author: Leaking, V. C.

text:
    Millville Aerie, No. 1836, Fraternal Order of Eagles, v. Benjamin B. Weatherby et al.
    [Submitted October 16th, 1913.
    Determined October 18th, 1913.]
    „1. Taxes accruing after a contract of sale but before the conveyance of the land must be paid by the party in possession, in the absence of an agreement to the contrary.
    2. Where the purchaser of land went into possession when the contract was executed, and from that time enjoyed the rents of the property, the payment by the vendor of taxes accruing after the purchaser went into possession and before conveyance, it appearing that the purchaser had refused to pay them, is not voluntary, for the vendor might pay them to protect the title, and charge the amount so paid to the vendee.
    3. P. L. 1908 p. 1/24 § 46, permitting a tenant to recover the amount of taxes paid from his landlord, does not modify the rule requiring a vendee in possession under a contract of sale to pay the taxes accruing during that period.
    4. A purchaser under a valid contract becomes the equitable owner of the land, the vendor retaining the legal title simply as trustee and as security for the unpaid purchase-money, and as such equitable owner the purchaser is entitled to the proceeds from policies of insurance on the property.
    5. Where the purchaser of property, subject to a mortgage, entered into possession before convej'ance, the contract providing that the purchaser might assume a mortgage as a part payment, and that, in case it or any amount due is demanded by the mortgagee, then the amount of the mortgage is to be secured by a purchase-money mortgage from the purchaser to the vendor, the vendor having insured the property and paid the premiums because the mortgagee threatened to foreclose in case it was not done, is not entitled to recover the amount of the premiums from the purchaser, it appearing that the insurance was taken out for the vendor’s benefit, and that the purchaser was given no option as to whether he desired it or not.
    6. Where the complainant, who was a vendor of land, sought to compel the vendee not only to pay taxes which accrued after he went into possession and before the contract was consummated, but to require him to pay insurance premiums, and was successful only as to the taxes, costs should be allowed neither party.

      On final hearing on bill for specific performance of contract for sale of land.

      Mr. Joseph F. Smith, for the complainant.

      Mr. Joseph TI. Powell, for the defendants.
   Leaking, V. C.

The question here presented is whether, as between vendor and vendee, the burden of taxes and insurance- covering the period between a contract of sale of land and the date for delivery of the deed of conveyance falls upon the vendor or vendee in the absence of any stipulation touching taxes or insurance other than the engagement of the vendor to deliver a deed for the property free from all encumbrances.

This bill is filed by the vendee for the specific performance of the contract. Vendee has made all payments specificallly named in the contract and the vendor refuses to deliver a deed until paid the amount he has expended for taxes and insurance. Both parties tender themselves as willing to complete the contract when it shall be determined on whom the burden referred to falls.

¡Taxes.—This question does not appear to have been adjudicated in this state; but the precise question has been frequently determined by the courts of sister states. The rule uniformly adopted is that as between the vendor and vendee taxes which accrue between the date of the contract of sale and the date of delivery of the deed of conveyance are chargeable to the one in physical possession of the property. In 39 Qyc. 1636, the several adjudications are collected and the following text,, which is fully supported by the cases cited, is adopted:

“It is well settled that if the purchaser after the contract is made goes into possession and enjoys the use of the property, he is liable for the taxes accruing during- his possession, notwithstanding the contract requires the vendor to convey by warranty deed at a future date.”

The same rule is stated in 29 Am. & Eng. Encycl. L. (2d ed.) 716. as follows:

“The vendor remaining in possession after the making of the contract must pay the taxes imposed on the land during the interval between the date of the contract and the date of completion, but if the purchaser is in possession he must pay the taxes.”

In the present case the purchaser entered into possession at the time the contract of sale was executed and has since enjoyed the rents of the property. Tax bills for taxes accruing during the period of performance were rendered to the vendor and by him forwarded to the vendee for pajunent and by the vendee returned to vendor unpaid. They were then paid by the vendor. Such payments cannot be regarded as in any sense voluntary. In Bradford v. Union Bank, 13 How. 57, 64 it is held that under such circumstances the vendor may pay the taxes to protect the title and charge the amount so paid to the vendee.

It is urged that P. L. 1903 p. 424 § 46, rendering a tenant liable for taxes and permitting the tenant to recover the amount paid from his landlord, is operative to modify the rule above stated. I am unable to adopt that view.

Insurance.—By the terms of the contract the property was to be conveyed subject to the lien of a certain mortgage, the payment of which the purchaser was to assume. The insurance here in question was placed on the property by the vendor, after the date of the contract, by reason of a demand of the mortgagee for insurance collateral to his mortgage; the mortgagee threatening foreclosure unless the insurance should be supplied in the manner stated.

I am unable to doubt that as between the vendor and vendee, under the issues here framed, the cost of his insurance is not chargeable to the vendee.

As purchaser under a valid contract of purchase vendee became the equitable owner of the property; in equity the property is regarded as belonging to him, the vendor retaining the legal title simply as trustee and as security for the unpaid purchase-money. By reason of this equitable relation of the parties to a contract of sale of land it has been determined by the great weight of American authority that money accruing on a policy of insurance, where the loss has occurred subsequent to the execution of the contract, will, in equity, inure to the benefit of the vendee; the vendor still retaining his character as trustee, and the insurance money in his hands representing the property that has been destroyed. ' See 1 War. Ven. 205 § 20; 39 Cyc. 1641, 1644- In the event of loss by fire the proceeds of the insurance policy here in question would have been applied to the payment of the mortgage, the amount of which forms a part of the purchase price of the premises purchased, and any surplus would have further inured to the benefit of the vendee by being applied on his purchase-money, and any further surplus would have been payable to him by his vendor. The insurance here in question must therefore be regarded as essentially for the benefit of the vendee, although it afforded an incidental benefit to the vendor in supplying him an 'additional security for the purchase price of the land; such additional security to vendor cannot, however, be here treated as an element of substantial value to the vendor, for its value could only arise from a failure of the vendee to comply with his contractual obligations to the vendor.

But, notwithstanding these suggestions touching the rights of the respective parties in the proceeds of the insurance, I am unable to reach the conclusion that the vendor is entitled to now require payment by the vendee of the amount paid by vendor for insurance, as a condition precedent to the delivery of the deed. The contract provides that the vendee may assume the mortgage heretofore referred to as a part payment of the purchase price, and that “in case said mortgage, or the amount due thereon, is demanded by the mortgagee,” then the amount of the mortgage is to be secured by a purchase-money mortgage from the vendee to the vendor.' The contract also provides for the vendee to pay interest to the vendor, pending the period for installment payments, on the full unpaid amount of the contract price and accordingly contemplates the payment of interest on the mortgage by the vendor up to the time of the delivery of the deed. The outstanding mortgage contains no insurance clause. It will thus be observed that it was immaterial to the vendee whether the vendor discharged the outstanding mortgage or not. When the mortgagee demanded of the vendor insurance collateral to his mortgage and threatened foreclosure unless it should be supplied, it became the duty of mortgagor to assume the burden oi any expense necessar}r to induce the mortgagee to defer the enforcement of his lawful demand for the money then due to him from the vendor. While, as already indicated, the insurance, if issued, would inure to the benefit of the vendee in the event of loss by fire, it was clearly the privilege of the vendee to determine for himself whether he would carry insurance for his own benefit or not. In this he was not consulted or given a choice. On the contrary, the insurance was in fact purchased by the vendor for ; the primary purpose of saving himself the burden of discharging the mortgage. Under these circumstances, I think it clear that the amount so paid by the vendor for insurance must be equitably regarded as a wholly voluntary payment which he is not privileged to now enforce against his vendee as a condition precedent to the delivery of a deed.

I will advise a decree pursuant to the prayer of the bill upon the amount which has been paid by defendant vendor for taxes which accrued during the performance period specified in the contract being paid to him, with interest on each payment from the several dates of payment.

Under the circumstances of this case, I think no costs should be recovered by either litigant against the other.


source: Caselaw Access Project

author: Leaming, V. C.

license: Public Domain

text:
    Frank Sailer v. Emma L. Podolski.
    [Submitted October 20th, 1913.
    Determined October 29th, 1913.]
    1. Where, of the thirty-three lots comprising a tract, eighteen of them were sold with restrictive building covenants and fifteen without such covenants, seven having been sold without restriction at the time of the purchase by complainant’s grantor, it could not be said that the lots were sold under a general development scheme so as to impose such restrictions upon all of the lots, though all of the six lots, on the avenue on which complainant’s were, were subject to the same covenants as in complainant’s deed.
    2. Where there was no 'general scheme of development of a tract divided into building lots, so as to make building restrictions in the deed of a common grantor inure to the benefit of all subsequent purchasers, the burden was upon a lot owner to show that a covenant by defendant’s predecessor in title was made for the benefit of subsequent purchasers of the lot later conveyed to complainant.
    3. Where the common grantor in a deed to defendant’s predecessor in title containing restrictive building covenants did not bind himself therein to perpetuate the covenants in favor of subsequent purchasers of the remaining portion of his land and the covenants did not purport to be for the benefit of subsequent purchasers of any unsold lots—Held, purely personal covenants between the grantee and the grantor in such deed.
    4. If a restrictive building covenant provides that it is intended for the benefit of subsequent purchasers of the grantor’s remaining land, it may be enforced by such subsequent purchasers against prior purchasers from the common grantor.
    5. If a common grantor has adopted a 'general development scheme and all of his deeds to the land contain restrictive building covenants, each purchaser may enforce such covenants against all other purchasers, whether subsequent or prior to his own purchase.
    6. That a common grantor of land inserted a restrictive building covenant in a subsequent conveyance of a part of a tract similar to that inserted in a prior conveyance would not of itself show a purpose to make the covenant in the prior conveyance enforceable by subsequent purchasers.

