author: Bentley, Y. C. Bentt.ey, Y. C.

text:
    Philip M. Grausman, complainant, v. Porto Rican-American Tobacco Company, defendant. William R. Hochster et al., complainants, v. Porto Rican-American Tobacco Company, defendant.
    [Decided July 11th, 1923.]
    1. A statute will not be held unconstitutional unless the conflict with the constitution is apparent.
    2. An amendment to a certificate of incorporation providing for the issuance of additional stock of no par value, designated as “class B common stock,” as distinguished from the stock having a xxar value existing prior to the amendment—Held, not to impair the contract
    .rights of stockholders in violation of the constitution of the United States.
    •3. The holder of a single share of stock can bring an action to prevent an attempted ultra vires act of the corporation.
    1. Under the statutes of New Jersey, which authorize a corporation to increase or decrease its capital stock and to create one or more classes of preferred stock, a corporation cannot, by'amendment of its articles of incorporation, change existing common stock into preferred stock.

      5. An amendment of the articles of incorporation authorizing an increase of the capital stock by the issuance of new no par value stock, and entitling the common stock formerly issued to a cumulative dividend at a certain per cent, before payment of a dividend on (he new stock at the same per cent., and providing that both issues share equally in additional profits—Held, not to attempt to change existing common stock into preferred stock.
    6. The right of present stockholders to have the first call upon the new stock cannot be defeated by any corrupt or other plan of the directors.
    7. A resolution submitting to the stockholders the question whether the board of directors might issue new stock of the character indicated to the holders of the old stock as a stock dividend, or offer to them the right to subscribe for the same, or otherwise dispose of it according to law, does not contemplate a plan whereby the stockholders were to be deprived of their right to purchase their pro rata share of the new stock.
    S. In a suit of a stockholder to enjoin the issue of new stock, the court will grant an application for a stay of the effect of a dissolution of an order of restraint, pending an appeal to the court of errors and appeals, where the refusal of a stay will result in the destruction of the subject-matter of the litigation, and where the appeal is manifestly taken in good faith, and there is a debatable question.
    n. Allen v. Francisco Sugar Go., 92 N. J. Eq. J/Sl, distinguished.
    Oil bill, &c. On rules to show canse.

      Messrs. McCarter & English, for the complainant Philip M. Grausman.

      Mr. Merritt Lane, for the complainants Hoehster et al.

      Messrs. Lindabury, Depue & Faulks, for the defendant.
   Bentley, Y. C.

These two cases were, by stipulation, argued together. The bill in each instance is filed by a stockholder to enjoin the defendant from holding a stockholders’ meeting for the purpose of issuing additional capital stock and was heard on bill and affidavits.

The company was incorporated in 1899 for the purpose of manufacturing and selling tobacco and tobacco products, with an authorized capital stock of $5,000,000, subsequently increased to $10,000,000, divided into one hundred thousand shares, par value $100 each, of which sixty-two thousand eight hundred and sixteen and one-half shares are now outstanding, all of which are common stock. In addition the defendant controls, through the ownership of their stock, three subsidiary corporations and is the most important Porto Rican tobacco industry and one of the largest manufacturers of cigars in the Hnited States. It had been exceedingly prosperous until the year 1921, when, through labor troubles, it was obliged to suspend business for about nine months of that year and thereby it has been financially embarrassed. Not only has it lost money by reason of inability to use high-priced stock which it already had on hand, but during the time that it was unable to fill orders the demand for its products has fallen off, so that it now finds itself in a position where it requires $1,500,000 for the purchase of supplies, principally a stock of tobacco of the present crop, and in conducting an advertising compaign to reinstate its products in their former popularity. It is impracticable for it to borrow because of a bond issue secured by a mortgage which has exhausted its credit in that direction.

To meet this situation it was proposed to issue, share for share with the existing common stock, a new issue of stock without par value, to be sold to the Tobacco Products Corporation for the price of $25 per share, up to the number of shares of common stock then outstanding; whereupon a resolution was adopted, pursuant to the statute, to call a stockholders’ meeting for that purpose, and it was provided that all of the existing stock be changed into a like number of shares of seven per cent, cumulative • preferred stock of the par value of $100, which should be entitled to receive each year a cumulative seven per cent, dividend before the new or non-par stock should be permitted to participate in the profits and then the latter class of stock to receive a dividend of $7 per share per year, and thereafter each share of stock of either class should participate equally in the further profits, and that upon dissolution the preferred stock should be redeemed at par, with accumulated dividends, if any, and that thereafter the assets remaining should be divided ratably among the holders of the non-par stock. Upon receiving notice of such intended plan, the complainants secured orders to show cause, with ad interim restraint, whereupon the plan was abandoned.

On May 3d, 1933, or less than two months thereafter, a new plan to finance the company was proposed by the board of directors, and this is the plan that is under consideration in these cases. A resolution was passed whereby it was recited that it was advisable to amend the certificate of incorporation of the defendant so that the present authorized capital stock of one hundred thousand shares of the par value of $100 per share, designated for convenience as “class A common stock,” be supplemented by an issue of one hundred thousand shares of “class B common stock,” without nominal or par value and without voting power, “which the board of directors may issue in their discretion, in whole or in part, to the holders of ‘class A common stock’ as a stock dividend or offer to them the right to subscribe for the same or otherwise dispose of in accordance with law.” It then went on to recite that the class A stock should first be entitled to a cumulative dividend of seven per cent, and that thereafter there should next be paid out of the profits a dividend of $7 per share per annum on class B common stock and that thereafter all additional profits should be equally divided between class A stock and class B stock,' share and share alike, and that upon dissolution of the corporation class A should be redeemed at par if possible and all excess, if any, be distributed ratably among the holders of both classes; and then went on to describe that in the issuing of any additional class A stock the holders of class B should have no preferential right to receive or subscribe to the same, and that in the event of any new class other than those just considered being authorized not only should the consent of two-thirds of class A be necessary, but as well two-thirds of class B.

It is then charged that such a plan is ultra vires and is against the objection of stockholders; that it would change the fundamental arrangement of the corporation and violate rights of the stockholders, because the issuing of no-par-value stock was not permitted at the time of the incorporation of the defendant; that it confiscates the property rights of the stockholders in the corporation; that it is a fraud upon the state to obtain an illegal change in its stock issue, and that the officers of the corporation have secured proxies of a sufficient number of stockholders to accomplish the plan they design to effectuate.

The corporation, as has been said, was organized in 1899 or more than twenty years before the legislative authority for the issuing of stock without any stated par value. P. L. 1920 p. SS6. The main point made by the complainants is, that under the authority of Allen v. Francisco Sugar Co., 92 N. J. Eq. 431, decided in this court by Vice-Chancellor Fielder and affirmed by the court of errors and appeals, there is no legal warrant for the issuing of such a class of stock. In that case it was proposed by the sugar company to execute a lease for “practically all its revenue-producing property” to another corporation, and the rationale of the decision was that there having been no legislative sanction therefor at the time of its incorporation it could take no advantage of a permissive act passed a short time thereafter, for the reason that it would impair the obligations of the contract into which the shareholders entered at the time of the company’s incorporation. It seems clear to me that the reasoning in the Allen Case is not apposite to the determination of the question presented here. In all of the authorities relied upon the case of Allen v. Francisco Sugar Co., supra, both in this court and in the court of errors and appeals, there was involved the question of the right of a corporation to dispose of practically all its property without legislative sanction against the objection of one or more of its shareholders. Of course, it is clear that this would work such a change in the original agreement of the stockholders as to disturb their vested rights and require unanimous consent of every individual concerned, no matter how small his holding might be. Kean v. Johnson, 9 N. J. Eq. 401; Black v. Delaware and Raritan Canal Co., 24 N. J. Eq. 455; Mills v. Central Railroad Co., 41 N. J. Eq. 1.

The main question • presented here is whether or not the issue oi stock without stated par value by the defendant would be such a change in the fundamental contract of the stockholders as to come within the rule expressed in those and other cases. If it would then it is clear that it would vitiate the constitution of the United States (article 1, section 10). If, on the other hand, it merely points out a different method of accomplishing the same result, by recourse to subsequent legislation, as might have been effected at the time of the incorporation of the company, no illegality will attach to the desired action.

No-par-value stock is, of course, a creature of recent origin, and no direct authority has been brought to my attention of any jurisdiction that will assist in resolving the question here under consideration. In Alabama the supreme court has recently decided the case of Randle v. Winona Coal Co., 89 So. 790; 19 A. L. R. 118. That case turned chiefly upon a comparison of the act with constitutional provisions peculiar to the State of Alabama, from which no assistance is to be had in determining the question presented in this case. It was pointed out in that opinion that although twenty-one states had adopted no-par stock legislation within a few years it is an unimportant consideration in the decision of a constitutional question. However, it needs no argument or citation of authorities to prove that there is a disinclination to disturb legislative enactments unless their conflict with the organic law is apparent. It does seem to me, however, that the.needs of commerce, as evidenced by the rapid adoption of the no-par stock idea, is something that may properly be taken into account unless it is clear that it does contravene the constitution, not in some fanciful or far-fetched manner, but substantially and in real effect. The decision of the main question presented here may have-a tremendous influence upon the fortunes of innumerable investors. Such consideration, however, I am conscious, must always be subordinate to the supreme law that is the foundation upon which our entire legal system is erected.

