the city of Trenton, county of Mercer and State of New Jersey, a body corporate, created and existing under and by virtue of the laws of the State of New Jersey, and being part of and connected with the Reformed Church in the U. S.”

Later on it acquired two other tracts, one by deed dated April 9th, 1900, made by Carrie W. Satterthwait to “The Trustees of the Hungarian Evangelical Eeformed Congregation of Trenton, 1ST. J.,” and the other dated April 8th, 1905, made by John E. Wargo to “The Trustees of the Hungarian Evangelical Eeformed Congregation of Trenton.” These tracts of land were owned by the society at the time of the events hereinafter mentioned. Upon this land the society had in the meantime erected a church edifice and a parsonage, and there were also some other buildings on the premises which were let to tenants.

Prior to and at this time there was in existence a church judicatory called “The Eeformed Church in the United States,” which had some sort of ecclesiastical jurisdiction over a large number of churches. This judicatory was governed by a set of rules called the Constitution of the Eeformed Church in the United States. The Trenton church became affiliated with this judicatory on September 26th, 1899, and came under the ecclesiastical jurisdiction of the Philadelphia classis thereof, and from that time on for a number of years the Trenton church sent delegates to the annual meetings of the Philadelphia classis. There were many churches affiliated with the Reformed Church in the United States, which were composed of Hungarians, among whom only the Hungarian language was used. These churches petitioned the. proper authorities of the Reformed Church in the United States for a direction that they be set off into a classis, to be called the Hungarian classis, but still under the ecclesiastical jurisdiction of the Reformed Church in the United States, and such proceedings were had that a Hungarian classis was organized to which the Trenton church was assigned and with which it became affiliated in June, 1905. This continued to be the situation of the Trenton church until the early part of 1907. It sent its delegates to the meetings of the higher judicatories; it recognized the jurisdiction of the Reformed Church of the United States over it, at least in spiritual matters, and it received annually a contribution from a board of missions which was associated with the Reformed Church-in the United States, and was organized for the purpose of assisting its weak churches. This contribution was in the form of an annual addition to the salary of the pastor. The difficulty, however, of procuring properly educated ministers for their church still continued, and it became a subject of rather frequent conversation among the men who formed the consistory of the church and others who were its interested .supporters.

There was, during all this time, a church organization in Hungary which was named the Universal Evangelical Reformed Church of. Hungary. This appears by the .testimony to have been and to be the highest judicatory of a denomination of.Hungarian Christians. In 1904, Count Joseph Dagenfeld visited the United States in the interest of this Hungarian body, and among the other churches that he called upon was the Trenton church, which he desired to have affiliated with the Hungarian body that he represented; his reason being that the Hungarian church was in a position to supply educated clergymen who spoke the Hungarian language, to the weaker churches in the United States, and would also make larger contributions toward the support of tlie worshiping assembly than was being provided by the Beformed church. Little or nothing appears to have been done about the matter until the month of February, 1907, yet Dagenfeld’s representations and promises were meantime much discussed by the members of the congregation. In February, 1907, the Eev. Alexander Yajo, who was the incumbent of the pastorate of the Trenton church, received a call from a church in Toledo, Ohio, which had a larger congregation and was perhaps a more important society than the one to which he was ministering. He communicated this fact to several members of his consistory, who casually met at his house on the evening of Saturday, February 16th, 1907. The meeting was purely informal, and is not claimed to have been a meeting of the consistory; but it was decided then and there that the pastor should on the following day, Sunday, February 17th, call a meeting of the consistory at the close of the church services in the afternoon of that day, and should likewise call a general meeting of the congregation to be held on Sunday, March 3d, both meetings, that of the consistory and that of the congregation, being called for the purpose of discussing two things—first, the call which the pastor had received from the Toledo congregation, and second, the question of dissolving the relations of the church with the Reformed Church in the United States and becoming affiliated with the Universal Evangelical Reformed Church of Hungary, the sole purpose of the latter being to have better facilities for procuring pastors when necessary, and also to obtain a larger degree of support than could be afforded by the agencies of the Reformed church.

On Sunday, February 17th, 1907, the pastor, in accordance with the custom of the church, announced that there would be a meeting of the consistory at the close of the church services. So far as I can see this meeting was regularly called. The bylaws provide that among the duties of the pastor is the duty “to summon the consistorial and congregational meetings and preside over them.” There is no other specific by-law or rule on the subject. At that meeting there was a discussion of the matters for which the meeting was called, and it was decided, without dissent, one at least of the complainants being present, that a general meeting oE the congregation should be called, and that the Eev. Ladislaus Bede, who, in some way, represented the Hungarian church, should be invited to make an explanation of the plan of affiliation with that body. On the morning of that day there were posted on the doors of the church a notice, signed by the pastor and the treasurer, who is also called curator, calling a general meeting of the members of the congregation to be held on Sundajq March 3d, 1907, for the purpose, among other things, of discussing the proposition to join the Hungarian society. The meeting was likewise announced from the pulpit and the object of it stated by the pastor. On February 28th, 1907, there was a meeting of the consistory, which likewise appears to have been regularly called. The Eev. Mr. Bede was present. At this meeting it was decided by the consistory, without a dissenting vote, that the congregation should sever its relations with the Eeformed church and should become affiliated with the Hungarian church, and that the whole matter should be submitted to the general meeting of the congregation which had already been called for Sunday, March 3d, 1907.

Besides the by-law above quoted there does not appear to have been any written rule in relation to calling meetings of either the consistory or of the congregation; a custom, however, was shown to have been in vogue in the Trenton church since its organization in relation to each. The pastor testified that his custom of calling the consistory together was, at the beginning of the church services to request the members of that body to remain after the service had been concluded, and that the method of calling congregational meetings was, for the consistory to pass a resolution for the purpose, then he, the pastor, would announce the meeting from the pulpit two weeks in advance, and a two weeks’ notice was always posted on the front door of the church edifice. The absence from the constitution of the church of a specific method of calling these meetings must have been deemed to be a defect in the laws of the church, for the reason that the new constitution adopted in 1908 contains definite rules on the subject. The practice which was followed, however, is one which is prescribed in article 40 of the church constitution which was in force at the time for calling meetings for certain objects therein specified. It declares:

“All matters of this kind must first be investigated and determined by the Consistory and then be' submitted for final decision to the congregation, a meeting of which shall be convened for the purpose by the Consistory on some suitable day.”

In this case, the matter in question was acted upon at a regularly called meeting of the consistory by a unanimous vote and was then submitted to a general meeting of the congregation to be held on March 3d, which was called by a fair and reasonable notice. In pursuance of the notices given a large number of people who belonged to the congregation assembled after the regular church services on that day, some of the witnesses putting the number as high as three hundred. The pastor explained the situation to the congregation, and, among other things, he stated that he proposed to have the congregation vote on the question of affiliating with the Hungarian church, but that if there was one dissenting voice, so far as he was concerned, he would let the matter drop. .

There is evidence in the ease to the effect that everyone of the complainants was present at that meeting, and that when the vote was taken, they voted in the affirmative. I find, as a matter of fact, that when the question was put by the pastor he called upon the people present to vote upon it by rising. When this call was made every person in the room stood up. In order to make sure of the fact the pastor appointed Joseph Horwath, the curator, and John E. Wargo to ascertain for him how the vote stood. They both say that they walked down the aisles between the benches to the rear doors, that they had an opportunity to see, and did see, whether everyone was standing or not; that they returned to the front of the church where the pastor was and reported to him in a loud voice which could be heard all over the church edifice that every person was standing—that is to say, that everyone who was present had voted in favor of affiliating with the Hungarian church. The 'testimony of the pastor, Mr. Horwath and Mr. Wargo to this effect is corroborated and supported by the testimony of several other witnesses, and while the complainants contest this position, I am firmly of the conviction that all who were present either voted in the affirmative or remained seated and did or said nothing. After the affirmative vote had been taken the pastor testified that he called for the negative vote, and no one appearing to vote in the negative, he declared the resolution carried. Jolm Bona, one of the complainants, testified that he attempted to speak, but that he was prevented from doing so by the pastor. The pastor explains this incident by stating that Bona did not attempt to speak until the close of the meeting when he was in the act of pronouncing the benediction; then, of course, it was too late. Up to this point, T think, the evidence shows very clearly that the meeting which was supposed to be the decisive meeting, the one held on March 3d, 1907, was regularly called, and that all the proceedings which took place at it were regular and in accordance with the course and practice of the religious body in question. I conclude that the vote was unanimous in favor of the secession from the Reformed Church of the United States. But assuming that the vote was not unanimous and that there was an objection made or a negative vote cast by the six complainants who were members of the congregation, would that be sufficient to invalidate the proceedings taken at the meeting P Assuming that there is a method by which this Trenton church could disconnect itself from the Reformed church and become affiliated with the Hungarian church, must it be upon the consent of every member of the church or by and with the consent of every member of the congregation ?

