text:
    Fidelity Trust Company v. Madeline Baker et al.
    [Filed August 4th, 1900.]
    1. The negligence of a bank in crediting the account of a depositor with the amount of a forged check for a large sum, without inquiry as to the truth of the statements of the depositor when presenting same, will not prevent the bank from following its money into the hands of one who received it with notice of the fraud.
    2. Money, although procured by fraud or felony, cannot be followed into the hands of a person who has received it innocently in satisfaction of an existing debt.
    3. Certified checks, when used and accepted as money in payment of debts, must be treated as money and are entitled to the same protection.
    On bill, amended bill, answers, replication and proofs.

      Mr. Robert II. McCarter, for the complainant.

      Mr. Alfred F. Slcinner, for the defendants Baker.

      Mr. Gorra N.' Williams, for the defendant Thompson.
   Emery, V. C.

Complainant’s case depends upon its right to follow funds procured from it by the fraud and forgery of one of the defendants, and which were paid over by this defendant to or for the benefit of the other defendants. The relevant substantial facts appearing by the pleadings and proofs are as follows:

In March or April, 1897, the defendant Byram, an attorney and solicitor, received from the defendant Madeline Baker, as guardian, $5,500 for investment upon a first mortgage upon land of the defendant Thompson.

This property was then encumbered by two mortgages, a first mortgage for $1,300 and a second mortgage held by the defendant Plaut for $4,200, and the money advanced by Mrs. Baker upon the mortgage to be given by Thompson was, by agreement between Thompson and Mrs. Baker, to be used in paying off the two prior mortgages so that her mortgage would be a first mortgage. Byram was applied to by Thompson to procure a loan for the purpose of paying off the mortgages, and he applied to Mrs. Baker, for whom he had acted as attorney in several matters. Byram acted for both Thompson and Mrs. Baker, no other solicitor being employed, and he was relied on by both parties to see that the prior mortgages were paid, and that the necessary legal formalities were complied with. Thompson gave the bond and mortgage for $5,500 to Mrs. Baker, which were duly recorded, and upon the execution of the bond and mortgage, which were left in Byram’s hands, the money was paid to Byram by Mrs. Baker for the purpose of paying off the prior mortgages. The $1,300 mortgage was so paid off at the time and an assignment by the mortgagee to Mrs. Baker was executed and delivered to Byram, who, however, did not inform Mrs. Baker of the assignment, and it remained in his possession without her knowing of it until October, 1898. Byram also paid off about the time of procuring the money from Mrs. Baker, $2,000 of the Plaut mortgage, informing Mr. Weeks, the attorney of Mrs. Plaut, to whom he paid the money, that his client, Mr. Thompson, was not able to pay off the whole mortgage as he (Byram.) had previously notified Mr. Weeks he would do. Until October 26th, 1898, both Mrs. Baker and Thompson supposed the entire amount of the Plaut mortgage had been paid with the money advanced by Mrs. Baker, and that the Baker mortgage was a first mortgage. Uo special inquiries, however, were made of Byram by either Mrs. Baker or Thompson as to the actual payment or cancellation of the prior mortgages, each of them relying upon Byram, in whom they had confidence, to protect- their rights in this respect. Byram himself paid the interest on the Plaut mortgage to Mr. Weeks after April, 1897. Thompson, subsequent to the execution of the Baker mortgage, paid interest on this mortgage only, one payment being made to Byram for Mrs. Baker, and the other (by Mr. Baker’s subsequent directions) to Mrs. Baker herself. Byram misappropriated the remaining $2,200 received from Mrs. Baker in March, 1897, without her knowledge that he had done so, and on October 24th, 1898, Byram, by fraud and the delivery of a forged check or draft, procured a deposit credit of $15,000 from complainant, against which he was allowed to have his checks certified, among others a check for the money now in question for $2,255, dated October 25th, 1898, and payable to the order of William R. Weeks, attorney, when it was certified. On the same day- — October 25th, 1898 — Byram enclosed this check in a letter to Mr. Weeks who was the attorney for Mrs. Plaut, as a payment of the balance due on her mortgage on Thompson’s property, and in the letter requested him to receipt payment in full on the mortgage and have it canceled of record, and then deliver it to Mrs. Baker. Upon the receipt of the check on the morning of the 26th, Mr. Weeks, as attorney of Mrs. Plaut, endorsed the mortgage as paid and wrote on it an authority to the register to cancel, but, considering that the cancellation was a matter for Mr. Baker to attend to, rather than himself, notified Mr. Baker at once to call at his office for the papers. Mr. Baker did so, was then first informed of the payment by Byram and its purpose and received the bond and mortgage from Mr. Weeks on the, 26th of October, but withheld the cancellation until he could procure information in reference to the matter from Mr. Byram or Mr. Thompson. Subsequent to Mr. Baker’s receipt of the mortgage, and on the same da3q the certified cheek was presented for pa3unent by Mr. Weeks on his behalf, but complainant having learned of the forger, payment was refused for that reason given. After this refusal Mr. TJzal McCarter, the president of the complainant Compaq, had an interview with Mr. Baker in which he notified Mr. Baker that the check had been obtained by the fraud and forgery of Byram, and after an interview, the accounts of which are very contradictor, procured a short delay in the cancellation of the mortgage. The certified check was duly paid on the morning of the 27th, and the bill was subsequently filed to restrain the cancellation of the Plaut mortgage and to compel repayment by Mrs. Plaut or to reinstate the Plaut mortgage as an existing security on defendant Thompson's lands prior to the Baker mortgage, and subrogate complainant to its benefit, or for such other relief as complainant may be entitled to. On the hearing the validity of the payment to Mr. Weeks for the defendant Plaut is not contested by complainant, nor is it claimed that Mrs. Plaut can be held liable for the repayment of the money. In view of the settled rules applicable to the ease, such claim could have no foundation. Money, although procured by fraud or felony, cannot be followed into the hands of a person who has received it innocently in satisfaction of an existing debt. This rule is based not upon the ground that the payment of an‘antecedent debt is a valuable consideration which will cut off the equities of third parties, but upon rules of public policy relating to money and currency, enforced for the prevention of the confusion and uncertainty which would inevitably result if a creditor, who received money in payment of a debt in due course of business and without notice, was subject to the risk of accounting therefor to a third person, who might be able to show that the money was obtained from him by felony or fraud. Stephens v. Board of Education, 79 N. Y. 183 (1879); Justh v. National Bank of Commonwealth, 56 N. Y. 478; Hatch v. National Bank, 147 N. Y. 184, 191, 192; Nassau Bank v. National Bank of Newburgh, 159 N. Y. 456, 460.

In Thompson v. Clydesdale Bank, App. Cas. 282 (1893), Lord Hersehell says (at p. 287) : “It cannot, I think, be questioned that under ordinary circumstances a person, be he banker or other, who takes money from his debtor, in discharge-of a debt, is not bound to inquire into the manner in which the person so paying the debt acquired the money with which he paid it.” Lord Justice Bacon, in Taylor v. Blakelock, 32 Ch. D. 560 (at p. 570), says, “that by the common law of England,, payment of an existing debt has always been a payment for a valuable consideration, that the man who has a debt due to him, when he has been paid the debt, has converted the right to be paid into the actual possession of the money, and that in taking-payment he relinquishes right for the fruition of the right; that in such a case the transaction is completed, and to invalidate-that transaction would be to lull creditors into a false security and to unsettle business.” Certified checks, when used and accepted as money in payment of debts, must, upon the same grounds of public policy, be treated as payments of money and entitled to the same protection. Nassau Bank v. Broadway Bank, 54 Barb. 236; Justh v. National Bank, supra. And where, upon the payment of the debt, there is a transfer, satisfaction or release by the creditor of an interest in the lands held as security for the debt, he becomes in addition a purchaser for valuable consideration. This character of holder for valuable consideration has been extended to cases where property (other than money) held in trust by a trustee, or purchased by trust funds, has been transferred and accepted in satisfaction of a debt owing by the trustee, to persons to whom he was liable under another trust, and who had no notice of the misappropriation. Taylor v. Blakelock, 32 Ch. D. 560 (1865), and cases cited. In the present case, before notice to Mr. Weeks of airy fraud in connection with Byram's obtaining the check, the receipt had been endorsed upon the mortgage with a direction for cancellation, and the mortgage had been delivered to Mr. Baker for the benefit of Mrs. Baker. Having surrendered and discharged her • mortgage on the receipt of the check, without notice of any fraud, Mrs. Plaut was a holder for valúe of the check and entitled to the payment thereof, and to retain the money even if a certified check used for the payment of a debt be regarded not as money, but merely as negotiable paper.