At the time of the defendant’s incorporation the pertinent provision of the Corporation act provided as follows:

“Every corporation organized under this act may change the nature of its business, change its name, increase its capital stock, decrease its capital stock, change the par vahie of the shares of its capital stock, change the location o£ its principal office in this state, extend its corporate existence, create one or more classes of preferred stock, and make such other amendment, change or alteration as may be desired, in manner following:”

Thus the law stood for the purpose of this case until the enactment of the so-called no-par-value-stock act, which was a supplement to the Corporation act. P. L. 1920 ¶. ¿S6, amended P. L. 1921 p. SSS.

The reasoning of the complainants is that under Allen v. Francisco Sugar Co. and the other cases cited above recourse may not be had to the act of 1931, but that changes in the capitalization of the company can only be accomplished by means allowed at the time of incorporation. The change desired by the defendant does not seem to me of such a fundamental character as to make the Allen Case applicable. At the time this company was organized, it will have been observed, it was within the power of the statutory majority to increase its capital stock. It was also, under the act, permissible to change the par value -of the shares. In substance and effect this is precisely what was contemplated at the time these bills were filed. It is to be borne in mind that, in the judgment of the directors and a vast majority of stockholders, no practical method of meeting the emergency with which they were faced was available except by an increase of its capital stock. Clearly, had it been desired the company could have reduced the value of its shares to the sum of $35 each and thereupon have increased its common stock by the issue and sale of an additional one hundred thousand shares. In the scheme under consideration the same result is to be effected by increasing the capital stock, declaring no expressed value of the shares upon the certificates of stock, and selling the same for $25 per share in the manner provided by law. In the case of Berger v. U. S. Steel Corporation, 63 N. J. Eq. 809, it will be recalled, that it was proposed to retire two million shares of preferred stock and pa y for the same out of bonds or the proceeds thereof, at a lower rate of interest than the cumulative dividend of the preferred stock, the particular shares to be retired being forty per cent, of the respective holdings of the preferred stockholders. This was determined by the court of errors and appeals not to be in derogation of any of the vested rights of such stockholders. Mr. Justice Van Syckel (at p. 812) said:

“In the presence of the fact that over ninétv-nine per cent, of all the stockholders in attendance at the meeting, personally or by proxy, voted in favor of the resolution, it cannot reasonably be expected that the court is impressed with the belief that the complainant will suffer any substantial injury by the consummation of the scheme. Nevertheless, if it appears that the proposed action is without legal authority, the complainant cannot be denied the relief which she seeks,, but, in passing upon this controversy, the greatest care must be observed that this overwhelming majority of the stockholders are not deprived of their rights by the very few dissentients.”

And in this connection 'it is significant, though not controlling, that the interest of the protesting stockholders is an exceedingly small percentage. I say “not controlling” because if their contention be sound the holder of a single share has a standing to prevent the attempted ultra vires act of his corporation. Chicago City Railway v. Allerton, 18 Wall. 233. In the Berger Case the retirement of the preferred stock was justified under an act passed in 1902, or one year after the incorporation of the United States Steel Corporation. Two objections were made to this by the complainant; first, that the act was special, and secondly, that it impaired the right of the complainant, vested prior to the passage of the act. In discussing the 'latter question, the opinion concedes that the fifth section of the Corporation act as it now exists (the reserve power to amend, alter or repeal charters), only applies to questions between the corporation and the state, but that the rights of stockholders, inter sese, cannot be so impaired except, of- course, so far as impairment may be incidental to the interests of the public. It says:

“It is difficult to perceive how any substantial force can be accorded to it, unless some amendment may be made which may affect the rights of stockholders inter sese to some extent.”

In regard to what may or may not amount to a substantial interference with private rights he saj's:

“It is unnecessary, however, to determine, in this case, what the true limitation upon the legislative power is; where the boundary line is which cannot be overstepped.
“Such a declaration in the ease would be obiter and unwise. The law upon this subject, which is of great moment, is, as yet, in a formative state; a general rule upon a subject of so wide a range can be implanted in our jurisprudence only by gradual development, as questions arise for adjudication.
“Vice in a legislative act cannot safely be predicated upon the' mere fact that it may not be unreasonable to apprehend that some depreciation in the value of shares may flow from it. The legislature may impose additional burdens; it may withdraw the right to engage in some remunerative branch of business, and may repeal the entire charter.
“Undoubtedly there may be changes so radical that underlying ant! fundamental principles will not permit the legislature to reserve to itself a right to make them.
“The act of 1S90 gave the appellant the right, by a two-thirds vote of its shareholders, to retire preferred stock by purchase; the act of 1902 preserves that right, merely regulating the manner in which it should be exercised. As before stated, the complainant held her stock subject to the right of the company to retire by purchase, the shares of such stockholders as might desire to sell, and (lie act of 1902 in no respect alters or changes her position, except to make it more secure when the given option is refused by her. No right which vested under the Corporation act of 1896 is impaired or taken away by the later statute.”

Just .so in the case sub judice. The complainants, having in contemplation at the time of their contracts the same changes that are now to be effected in the capitalization of the company, are in nowise injured by reason of the method pursued being different from the procedure-permitted at that time.

Similarly, the other objections by the stockholders as to the effect of the change in capitalization are without substance. For example, the effect upon the dividend and distributive values of the shares and right of class B to vote as to the creation of any new class of stock might have been accomplished by a similar method that has been referred to, namely, the reduction of the par value of the existing capital stock and then the issue of an additional one hundred thousand shares.

The case of Einstein v. Raritan Woolen Mills, 74 N. J. Eq. 624, stands upon a very different footing, the defendant having been incorporated by a special act of the legislature which therein limited by express terms the capitalization to $250,-000. Subsequently, it was proposed to. increase the capitalization to $525,000. Such a plan, in the face of the instrument of its birth, requires no argument to show it was a vastly different and more injurious proceeding than the increase of capitalization in the case at bar, supported by legislative sanction as there is, for the reason I have already given.

In the next place, it is urged that the resolution under discussion, if adopted-by two-thirds of the stockholders, would result in changing the existing common stock into preferred stock. It is clear, from an examination of the statute already quoted, that if this be so it is a fatal defect. Einstein v. Raritan Woolen Mills, supra. So far as I know or have been able to learn no comprehensive definition has ever been attempted of “preferred stock.” Counsel have cited text and cases to the effect that the adjective prefixed to “stock” means nothing, and that the question is one of contract, to be gathered from all the surrounding circumstances, such as the statute, the certificate of incorporation, the resolution of the board, &c. To assure to holders of a class of stock a certain minimum return upon their investment does not of itself, I think, so change the character of the shares as to present the vice protested by the complainants. An attempt, under guise of such a benefit, to deprive the owners of such shares of a fundamental and vital privilege would, of course, present an insuperable objection. No such attempt is here to be observed. It is not intended to take from the holders •of existing stock the right of suffrage except incidentally, as might have been done under the original statute. It is not proposed to interfere with their dividend rights, subject to the same qualification, or the distribution of the assets, or in any ■other way.

The remaining objection of the complainants to be dealt with is their complaint that the present stockholders are to be deprived of their right to purchase each his pro rata share •of the new stock if and when issued. An examination of the resolution to be submitted to the stockholders, I think, disposes of this objection. It is true that in March of the present year there was proposed a similar issue of stock to the one under consideration, that was to be disposed of to an independent company kuown as “The Tobacco Products ■Company,” without first being offered to the stockholders in the manner required by law. That plan, as I have already said, upon being challenged by the filing of a bill or bills by stockholders, was abandoned because the iniquity of the scheme had only to be stated to convince the directors. The resolution of May 3d, 1922, to be voted upon by the stockholders, on the other hand, provides that “the board of directors may issue, in their discretion, in whole or in part, to the holders of class A common stock as a stock dividend, or offer to them the right to subscribe for the same, or otherwise dispose of in accordance with law.” So far as the first two discretionary powers are concerned, there can be no •quarrel. Objection, however, is made to the clause “or otherwise dispose of in accordance with law.” Of course, this • entire opinion is predicated upon the disposition of the new shares as required by the rule laid down in Wall v. Utah Copper Co., 70 N. J. Eq. 17; Morganstern v. American Malting Co., 87 N. J. Eq. 358, and Way v. American Grease Co., 60 N. J. Eq. 263. The right of the present stockholders to have first call upon the new stock cannot be defeated by any corrupt or other plan of the directors. The resolution distinctly says that it must be disposed of in accordance with law, and not only is there nothing in the proofs to indicate that it will not be so disposed of, but, in addition thereto, any such attempt can be promptly and efficiently controlled. I intimated upon the argument, merely as an argument, that the complainants might say that in view of the unlawful resolution of March, a just suspicion “might attach to the resolution of May; but, on the other hand, it is equally reasonable to think that the error of the company having once been pointed out to it there would be no subsequent attempt to deprive the present stockholders of the right in this connection. But be that as it may, there is nothing to warrant the belief that the directors will deliberately fly in the face of the law, and if they do, there will then be a sufficient remedy. If the new issue were beyond the power of the corporation, then it would undoubtedly be true, as complainants say, that they could not be compelled to spend one penny in protecting rights that were beiiig illegally affected. However, in Berger v. United States Steel Corporation (at p. 815), it is said: “Equality and the equitable right of shareholders to uniform treatment is preserved by giving the like option to all.” So, here, the no-par-value act of 192-1 being applicable, as I have already shown, the present stockholders cannot object to the increased issue where, equally in proportion to their holdings, they are protected against any advantage being taken of them. Otherwise, any corporation finding itself in the financial emergency that faces this one could be wrecked by any individual having an interest therein, however small, to the destruction of the fortunes of all his associates and irrespective of his motives in making his attack.