It is very certain that immediately after the meeting objections were made which came to the ears of the pastor and the consistory, and was also called to the attention of the classis, which was the next higher judicatory of the Reformed church. It resulted in another general meeting of the congregation held at the close of the church services on April 7th, 1907. The Rev. Mr. Csutoros, the president of the Hungarian classis of the Reformed church, was present. He had come for the purpose of making explanations and endeavoring to ascertain what were the facts about the secession. Eor this purpose he put the question to the meeting anew. Four objectors arose, John N. Yargo, Mrs. Dubos, Mrs. Yatchi and John Bona. This meeting, however, was of no effect on the question at issue. That had already been decided. At a meeting of the whole congregation regularly called, there had been a unanimous vote in favor of the secession from the Eeformed church and an affiliation with the Hungarian church, and no appeal was taken from the action of the congregation to any higher judicatory of the church.

The next question that arises is whether the Trenton church had an inherent right to so secede.

The complainants say that when once affiliated with the higher judicatory of the church, there can be no secession by any of the units without the consent of the supervising body. This claim makes it necessary to ascertain what the relations of the two bodies really were. The complainants urge that the certificate of incorporation and the two first conveyances to the corporation record the statement that the Trenton church belonged to the denomination known as the Eeformed Church in the United States, and was a part thereof, and was connected therewith. These statements, however, were all made prior to the time when the church was actually received into the Philadelphia classis, and while it was an undoubtedly independent religious society. It has been held, as defendants’ counsel has shown by eases cited in their brief, that such a situation creates a mere voluntary connection which may be broken at any time by a majority vote of the church. Lawson v. Koibenson, 61 Ill. 405; Heckman v. Mees, 16 Ohio 584; Miller v. Gable, & Den. 492. In Watson v. Jones, 13 Wall. 679, the supreme court of the United States stated the law to be that where property had been acquired by an independent religious society, the court would not interfere with its disposition of its property. If there is anything in the constitution of the Eeformed church which denies the right of secession without the consent of the supervising judicatory, then it would be the duty of this court to follow the ecclesiastical rule and not permit the secession to take place except in accordance with the laws of the church. If, however, there is nothing which prohibits such action on the part of the inferior body this court would not be justified in declaring the secession unlawful for the reason that there was no prohibition of such action. If, again, the ecclesiastical laws permit this sort of action, then the court will not take cognizance of any proceeding which seeks to restrain the right of the individual church to control its own property. An examination of the constitution of the Eeformed Church in the United States discloses the fact that the ecclesiastical judicatories of that church are—first, the consistory; second, the classis; third, the synod; and fourth, the general synod; and in relation to these bodies this fundamental law in article 2i provides as follows:

“These judicatories shall take cognizance only of ecclesiastical matters; their power is wholly spiritual; they possess the right of requiring obedience to the laws of Christ and of punishing the disobedient by excluding them from the privileges of the church, but not by the infliction of any civil penalties.”

By article 4.0 the jurisdiction of the consistory, which is the lowest judicatory, is defined. It is as follows:

“To the Consistory as such belongs the choice of delegates to represent it in the higher judicatories of the church and the management and control of the temporal concerns of the congregation. In the calling of a minister, the judging of a minister or other officers of the church, the purchase or sale of property, the Consistory can determine nothing conclusively without the consent of a majority of the congregation present. All matters of this kind niust first be investigated and determined by the Consistory and then be submitted for final decision to the congregation, a meeting of which shall be convened for the purpose by the Consistory on some suitable day.”

The jurisdiction of the classis does not include the management and control of the church property, but does include whatever concerns the spiritual welfare of the several congregations committed to their care which does not come within the power of a consistorj'. They decide cases which are brought before them by appeal or complaint from consistories as well as all cases respecting either ministers or congregations which may arise within their jurisdiction and are regularly brought before them, such as the forming of new congregations, the determining of their boundaries when they are contested, the decisions of controversies between existing congregations, and the forming or dissolving of connections as may be requested or the classis may deem expedient. The synod and the general synod do not appear to have any jurisdiction over the church property at all. In view of the provisions of the twenty-fourth article of the constitution and- the absence of any prohibitory mandate in the fundamental church law, I conclude that the government of the Reformed Church in the United States was not Episcopal or Presbyterian in form, but that it was congregational to the extent that each worshiping unit had the absolute control of its own property, and that its connection with the main body was merely spiritual, disciplinary and doctrinal. The express renunciation of all other connections by the terms of the twenty-fourth article necessarily lead to this conclusion. The two experts in the ecclesiastical law of the Reformed church, who were called as witnesses, both stated that there was not any express rule forbidding secession.

It is argued on behalf of the complainants that the expressions made use of in the certificate of incorporation of the Trenton church, and in the two deeds of conveyance to it, are sufficient in themselves to create a trust in favor of the denomination known as the Reformed Church in the United States. As to the expression in the charter, I think that that was used merely for the purpose of stating what denomination of Christians the church members belonged to, and as to the expressions in the deeds, it is quite clear that they were at the time not true, because the Trenton church was not received into the Philadelphia classis of the Reformed church until a considerable time after these deeds had been executed and delivered.

The evidence shows that after the meeting of March 3d, 1907, there was no change whatever in either the form or the substance of the religious teachings or of the doctrines to which the members of the congregation adhered. There was no dismissal of the pastor nor any break in the relations between him and the congregation. The congregation continued its identity unchanged and unbroken, except that the complainants and certain of their friends declined to recognize the change. The main body of the people comprising the congregation continued to worship in the same manner as theretofore, and in all respects the situation was unaltered, except that the congregation considered itself affiliated with the Hungarian church and no longer with the Beformed church. The case comes within the rule announced by the supreme court in Pulis v. Iserman, 71 N. J. Law (42 Vr.) 408. There the question was whether there might be lawfully a secession by the Paramus church from the classis of the True Beformed Dutch Church. Mr. Justice Dixon says, in the opinion, that inasmuch as the constitution of the True Be-formed Dutch Church contained no explicit declaration on the subject of secession, it must be regarded as permitting that right, and, pursuing the subject, he says: “That the Paramus congregation, when, by unanimous vote, it separated from classis and synod, did not ipso facto lose its congregational or corporate character is a proposition supported by the decisions in Doremus v. Dutch Reformed Church, 3 N. J. Eq. (2 Gr. Ch.) 332, and Den v. Pilling, 24 N. J. Law (4 Zab.) 658, and if, as we think, it thereby exercised its right of secession, it became an independent congregation. The authority of classis and synod over it being thus terminated, the subsequent attempts of classis to reconstruct that congregation or to transfer its franchises to a new congregation were futile.” And the result was that the church which so seceded from the True Beformed Dutch Church was permitted to become a Presbyterian church under the care of the Presbytery of Jersey City.

Much reliance is placed by the complainants on the authority of Den v. Bolton, 12 N. J. Law (7 Halst.) 206. That case cannot be regarded as any authority for the present one because the chief-justice states in the beginning of his opinion that the case did not require the court to consider or decide what was the effect upon the joint property of a religious society of the withdrawing of the whole or a portion of its members either with or without a change of doctrine and their union with some other religious denomination or their formation of some new sect or some new ecclesiastical arrangement, nor whether those who thus change or withdraw carry with them any portion of the common funds, thus omitting from consideration the very things which are of paramount importance in the case at bar.

Counsel for complainants considered that Roshi’s Appeal, W Pa. Sl. 468, was decisive of the question of the right to secede. A careful examination of the case, however, shows that the proceeding was taken for the purpose of enforcing an express trust which was impressed upon the land in question.in the deed by which the church took title from the individual who had donated the same and devoted it to a particular use. Whatever is said in that case about the right of the secession must be limited to the particular facts under which that question of law was presented.