These settled principles in relation to the receipt of money by a creditor in satisfaction of existing debts or obligations, are referred to and restated not because complainant's counsel dispute either their validity or effect so far as Mrs. Plaut is concerned, but because their application for the protection of cither Mrs. Baker or Mr. Thompson is disputed, and for the further reason that in the view which I take of the whole case, the question upon the solution of which the decision of the case depends, is, whether the payment to Mrs. Plaut by Byram must not, by reason of the peculiar facts in the ease, be considered also such a payment or discharge of an existing debt or obligation owing by Byram to Mrs. Baker and Thompson, as entitles them to protection of the same character, if they also had no notice of the fraud. It is important, therefore, in this view, to consider the basis of the legal rules which protect Mrs. Plaut in retaining the money paid to her. The special feature of the case is that the payment to Mrs. Plaut of her mortgage was the very duty or obligation which both Mrs. Baker and Thompson had previously contracted with Byram that he should perform, and for the performance of which each of them, in advance of the performance gave valuable consideration, Thompson by the mortgage to Mrs. Baker, and Mrs. Baker by advancing the money for the payment to Byram. Byram’s failure to pay the whole of the mortgage at once, and his misappropriation of portion of the money, made him a debtor to-Mrs. Baker for the misappropriation of her money, although he was such debtor without her knowledge. When Byram subsequently paid the Plaut mortgage, he discharged not only that mortgage, but also the duty or obligation to pay this mortgage which he contracted with Mrs. Baker upon valuable consideration previously received from her. That the payment by Byram was intended as a discharge of his obligation to Mrs. Baker sufficiently appears from his request to Mr. Weeks to cancel the Plaut mortgage and return it to Mr. Baker after cancellation, and as between Byram and- Mrs. Baker, the debt or obligation due to her from Byram to pay the Plaut mortgage was discharged upon Mr. Weeks’ receipt of the check as payment, and his endorsement of the mortgage as paid and for cancellation. And this discharge of his debt to Mrs. Baker, although without her knowledge when made, cannot affect, as between Byram and Mrs. Baker, the validity or effect of the payment as a discharge of the debt owing to Mrs. Baker, or the right of Mrs. Baker to treat it as a discharge. This was the rule applied in Nassau Bank v. National Bank of Newburgh, 159 N. Y. 456 (1899).

In this case one T. obtained money from a bank upon a check forged by him, in the name of one of its depositors, and the pajoment was charged to the depositor’s account as upon a genuine check. Afterward T., by forgery, procured from another bank its check, which he deposited in the first bank to the credit of the depositor, not of the bank, thereby replacing, through the medium of the depositor’s account, the funds stolen from the first bank, which was ignorant both of the original forgery and of the repayment.

Upon a suit brought by the second bank against the first it was held that the first bank was entitled to retain the check and the money thus procured from the second bank, because it was a payment of the debt in fact due to it, although without its knowledge, and that after this payment the debtor (being the forger) could not reclaim it, and that no interest in the moneys remained in him. The payment or discharge of Byram’sprevious debt or obligation to Mrs. Baker, having in fact occurred by Byram’s payment of the Plaut mortgage, for the purpose of discharging the obligation to Mrs. Baker, as well as to-Thompson, she is, as it seems to me, not only a creditor entitled to hold the benefit of pajcment as made in fact on her existing debt, but also a holder for valuable consideration.

The fact that this payment or discharge was made with money fraudulently or feloniously obtained from complainant cannot,, as it seems to me, change or disturb the effect of the payment of the money in discharge of a debt, either as to Mrs. Plaut or-as to Mrs. Baker, unless at the time of the pa3unent, or at. furthest, at the time of the receipt of the mortgage by Mr. Baker, he, or Mrs. Baker, through him, were charged with notice, actual or constructive, of the fraud of Byram. Actual-notice of Byram’s fraud in procuring the money from the complainant for the payment is claimed because at the time of the-receipt of the mortgage from Mr. Weeks, Mr. Baker had, it is-said, notice of Byram’s misconduct and fraud. The information then received by Mr. Baker that the Plaut mortgage had just been paid by Mr. Byram, more than a year after he had' received the money for that purpose, was notice of Byram’sirregular dealing with their money, which might require explanation from him, but it cannot be considered as notice either to Mr. Weeks or to Mr. Baker of a fraud or crime of Byram in procuring the money for the payment from the bank. Nothing had occurred at the time of the payment to Mr. Weeks, or at the time of the delivery and receipt of the Plaut mortgage, to arouse any suspicion that the certified check had been procured by fraud or forgery, so as to put them upon inquiry of the bank. Nor-did the complainant itself at that time have any such knowledge. I find nothing in the ease to charge Mr. Baker with actual notice of Byram’s fraud in procuring the check, by reason of any facts which came to his knowledge, or as to which he was put upon inquiry. Constructive notice of Byram’s fraud in procuring the money, is also claimed by reason of Bjcrani being Mrs. Baker’s solicitor, but this contention cannot prevail.

Byram was Mrs. Baker’s solicitor or agent for the purpose of paying over to Mrs. Plant, in satisfaction of her mortgage, the money furnished by Mrs. Baker, and was in no respect her solicitor or agent for the purpose of procuring money from other sources for that purpose. The payment made by Byram to Weeks was not of Mrs. Baker’s money, as her solicitor, but was of money which was paid and received as his own money, and he paid this money not as Mrs. Baker’s solicitor, but for himself to discharge his debt to her. Constructive notice to her through her solicitor can only extend to information received by Byram in the course of the transaction in which she employed him as her solicitor, which information the law presumes that the solicitor in the course of the business communicated to his client.

It would, as it seems to me, be an unauthorized and unjust extension of the rule in question to charge Mrs. Baker, merely by reason of the employment of a solicitor to pay over her money for a special purpose, with constructive knowledge that the solicitor subsequently misappropriated her money and afterwards fraudulently procured money from others to pay his debt to her. That Byram intended to repay the money secretly and without her knowledge sufficiently appears from his request to Mr. Weeks to cancel the mortgage and then send it to Mr. Baker.

Upon the whole case, therefore, I conclude that Mrs. Baker and Thompson, not having any notice, actual or constructive, of Byram’s fraud in procuring the certified check from complainant, are entitled to the benefit of the payment of the check as money in discharge of the Plant mortgage, upon two grounds — first, that it was a payment of money made by Byram in discharge of an existing debt owing by Byram to them, and a payment of money which neither Bj'rarn nor the complainant, from whom the money was fraudulently procured, can rescind nor revoke; and second, that this payment of the mortgage being made by .Byram upon the consideration of money previously advanced to Byram expressly for that purpose by Mrs. Baker, on Thompson’s mortgage, they are holders for valuable consideration of the' premises released from the Plaut mortgage, and this mortgage cannot be reinstated as a prior subsisting mortgage to their detriment.

Other questions were raised in the cause, one as to the negligence of the complainant in allowing Byram’s account to be credited with the amount of the forged check without inquiry as to the truth of his statements, and another as to the negligence of Mrs. Baker and Thompson in not employing different solicitors, and in their subsequent conduct in failing to see that the Plaut mortgage was paid and canceled of record.

I find that neither of these claims have been established as matters of fact, and that the negligence of either party, in the respect charged, is wholly irrelevant to the present case. The •complainant’s case is based on its equitable right to follow its money procured by fraud and crime, and its negligence or carelessness in parting with its money could not deprive it of its title to the money, or give title to the money to the frauddoer or to a recipient who did not receive it innocently for a valuable consideration, or as money received in payment of an existing debt. And on the other hand, defendants’ case is based on their ■right to retain and hold the benefit of a payment made for their benefit and in discharge of a duty owing to them, and their negligence in relying upon Byram, if any existed, was not in any legal 'sense the cause of complainant’s loss. Nor was the. complainant’s act which was the direct cause of its present loss, viz., the certification of Byram’s cheek, induced by any reliance on any act or omission of the defendants. The case presented is simply one where both complainant and defendants have been defrauded by Byram, a trusted attorney, who has fraudulently obtained money from the complainant, a part of which he has used to repay and restore a previous misappropriation of defendants’ money.

