text:
    Charles D. Crickler v. C. Virginia Crickler.
    [Filed July 27th, 1899.]
    1. Where a separation has been occasioned by cruelty of the husband to the wife to an extent sufficient to support a decree for divorce against him, he cannot successfully claim that her absence from him for over two years thereafter is a statutory desertion.
    2. The rights of the parties in such a case are not altered by invitations sent by the husband to the wife asking her to return.

      3. Irrespective of suck a defence, it is the duty of a husband whose wife has separated from him, to show that he has been during the two years, sincerely willing and desirous that she should return to him, else her absence is not obstinate.
    Ou bill for divorce for desertion. Answer and proofs.

      Mr. David J. Pancoast, for the complainant.

      Mr. Francis D. Weaver and Mr. John W. Wescott, for the defendant.
   Grey, V. C.

The parties, Charles D. Crickler and C. Virginia Crickler, were married in November, 1881, in this state, and for thirteen years and more have resided in Cumberland county, New Jersey, and still reside there.

The married life of the parties was unhappy, the wife alleging that the husband was unfaithful to his marriage vows, and that he treated her with great cruelty and harshness.

In May, 1894, an article of agreement between Mr. and Mrs. Crickler and one Samuel Hann, as trustee for Mrs. Crickler, was entered into, wherein it was recited that Mr. and Mrs. Crickler had agreed to live separate from each other; that Mrs. Crickler should take with her their child, Theodosia, about thirteen years of age, and that she should not call upon Mr. Crickler for any other support for herself and her child than was provided by the terms of the agreement. There was a division of the household furniture, and Crickler agreed to pay to Hann, in trust for Mrs. Crickler, $8 a week for her own support and $2 a week for the support of Theodosia, as long as she lived with her mother, during her infancy.

Mr. Crickler further agreed to give a mortgage in the penal sum of $2,500, to Hann, as trustee, conditioned for the performance of his agreement to make the payments above named, the mortgage to cover all the interests of Crickler in the house and lot on Atlantic street and in the machine-shops and lot wherein they are situate, on Atlantic street, in Bridgeton.

Mr. Crickler gave the mortgage, dated May 29th, 1894, provided for by the agreement, and the parties undertook their separate life, Mrs. 'Crickler taking charge of the little child and assuming the possession of the furniture, which, under the terms of the agreement, she was to have.

The parties have liyed apart from the making of this agreement in May, 1894, until the present time. In November, 1895, Mr. Crickler wrote to his wife a letter, in which he said he desired her to return and live with him. To this his wife made no reply. In April, 1896, he wrote her again, stating that he was still anxious that she should return and resume her position as his wife, and that if she did not act as his wife he would stop paying her the allowance. No reply was sent by the wife to this letter. Mr. Crickler then stopped his payments for her support, and some time afterwards filed his petition against her for divorce on the ground of desertion.

This petition was dismissed in September, 1897, because it appeared that Mr. Crickler had, by the agreement, assented to the separation, and that two years had not elapsed since he had requested his wife to return.

In October, 1897, as Mr. Crickler had ceased paying the weekly sums secured by the mortgage, Hann, the trustee, began a foreclosure proceeding in this court to enforce their payment.This suit is defended by Crickler, who contends that the mort-. gáge was obtained from him by a false accusation that he had committed an assault and battery upon his wife, threats that he would be sent to state prison therefor, and an offer to suppress the prosecution if he would give the mortgage, &c., in question. The foreclosure suit has come to an issue, and as the testimony' was in many particulars the same as that required in this cause, the two were heard together, upon a stipulation between counsel that all the testimony should, where relevant, be considered as taken in both causes.

In January, 1898, Mr. Crickler filed the new petition for divorce now before this court, upon the ground of desertion by his wife. This suit she defends, justifying her separation and absence from him because of his cruel and harsh treatment of her and his repeated breaches of his marriage vows.

That the parties were both bona fide residents of this state when the bill was'exhibited, and that they have been so resident for many years before, is affirmatively shown beyond question.

That Mrs. Crickler willfully lived separately from her husband for the space of more than two years before the filing of the petition in this cause is not disputed, and I think the weight of the proofs shows that she has been during that period of •time and is now fully determined not to return to her husband, to resume her wifely duties, unless a change of circumstances takes'place, of which there is no present indication.

She claims to justify her absence from him, and her refusal to maintain her marital relations with him, by showing his extreme cruelty to her, so that she was and is afraid to live with him, and also contends that he has been unfaithful to his marriage vows.

The original separation of the parties in’ April, 1894, was occasioned by Mr. Crickler’s violence toward his wife. He was seeking to get possession of a bill which he believed would show that his wife had injudiciously spent his money. He supposed she was trying to hide this bill from him, and becoming enraged, he so violently threw her against a projecting corner that she received injuries which the doctor defines as a bruise on her left side, eight inches long and two inches wide, another at the lower end of her spine and a uterine displacement. In consequence of these injuries’she required medical attendance for four weeks, and when moved in the June following, had to be carried in an invalid’s chair. Mrs. Crickler gives this account of the affair, and Mr. Crickler denies it, stating that in the struggle she caught hold of his clothes, and his hurried exit may have thrown her down. But his story has no element of probability in itself, is not consistent with his admitted conduct, as he never attempted to aid his wife as any man would naturally help any woman whom he had hurt by misadventure, and it is also inconsistent jvith the testimony of the woman of the house, who heard Mrs. Crickler scream for help, as if in much distress and fright, and on coming in found her alone in great suffering as above stated. Mr. Crickler was indicted for this attack, and thereafter the parties lived separate. The agreement for separation and support and the securing mortgage, were then made by Mr. Crickler. He now alleges these were procured from him by threats. This claim is discussed in the opinion in the foreclosure suit of Hann, Trustee, v. Crickler. It is enough to say here that the proofs show that this charge is entirely false.

He had in the fall of 1893 (six months or more before his attack on his wife, in April, 1894, had resulted in the separation) procured from his own lawyers articles of separation, and had insisted that his wife should sign them, which she refused to do. His conduct tended strongly to show that he wished to force her to a separation. Save for his misconduct she had no reason to desire to live apart. Her material comforts and those of her child, were admittedly far better if they lived together than if apart.

The result of these transactions shows, that Mr. Crickler not only assented to the original separation, but that he actually desired and contrived and gave occasion for it. Under such conditions their separation was no desertion on the part of Mrs. Crickler, and on this ground his first divorce suit was dismissed.

He now claims that his letters of November 14th, 1895, and April 16th, 1896, expressing his desire that his wife should return to him, made it her duty at that time to come back and resume their marital relations, and that her refusal so to do, for two years, is a willful, continued and obstinate desertion.

In order to ascertain the extent of Mrs. Crickler’s duty in the premises, a statement of the facts as shown by the weight of the proofs is necessary.

Mr. Crickler testified that his wife is a Christian woman. Her testimony and her appearance on the witness-stand indicate that she desires to tell the truth, and that she has the capacity necessary to perceive and to relate it. She appears to be of delicate physique and in frail health. Her answers to all questions, even those which she might well believe would, militate against her, were fairly and frankly given. She narrates an account of their married life, which shows a series of incidents ■of ill-treatment, physical violence and abuse on the part of her husband, which culminated in the affair of April, 1894, when she received from him injuries which confined her to her bed for weeks, from which she did not recover for more than two-months, leaving her in a condition of terror which occasioned their separation, as she says, because shé feared he would take her life. She testifies that she'thought it was her duty to preserve her life by staying away from him; that she is willing to. return to him if she had any reasonable assurance that he would treat her in a proper manner, but she hesitated to say that she would take his word to that effect, because he had heretofore broken like promises. To several witnesses Mrs. Crickler stated that she would not live with her husband, but when a reason appears it is because he had treated her so badly, &c. Such statements of refusal to renew marital relations, when justified by the truth of the reason stated, are not evidence of willful or obstinate desertion. •

Mr. Crickler denies all the charges of cruelty to his wife,,but it is impossible to accept his statements as true. His daughter •testifies that he pulled his wife off the lounge, and, when the daughter threatened to give an alarm, he put his hand over her mouth and told her to be still. The incident of his throwing his wife against a corner and thus causing her serious injury, is established as narrated by Mrs. Crickler, because her statement is in natural accord with the admitted facts, and with the conduct and statements of both at the time, while Mr. Crickler’» version is quite improbable, and his action at and immediately following the transaction is wholly inconsistent with his account of it. His eager desire to effect some settlement which would shield him from punishment, shows his consciousness that he had caused his wife’s injury. His testimony has in several particulars been flatly contradicted by disinterested witnesses, so that he is discredited. All these go to establish the truth of Mrs. Crickler’s narration, and to show that Mr. Crickler had used to-his wife such extreme physical violence, that she might reasonably fear, in view of her frail condition (which is now manifest upon looking at her, and proved by several witnesses to have always existed), that her life was in danger. Under such circumstances it was her right and duty to separate from her husband. There is no proof whatever that the husband ever expressed any regret for his cruelty to his wife, or that he gave her any assurances of future safety and considerate treatment.