After the meeting of April 7th, 1907, nothing was done by either party looking to a reconciliation of their differences. The consistory and trustees then in office remained in office until the midsummer of that year, when a new consistory was elected, which thereafter took steps to carry out the proposed union with the church in Hungary. Meantime the complainants lay still and did nothing to prevent affirmative action on the part of the new consistory and trustees. The things which were done in that direction and for that purpose must have been known to the complainants. Indeed, I can hardly conceive how any important transaction could be had by the prevailing party in relation to church action which could have escaped their vigilance. There is, it is true, no evidence which tends to show that they had actual knowledge of these subsequent transactions, but I think it is fair to assume that they could hardly have taken place without some hint coming to the ears of those objectors.

Hp to this time the church was indebted to the Mercer Trust Company, on its promissory note, for a loan of $1,300, and to one G-rumholz, on a mortgage, for $1,700, making $3,000 in all; about the midsummer of 1907 the consistory had an opportunity to purchase a piece of land adjoining the church property from Mrs. Martba L. Moore. On August 11th, there was a meeting of the congregation at which the pastor stated that the Moore property could be bought for $5,050, but that in order to make the purchase it would be convenient that the church should procure a loan of $8,000, and so fund the said indebtedness and the cost of the Moore property into one loan; that this loan could be had from the Magyar Altalanos Hitelbank of Buda Pesth, Hungary, one of the defendants to this suit. This purchase and the loan were authorized at that meeting. On September 1st, 1907, at a meeting of the consistory, the pastor reported the purchase of the Moore property; that $50 had been paid in advance thereon, and that $200 more was paid on August 27th, and that the balance of $4,800 must be paid by the 1st of November; that for the purpose of procuring the loan a new charter would have to be procured which would bind the church to the Hungarian body, and that the property should be transferred to the corporation thus to be organized. In order to effectuate this step the consistory provided for another congregational meeting to be held on September 8th. At this meeting the pastor stated the necessity of a new charter in order to effectuate the loan, and that it would be necessary to transfer the property to the new corporation; he proposed that the scheme be adopted by the congregation, and that five new trustees should be elected to carry out the plan. The congregation unanimously affirmed the plan and elected as trustees, John E. "Wargo, John Pandek, Andrew J. Dueli, Alexander Kovach and Andrew K. Wargo. I repeat that these public events could hardly have taken place among the Hungarians in Trenton without being heard of by the complainants. They permitted the new charter for a new corporation to be filed on October 3d, and by it the Magyar Reformed Church of Trenton to be organized; they permitted the trustees of the Hungarian Evangelical Reformed Church of Trenton to convey its church property to the Magyar Reformed Church of Trenton by deed dated October 1st, 1907, which was acknowledged and recorded on October 7th, 1907. They permitted the Magyar Reformed Church of Trenton to purchase from Martha L. Moore a tract of land adjoining their property by deed dated October 31st, 1907, for the consideration of $5,-050; and thejr permitted the Magyar church to borrow from the Hungarian bank, through the agencies of the Hungarian church on bond and mortgage on all their church property, the sum of $8,000, a portion of which was used to pay off the indebtedness to Grumholz and the Mercer Trust Company, and the remainder for the purchase of the Moore property. And I say again that these facts must have been known to the complainants, or some of them, because it is in evidence that they, or perhaps a majority of them, attended the church from time to time and called upon the pastor to assist at their weddings and funerals.

In my opinion, if the complainants ever had any canse of action arising out of the facts in this case they lost their right to bring a suit thereon by their inaction after March 3d, 1907. If they had, or considered that they had, a cause of action arising out of the circumstances of the meeting which was held on that day, they should at once have prosecuted the same, and to delay and permit the important transactions above recited to be closed without so much as making inquiry as to what the defendants intended to do, or what they were doing, is such laches as dis-entitles them to favorable consideration in a court of equity.

It should perhaps be stated that after the organization of the new corporation (the Magyar church) the identity of the congregation continued; it consisted of the same persons; it was governed by the same rules and adhered to the same doctrines, and was ministered to by the same pastor as formerly.

The defendants also claim that the six complainants have, by their participation in the proceedings complained of, so far acquiesced as that they ought not now to be heard in opposition. John EToai Yargo was a member of the consistory, attended the meeting of February 17th, and there voted to join the Hungarian church; he repeated this action on February 28th, and the weight of the testimony is that he was at the meeting of March 3d and either voted in favor of the secession or remained silent. John Bona was present at the meeting of March 3d and either voted in favor of the proposition then pending or remained seated. The same may be said of John Scoke, of Joseph Kovach, of George Dubos and Andrew K. Duch. There is some denial of these allegations, but the weight of the testimony is in their favor. Indeed, it was said at the meeting of April 7th, when John Noai Yargo expressed his dissent from the action that had been taken, that he had voted for the proposition on March 3d, and he said in response that he had changed his mind. Some of the complainants have either actually or practically withdrawn from the suit. John Scoke says in his testimony that he was not suing, that they only called him to a notary public because he knew how the church was built, but that he did not sign to sue and that he never would sue. Joseph Kovach and Andrew K. Duch have actually withdrawn from the suit by paper-writings which were put in evidence. Then there is the further fact that these men are mere dummies whose names are being used by the Beformed Church in the United States in an attempt to hold under its jurisdiction the valuable property which the Trenton church has acquired. This appears in the testimony of John Bona. There are many, other difficult and important questions in the suit which I do not find it necessary to decide. One is the relation which the five trustees who were elected on September 8th bear to the present organization, it being argued, on the part of the Hungarian bank, that the case of Doremus v. Dutch Reformed Church, 3 N. J. Eq. (2 Gr. Ch.) 332, goes to the extent of holding them in office, whatever may happen to the other branches of the transaction. Another question is whether the church property of the Trenton church was transferred to the Magyar church by the deed of October 1st, 1907; that is, whether Joseph Horwath, who signed as president, was authorized to execute the deed. Another is perhaps whether the mortgage to the Hungarian bank is a valid lien upon the church lands from a legal standpoint. These questions are not of importance to the present suit under the view that I have taken of the main part of the case. If the persons who were elected as trustees on September 8th were actually such trustees, I do not understand how Mr. Horwath could have authority to sign the deed.

The result is that the bill should be dismissed, with costs, and I will so advise.


source: Caselaw Access Project

license: Public Domain

text:
    Pauline S. von Bernuth v. Frederick A. von Bernuth, Jr.
    [Submitted June 8th, 1909.
    Decided June 17th, 1909.]
    1. Events happening after the bringing of the original suit are interjected into it by leave of the court by supplemental bill or answer, and, as to the facts set up therein, they relate to the dates of happening thereof.
    2. A husband may be enjoined from maintaining- in another staté an action for separation instituted subsequent to the commencement in New Jersey of a suit for divorce by his wife and his appearance and answer therein, where his action is vexatious and harassing to her, and, if the two causes are allowed to proceed, will undoubtedly be embarrassing to the courts of both states, and likewise on the general ground that the cause of action was within the jurisdiction of the New Jersey court before any attempt was made to compel the wife to submit to a foreign tribunal, and where such injunction will not contravene the public policy of such other state.
    On petition for clivorco. Motion for injunction.

      Mr. Thomas L. Raymond, for the motion.

      Mr. Glint on II. Blalce, Jr. (of the New York bar), and Messrs. Sommer, GoTby & Whiting, contra.

   Howell, Y. C.

This is a motion for an injunction to restrain the defendant from further prosecuting an action in the supreme court of New York. On October 5th, 1908, the petitioner filed her petition in this court praying for a divorce against the defendant upon the ground of desertion. This petition was subsequently amended and citation thereon was issued and returned by the sheriff not served. An attempt was then made to secure the appearance of the defendant, who was residing in the city of New York, by substituted service. The order for publication of the substituted notice was made on November 25th, 1908, and the time for answer appointed thereby expired on January 26th, 1909. On January 20th, 1909, counsel for the defendant took an order that he have twenty days additional time in which to file an answer or demurrer to the amended petition. On February 13th, 1909, another order was made on motion of defendant’s counsel extending the time to answer or demur twenty days further. On February 24th a general appearance was entered for the defendant by one of the solicitors of this court, and on the same day he filed an answer denying the allegations of the amended petition.' On March 1st, 1909, he again appeared by counsel to oppose a motion for alimony, and on May 5th, 1909, he filed an amended answer and a cross-petition for an absolute divorce against the petitioner, alleging as the ground thereof her desertion of him. These are all the proceedings in the New Jersey suit which it is of importance to set out.