The bill will be dismissed, with costs.


source: Caselaw Access Project

author: Emery, V. C.

license: Public Domain

text:
    George H. Clowes v. Charles Miller et al.
    [Filed October 11th, 1900.]
    1. Complainant and the administrator of his deceased partner organized a corporation to continue the partnership business under the partnership name, and agreed that complainant should have an option of purchasing certain preferred stock on or before January 1st, 1901, and that such stock could be transferred on consent of both parties. The. administrator, with consent of complainant, transferred the stock to defendant, subject to complainant’s option to purchase it. The directors of the corporation called a meeting to change the name of the corporation, and complainant filed a bill to restrain defendant from voting such preferred stock, on the ground that the change of name was being made to affect the value of the stock and prevent him from .exercising his option. — Held, that complainant was not entitled to an' injunction, since he could protect his interest by exercising his option to purchase.
    2. Where complainant and It. organized a corporation, and by agreement placed certain shares of stock in the hands of a trustee until divided between them, It. to have the right to direct the vote of such stock until the division, and R. transferred his interest, with complainant’s consent, to defendant, the' trustee, after such transfer, had an absolute right to vote the stock as a necessary incident to its legal ownership, and such agreement was valid, and not objectionable as contrary to public policy; but such agreement did not give R. the right to direct the vote of the stock after he had transferred his interest, since an irrevocable power to direct the vote of corporate stock cannot be vested in a person who has no interest in it, and who does not represent persons who are interested; but such transfer did not confer on defendant the right to" direct the vote of the stock, since the privilege was personal to- R.
    3. In such a case complainant was entitled to an injunction to' restrain defendant from directing the vote of the stock, since by its transfer to defendant the absolute right to vote it passed to the trustee.
    4. R., by consent of complainant, having transferred his interest to defendant before the date set for division, such transfer did not entitle complainant to a division of the stock on the ground that the trust had expired by limitation.
    On application for preliminary injunction heard on bill and affidavits and answering affidavits.

      Complainant and one Edward E. Randolph, who died in December, 1898, had from 1886 carried on as partners a manufacturing business in Waterbury, Connecticut. The business was conducted under the firm name of Randolph & Clowes, and after the death of Randolph, the complainant, as surviving partner, continued the business under the same name, until the transfer of the assets, business and good will of the firm, on or about August 1st, 1899, to a company organized under the laws of this state by the complainant and Obadiah Randolph, the administrator of the deceased partner, for the purpose of taking over the property, and continuing the business of the firm. The corporate name adopted was “The- Randolph-Clowes Com.pam''.”
    At the time of the transfer the firm owed to creditors other ■than the deceased partner, Randolph, about $300,000, nearly all of which was incurred before Randolph’s death, and Randolph, who had originally contributed the entire money capital of the firm ($75,000) was a creditor for further money advanced to the extent of nearly $500,000, besides a claim for interest thereon amounting to $375,000. The arrangement for transfer of the assets of the firm made between complainant and the administrator, included a provision for the issue of stock in the amount of $800,000 in payment, and an ultimate division of the stock, which should also be a settlement of any claim of the administrator against the complainant, and it also included a transfer to the new company of the stock and assets of the Calcium King Lamp Company, a company owned or controlled by the complainant alone, but which was indebted to the firm for a large sum. The formal proceeding adopted for the purpose of making lire sale was a written proposal or. offer to sell made by the complainant individually and' as surviving partner, to which offer the administrator annexed his consent. This offer was dated July 31st, 1899, and was accepted by the company on the same date. On August 1st, 1899, the day following the proposal to sell and its acceptance, and before the issuance of the stock to be received in payment, complainant and the administrator executed an agreement in reference to the disposi-' tion of the stock to be issued (being $400,000 preferred and $400,000 common stock), by which it was provided that three thousand seven hundred shares of the preferred stock was to be issued to the administrator, and to Clowes, the complainant, or to his order, three hundred shares of preferred stock and one thousand two hundred and fifty shares of the common stock. The remaining two thousand seven hundred and fifty shares of the common stock were by the agreement,
    “to be issued to the Corporation Trust Company of New Jersey, as trustee, which stock is to be held by the said Corporation Trust Company as trustee, until January 1st, 1901, unless sooner disposed of by the consent of both parties hereto, or their legal representatives, and said stock so held in trust is to be voted on at all elections or other meetings, as directed by the administrator until that date.”
    By the agreement the administrator also agreed to sell to the complainant, or to such persons as he might procure to purchase and pay for the same, the preferred stock issued to the administrator for $300,000, provided the sum should be paid on or before May 1st, 1900, the administrator agreeing to deliver five shares of stock (par value, $100) for every $400 paid him, and that if the complainant did not purchase or pay for all of such stock by May 1st, 1900, the administrator would sell the preferred stock then remaining in his hands to Clowes, or such persons as he should procure to purchase the same, at any time before January 1st, 1901, for ten per cent, additional.
    As to the two thousand seven hundred and fifty shares of cranmon stock to be issued to the trust company, to be held until January 1st, 1901 (the time of expiration of complainant’s options), it was further provided that
    “if the preferred stock issued to the' administrator is sold and paid for according to the terms of this agreement before January 1st, 1901, the 2,750 shares of the common stock are to be transferred to the said Clowes, and if the said administrator’s preferred stock is not so sold and paid for on or before January 1st, 1901, there are to be transferred by the said Corporation Trust Company, as trustee, to the said Clowes, or his legal representatives, 1,875 of the said shares, and the remaining 875 of the said shares are to be transferred by the said Corporation Trust Company as trustee, to the said administrator, his successors or assigns.”
    On August 8th, 1899, complainant individually and as surviving partner, and the administrator, united in a written request and directions to the company, that the stock issued in payment for the property transferred should in the first instance be issued three thousand seven hundred preferred stock to the administrator, two hundred and fifty preferred stock to Charles Miller, fifty preferred stock to one Goss, one thousand two hundred and fifty shares of common stock to the complainant, and two thousand seven hundred and fifty shares of common stock “to the Corporation Trust Company of New Jersey, as trustee/' and the stock was so issued. On September 5th, 1899, a tripartite agreement was made between the company, the administrator and the defendant Miller, by which Miller agreed to advance to the company $300,000 for the purpose of paying the indebtedness of the firm which the company had assumed, the sum so advanced to be secured by a mortgage upon the property of the' company, and also to pay to the administrator for
    “his 3,700 shares of preferred stock and his interest in the 2,750 shares of common stock held by the trust company, the sum of $100,000, taking said stock subject to all the conditions of the agreement dated August 1st, 1899, between Clowes and the administrator (a copy of which was annexed), $40,000 to be paid in sixty days, $30,000 in four months, and $30,000 in six months from date, evidenced by notes, upon the delivery of which notes the administrator agrees to deliver the 3,700 shares indorsed in blank, and an assignment of all the right, title and interest of the administrator in the 2,750 shares of common stock, the 3,700 shares to be pledged as collateral for the notes.”
    The three thousand seven hundred shares of preferred stock issued to the administrator have been delivered by him to Miller and transferred on the books of the company to the defendant Charles Miller, who is also the owner of two hundred and forty-nine shares additional of preferred stock and one share of common stock.- The directors of the company, seven in number, and including the defendant Miller and the complainant, subsequently took the initial steps looking to a change of the name of the company, under the twenty-seventh section of the Corporation act (Rev. of 1896; P. L. of 1896 p. 285), and on February 13th, 1900, the directors adopted a resolution to change the name of the corporation from the Eandolph-Clowes Company to' the Connecticut Brass Company, or some other name, and called a meeting of the stockholders to vote upon the change of name. The statute provides that such .change may be made upon the vote and written assent in person or by proxy of two-thirds in interest of each class of stockholders having voting powers. Complainant’s bill alleges that the name of the company is a valuable asset of its business, which will be materially injured by the change, and that the object of the change is to affect the value of the stock so as to prevent his exercise of his option to purchase the preferred stock and to render the common stock valueless.
    Complainant is now the owner of one thousand and ninety-five shares of the common stock and claims that under the agree-! ment of August 1st, 1899, he is also the owner of at least one thousand eight hundred and seventy-five shares of the common, stock, which is to be delivered on January 1st, 1901, if the options to purchase the preferred stock are not exercised, and that these shares together constitute more than one-third of the common stock.
    The Corporation Trust Company, which is made defendant as trustee, intends, as is alleged in the bill, to vote at the stockholders’ meeting for the change of name upon the direction of the defendant Miller, who intends to so direct. An injunction is prayed restraining the trust company, until January 1st, 1901, from voting on the two thousand seven hundred and fifty, shares to change the corporate name, and also until the same time to restrain the defendant Miller from voting on the preferred stock for such change. Defendants’ answering affidavits set up that by reason of the bad credit of the firm a change of, name is advisable for business reasons, and that the change is proposed solely in the interest of the company, and not for the purposes of injuring complainant. Yo answer was filed formally setting up defendant Miller’s claim in reference to his rights as assignee of the administrator to direct the vote of the trust company, but at the hearing this right was claimed, and the application should therefore be considered and disposed of as affecting such claim. íhe trust company does not appear on the application, although duly notified. The administrator is not a party to the suit. On the hearing the complainant also claims (1) that under the agreement the right to direct the voting by the trust company is personal to Randolph, the administrator, and cannot be exercised by his assignee, and (2) that by the administrator’s sale of his share or interest in the stock held in trust the administrator has dissolved the “voting pool,” and the trust company is bound to deliver to the complainant at once the one thousand eight hundred and seventy-five shares of the common stock. Upon the part of the defendant Miller it is claimed that the right to direct the vote upon all of the stock held in trust passed to Miller as his assignee, and that the change of name, being a matter of business management, the court will not interfere to control the Iona -fide exercise of the power of the stockholders and directors and substitute its own judgment therefor.