It is shown that about April or May, 1894, while she was yet ill from the effects of his violence and he was under, a criminal charge therefor, he went on his knees to her, as is stated by a witness, begging her to be reconciled and not to break up the home, for the child’s sake. How far this was caused by fear of punishment and how much was regret for his own misdoing, does not appear. He is not shown to have given her even a verbal promise of his future better behavior, and while yet suffering from his violence she might well hesitate to listen to invitations which, if accepted, would free him from restraint, and leave her unprotected from a renewal of his cruel treatment. After he was discharged from indictment there was no more begging for a reconciliation.

During nearly four years from April, 1894, until January, 1898, when petition was filed in this case, this husband, who had cruelly abused his wife, never even asked her to return to him save by the two formal letters hereinafter discussed.

The wife narrates several incidents which savor strongly of marital infidelity on the part of the husband. He denies these, but his testimony, having been contradicted by several disinterested witnesses on other points, must be held less credible on this matter, where the secrecy of the transaction might well be deemed by him to afford a safe opportunity to maintain his character by a false statement. In addition to the statements of the wife, it was proven by a hotelkeeper that Crickler had been at his hotel at Ocean City for several days and nights with two different women, neither of whom was Mrs. Crickler, at two different times; that Crickler’s room was opposite the room which the women occupied, the doors facing each other. Mr. Crickler paid the bills for each of these women. His conduct was such that it attracted attention and caused the hotelkeeper to tell him that he did not want him to come to his house with any more women. Mu. Crickler declares that there was but one occasion when he was at this hotel with a woman, and he denies ■that his conduct on this occasion was in any way a breach of his marital duty. He declares that he met a lady on the train by chance, and at her request went to the hotel with her, as she had never before been in Ocean City. He explicitly denies that he paid the hotel bills of any lady, &c., and also all improper conduct. The hotelkeeper is, however, a witness who has no interest whatever and is not likely to have been mistaken either as to the payment of the bills or the number of times Crickler had women at his place; and the latter’s denial of these clearly-proven facts makes his testimony much less credible when refuting accusations which are usually necessarily proven by inference.

The weight of the proofs having shown that the husband’s treatment of his wife was extremely cruel, resulting in her physical disablement, and also that he had probably been unfaithful to his marriage vows, she was justified in separating from him, and to this he appears to have assented. It has been held, however, that where the separation was by mutual consent it would become desertion if the complainant party makes sincere overtures to terminate it (Hankinson v. Hankinson, 6 Stew. Eq. 66), and it is insisted Mr. Crickler’s invitations to his wife asking her to return imposed. upon her an obligation to resume their marital relations, so that her failure to accept them for two years was such a desertion as the statute defines to be willful, continued and obstinate.

Mrs. Crickler’s testimony shows that Mr. Crickler made no other application to her to return than is exhibited by the two letters of November 14th, 1895, and April 16th, 1896. The letter of April 16th, 1896, if relied upon to terminate the agreed separation and to begin a period of two years during which Mrs. Crickler’s continued absence would be willful and obstinate, has no such effect, as Mr. Crickler’s petition in the present cause was filed on January 31st, 1898, more than two months before the expiration of two years after the writing of that letter. Though this April letter cannot be of any aid to the petitioner when relied upon to terminate the agreed separation and to start a period of desertion, it may be used, when taken in connection with Mrs. Crickler’s omission to accept its invitation to return, as evidential of her continued and obstinate adherence to a willful purpose to desert her husband, during the period beginning January 31st, 1896, which is two years before the petition in this cause was filed.

As there was no conference between the parties, the only earlier time which is in auy way indicated as ending the agreed separation and which might begin a period of willful desertion on the part of Mrs. Crickler, was the date of her receipt of the letter of November 14th, 1895, from Mr. Crickler, which was more than two years before the filing of the petition in this cause. This letter did invite her to return and expressed the belief that if she would do so they might be happy, &c. If the circumstances of the case presented no other question than a mere agreed separation without legal cause or right, this letter, if it sincerely expressed the wishes of the husband and had been supported by conduct towards his wife in accord with its invitations, would have been forceful to cast upon the absent wife the duty to return. But if the offences of the husband had been such as to drive the wife away for some reason which gave her a cause of action for divorce against him, he could not by mere invitation to her to return, put her in the position of a wife who willfully and obstinately deserted her husband, even if she refused to come back. The separation in such case is justified, and in the contemplation of the court is the husband’s own desertion and not the wife’s. McVicker v. McVicker, 1 Dick. Ch. Rep. 490, 500, and cases there cited.

The proofs in this case disclose the exercise of extreme cruelty on the part of the husband towards the wife, resulting in severe physical injury to her and creating a condition of fear on her part of further association with him, which the facts show is entirely reasonable.

The proof of the marital infidelity of Mr. Crickler by testimony other than that of his wife is, perhaps, not .strong enough to support a decree for divorce upon thát ground, but is suggestive of grave suspicions, aud in view of the fact that he had assented to her separation from him, this disclosure has weight to show that his invitation to her to return, which he was bound to extend, was not sincere, but was given merely to put her in a false position, and thus excuse him from supporting her.

Irrespective of these serious grounds justifying her refusal to return to her husband, his acts, seeking a reunion, fall far short of what is fairly required of him by the circumstances of this case and his legal duty.

The husband, froth the point of view most favorable to him, had' certainly so conducted himself that the wife had at least reasonable cause to doubt his faithfulness to his marriage vows. He had so cruelly treated her that she was seriously injured, and with his assent had for that cause separated from him. Under these circumstances (aside from her defence, because of his extreme cruelty, which in my view was sufficient) the husband, in order to make his wife’s separation from him a desertion, must, by his conduct, have given her sincere assurances that he desired her to return, and that if she would do so she would not be subjected to the same dangers which she had suffered during her past association with him, which had caused this separation. Bowlby v. Bowlby, 10 C. E. Gr. 406; affirmed on appeal, Bowlby v. Bowlby, 10 C. E. Gr. 570 ; Grant v. Grant, 9 Stew. Eq. 502.

The action of this husband has not even approached the standard of conduct prescribed by these cases. Ear from expressing regret for his past cruelty and promising to amend his .conduct in the future, he falsely denies that he ever treated his wife cruelly, and attempts to justify his previous actions. The wife is thus plainly notified that if she returns she will receive no better treatment in the future than she has had in the past. The husband, by the cases cited, is required to be in a receptive frame of mind, willing to receive his wife, but this husband has been shown to have been so eager for a separation from his wife that he filed a bill for divorce for her supposed desertion before the statutory time had elapsed. He wrote her the letters inviting her return, and on these invitations bases his claim that her non-return was desertion, and yet in the summer following the writing of these letters, occurred the discreditable incident of his association with the women at the Ocean City Hotel. His .letters vyere plainly provoked not by any contrition for his past cruelty, by any present regard for his wife or any desire for her return, but by the fact that he was subjected to some pecuniary straits in paying for her support. The phrasing of these letters was obviously intended to put the wife in such a position that she must return to her husband without any expression of regret from him for his past ill-treatment or assurance that in the future she would receive any better, or if she did not return that further support for her and her child might safely be refused. Mr. Crickler is very strenuous in his insistment that he dictated this correspondence himself. While the style of the letters as compared with his literary capacity may lead one to doubt the truth of his statements, his contention is yet quite sufficient to show that he thoroughly approved of the purpose which caused them to be written. They alone, unaccompanied by any reconciliatory acts, do not, under the circumstances of this case, exhibit that sincere desire for the wife’s return which is necessary in order to make her desertion obstinate.