On March 17th, 1909, the defendant brought an action in the supreme court of New York against the petitioner by the issue of a summons out of that court'directed to the petitioner herein and entitled “action for a separation.” On March 23d, 1909, that court made an order for substituted service on the petitioner ; the summons, with notice of the order, was served upon her on March 24th, 1909. This required her to file her answer in the New York suit on or before April 23d, 1909. The petitioner moves upon petition and affidavits showing these facts to restrain the defendant in the New Jersey action from further prosecuting his action in New York upon the grounds—first, that this court having obtained jurisdiction of the matrimonial status of these parties and of the causes of action between them, is entitled to proceed to a determination of the issue, and 0 second, that the action of the defendant in New York is vexatious and is designed only to hinder and harass the petitioner in her prior action in New Jersey, and to cause her the expense and labor incident to the trial of one issue in two separate actions.

•The suit in this court in favor of the wife, and the defendant’s appearance and answer thereto, were prior in date to the beginning of the New York action. The New Jersey suit relates to the situation as it was at the date of its beginning. The amendment to the petition relates back to that date, and the defence, by way of answer, speaks as of the same date. At the time of the filing of the petition herein the wife claimed that she had a cause of action against her husband for a desertion which began more than two years before. The husband, by his cross-petition, claims to have cause of action against the wife for a desertion which began more than two years before the filing of the cross-petition. The evidence in each case must include all the acts and doings of both parties during the period of desertion alleged. To illustrate, on the issue made on the original petition and answer, it will be competent' for the defendant to bring out matrimonial misconduct on the part of the petitioner as a bar to her action, and if the Tew York suit were to be tried, the petitioner, by way of defence, would be permitted to set up a matrimonial offence committed by the defendant in bar of his Tew York suit. The fact that the original petition and the cross-petition in this court with their respective answers are heard together makes no difference as to the evidence. The adjudication in the Tew Jersey suit must be made on these pleadings, and while the decree will settle the rights of the parties as of its date (Peck v. Goodberlett, 109 N. Y. 180; Randel v. Brown, 2 How. (U. S.) 406), no decree at all could be made unless the parties respectively had causes of action which related back to the earlier dates mentioned. Events happening after the bringing of the original suit are interjected into it by the leave of the court by supplemental bill or by supplemental answer, and when these go in the adjudication as to the facts set up therein, will relate to the dates of the happening thereof.

The defendant in his cross-petition in this suit alleges that the petitioner, without any cause or justification whatever, and without any fault on his part, wrongfully, willfully and obstinately abandoned and deserted him, and that for more than two years then last past she had willfully, obstinately and continuously deserted him, and he prays that he may be divorced from his wife and be awarded the custody of his children. In the complaint filed in Tew York the defendant alleges that the petitioner deserted him without any justification whatever and with intent not to return to him; and abandoned him, and that she had been -willfully and continuously absent from him for a period of more than one year last past; and he prays for a judgment of separation from the bed and board .of the petitioner, and that the court may award to him the custody of his children. The basis of the action in each case is the desertion. The relief prayed for in each ease is founded on the allegation of the fact of desertion. This court obtained possession of that cause of action on the day of the filing of the original petition, and the petitioner insists that for this reason this court should continue to hold the cause and should adjudicate every matter which might by the course and practice of this court be adjudicated between these parties. She likewise claims that the New York action is vexatious and is intended to hinder and harass her in the prosecution of her suit in this court. The defendant maintains that the cause is one governed by the ordinary rules and that it is entirely proper for him to have two suits pending for the same cause of action in two different states at the same time, and that the pendency of one cannot be pleaded in bar to the other. While there is nothing in the case to show that the defendant had in his mind any intent to embarrass the petitioner, his New York action has that effect. She is called upon in this court to defend a suit for an absolute divorce on the ground of desertion. She is called upon in New York to defend against a prayer for a limited divorce founded upon the same general cause of action. She is notified in the New Jersey ease to defend against a desertion which is alleged to have taken place on March 19th, 1907, and in the New York case to defend against a desertion which is alleged to have taken place on July 3d, 1906. She is put to the expense and trouble of defending two actions, when the defendant might have all the relief to which he is entitled, and more than he asks for in New York, by litigating the cause pending in this court. This is undoubtedly vexatious and harassing to the petitioner, and if the two causes are allowed to proceed will undoubtedly be embarrassing to the courts of both states. If, therefore, there exists in the law any proceeding by which this vexatious action of the defendant may be prevented, such proceeding should be applied to this case.

This raises the question oí the power of this court to enjoin persons who are under its jurisdiction from prosecuting actions in the courts of foreign states. Almost the final word was said upon the subject by Lord Brougham in Portarlington v. Soulby (1834), 3 M. & K. 104, but the point has also received much attention in the courts of this state. In Home Insurance Co. v. Howell (1873), 24 N. J. Eq. (9 C. E. Gr.) 238, the facts were these: The Home Insurance Company issued policies of fire insurance to the defendant, Howell, a resident of Illinois, insuring his property in this state. The bill alleged that the defendant had procured the policies by fraud and prayed that they might be declared void and be delivered 'up to be canceled, and the defendant enjoined from bringing any action at law upon them. The defendant was actually served with process in this state, and so came within the jurisdiction of this court. He filed his answer, to which the complainant filed a replication. In the meantime the defendant brought a common law action in a state court in Illinois upon the policies, which action the complainant removed to the United States circuit court upon the ground of diversity of citizenship, and then moved this court for an injunction to prevent the defendant from prosecuting his common law action in the federal circuit. Chancellor Bun-yon granted the injunction; the argument on the point was had on a motion to dissolve it. The chancellor held the injunction upon the sole ground that this court had first obtained jurisdiction over the controversy, and was therefore entitled to hold possession of it for final disposition. Speaking of the subsequent suit in Illinois, he says: “If bringing the suit at law was not a contempt of this court under the circumstances, it surely was a proceeding which this court will discountenance.” The case was cited subsequently with approval in New Jersey Zinc Co. v. Franklin Iron Co., 29 N. J. Eq. (2 Stew.) 422. The next reported case is Kempson v. Kempson (1899), 58 N. J. Eq. (13 Dick.) 94, in which this court enjoined a husband whose residence was in Hew Jersey from prosecuting a suit for divorce against his wife in a foreign state, upon a satisfactory allegation of fraud, which consisted of the husband’s allegation that he was a resident of such foreign state, whereas as a matter of fact- he was a resident of New Jersey. In this case the jurisdiction was exercised upon the ground of fraud, and upon the further ground that the wife was put to the trouble and expense of appearing in a foreign state to resist her husband’s claim, thus making the foreign proceeding a vexatious one. In the same year occurs the case of Hueettinger v. Hueettinger (1899), 43 Atl. Rep. 574, in which Vice-Chancellor Grey, following Kempson v. Kempson, enjoined the husband from prosecuting a suit for divorce in a foreign state, the ground being the fraudulent representation by him of his residence in such foreign state. In both these cases this court claimed jurisdiction over the defendant upon the ground that he was a bona fide inhabitant of this state. A similar injunction was ordered in 1899 in Streilwolf v. Streilwolf, 58 N. J. Eq. (13 Dick.) 563, 570.

The next case that occupied the attention of this court is Margarum v. Moon (1902), 63 N. J. Eq. (18 Dick.) 586. In that case the court enjoined a resident of this state from prosecuting an attachment in a foreign state against his debtor, who was also a resident of this state, for the purpose of evading a law of this state and obtaining in the foreign jurisdiction an advantage which he would not have under the New Jersey law. The opinion is by Vice-Chancellor Reed. He cites the leading cases of Cole v. Cunningham, 133 U. S. 107, and Keyser v. Rice, 47 Md. 203, which has since been affirmed and extended by Miller v. Gittings, 85 Md. 601; 60 Am. St. Rep. 352, and places his judgment upon the ground of the unjust advantage gained by the creditor by the prosecution in the foreign state. In Standard Roller Bearing Co. v. Crucible Steel Company of America, 71 N. J. Eq. (1 Buch.) 61, Chancellor Magie enjoined a proceeding in the courts of a foreign state upon the ground that such proceeding had the effect of harassing and oppressing the defendant therein. Einally, there is the case of Bigelow v. Old Dominion Copper Mining and Smelting Co., 74 N. J. Eq. (4 Buch.) 457, in which Chancellor Pitney declares that the power of this court to restrain persons within the control of its process from prosecution of suits in other states is clear, but holds that upon grounds of comity it should be sparingly exercised. He denied the injunction in that case upon the ground that there the foreign court, being a court of general jurisdiction, had full jurisdiction of the ease in question .which it had acquired several years before the New Jersey action was begun.