      Mr. Allan McDermott and Mr. Willard G. Fislc, for the complainant.

      Mr. Mahlon Pitney and Mr. Warren (of the New York bar), for the defendant Miller.
   Emery, V. C.

(after statement of facts).

The directors and stockholders of a corporation are expressly authorized by the statute to change the name of the corporation, and such change of name is ordinarily, if not always, a pure matter of internal business management, which they are entitled to control, and a subject upon which the court will not undertake to substitute its judgment for that of the directors and stockholders. The only basis for such interference on behalf of a stockholder would be, as it seems to me, the existence, under special circumstances, of a right, legal or equitable, in such stockholder, to the continuance of the existing name, together with such a threatened interference with such right as could be remedied only by the action of this court. No such right was expressly reserved to the complainant in the present case by the agreement which is the sole basis of his claim, nor can any such right be implied. The complainant having the right under the agreement to purchase the preferred stock at any time before Januarjq 1901, may, by such purchase, control the change of name, and in the absence of .any express provision of the contract qualifying the ordinary rights of the administrator or his assignee, as holder of the preferred stock pending the option, the court will not interfere to control the vendor’s ■exercise of such right. It certainly should not interfere where, •as here, the matter sought to be controlled by the decree of the court is a matter of business management in which the defendants are not clearly shown to be acting in bad faith.

The complainant is not, under these circumstances, entitled to the aid of this court to give him a control of the preferred .stock, pending his option to purchase, which is -not given him by the contract, and which he may at any time secure for himself by carrying out the contract of purchase. The application to enjoin Miller from voting on the preferred stock for a change •of name must therefore be denied. The principal question .argued was as to Miller’s right to direct the trust company to vote the entire stock held in trust in favor of such change.

The deposit in trust in this case was not simply a deposit for voting or “voting trust,” but was in substance a deposit in trust for a limited period made by two persons who, at the time of the deposit, had, by reason of their agreement, for sale, with- the •company, a joint undivided interest in the two thousand seven hundred and fifty shares of common stock to be issued by the •company.

The trust agreement provided for the ultimate division of the stock by the trustee between the parties so jointly interested, •on January 1st, 1901, in the proportion and the manner fixed by the agreement.

The acceptance of the stock for these purposes of ultimate •disposal by the trustee constituted a valid trust, and, in the absence of any provision in the trust agreement, the trust ■company, pending the execution of the trust, would have a voting power on the stock, which right it would be under obligations as trustee to exercise for the benefit of the cestuis que trustent, according to its own best judgment. And, so far as the trust agreement has not deprived the trust company of this power and obligation by a valid and continuing restriction, this power must still inhere in the trust company itself as a necessary incident to the legal ownership of the stock.

The provision of the agreement that the stock held in trust was to be voted at all elections and other meetings, as directed by the administrator, until January 1st, 1901, was, in view of the character of the entire transaction, as part of a transaction for the sale of the stock and a settlement of partnership affairs, a valid provision, and not objectionable on any grounds of public policy. Hey v. Dolphin, 36 N. Y. Sup. 627 (1895), and cases cited at p. 632; Chapman v. Bates, 46 Atl. Rep. 591 (Vice-Chancellor Pitney, 1900).

But, so far as the administrator’s personal right to direct the vote was concerned, the agreement could not be valid for the purpose of securing the control of the voting, on the trust stock to him personally, if he did not continue to be an owner of the stock or interested in the stock.

It is against the settled rules governing the control of corporations that an irrevocable power of 'voting dr directing the votes on stock should be vested in a person who is neither interested in the stock nor a representative of persons interested. White v. Thomas Inflatable Tire Co., 7 Dick. Ch. Rep. 178, and cases cited at pp. 183, 184 (Vice-Chancellor Pitney, 1893).

This agreement, therefore, so far as it expressly authorized Bandolph to direct the vote, is not valid for the purpose of continuing such a power of direction in Bandolph personally after the transfer of his entire interest in the stock of the company. And so far as the express provisions of the trust agreement extend to affect the right of voting inherent in the trust company by virtue of the legal ownership of the stock, it must be held that so far as Bandolph personally is concerned, it ceased to extend or operate upon his transfer of his entire interest in the stock, and that Bandolph has no longer the right to direct the vote. The question is whether Miller, as the assignee of all of Bandolph’s interests, has succeeded to this -right of Miller’s. I do not think he has. The common stock held in trust was, by the terms and method of the purchase from the company, owned by the complainant and the administrator jointly, and the deposit of this stock in trust was a joint act of deposit with a provision for ultimate division between them and a separation of their joint interest. Had the stock been issued to them jointly, the concurrence of both would have been necessary to a vote on the stock. 3 Thomp. Corp. Off. § 3871.

The provision giving Eandolph the direction of the trustee’s vote pending the trust was, in my judgment, and under all the circumstances of the case, intended as a personal authority to him pending the trust, and was not intended to be attached to the owner or owners of his interest in the eight hundred and seventy-five shares of the two thousand seven hundred and fifty deposited.

The privilege certainly is not connected with the ownership of the preferred stock, for this may be separated from the right to the common stock, and the inference of intention should be very clear in order to justify the conclusión that the agreement intended to confer on any owner or owners of eight hundred and seventy-five shares a right to direct a vote upon the whole two thousand seven hundred and'fifty which was given in terms only to Eandolph himself, and was not expressly extended to Ms assigns. My judgment is that the authority to direct the vote was personal to Eandolph, and that he having now by his sale incapacitated himself from giving the direction, the trust company itself, as the legal holder of the stock, has the right to vote the stock without being bound absolutely under the agreement by the direction of either the complainant or Miller, and it must exercise this right and power honestly and in its best judgment as trustee, giving such weight as in its judgment it is entitled to, to the fact'that'the complainant, the owner beneficially interested in the majority of the stock held in trust, is opposed to the change. '

Irrespective of the omission in the agreement of any express provisions as to the right to direct the trustee’s vote on the whole stock following the assignment of Eandolph’s interest alone in the minority of the stock, 'there are serious practical difficulties in the way of holding that 'this right to direct the vote on the whole stock follows the assignment of' Eandolph’s eight hundred and seventy-five shares or his interest therein. These may be assigned to different holders, and if so, to whom does the right of direction of the trustee’s vote go; to the holders of the majority, or to all the holders jointly and not otherwise? Manifestly such contingencies should be provided for in the trust agreement itself, if the trustee’s legal right to vote is to be controlled thereby, and in many instances of trust agreements there are such express provisions where,'by the issuing of trust certificates and other machinery, the holders of certificates as the equitable owners of the stock, are to a certain extent given, as against the trustee, rights analogous to those of legal shareholders. These rights in the ultimate equitable owners to direct the voting as against the legal holder and trustees, are the result, however, of express provisions in the trust agreement or necessary implications from its provisions. But where, as here, there are-no provisions, either expressly or by necessary implication, continuing the control or direction of the voting powers over the whole stock in the assignee or assignees of the minority of the stock, the provision as to the direction of the vote must be held to be personal in the appointee, and to have now become unlawful for him to exercise, because he has no interest either in the stock to be voted or the preferred stock. The-power thus given to Randolph having failed, there is no provision in the agreement which will deprive the trustee of the power or relieve it from the obligation of voting on the stock as trustee.

As such trustee, however, the trust company, will not be entitled to vote merely as directed by Miller, and in view of Miller’s claim to this right to direct the vote, and the failure of the trust company to disclaim its intention to be directed by Miller, a preliminary injunction will be advised enjoining the trust company, until answer or further order, from voting on the trust stock under the direction of Miller, and enjoining Miller from giving such directions. The trust company, however, will not be enjoined from voting as trustee on the question of a change of name.