      7. The fact that a common grantor retained a lot adjacent to a lot conveyed with restrictive building covenants would not of itself show that the covenants were intended by the parties to the deed to be enforceable by a subsequent purchaser of the lot retained.
    8. Before a court of equity can be justified in restricting another in the uses to which he may lawfully put his property by reason of the existence of restrictive building covenants, the right of complainant to relief must be made entirely clear.
    On final hearing on bill for injunction to restrain violation of restrictive building covenants.

      Mr. Theodore W. Schimpf and Mr. James M. Sheen, for the complainant.

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

The restrictive building covenants which this suit seeks to enforce are quoted in Sailer v. Podolski, 81 N. J. Eq. (11 Buch.) 327. That preliminary hearing proceeded upon the then uncontroverted assumption that these covenants formed a part of a general scheme for the development of the tract; for that reason complainant’s right to enforce the covenants was not then questioned.

The proofs taken at final hearing disclose that these covenants cannot be sustained and enforced upon the theory of a general scheme of development.

In the year 1901 Petrol? and Newton owned a wild tract of land and laid it out into thirty-three building lots for the purpose of making sale of the lots. Streets were by them projected on three sides of the property and a street projected through it; in this manner street fronts were provided for all the lots. All of these lots have since been sold. The conveyance from these common owners to defendant’s predecessor in title was dated December 16fch, 1901, and contained the restrictive cove-' nants referred to. The conveyance from the common owners to complainant’s predecessor in title was dated May 19th, 1902, and contained similar covenants. When this conveyance was made by the common grantors to complainant’s predecessor in title seventeen of the lots had been conveyed by the common grantors by deeds containing restrictive covenants and seven without restrictive covenants. A month .later the remaining eight lots were conveyed by the common grantors without restrictive covenants. It thus appears that in a tract comprising thirty-three lots eighteen lots were conveyed by deeds with restrictive covenants and fifteen without; and at the time of the purchase by complainant’s predecessor in title seven lots had been conveyed free from restrictions. When complainant purchased from her predecessor in title fifteen, or nearly one-half of all the lots comprising the tract, had been conveyed by the common grantors free from the operation of restrictive covenants. It seems clearly impossible to regard an enterprise which has been developed in the manner stated as one embracing the necessary elements of a general scheme or plan to subject the several lots of the tract to the operation of uniform restrictions. The elements necessary to render a general scheme operative to bestow upon each lot owner the right to enforce the restrictions against all other lot owners are clearly defined in De Gray v. Monmouth Beach, 50 N. J. Eq. (5 Dick.) 329, 340.

It is urged that as the lots of complainant and defendant face on Atlantic avenue, and all of the six lots facing on that avenue are subjected to the same restrictive covenants as are found in the deeds of complainant and defendant, the conclusion is justified that that part of the tract was subjected to a general scheme of development which failed only as to the remainder of the tract. I am unable to adopt that view. There is nothing to' indicate that any defined purpose existed or was recognized in relation to any segregated portion of the tract different from the other portions of the tract except the mere circumstance that the deeds for these six lots facing on Atlantic avenue are now found to have contained the restrictive covenants.

As complainant’s right to enforce defendant’s covenants cannot be sustained as a right emanating from a general scheme of development, it follows that it can only be sustained upon the claim that defendant’s covenant was entered into for the benefit of subsequent owners of the lot subsequently conveyed by the common grantors to complainant’s predecessor in title and thereafter conveyed to complainant. The deed from the common grantors to defendant’s predecessor in title was dated December 16th, 1901; the deed from the common grantors to complainant’s predecessor in title was dated May 19th, 1902. In Hemsley v. Marlborough Hotel Co., 62 N. J. Eq. (17 Dick.) 164, 170; affirmed in 63 N. J. Eq. (18 Dick.) 804, it is held that in a case of the nature stated the burden rests upon complainant to establish that the covenant was made by the prior grantee of the common grantor for the benefit of the subsequent purchasers of the lot owned by complainant. In McNichol v. Townsend, 73 N. J. Eq. (3 Buch.) 276, Hemsley v. Marlborough Hotel Co., supra, was followed, and it is there also pointed out that no presumption arises from such a covenant that it is for the benefit of subsequent purchasers of the remaining land of the common grantor, and that in the affirmance of Rendís v. Cowlishaw, reported in 11 Ch. Div. 866, 868, it is stated that to enable the subsequent purchaser to take the benefit of restrictive covenants of a prior purchase, there must be something in the deed containing the covenants to define the property for the benefit of which the covenants wore entered into. The covenants contained in the deed of conveyance from the common grantors to defendant’s predecessor in title are solely covenants of the grantee; grantors neither bind themselves to enforce or perpetuate the covenants against their grantee and his assigns nor to create or enforce similar or any covenants against subsequent purchasers of other parts of their land,, nor do the covenants in any way state that they are for the benefit of subsequent purchasers of all or any part of the unsold lots of grantors ; the covenants are in form purely personal covenants of the grantee to his grantors, restricting the manner in which the grantee should use the land granted. If these covenants were intended by the parties to embody stipulations which were not expressed, if they were intended by the parties to include by implication the stipulation that they were for the benefit of the purchasers of all dr some particular portion of the unsold lots of the grantors, or were to be enforceable at the instance of subsequent grantees of remaining lots, the accurate ascertainment of that intention is clearly necessary to clothe the subsequent purchaser with the right of enforcement of the covenants. This has been the view uniformly accepted by the courts of this state from Coudert v. Sayre. 46 N. J. Eq. (1 Dick.) 386, and De Gray v. Monmouth Beach, 50 N. J. Eq. (5 Dick.) 329, to the present time.

Where the restrictive covenant of the prior purchaser expressly provides that it is intended for the benefit of subsequent purchasers of the remaining land of the common grantor or so declares by providing that it may be Enforced by such subsequent purchasers, it may be enforced by such subsequent purchasers against such prior purchasers. This is clearly pointed out in Coudert v. Sayre, 46 N. J. Eq. (1 Dick.) 386, 392, and has been at all times uniformly recognized as the settled law of this state.

And where a general building or development scheme has been adopted by the common owner and perpetuated through the medium of uniform restrictive covenants in all deeds made by such common owner, each purchaser may enforce the uniform covenants against all other purchasers irrespective of the time of order of their respective purchasers, because such a general scheme can only exist as such by reason of its necessary comprehension of the plan to subject the entire tract to the operation'of the uniform covenants.

But where there is no such general scheme and where neither the instrument containing the covenant nor any other instrument provides that similar covenants shall be inserted in subsequent deeds to be made by the grantor of his remaining land nor in any other way restricts the grantor in the use or disposition of his remaining land, nor provides that the covenant is for the benefit of subsequent purchasers of all or any part of the unsold land of the grantor, nor that it may be enforced by such subsequent purchasers, it may well be doubted whether any satisfactory ground can be found to support a claim of right of a subsequent purchaser from the grantor to enforce the covenant. As already suggested, to sustain such claim of right there must be read into the written contract by way of construction from the light of surrounding circumstances' an engagement or stipulation or purpose which the parties to the contract did not express. It seems at least clear, upon principles which scarcely need be stated, that the subsequent conduct of the grantor in inserting a similar covenant in a subsequent conveyance of a part of the tract cannot he properly regarded as a circumstance in aid of the intention or purpose of the parties to the prior deed. Nor does it seem to me that the circumstance that the grantor retained a lot adjacent to and similar to the lot conveyed can justify the conclusion that the covenant was mutually intended by the parties for the benefit of and to be enforceable by a subsequent purchaser of the lot so retained. The prior purchaser may well have refused to enter into a covenant broader than that contained in his deed, and the grantor may well have had no purpose to exact a covenant other than one purely personal to himself. The mutual purpose that the covenant should import no more than it expressed and should be purely personal and should not inure to the benefit of or be enforceable by a subsequent purchaser of the remaining adjacent Jot, may well have entered into the consideration price of the purchase. Reported cases are to be found in which tire writers of the opinions appear to have suggested the possibility of the existence of surrounding circumstances adequate to justify a judicial determination that a restrictive covenant of the nature, of the one here in question was intended by the parties for the benefit of the unsold land of the grantor and could, in consequence, be enforced at the instance of subsequent purchasers of a part of the unsold land; but 1 have found but one adjudicated case in which that view has been made the basis of relief except in that class of cases already referred to in which a general scheme of development has been sustained. I refer to the case of Childs v. Douglas, Kay 560; but the subsequent history of that case, as is pointed out in Keales v. Lyon, L. R. 4 Ch. App. Cas. 218, destroys the. value of that case as a precedent.

But assuming that such an implied purpose may be established by circumstances surrounding the parties to the deed in the absence of some stipulation in the deed indicating the existence of such a purpose, I am convinced that no circumstance exists in this case to justify the affirmative conclusion that the restrictive covenants, in the deed of defendant’s predecessor in title were for the benefit of subsequent purchasers of the lot now owned by complainant. The lot now owned by complainant is indeed adjacent to the lot of defendant, but in the absence of a general scheme of development that circumstance cannot, in my judgment, be deemed operative to enlarge or define the covenant of the parties in such manner that it can with certainty be said to have been made for the benefit of subsequent purchasers of ■ such adjacent lot. In Fortescue v. Carroll, 76 N. J. Eq. (6 Buch.) 583, our court of errors and appeals has pointed out with the greatest emphasis that in cases of this class the right of complainant must be entirely clear before a court of equity can be justified in restricting another in the uses to which he may lawfully put his property.

The views herein expressed render unnecessary a consideration of whether it appears with sufficient certainty that the covenants have in fact been violated.