Attention has been called to the foregoing New Jersey cases merely for the purpose of showing the grounds upon which the jurisdiction has been exercised in this state. An examination of the general subject will disclose the fact that the courts have exercised the jurisdiction in cases where -the foreign action operates to the substantial detriment of the resident, not only where the claim is equitable, but also where it is legal. In Harris v. Pullman, 84 Ill. 20; 25 Am. Rep. 416, the jurisdiction was put upon the ground that it was inconsistent with interstate harmony that after a suit had been commenced in one of the states, the prosecution thereof should be controlled or interfered with by the courts of another state. In Sandage v. Studabaker, l42 Ind. 148; 51 Am. St. Rep. 165, it was put upon the ground that the foreign suit could not be instituted for the purpose of evading the laws of the state in which the plaintiff lived. In Keyser v. Rice, 47 Md. 203 ; 28 Am. Rep. 448, it was put upon the ground of oppression and vexation. In this case the necessity for the exercise of the jurisdiction is very clear. The facts bring it within that class of cases which permit injunctions to issue to restrain foreign actions on the ground of oppression and vexation, and likewise upon the general ground that the cause of action was within the jurisdiction of the court appealed to before any attempt was made to compel the petitioner to submit to a foreign tribunal. In Miller v. Gittings, supra, an injunction was issued in favor of a resident of Maryland against his creditor, also a resident of that state, to restrain the creditor from pursuing the debtor in the New York courts by process of arrest, a remedy which he could not have in their home state. The case is thoroughly considered and contains a valuable collection of cases on the subject. In Dehon v. Foster, 4 Allen 545, the supreme court of Massachusetts enjoined a citizen of that state from prosecuting a debtor by attachment in Pennsylvania because the effect of allowing "the attachment suit to go to judgment would be to give the attaching creditor a preference over other creditors and so defeat the operation of the Massachusetts Insolvent law. In Hawkins v. Ireland, 64 Minn. 339; 58 Am. St. Rep. 534, a citizen of Minnesota was restrained from prosecuting an action in a foreign state where it was necessary to prevent one citizen from obtaining an inequitable advantage of another. In Vermont it was declared that the jurisdiction. would be exercised in that state only when the ends of justice and not the convenience of parties required it. Bank of Bellows Falls v. Rutland Railroad Co., 28 Vt. 470. In Indiana an injunction issued where the attempt was made to enforce a claim in a foreign jurisdiction in such a manner as would deprive the debtor of his exemption under the laws of Indiana: Wilson v. Josephs, 107 Ind. 490. The same doctrine was held in Ohio in Snook v. Snetzer, 25 Ohio St. 516, and in Wisconsin, Griggs v. Doctor, 89 Wis. 161; 46 Am. St. Rep. 824.

The restraint sought for by the petitioner dogs not impugn the policy of the State of New York, for the reason that the rule which prevails in New Jersey on this subject also prevails there. Indeed, Chancellor Runyon based his opinion in Home Insurance Co. v. Howell, supra, largely on the early New York case of Mead v. Merritt (1831), 2 Paige 402. The doctrine has since been applied in numerous eases. Newton v. Bronson, 13 N. Y. 587; Gardner v. Ogden, 22 N. 7. 327; Slevens v. Central National Bank, 144 N. Y. 50. See, also, Kittle v. Kittle, 8 Daly N. Y. 72. It therefore appears that the power which .is invoked actually inheres in this court, that the present case is one in which it should be exercised, and that the exercise will not contravene the public policy of the State of New York.

An injunction will therefore issue against the defendant to restrain him from the further prosecution of his suit in the supreme court of New York against bis wife for a separation.


text:
    Walter M. Jackson v. Horace E. Hooper et al.
    [Decided July 10th, 1909.]
    1. While a business carried on by two or more persons for a profit, with a community of interest, and a share of profits and losses, is essentially a “partnership,” these requirements may exist without creating a partnership, and there can be no partnership unless the agreement contemplates an agency whereby each is the agent for the other or others.
    2. A “joint adventure” may exist where persons embark in an undertaking without entering on the prosecution of the business as partners strictly, but engage in a common enterprise for their mutual benefit; they each have the right to demand and expect from their associates good faith in all that relates to their common interests.
    3. Though there is a distinction between a partnership and a joint adventure, they are of a similar nature, and the rules of law applicable to partnerships apply to joint adventures, and equity will wind up a joint adventure because of misconduct of one of the parties and for an accounting, and in case of disagreement either party may sue for the dissolution of the agreement, and obtain an injunction to protect his ' rights.
    4. A contract establishing a joint adventure need not be express, but may be implied from the conduct of the parties.
    5. The parties to a joint adventure must act with the utmost good faith towards each other.
    6. Complainant and defendant, engaging in business with third persons, bought out the third persons,.and then organized a corporation and carried on the business by their joint direction. They were equal stockholders in the corporation, and they managed it jointly with the aid of employes. Instead of dividends, they drew profits from the bank accounts of the business; each drawing substantially equal amounts. This corporation was liquidated and other corporations formed. They were equal holders of the stock of the new corporations; but to comply with the law a few shares were put in the names of two other persons. Defendant stated in a letter that the whole business was one concern. The receipts from the business, which was conducted in various countries, were deposited indiscriminately in the same banking accounts from which expenditures were made generally. The funds received from every source were deposited in banking accounts kept in different names, but were subject to withdrawal by complainant and defendant.—Held, that complainant and defendant were parties, to a joint adventure and were not partners.

      On motion for preliminary injunction.

      Messrs. Lindabury, Bepue & Faulhs and Mr. Sherman L. _Whipple (of the Massachusetts bar), for the complainant.

      Mr. Robert R. McCarter, Messrs. Wollman & Wollman and Mr. Henry Wt Taft (of the New York bar), Mr. Benjamin V. Becher and Mr. Jacob Newman (of the Illinois bar), for the defendants.
   Howell, Y. C.

The theory of the bill in this case is that Walter M. Jackson and Horace E. Hooper are and' for a number of years have been partners in business. The bill is filed for the purpose of dissolving the partnership and for an accounting of all the partnership affairs. It also prays for an injunction to restrain the defendants, Horace E. Hooper, Harris E. Burrows, Charles C. Whinery and Eranklin H. Hooper from transferring or disposing of some shares of stock standing in the names of the said Harris B. Burrows, Charles C. Whinery and Franklin H. Hooper, on the books of two corporations, one an English corporation and the other a corporation organized under the laws of the State of Illinois; and also from withdrawing from the so-called partnership business any moneys for the private use of any of the defendants, and from interfering with the assets thereof, except in the regular course and in the ordinary conduct of the business, and from excluding the complainant from participation in the conduct of the business.

The bill alleges that prior to the year 1900 the complainant, J ackson, and Horace E. Hooper had been associated with J ames Clarke and George Clarke in the business of selling subscription books in England; that they purchased the Clarke interest in that business in March, 1900; that at that time an agreement was entered into between Jackson and Hooper which is set out in the bill as follows:

“That upon the acquisition of the Clarke interests and so long as they might be associated together in business, their general policy in respect to their joint undertakings should be determined by mutual assent; that nothing should be done by either in connection therewith contrary to the wishes or against the interests of the other; that in respect of their said business enterprises, their ownership interests and authority and control in management should be on a basis of exact equality and that each should have and exercise the authority and control of equal partners ; a further proviso being- agreed upon to the effect that either might act alone in the routine conduct of the business in the absence of the other.”

The bill further states that Jackson and Hooper carried on an extensive and very profitable subscription book business from 1900 until near the end of 1908; that a part of the business was conducted and carried on under the individual names of the complainant and the defendant Horace E. Hooper, and a part by the use of trade names assumed or acquired for the purpose; that a part of the business was conducted by them directly as individuals and other parts in the names of corporations organized by them for the purpose, and also. through the agency of other individuals, but that their more important engagements and undertakings were made in their own names; that during this period the complainant and Hooper acquired the copyright and trade name of the Encyclopaedia Britannica, the title to which was taken in their individual names, and that the business relating to the sale of the encyclopaedia to individual customers was conducted in the name of some newspaper like the “London Times,” or under some trade name adopted by them; that the accounts in the early history of the business were kept in the books of the Clarke Company, Ltd., but that the banking accounts in which were deposited the receipts from all their business were kept indiscriminately at that time either in the name of Jackson or Hooper or Clarke Company, Ltd., and that these accounts were subject to check by either Hooper or the complainant, and that each drew therefrom at will for his private use.