As to the contention of the complainant that, by reason of the administrator’s sa-le of his stock, the “voting pool” is destroyed and complainant is entitled at once to his one thousand eight hundred and seventy-five shares of stock, it must be observed that the trust agreement is not simply a deposit for the purpose of voting, but is a trust to hold the stock for ■ a limited period, to await the result of certain options of purchase, which affect the ultimate disposal of the stock. The transfer of the subject of sale (the preferred stock) by the administrator, put it out of his power personally to carry out the contract, and might, perhaps, give the vendee the right to consider the contract rescinded, and the trust terminated except for the division of the stock. Upon this point, however, I express no opinion, because, even if it be well taken, yet it was clearly in the option of the complainant to consider the contract of sale as in force, and to consider the right to purchase the preferred stock as continuing against the purchaser Miller, who purchased not only with notice of the agreement of sale, but expressly subject to its provisions. The bill in this case is filed on the basis of a continuance of the contract to purchase the preferred stock and its continuing validity against the defendant Miller, and the continuance of the trust in the trust company-to hold the stock pending the expiration of the option. On this bill, therefore, it cannot be held that the trust has been extinguished by the sale to Miller, or that the complainant, who has not treated the sale to Miller as a rescission, is now entitled to a division of the stock as on the expiration of the trust by limitation.

The case being one in which the defendant is entitled to a speedy hearing on appeal, the preliminary injunction, to the extent above indicated, will be directed on the condition that, if the defendant appeals within ten days after the order, complainant shall consent to have the appeal brought on for hearing at the next term of the court of errors and appeals.


author: Reed, V. C.

text:
    The Seitz Brewing Company v. Jane Ayres et al.
    [Filed May 15th, 1900.]
    1. Parol declarations made by lessors’ agent at the time of the execution of a guaranty for the payment of rent, to the effect that the lease would be altered by inserting a clause providing for the abatement of the rent specified in the lease and guaranty, is inadmissible in an action to reform the lease on the ground of mistake.
    2. Where an oral promise was made that a guaranty for the payment of rent should not be delivered until the lessors consented to the insertion of a clause in the lease for the reduction of rent, and it was delivered with nothing to indicate the existence of such condition, the guarantor was bound upon the facts shown in this case. — Held, that the evidence was insufficient to warrant a reformation of the lease on the ground of mistake.

      Mr. Irwin W. Schuliz, for the complainant.

      Mr. John II. Dahllce and Mr. William II. Morrow, for the defendants.
   Reed, V. C.

On December 31st, 1898, Jane Ayres and others, owners of a hotel property in Oxford, Warren county, New Jersey, made a lease to William R. Johnson of said property, for a period running from the date of the lease to April 1st, 1900, at a rental of $50 a month. This lease was made on that date to enable Mr. Johnson to apply for a license at the December Term- of the Warren county court of common pleas. On account of the failure to get the signatures to his application in time, it was not presented to the court at that term. On January 5 th the lease was re-executed by the lessor and lessee, the term being changed so as to begin on April 1st, 1899, instead of December 31st, 1898. This was the only change in the lease as originally drawn.

It was agreed that the complainant should become surety for the payment of the rent, and on January 9th it executed a guaranty that Mr. Johnson should pay the rent for which, the lease stipulated. It was expected that a license would be granted to Mr. Johnson at the April Term of the county court, but the court refused to grant the license. ••

The complainant claimed that at. the-time when it executed the guaranty, Mr. Dahlke, the attorney who had drawn the lease and who had gone to Easton to fhe:place of business of the complainant to procure the signature to the guaranty,“promised that the lease should be altered, .s,o. that the rent, in case no license should be granted, would be:$24.16 a month instead of $50.

Complainant by its- biljL asks that the lease may be reformed and the defendants enjoined from collecting more than $24.16 a month. ....

There seems to be. some contrariety in the testimony as to what took place at, the .interview between Mr. Dahlke and the officers of the complainant at the time of the execution of the guaranty. Mr. Dahlke sajrs that the. conversation was only in respect to the rent'fpj the month of April,-during which month the house would be without license, as the. court met late in April. He says he agreed to have the rent for that month reduced to $25. He says that nothing ;was said about an alteration in the lease to the effect that the-rent for the entire term, in case no license was granted, should be -reduced from $50 to $25 a month.

On the other hand, the two Messrs. Seitz who were present, and Mr. Johnson, the lessee, swore with more or less positiveness, that the agreement applied to all the months in the term.

I do not consider it necessary to discuss the weight of the testimony upon this point, for if it be conceded that the lease embodied a contract which the lessors and the lessee intended to enter into, then I do not perceive how any relief can be accorded to the surety, even if its witnesses correctly state the facts of that interview. If the promise of Mr. Dahlke was merely that the lease should be altered, i. that the effect of the guaranty should not be what the writing as executed purported, then the testimony would be incompetent because it varied-the terms of a written instrument. Wright v. Remington, 12 Vr. 48. And if the promise was that the guaranty should not he delivered until the lessors consented to the insertion of a clause for diminution of rent, nevertheless the paper having been delivered, with nothing to indicate the existence of such condition, the guarantors were bound. Ordinary v. Thatcher, 12 Vr. 403. If the promise discharged the guarantors their defence was adequate at law.

The complainant’s case must, in my judgment, rest upon its-right to have the original contract between the lessor and lessee-reformed. If Mr. Johnson had such right in the particular mentioned, then I think the complainant as surety has the right, to assert the same right. Aside from the evidential force of a letter written by Mr. Dahlke to Mr. Johnson under date of January 3d, there would be, in my judgment, no colorable case for reformation. The complainant’s case would depend solely upon the testimony of Mr. Johnson, the second time he was called to-the stand. He then said that he received a letter signed Jane Ayres, written by Mrs. MacMiller, saying that if license was not granted the rent should be $390. This letter he was unable to-produce at the trial, although he produced the letter of January 3d just mentioned, another letter of January 13th, and a postal card, which he says he kept in his pocket.

Mr. Johnson is contradicted by the testimony of Mrs. Ayres- and Mrs. MacMiller, and by the fact that he subsequently signed the lease as it is. Therefore I repeat that if it was not for the letter of January 3d, there would be no ground whatever for reformation. In the letter of January 3d, 1899, addressed by Mr. Dahlke to William K. Johnson, the former says:

“I received' a letter from Mrs. Ayres to-day in reference to the lease. X suppose they have talked over the matter with you on Monday, as they say the rent, in case you do not get the license, is to be $290, and they want the matter settled this week.”

This letter is of course very persuasive that Mr. Dahlke had' got from some source the information which he conveyed to Mr. Johnson. The letter itself is of course mere hearsay. ' But Mr. Dahlke swears that while he has no recollection of the facts, he-has no doubt that he communicated everything actually as it was to be done. While this letter is persuasive that Mr. Dahlke had received a communication to the effect that if the hotel was without license it would be rented for $290, the letter which he received is not in evidence. The three persons, one of whom must have written it if it came from a source which bound the lessors, have no recollection of writing such a letter, or of having ever agreed to rent the hotel property for less than $50 a month.

Then there are puzzling circumstances in respect to the transaction. The lease, without doubt, was originally written on December 31st, 1898. Mr. William H. Seitz, who went with Mr. Johnson to see about renting the.property, says that the lessors refused to rent for less than $50 a month. He says that he'told them that the property had no license, and they might not secure a license, and he asked them for a reduction in rent in case no license was granted, and they refused to agree to a reduction of rent in case no license was granted.

How, the court met on January 2d, and, as already remarked, by reason of the failure to get the application for the license signed, no application was presented. On January 3d — the next day — Mr. Dahlke appears to have written the letter in question. The lease was drawn up, as already remarked, providing for -$50 a month payment of rental. Mr. Seitz did not see the lessors again about the lease, nor does Mr. Johnson say he saw them again before January 3d. If the lessors wrote to Mr. Johnson and to Mr. Dahlke, they must have done so early on January 3d, or on the day the court sat. How, what induced them to change their mind so suddenly is not apparent.

Again, two days after Mr. Dahlke wrote this letter to Mr. Johnson, and while its contents must have been fresh in the minds of both Mr. Dahlke and Mr. Johnson, the original lease was re-executed, leaving the rental at $50 a month.

Then again, no one seems able to explain the meaning of the figures $290. Mr. Seitz said that this amount was not mentioned at the interview on January 9 th, when the guaranty was executed, and that the only sums mentioned were $25 and $50 & month.

Then again, Mr. Johnson, who was present at that interview and heard the conversation between the Messrs. Seitz and Mr. Dahlke respecting the reduction of rent, said nothing about the original agreement between him. and the lessors, that ‘the rent without license was to be $290. If Mr. Johnson had so recently received a letter from ’the lessors, it would have been natural, when.he heard Mr. Dahlke speaking of getting the lessors to provide for an abatement of the rent, in case no license was granted, for him to have said: “Why, it was agreed with me that there should be a reduction, and I have letters to that effect both from the lessors and Mr. Dahlke.”