Mr. Crickler declares that Mrs. Crickler would not talk to him, but her whole testimony shows that had he approached her in a proper spirit of contrition for his past wrongdoing, assuring her that she would have nothing to fear from him if she returned, he would probably have induced her to resume their marital relations. If his cruelty had caused her to hesitate to grant a personal interview, correspondence was still open to him. He appears to have had no occasion for letter-writing, except in an effort to establish a legal ground for a divorce.

The complainant has failed to show such a case of willful, continuous and obstinate desertion by his wife as entitled him to a decree of divorce. The bill should be dismissed, with costs.


source: Caselaw Access Project

author: Grey, V. C.

license: Public Domain

text:
    C. Fletcher Myers v. Allspruce Meadow Company.
    [Filed July 27th, 1899.]
    An injunction-will lie to restrain a meadow company from overflowing banked meadow lands within its bounds, lying adjacent to a tidal stream, where the company proposes to determine the question of such overflow at a special meeting in May called for the purpose, instead of at an annual meeting in April, as required by Gen. Stat. p. 2035 ¶ 59 and Gen.- Stat. p.- 2028 ¶ 29, providing that such questions must be passed upon at such annual meeting, before crops are planted.
    On bill, answer, order to show cause and affidavits.

      Mr. Daniel V. Summerill, for the complainant-.

      Mr. Samuel H. Richards, for the defendant.
   Grey, V. C.

The complainant is the possessor of a tract of banked meadow land, being a portion of those lying within the bounds of the defendant, the Allspruce Meadow Company, situate on Oldman’s creek, in Gloucester county. The defendant company is one of those organized under the act of this state, passed November 29th, 1788, and to be found in Gen. Stat. p. 2022, for the purpose of preventing the overflow of the lands adjacent to tidal streams by the construction of a bank, sluices, &c.

The Delaware river railroad constructed its roadbed across this company’s lands, thus dividing them into two parts, a portion of the bank being on each side of the railroad bed. In the fall of 1898 a breach in the meadow bank -was made by the tidewater on the westerly side of the railroad. The railroad company so filled in, raised and constructed its roadbed as to exclude the tide-water thus admitted from flowing across, through or under its tracks, thus saving that portion of the meadow which was on the easterly side of the railroad tracks, from overflow. The complainant’s land lies in this easterly part of the meadow company’s tract.

The clerk of the meadow company has given notice of. a special meeting of the defendant, Allspruce Meadow Company, on May 27th, 1899, for the purpose of determining, by vote, the advisability of placing said Allspruce meadows “ out to the tide ” for a term of years. . The portion of meadow lying on the westerly side of the railroad is already “ out to the tide,”, and the only object of such a meeting must be to throw out the easterly portion of which the complainant’s meadow forms a part.

The placing of banked meadows out to the tide,” means its temporary abandonment and the ruin of all growing crops within, the bank, as the daily in and outflow of the tide-water will, effectually destroy all herbage except water plants. This is also, for a time at least, an abandonment of the maintenance of the banks, sluices, ditches and other water-works of the meadow company, perhaps with an expectation of the ultimate improvement of the land by securing an additional deposit of silt from the overflow of the tide-water and a subsequent restoration of the bank and resumption of its functions by the meadow company. Such a course of management is quite common in those localities were tide-meadow companies have been established. But to secure the benefits of such a deposit of silt requires several years of overflow, and meanwhile all present profits of the. meadow must be given up. It is quite obvious that so important a transaction as the voluntary placing the meadow “ out to the tide,” necessarily resulting in the entire destruction of all the grass and other crops there growing, would work serious injury to the owners and occupiers of meadow lands lying within the bounds of the meadow company. For this reason, the statute regulating the actions of these meadow companies requires, that if this particular matter of overflowing the meadow is to be passed upon, it must be at an annual meeting of the company, and that the owners of more than one-half of the meadow lands shall agree to the overflowing. Gen. Stat. p. 2035 ¶ 59. These annual meetings are required to be held in the month of April (Gen. Stat. p. 2028 29), when such tilled crops as are raised on such meadows are unplanted, and when, if the meadows are used for grass, other arrangements to supply the loss of. the crop may be made.

The defendant company proposes to determine this question, not at the annual meeting of the company, so required by the statute, but at á special meeting called for that particular purpose, and not in April, as prescribed by the act, but on the 27th day of May.

This is an act outside of the statutory powers given to the company, which will, if submitted to, put the complainant in a position of great danger of the destruction of his growing grass or other crop on the easterly side of the railroad bed and also of his meadow land for all its present uses.

An injury of this sort will be of a continuing character, destructive of all the profit which may be derived from these meadow lands, so long as the overflow be permitted. Eor redress the complainant may be obliged to bring as many successive suits as he loses crops and to look to persons who would, if such a resolution passed, attempt to justify their conduct by the company’s unauthorized action.

The defendant, in its answer, asserts that there is authority in the law for holding such a meeting at the time and for the purpose above named. But neither in the answer nor in any affidavit, nor in argument, is any authority in the law for such proposed action referred to or set forth.

The defendant further alleges that the breach in the tide-bank on the westerly side of the railroad bed is at that precise point where, in 1804, commissioners who laid out the meadow had directed that the occupiers of “Heston and Carpenter’s meadow” should keep up sixty-five rods of bank; that the complainant is an occupier of at least some part of the “ Heston and Carpenter meadow,” and as he and the other occupiers of that meadow have not mended that breach, the defendant contends that the complainant has no standing to invoke the aid of this court to stop its proposed, though unauthorized, meeting to put the rest of the meadow “ out to the tide.”

Whether this contention could be sustained as a defence if the facts were proven it is not necessary to determine, for the affidavits which are relied upon to support it do not sufficiently establish its truth. The allotment of the different portions of the bank to be maintained was with relation to' the ownership of the portion of the meadow within the bank as they were held in 1804. To present the point in question it is necessary to show, first, that the neglected breach is within the sixty-five rods allotted to be maintained by the occupiers of the “Heston and Carpenter meadow,” and secondly, to prove that the complainant is an occupier of those particular lands of “ Heston and Carpenter ” which, in 1804, were charged with a duty to maintain that part of the bank. The affidavits submitted are those of parties whose knowledge of the location of the meadow lands extends back but thirty years. As to the portion of the'bank allotted, there is some aid from the commissioners’ report, copy of which is annexed to the bill, but on the second point, that the complainant is an owner or occupier of a part of those lands of “Heston and Carpenter” which were, in 1804, charged with the maintenance of that part of the bank in which the breach has occurred, the report does not identify those lands in any way except by statement of quantity. There is no other proof than a statement that the affiant,s “know by reputation that complainant is an occupier of part of the said ‘ Heston and Carpenter meadow’” and an allegation that the complainant and his father had been heard to say that part of the tract now occupied by complainant is “ Heston and Carpenter’s meadow.” There are ofttimes many and various tracts designated by the name of an owner. It is not all lands or meadows of “ Heston and Carpenter” which are charged, but only these pieces which, in 1804, were referred to by the commissioners. These are not in any way identified. Such proof as this is quite too general and uncertain to be made the basis on which to deny protection from a threatened irreparable injury.

The meadow company, defendant, proceeding in accordance with the powers given it by the statute, may, at the proper time and in the mode prescribed by the act, pass upon the question in dispute. Its proposed course of procedure is without its power, and threatens to do the complainant an injury from which the defendant should be restrained.