I will advise a decree denying the relief sought by complainant and dismissing the bill.


author: LEAMING, V. C.

text:
    Mary J. Robinson v. Samuel D. Robinson.
    [Submitted October 27th, 1913.
    Determined October 31st, 1913.]
    1. If petitioner knew when she married defendant that she was not then divorced from her former husband, and defendant did not know it, petitioner is not entitled to alimony pendente Ute, unless, after the dissolution of petitioner’s former marriage, the parties showed their consent to the marriage by evidence other than that arising from continual matrimonial repute; but, if at the- time of the marriage the parties believed they could be lawfully married, and lived together in that belief, it may be inferred from their continuous living tpgether as husband and wife that they consented to the marriage after the removal of the legal obstacle thereto by the wife’s divorce from her former husband.
    2. If a former marriage of the wife had not been dissolved when the parties to a divorce suit were married, and it is not shown that the parties consented to marriage after the former marriage was dissolved, alimony pendente Ute should not be awarded to the wife.
    3. A wife seeking alimony pending a divorce suit has the burden of showing the existence of the marriage relation; and if her former marriage, existing when she was married to defendant, had been subsequently dissolved, she has the burden of showing that there was an interchange of consent to marriage after such dissolution.
    4. On petition by the wife for alimony pendente Ute, evidence held insufficient to show that the wife believed when she married defendant that her divorce from her former husband had been granted.
    On petition for divorce. Hearing. of petition for alimony pendente lite and counsel fee.

      Mr. Townsend Godfrey, for the petitioner.

      Mr. Ulysses G. Slyron, for the defendant.
   LEAMING, V. C.

It is admitted that a marriage was celebrated between petitioner and defendant July 15th, 1902, and that thereafter until shortly before the institution of this suit petitioner and defendant continuously cohabitated as husband and wife and made themselves known to the world as such during all of that time. It is also admitted that at the time of the marriage ceremony petitioner had a husband living against whom a divorce suit was then pending and that the decree in that suit—which decree granted to petitioner a divorce from her former husband— was not in fact .entered until twenty-three days after the ceremonial marriage between petitioner and defendant. The only disputed fact at this time is whether petitioner knew at the time of her ceremonial marriage to defendant that the decree against her former husband had not been then entered; petitioner now claiming that she then believed she had been divorced and defendant now claiming that she then knew she had not been divorced. Defendant claims that his first knowledge of the fact that petitioner had not been divorced prior to his ceremonial marriage to her was obtained by him since the beginning of this suit.

The views stated for the court of errors and appeals by the learned chief-justice in Collins v. Voorhees, as reported in 47 N. J. Eq. (2 Dick.) 555, must be regarded as controlling to this court. If, therefore, petitioner knew at the time of her ceremonial marriage to defendant that she was not then divorced from her former husband and defendant did not know of that fact and has first ascertained that fact since the recent separation of the parties, it seems impossible to grant relief toi petitioner consistently with the rules stated in Collins v. Voorhees, supra, in the absence of some evidence of interchange 'of consent to marriage by the parties subsequent to the date of the removal of the impediment to a lawful marriage other than evidence afforded by the continuous matrimonial habit and repute. If, on the other hand, both petitioner and defendant believed at the time of their ceremonial marriage that no impediment to their lawful marriage existed and have since, until their recent separation, continuously lived together as husband and wife in the mutual belief that their ceremonial marriage was lawful Collins v. Voorhees, supra, and Chamberlain v. Chamberlain, 68 N. J. Eq. (2 Robb.) 736, support the view that upon the removal of the impediment already referred to the subsequent interchange of consent to marriage necessary to create a lawful marriage relation may be inferred from’ the continuous matrimonial habit and repute in the absence of other evidence of the fact. In the former case the original meretricious purpose of the wife may be presumed to have continued and tire husband -would thus become entitled to be relieved from the consequences of the fraud practiced upon him when he first ascertained the facts, notwithstanding the removal of the impediment to the marriage in the interim; in the latter case the original meretricious purpose of both to be husband and wife may be presumed to have continued.

The real issue here presented is, therefore, one of marriage or no marriage. In such ease a preliminary order for alimony may be made, but should not be made if the result of that issue appears to be in substantial doubt, for the very foundation of the right is the existence of the marriage status, and the burden of establishing the existence of the marriage relation is on the petitioner. Vreeland v. Vreeland, 18 N. J. Eq. (3 C. E. Gr.) 43; Cray v. Cray, 32 N. J. Eq. (5 Stew.) 25; Freeman v. Freeman, 49 N. J. Eq. (4 Dick.) 102. As it is here admitted that when the marriage ceremony -was performed petitioner had a husband living from whom she had not then been divorced, the burden rests upon her to establish as a fact that she and defendant at that time believed that no impediment existed, if she now seeks to avail herself of the benefits of 'the claim that the subsequent removal of the impediment followed by matrimonial habit and repute presumptively established a new matrimonial compact, for the matrimonial habit and repute, under the circumstances stated, become mateiial only when the good faith of petitioner in contracting the ceremonial marriage is first established. See Atlantic City Ry. v. Goodin, 62 N. J. Law (33 Vr.) 394, 400. The only evidence here present touching that important fact is petitioner’s statement to that effect and the statement of defendant to the contrary; her statement now is that she then believed that her divorce against hex former husband had been granted before her ceremonial marriage to defendant; his statement now is that when the ceremony of marriage was performed she knew that she had not been divorced and that he did not then know it, and only recently ascertained it. In this condition of the record it must now be determined that petitioner has not sufficiently sustained the burden of proof which the law casts upon her in a case of this nature to justify an order for alimony pendente lite.

A counsel fee was allowed to petitioner in this suit and paid by defendant before defendant ascertained that .petitioner was in fact married at the time of his ceremonial marriage to her. I do not think an additional allowance can be properly made.


text:
    William B. Riley v. Lillian L. Hopkinson.
    [Submitted November 3d, 1913.
    Determined November 13th, 1913.]
    1. A mortgage which is not supported by a consideration was void in the hands of either the mortgagee or his assignee, since the assignee would take subject to existing defences of the_ mortgagor.
    2. A mortgage to a straw mortgagee without consideration, but delivered by the mortgagor to her own agent for sale for an amount less than the secured obligation, was usurious as to a purchaser for such lesser amount from the agent without inquiry.

      3. By purchasing from mortgagor’s agent at a discount a mortgage executed to a straw mortgagee without consideration, without making inquiry as to the nature of the transaction, the purchaser became charged with knowledge of the usury in the mortgage, so that mortgagor could set up that defence in a foreclosure action by the purchaser.
    4. Credit should be allowed the debtor only for the amount of illegal interest paid under a usurious contract and not for all of the interest paid.
    On final hearing on bill to foreclose mortgage with defence of usury.

      Messrs. Bolte & Sooy, for the complainant.

      Mr. Edmund G. Qashill, Jr., for the defendant.
   Leaking, V. C.

The mortgage which complainant seeks to foreclose was executed by the mortgagor to a straw man as mortgagee wholly withput consideration. So long as it remained without a consideration it was necessarily void, either in the hands of the mortgagee or the assignee of the mortgagee, as an assignee would take subject to existing defences of the mortgagor. Magie v. Reynolds, 51 N. J. Eq. (6 Dick.) 113.

'But the mortgage was not in fact delivered to the mortgagee. It was delivered by the mortgagor to her agent for the defined purpose of having the agent, in her behalf, sell it for an amount less than the obligation which it represented; the plan being to have the agent of mortgagor cause the straw mortgagee to make an assignment of the mortgage and its accompanying bond to such purchaser as the agent should procure.

Until money was actually paid for the mortgage and reached the hands of mortgagor or her authorized agent no consideration whatever supported the mortgage. It follows that the contract of the mortgagor for the payment -of money—which contract is embodied in the bond and mortgage—first received vitality as a contract when it was purchased by complainant at a discount; prior to that time it was a nudum factum. It thus appears that the mortgage was conceived in usury, as it was executed by tlie mortgagor to a straw mortgagee as a contract to secure the payment of an amount in excess of the amount the mortgagor was to receive; and this usurious purpose of the mortgagor was consummated through the medium of the purchase of the mortgage by complainant for an amount less than its face. The fact that the mortgage was executed by the mortgagor to be sold by her agent at less than its face could have been ascertained by the purchaser by the inquiries which are usual in the purchase o£ mortgages. By purchasing the mortgage at a discount without such inquiries—either through design or negligence—the purchaser made himself the effective instrument through which the mortgagor was enabled to borrow at a rate forbidden by law. The practical effect of the transaction was precisely the same as though the mortgagee had made a loan to the mortgagor for an amount less than the amount of the mortgage. Under such circumstances it seems impossible to escape the conclusion that the purchaser should be charged with a knowledge of all the facts which reasonable inquiry on his part would have disclosed, and that the defence of usury is, in consequence, available to the mortgagor. Any conclusion to the contrary would be clearly destructive of the beneficial purpose of our statute against usury.

The rule touching credits for interest paid upon a usurious .contract is that credit shall be given the debtor for the amount of illegal interest paid by him and not for all interest which has been paid. Kohn v. Kelly, 76 N. J. Eq. (6 Buch.) 132. Kohn v. Kelly was subsequently affirmed by the court of errors and appeals for the reasons stated in this court. 77 N. J. Eq. (7 Buch.) 273.