Nor did Mr. Johnson mention the letter which he says he received from the lessors, until he was recalled to the stand the second time. Besides, he says he received a copy of the lease soon after — he thinks three days — after it was executed. He does not seem to have examined it to see whether the lease had been changed in the respect he swears it was to have been altered to conform to the verbal agreement.

But, notwithstanding these somewhat curious features of the case, it may be admitted that if the case turned upon the balancing of probabilities, it-would seem more than probable that a letter was written to Mr. Dahlke by some one of the lessors, the contents of which is represented by Mr. Dahlke’s letter, and that the failure to alter the original lease, upon its second execution, was a mistake. But it needs a degree of evidence stronger than probability to justify the court to reform an instrument to which parties have subscribed their names. The stability of written contracts is guarded by a wholesome rule which requires the clearest evidence of mistake to support a judicial alteration of what the parties themselves have put in writing. Graham v. Berryman, 4 C. E. Gr. 29; Burgin v. Giberson, 11 C. E. Gr. 72; Hendrickson v. Wallace, 4. Stew. Eq. 604; Henderson v. Stokes, 15 Stew. Eq. 586; 2 Pom. Eq. Jur. § 859, and cases cited.

The probative force of such testimony must be so convincing as to, in the language of some of the cases, leave no reasonable doubt of the terms of the verbal agreement or of the mistake of the facts which would justify its substitution for the written. Stockbridge Iron Co. v. Hudson River Iron Co., 102 Mass. 45; Hupsch v. Resch, 18 Stew. Eq. 657; 1 Dick. Ch. Rep. 609.

Tbe bill must be dismissed.


text:
    Harvey Edward Fisk, trustee, &c., v. Perrin Bartlett Fisk et al.
    [Filed May 21st, 1900.]
    1. Where a will provides that testator’s property shall be given to such persons as would be his heirs under» the statute of distribution, the clause will be construed to mean the testator’s next of kin, as technically there are no heirs under the statute of distribution.
    2. The statute of distribution was amended by act of March 22d, 1899, by omitting the restriction contained in the original act, that no representation should be admitted among collaterals after brothers’ and sisters’ children. Testator died before the statute was amended, but by the terms of his will the property was to pass to his next of kin when his wife died, which occurred after the amendment. His next of kin at that time were certain nephews and nieces, and descendants of deceased nephew and nieces. — Held, that the descendants of the deceased nephew and nieces were entitled to the shares which such nephew and nieces would have taken if living.
    3. Where property of decedent is to be distributed among his nephews and nieces, who are his next of kin, they all share alike, and not per stirpes, as representing their parents.
    On bill filed for tlie construction of the will of Jonathan Fisk, deceased.

      Mr. William M. Lanning, for the complainant.

      Mr. George E. Green, for the defendant Henry H. Clark & Company.

      Mr. James Willis Gleed, for the defendants C. S. G-leed and J. W. Gleed.
   Reed, V. C.

Jonathan Fisk died on December 5th, 1812. - He left a will dated January 28th, 1868, in which, after making certain bequests, he proceeded as follows:

“Fifth. It is my will and I do hereby give, devise and beqúeath unto my beloved wife, Mary A. Fisk, the income, rents and dividends of all the rest and residue of my estate whatsoever, and wheresoever it may be, for and during the full term of her natural life.
“Sixth. And at and after the decease of my said wife, then I give, devise and bequeath the said residue of my estate to such persons as would then be my heirs, at law, under the statute of distribution of the State of New Jersey.”

The testator left no children or issue.

■His widow died March 24th, 1899.

After her death the complainant was appointed trustee to-execute the testamentary trusts remaining to be executed. The estate of the testator consisted entirely of personal property. The question propounded is, among whom is this personal property to be distributed? It is observed that by the direction of the sixth clause of the will the residue is bequeathed to such persons as would be the heirs-at-law of the testator under the statute of distribution of this state then — that is, at the decease of the widow.

At the date of the death of Mary A. Fisk, there were living no ancestors and no descendants, no uncles or aunts, and no-brothers or sisters, either of the whole or of the half blood of Jonathan Fisk. His nearest kin were twenty-one nephews and nieces, the children of deceased brothers and sisters of the testator.

There were also twenty-five descendants of eight deceased nephews and nieces of Jonathan Fisk.

There were also two descendants, one of a deceased grandnephew and another of a deceased grand-niece of the testator.

It is to be first observed that there are technically no heirs-at-law under the statute of distribution. What is meant by the-use of these words in the sixth clause is the next of kin under' the statute of distribution.

Under our statute of distribution, as it stood previous to March 22d, 1899, it is entirely clear that the twenty-one nephews and nieces would have taken the residue to the entire exclusion of all the grand and great grand-nephews and nieces of the testator. By the statute as it then stood no representation among collaterals was permitted after brothers’ and sisters’ children. But the revised act of March 22d, 1899 (P. L. of 1899 p. 201), struck from the statute the prohibitive clause against representation among collaterals. The statute originally stood thus:

“Section 2. In case there be no children, nor any legal representative of them, then one moiety of the said estate shall be allotted to the widow of the said intestate, and the residue of the said estate shall be distributed equally to every of the next of kindred of the intestate, who are in equal degree, and those who represent them; provided, that no representation shall he admitted among collaterals after brothers’ and sisters’ children.
“Section 3. In case there be no widow, then all the said estate to be distributed equally to and among the children; and in case there be no child, then to the next of kindred in equal degree of or unto the intestate and their legal representatives as aforesaid, and in no other manner whatsoever.”

The revised act of 1899 left out the italicized words in the section as above displayed.

The purpose of the legislature in making this alteration cannot be doubted.

It is true, it seems to have been the practice of the ecclesiastical court to permit no representation among collaterals beyond the children of brothers and sisters, and the prohibitive clause in the original statute of 22 <& 28 Charles II., merely confirmed the previous practice. Yet the deliberate excision of the prohibition from our act by the legislature was well understood to be for the purpose of placing representation among collaterals upon the same footing as representation among lineals.

It is indisputable, therefore, that children of a deceased niece or nephew will divide the share of its parent, and the child or children of a deceased grand-niece and grand-nephew will take the share that its or their parent would have taken if alive.

It is mooted, however, whether all nephews and nieces take share and share alike, or whether each group of children of a deceased brother or sister take among them the share which its parents would have taken. In other words, whether they take per capita or per stirpes by representation.

They take per capita.

It is the doctrine under the statute of distribution that the claimants take per stirpes only when they stand in unequal

degrees, or claim by representation, and then the doctrine by representation is necessary. But when they stand in equal degree as three brothers, three grandchildren, three nephews, &c., they take per capita, or each an equal share; because, in this case, representation or taking per stirpes is not necessary to prevent the exclusion of those in a remoter degree. 2 Kent Com. 426; Wagner v. Sharp, 6 Stew. Eq. 520, and cases cited by Chancellor Eunyon and by the reporter.

The nephews and nieces, therefore, form a rank of kinsmen between whom and the testator there was none of nearer kin, and so take each an equal share of the property to be distributed. But a child or children of a deceased niece or nephew takes by representation the share the deceased parent would have taken if living; and as representation is now under the statute unlimited, the great grand-nephews and nieces, children of any deceased grand-nephew or niece, takes the share which its parent would have taken if living.

A decree will be advised in conformity with these views.


text:
    Rebecca H. Shreve et al. v. William A. MacCrellish.
    [Filed May 21st, 1900.]
    A testator gave a life estate in liis real estate to his wife, remainder in fee-simple to his son, with a limitation over in case the son should die before his mother, or under the age of twenty-one years, or without lawful issue. — Held, that the word “or” in the will should be read as meaning “and,” and, the son having attained the age of twenty-one years, the limitation over is defeated, and he has a vested remainder. In such case a deed of the property by the mother and son together conveys title in fee-simple, and complies with an agreement to convey such a title.

      Mr. John T. Bird, for the complainants.

      Messrs. Beasley & Wallcer, for the defendant.
   Reed, V. C.

This is a bill to compel the defendant, as a vendee, to specifically perform a contract between the parties to this suit, by which the defendant agreed to exchange a property of his for a property of the complainants. The contract required that a title in fee-simple should be conveyed to defendant, and he refused to make a conveyance of his property, upon the ground that the complainants have not a title in fee-simple to the property which they agreed to convey to him.

The sole question is whether the deed tendered by the complainants was one conveying a title in fee-simple.