I will advise the issuing of a preliminary injunction.


text:
    Richard A. Donnelly v. Otis F. Johnes et al.
    [Filed August 5th, 1899.]
    1. Under the operation of section 5 of the supplement of March 14th, 1895, to the Mechanics’ Lien act (Gen. Slat. p. 2074), workmen and materialmen who furnish labor and material to the building, acquire an inchoate lien which attaches from the beginning of the owner’s liability to the contractor under the contract filed. This inchoate lien becomes perfect, only on service of notice in conformity to the statute before that liability matures, and expires on such maturity as to liens not so noticed. If an installment coming to be due next after the service of such notices, satisfies them and leavep a residue, that residue is at the disposal of the contractor and liable to the attack of his outside creditors. If there be a deficiency, the unsatisfied notices will operate upon the next installment which comes to be due under the contract, in the progress of the work, and so on until the final installment has been disposed of in the same manner.
    2. If a workman or materialman give notice for more than is due to him from the contractor, he is not entitled to have the owner retain for him from the contract price. If he give notice for a less sum than is due him, he will be held to have waived his claim for the difference between the sum demanded and the sum actually due, and his notice for the lesser sum, if otherwise in conformity to the statute, will be sustained.
    3. Notices to retain operate in succession, in the order of their time of service, to secure payment in full of the amount noticed to be retained.
    4. Equitable assignments as between themselves, also operate in the order of their presentation, but their payment is postponed until the notices of the workmen and materialmen have first been satisfied in the manner above stated.

      5. In order to. secure the special preference of precedent payment given to journeymen and laborers for payment of their wages, &c., by section 43 (7) of the supplement of 1895 {Gen. Stat. p. S075), the claimant must prove that he is a journeyman or laborer, and that his claim is for the payment of wages, &e., and thus show that he is within the class to whom the statute gives this special privilege.
    On bill of interpleader. Answers and testimony.
    General Donnelly, the complainant, is the owner of a house' and lot at Spring Lake, N. J. The house was built by the defendant Johnes, under a contract dated the 1st day of October, 1896, and filed in Monmouth county clerk’s office. By the terms of the filed agreement, the contract price was to be paid in six installments at different periods in the progress of the work. The contractor proceeded so far with the performance of the contract that he became entitled to receive the first five installments, all of which were paid to him by General Donnelly, the last one on March 1st, 1897, leaving only the final installment of $2,250 unpaid. The contractor, Johnes, now became financially embarrassed. A judgment was recovered against him by Charles Lewis, and execution and supplementary proceedings were taken thereon, and a restraint from payment was served on General Donnelly on April 17th, 1897, and in the latter part of May, 1897, Johnes abandoned the further prosecution of the work, leaving the house unfinished. Under the terms of the contract, the complainant’s architect assumed charge and finished, or nearly finished, the building, as it was stipulated he might, out of the contract price. The last work done on the building was that performed by one Reed, a plumber, employed by the complainant’s architect, on August 4th, 1897. On September 30th, 1897, General Donnelly accepted the building as completed, and directed the giving by his architect of a certificate of completion.
    Both before and after the failure of Johnes, the various subcontractors, and parties who furnished material or work to him, began to present to the owner, notices to retain their moneys or orders from Johnes to pay them. The sum of all these claims exceeded the moneys due the contractor under the contract, and the complainant, having done a considerable amount of work on the building himself, directed his architect to certify the house to be finished, 'as stated, filed his bill of interpleader and deposited the balance of the contract price in this court.
    No dispute is raised touching the expenditures by the complainant out of the contract price in finishing the building, and all the defendants admit that the $2,166.64 brought into court is the true sum remaining payable by the complainant under the contract.
    The defendants having filed their answers, none of them disputing the complainant’s right, a decree for the complainant was taken that the defendants interplead, &c., and he was dismissed, with his costs of suit. Under the modern practice these answers, which set up the various claims of the parties each against the other, will be taken to be their interpleadings, and the rights of the claimants on the fund will be determined upon the equities thus asserted. Hall v. Baldwin, 18 Stew. Eq. 866.

    At the hearing, all the parties agreed that the copies of notices set forth in the bill of complaint are correct, and that, as to the time of the receipt of notices to and orders on the owner, the statements of the bill are to be taken as true, without further proof. They have been so used.

      Mr. Frank S. Katzenbach, Jr., for the complainant.

      Mr. David Harvey, Jr., for William B. Crowther and others, defendants.

      Messrs. Hawkins & Durand, for Benjamin B. Pearce, receiver, &c., and others, defendants.
    . Mr. Samuel A. Patterson, for Charles P. Pridham and others, defendants.

      Messrs. Howell Brothers, for Doyle & White, defendants.

      Mr. Claude V. Guerin, for Richard E. K. Rothfr.itz, defendant.

      Mr. Joseph McDermott, for Charles McDermott, defendant.

      Mr. Stephen O. Goolt, for Edward Kleinkauf and others, defendants.

      Mr. Samuel G. Naar, for Richard Smith, defendant.

      Mr. Carroll Robbins, for A. K. Leuckel & Co. and others, defendants.
   Grey, V. C.

The claims against the fund in court consist of four classes— first, stop-notices, served under the third section (now thirty-eighth) of the Mechanics’ Lien act; second, orders for payment given by Johnes, the contractor, upon Donnelly, 'the owner; third, a judgment entered April 12th, 1897, and supplementary proceedings and a receivership thereunder in the suit of Charles Lewis v. Otis F. Johnes, the contractor, in the Monmouth circuit court, and fourth, an attachment issued out of the supreme court in the case of Harry A. Ashmore v. Otis F. Johnes, on October 2d, 1897.

The status of claims under orders (operating as equitable assignments) given by a contractor upon the contract moneys in the hands of the owner, in cases of building contracts which have been filed, &c., has been materially changed by the supplement to the Mechanics’ Lien act, passed March 14th, 1895, and to be found in Gen. Stat. p. 2074. 41(5). This statute prescribes that where the contract is filed, if the owner shall

“ for the purpose of avoiding the provisions of the act which this is a supplement,' or in advance of the terms of the contract, pay any money * * ■ * on such contract, and the amQunt still due to the contractor after such payment h s been made shall be insufficient to satisfy the notices served in conformity with the provisions of the act of which this is a supplement, such owner * * * shall be liable in the same manner as if no such payment had been made."

. The court of appeals interpreting this act has, in the case of Slingerland v. Binns, 11 Dick Ch. Rep. 413, declared that this supplement changes the situation, and forbids the owner to pay any money in advance of the terms of the contract if the effect be that the amount unpaid will prove insufficient to satisfy 'notices served in conformity to the statute. The essential principle of this decision is its declaration that the effect of the supplement is to secure

“ to persons entitled to serve the statutory notice, an inchoate lien upon the liability of the owner under the contract, such lien to become perfect on service of the notice before the liability matures, but to expire on such maturity if no notice has been given, for a notice served after maturity derives no aid from this provision. Of course this inchoate lien does not impair the owner’s right to protect himself against the consequences of any default upon the part of the contractor.”

In Leary v. Lamont, 42 Atl. Rep. 97, it was held in this court that the supplement of 1895, as expounded by the judgment of the court of appeals in the case of Slingerland v. Binns, has altered the previous operation of notices served under the old third section so that they no longer gave priority according to date of service, but becoming inchoate liens as fast as the work was done or material furnished, they were perfected by service of notice and chargeable on the fund pro rata, regardless of the order of priority of service of notice.

In Bayonne Building and Loan Association v. Williams, 42 Atl. Rep. 172, the supplement of 1895 and the judgment in Slingerland v. Binns were again discussed in this court. The construction declared in Leary v. Lamont that noticing material-men and laborers took pro rata, and not in succession according to date of service of notice, was approved. It was also held that there was no difference in equity between an order given by the contractor upon the owner for the price of material used in the building, and a stop-notice served by one who furnished material used in the building in conformity with the requirements of the third section of the original Mechanics’ Lien act.

On appeal, Bayonne Building and Loan Association v. Williams was reversed, and the declaration in that case and in Leary v. Lamont that the stop-notices should be paid pro rata and not in full according to order of service, was overruled. 43 Atl. Rep. 669.

The court of appeals declared that, under the supplement of 1895, statutory stop-notices still entitled the noticing party to be paid in full in the order in which the notices were presented to the owner as theretofore they had, and that the inchoate lien created by the operation of that supplement could be perfected only by serving the notice required by the provisions of the Mechanics’ Lien act, and not by an order given on the owner by the contractor; that the inchoate lien attaches ab initio upon the liability of the owner to the contractor of a building for which workmen and materialmen furnish labor and material; that the lien becomes perfect only on service of the statutory notice before that liability matures, and expires on such maturity if no notice be given.