I will advise a decree for the amount paid by complainant less the amount of interest which has been paid to him by the mortgagor in excess of the legal rate on the amount paid for the mortgage. No costs can be recovered.


text:
    Charles W. Leech v. Sarah E. Leech.
    [Submitted November 17th, 1913.
    Determined November 17th, 1913.]
    1. While the act of a wife in submitting to intercourse with her husband through force or duress, with knowledge of his previous adultery, would not constitute condonation thereof in a suit for divorce, yet where she continued to do so over a period of seven months, her acts could not be held involuntary within the rule that the injured spouse is placed to her election either to terminate their relations or forego the remedy for the offence.
    2. A husband’s adultery affording ground for divorce was not condoned by the wife’s subsequent submission to intercourse with him, where he continued to treat her with extreme cruelty until she fled from his home.
    On final bearing on petition and cross-petition for divorce?
    Petitioner seeks a divorce against his wife for desertion. The petitioner alleges that his wife deserted him by permanently leaving his hoine December 10th, 1908, and that the desertion has been willful, continued and obstinate for more than two years preceding the. commencement of this suit against her. The petition was filed April 6th, 1912.
    The wife in her answer admits that she left petitioner’s home December 10th, 1908, and has not since returned, but alleges that she was at that time obliged to leave petitioner by reason of his extreme cruelty. By her cross-petition she seeks a divorce from petitioner by reason of his constructive desertion of her in driving her from his home by his cruel treatment, and also by reason of adultery which she charges that her husband committed prior to her leaving him.
    By his answer to the cross-petition petitioner denies the charge of constructive desertion and alleges condouation as a defence to the charge of adultery.

      Mr. Joseph Beck Tyler, for the petitioner.

      Messrs. Scovel & Harding, for the defendant and cross-petitioner.
   Leaming, V. C.

There is little doubt touching the essential facts of this case. About seven months before Mrs. Beech left her husband’s home she ascertained that he was living in adultery with the woman named as co-respondent in her cross-petition. The evidence at that time brought to her knowledge was the same evidence which she produced at the hearing; that evidence conclusively establishes the husband’s guilt. When she learned of her husband’s adulterous habits she confronted him with the charge and he brutally informed her that it was none of her business. Had she left him at that time no question touching her right to a divorce could exist. But she did not then leave her husband’s home because she could not; she saw no way in which she could support herself and her son, in whom her life was centered. Accordingly she moved from the bedroom which she had theretofore shared with her husband to another bedroom in the same house for the purpose of escaping- his embraces. From that time she never returned to his room or voluntarily permitted him to come to her room. But her purpose to deny to her husband sexual intercourse was futile. From time to time her husband would go to her bedroom and demand and receive the sexual privileges he sought. Bier reason and only reason for permitting this was because she did not dare refuse him. Her fear of him was well founded. For a long time he had been drinking to excess and frequently returning to his home in a drunken and irresponsible condition and making himself a terror in the household. .When drunk there was no safety in his presence, and at no time does it seem to have been sáfe for his wife to have resisted his will. She was undoubtedly living in constant fear of his violence, and her fears were fully justified by his conduct. In some of his assaults upon her she. would escape physical injury by flight, in others she received severe physical injuries at his hands. This condition continued up to the time she permanently left him. From the time she learned of her husband's adulterous conduct until about a week before she left his home he continued to go to her room from time to time and there have sexual intercourse with her, to which she submitted through fear of personal violence in the event of her refusal to accede to his demands.

Prom the foregoing statement of facts it will be observed that the wife has at no time since she learned of her husband's adultery voluntarily submitted to his embraces, nor did she at any time during that period in fact forgive him for either his adulterous conduct or his other acts of cruelty. This raises the question whether the failure of the wife for so long a period of time after she learned of her husband’s infidelity to withdraw from his presence in such manner that it would not longer be necessary for her to submit to his embraces, with the knowledge on her part that her failure to so withdraw from his presence would necessitate the repeated acts of sexual intercourse with him which the testimony discloses in fact occurred, is operative to now deny to her the benefit of the claim that her sexual intercourse with her husband was involuntary and without forgiveness, and did not, in consequence, constitute con-donation.

I should have great hesitancy in holding that submission by the wife to sexual intercourse with her husband under tire circumstances already stated constituted condonation if that question could be properly considered an open question in this court. But in Rogers v. Rogers, 67 N. J. Eq. (1 Robb.) 534, the view is unequivocally adopted that the law places upon the injured spouse the election to terminate sexual intercourse or forego the remedy which the law gives for the offence, and that forgiveness, in its popular sense, is not a necessary element of condonation. In Rogers v. Rogers the adultery was by the wife and no element of involuntary marital cohabitation was involved, but the rule is there laid down that courts will not seek to discover the reasons which induce the offended party to forego the remedy afforded. It is of course true that tire act of submission by the wife to sexual intercourse through force of duress would not constitute condonation, but continued acts extending over a period of seven months under the circumstances stated cannot be classed as wholly involuntary if the doctrine of election by the injured party to forego the legal remedy is preserved in its fullness as the basis of adjudications in cases of this class.

I think it unneeessar}', however, to here determine whether the inability of the wife to leave her husband’s horpe coupled with her continued submission to his embraces through fear of personal injury in the event of her refusal, constitute condonation; for even though it be assumed that sexual intercourse under the circumstances stated constitutes condonation such condonation will always be deemed conditional. That principle is stated by Vice-Chancellor Van Fleet in Warner v. Warner, 31 N. J. Eq. (4 Stew.) 225, as follows: “Condonation is always conditional, the condition being that the pardoned party shall in the future treat the other with conjugal kindness. And by this is meant that he shall not only refrain from a repetition of the offence forgiven, but shall also refrain from committing any other offence which falls within the cognizance of a matrimonial court.” It is therefore held with great uniformity that if after the adultery of a husband has been condoned by his wife he is guilty of extreme cruelty to her the conditional element inherent in condonation is violated and condonation no longer exists as a bar to relief based on the offence thus conditionally condoned. In 14 Cyc. 643 this rule is stated as follows:

“An offence which has been condoned may be revived not only by a repetition of the same offence, but also by the subsequent commission of other marital offences. Thus the act of adultery will be revived by subsequent cruel and unkind treatment.”

The history of this doctrine and the extent to which it has been adopted by the courts of this country is fully shown in 2 Bish. Mar., Div. & Sep. §§ 308-323.

In the present case it is not definitely known how long the adulterous acts of the husband continued after the wife was apprised of his adulterous conduct, but his extreme cruelty not only continued throughout the entire period already referred to during which he had access to her bed but continued thereafter. As already stated the last act of sexual intercourse between the parties was about a week before she fled from his home. His extreme cruelty continued up to the time of her departure. It is entirety apparent from the evidence that at that time the husband’s habits' and conduct were such that the wife could not with safety to either her health or her life longer remain in his home. The culminating act of physical violence occurred the day before her departure and was alone fully adequate to violate the condition of any condonation that may be said to have theretofore existed.

The views here adopted render it unnecessary to consider the other questions raised by the issues. I will advise a decree of divorce in favor of cross-petitioner upon the ground of adultery as charged in her cross-petition.


author: Leaming, Y. C.

text:
    Daniel B. Ingersoll v. Somers Land Company et al.
    [Submitted November 12th, 1913.
    Determined December 11th, 1913.]
    1. Where encumbered lands are sold to different 'persons at different times by, conveyances intended to be free from the lien as between the grantees and the person holding the lien, the lands are chargeable in equity with the encumbrance in the inverse order of their alienation.
    2. The rule that the equity to have assets marshaled will not be enforced to the injury of a third person does, not apply where the third person has an inferior equity.
    3. An equity to marshal assets is not inferior to the rights of liens subsequently acquired, unless such rights are held .by innocent purchasers for value without notice of the existing equity, or are inherently superior thereto.
    4. Complainant purchased a tract of land from one against whom defendant company held a judgment, without knowledge of the judgment, and the judgment debtor • afterwards conveyed another tract to one who subsequently executed a mortgage thereon to defendant company to secure a pre-existing debt, and defendant seeks to enforce its judgment against the land conveyed to complainant.—Held, in view of the fact that defendant was chargeable with notice of complainant’s equity when it took the mortgage, and that the mortgage was to secure a pre-existingdebt, defendant was not an innocent purchaser, and complainant could enjoin enforcement of the judgment against the land conveyed to him by the judgment debtor until it was first enforced against the land mortgaged to defendant.
    On final bearing on bill to enjoin sale -under execution.

      Messrs. Bourgeois .<& Coulomb, for the complainant.

      Messrs. Godfrey & Godfrey, for the defendants.
   Leaming, Y. C.

The Somers Land Company was the owner of a judgment against one ICearns; Kearns was, at that time, 'the owner of several tracts of real estate; one tract was subsequently conveyed by Kearns to complainant by warranty deed, complainant not knowing of the existence of the judgment; Kearns subsequently conveyed another tract to one Knauer; Knauer subsequently executed a mortgage to the Somers Land Company to secure a pre-existing debt which he owed to that company. The Somers Land Company now seeks to enforce its judgment against the land conveyed by Kearns to complainant; complainant, as the first grantee of the judgment debtor, seeks to prevent the enforcement of the judgment against that land until it shall have been first enforced against the land of the judgment debtor which was, as stated, subsequently conveyed to Knauer, and bjr Knauer mortgaged to that company.

In this state the rule has always been recognized that when lands subject to an encumbrance are sold to different purchasers, in different parcels and at different times, by conveyances which are intended to be free from the lien of the encumbrance, as between the several grantees and the person holding the encumbrance, the lands are in equity chargeable with the encumbrance in the inverse order of their alienation. Shannon v. Marselis, 1 N. J. Eq. (Saxt.) 413; Wikoff v. Davis, 4 N. J. Eq. (3 Gr.) 224; Weatherby v. Slack, 16 N. J. Eq. (1 C. E. Gr.) 491; Mount v. Polts, 23 N. J. Eq. (8 C. E. Gr.) 188; Warwick v. Ely, 29 N. J. Eq. (2 Stew.) 82; Hiles v. Coult, 30 N. J. Eq. (3 Stew.) 40; Powles v. Griffith, 37 N. J. Eq. (10. Stew.) 384; Gray v. Hattersley, 50 N. J. Eq. (5 Dick.) 206, 211; Daly y. Ely, 51 N. J. Eq. (6 Dick.) 105; Davis v. Piggott, 56 N. J. Eq. (11 Dick.) 634; Jackson v. Condict, 57 N. J. Eq. (12 Dick.) 522. The reason for this rule is fully disclosed by an examination of the cases above cited. When the owner of lands subject to an encumbrance sells a part of the land by a conveyance intended to be free from the lien of the encumbrance an equity arises, in favor of the purchaser, to have the unsold land first applied to discharge the encumbrance; the land remaining in the grantor being primarily liable, it necessarily follows that a subsequent purchaser of another part of the encumbered land not only takes subject to the existing equity of the first purchaser, but has a similar equity as to the part remaining unsold.; when the last parcel is sold the grantee of that parcel simply takes subject to the prior equities.