The solution to this question is dependent upon the construction of the will of E. Mercer Shreve, whether the testator in that instrument intended to give his son Henry Wallace Shreve an indefeasible estate if he attained the age of twenty-one. If so,' he, having attained that age, he, with his mother, Eebecca H. Shreve, is capable of conveying a title in fee-simple.

The clause of the will upon which the complainants rest their claim that they have title, is as follows:

“I devise to my wife Rebecca H. Shreve in lieu of her dower in my lands, all iny real estate wheresoever situate and the policies of insurance thereon to have and to hold the same and enjoy all the rents, issues and profits thereof for and during the term of her natural life with remainder in fee simple to my son Henry Wallace Shreve — Provided nevertheless that in case my said son shall die before his mother or under the age of twenty one years, or without lawful issue, then my will is and I in such a case hereby devise all my real estate and policies of fire insurance thereon to my executors hereinafter named in trust nevertheless to pay over the rents, issues and profits thereof, after deducting all necessary expenses for repairs and charges, to my brother William I. Shreve and my sisters Mary Anna ITishe.r, and Sarah Matilda Wallace in equal shares .or parts; the children of any deceased sister taking the same share that their parent would have taken if living.”

The widow of the testator is still living.

On the part of the complainants it is claimed that the son, having attained the age of twenty-one years, is invested with the remainder in fee-simple. This result, it is insisted, springs from a construction which would read the words “or” as they occur in this clause of the will as meaning “and.” The clause would then read, “in ease my son shall die before his mother, and under the age of twenty-one years, and without lawful issue, then,” &c., I devise all my real estate to my executors in trust for the benefit of my brother and sisters.

It is entirely settled that if the contingency upon which property is limited over is dying before reaching the age of twenty-one years, or without issue, the words “or” will be read “and.” Both events must fail before the limitation over can take effect. If the first taker live until the age of twenty-one, or if he die before he attains the age of twenty-one, and yet leaves issue, the limitation over is defeated. This rule of construction is supported by innumerable eases, and has become a canon upon which innumerable titles rest. Holcomb v. Lake, 1 Dutch. 605. So if the contingency is upon death before any particular date, as upon attaining the age of twenty-five years or without leaving issue (Fairfield v. Morgan, 2 Bos. P. N. R. 38), the same construction will control.

There is therefore no question that the second “or” should be read “and.” This would leave the clause reading thus: “In case my son should die before his mother or under the age of twenty-one, and without issue, then I devise my real estate over,” &c.

But if the limitation over is in opposition to the clause read with the first disjunctive “or” unchanged, then the event may happen by the death of the son without issue either before his mother or before he arrives at his majority. This would still leave the title of the son indefeasible in case of his death without issue, before the death of his still-living mother.

If, however, the copulative “and” is substituted for this disjunctive “or,” then the limitation over is in opposition to the whole clause, and all the events must have occurred before it can take effect. Then, inasmuch as he cannot die before he attains the age of twenty-one, he having attained that age, the limitation over is already defeated, and the son has'a vested remainder.

In my judgment the latter is the correct construction of the clause.

If the word “or” were retained as expressive of the intent of the testator, this is what might have happened: had the mother died before the son attained his majority, and if he had thereafter died before he attained the age of twenty-one his estate would have been defeated, notwithstanding his mother’s death. Now it is perceived that the will in the first place gives to the son the estate immediately upon the death of the mother, for the devise is to her for her life and remainder to her son.

In the case of Miles v. Dyer, 8 Sim. 330, the testator gave the accumulated surplus of his estate to his wife during her life, and after her death directed his trustee to sell the property and divide the proceeds among his children, on their attaining the age of twenty-one. He then provided that in case all his children should die in the lifetime of his wife or under twenty-one, &c., leaving issue, then, after his wife’s death, to sell the property and divide the proceeds among several persons. It was held that “or” should be read “and,” and that the children having attained the age of twenty-one were absolutely entitled to the property, though their mother was still living.

In arriving at this conclusion, Yice-Chancellor Shadwell said: “Moreover, it would be inconsistent with a gift to the children, if I should hold that the property which is the subject of it was intended to go over in case the children should die in the lifetime of the wife; for the gift to the children is made to depend on their attaining twenty-one, whether they die in the lifetime of the wife or not.”

In that case the children did not come into possession of the property upon attaining twenty-one unless the widow was then dead, yet the court treated the direction as evidence of an intent that they should have the property when arriving at that age.

In the present case the direction is that upon the death of the widow, the child shall have the property; and to hold that thereafter it was liable to go over on his subsequent death before attaining his majority would be inconsistent with the devise.

In Bentley v. Meech, 25 Beav. 197, the residue of an estate was left in trust to executors to pay the proceeds thereof to the widow during her life, and on her death to make over to his son all the property upon his attaining the age of twenty-one. Then followed the limitation over in these words: “But if my son shall depart this life before my said widow or before said age of twenty-one years, then the property to go to my brother Charles/5 it was held that the word “or55 should be read “and.55

In the present ease, to each of the incidents upon which the limitation over is to take effect, namely, dying before twenty-one or dying before the widow, is added the condition “and dying without issue.55 As already remarked, it could not have been the intention of the testator that if he died before the widow, although under twenty-one, leaving issue, that the issue should be cut out.

To save the issue in such an event, it is essential to read the first “or55 as “and/5 and so reading it, it makes the estate of the son indefeasible upon his attaining the age of twenty-one. The intention of the testator was that when the widow should die, if before the son attaining the age of twenty-one, or when he attained the age of twenty-one in the lifetime of the widow, the fee in the first instance, and the remainder in the second instance, should be invested in him indefeasibly. ' •

I am of the opinion, therefore, that the mother and son together can make a title to the^ property in question in fee-simple.


text:
    John D. Bartine v. Abram Davis et al.
    [Filed June 5th, 1900.]
    A testator devised a share of his estate to his daughter, O., for lifer and after her death to her heirs, with a direction that, in case she died without issue, her share should be divided between his other two children, J. and E., “or their heirs.”' — Held, that the children of J. and E., on the death of their parents before 0., who died without issue, took her share per stvrpes and not per capita.

      On a bill for construction of a will.

      Mr. John D. Bartine, for the complainant.

      Messrs. Fluck & Parker, for the defendants.
   Reed, V. C.

The single question presented is whether the one-third portion of the estate of Josiah Davis, the testator, is divisible among the children of his two children, Josiah and Adeline, per capita or per stirpes; whether all the children of both Josiah and Adeline take equally or the children of Josiah take one-half of the said one-third portion and the children of Adeline take the other one-half of the said portion.

The clause in the will which calls for construction reads thus:

“I give and bequeath to my daughter Catherine the one third or one share during her natural life, and after her decease to her lawful heirs. And in case she shall have no lawful heirs, then her share to be divided between my other two children Josiah and Adeline or their heirs.”

Josiah and Adeline died before Catherine, he leaving eight children and she three children.

The share of Catherine amounted to $1,603.53. She died leaving no heirs.

In my judgment, the children of Josiah and Adeline take per stirpes.

The eases which established the rule of construction that, a gift to the children of several persons, whether it be to the children of A and B, or to the children of A and to the children of B, they take per capita, are not pertinent.

The bequest is not to the children of Josiah and Adeline, bulto Josiah and Adeline, or their heirs.

Whenever it appears that the gift to children is substitutional, they generally take by representation the share which their parent would have taken. 2 Jarm. Wills § 195.

Where the direction was that certain portion of an estate should be divided among the testator’s surviving brothers and sisters, and their issue, share and share alike, it was held that the issue took by substitution for their parents. Shailer v. Groves, 6 Hare 162; Burrell v. Baskerfield, 11 Beav. 525.

The bequest in the present case is to Josiah and Adeline, or their heirs.

The word “or” is a word of substitution. Congreve v. Palmer, 16 Beav. 435.

In the following cases gifts to two or more persons, or their issue or children, were held to be substitutional, and the issue or children took the deceased parents’ share. Price v. Lockley, 6 Beav. 180; Timins v. Stackhouse, 27 Beav. 434; Gowling v. Thompson, 19 L. T. (N. S.) 242; In re Sibley’s Trusts, L. R. 5 Ch. Div. 494.

In addition, as remarked by Chief-Justice Kirkpatrick in Roome v. Counter, 1 Halst. 134, the term “heir” carries with it the idea of representation.

I have no doubt that Catherine’s portion should be divided into two parts, one of which goes to the three children of Adeline in equal shares, and the other to the eight children of Josiah in equal shares.