T will advise an order denying the preliminary injunction sought and dissolving the existing restraint.

Bentt.ey, Y. C.

Upon the presentation and signing of the decrees in the foregoing cases, application was made, under the statute, for a stay of the effect of the dissolution of the preliminary restraint and the refusal of the temporary injunction.

On behalf of the defendant, it is urged that such a course will result in the ruination of the company, for the reasons indicated in the opinion. On behalf of the complainants, it ‘requires no urging to show that long before the relief can be obtained from the court of errors and appeals the subject-matter of the appeal will have been destroyed. The defendant, it will be remembered, says that it is driven to its present plan of procedure to raise the sum of $1,500,000 for the purposes of advertising and securing a stock of raw material for its -manufacture. So far as the advertising is concerned, in view of the last statement of the corporation, it is clear that the postponing of the campaign for two months will not be destructive of the defendant’s fortunes, although it may result in some inconvenience and will undoubtedly delay to some extent'the complete rehabilitation of its business. So far as the other purpose, namely, the purchase of supplies, is concerned, it seems incredible that a corporation of the standing of this will be unable to secure raw tobacco to be made up into articles of commerce. This company, as has been said, has a practical monopoly upon the tobacco industry, and I am at a loss to see how in a comparatively short time any competitor can gain such a footing in opposition to it as will result in its being bankrupt for such material.

With these considerations in view, and the policy of our jurisprudence in favor of review of legal questions, it seems to me that my duty is plain.

“So, also, where there would be danger of irreparable mischief. In cases of injunction, for instance, and, still more, of orders dissolving injunctions, an appeal ought always to be permitted to staj' execution.” 2 Dan. Gh. PI. & Pr. (6ih Am. ed.) 1468; citing Wood v. Griffith, 19 Ves. 550; Way v. Foy, 18 Ves. 452; Hyam v. Terry, 29 W. R. 32; Jewelt v. Drinyer, 29 N. J. Eq. 199.

The rule of discretion in these matters is to determine whether or not the refusal of a stay will operate to defeat the object of the appeal. Jewett v. Drinyer, supra; Pennsylva nia Railroad Co. v. National Docks Railroad Co., 54 N. J. Eq. 647; Delaware, Lackawanna and Western Railroad Co. v. Breckenridge, 55 N. J. Eq. 159; Ashby v. Yetter, 78 N. J. Eq. 173; Cape May, &c,, v. Cape May, &c., 82 N. J. Eq. 204; Robinson v. Robinson, 86 N. J. Eq. 165. For the reasons I have already mentioned, I conceive that if the court of errors and appeals should determine that I have fallen into error, the damage to the complainants will have been irreparable indeed.

Another consideration brought to my attention by counsel is the fact upon which I have already commented, namely, that this is a case of first impression and one of great importance not only to the parties but to the public. It is apparent that an appeal by the complainants would present to the appellate court a mere academic question. Therefore, a stay should be granted so that the question presented may be once and for all determined.

I am also inclined to this course by reasoning similar to that upon which it is well settled, that a temporary injunction should not be granted when the right of the complainant depends upon an unsettled question of law. Citizens Coach Co. v. Camden Horse Railroad, 29 N. J. Eq. 299; Kearny v. Bayonne, 92 N. J. Eq. 627.

AYhile the solution of the question in this case appeared so clear to me as to present no difficulty, yet I am disinclined to refuse sincere and experienced counsel an opportunity to review me when so earnestly besought. Therefore, as a matter of policy, I feel that the application to my discretion compels me to stay the effect of the decrees herein pending the application to the court of errors and appeals at the first available opportunity, which I am informed will be in the first week of September.


source: Caselaw Access Project

author: Bentley, Y. C.

license: Public Domain

text:
    Arthur J. Stever Jr., et al., complainants, v. Samuel E. Hall et al., defendants
    [Decided October 25th, 1923.]
    1. "Where an executor applied to the orphans court for leave to .sell lands of his testator to pay debts, which was granted, and the lands sold and the sale confirmed, the purchaser shortly afterwards conveying the lands to the executor individually, both deeds being recorded about six months after the sale, such action is not sufficient to put a reasonably prudent man upon notice that the above conveyances constituted a means of carrying out a fraudulent agreement ; fraud of this character must be clearly proved.
    2. A deed from a trustee directly to himself is voidable at the option of the beneficiary; but there is no rule of law to prevent a trustee purchasing such property from a bona fide purchaser at the trustee’s sale, so long as there was no corrupt agreement between him and the purchaser.
    On bill to quiet title.

      Messrs. Wwts & Plympton, for the complainants.

      Mr. David D. Ackerman, for tbe defendants.
   Bentley, Y. C.

The bill in this case is filed to quiet title to a piece of land in Bergen county, of which William .F. Hall died seized in 1882, leaving a will, wherein he devised his estate to his only two children, one of whom died in infancy, so that after a life estate to his widow, who is dead, all his property went ■to the defendant Samuel E. Hall, the other child. In and by said will be appointed Samuel G. Y. Edwards and another "his executors. The other failed to qualify and, therefore, 1 Ed wards became the sole executor. The defendant Samuel is the only next of kin a.nd heir-at-law, and is entitled to all of" the estate left by his father, William E. Hall.

Shortly after qualifying the executor purchased a small mortgage, upon which there was due the sum of $1,300 from one Maria Hall, encumbering the premises in question. The assignment of this mortgage he took to himself individually and not in his representative capacity.

Edwards, as such executor, presented a petition to the orphans court, setting forth' that the personal estate of William E. Hall was insufficient to pay the debts and praying permission to make sale of the premises in question, which were said to be of the “supposed value” of $3,000. Whereupon a decree was regularly entered in said court allowing the said sale, and such sale was confirmed by decree dated December 3d, 1885.

On the 9th day of February, 1886, a final account of Edwards was filed in the surrogate’s office of Bergen county, wherein, among other things, he charged himself with the sum of $2,000, being the purchase price secured on the sale of the premises in question pursuant to the said decree, and prayed allowance for the sum of $1,805.50 paid on principal and interest of the Maria Hall mortgage.

On June 2d, 1886, Edwards recorded in the clerk’s office of Bergen county two deeds eonvejdng the land in question, one bearing date the 15th day of February, executed by Edwards to one Abram C. Holdrum, expressing a consideration of $2,000, and the other a bargain-and-sale deed, dated April 26th, 1866, from the said Holdrum to the said Edwards. These deeds were both acknowledged before Garrett Demarest, a master in chancery, who is dead, as are both of the parties to said conveyance. Edwards having theretofore died, his executor, with power of sale, conveyed the premises in ques-' tion to Arthur J. Stever, the father of one of the complainants.

Quite some time before the filing of the bill herein the defendant received his first knowledge of the conditions that have given rise to this snit, by having the complainant take up with him the matter of his quit-claiming any interest he might have in the premises in question. From that time to the filing of the bill the parties engaged in extensive negotiations and, certainty, no laches or neglect can be charged to either as against the other. When it became apparent that the matter would have to be determined by litigation, the complainant forestalled the defendant by filing tliis bill, whereupon the defendant raised the main question by the filing of a counter-claim, seeking to have a trust declared upon the premises in favor of the defendant, and for an accounting.

The theory of the defendants* case is that the conveyances mentioned above constituted the means of carrying out a fraudulent agreement between the parties thereto, whereby Edwards purchased, through an intermediary, for his individual benefit, property that he had held in trmt. T fail to see how it can be said that the record of these conveyances was sufficient to put a reasonably prudent man upon notice. Perhaps taken in connection with various facts that were proved upon the hearing a grave suspicion may be aroused in the mind of anyone; but of course it is trite to say that suspicion is not proof and that fraud of this character must be clearly proved.

My difficulty with the defendants* case arises out of his efforts to prove that the complainants’ testator was not an innocent purchaser; that he was a purchaser for value is not denied; but it is maintained that he took with notice of the corrupt agreement of Edwards with Holdrum. With this I am not inclined to agree. Astute counsel, in the interests of his client, has been able to uncover many facts and circumstances that a purchaser with reasonable vigilance would not have found. At the time the complainants’ testator, Stever, searched the title all he found was the will of William F. Hall, the petition for sale, and the consequent decrees in the orphans’ court, and then a deed from the executor as such to PToldrum, and one back from Holdrum to the executor in his individual capacity. The only agreement, if it may be so denominated, that appears upon the records, was the long period of time that had existed between the maldng of the conveyances and the recording thereof. That, however, is not an unusual thing, or perhaps it is more accurate to say was not unusual in those day's and in the rural parts of the state. When Stever purchased this land from the executor of Edwards on August 6th, 1890, he had a right to rely upon the title as it appeared of record, and especially in view of the lapse of time since the making of the conveyances attacked

That a deed from a trustee directly to himself is voidable ..at the option of his beneficiary, is elementary; but there is no rule of law to prevent a trustee purchasing such property from a bona, fide purchaser at the trustee’s sale. So long as the sale by the trustee was conducted in good faith, without any corrupt agreement between him and the purchaser, he may immediately commence negotiations with the purchaser .and buy the self-same property for himself in his individual capacity. Creveling v. Fritts, 34 N. J. Eq. 134. In my opinion there was nothing on the record to put the purchaser Stever upon inquiry', and to hold otherwise would render insecure a very large percentage of the titles in this state.