In the present ease, the controversy arises from the circumstance that after the conveyance to complainant of a part of the land encumbered by the lien of the judgment owned by the Somers Land Company, another part of the encumbered land was conveyed to Knauer, who owed money to the Somers Land Company, and that company thereafter took a mortgage from Knauer to secure that debt. It is, therefore, urged in behalf of the Somers Land Company that the present enforcement of the equity of complainant to have the value of the Knauer tract applied on the judgment before the judgment is enforced against complainant’s tract will be operative to injure that company because it will lessen the security afforded by their mortgage on the Knauer tract.

It has been frequently stated that the equity to have assets marshaled will not be enforced when its enforcement is operative to injure a third party; but such statements have no reference to circumstances in which the third person injuriously affected has an inferior right or equity. In Reilly v. Mayer, 12 N. J. Eq. (1 Beas.) 55, a mortgage was executed to a mutual building association and shares of stock of the mortgagor were at the same time assigned to the association as collateral security for the same indebtedness. Subsequently, the mortgagor executed' a second mortgage on the same land to complainant. Subsequently, the mortgagor assigned his interest in the stock to a third party. Complainant, as holder of the second mortgage, sought to have the shares of stock applied to the payment of the first mortgage before the land common to both mortgages should be resorted to. It was held that complainant’s equity could have been enforced but for the rights which had been acquired by the bona- fide purchasers of the mortgagor’s rights in the stock without knowledge of the existence of complainant’s equity, but that the equity of complainant would not be enforced to the injury of such purchasers.

In Herbert v. Mechanics Building and Loan Association, 17 N. J. Eq. (2 C. E. Gr.) 497, substantially the same situation existed, except that the third parties, whose interests were to be injuriously affected by having the assets marshaled, were subsequent judgment creditors of the mortgagor with levies upon the mortgagor’s interest in the collateral stock. It was held that subsequent judgment creditors could not be regarded as purchasers for value in the contemplation of a court of equity, and that the rights in the stock thus subsequently acquired by the judgment creditors would give way to the equity of the prior second mortgagee of the real estate to have the stock appropriated before the real estate was resorted to. “The rule established by these decisions,” saj^s the reported opinion, “will, upon examination, be found to be that the right of the creditor to marshal the assets of the debtor, is absolute as to the debtor himself,' and that although it is subject to the legal and equitable claims of prior creditors, it cannot be impaired or in any respect injuriously affected by the intervention of those of later date.” The following cases are to the same general effect and conclusively establish the principle that the equity to mar-1: slial assets will not be displaced by rights or liens subsequently; acquired by others unless the subsequently acquired rights are those of innocent purchasers for value without notice of the existing equity or are inherently superior equities. Phillips- burg Mutual Loom and Building Association v. Hawk, 27 N. J. Eq. (12 C. E. Gr.) 355; Bergen Savings Bank v. Barrows, 30 N. J. Eq. (3 Stew.) 89; Bacon v. Devinney, 55 N. J. Eq. (10 Dick.) 449; Whittaker v. Belvidere Roller Mill Co. 55 N. J. Eq. (10 Dick.) 674, 689.

In the present ease, the subsequently acquired rights of the Somers Land Company were not rights constituting a superior equity. Not only was the Somers Land Company chargeable with notice of complainant’s equity at the time they took their mortgage, but the mortgage was made to secure a pre-existing indebtedness of the mortgagor. Under such circumstances they cannot be regarded in equity as occupying the position of innocent purchasers for value. Mingus v. Condit, 28 N. J. Eq. (8 C. E. Gr.) 313; Wheeler and Green v. Kirtland, 24 N. J. Eq. (9 C. E. Gr.) 552; Pancoast v. Duval, 26 N. J. Eq. (11 C. E. Gr.) 445; 2 Pom. Eq. Jur. § 749.

Van Mater v. Ely, 12 N. J. Eq. (1 Beas.) 271, is relied on by the Somers Land Company. That case is an exemplification of the well-recoguized principle that equity will not compel a creditor to resort to a common fund to his own prejudice. But in the present case defendant seeks to destroy complainant’s equity by the acquisition of a lien on land convejred by the judgment debtor to a third party subsequent to the conveyance to complainant, which lien was acquired for a pre-existing debt of the third party; in such case the equity of complainant is clearly paramount. The mere circumstance that the lien was acquired by the same person who owned the prior lien cannot impart to the lien so acquired any additional virtue or privilege. Jones v. Maney, 75 Tenn. (7 Lea) 341, 348; Newton v. Nunnally, 4 Ga. 356, 358.

I will advise a decree enjoining the sale of complainant’s land under defendant’s judgment until the land of Knaner, which was purchased from the judgment debtor, is first sold under the judgment.


author: Teaming, V. C.

text:
    LeGrand Company v. William Richman et al.
    [Submitted December 17th, 1913.
    Determined December 20th, 1913.]
    1. The rule stated in Higgins v. Senior, 8 Mees. & W. 848, to the effect that a person not a party to a written contract may be shown to be a party by parol evidence, in the absence of ambiguity, fraud, mistake or subsequent contract, has never been adopted by the courts of this state.
    2. In a suit for specific performance of a written contract for the sale of land, where no change of possession has occurred, a person cannot be shown to be a party by parol evidence. This does not, of course, deny the right of proving by parol evidence the authority of an agent who has executed a written contract in the name of his principal.
    3. In a suit for the specific performance of a written contract for the sale of land a demurrer will be sustained where the demurrants are not parties to the written contract sued on, and there is no averment in the bill suggesting that the contract was not exactly as the parties to the contract intended it to be, or that complainant did not know that demurrants were the parties in the transaction, and that a party with whom complainant was contracting was simply acting as an agent of demurrants.
    On demurrer to bill for specific performance for sale of land.

      Mr. Theo. W. Schimpf and Mr. James M. Sheen, for the complainant.

      Messrs. French & Richards, for the demurrants.
   Teaming, V. C.

The rule stated in Higgins v. Senior, 8 Mees. & W. 843, to the effect that a person not a party to a written contract may be shown to be a party by parol evidence, in the absence of ambiguity, fraud, mistake or subsequent contract, has never been adopted by the courts of this state. In Schenck v. Spring Lake Beach Improvement Co., 47 N. J. Eq. (2 Dick.) 44, that rule is given careful and thorough consideration and expressly repudiated; it is there held that in a suit for the specific performance of a written contract for the sale of land, where no change of possession has occurred, a person not a party to the written contract cannot be shown to be a party by parol evidence. This does not of course deny the right of proving by parol evidence the authority of an agent who has executed a written contract in the name of his principal. Schenck v. Spring Lake Beach Improvement Co., supra, has been recognized as an accurate exposition of the law on that subject not only in this court but in our supreme court and court of appeals. Bowers v. Glucksman, 68 N. J. Law (39 Vr.) 146; Clement v. Young-McShea Amusement Co., 70 N. J. Eq. (4 Robb.) 677; Stengel v. Sergeant, 74 N. J. Eq. (4 Buch.) 20.

The present case is essentially identical with the case of Schenck v. Spring Lake Beach Improvement Co., supra. Demurrants are not parties to the written contract which is here made the foundation of the suit, and by the arguments in support of the bill it may be regarded as conceded that no written evidence exists establishing the agency of the party who executed the contract. No averment of the bill suggests that the contract was not exactly as the parties to the contract intended it to be, or that complainant did not know that demurrants were the principals in the transaction and that the party with whom complainant was contracting was simply acting as an agent of demurrants. Under such circumstances an averment of the bill to the effect that the principal who executed the contract as a principal was the agent of demurrants must be deemed inadequate to support the relief sought by the bill as against demurrants; it is expressly so held in the Schenck case above referred to.

I will advise an order sustaining the demurrer. Should complainant desire to amend the bill, twenty days from the date of service of the order overruling the demurrer may be allowed for that purpose.


text:
    Simmons Watkins et al. v. Julia E. Watkins et al.
    [Submitted October 31st, 1913.
    Determined December 26th, 1913.]
    1. A parol antenuptial agreement to make a settlement in consideration of marriage is within the statute of frauds, and marriage alone is not such part performance thereof as will save it from the operation of the statute so as to make it enforceable in equity.
    2. The jurisdiction of equity to aid the defective execution of powers will only be extended to supply the formal defects in transactions between private parties, and not to supply omissions of statutory requirements.
    3. Where a defectively executed will does not refer to a parol ante-' nuptial contract, by which testator agreed to leave his entire estate to his wife, the will cannot be considered as a written recognition of such contract.
    On bill for partition. Heard on demurrer to cross-bill of defendant Ella Beatrice Watkins.
    The cross-bill of defendant Ella Beatrice Watkins, which has been filed by her in defence of a bill for partition, sets forth, in substance, that she is the equitable owner of the real estate which the bill seeks to have partitioned, by reason of a parol antenuptial agreement which was made between her and her husband, whereby it was agreed that in consideration of her marrying him he would leave his entire estate to her by will at his death; that the real estate described in the bill was owned by her husband at the time of the marriage and the legal title remained in him until his death; that after her marriage her husband attempted to carry out and fulfill his part of the agreement and for that purpose in his own handwriting wrote what purported' to be his will and signed it before a subscribing witness, and therein devised and bequeathed his entire estate to cross-complainant; that the will failed in law because not executed in accordance witli onr statute: that the will was an attempted performance by her husband of the parol antenuptial agreement and in equity conferred upon cross-complainant the title to the real estate sought to.be partitioned.
    The heirs-at-law of cross-complainant’s husband, as owners of the legal title, have demurred to the cross-bill and have set up the statute of frauds as a bar to the claim made by the cross-bill.