The effect of this construction of the supplement of 1895, in cases where the contract price is payable by installments, is to require an ascertainment of the time when under the terms of the contract each payment comes to be due. Each person entitled under the lien act to serve a stop-notice has an inchoate lien charged upon the contract price, which lien becomes complete on service of the stop-notice before the liability on any installment matures, but expires on such maturity as to any claims on which no notice has been given. An owner, in order to protect himself, must, therefore, as each installment comes to be due (if it is not needed to protect him from the contractor’s default), apply it fifst to the payment of the moneys theretofore demanded by the stop-notices served in conformity to the lien act, and if any portion remains thereafter, he must apply that residue to the satisfaction of any equitable assignment which has been presented, or other lawful charge upon the funds in his hands, or pay it to the contractor.

Under the declaration of the law above recited, the workmen and materialmen obtained “ an inchoate lien ab initio upon the liability of the owner to the contractor of the building.” The liability of the owner to the contractor (subject to the performance of the agreement) begins with the delivery and filing of the contract, and therefore each installment of the agreed price must be held to stand from the time of filing the contract (as to the workmen and materialmen who may furnish labor or material) as a fund charged to pay them for work or material supplied to the building in case they serve on the owner the statutoiy notice before the installment matures, and discharged as to each installment fhat comes to maturity without such service of notice.

If it were held that the lien of the workmen and materialmen arises only as each may furnish work or material to the building, then an order given by the contractor on the owner after the filing of the contract, but presented before the work was done, under which stop-notices were subsequently served, would precede the inchoate lien of the workmen and materialmen, contrary to the purpose of the supplement of 1895, which is expounded by the court of appeals to intend that the contract price, until the time arrives when by the terms of the contract it becomes payable to the contractor, shall stand to respond, first, to complete the contract, and next, for the workmen and materialmen who serve the statutory notices. Almost all building contracts provide for payment in installments, which come to be payable not 'at named calendar periods but upon the completion of specified successive stages of the work. If the installment thus coming due next after the notices served, satisfies them and leaves a residue, that residue is at the disposal of the contractor; if there be a deficiency, the unsatisfied notices will operate (with any others that may meanwhile be served) upon the next installment which comes to be due under the contract by the progress of the work, and so on until the final payment has been disposed of in the same manner.

Applying this interpretation of the supplement of 1895 to the case under consideration, it must be noted that the only installment affected is the last payment of $2,250; that the first-charge against this is such sum as was necessary to secure the owner in completing the building under the terms of the contract. This sum has been expended, leaving a balance of $2,166.64, which has been paid into court in this cause. It is a matter of vital importance to ascertain the time when the liability of the owner in any installment sought to be applied by a notice matures, because it is only those notices which are served before that time that are effective. After maturity of the owner’s liability, without notice served, the statutory inchoate lien expires as above stated.

In the case under consideration the terms of the contract prescribed that the final payment should be due (and thus matured the liability of the owner) “ thirty days after completion and acceptance ” of the building. It is shown without dispute, by the testimony of General Donnelly, that the building was ac-: cepted as complete by a certificate of the architect to that effect, issued on September 30th, 1897. Thirty days after this period was October 30th, 1897. The liability of the owner for the final payment matured on that day. All notices which perfected inchoate liens of workmen and materialmen must, therefore, have been served on or before October 30th, 1897. Any. residue remaining after satisfying these perfected liens became, on and after October 30th, 1897, free from the operation of all liens under the statute, and applicable to the general use and direction of the contractor, by payment to him or to his order, or liable to charge as his property.

A necessary consequence of this construction is that liens on the fund in favor of equitable assignees of the contractor, and of his attaching creditors, all fasten upon it as of the date on which they may respectively be lawfully charged, but subject to the superior rights of workmen and materialmen whose inchoate liens relate back to the beginning of the liability of the owner. These latter liens may be discharged (if perfected by proper notice) by payment out of the fund or (if not so perfected) by the maturing of the liability of the owner. In either event, the residue of any matured portion of the fund becomes applicable to the payment of the charges upon it arising outside of the Mechanics’ Lien act in the order of their priority of service.

The claims by statutory notices under the lien act are quite numerous, and some of them are sharply disputed. As they are payable in the order of their service, they will be considered in that order. Those of them which have been efficiently served and sustained by proof, will be directed to be paid in full from the fund in their order of priority, treating them as superior liens which were a charge upon the fund. ■ The residue of the fund (these superior liens being thus satisfied) will be applied to pay such other claims as may have been charged upon it.

A notice to retain, to be in conformity with the provisions of the lien act, must be preceded by a demand upon and a refusal of pay by the contractor; it must be in writing and must notify the owner of such demand and refusal, and of the amount due the noticing claimant, and the owner must be satisfied of the correctness of the demand. See Gen. Stat. p. 2073 38; Reeves v. Elmendorf, 9 Vr. 125. The privilege of preferential payment out of the contract price fund is purely statutory; it becomes complete only when the statutory conditions are fulfilled. If these are not complied with, the owner has no right to pay and the claimant no right to receive payment from him.

The first notice claimed to have been served on the owner, General Donnelly, is that of Warren, Balderston & Company, on December 29th, 1896, by a notice in the form of a letter of that date, signed and sent by the claimant to him. The claim is so lacking in the requisites prescribed by the third section of the Mechanics’ Lien act (now Gen. Stat. p. 2073 38) that it cannot operate to retain any of the fund. The statute requires that the claimant' shall make demand upon the contractor for payment of the money due him, and whenever he is refused he shall give notice in writing to the owner of such refusal and of the amount due him and so demanded. This letter of Warren, Balderston & Company neither states a refusal of payment by the contractor nor the amount demanded to be retained, nor is any proof made to support the claim. It must therefore be rejected.

The second notice claimed to have been served was that of Pullen & Wright, trading as Trenton Stair Building Company. This notice fails because of the same defects noted in the claim of Warren, Balderston & Company, and also because the notice is .that payment for future work then yet to be done would be demanded from General Donnelly when it was finished. The statute contemplates a notice given after the work has been •done, so that payment therefor might rightfully have been demanded. This claim is subsequently dealt with under another notice.

The third notice is claimed to have been served by William B. Crowther, Jr., on April 4th, 1897, by a letter sent by mail •to General Donnelly. The nearest Mr. Crowther came to notifying General Donnelly of the refusal required by the act is the statement in his note to him, in these words: “ I can’t seem to get a settlement from Mr. Johnes, the builder.” This phrase •does not show any reason why he could not get a settlement. There may have been other reasons than a refusal of payment. ■Crowther may never have asked for payment. This letter •certainly .does not give any notice to General Donnelly that Crowther had made a demand for payment upon Johnes and received a refusal from him, and must be rejected- as insufficient.

The next notice is claimed to have been served by Paul C. 'Taylor, by two letters sent by mail — one dated April 20th, 1897; the other, of a somewhat later date, has been lost by the •owner, General Donnelly. The first letter on the subject is set forth in the bill, and is dated April 20th, 1897, written by Taylor to General Donnelly, who states in his bill that he received it about April 21st, 1897. The letter is defective as a notice, because it gives no warning of any refusal of the contractor to pay upon demand made. The nearest phrase in this •note to the statutory requirement is in these words : “ ISTot having been paid in full as yet, thought I would drop you a line or so ■to inform you of the same.” In the second letter Mr. Taylor • enclosed his itemized bill, stating the amount due to be $34.95. When asked whether the letter containing that itemized bill communicated any statement to General Donnelly, he said he was not sure whether there was anything said. Then he ■stated that he thought he had told General Donnelly in his second -letter that he had demanded paymént of Johnes, and had by him been referred to General Donnelly. He declared he knew that he told Donnelly that Johnes had referred him •(Taylor) to Donnelly for payment, and thát he looked to the latter. These varying statements are the testimony of a witness in his own behalf, seeking to prove the contents of a lost letter, which he claims operated as a notice that he had been refused payment on demand. I am unable to give them much weight, in view of their uncertainty and the interest of the witness. The second letter to General Donnelly in all probability simply enclosed the itemized bill, as that was the only pccasion for writing it. The varying statements of the witness are quite too uncertain to support a finding that the lost letter contained a notice to Donnelly of a refusal by Johnes to pay on demand.