The bill further states that in order to avoid the provisions of the English Tax law, it was determined, in 1902, to liquidate the Clarke Company, Ltd., and to organize in its place two other companies, one under the English law, to be called Hooper & Jackson, Ltd., to transact business in Great Britain, and the other under the law of the State of Hew York, to be known as the Encyclopasdia Britanniea Company, to transact the other business in which the complainant claims that he and Horace E. Hooper were engaged; that the complainant and Hooper were equal holders of the stock of these corporations, and are now equal holders of the stock of the English corporation; that in 1903, for reasons of convenience not now necessary to be stated, the complainant and Hooper,organized a corporation under the laws of the State of Illinois, which they called the Encyclopaedia Britanniea Company, and which will hereafter be mentioned as the Illinois corporation; that this corporation issued its stock to the complainant and Hooper in equal shares, and they have owned and now own all the shares of that corporation, each being entitled to an equal number; that it became necessary to have other shareholders in these two corporations in order to comply with the provisions of the English and the Illinois law, and for this purpose four shares of the Illinois corporation and six shares of the English corporation were put in the names of Burrows, Whinery and E. H. Hooper, each of whom now claims to be a stockholder hi the said corporation respectively; these are the shares of stock concerning which the complainant prays for an injunction.

The hill alleges further that the business in which these parties had embarked was carried on with great vigor and with great profit all over the world, and that accounts thereof were kept at a central office in London, the accounts relating to the English business after the liquidation of Clarke & Company, Ltd., being kept in the books of Hooper & Jackson, Ltd., and the accounts relating to the business in the other portions of the world being kept in the name of the Illinois corporation; that the cash receipts from the business in all the countries covered thereby were deposited indiscriminately in the same banking accounts, from which expenditures were made generally without regard to whether the business concerned was entered on one set of accounts or the other, or whether the business involved was that conducted in Great Britain or in foreign countries; that these accounts were kept in the name of Hooper & Jackson, Ltd., and in the names of Horace E. Hooper, the defendant, and Walter M. Jackson, the complainant, and until 1904, in the name of the Illinois corporation; that these banking accounts were subject to drafts by Hooper or Jackson individually, and that during the entire period covered by the business, each one drew therefrom at will for his private and personal uses, and each one also drew indiscriminately from each or any of said accounts for the payment of obligations contracted indiscriminately in the name of the English corporation, the Illinois corporation, Walter M. Jackson and Horace E. Hooper; and that these drafts included also payment made for obligations incurred in the name of the “London Times” and other trade names used by them in the conduct of their business.

The bill further alleges that the profits drawn by Hooper and Jackson were drawn in the manner just indicated; that they drew substantially equal amounts; that they were not paid any salaries out of the corporation assets or out of any other assets of the business so called; that no dividends were ever declared by either of these corporations, except on one occasion when it became necessary for some purpose of convenience to declare a dividend of four hundred per cent, out of the surplus of Hooper & Jackson, Ltd.; that no meetings of the stockholders or of the directors of either of these corporations were ever held, except to comply with the most formal requirements of the statutes under which they were organized, and that until the controversy arose which is the foundation of this suit, neither of the said corporations as such had any active hand in the conduct of the enormous business which arose out of the sale by subscription of sets of the Encyclopaedia Britannica. In fact the bill states that only four meetings of the directors of the Illinois company have ever been held; that when these meetings were held no business affairs or business policy was ever discussed; that the three nominal directors of the Illinois company and of the Hew York company, which preceded it were changed from time to time as Hooper and the complainant decreed, and that, in short, the whole business was conducted jointly by Hooper & Jackson as their own business, and that they made use of the corporations they had organized as mere agencies for carrying out the plans which the two principal parties from time to time agreed upon between themselves; and that the other directors as such had little or no knowledge of and no participation in the very large business that was conducted by Messrs. Hooper and Jackson.

The bill further sets out large and important transactions touching the conduct of the said business which were carried through wholly by Hooper and Jackson without the aid of the corporations, and concerning which they made and executed contracts in their individual names. Particularly does the bill refer to an enterprise so conducted known as “The Times Book Club,” which was a specially devised scheme for selling sets of the encyclopaedia through the instrumentality of the “London Times.” The bill states that the outstanding assets of the business, the legal title to which assets is in the two corporations, is very large, approximately two millions of dollars, and this, in addition to the title of the copjuights and publication rights of the encyclopaedia, which, since June 1st, 1903, have stood, and now stand, in the name of the Illinois corporation, and which are valued by the complainant at a very large sum.

The bill further states that just prior to July, 1908, the defendant, Hooper, and the complainant had a disagreement in relation to their joint undertaking which arose out of a proposition to consolidate the encyclopaedia business with the property known as the “London Times”; that negotiations-were afterwards opened for the sale of the encyclopaedia business as a whole; that the breach widened, and that finally steps were taken by Hooper, with the aid of Burrows, Whinery and Franklin H. Hooper, as directors in the Illinois corporation, to exclude the complainant from participation in the conduct of the business; that among other things complained of by him is that the bylaws of the Illinois corporation were amended so that the authority to conduct the entire business of the corporation was practically given to Horace E. Hooper, the president, and by making a majority of the stock necessary for a quorum at a stockholders’ meeting, whereas previously the said Hooper and Jackson were equal stockholders, and no meeting could be held without their joint action. The bill alleges also that Hooper, who has obtained control of the English corporation, is threatening to turn over all its assets to the Illinois corporation, and that he has recorded a vote, he himself being the sole director present at the meeting, authorizing the English company to turn over to the Illinois company sufficient of its assets to cancel a claim which it appears by its books to hold against the English company, but which the complainant says is purely fictitious; that although Jackson is the treasurer of the Illinois company, the board of directors, by a resolution passed in April of the present year, have practically deprived him of the power of signing cheeks, and that his authority to do so has been conferred upon an employe of the company who was elected to the office of assistant treasurer; and that having thus excluded the complainant from the conduct of the business, Hooper means to further disintegrate and destroy the general business by a wasteful and unnecessary sale and disposition of its assets. Complaint is made also that Hooper has been guilty of mismanagement of the business and has conducted the same extravagantly, and that in all these matters he has been aided by his brother Eranklin H. Hooper, and by the two other directors of the Illinois corporation who hold their positions as stockholders in the company only by reason of the fact that they appear upon the books thereof to hold stock which really belongs jointly to the complainant and Horace E. Hooper.

There is hardly any proposition of fact contained in the bill which is not more or less specifically denied, with one very important exception that will be noted hereafter. In particular, does Mr. Hooper deny the making of the partnership agreement, which is sot out at the beginning of the bill. He claims that he and Jackson never entered into any partnership agreement, that they never were partners, but that on the contrary, they were simply equal stockholders, in what are now two corporations, and that there is nothing in the case set out in upwards of five hundred printed pages of affidavits which would justify the court in charging him as a partner with the complainant in this business.

The fundamental feature of the complainant’s case, as it is framed, is the agreement set out at the beginning of the bill which the complainant calls the partnership agreement. If no such agreement exists, or ever existed, it is difficult to perceive how the court can declare in favor of a strict partnership. If, however, the court can imply an agreement from the acts and conduct of the parties, then a different situation may ensue. It is true that in some of the correspondence and in some of the conversations Mr. Hooper and Mr. Jackson spoke and wrote of each other as partners, each calling the other by.that significant name, and it is likewise true that there has been a uniform, systematic, energetic and successful course of business between these two men which in the absence of an express agreement might indicate an implied agreement or tacit understanding to carry on a business jointly and for their joint benefit.