      Mr. William C. Jones, for the defendant and the cross-complainant Ella Beatrice Watkins.

      Messrs. Oil & Carr, for the demurrant.
   Leaming, V. C.

An antenuptial parol agreement to make a settlement in consideration of marriage cannot be made the foundation of an action by reason of the provisions of our statute of frauds. Nor is marriage alone such a part performance of an antenuptial parol contract as will withdraw the contract from the operation of that statute and thereby render it enforceable in equity. This must be regarded as the settled law of this state, whether rights of creditors are involved or not. Manning v. Riley, 52 N. J. Eq. (7 Dick.) 39; Russel v. Russel, 60 N. J. Eq. (15 Dick.) 282; S. C. on appeal, 63 N. J. Eq. (18 Dick.) 282; Pennsylvania Railroad Co. v. Warren, 69 N. J. Eq. (3 Robb.) 706.

Cowdrey v. Cowdrey, 71 N. J. Eq. (1 Buch.) 353, is relied on in support of the'cross-bill. In Cowdrey v. Cowdrey the recognized equitable jurisdiction to aid the defective execution of powers and defective surrenders of copyholds was by analogy applied or extended in aid of a conveyance which was complete in all its essential parts except a seal; the instrument had been executed and delivered to the wife in fulfillment of an ante-nuptial parol contract. Upon that authority this court is now asked to give vitality to the provisions of an instrument which fails as a will because it has not been executed in conformity to the requirements of our statute. The infirmity of the instrument here in question is not of mere form; it is of substance. In prescribing the manner in -which a will must be executed our statute declares the essential elements of a will; in the absence of these essential elements the instrument is not a will. The jurisdiction of a court of equity to aid the defective execution of powers has never been' extended to supply more than formal defects as distinguished from defects of substance, and has been uniformly limited in its application to requirements created by private parties; defects arising from the omissions of statutory requirements have never been regarded as falling within that jurisdiction, for courts of equity cannot dispense with regulations prescribed by statute. 2 Pom. Eq. Jur. §§ 589, 590, 834; 1 Story Eq. Jur. (13th ed.) 101 § 96. I find no authority which justifies the exercise of the branch of equity jurisdiction here invoked in aid of the provisions of a will or other instrument which has not been executed in accordance with the positive requirements of a statute. After the enactment of the statute of 1 Vict. c. 26 § 10, prescribing the necessary ceremonies for the execution of wills, the court of chancery of England no longer assumed to aid the defective execution of powers by wills which had not been executed in conformity to the requirements of that statute. 2 Sugd. Pow. 126.

Nor can the intended will be regarded as such a written recognition of the parol antenuptial contract as will enable this court to enforce that contract; the writing contains no reference to the contract and its terms cannot be enlarged or changed by parol. Schenck v. Spring Lake Beach Improvement Co., 47 N. J. Eq. (2 Dick.) 44.

ha Cowdrey v. Cowdrey, supra, reference is made to the case of Caton v. Caton (1865), L. R. 1 Ch. App. 137. As that case bears some resemblance to the present case it may be well to here note that after being overruled on appeal by the lord-chancellor, it is appealed to the house of lords and the opinion of the lord-chancellor was there unanimously affirmed. Caton v. Caton, L. R. 2 Eng. & Ir. App. Cas. 127.

I am obliged to advise an order sustaining the demurrer to the cross-bill.


text:
    Crystal Ice and Cold Storage Company v. Howard N. Elmer et al.
    [Submitted December 8th, 1913.

    Determined December 30th, 1913.]

    1. Under 1 Comp. Btat. 1910 p. 106 § 6, providing that every arbitrator shall take an oath to faithfully and fairly hear the cause and make an award, the failure of the arbitrator to be sworn before proceeding, and to proceed without giving a hearing- to the parties, was fatal, whether the arbitration was made as a rule of court or not.
    2. The parties to an arbitration are entitled to notice of the time and place of hearing, irrespective of statutory requirements, and an award made without an opportunity for a hearing is invalid.
    3. In a suit for specific performance of an award of arbitrators determining the price to be paid by a lessee upon purchasing, the bill will not be held to await another award upon determining that the award made was invalid for want of a hearing by the arbitrators, &c.
    On final hearing on bill for specific performance of an award, and for an injunction against a suit at law.
    The bill is filed for the specific performance of an award of arbitrators and for an injunction against a pending action of. ejectment wherein defendants herein seek the recovery of possession of the real estate which is the subject-matter of the award.
    Complainant is lessee of the real estate which is now the subject of dispute under a lease which has expired. The lease provides that at the expiration of the lease the lessee shall have the privilege of purchasing the leased land at a price to be determined by three disinterested parties, one of whom should be chosen by each of'the parties to the lease, the two so chosen to select a third. Shortly before the expiration of the term named in the lease complainant gave notice of his determination to purchase the leased premises and each party to the lease thereupon appointed an arbitrator and the two so selected appointed a third, and an award was thereupon made by the three arbitrators fixing the purchase price. Defendants have refused to convey the premises for the amount awarded by the arbitrators and have brought suit at law for the recovery of possession of the premises.
    The defence to the present suit includes, among other things, the claim that the arbitrators were not sworn and that they made their award without giving the parties a hearing or an opportunity to be heard.

      3Iessrs. Hampton & Fithian, for the complainant.

      3Ir. Walter H. Bacon, for the defendants.
   Leaking, V. C.

The evidence discloses that the arbitrators made the award here sought to be enforced without first being sworn and without giving a hearing to the respective parties in interest. This is clearly fatal to the validity of the award.

The sixth section of our act touching arbitration and references (1 Comp. Stat. p. 106), when read in connection with the fourth section to which it refers, provides that in cases of arbitration, every arbitrator shall, before he proceeds to the business submitted to him, take an oath or affirmation that he will faithfully and fairty hear and examine the cause and make a just and true award according to the best of his skill and understanding.

The arbitration here in question was not made a rule of court, and it is urged in behalf of complainant that the sixth section of the act above referred to only relates to arbitrations which have been made a rule of court. In Inslee v. Flagg, 26 N. J. Law (2 Dutch.) 368, that contention was made and expressly overruled; it is there determined that the sixth section of our Arbitration act applies to all arbitrations, whether made a rule of court or not, and requires all arbitrators to be sworn or affirmed before proceeding with their duties, and that the section is operative to vitiate any award made by arbitrators who have not been sworn or affirmed pursuant to the provisions of that section. As the arbitrators who made the award which is the foundation of the relief sought by the present bill were'not sworn or affirmed to perform their duties, it is clearly impossible for this court to grant the relief sought by complainant.

The other circumstance already referred to is equally fatal to the relief here sought. In West Jersey Railroad Co. v, Thomas, 21 N. J. Eq. (6 C. E. Gr.) 205, and 23 N. J. Eq. (8 C. E. Gr.) 431; S. C. on appeal, 24 N. J. Eq. (9 C. E. Gr.) 567, it is definitely determined that the parties to an arbitration are entitled to notice from the arbitrators of a time and place for a hearing to the end that they may be present and present their case. This rule is wholly independent' of statutory requirements to that effect, The award which is made the foundation of the present suit was made not only without the parties to the arbitration being heard, but also without the parties having been given an opportunity to be heard.

The suggestion is made in behalf of complainant that in the event of the award being found defective the bill should be held to await another award. I find no justification for that course. Without an award there appears to be no foundation for the present bill to rest upon. Whether a bill based upon a declared purpose upon the part of complainant to re-assert its claim of right to purchase through a new arbitration would support an injunction against the further progress of the ejectment suit cannot be now appropriately determined.

The views here expressed render consideration of the other defences unnecessary.

I will advise a decree dismissing the bill.


text:
    Michael Zarecki et al. v. Guarantee Realty Company.
    [Submitted January 2d, 1914.
    Determined January 3d, 1914.]
    1. In a suit to reform a written building contract for the erection of a building forty feet in depth instead of forty-four feet in depth as had been agreed upon, where it appeared that the complainants undoubtedly signed the contract believing it to be for a building forty-four feet in depth as previously agreed upon, and defendant’s representatives either did the same or concealed the fact that they had observed the error, in either case the right to reform would obtain.
    2. Evidence examined, and Held that complainants were entitled to a decree of reformation in accordance with the prayer of the bill.
    On final hearing on bill to reform contract.

      Mr. Joseph B. Tyler and Mr. A. Moulton McNutt, for the complainants.

      Messrs. Stackhouse & Kramer, for the defendant.
   Leaking, V. C.

To entertain a substantial doubt touching the truth of the material averments of a bill of this nature is to deny the relief sought; but in this case I am convinced that there can be no real doubt touching the material facts. There is conflict of testimony of witnesses, but the truth is too obvious to be doubted.