The defendant has made great point of the fact that Edwards filed his account one week before the date of the deed from himself as executor to Holdrum and notwithstanding charged himself with the sum of $2,000, being the proceeds of the sale. This in itself does not prove anything. The decree confirming this sale bears elate the 3d day of December, 1885, or more than two' months before the date of the account just referred to. The fact that the conveyance had not been executed was no reason why the executor should not with perfect propriety charge himself with the proceeds of the sale, because a sale had been made and confirmed and the purchaser was bound to take title and pay therefor.

The formal elements of a suit under a statute having been all admitted, I will, on the above reasoning, advise a decree in accordance with the prayer of the bill.


author: Bentley, Y. C. (orally).

text:
    May E. Prescott, petitioner, v. Edward R. Prescott, defendant.
    [Decided October 29th, 1923.]
    1. A party to a suit while necessarily going to, staying at, or returning from a court is equally privileged from the service of a summons or of a capias in a civil action. This rule also applies to the writ of ne exeat.

    2. Where a defendant tinder bail in a criminal cause, returned to this state from another to stand trial, and, upon the trial being postponed, was arrested under a writ of ne exeat while eating his luncheon at a restaurant across the street from the court house, he should be discharged from custody under that writ.
    On writ of ne exeat.

    Stenographic report of the oral opinion given in the above-stated canse, at the chancery chambers in Jersey City, on Monday, October 29th, 1923, at ten o’clock in the forenoon, by his honor John Bentley, vice-chancellor.

      Messrs. Simpson, Gordon & Sewell (Mr. William E. Sewell), for the petitioner.

      Mr. Edward M. Salley, for the defendant.
   Bentley, Y. C. (orally).

On October 24th, 1923, the defendant presented himself at the court house in Hudson county to stand trial on an indictment charging him with desertion of his wife and child. A postponement of such trial was ordered, and after having left the court house and while in a restaurant across the street therefrom, with his counsel, eating lunch, he was taken into custody by a constable from the sheriff’s office under a writ of ne exeat previously allowed by me. I feel that it is only-fair to the petitioner’s counsel to say that he was entirely frank with me at the time he secured the order for the writ. He then explained that it was likely no service could be made until and unless the defendant should appear on the trial of his indictment. Not being entirely sure of the law myself, and at the time having no opportunity to inform myself, I indicated to counsel that he should make the service in such way as he might be able to and that if any objection was made thereafter I would deal with it when presented to.me.

I felt that every proper opportunity ought to be extended to the wife to compel this man to contribute to her support and that of their child. There was enough against him to warrant an indictment, from which he had fled, and a petition for divorce that he did not care to come into court and defend. As between his discomfort and the distress into which he had plunged his wife I felt that all doubts pending an argument of the question might- properly be resolved in her favor.

Promptly after the defendant’s arrest his counsel applied to set the same aside upon the ground that the defendant had voluntarily come within the jurisdiction to stand his trial.

Originally, and before he pleaded, the defendant was arrested in the city of New York on a warrant or indictment issued or returned in this state. While in custody in New York under that process he waived extradition and returned in custody to New Jersey where he was arraigned and pleaded not guilty. Had service of the writ been made upon him when brought here under these circumstances a very different case would be presented. Thereupon, he was placed in custody of the probation officer by the judge of the quarter sessions and ordered to pay $8 per week to his wife and was permitted to go at large, whereupon he returned to the State of New York. There he has remained until the 24th of October mentioned, when he voluntarily came back into this jurisdiction and was placed in custody, as at first mentioned-.

It is said that his last return on the date just mentioned

cannot fairly be called “voluntary,” inasmuch as it was upon the order or direction of the probation officer for his trial. That, however, is not the meaning of the word “voluntar)-,” as used in this connection. To be a voluntary return it is not necessary that it should be something to excite pleasure in the breast of the defendant, or to which he would look forward eagerly; it means, on the other hand, the doing of something which he at the time is free to do or not to do, as .he so decides. It is synonymous with “intentional” or “voluntary,” and contemplates the doing of an act by one’s own will and not compelled by vis major. That this is so will further appear from the quotation which I shall read presently.

The rule in this state is laid down in an opinion by Mr. Justice Parker in the case of Michaelson v. Goldfarb, 94 N. J. Law 352. That rule, in substance, is that “a party to a suit while necessarily going to, staying at, or returning from a court is equally privileged from the service of a summons or of a capias in a civil action.” In the Michaelson Case the defendant was also the defendant in a criminal case in the Monmouth county oyer and terminer, so that the rule is equally applicable whether the party has been attending a civil or a criminal trial or other proceeding.

In the case just mentioned, the court distinguished Rutledge v. Krauss, 73 N. J. Law 397, because there the defendant had returned into this state not voluntarily but in custody under an extradition warrant, and it was there held that he had no privilege because he was a fugitive from justice and was returned in invitum.

Counsel for the petitioner maintains that under this very distinction the defendant, in the case at bar, should not be released from confinement until he gives bail; but I think that can best be answered by quoting from the Michaelson Case (at p. 353) : “It is argued that defendant was legally in custody of the law while under bail, and therefore subject to service of outside process;.and the New York case of Netograph Co. v. Scrugham, 197 N. Y. 377; 90 N. E. Rep. 962, is certainly in point and supports this proposition. But we are unwilling to give our assent to it. The New York court, while apparently unanimous, conceded that The question was not free from difficulty;’ and from the standpoint of our decisions the difficulty is insuperable. Theoretically, it is true, the defendant under bail is Tn the friendly custody of his sureties.’ 6 G. J. 1042. They can, of course, arrest and surrender him at their option. Theoretically, in another sense, he is in the custody of the law. But the question of exemption of witnesses and litigants from extraneous^ process is pre-eminently a practical one, whose end is to encourage such witnesses and litigants to attend our courts with confidence. For all practical purposes a defendant under bail is as free as any other man so long as he keeps to the terms of his bond and retains the confidence of his sureties. If he is Tn the custody of the law,’ so, also, we suppose, is a defendant who has given cash bail or has been discharged on his own recognizance. In all three cases the bail is, in a practical sense, merely a security for his appearance. The distinction between this case and Rutledge v. Krauss becomes .striking if we assume that this defendant had violated his bail bond, had fled, and had been recaptured and brought here. And it can readily be seen that defendant under bail would be tempted to evade our courts if they are aware that by voluntarily coming here to face an indictment they are rendering themselves liable to summons or capias in a civil action. We might add that similar reasoning might well induce witnesses under bail in criminal cases to take similar action.”

The last objection made to the release of this prisoner is, that in the Michaelson Case the court was only dealing with the service of summons and capias and that therefore it should not extend to process of ne exeat. In so arguing, counsel loses sight of the reason for the rule and the breadth of its sweep. No further argument is required for us to see that the purpose of the rule is to encourage parties and witnesses to come voluntarily within a jurisdiction where they co.uld not be compelled so to do, in the advancement of the administration of justice. It is, as Mr. Justice Parker says, a practical rule intended to secure the greatest good in the largest number of cases, and it cannot be denied that fear of arrest under a writ of ne exeat would be quite as deterring to a party outside of the jurisdiction as the service of a summons or capias upon him.

Of course, I am not concerned with the entirely different question of the service of process upon a party resident in this state while going to, remaining at or returning from a court.

I will advise an order releasing the defendant from custody.


text:
    William S. Meeks, complainant, v. Mary M. Bickford et al., defendants.
    [Decided November 7th, 1923.]
    Where the county clerk of a sister state certified that a notary who took the acknowledgment of a deed covering property in New Jersey was “duly authorized to take the same” this language is substantially that called for by the twenty-third section of our Conveyance act as amended (P. L. 1912 p. 326) and authorize the recording of such deed.
    On bill, &C.

      Messrs. Morrison, Lloyd & Morrison (Mr. Franlc A. Morrison), for the complainant.

      Mr. Pierre F. CooTc, for the defendants.
   Bentley, Y. C.

This is a bill under the statute to quiet title and presents for determination a single question, namely, whether or not a county clerk's certificate from another state was sufficient to authorize the recording of a deed.

In 1914 the complainant purchased land in Bergen county, taking three separate deeds on different dates .from one Juliette Smith. On October 11th, 1916, the defendant took a conveyance of the same land from the same grantor and paid consideration therefor. The defendants' deed was executed in Kansas before a notary public of that state, and was promptly recorded in the office of the clerk of Bergen county on October 16th, 1916. The complainant, on the other hand, did not record his deeds until more than a year and a half thereafter and nearly four years after taking the same. Under this state of facts it would, appear that the defendant has the better right to the title, because the fifty-ninth section of the statute entitled “An act respecting conveyances" provides, in the pertinent part thereof, as follows:

“Every deed. * * * shall, until duly recorded, * * * be void and of no effect against * * * all subsequent bona fide purchasers * * * for valuable consideration, not having notice thereof, whose deed * * * shall have been first duly recorded, * * * provided that such deeds * * * shall be valid and operative, although not recorded, except as against such subsequent * * * purchasers.”