There are some statements which, for the purposes of this motion, I shall assume to be facts. Hooper and Jackson engaged in business with the Clarkes, bought them out in 1900 or thereabouts, organized Clarke & Company, Ltd., and at that time carried on the business by their joint direction; they were equal stockholders in that early corporation; they managed it jointly, with the aid of persons who were merely employes, and from that time forward they appear to have employed the corporation form as a mere agency for the convenient and proper conduct of the extremely large business in which they were engaged. There are a number of striking facts in this connection which may be here spokeu of. None of these companies ever paid any salaries to either Hooper or Jackson, although they were making enormous profits and acquiring large amounts of property. No dividends were ever declared with the single exception herein above mentioned. Instead of dividends upon their corporate stock, Hooper and Jackson drew profits from the bank accounts of the business; each drew against such accounts as he saw fit, and they each drew a substantially equal amount. The corporation business was carried on, not by meetings of the boards of directors, but by consultation and agreement between Mr. Hooper and Mr. Jackson, and they appear to have made and unmade these corporations, in which they were equally interested, at their will. Many references are made to “the business.” Mr. Hooper, in a letter written to his brother Eranklin H. Hooper, on April 3d, 1905, comments upon the situation. He encloses in that letter a debit memorandum from the New York office for £805, which is to go through Mr. Muirhead’s account- on the books of the Illinois company kept in its Few York office. He says that he cannot see why this is sent, that there may be some good reason for it, but that it is beyond him; that Mnirhead was sent to Few York for the benefit of the Few York office, and not for the benefit of the London office, and that if either ought to charge the other anything, it is the London office that ought to charge the Few York office for letting Muirhead stay there. Then follows this significant sentence:

“I wish you would try and get it into somebody’s bead over there that the whole concern is one, and that it never does any good trying to rob one part of the business for the benefit of the other.”

But perhaps the most cogent fact is the indiscriminate commingling of the accounts, fully set out on page eleven of the printed copy of the bill, and not denied by the principal defendant, or any of the affiants who come to his support. The complainant says that receipts from all the countries in which these gentlemen did business were deposited indiscriminately in the same banking accounts, from which expenditures were made generally without regard to whether the business concerned was entered on one set of accounts or the other, or whether the business involved was that conducted in Great Britain or in foreign countries ; that funds received from every source alike were deposited in banking accounts kept in four different names and were subject to withdrawal by the principal parties to this litigation, and that they drew indiscriminately in any name used by them in the conduct of their business. While this statement lacks that degree of full and exact verification which ought to accompany so important a narration, inquiry was made by me on the argument concerning the truth of it, and I understood that it was not denied. This statement is wholly inconsistent with the defendant’s claim that the business was conducted by the corporations; it shows that the corporation form was a mere form and lends credence to the statement of the complainant that the business was conducted by Mr. Hooper and himself, and that they used the corporations as mere agents.

It appears in the papers that Hooper and Jackson made a personal contract with Eranklin H. Hooper by which they agreed that in certain contingencies and for a certain consideration they would sell him a small percentage of the stock of the two companies; similar agreements were made with others. The coupling of the stock of the two corporations as the subject-matter of these contracts is also significant when taken in connection with Mr. Hooper’s remark that the whole concern was one. Eranklin H. Hooper now files an answer and cross-bill in •which he sets up Iris contract and claims to be equitably entitled to the benefit of it upon the ground that he has paid some or all of the consideration therefor. I do not think I can regard him as an equitable shareholder in the company at the present time and for the purposes of this motion, because it appears that his rights to the stock is denied by the complainant who has attempted to rescind the contract; and to consider Mr. Eranklin H. Hooper a stockholder by virtue of that contract, at this time, would be to decide that branch of the case in his favor on ex parte affidavits. Mr. Eranklin H. Hooper is the holder, as I remember the statement, of one share of the stock of the Illinois corporation originally transferred to him to qualify him to become a director thereof. A significant fact relating to these qualifying shares, including his own, is that -while they appear on the books of the company to stand in the name of these employes, as a matter of fact, the certificates were endorsed by them respectively and handed back to Mr. Eranklin H. Hooper, who placed the same in the company’s safe, indicating not a delivery, but the very opposite.

If the situation is as it is claimed to be by the complainant, then we have the spectacle of the complainant having wrested from him a hand in the control of a business in which he is interested to the extent of one-half, and this action is accomplished by the other half owner not by extraneous means but by the use and manipulation of the complainant’s own stock.

I therefore find that the complainant and the defendant Horace E. Hooper were engaged as principals in a joint undertaking in which they had equal interests, and in which, until this controversy arose between them, they exercised equal control, and from which they derived and were entitled to equal shares of the profits, ancl that the English and Illinois corporations were respectively agencies by which they accomplished their results.

The complainant claims that he and Horace E. Hooper were partners. If they occupied toward each other the legal relation of. partners certain rights, duties and liabilities flow therefrom which will need" to be considered. It is not always easy to define a partnership or to state in general terms what actual rights, duties and liabilities are included in the term. There must of course be a business to be carried on for profit; there must likewise be some sort of community of interest and a sharing of profits and losses; but all these requirements may exist and yet there may be no partnership. It was held in Cox v. Hickman (1860), 8 H. L. C. 268, in the opinion of Lord Cranworth and Lord Wensleydale, that the relation between so-called partners was best ascertained by inquiring whether their agreement was of such a nature as that one was agent for the other or the others. This requirement was adopted by our court of errors and appeals in Wild v. Davenport (1886), 48 N. J. Law (19 Vr.) 129. Mr. Justice Depue, speaking for the court, says: “My citation of authorities has been made with a view of showing that a right to receive a share of the profits of a business does not furnish an invariable test of a partnership even as to creditors; that a person not actually engaged in the business as a principal and not holding himself out as a partner, cannot be held for debts contracted in the business as dormant partner unless in virtue of some contract, express or implied, on his part in legal effect creating as between him and the persons actually carrying on the business the relation of principal and agent.” Cox v. Hickman appears to express the law in England at the present time. Bullen v. Sharp (1865), L. R. C. P. 86; 35 L. J. C. P. 105; and see the opinions in the cases of Mollwo v. Court of Wards (1872), L. R. 4 P. C. 419; Adam v. Newbigging (1888), 13 A. C. 308; 57 L. J. Ch. 1066. I have failed to find any case in which our court of errors and appeals has receded from its adoption of the doctrine in Wilde v. Davenport. The rule is followed by the supreme court in Sedbury v. Bolles, 51 N. J. Law (22 Vr.) 103, and by this court in Hallenback v. Rogers, 57 N. J. Eq. (12 Dick.) 199. The rule is distinguished from that applying to profit-sharing agreements in Jernee v. Simonson, 58 N. J. Eq. (13 Dick.) 282, and in Potter v. Morris & Cumings Dredging Co., 59 N. J. Eq. (14 Dick.) 422. I take it therefore to be established law in this state that there can be no-partnership within the proper meaning of that term, unless the-agreement between the parties contemplates the sort of agency which is contemplated by the rule announced in Cox v. Hickman. This peculiar sort of agency is thus described by Sir George Jessel in Pooley v. Driver (1876), 5 C. D. 458; 46 L. J. Ch. 466: “It is the one person acting on behalf of the firm; he-does not act as agent in the ordinary sense of the word for the-others, so as to bind the others; he acts on behalf of the firm of which they are members, and as he binds the firm and acts on-the part of the firm he is properly treated as the agent of the-firm.”

Mr. Justice Story, in the first section of his work on Partnership, says: “Every partner is an agent of the partnership, and his rights, powers, duties and obligations are in many respects governed by the same rules and principles as those of an agent; a partner, indeed, virtually embraces the character both of a principal and of an agent. So far as he acts for himself' and his own interest in the common concerns of the partnership, he may properly be deemed a principal, and so far as he acts for his partners, he may as properly be deemed an agent.” The case of Carr v. Hertz, 54 N. J. Eq. (9 Dick.) 127; affirmed, 54 N. J. Eq. (9 Dick.) 700, exemplifies another phase of the theory. There one member of a firm executed a chattel mortgage to secure a firm debt; the other party did not join; he dissented therefrom and so notified the chattel mortgagee. The chattel mortgage was declared to be void on the ground that the agency of the one partner to act for the firm had been revoked, and that the mortgagee had notice of it.

The application of this rule to the facts in this case leaves my mind in some doubt as to whether the agreement set out in the-bill itself amounts to a partnership agreement, or whether the-long course of dealing between the complainant and Horace E. Hooper would justify the inference that they considered that some sort of a partnership existed between them. The feature-■which is inconspicuous is the fact of agency, which is put forward so prominently in the cases above cited. So far as I am able to observe there was never any transaction of real importance carried on in relation to the joint business which was not discussed and passed upon by the two principal parties in person. 1 find no transaction of any consequence that was carried through by either Mr. Jackson or Mr. Hooper alone.