The type-written translation of the contract which had been executed in the Polish language, as that contract had been interlined after its execution, was admittedly made the basis of the final contract. The interlineations in that type-written translation were undoubtedly determined upon at a conference between Harry Varbalow, representing defendant company, and complainant Michael Zarecki, assisted by Mr. Gulcz and Mr. Oinkowski. The testimony of the two latter witnesses, who have no pecuniary interest in this controversy, is that all the modifications of the type-written translation which were then agreed upon were embodied in it by erasures and interlineations, and that a modification of the depth of the building was neither agreed upon nor even suggested. The contract that was agreed upon on that occasion was undoubtedly the type-written translation as modified by ink erasures and interlineations made at that time. Both of these witnesses have also testified that they then retyped this interlined document with a purpose to accurately reproduce it; that one dictated while, the other operated the typewriter, and that by error of one of them—and not by intention—the depth of the building was made forty instead of forty-four feet. If this is true—and of its truth there can be no real doubt—the idea of a building forty feet in depth, or of any depth except forty-four feet, never formed any part of the negotiations or entered the minds of any of the parties prior to the meeting at which the signatures were affixed to the contract. At that meeting the parties undoubtedly met with a mutual purpose to execute a contract for a building forty-four feet in depth, as previously agreed upon. Whether the contract was read at that meeting or not is of little importance, for it is inconceivable that complainants at that time voluntarily and knowingly waived four feet of the depth of the building as already agreed upon without comment or protest, and if defendant’s representatives at that time observed the change in the depth of the building, it was their plain duty, under the then existing circumstances, to call complainants’ attention to that change. Complainants undoubtedly signed the contract believing it to be for a building forty-four feet in depth as had been previously agreed upon; defendant’s representatives either did the same or concealed the fact that they had observed the error. In either case the right of reformation would obtain. Simpson Plumbing Co. v. Geschke, 76 N. J. Eq. (6 Buch.) 475, 478; S. C. on appeal, 78 N. J. Eq. (8 Buch.) 306.

There is conflict of testimony touching the subsequent conduct of the parties which might well cause a court to hesitate in granting the form of relief here sought if that relief were to any considerable extent dependent upon confidence in the testimony of complainant Michael Zarecki. But I do not believe the testimony of either Mr. Goldstein or Mr. Zarecki touching those matters. The truth touching those transactions is reasonably obvious; it is not, in my judgment, as stated by either party to the transactions.

I will advise a decree of reformation in accordance with the prayer of the bill.


text:
    Emma J. B. Saunders v. Levin J. Saunders.
    [Heard January 21st, 1914.
    Determined January 22d, 1914.]
    1. In a wife’s suit for a limited divorce from her husband on the ground of his extreme cruelty, evidence examined, and Held that although immediately preceding the separation of the parties the husband undoubtedly struck his wife under provocation from her, there neither has been nor 'will be real injury or danger to her life or health from his past or probable future conduct if she shall return to his home, and hence her petition will be dismissed, but without prejudice, if on her return he shall again treat her with violence.
    ' 2. The remedy by decree of divorce for extreme cruelty is applicable, not as a punitive, but as a preventive measure, to protect the health or life of the wife in the future from threatened danger.
    On final hearing on bill for divorce from bed and board for extreme cruelty.

      Mr. Joseph B. Tyler, for the complainant.

      Messrs. Wilson & Oarr, for the defendant.
   Leaming, V. C.

I am convinced that the evidence in this case does not justify a decree of divorce. It is entirely clear that the married lives of these two parties have been extremely unhappy, but it is equally clear that the unhappiness has been the result of mutual fault; they appear to have formed the quarreling habit and persisted in -its exercise with great tenacity. It is impossible to conclude that this was the fault of either to the exclusion of the other. The only physical violence upon the part of the husband was the occurrence which immediately preceded the separation of the parties. On that occasion the husband undoubtedly struck his wife with the satchel which he held in his hand; he had no right to do so and deserved the most severe censure for the act. It is reasonably apparent that 'the act was provoked by the wife and occurred at the moment of impulsive anger on the part of the husband, but while the anger majr have been justified the blow was not. That single act cannot, however, properly be made the basis of a decree under our statute. The remedy by decree of divorce for extreme cruelty is applicable, not as a punitive, but as a preventive measure, to protect the health or life of the wife in the future from threatened danger; this has been repeatedly held.

The evidence in this case satisfies me that there neither has been nor will be real injury or danger to the life or health of petitioner from the past or probable'future conduct of her husband. I am satisfied that he has deeply repented his loss of self-control on the occasion referred to and that the future will afford the wife entire safety in his home, and also reasonable happiness there if she is disposed to contribute her efforts toward making that home a happy one. It takes two persons to quarrel, and I believe it to be within the power of either spouse to make a home happy.

It is entirely apparent that petitioner has at no time feared defendant; any infirmity of health which may have existed prior to their final quarrel was not due to petitioner’s fear of defendant. Nor am I able to believe that defendant ever threatened to shoot petitioner. Tt is clear she never regarded the revolver incidents, if they in fact occurred, as a source of danger.

The concluding language of the opinion of Chancellor Runyon, in Coles v. Coles, 32 N. J. Eq. (5 Stew.) 547, 557, may be here adopted as embodying my views in this case:

“The defendant’s conduct, in laying violent hands on his wife, is not justified. It is not capable of justification. But the question to be determined is, whether there is reason to apprehend that, if complainant shall return to his house, she will be in danger of violence or cruelty at his hands. I do not think she will. But if, on her return, he shall again treat her with violence, this court will be open to her for relief. The bill will be dismissed, but without prejudice, as in English v. English, 27 N. J. Eq. (12 C. E. Gr.) 579.”

I will advise a similar decree in this case.


author: Teaming. Y. C.

text:
    Homer F. Merriman v. National Zinc Corporation et al.
    [Submitted December 5th, 1913.
    Determined January 28th, 1914.]
    1. Two certain contracts were made between the corporation and one H., the first granting to him and his assignees for a term of years the exclusive right of mining for minerals (except limestone and clay), in certain lands, the mining rights in which the company owned, he being required promptly to begin active operations in prospecting for ore and to spend $10,000 in prospecting- work, unless ore should be found in marketable quality by the expenditure of a less amount, and being required to pay the company twelve and one-half per cent, of the gross receipts from sales of ore, as royalty; and the other contract authorizing H. to prosecute certain claims of infringement on the company’s mining rights, and to pay to the company one-half of the gross amount recovered. Upon a bill by a stockholder of the company in behalf of the company to set aside said contracts, evidence Held not to warrant the conclusion that said contracts, as alleged in the'bill, were made in disregard of the best interests of the corporation, the same having been authorized by formal votes of the companj'’s board of directors, and at the next succeeding annual stockholders’ meeting reported to, and approved by, the stockholders.
    2. There can be no doubt of the right of this court to relieve against the operation of fraudulent action of a board of directors of a corporation, at the instance of a single stockholder, in the absence of intervening rights of third parties.
    3. The operative force of any action by a board of directors of a corporation is necessarily found in its quality as an honest exercise of the legitimate functions of office; the supervisory and remedial powers of this court exist only for the purpose of insuring the honest exercise of such official powers and cannot be extended further. In matters of business management within the powers of the board its judgment, if honestly exercised, must control, and not the judgment of this court.
    4. Direct interest of members of the board of directors in a contract made by the board may render such contract voidable as a contract made by a trustee with himself touching the property of his cestui qua trust, and gross inadequacy pf consideration may afford a badge of fraud; but no justification can be found for the assumption that the members of a board have not exercised their honest judgment in behalf of the corporation represented by them because private interests of members of the board, which are wholly unconnected with the contract authorized by the board, may be enhanced by the action taken.
    5. The failure of the contract first above recited to require H. to spend more than $10,000 in development work does not justify the conclusion that an honest business judgment of the board was not exercised, it appearing that fully three times that amount has in fact been expended in development work by the. corporation to which H. assigned the contract; and without successful development work the contract was clearly valueless to H. or his assigns.
    6. Individual stockholders cannot question, in judicial proceedings, the corporate acts of directors, if the same are within the powers of the corporation, and in furtherance of its purpose, are not unlawful or against good morals, and are done in good faith and in the exercise of an honest judgment. Questions of policy, of management, of expediency of contracts or action, of adequacy of consideration not grossly disproportionate, of lawful appropriation of corporate funds to advance corporate interests, are left solely to the honest decision of the directors if their powers are without limitation and free from restraint. To hold otherwise would be to substitute the judgment and discretion of others in the place of those determined on by the scheme of incorporation.
    7. There is no such recognized trust relation between stockholders of a corporation as will impose upon one who may be interested in a transaction, the authorization of which is being acted upon at a stockholders’ meeting, the burden of establishing his good faith in the vote which he has cast. The action may be so clearly detrimental to the corporation itself as to render it a fraudulent destruction of the rights of minority stockholders; but the personal interests of a stockholder will not in itself deny such stockholder the right to cause his stock to be voted in the line of his personal interests.

      S. Stockholders of a corporation who possess the major portion of its stock cannot by force of their votes lawfully appropriate the property of the corporation to their own use in disregard of the rights of other stockholders.
    On final hearing on hill to set aside certain contracts.

      Mr. Hugh B. Reed, for the complainant.

      Mr. /S'. Stanger Isznrd, for the defendants.
   Teaming. Y. C.

The bill is filed by a stockholder of the Sussex Calcite Company in behalf of that corporation to set aside two certain contracts made by that company with Eugene Howard, bearing date February 21st, 1908, and March 18tb, 1908, respectively. The rights of Howard under these contracts have been assigned to and are now held by defendant National Zinc Corporation.

These contracts were authorized by formal votes of the board of directors of the Sussex Calcite Company and at the next succeeding annual stockholders’ meeting of that company, held April 8th, 1908, were reported to and approved by the stockholders.

The bill challenges the integrity and sufficiency of the actions taken at the two directors’ meetings and also at the stockholders’ meeting. It is claimed that the actions taken at the directors’ meetings were not tbe exercise of sound or honest business discretion by the board, but were taken in bad faith and in disregard of tbe interests of tbe corporation represented by the board and in the interest of members of the board. The confirmatory action taken at tire stockholders’ meeting is challenged by the claim that an affirmative vote of two-thirds of the outstanding stock of the corporation was necessary to validate the contracts and that less than that amount of stock was voted in support of the resolution of confirmation; it is also claimed that the vote of approval of the stockholders’ meeting was influenced and made possible by reason of secret interests which certain stockholders held with Howard in these contracts.