The next notice was served by Doyle & White, on April 26th, 1897, by a letter by mail, and notifies General Donnelly that Johnes had given them an order on him for $450 for lumber furnished at his house, asking him to retain that amount from money due, or to become due, to Johnes and to pay it to them, Doyle' & White. No reference whatever is made to any demand or refusal by Johnes to pay. The letter amounts to no more-than a notice that Johnes had given an order on Donnelly in favor of Doyle & White. This is in no sense such a notice as the statute requires, and this claim as such must be rejected. It is hereinafter considered as an equitable assignment.

The next notice was served on April 30th, 1897, by JacobHaberstick, by a letter by mail, to General Donnelly, dated April 28th, 1897. This letter, like the last, gives no notice of' any refusal by Johnes to pay on demand made. It simply states- the amount due me on your cottage at Spring Lake, N. J., is-$320. Please hold the amount for me,” with a postscript as follows: Mr. Johnes requested me to protect my claim.” This letter is wholly insufficient to satisfy the requirement of the statute. Like the others, it gives no notice of any refusal or demand made upon the contractor for payment.

.All of the above so-called notices were, in fact, letters sent by mail in ordinary correspondence for the collection of money due, and in none of them is there any attempt to give'notice of any refusal of Johnes to pay on demand made. At the time these letters were written there was no purpose that they should be statutory notices. Although they were in the style of business letters, yet if the essential requirements of the statute did, in fact, appear in such correspondence received by General Donnelly, the mere form of their expression would not have prevented the letters from operating as statutory notices. ■ But they all lack these requirements, not only in form but in substance. .The claimants are now seeking to give to the correspondence an ■effect not contemplated by them when the letters were sent.

The next notice was served on General Donnelly, on the 30th day of April, 1897, by A. K. Leuckel & Company, for $760.23. This gives efficient notice to the owner of the amount of the debt due from Johnes for work and material done on the building in question, of demand made upon him for payment, and of his refusal, and the proofs made in behalf of these claimants .show that the above amount of $760.23 is due to them under the provisions of the statute. This claim of A. K. Leuckel ■& Company, being the first efficient notice, is the first to be paid in full out of the fund in court.

The next notice is that of Charles Pridham, received by General' Donnelly by mail, on May 13th, 1897, demanding that he retain $232 for work done and materials furnished. The notice served complies with all the requirements of the statute. The claimant, when testifying in proof of his claim, stated that his ■contract was by parol; that he had served his notice on May 13th, 1897, and in one part of his testimony he said that at that •time he had not entirely completed .the work. The claimant ■appears to be a truthful man, but is evidently unfamiliar with ■ the giving of testimony, and his statements are somewhat confused. He afterwards explained that there was some extra work •engaged, which he did, but that he had, in fact, completed his ■contract work before his notice was served; that the contractor acknowledged that he had more than finished it when he demanded his pay, and that the work which he did on the house after the original completion of his contract, was some finishing and retouching of the floor, done “gratis” to please Mrs. Donnelly. I think the proofs offered fairly sustain the notice, and that Mr. Pridham is entitled to the $232 demanded by his notice. This is the second efficient notice and proof, and is to be secondly paid from the fund.

The next notice claims to have been served by Paul C. Taylor,, on June 12th, 1897, for $34.95 for hardware. This is the same claim heretofore referred to as a letter received by General Donnelly, about April 21st, 1897. When that letter was received, General Donnelly requested Taylor to send him an itemized bill,, which he did about June 12th, 1897. This letter containing the itemized bill is not shown to have been any nearer to being a notification to the owner of a demand for payment from the contractor and his refusal to pay than was the first letter of April 20th, 1897. Mr. Taylor testifies that he is not able to-state clearly just what further he wrote, except that he told General Donnelly that he was by Johnes referred to him, and that he should look to him for payment of the bill. As stated above,, such correspondence stating merely that the claimant was referred to an owner for payment, is not a notification of a demand- and refusal.

The next claim is a notice served September 21st, 1897, by Pullen & Wright, trading as Trenton Stair Building Company,, for $195 for work and materials, &c. The notice served sufficiently complies with the statutory requirements, and the proofs-support it. This claim is entitled to be thirdly paid in full from-the fund in court.

The next is the claim of Jonathan G. Ely, under a notice-served October 4th, 1897, for $186.31, stated to be for wages. The notice conforms to the statutes. This claimant is a carpenter whose book was found not to be admissible because lacking in essential incidents necessary to make it evidence. The claimant appears, by the typewritten copy of his testimony, to have-varied in his statements of the total amount of the partial payments made to him. When stating his items of work, price and payments from his book, using it as a memorandum to refresh-his memory, he is probably more accurate than when attempting to recall the matter by his unaided memory. Taking this-part of his testimony as a guide, it shows that his account should be stated as follows :

One hundred and fourteen and one-quarter days’ work, at $2.75 per day................................................. $314 18
Deduct payment by Jolmes on account...................... 124 97
Actual balance due Jonathan Gr. Ely.................. $189 21

This sum, $189.21, was $2.90 more than he demanded. Thougli a demand for more than is due has been held to be fatal (Reeves v. Elmendorf, 9 Vr. 133), a demand for less would seem to work no injury to anyone but the claimant, who may be held to have waived the remainder due him. Mr. Ely is an illiterate man, and evidently made an error in his calculation in presenting his claim for a less sum than was due him. As this mistake led only to his own loss, his claim as made for the lesser sum, $186.31, should be admitted to payment. It is contended against its allowance, that Ely had a private sub-agreement with Johnes, the contractor, whereby he (Ely) became a partner in Johnes’ contract for building General Donnelly’s house. There appears to have been some talk of an agreement by which Ely should have part of Johnes’ profits in the building contract, if there were any.

The evidence is quite insufficient to show that there was any partnership and too uncertain to sustain any contract even for profit-sharing, as it appears there was neither perfected agreement between the parties nor arrangement as to how profits were to have been ascertained, nor what share either was to have received, nor any consideration for such an agreement. The profit-sharing seems to have been a discussed proposition rather than a contract. Moreover, it is expressly shown that there was a distinct-agreement between Johnes and Ely that the latter should receive $2.75 per day for his services. This claim of Jonathan G. Ely is entitled to be fourthly paid from the fund in court.

The next is the notice of Edward Ely, served October 4th, 1897, for $50, stated to be for wages due him for carpenter work. The notice is in conformity to the requirements of the statute, and the proof shows demand made and that there was a refusal to pay. This claimant also had an order given him by Johnes for the payment of this $50, which he presented to General Donnelly on May 1st, 1897. Under the supplement of 1895, above quoted, this order could only operate subject to such statutory notices as should be served. On October 4th, 1897, Edward Ely served the notice above referred to, which is effective. This claim is entitled to be fifthly paid from the fund.

The notices of these two claims of Jonathan G. Ely and Edward Ely, served upon the owner and set forth in the bill, allege that the amounts respectively demanded were due for wages earned as journeymen carpenters. The supplement of 1895 [Gen. Stat. p. 2075 43(7) provides that the claim of journeymen or laborers shall have priority and preference over employers of labor, contractors or materialmen for the payment of wages without reference to the date of the service of notices. To secure this special statutory preference the claimant must not only give the notice required by .the act, but when his claim is litigated, must prove by evidence that he is within the class of journeymen or laborers working for wages, to which the statute gives this preference. The notices served to retain, &c., for these two claims, sufficiently notify the owner that they are within this specially preferred class. But the proof offered to support the claims does not sufficiently show the claimants to have been as alleged in the notices, journeymen claiming payment of wages. The result is that while shown to be entitled to the position of workmen who have noticed in conformity to the act, these two parties have not proven themselves entitled to the special preference over employes, &c., given to those who are journeymen or laborers working.for wages, &c., by the forty-third section of the act. Gen. Stat. p. 2075. In this case this omission of proof happens to make no difference, as the fund is sufficiently large to pay in full all the workmen and materialmen who have served notices in conformity to the act.