This rather leads me to the view that the series of transactions set out in the -bill were not strict partnership affairs, but belonged to that class of transactions which are known by the name of joint adventures; there is a class of cases which relate to persons who embark in such undertakings, but who do not enter upon the prosecution of their business as partners strictly. The case of Ross v. Stevens (1888), 45 N. J. Eq. (18 Stew.) 231, is an example. That ease dealt with a real estate transaction in which the evidence of the relation of the parties was contained in a letter written by one to the other in which the writer said: “It is hereby distinctly understood and agreed that this purchase is a joint transaction involving you equally with me,” and in another letter states that they are to share equally in any profit or loss resulting from the transaction. Vice-Chancellor Van Eleet held that the arrangement was not a partnership but a joint venture, and his judgment was affirmed on appeal. The report is meagre, but it is sufficient to differentiate a joint adventure from a partnership and to indicate the full jurisdiction of a court of equity over that class of cases. In Warwick v. Stockton (1896), 55 N. J. Eq. (10 Dick.) 61, Vice-Chancellor Pitney dealt squarely with the question. There an inventor sold to a manufacturer the exclusive right to manufacture and sell certain inventions; the manufacturer to furnish all the capital for the enterprise and to pay the inventor half the profits and a salary for his services. The vice-chancellor saj's, by way of distinguishing the case from Wild v. Davenport, supra: “There is no provision expressed or implied that the complainant [the inventor] should have the usual power of a partner as agent of the firm to bind the partnership and to take part in the details of the management of the business, nor is there anything in the ■ agreement to indicate that he was to become liable for any share of the losses iE the business was unsuccessful. * * * These features show that the relations were not those of partners, but of a mere common interest in a joint adventure.” He declined to appoint a receiver to wind up the business, but held the bill for an accounting.

Another case is Simmons v. Lima Oil Co. (1906), 71 N. J. Eq. (1 Buch.) 174. There Vice-Chancellor Garrison sustained a suit in equity to wind up a joint adventure because of the misconduct of one of the parties, and for an accounting.

While this distinction exists it has been held that the partnership and the joint adventure are of a similar nature, and that the rules of law which apply to partnerships apply also to joint adventures. In Getly v. Devlin (1873), 54 N. Y. 403, there was before the court a joint enterprise in which it was alleged that one of the parties had been guilty of a fraud upon the others. Concerning the law touching the relationship, Commissioner Earl says: “In all such cases, the subscribers enter into relations of trust and confidence with each other. They engage in a common enterprise for their mutual benefit, and have the right to demand and expect from their associates good faith in all that relates to their common interests. Equality and mutuality of burdens and benefits is implied in all such enterprises in proportion to the amounts subscribed, and no one of the subscribers can be permitted to take to himself a secret or separate advantage to the prejudice of his associates.”

The same rule was announced by the supreme court of Pennsylvania in McCutcheon v. Smith, 173 Pa. St. 101; 33 Atl. Rep. 881.

In Marston v. Gould, 69 N. Y. 220, there was a joint adventure in the purchase and sale of shares of the capital stock of the Erie Railway Company, in which the funds were to be provided by the defendant, who was to bear the loss if a loss should ensue, but in which the plaintiff was to have one-fifth of the profit, if there was a profit. This transaction was held not to be a partnership, but a joint enterprise, and that as such it was terminable at any time by either of the parties, and that either could maintain an equitable action against the other for an accounting. See, also, Hurley v. Walton, 63 Ill. 260; Edson v. Gates, 44 Mich. 253; 6 N. W. Rep. 645. In Scudder v. Budd, 52 N. J. Eq. (7 Dick.) 320, the court of errors and appeals of this state held that in a case where the parties to the suit agreed to erect buildings to be sold at a profit, the defendant to advance the money, and the complainant to contribute his skill and time as superintendent, and to divide the profits equally, the complainant was entitled to an accounting without reference to the question whether a partnership existed between the parties. See Hambleton v. Rhind, 84. Md. 456; 36 Atl. Rep. 597.

And finally it has been held that a contract concerning a joint adventure does not need to be express, but may be implied from the conduct of the parties. In Knapp v. Hanley, 108 Mo. App. 353; 83 S. W. Rep. 1005, there was a joint enterprise alleged in the plaintiff’s petition arising out of an express contract. Apparently, the plaintiff failed to prove the contract, and the court permitted the course of business between the parties to be offered in evidence. There was a demurrer to the evidence which came on for argument in the appellate court. I quote from the opinion: “The law did not devolve upon the plaintiff in the trial to establish the agreements declared on as express contracts of the parties, but it was legally sufficient to exhibit a state of facts from which such agreements might reasonably be inferred by the jury. The evidence expressly disclosed the joint employment and undertaking, but by legal implication in the absence of distinct separate agency, the authority conferred and rights acquired thereby are presumed to be joint. Words of express joinder are not essential, but language of severance must be applied and be present to produce several responsibility or right. * * * As a consequence of such joint agency the law exacted from them the highest degree of good faith, not only toward their principal, but also in all other dealings with each other, and it implied an agreement for an equal division of the compensation paid for their joint services by their common principal in their joint employment.”

It thus appears that if these parties are joint adventurers, practically the same rules apply as apply to the relation of partnership. An agreement may be implied from the course of dealing, and when once the engagement has been made the parties must act with, the utmost good faith toward each other; in case of a disagreement either party may seek the aid of this court for the dissolution of the relation, and in case of misconduct of either party the injured party may have the same relief. The purpose of the court must be to ascertain what the contract, express or implied, between the parties, is, and to enforce it in accordance with the well-settled principles of equity jurisprudence.

In my opinion, the complainant is entitled to an injunction broad enough to hold the status quo, and yet so limited as not to interfere with the orderly, regular and usual conduct of the business. Any interference with the efficiency of its management at this stage of the litigation would be wrong and would not be desired by either of the parties. My present impression is that the injunctive order now in force attains the object just indicated, but I will hear counsel on the scope of the injunction within the limits above mentioned upon the settlement of the order.


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    Pauline S. von Bernuth v. Frederick A. von Bernuth.
    [Decided July 16th, 1909.]
    Where a husband, pending' suit against him for divorce, applied for the right of access to and custody of his children, two boys, ten and fifteen years of age. respectively, and they, on a private examination, exhibited extreme hatred for their father, absolutely refusing to see him, and declined to entertain any propositions looking toward the father’s society, which it appeared resulted from the mother’s adverse influence over them, the father’s application will be denied; but he was entitled to a reduction of alimony for their support from $46 to $10 a week.
    On petition for custody of children in a pending divorce suit.

      Mr. Borden D. Whiting and Mr. Strong (of the New York bar), for the petitioner.

      Mr. Thomas L. Raymond, contra.

   Howell, Y. C.

A divorce suit was brought in favor of the petitioner against the defendant in October, 1908. The defendant has answered •and the cause has been set down for final hearing. On June 15th, 1909, the defendant, the husband, filed his petition in the divorce suit praying for an order. giving to him the right of access to and custody of his children upon such terms and in such manner as to the court might seem just and proper. On the presentation ol: the petition, an order was made directing that a writ of habeas corpus issue to bring the children before the court. This writ was made returnable on June 23d, 1909, and was returned on that day by the mother who therewith produced the children in court. They are two boys, one about fifteen years of age, and the other about ten. The application of the father was strenuously resisted. I submitted the children to a private examination lasting the better part of a half hour. They exhibited extreme hatred and contempt of their father and absolutely refused to see him or to be seen by him. I urged upon them the duty which they were under to attempt to reconcile their parents, and endeavored to have them consent to spend the month of August with their father at their paternal grandfather’s summer residence in the State of New Hampshire, this having been suggested in the petition and proposed in open court. The children declined these propositions and absolutely refused to entertain them or to see the father under any circumstances. I thought that I was able to perceive that the mother had been exercising an adverse influence over the children, because it is quite unnatim.'. that children of fifteen and ten years of age should exhibit toward their father the hatred which these two boys seemed to bear toward theirs.' Hnder these circumstances, 1 do not see how the court could reasonably grant the prayer of the petition. I think the result is wholly chargeable to the mother, and, under the circumstances, I see no reason why the father should be compelled to support children who thus renounce him. I so announced on the return of the writ of habeas corpus after my examination of the children,, and intimated to counsel for the defendant that I would listen to an application for the reduction of the alimony. Such a motion has been made and has been fully argued on behalf of both parties, and I think it proper under the circumstances and in the exercise of a proper discretion to make the reduction. The matter of alimony and counsel fee was originally referred to a master, who made a report that the two boys were being maintained by the mother without consultation with the father,, at the rate of $2,200 annually, which amount was paid by him. This expenditure amounts to about forty-six dollars per week. I will advise an order reducing the alimony payable by the husband to the wife to the sum. of $10 per week, the reduction to take-place from and after the date of the order relating thereto.