But the attack made upon this position assumed by the defendants is that the certificate of the county clerk does not conform to the requirements of the twenty-third section of the act just mentioned as amended in the pamphlet laws of 1912, at page 326. The pertinent provision of this latter section provides that an acknowledgment of a deed executed out of this state shall be an effectual one, provided in such cases the certificate of acknowledgment or proof shall be accompanied by a certificate under proper seal, that the officer before whom such acknowledgment or proof was or shall be made was at the time of the taking of the said proof or acknowledgment “authorized by ilia laws of such state, territory, or district to take acknowledgments and proof." The form of acknowledgment and the language of the certificate of the Kansas county clerk in this respect was as follows:

“State of Kansas
County of Shawnee
ss'
Be it remembered that on this 11th day of October, in the year of our Lord nineteen hundred and sixteen, before me a notary public, personally appeared Juliet 0. Smith [unmarried], who I am satisfied is the grantor mentioned in the within indenture, and to whom I first made known the contents thereof, and thereupon she acknowledged that she signed, sealed and delivered the same as her voluntary act and deed for the uses and purposes therein expressed.
A. Y. Lindeli,, Notary Public.”
“State of Kansas,
County of Shawnee,
Third Judicial District,
ss.
I, C. W„ Bower, clerk, of the district court of Shawnee county, state of Kansas, the same being a court of record, do' hereby certify that A. Vi. Lindell, whose name is subscribed to the certificate of the proof or acknowledgement of the annexed instrument, and thereon written, was, at the time of taking such proof or acknowledgment, a notary public in and for the county of Shawnee, dwelling in the said county, commissioned and sworn, and duly authorized to take the same. And, further, that I 'am well acquainted with the handwriting of such notary, and verily believe that the signature to the said certificate of proof or acknowledgment is genuine.
In testimony whereof, I have hereunto set my hand and affixed the seal of said court, this 11th day of October, 1916.
0. W. Bower.”

If the county clerk’s certificate does not come within the meaning of the twenty-third section of the act respecting conveyances then, of course, the recording of it is a mere nullity. To this effect will be found, among others: Brinton v. Skull, 55 N. J. Eq. 747; Osborn v. Tunis, 25 N. J. Law 633; Lindley v. O’Reilly, 50 N. J. Law 636.

The question to be determined is whether or not this certificate of the county clerk was a substantial compliance with the language of the twenty-third section of the act providing for acknowledgment taken out of the state. I say “substantial compliance” because that is the language of all the cases, of which Den v. Geiger, 9 N. J. Law 225, and Thayer v. Torrey, 87 N. J. Law 339, are typical. The rule laid down in all these cases is that substantial but not verbal compliance is required. It seems to me that the clerk’s certificate in this instance is good because it appears by the acknowledgment set out above that the same was taken in the county of Shawnee, State of Kansas, and immediately thereafter, on the county clerk’s certificate attached to the acknowledgment to which it refers, it is said that the notary was a notary in and for that county, commissioned and sworn, “duly authorized to take the same.” Yet the complainant says that this is an attempt upon the part of the county clerk to usurp the functions of this court and adjudicate that the acknowledgment is efficacious within the State of New Jersey, and not a certificate as the law requires, that the notary was authorized by the law of that state to take acknowledgments in Kansas. This seems to be a very strained construction of the language of the-county clerk, taken in connection with the acknowledgment. Some force must be given to the presumption that public officers know their duties and perform them. 1 R. C. L. 256. In this case the incumbent of the very responsible office of county clerk has certified that the acknowledgment which, on its face, shows it to have been taken in Kansas was taken by an officer duly authorized to do so, and it can scarcely be thought that the county clerk meant that the notary was authorized by the grantor, or by any other than the entity, that authorizes all public officers to perform their public duties, and that, of course, is the law of the jurisdiction in which they act. It seems clear to me that the meaning to be given to the language of the certificate of the county clerk is substantially that called for by the twenty-third section of the act.

The legislature has established the policy of this state with regard to requiring a class of instruments, of which a deed is one, to be recorded. It is clearly the intent of that policy that protection be given to the diligent grantee who forthwith gives notice to all the world from then on of his title, and that any other interpretation of the language used in the certificate would defeat the clearly-expressed purpose of the law. That this policy is generally prevalent throughout this country will be shown by an examination of the case of Summer v. Mitchell, 29 Fla. 179, which will be found in 14 L. R. A. 815, with a wealth of citations, both in the opinion and the foot notes attached thereto.

No proof of' fraud or actual knowledge has been given, nor has any question been raised as to the effect of the defendant’s deed, whether recorded or not recorded. The only question that has been pressed by the parties for determination is the one that I have discussed, and being ineffective to change my decision it is not necessary to consider any other aspect of the ease.


author: Ingersoll, Y. 0.

text:
    The Prudence Bonds Corporation, complainant, v. William Zawojski et ux., defendants.
    [Submitted September 17th, 1923.
    Determined October 11th, 1923.]
    In taxing costs on the foreclosure of mortgages where the amount due does not exceed $300—all fees except those not payable to any official shall be one-half of the amount allowed ¡by law where the amount exceeds $300—but the fees allowed by law to newspapers for printing notices, &e., should be allowed in full.
    On petition for relaxation of costs;

      Mr. D. Trueman Stackhouse, for the complainant.
   Ingersoll, Y. 0.

The petitioner (complainant) filed its petition praying for the retaxation of costs in a foreclosure proceeding where the amount found due was less than $300.

Section 59 of an act respecting the court of chancery (1 Gomp. Stat. p. 4&S) is as follows:

“In all foreclosures of mortgages and the sale of mortgaged premises, where the amount due does not exceed three hundred dollars the fees of the solicitor, clerk, chancellor, master and examiner, sheriff or any other official, shall be one-half the amount allowed by law, where the amount due exceeds three hundred dollars.”

This act needs no interpretation in so far as fees of the “solicitor, clerk, chancellor, master and examiner, sheriff or any other official” may be concerned. It is clear and explicit that the fees of such officials shall be one-half the amount allowed when the amount due exceeds $300.

Objection is made, however, in this case to the division of fees for searches and taking of affidavits, and suggestion is made that printers’ fees are not under the act subject to reduction.

Searches can be made either by the clerks of the several courts, or other officers, or by the solicitors, and in such cases the fees allowed therefor are without doubt within the pro^ vision of the statute. Assuming, without deciding, however, that the searches provided for may be made, as is very often done by title companies, certainly the court would not allow to be taxed such fees in whole, where under the statute only one-half could be taxed where made by an official.

The item of taking an affidavit as to search fees is also objected to. It is clear that this affidavit must be taken by an “official” and comes within the purview of the act.

The only question remaining is as to the fees for publication of such notices as may be required.

The newspaper does not come within the terms of the act, “solicitor, clerk, chancellor * * * or other official.”

The result is that in taxing costs in cases of foreclosure, where the amount due does not exceed $300, all fees except those not payable to any official shall be one-half of the amount allowed by law, where the amount due exceeds $300. In the case under consideration all fees are (or in case of searches could be) of some official and the petition to retax the costs will be refused.


author: Ingersoll, Y. C.

text:
    Carlton Godfrey, complainant, v. City of Atlantic City et al., defendants.
    [Decided September 11th, 1923.]
    1. A prelimianry injunction will not issue where the right of the complainant is in doubt.
    2. Where agreements and deeds from owners of lands with and to a municipality provided that certain lands shall be dedicated to the public use and shall forever remain open so that the view ocean-ward shall be free, open and unobstructed, and public announcement was made that certain buildings'or structures would be erected on the lands covered by the conditions contained in said agreements and deeds, such erection will not be enjoined at the suit of a taxpayer, not on behalf of the public, who is not the grantor of any of the land on which the temporary structures are to be erected, and when interest is remote and infinitesimal.
    3. Where a carnival committee proposed, by leave of, or without protest from, Atlantic City, to erect a temporary building or structure upon the boardwalk to seat many thousands of spectators during a certain parade, partially obstructing the view, and such structure was sought to be enjoined as violative of the condition of the boardwalk deeds to the effect that the lands thereby granted and conveyed should forever be and remain open and be used for the purpose of a street, and when the city should cease and neglect to use the same for that purpose, the lands should revert absolutely to the grantors. Held, that such a condition subsequent in a deed to a municipality Will be strictly construed; that a partial and temporary obstruction of the street in question is not neglect or cesser to use same as a street, and is not a breach of such condition and will not be' enjoined.
    On bill and affidavits.

      Mr. Garitón Godfrey, pro se.

   Ingersoll, Y. C.

The complainant, a citizen and taxpayer of Atlantic City, files the bill of complaint alleging that:

In 1896 Atlantic City laid out and opened a public street along the ocean front of said city and erected thereon a public steel, board or plank walk.

The owners oí practically the entire ocean front property through which the street was to be laid out executed to the city agreements generally known as rights of way, in which the said grantors covenanted and agreed “that it shall and may be lawful for the party of the second part, its successors and assigns, and its agents and servants, and for any other person or persons, subject to such regulations and restrictions as the party of the second part may impose, at all times to pass and repass, to use, occupy and enjoy so long as the same shall be used for the purpose of a street and a public steel, board or plank walk, the lands and premises therein described, together with the, "right to use, occupy and control the same so long as the same shall be used for the purpose of maintaining a streét and a public steel, board or plank walk, and when the party of the second part shall cease or neglect to use the same for that purpose it shall revert absolutely and without any condition or qualification to the grantors.”

It was also covenanted and agreed that the said sixty-feet-wide strip should be used for no other purpose than that of a street and public board or steel walk, and the party of the second part covenanted and agreed that it would not place or erect, or allow to be placed or erected, any buildings or structures of any kind or description on the lands described except as above provided, and that these covenants should attach to and run with the lands and premises thereby granted and the lands on the ocean side thereof so long as the same should be used for the purpose of a street and public-steel, board or plank walk.