The distribution of the fund in court as above directed stands at this stage as follows:

52,166 64 Fund in court................
Deduct costs of this suit

Claims above allowed as noticed in conformity to the statute :

A. K. Leuckel & Co ............................................. §760 23
Charles Pridliam................................................... 232 00
Pullen & Wright....................................... 195 00
Jonathan G. Ely.................................... (........ 186 31
Edward Ely........................................................ 50 00

The foregoing are the only notices which appear to have con-formed to the requirements of the statute and to have become ■ complete liens on the fund by service before the maturity on October 30th, 1897, of the liability of the owner under the •contract, according to the construction of the supplement of 1895, as expounded by the court of appeals in Bayonne Building and Loan Association v. Williams, 43 Atl. Rep. 669.

The residue of the fund not necessary to pay these perfected liens became, on October 30th, 1897, free from all the inchoate liens under the Mechanics’ Lien act, and was thereafter subject -to such disposal as the contractor might make of it, and to the ■ enforcement of such other liens or charges as his creditors might have established upon it. These other charges, thus relieved of the superior statutory liens, are, as against this residue of the fund, enforceable in the order of their priority, which I find to •be as follows:

The first is the claim of Edward Eleinkauf, under an order for $60 given by Johnes, the contractor, upon General Donnelly, owner, and served upon him on April 1st, 1897. This ■ order operated by way of equitable assignment, subject to the statutory, inchoate and subsequently-perfected liens, which having been satisfied, this should be first paid out of the resi- ■ due of the fund.

The next in point of date is the claim of Benjamin A. Pearce, -receiver, under the supplementary proceedings on the judgment -of Charles Lewis against Otis F. Johnes, the contractor, and execution thereunder issued April 12th, 1897. This claim does not appear to be valid under the construction given to the statute authorizing such proceedings. In Willison v. Salmon, 18 Stew. Eq. 257, the court of appeals held that while the right of a judgment creditor to this relief against his debtor authorized-* the seizure of actually-existing debts, money to become due by the future performance of a building contract is not such an existing debt. It is a mere inchoate right, upon which the-statute does not operate. In that case, as in this, the supple-mentary proceedings were taken by a receiver to secure the final-installment of a building contract before the contract had been-performed. The court also held that if a different conclusion-had been reached the receiver’s claim could not have been superior to the noticing claimants under the lien law, because all the-receiver could acquire was the right of the contractor, who was-the debtor, in the judgment, and his right was subject to the-superior charge of the noticing lien claimants. Under the first ground stated in the case of Willison v. Salmon, the receiver-had no authority to attach the moneys not yet earned, and his-claim must be rejected.

Then follow a number of orders drawn by Johnes, the contractor, and served upon General Donnelly, the owner, each operating by way of equitable assignment and payable out of the residue of the fund, in the order of their priority, as follows:

O. E. Askew, for $65.80, served on April 17th, 1897. This-should be secondly paid.

Addison B. Johnes, for $45, served on April 20th, 1897. This-should be thirdly paid.

Richard H. Smith, for $60, served on April 23d, 1897. This-should be fourthly paid.

Charles McDermott, for $200, served on April 25th, 1897, This should be fifthly paid.

Doyle & White, for $450, served on April 26th, 1897. This-should be sixthly paid.

The liens of the above notices, served in conformity to the-requirements of the Mechanics’ Lien acts and the other equitable charges upon the residue above ascertained and established, are more than sufficient (with the costs of suit) to absorb-the whole of' the moneys paid into the court in the cause.

There are several claims which are excluded from sharing in the fund because the fund is insufficient to pay them. I do not deem it necessary to discuss these in detail.

A decree will be advised in accordance with the views above-expressed.


text:
    Lewis A. Reilly et al. v. The Penn Cordage Company.
    [Filed August 18th, 1899.]
    In an insolvency proceeding against a corporation, in order to vest- this court with jurisdiction to make a decree for the sale of the property of the insolvent company clear of prior encumbrances under the eighty-first section of the Corporation act, two jurisdictional facts must appear — first, that the prior encumbrances are disputed as to either legal or equitable rights asserted under them, and secondly, that the property is of such a character that it will materially deteriorate in value pending the litigation.
    On petition of receiver for an order to sell clear of encumbrances, and petition, of prior encumbrancer for leave to foreclose, &c., proofs, &c.
    The defendant company has been decreed to be insolvent, a receiver has been appointed, who has qualified and entered upon the performance of his duties.
    The property, which has come into his possession and ownership as receiver, consists of a lot of land near Beverly, in Burlington county, and buildings, engines, boilers, shafting, gearing and belting, and also machines on-the property, there in use for the making of rope, twine and cordage.
    When the property came to the receiver, it was subject to several classes of liens.

      First. Unpaid local taxes.

      Second. A mortgage made by the Penn Cordage Company to the Knickerbocker Trust'Company of New York, on February 1st, 1896, on its face purporting to cover all the real, personal and mixed property of the mortgagor then owned, and upon all personalty thereafter to be acquired, &c., to secure bonds of the mortgagor to the amount of $100,000 with interest, &c., recorded as a real estate mortgage only, on the 10th day of April,
    1896. This mortgage was neither executed, proven nor recorded as a chattel mortgage.

      Third. A mortgage made by the Penn Cordage Company to Constantine P. Ealli, to secure its bond for $50,000 and interest, purporting to cover the company’s land, improvements, franchises and income, and all real, personal and mixed property then owned by the mortgagor, recorded October 12th, 1897, as a real estate mortgage only, and assigned on October 5th,
    1897, by Ealli to the Guarantor Finance Company of Philadelphia. The last-named mortgage was not executed, proven or recorded as a chattel mortgage. The debt secured by it is disputed, and when proven by the Guarantor Finance Company before the receiver was by him disallowed and rejected, and an appeal has been taken. .

      Fourth. Numerous judgments recorded and entered in the supreme court and in the Burlington county courts against the Penn Cordage Company, the earliest on the 11th day of October, 1897, and the latest on the 1st day of December, 1897. Under all these judgments levies were made upon all the property of the Penn Cordage Company previous to the appointment of the receiver.
    After the receiver had for some time been managing the affairs of the insolvent company, looking to the liquidation of its debts by the disposition of its property, he instituted an inquiry as to the property of the insolvent company to ascertain what portions of it were real estate covered by the real estate mortgage, and what personal property not affixed to the freehold. Pursuing this examinátion, the receiver inspected the property and made a division of the personalty from the realty, by lists and schedules, naming each piece of personal property and declaring all the remainder to be part of the realty. He then filed his petition setting forth the above-stated facts, alleging that he is advised that the said real and personal property cannot be sold subject to the liens thereon, because the bidders would not be able to determine what title they would get, or what valid lien the same might be subject to, and that for this reason both the real'and personal should be held by the direction of this court, free of all liens, and the .money should be paid into this court subject to distribution by the decree of this court after the validity and priority of the several liens thereon shall have been determined, and praying that his determination as to what constituted the realty and what the personalty may be ratified; that the personalty may be sold free from the liens of the judgments and executions, and the purchase-money be paid into this court, to abide its further order, and that the real estate and its appurtenances be likewise sold clear of all liens, and the purchase-money be brought into this court, and that the validity of the mortgages and claims of creditors, may be here determined and the purchase-money distributed as equity may require.
    On this petition an order was allowed upon the mortgage-holders, and judgment and other creditors who had proved claims, that they show cause why the prayer of the receiver’s petition should not be granted. Under this order all the parties representing each of the above-stated interests appeared and proof has been taken.
    While the receiver’s petition for an order to sell clear of the liens of the mortgages and levies was pending, the Knickerbocker Trust Company of New York, trustee for the first-mortgage bondholders, filed its petition in this court in this cause, showing a default in the payment of the moneys due on its mortgage, alleging that it was about to foreclose, and praying leave to make the receiver a party defendant. This petition and that of the receiver above referred to were directed to be heard at the same time, and counsel for all the parties interested consented and have been heard.

      Mr. James E. Howell, for the receiver.

      Mr. Eugene Stevenson, for the Knickerbocker Trust Company, first mortgagee.

      Mr. Lawrence (of New York), for the bondholders under the Knickerbocker Trust Company.

      Mr. Joseph H. Gasldll, for the Pennsylvania Railroad Company, judgment creditor.