There can be no doubt of the right of the court of chancery to relieve against the operation of fraudulent action of a board of directors of a corporation at the instance of a single stockholder in the absence of intervening rights of innocent third parties. Nor can stockholders of a corporation who possess the major portion of its stock by force of their votes lawfully appropriate the property of the corporation to their own use in disregard of the rights of other stockholders. While it is held, in United States Steel Corporation v. Hodge, 64 N. J. Eq. (19 Dick.) 807, that a stockholder’s personal interests will not disqualify him from voting his shares at a stockholders’ meeting, no suggestion is there found to the effect that any measure can be given vitality by either illegal or fraudulent action of stockholders.

The contract of February 21st, 1908, bestowed upon Howard and his assignees for a term of fifty years the exclusive right of mining for all minerals except limestone and clay in certain lands in which the Sussex Calcite Company then owned the mining rights. The contract required Howard to promptly begin active operations in prospecting for ore and to spend $10,-000 in prospecting work unless ore should be found in marketable quantity by the expenditure of less than that amount; when found the work of mining and selling ore was to be prosecuted with diligence. Twelve and one-half per cent, of the gross receipts from sales of ore were to be received by the Sussex Calcite Company as a royalty. The contract of March 18th, 1908, authorized Howard to prosecute certain claims of infringement on the mining rights of the Sussex Calcite Company and to pay to that company one-half of the gross recovery. At about the time these contracts were made another contract was made with another party leasing to that party the mining rights*of the Sussex Calcite Company for limestone and clay. These three contracts, taken together, covered substantially all the property of the Sussex Calcite Company except the surface rights of the land; the surface rights were held by the Sussex Calcite Company under contract of purchase and have been since paid for and are now owned by that company subject to certain mortgage encumbrances.

At the time these leases of mining rights were made by the board, and also at the time they were approved by the stockholders, the affairs of the Sussex Calcite Company were in an embarrassed condition. Stock of the company had been sold by its officers under representations which were by officials of the United States government deemed fraudulent, and what is-known as a “fraud order,” had been issued, forbidding the Sussex Calcite Company the use of the mails and the officers of the company were under indictment by the federal grand jury on like charges. Thus discredited it was clearly 'impossible for the company to procure funds for development work by the sale of its stock, and such development work as had been done by the company had shown no favorable results. Under these conditions it was apparent to the officers of the company 'that if development operations could be promptly begun and ore discovered in paying quantities a valuable defence to the pending indictments would be afforded. This circumstance is urged by complainant as the impelling motive of the lease of mining' rights to Howard. The by-laws of the Calcite company provided for a board of five directors. Five had been elected, but two had resigned. At the time of the Howard lease two of the three qualified directors were under indictment for the cause stated; the lease to Howard was authorized,by vote of these three members of the board. At the date of the second Howard agreement an additional member of the board had qualified. This court is accordingly asked to find that in making the mining lease to Howard the board was guided by selfish purposes of its members in a desire to afford for two of them, as well as for others who were also indicted, a. valuable defence to the indictments, and that by reason of these selfish purposes the board disregarded the rights and interests of the company and thus failed to exercise its legitimate function of management. It is urged that this is apparent not only by the personal embarrassments and needs of two of the three of the board, but also from the circumstance that the mining contract does not obligate Howard to spend more than $10,000 for prospecting purposes. It is also claimed that one of the members of the board had a secret interest with Howard—that claim will be considered later.

As already suggested, the operative force of any action by a board of directors of a corporation is necessarily found in its quality as an honest exercise of the legitimate functions of office; the supervisory and remedial .powers of this court exist only for the purpose of insuring the honest exercise of such offi•cial powers and cannot be extended further. In matters of business management within the powers of the board its judgment, if honestly exercised, must control, and not the judgment of this court. Direct interest of members of the board in a contract made by the board may render such contract "voidable as a contract made by a trustee with himself touching the property of his cestui que trust, or gross inadequacy of consideration may afford a badge of fraud; but no justification can be found for the assumption that the members of a board have not exercised their honest judgment in behalf of the corporation represented by them because private interests of members of the board, which are wholly unconnected with the contract authorized by the board, may be enhanced by the action taken. Nor does the failure of the contract to require Howard to spend more than $10,000 in development work justify the conclusion that an honest business judgment of the board was not exercised. The evidence discloses that fully three times that amount has in fact beexr expended in development work by the corporation to whom Howard assigned the contract; and without successful development work the contract was clearly valueless to Howard or his assigns. The rule as stated in Ellerman v. Chicago Junction Railway Co., 49 N. J. Eq. (4 Dick.) 217, 232, is as follows: “Individual stockholders cannot question, in judicial proceedings, the corporate acts of directors, if the same are within the powers of the corporation, and in furtherance of its purpose, are not unlawful or against good morals, and are done in good faith and in .the exercise of an honest judgment. Questions of policy, of management, of expediency of contracts or action, of adequacy of consideration not grossly disproportionate, of lawful appropriation of corporate funds to advance corporate interests, are left solely to the honest decision of the directors if their powers are without limitation and free from restraint. To hold otherwise would be to substitute the judgment and discretion of others in the place of those determined on by the scheme of incorporation.”

It is claimed that Bichards, one of the directors, was directly interested with Howard in the contracts and was to receive a percentage interest from Howard. Bichards has testified to that fact with shameless effrontery. It is difficult for testimony to carry less conviction than his testimony of that fact. He had theretofore stated to the exact contrary, and the evidence disclosed that he did not receive the stock to which he would have been entitled after the organization of defendant company had such an agreement existed between him and Howard. A finding that such an agreement existed is not justified.

I am not aware that any attack is made on the contract of March 18th, 1908, other than the general claim that its authorization was not the exercise of sound business judgment by thel board of directors.

It remains to consider the action taken at the stockholders’ meeting. At the annual stockholders’-meeting succeeding the action of the directors, already referred to, a resolution was adopted approving these contracts with Howard, and also approving the contract, heretofore referred to, leasing the Calcita mining rights to another person. It is urged in behalf of complainant that these three contracts, taken together, disposed of practically all tlio property of the Calcite company, and, in consequence, required the assent of two-thirds of the stockholders, by reason of the provisions of the act of March 24th, 1899. Comp. Stat. p. 1600 § 2a. The evidence clearly establishes that more than two-thirds of the outstanding stock of the Sussex Calcite Company was voted in approval of these contracts, unless iti be found that one Baglej-, who was present at the stockholders’ meeting, failed to vote the stock represented by him in favor of the resolution of approval. Bagley has been called as a witness and has testified that he did vote for the resolution of approval. It is impossible to doubt the accuracy of his testimony. He is wholly without interest in the controversy and has stated that he was sent to- the stockholders’ meeting as a proxy expressly to vote for the approval of these contracts, and ihe owner of the stock represented by Bagley has also testified that he sent Bagley as his proxy with that specific instruction. The error in the minutes is explained by the fact that at the stockholders’ meeting the resolution of approval included with the contracts here in question the contract already'referred to which leased the mining rights of limestone and clay,' and Bagley explained at the meeting that he would vote against the approval of that contract if the resolution of approval should be divided; but failing to procure a division, he voted for the resolution as presented. I entertain no doubt that the stock represented by Bagley was voted as he states, and that more than two-thirds of the outstanding stock of the Sussex Calcite Company was voted to approve the contracts here in question.

It is undoubtedly true that some of the stock which was voted for the approval of these contracts was owned by persons who expected to become associated with Howard in a corporation which would take over these contracts and operate under them. While their votes could not lawfully authorize a wanton or fraudulent disposition of the assets of the corporation, the rules defined in United States Steel Corporation v. Hodge, supra, render it clear that they were not disqualified from voting their stock by reason of their personal interests. In the Hodge Case directors who were interested in the bankers’ contract which was before the stockholders’ meeting for approval were held to have been privileged to vote as stockholders, and no question was there raised against the right of interested stockholders to vote who were not directors. There appears to be no such recognized trust relation between stockholders of a corporation as will impose upon one who may be interested in a transaction, the authorization of which is being acted upon at a stockholders’ meeting, the burden of establishing his good faith in the vote which he casts. The action may be so clearly detrimental to the interests of the corporation itself as to render it a fraudulent destruction of the rights of minority stockholders; but the personal interests of a stockholder will not in itself deny such stockholder the right to cause his stock to be voted in the line of his personal interests. The rule, as stated by Judge Thompson, in his work on Corporations, is as follows:

“It is well settled that the stockholders do not hold fiduciary relations to each other in the sense that one is prevented from voting at a stockholders’ meeting on a question in which he has an individual interest.” 4 Thomp. Oorp. (2d ed.) § 4467.

1 am unable to reach the conclusion that the contracts here in question can be said to have been made in disregard of the best interests of the corporation. The value of the mining rights of the corporation were wholly problematical and speculative; if minerals in paying quantities could not be found the rights were valueless. Minerals had not been found and further development work by the corporation had become practically impossible. The contract reasonably insured the further prosecution of development work and a liberal royalty in case minerals were discovered. Approximately, $30,000 has been spent by the assignee of the contract in this development work and no minerals have yet been found. The bill avers that this expenditure has been purposely misdirected, with a view to avoid the discovery of minerals, but the evidence does not establish that fact.

The views here stated render it unnecessary to consider whether complainant’s right to prosecute this 'suit is barred by laches or by his stock having been voted by his proxy in affirmance of the contracts in question.

I will advise a decree dismissing the bill.