That about the year 1900 the owners of practically all of the property along the ocean front -in Atlantic City dedicated by conveyance or agreement to Atlantic City their right, title and interest in their properties' lying oceanward from the landward line described in the above-mentioned right of way agreements for park purposes, subject to the condition and provisions contained in the said agreements or park deeds. That the said park agreements or deeds contain the following provisions:

“Fourth. That the lands hereby granted and dedicated to public use shall forever be and remain open so that the view oceanward from .the said elevated public walk erected and to be erected as above pientioned shall be free, open and unobstructed, and that no use phall be made of the said land by the grantee, its successors or assigns, inconsistent with its use as a public park or place for public resort and recreation.”'

The bill of complaint further alleges:

“That a'carnival committee of which'Armand T. Nichols is director has announced that they propose to erect or construct, or permit to be erected or constructed, a building or buildings or structure or structures upon the land above described other than the steel, board or plank walk provided for in said agreements, and that the city of Atlantic City has allowed said illegal building or buildings or structure or structures to be erected; that such illegal buildings or structures consist of wood or metal seats in about four rows, one row back of and above the other, and are of a capacity to seát many thousands of persons; that said committee has planned to erect, or cause to be erected, said illegal building or buildings, structure or structures, during the 'latter part of August or early part of September, 1933, to be used exclusively during the parade or certain other exercises of the carnival to be held in the month of September, 1933, by the persons who pay a fee or charge of $3 or some other sum for each seat for one person or for each person admitted to that portion of the boardwalk in which said illegal buildings or structures are to be erected.

“That the said illegal buildings or structures are to be located upon the land and premises which are subject to the conditions contained in said agreements, which agreements were accepted in writing by Atlantic City as aforesaid, and said city is bound thereby.

“That the imposition and collection of said charges or fees are in violation of the provisions of said agreements."

The complainant pTays:

“That the carnival committee, of which Armand T. Nichols is director, the city of Atlantic City, and all other persons and corporations be enjoined and restrained from the putting, placing or erecting, and from allowing to be placed or erected, any building or structure of any kind or description on the land included within the limits of the strip of land described in the boardwalk right of way agreements to Atlantic City and upon the land described in the ocean front park agreements or deeds to Atlantic City, except a public steel, board or plank walk, and from making or collecting any charges or fees for the use of seats placed or erected upon the said street or boardwalk and from interfering with 'the free use and occupanejr of any such seats erected or to be erected upon said street, park or boardwalk bj' any person or persons.”

Under McMillan v. Kuehnle, 78 N. J. Eq. 251, a preliminary injunction was held not to lie at the suit of two citizens to restrain the alleged nuisance of Sunday baseball games, as the bill was not filed on behalf of the public to restrain a public nuisance, and also that a preliminary injunction should not issue unless from urgent necessity, and not unless the injury was irreparable.

The bill of complainant is not by a grantor of any of the lands on which the temporary stands are to be erected, nor is it filed on behalf of. the public. Godfrey's interest is therefore remote and infinitesimal, is more or less technical, and therefore not sufficient to call for a temporary injunction.

The covenant is that if the city shall cease or neglect to use the land conveyed for the purpose of maintaining a street and a public steel, board or plank walk, it shall revert absolutely to the grantors.

Equity will not assist the recovery of a penalty or forfeiture. See Morris v. Kettle, 56 N. J. Eq. 826.

The conditions that would work a forfeiture must be abundantly present, there would have to be an abandonment of the use. A temporary encroachment on the highway, only restrictive of the use and in nowise an abandonment of it, not even temporary, would not be a violation of it.

Another covenant is that the strip shall be used for no other purpose than that of a street, &c., without any forfeiture clause in case of violation. And still another covenant that the city will not place or erect, or allow to be placed or erected, any building or structures of any kind or description except as above mentioned, namely, a boardwalk, but here again is no clause of forfeiture. Likewise in the park deed there is no clause of forfeiture.

The bill does not show that the city has itself done any act in violation of any covenant in the right of way or the park deed.

In 3 Dill. Mm. Corp. (5th ed.) 979, it is laid down that a condition subsequent will be strictly construed (citing Rose v. Hawley, 118 N. Y. 502), as holding that where land was conveyed to a town upon condition that it should not be used for any other purpose than a town house (city hall), and the town rented the hall for meetings, lectures, &c., and other rooms for business purposes, that the condition was not broken.

' A more or less cursory examination does not disclose a case on this subject in our state. I incline to think the law stated by Dillon obtains here; and it is at least doubtful if any injunction will lie at all. A preliminary injunction will not issue where the right of the complainant is in doubt. National Docks, &c., Railway v. Pennsylvania Railroad Co., 54 N. J. Eq. 10.

The result is that a preliminary injunction will not be advised.

The complainant may desire a final hearing to settle definitively the questions involved. Assuming, without deciding, that that can be had after the conditions which provoked the bill no longer exist, all questions will be reserved until then.


author: Ingersoll, V. 0.

text:
    The Shelburne, Incorporated, complainant, v. Crossan Corporation et al., defendants.
    [Decided November 21st, 1923.]
    1. Where an electric sign is so operated that it shines into and disturbs the rest of occupants of bedrooms in an adjacent hotel, it becomes a nuisance if it interferes with the ordinary physical comfort of those occupying the rooms.
    2. Where the hotel employs musicians and provides music and dancing in a room adjacent to the bedrooms affected by the light from the electric sign, it cannot complain of the disturbance of rest caused by the light from the electric sign during those hours when the music and dancing are permitted1 to go on, as that also interferes with the r&st and physical comfort of the occupants of the rooms affected by the light from the sign.
    On bill for injunction.

      Mr. Louis E. Stern, for the complainant. '

      Messrs. Thompson & Ilanstein (Mr. Hervey S. Moore and Mr. Emerso'n L. Richards), for the defendants.
   Ingersoll, V. 0.

The complainant is the owner of, and conducts a large hotel known as, the Shelburne, situate on the boardwalk at Michigan avenue, in Atlantic City.

This hotel has been operated at this location for many years, and has recently been greatly enlarged, by the addition of a brick, concrete and steel structure of one hundred and twenty-one rooms. About sixty of these are bedrooms, having southerly or southwesterly exposure.

The defendant Crossan Company is the owner of property immediately adjoining to the southwestward of the Shelburne property, upon which is erected an apartment-house, the roof of which is rented by that company to the defendant R. C. Maxwell Company, for sign purposes.

The defendant Maxwell Company, being in the business of building and operating signs, entered into a contract with the defendant Colgate Company, agreeing to furnish and operate for Colgate Company a sign in Atlantic City—not specifying the location. In compliance with said contract it has erected and operated a sign constructed of angle-irons, wire conduits, receptacles and lamps, which, with the under-structure and supports of heavy beams, weighs about twenty tons. The sign is sixty-six feet high and seventy-two feet long.

Upon and composing the lettering and ornamentation of this sign are one thousand and eighty-four fifteen-watt lights, all of which are colored; six one-hundred-watt lights and twenty-eight seventy-five-watt lights; the latter are used for the indirect lighting of a figure of a thermometer on the sign. All the lights on the sign are steady-burning and without speed effect.

This location has been under the control of the Maxwell Company for sign purposes for a number of years and has been used by it for at least three other signs (advertising other products). It has been testified that the lights in the present sign are only about ten per cent, in power of at least one of the previous signs.

The new wing of the Shelburne is at, or nearly at, right angles to the boardwalk, and the sign is practically parallel with the wing and about one hundred and ten feet southwesterly therefrom. The face or front of the sign is toward the Shelburne, and the lights therefrom shine into some of the bedrooms, in the new wing of the hotel.

The sign in question is illuminated or operated from, the “time it begins to be dark until about twelve o’clock” (at the time of the hearing, daylight saving time). J. Haines Lippincott, a witness produced on the part of the complainant, testified that he visited the Shelburne after twelve o’clock the night before he gave his testimony, and the lights of the sign were then burning.

It is testified that this sign “lights up the entire room of forty or forty-five rooms of the new wing of the hotel and thereby disturbs the guests, and by reason thereof lowers the value of those rooms and thereby seriously affects detrimentally the business of the complainant.”

The complainant admits that, for the purpose of dancing and other amusement of its guests, it provides an orchestra composed of six pieces, including a piano and drums. This orchestra plays and dancing is permitted (and indulged in) until about twelve o'clock at night, in a room known as the “orange room,” which is “directly under the part of the new wing which is nearest to the Colgate sign.”

Some time before the new wing was built, which was completed in July, 1922, a bill was filed in this court complaining of “the continuous flashing [of the lights] and the noise of the sign itself and the candle power.” This bill was abandoned because the defendants therein caused the flashing to be stopped, and lowered the candle power, and, further, because very few rooms were affected.

Although many signs of the nature of the one in question are located along the boardwalk, this one is apparently the only one built parallel with any hotel building and with light directly projecting into bedrooms, although others exist, the lights of which shine into bedroom®, but upon an angle.

Although expert testimony was produced by the defendants to the effect, that in many of the rooms of the hotel no illumination was caused by the sign, and in none was there any serious effect caused by the light from the sign. I cannot but believe that the amount of light radiating from the sign does illuminate or “light up” many of the rooms facing it, and in some instances, at least, to such an extent as to be objectionable to the guests.

Atlantic City is a seashore resort, catering to visitors desiring comfort, rest, recreation or to recuperate from) illness, from all sections of the world. Its: boardwalk is, and the hotels along this boardwalk are, famed throughout not only this country, but in every civilized country. In addition to the business of catering to guests, and by reason partly, at least, of the cosmopolitan character of these guests, there has grown up the custom of operating electric and other signs along this boardwalk. In fact, the testimony shows that the boardwalk is considered as one of the best advertising locations in the country.