      Mr. Charles V. D. Joline, for Fries and others, judgment •creditors.

      Mr. William H. Carson, for the second mortgagee.
   Grey, V. C.

These two matters, by consent of counsel and for their convenience, have been heard together.

The one, the petition of the receiver of the Penn Cordage ■Company, alleging that the company was at the time of the appointment of the receiver seized of both real and personal property encumbered by mortgages, judgments and executions and tax liens; that the validity and extent of the liens of the mortgagees and judgment and execution creditors is in dispute, and asking that his determination as to which of said property is realty and which personalty may be ratified and confirmed, and that the property so designated as realty and personalty may be separately sold, each free from the lien aforesaid, and the purchase-money may be brought into court to be distributed among the parties entitled thereto, as justice and equity may require.

The other matter presented is the petition of -the Knickerbocker Trust Company of New York, trustee mortgagee, holding a mortgage which, upon its 'face, appears to be a lien upon all the real and personal property of the insolvent company, but which has not been recorded in the place of record of a chattel •mortgage, according to the directions of the Chattel Mortgage -statute The Knickerbocker Trust Company prays that it may .be permitted to foreclose the mortgage against the receiver, .making him a party defendant in its proposed suit.

The receiver contends that the situation of the property of the •insolvent corporation is such that he may rightfully invite this • court to make order that he may sell all the property of the insolvent corporation, clear of encumbrances, for the best price •.that can be obtained, and pay the proceeds thereof into this •court, to be disposed of as the rights of the parties in interest may require.

The only authority of this court in case of an insolvent corporation to order such a sale, clear of liens and encumbrances •charged upon the property before jurisdiction over it was assumed by this court, is conferred by section 81 of the General .•Corporation act. P. L. of 1896 p. 303. The court of appeals has declared, in the case of Randolph v. Larned, 12 C. E. Gr. 560, that the power of this court to order such a sale, clear of prior encumbrances, depends upon the existence of the two prerequisites specified in that statute — first, the legality of the prioriliens must be brought in question, and secondly, the properly must be of a character materially to deteriorate in value pending the litigation. The court declared that the statute should •receive a liberal construction, and that the dispute bringing into ..question the legality of the liens was not to be limited to an objection to the validity of the mortgage itself, but might exist •by reason of disputes touching the extent of the lien created by •it, its relative priority to other encumbrances, or other equities raising substantial differences between the parties, the effect of •which might lead to extended litigation. If these conditions do not exist, the mischief which the statute is intended to correct •does not threaten, and the remedy which the statute applies is not needed.

The legislature did not intend that this statute should be used as an excuse to deprive preceding encumbrancers of- their right .(subject to such order of this court as might preserve the property taken into its custody) to use by foreclosure or other proceedings the remedies which secured them by their contracts the-power to take the initiative steps, and to control the time, place- and circumstances when, where and under which the property mortgaged should be disposed of. This privilege, in many cases,-, may have had a great influence in inducing the making of the-contract, and may have added largely to the value of the mortgage security as an investment. It is only when the two jurisdictional facts of disputed prior encumbrances, and probability of deterioration in value of the property, both exist, that this court is justified in depriving the holder of the prior encumbrance of his right to enforce at his option, the remedy secured him by his contract.

Proceeding to inquire whether the present application of the-receiver shows the existence of these two conditions, it is alleged that the legality of the prior mortgage, held by the Knickerbocker Trust Company, is brought in question. The legality of that mortgage as a duly-executed encumbrance, made in good faith and duly recorded as a real estate mortgage, is not attacked. The grounds on which it is questioned are, first,. that this mortgage appears, by its words of conveyance and its-description of property, to be an encumbrance not only on the-real estate but also on the personal property of the insolvent company, when in fact it lacks all the statutory requisites of a-chattel mortgage. To this it is well answered that this mortgage also shows on its face that it was not recorded as a chattel mortgage, in accordance with the requirements of the Chattel Mortgage acts, and that no claim whatever is made under it as-a chattel mortgage; in short, that its invalidity as a chattel mortgage is too plain to be made even the subject of disputation. ■ It is claimed, secondly, that, taking this mortgage.to be-only a real estate mortgage, yet the extent of its lien upon the property of the insolvent company is brought into question because the trustee mortgagee and the receiver and the creditors are in dispute whether a number of articles, claimed by the receiver and creditors to be personal property and not subject to the lien of the trust mortgage, are in fact real estate and included in the lien of that mortgage. The court of appeals in Randolph v. Larned, ubi supra, declared that in ascertaining the first jurisdictional fact — whether the legality of the prior encumbrance was brought in question — the court should not limit itself to an ascertainment whether there was a dispute concerning only legal objections to the validity of the prior mortgage, but should exercise the remedies of the act as well where the questions of dispute related to differences touching equitable rights, and used as instances questions concerning the extent of the lien created by the prior mortgage and its relative priority as to other encumbrances. That in this matter the extent of the lien of the Knickerbocker Trust Company mortgage is brought in question is plainly apparent on the face of the petition of the receiver, the answer of that company, and is also shown in the proofs.

That the legality of the second mortgage, made by the insolvent company to Constantine Ralli, is brought in question is also exhibited whenever, in these insolvent proceedings, that mortgage is referred to, as it is alleged by all subsequently interested that it was neither made nor used in good faith, and a claim under it, filed with the receiver, has by him been rejected, and an appeal from his rejection has been taken.

. So far as the existence of the first jurisdictional fact — the bringing in question the legality of the prior encumbrances — is involved, it appears to be sufficiently established.

The sécond condition of fact necessary to the exercise of this statutory jurisdiction is that the property must be of a character materially to deteriorate in value pending the litigation. The existence of this second condition is just as essential to the use of this remedy as is the establishment of the first. Both are necessary pre-requisites to the exercise of the power. Randolph v. Larned, ubi supra.

There is no allegation in any proceeding in this cause that tfie property in question is of a character materially to deteriorate in value pending the litigation-. There is no evidence offered to show the existence of such a condition.- This court cannot ignore the fact that it has, on the application of the receiver, made several orders in this insolvent proceeding for the conduct of the business of the insolvent company, showing that its property is in present producing use for the purposes for which it was designed, and the trend of the testimony goes to show that there is no likelihood that within a period necessary for the foreclosure and judicial settlement of all the disputes and final realization upon the prior mortgage to the Knickerbocker Trust Company, the property would be subject to material deterioration in value.

In the absence of a showing that both the conditions exist which are prescribed by the statute, and declared by the court of appeals to be pre-requisites to the exercise of the power, the application .of the receiver seeking an order for sale of the property of the insolvent company, clear of prior encumbrances, under the power given by the eighty-first section of the Corporation act, must be refused, and the holders of those securities must be permitted to obtain their remedies by proceeding with a foreclosure.

When such a bill is filed by the Knickerbocker Trust' Company, first mortgagee, it must necessarily (in view of the presently-existing .disputes as to what portion of the property of the insolvent company is real estate and what personal) present for determination the claims of the mortgagees in such shape that all subsequent claimants will have, on a proper issue made, the opportunity to assert their rights and to have them once for all authoritatively determined. Such litigation in all probability will not be extended. This renders it unnecessary to consider the questions raised by the voluntary determination of the receiver as to what articles constitute part of the realty and what part of the personalty.

The proceedings in this cause indicate with considerable significance that the total value of the mortgaged real estate when realized by a sale will not equal the amount admitted to be due the Knickerbocker Trust Company on its first mortgage. It is not the purpose of the statute giving to this court the power to seize the property of insolvent companies and administer it (nor should it be the policy of this court) to take from prior mortgagees the disposal of the property of the insolvent company, where its value is, with relation to the prior mortgage, so little that in all probability nothing will be realized for the benefit of auy creditor other than the prior mortgagees. In such cases the risk, trouble and expense of sale should be borne by that class of creditors which, by reason of its express contract and advantageous position, will take all the benefit of the realization. There is no occasion for this court to prevent or to aid action by the prior mortgagees in such cases, because they have their remedy by their express contract. The unsecured creditors for whom the receiver should especially care would receive no benefit if the sale were made by him.

The prayer of the receiver’s petition should be refused. The trust company should be permitted -to make the receiver a party defendant to its foreclosure bill.