There can be little, if any, doubt that light radiating from lamps of the intensity, and, when placed in the position of those in the sign in question, may become a nuisance, if it (the light) materially interferes with the ordinary comfort, physically, of human existence. Cleveland v. Citizens Gaslight and Power Co., 20 N. J. Eq. (at p. 205).

It is not claimed that the sign is a nuisance in the daytime and when not illuminated.

The prayer in the bill is “that the defendant * * * be restrained from exhibiting, operating and maintaining any electric contrivance or sign * * * in such manner as to create a nuisance by the light it radiates,” &c.

Vice-Chancellor Learning, in Seligman v. Victor Talking Machine Co., 71 N. J. Eq. 697 (at p. 700), said: “It is well recognized, however, in cases of nuisance, that the things to be taken into account include not only the degree and character of the annoyance and the circumstances under which it occurs, but also the time of its occurrence. As is well said by Vice-Chancellor Pitney, in Gilbough v. West Side Amusement Co., 64 N. J. Eq. (at p. 28) (1902): cSo the time when a noise is made is also to be taken into account. Mankind needs sleep for a succession of several hours once in every twenty-four hours, and nature has provided a time for that purpose, to wit, the night-time, and by common consent of civilized man the night is devoted to rest and sleep, and noises which would not be adjudged nuisances, under circumstances, if made in the daytime, will be declared to be nuisances if made at night, during the hours which are usually devoted by the inhabitants of that neighborhood to sleep.’

“Many other authorities are to the same effect. Kerr Tnj. (8d ed.) 216 note 87; Wood Nuis. (2d ed.) 618; 21 Am. & Eng. Encycl. L. (2d ed.) 697 note 8.”

The complainant has fixed its own hour, prior to which it is not entitled to relief. Surely the light complained of cannot be considered as a nuisance upon the ground that guests are unable to procure necessary sleep, when the complainant at the same time causes an orchestra, loud in its nature, to play, and dancing to be indulged it, in close proximity to the rooms alleged to be affected.

The testimony of Mr. Weikel, the president and general manager of the complainant, is, as before stated, that the sign is in operation until about twelve o’clock, and the orchestra plays until twelve o’clock. I am satisfied that, in view of all the facts as presented, that the operation of this sign prior to twelve o’clock at night would not entitle the complainant to have the relief prayed for; but the witness Lippincott testified that the sign was operated after twelve o’clock at night, at least upon one occasion.

I am of the opinion that the complainant is entitled to a decree against the defendant Maxwell Company restraining the operation of the electric sign in question during each night after the hour of twelve o’clock midnight, and will advise a decree to that effect.


author: Ingersoll, V. C.

text:
    Mary I. Sweeney, petitioner, v. Daniel A. Sweeney, defendant.
    [Submitted July 25th, 1923.
    Determined November 30th, 1923.]
    1. Where alimony is ordered in a decree nisi in a suit for divorce such order remains in force until the court otherwise orders.
    2. Application may be made concerning alimony at any time after final decree, and even after the enrollment of the decree.
    On petition to modify decree.

      Mr. Albert S. Woodruff, for the petitioner.

      Mr. James Mercer Davis, for the defendant.
   Ingersoll, V. C.

The facts of this case are that the petitioner filed her petition for divorce on November 21st, 1921, alleging adultery. The matter proceeded on petition, answer and oral proof taken in open court, with the result that a decree nisi was advised on the 31st day of May, 1922, by Advisory Master Grey. In the decree nisi it was ordered and adjudged “that the said defendant pay to the petitioner for the maintenance of herself and the two children of the marriage aforesaid the sum of $15 each and every week until the further order of this court, and that the defendant pay to the solicitors of the petitioner the sum of $50 as counsel fee, and that he do further pay the costs of this suit incurred, and to be incurred, to be taxed, and that the petitioner do have execution therefor, according to the practice of this court.”

On the 1st day of December, 1922, the final decree was entered, wherein it was ordered, that the said decree nisi be made and become absolute and “that the said petitioner and said defendant are divorced from the bonds of matrimony for the cause aforesaid, and the marriage between the said petitioner and the said defendant is hereby dissolved accordingly, and the said parties and each of them are and is hereby freed and discharged from the obligation thereof.”

A petition was filed by the defendant praying that the decree nisi and the final decree entered thereon be modified, alleging the inabilitjr of the defendant, by reason of Iris physical condition, to pay the alimony ordered.

The first question to determine—does that portion of the decree nisi “ordering” the defendant to “pay to the petitioner for the maintenance of herself and the two children of the marriage aforesaid the sum of $15 each and every week until the further order of this court” remain in effect after the final decree is entered. The final decree not including, in terms, the order for alimony.

Mr. Biddle, in his Divorce Practice (2d ed.) 1SS, says:

“It will be observed that nothing is nisi except the determination of the status. Whatever else is written on the same sheet of paper may for convenience be called a part of the decree nisi, but it properly decerns, and is interlocutory or final, according to tlie nature of the subject dealt with, and the terms of the order disposing of it. Thus, the decree for costs is final; that for the custody of children is usually so, subject, of course, to the ever-continuing statutory power to modify or repeal.”

And concerning alimony (on p. 151) :

“tinder the former phrasing of this section it was considered doubtful whether, if the final decree was silent as to the matter, alimony could afterwards be awarded. But the present act is considered to leave every case open for future application, without any express reservation in the decree. The decree nial is considered a sufficient adjudication to permit of the allowance of permanent alimony to a wife in whose favor the decree is made.”

Since the present Divorce act was enacted it has been the accepted practice to consider the order (concerning alimony) in the decree nisi, as being in force and effect until otherwise ordered. Even if the final decree is silent on the subject application may be made concerning alimony at any time after final decree and after enrollment of the decree. Section 25 of Divorce act, 2 Comp. Skit. pp. 2021, 2035 (Rev. 1907): McKensey v. McKensey, 65 N. J. Eeq. 633.

This view does not conflict with McGrail v. McGrail, 51 N. J. Eq. 537, and Swallow v. Swallow, 84. N. J. Eq. 109.

In each of these cases the order was by its terms limited in time to the pendency of the suit.

The decree nisi, containing the order now under consideration. was by the decree final made absolute. By the statute above referred to ‘fit is now lawful for the court to make such order touching the alimony of the wife * * * as bv the circumstances * * * shall be rendered fit.”

It follows, therefore, that the petition is timely and the court has jurisdiction.

The defendant was on the stand and his manner and appearance were convincing, that he was at that time una,ble to work, and I am satisfied that he was unable either to support himself or his family.

Before making an order, however, I desire to have the defendant called as a witness. This may be done on the 20th day of December, 1923, at the chancery chambers, at Camden.


author: Inuersolt., A'. 0.

text:
    Mary Allan Elwood, complainant, v. Vivian B. Smith, defendant.
    [Decided December 10th, 1923.]
    1. Wihere a contract for sale of lands was not signed by the wife of the vendor, who later refused .to consummate the sale, not in any way because of the connivance of her husband, there being no irreparable damage, specific performance of the contract will be decreed without indemnity or abatement, or if the complainant so elects, the bill will be dismissed without prejudice to any action at law which the complainant may bring.
    2. (done v. (ttanley, 92 N. J. Bq. 310, approved and followed.
    On bill, &c. On bill for specific performance.

      Mr. If envy 11'. Lems, for the complainant.

      Mr. Richard IT. Roherison, for the defendant.
   Inuersolt., A'. 0.

This is a suit for the specific performance of a contract entered into on the 11th day of December, 1922, between the complainant by her luisband, her duly authorized agent, and the defendant, wheiein the defendant agreed to convey certain lands and premises to the complainant for the consideration of $7.000, payable as specified in the contract.

' The testimony of the agent is that the contract was entered into, the agreement was drawn, executed by each and a check of $1,000 given by him to and accepted by the defendant.

The defendant insists that the papers were signed upon the condition that they would not become effective until and unless he obtained his wife’s signature thereto; that his wife declined to sign the agreements, and that he so notified the complainant and returned the check.

Elwood denies this -testimony and says the only knowledge he had concerning the possible objection of the wife to the contract was that Smith told him at the time of the execution of the contract, “'That this will raise a rumpus at home.”

There is no doubt that Elwood knew that Smith was married. Nor can there be any doubt, from the manner of the giving of his testimony, and the fact that he dictated the agreements, that he is acquainted with business transactions of this nature.

The wife refused to join in the agreement, claiming that the property had been purchased by her husband for the exclusive purpose of building a home thereon.

While it is true that no determined effort was made by Smith to induce his wife to sign, I am not convinced that her refusal to execute the agreement (or a deed) was in any way due to connivance of her husband.

In this case there is also the absence of anything in the nature of irreparable damage. No suggestion is made that the purchase was made fox other than speculative purposes. In fact the complainant produced evidence to the effect that the property was at the present worth about $12,500, an increase over the purchase price of seventy-eight and four-sevenths per cent, in less than a year, and his loss, if any, is the loss of his bargain, which loss a law court could easily measure and recompense.

Following the reasoning of Vice-Chancellor Learning in Stone v. Stanley, 92 N. J. Eq. 310, I will advise a decree against the defendant for specific performance, without either indemnity or abatement. If, however, the complainant does not signify her willingness to accept a conveyance subject to the inchoate right of dower, I will advise a decree dismissing the bill, but without prejudice to any action at law which complainant may be advised to pursue.


author: Grirrin, Vice-Ordinary.

text:
    Edwin Robert Walker, Ordinary. Edmund B. Leaming, Vivian M. Lewis, John H. Backes, John Griffin, John E. Foster, Malcolm G. Buchanan, James F. Fielder, Alonzo Church, Robert H. Ingersoll and John Bentley, Vice-Ordinaries. In the matter of the estate of George W. Helme, deceased.
    [Decided November 20th, 1923.]
    1. Where testator creates a trust for accumulations for the benefit of grandchildren generally, and it appears from the context that he did'not intend to limit his bounty to the grandchildren in being, grandchildren born after testator’s death are included.
    2. When-e, under tile trust, grandchildren are given $2,500 each as they severally attain the age of twenty-one years, such gifts, being separate and independent, are not gifts to a class, and are valid as to legatees born in the lifetime of testator and invalid as to those born after.

      3. Where a trust for accumulations is created,. and life or lives in being form no part of tlie period during which vesting is postponed, the duration thereof can only extend to twenty-one years (and the gestative period) after death of testator; if it extends beyond it is void as violative of the rule against perpetuities.
    1. A gift to a class arises where the gift is of an aggregate sum to a body of persons uncertain in number at the time of the gift, to be ascertained at. a future time, and who shall take in equal or some other definite proportions, the share of each being dependent for its amount upon the ultimate number of persons.
    it. Where there is a gift to a class, the gift, if void as io a part, is void in toio.

      Mr. Carl M. Herbert, for the trustees.
   Grirrin, Vice-Ordinary.

George W. Helme departed this life on June 13th, 1893, leaving a last will and testament dated the 5th day of September, 1892, and leaving the following children—Adelaide H. (Strater), then aged thirty four years; Olivia A. (Herbert), aged thirty-one years, and George A. Helme, aged twenty-eight years.

In and by the sixth clause of his will the testator gave to trustees one hundred shares of the capital stock of “the George Helme Company” in trust for accumulations.

The trustees have now filed their account, praying that an order of distribution be made, and that they lie discharged as trustees under said clause.

In order to make the decree sought a construction of the sixth clause is necessary.

Due notice has been given to all parties interested.

The sixth clause is as follows:

“Sixth. I give and bequeath to my trustees hereinafter named one hundred shares of the capital stock of “the George W. Helme Company,” to be by them held as a special trust fund upon trust to receive and accumulate the dividends and income therefrom, and I direct that out of such dividends and income the said trustees pay to each of my grandchildren, as they shall severally arrive at the age of twenty-one years, the sum of $2,500. Upon the arrival at age of the youngest grandchild, or upon the death of the last surviving grandchild, who may be a minor, the residue of the trust fund, both income and capital, shall be equally divided among the grandchildren, then living and the. issue of such as may be dead, the issue of a deceased grandchild taking the share of or interest the parent would have taken if living, and provided, in case any of my grandchildren shall die before being entitled to receive the said sum of $2,500 (whether in my lifetime or subsequently), leaving issue which shall survive at the time the parent would have been entitled to receive the same if living, then the said sum shall be paid to the issue of the grandchildren so dying.”

When the will was made, as Avell as at testator’s death, he had several grandchildren living, aged eight years and under. After his death several grandchildren were born and are now living, and still others may hereafter be born.

Tavo questions are presented under this clause -for solution :

1. Is the trust valid in part and void as to the residue?

2. Is the entire clause invalid as violating the rule of Iuav against perpetuities?

|Tm dealing with these questions it must first be ascertained what the testator meant when Ire created this trust for his grandchildren—did he intend as the object of his bounty only such as might be in being at the time of his death, or all of his grandchildren born after as well as prior thereto ?

The situation confronting testator, both on the date of his will and of his death, was that he had íavo daughters and one son, all young; each had a child, or children; their ages were such that he could assume that other children, his grandchildren, AArould be born.

Reading this clause in connection Avith the entire will I can see nothing Avhich tends to Aiary the plain language "each of my grandchildren” * * * "upon the arrival at age of my youngest grandchild, or upon the death o£ the last surviving grandchild who may be a minor,” Avhich means grandchildren born and thereafter born. Examining further, it appears that he makes provision for his great grandchildren in the event of the death of a grandchild prior to the period of distribution. Why should he be so solicitous -Fm- Ría o-rosi+. Grandchildren and disregard his after-born

Iii the case of Hewiil v. Green, 77 N. J. Eq. 345, a case was presented quite similar to the present; the estates in both cases were large, and the testators both carved out of the bulk of their estates portions of the principal for the benefit of grandchildren. Vice-Chancellor Stevenson said, his purpose was to reach over his children to li:s grandchildren, and give to them that protection against those eventualities which, by reason of the many accidents of life, might reduce the estate of their parents and thus leave them without ample provision; and this provision was apparently made for the protection of all of his graudchildien born and to be born.

In Kates, Trustee, v. Walker, 82 N. J. Law 157, on case certified from the Camden circuit, the will construed, devised and bequeathed real and personal estate to trustees to sell the real estate, to invest the proceeds of the sale thereof, and pay the interest on such investments to the testator’s wife during her life; the will then proceeded as follows:

“And at her death it is my will that said trust continue, and I direct my said trustees to continue said investment for the benefit of my grandchildren, the children of my daughter Mary Jane Walker, until the youngest child shall attain the age of twenty-five years ,at which time said trust shall end,” and payment should then be made “to my said grandchildren, the children of my said daughter, Mary Jane Walker, share and share alike.”

In that ease Chief-Justice Gummere, speaking for the pupreme court, in holding the trust void, said: “The will does not speak with relation to the youngest child who should be living at the death of the testator, but the youngest child who should be born of the testator’s daughter Mary”—and ¡this was the court’s construction, couched in the above language.

In Fosdick v. Fosdick et al., 6 Allen (Mass.) 41, the trust was created for accumulations until “my youngest grandchild may, if living, attain the age of twenty-one years.” The court (at p. 44) held that any grandchild born after the testator’s decease would be entitled to be let in and to share equally with the others in such income as one of the legatees.

In the leading case of Leake v. Robinson, 2 Meriv. 363, 383; 35 Full. Eng. Rep. 979, 986, Sir William Grant, master of the rolls, said: “Indeed, I believe wherever a testator gives to a parent for life with remainder to his children he does mean to include all of the children such parent may have at any time. This is not an artificial rule. It is a rule which excludes any of the children that is and has been called an artificial rule.” See, also, Aldendifer v. Wylie, 306 III. 426; 138 N. E. Rep. 143.

ÍMy conclusion is that under this clause after-born grand-

|^This clause creates an executory bequest. Lives in being form no part of the period during which the vesting is postponed. In such case, vesting must take place within twenty-one years (and the period of gestation) after the death of the testator or the bequest is void. Van Riper v. Hilton, 78 N. J. Eq. 371, 376 (Garrison, vice-chancellor); Andrews v. Lincoln, 95 Me. 541; 50 Atl. Rep. 898; Kimball v. Crocker, 53 Me. 263; and, as was said by Chancellor Walker in Graves v. Graves, 1 N. J. Adv. R. 252; 94 H. J. Eq. 268: in being and twenty-one years thereafter may be exceeded, and not the certainty, or even the probability that it will be exceeded in a given trust, which calls for the application of Tfc is the possibility that the period covered by a life or lives

1. As to the first question: While these legacies of $2,500, by the terms of the Will, are to be paid both to grandchildren born in the lifetime of the testator as well as thereafter, yet they are separate, distinct and independent legacies, valid as to those grandchildren born in the lifetime of the testator, and invalid as to those born thereafter for remoteness. Minot v. Doggett, 190 Mass. 435; 77 N. E. Rep. 629; Dorr v. Lovering, 147 Mass. 530; 18 N. E. Rep. 412; Boughton v. James, 1 Coll. 26; Boughton v. Boughton, 1 H. L. 406, 414; Storrs v. Benbow, 3 DeG. M. & G. 390. See, also, Gray Perp. § 389.

2. As to the second question: Dealing with the second part of this clause, which disposes of the corpus and accumulations,rare bequests to grandchildren born after the testator’s death are clearty void for remoteness. But a question arises as to whether such a construction may not be given to it by separating the gifts to the after-born grandchildren from those made to the prior born grandchildren. This calls for a decision as to wiiether the grandchildren take as a class!?

In the case of Clark v. Morehous, 74 N. J. Eq. 658, Vice-Chancellor Howell cites with approval the opinion of Judge O’Brien (In re Russell, 168 N. Y. 169), who said: “A gift to a class has been defined by a recent decision of this court to be a gift of an aggregate sum to a body of persons uncertain in number at the time of the gift, to be determined at a future time, who are all to take in equal or some other definite proportions, the share of each being dependent for its amount upon the actual number.” See, also, Aitken v. Sharp, 93 N. J. Eq. 336; 1 Jarm. Wills 534 (at p. 259).

¿The conclusion I have reached on this point is that this gift of the residue of the corpwsjand accumulations¿Js"a gift to a class, the class comprising grandchildren born prior to and after the testator’s death, and is void for remoteness, the period of vesting being postponed until the youngest grandchild living attains the age of twenty-one years, which possibly might postpone the period of vesting for -more than twentjr-one years (and the period of a gestation.) Kates, Trustee, v. Walker, supra; Leake v. Robinson, supra.

The result is that the balance of the trust fund in the sixth clause, after deducting the $2,500 legacies to the children in being at the testator’s death, lapsed and fell into the residue.

/A decree will be advised in accordance with the views above