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    George W. Miller, trustee, and Georgiana M. Johnson v. Edward S. Savage, receiver of the Johnson Railroad Signal Company.
    [Filed June 20th, 1900.]
    1. Where a mortgage, executed by an insolvent corporation to secure creditors, failed to convey a fee in the real estate, as intended, because of omission of words of inheritance by error of the draftsman, equity will reform the same, as ag'ainst a receiver appointed for such corporation after its execution, since the receiver took only the title of the corporation of its property at the time of his appointment, subject to all equitable liens.
    2. Equity will not refuse to reform a trust mortgage executed to secure creditors of an insolvent corporation because voluntary, since such a mortgage is not purely voluntary, in the sense of being a gift.

      Mr. Albert G. Wall, for the complainant.

      Mr. John Griffin and Mr. Patrick E. Gilhooly, for the defendant.
   Reed, V. C.

This is a suit brought by the complainant trustee to have reformed a mortgage given to him by the Johnson Railroad Signal Company, of which company the defendant is the receiver.

' The mortgage was made to secure debts then due by the mortgagor amounting to about $50,000. The mortgage covered real estate, and was made to George W. Miller and his successors in the said trust for the equal security of a number of creditors of the Johnson Railroad Signal Company. The corporation mortgagors were insolvent at the time of the execution of the mortgage, and subsequent to its execution were so declared, and the defending receiver was appointed. The mortgage as drawn failed to convey a fee in the real estate mortgage to the trustee and the trustee now asks that it be reformed by inserting words of inheritance in the place of and addition to the word “successors.”

It is entirely clear that if the suit was against the original debtor and mortgagor a reformation would be decreed, for it is transparent from the instrument itself, as well as from the circumstances attending its execution, that the parties intended to mortgage all the interests of the corporation, and that the use of the word “successors” was an error of the draftsman, who was an attorney of the State of Yew York, in which state a mortgage drawn with the same phraseology would convey a fee. All the circumstances in this ease bring it within the determination reached in the court of errors in the case of McMillan v. New York Water Proof Paper Co., 2 Stew. Eq. 610, and the subsequent case in the court of chancery of Bunker v. Anderson, 5 Stew. Eq. 36.

The important question is whether, assuming that the instrument would be reformed against the original party, the Johnson Railroad Signal Company, it will be reformed as against the receiver of that corporation.

It is urged that the influence which induced the execution of the mortgage, it being made to secure a wife’s debt, by the vote of the husband who was a director of the mortgagor, and to secure other debts by similar influence, should prevent a reformation of the instrument. But it has been decided by the court of appeals that these influences were entirely proper, and that the mortgage must be regarded as a valid encumbrance.

It is again insisted by the counsel for the receiver that, inasmuch as the mortgage was given to secure precedent debts, the trustee was not a purchaser for a valuable consideration; that his right to a reformation is a purely equitable right, and upon his appointment the receiver got a legal lien upon the property, which is prior in right to the equity of the trustee.

The special case cited in support of this contention is Wheeler & Green v. Kirtland, 9 C. E. Gr. 552. In that ease reformation of a mortgage was refused, and one of the grounds for such refusal was because it was given for a precedent debt, and so the equitable rights of the mortgagee would not be enforced against a subsequent judgment creditor, who had perfected his legal lien by judgment and execution.

Now the lien of the receiver is said to be similar to that of a judgment creditor, and therefore it follows that as against a receiver as against a judgment creditor, the trust in fee should not be executed.

While the receiver’s lien is in many respects as efficacious as that of an execution creditor, it is not of the same character in all respects. He is trustee for the whole body of general creditors, and he takes the property, subject not onty to all legal liens, but to all equitable liens as well.

His title to the property of the debtor is exactly the same as the title of the debtor himself at the moment when it goes into the receiver’s hands.

. Any previous equitable assignment of any of the property will be enforced against a receiver. LeRoy v. Globe Insurance Co., 2 Edw. Ch. 657; In re LeBlanc, 14 Hun 8; S. C., 75 N. Y. 598.

Says Mr. Smith in his excellent work on Receivers (at ¶. 21):

“The custody of the receiver is that of the law, and in its nature is provisional and suspensive, leaving the rights of all persons concerned controlled by the ultimate judgment of the court. ' The appointment in and of itself determines the right of no one, and does not disturb or in anywise affect the legal or equitable standing of any party to the suit, ■or a stranger thereto.”

It may be further remarked that the mortgage is not voluntary in the sense of being a gift, and it is only an instrument of a purely voluntary character which courts of equity refuse to reform in favor of the-donee.

The mortgage will be reformed.


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    The Avon-by-the-Sea Land Improvement Company v. George W. Thompson.
    [Filed July 12th, 1900.]
    An agreement for the sale and conveyanpe of lands, providing that either party failing to perform the same shall pay the sum of $5,000 as liquidated damages, does not constitute such agreement an alternative contract, so as to release the vendor from performance, without a bona fide effort to perform, upon the payment of the damages stipulated in the agreement.
    On demurrer to a bill.

      Mr. Ación O. Harishorne, for the complainant.

      Mr. Franle Durand, for the defendant.
   Reed, V. C.

The bill is filed for the specific performance of a contract to sell lands. The bill sets out that the.complainant, the Avon-by-the-Sea Land Improvement Company, on November 22d, 1899, agreed with George W. Thompson, the defendant, to convey to the latter on February 15th, 1900, several hundred lots and a. hotel property, sewers and other real property situated at Avon-by-the-Sea, in this state. Five thousand dollars were to be paid and were paid, when the contract was executed. The remaining-part of the consideration, namely, $170,000, was to be paid upon the delivery of the deeds, at the time and place mentioned. Deeds were prepared, and were ready for delivery at the place- and time agreed upon, but the defendant did not make his appearance. Afterwards, in April, a deed was tendered to Mr. Thompson, who refused to accept it and pay the balance of' the-consideration, but stated that he did not have the money, but expected to know in a few days what he would do.

The demurrant challenges the right of the complainant to a decree for a specific performance of the contract by the defendant, upon the sole ground that, under the terms of the contract, which the bill is filed to enforce, there is given to the defendant an option, to either take the property and pay the price, or to forfeit the $5,000 named in the 'contract as liquidated damages.

The clause in the contract, upon which reliance is put to-support this position, reads thus:

“And for the due performance of all and singular the covenants aforesaid, the said parties hereto do bind itself and himself, and their respective heirs, successors and administrators, and they hereby agree to-pay, upon failure to perform the same, the sum of five thousand dollars by the party failing to carry out this agreement to the other, which they' hereby mutually fix and settle as liquidated damages therefor. And the said party of the second part agrees to forfeit the sum of five thousand dollars to said party of the first part as said damages, in case he fails to-carry out his part of this agreement.”

The question thus raised is, whether this clause exhibits an intention to create an alternative contract, by which Thompson agreed to pay the purchase-money upon the delivery of the deed,, or to forfeit the sum of $5,000 already paid and be relieved from performance.

In the case of St. Mary’s Church v. Stockton, 4 Halst. Ch. 520, Chancellor Halsted expressed an opinion that as the parties had stipulated that a certain sum should be paid in case of breach of' the agreement, it showed that each party contemplated an action-at law for damages, in case of the failure of the other to perform, and stated this as one of the grounds for refusing specific performance. As appears by the reported case, the sole defence set up was that the complainants were not able to make a good title.

The chancellor, after seeming to hold that this ground was good, proceeded to make the remark in respect to the effect of the provision for liquidated damages. The latter question was evidently not the subject of discussion by the distinguished counsel who argued the cause, nor of serious consideration by the court; but the remark was not obiter, for it stated, one of the grounds upon which a decree for the complainants was denied.

If this was the only case in which this matter had been passed upon, I should follow it as the law of this court. But three subsequent suits for specific performance have been the subject of consideration in this court, in which cases the parties had liquidated the damages to be paid in case of failure to perform a contract. ' The first of these cases was Crane v. Peer, 16 Stew. Eq. 553. The defendant had sold to the complainant his stock in trade, and agreed not to become interested in the same business, in the same township, for five years, under a penalty of $500. On a bill filed to restrain the defendant from violating his agreement, it was held that, assuming the $500 to be named as liquidated damages, nevertheless the defendant would be compelled to specifically perform this contract by refraining from its violation. The advisory master, now Vice-Chancellor Pitney, after a review of the cases, came to the conclusion that, by the weight of authority, as well as by reason, the fact that the parties to a contract had agreed upon a fixed sum as the measure of the damages to be paid in case of a failure to perform, does not, necessarily, turn the contract into an 'alternative one, under which the party has the option to either perform or pay the sum mentioned. The learned master held that it was always a question of intention, to be derived from the language and the subject-matter of the contract.

The' next of these cases was O'Connor v. Tyrrell, 8 Dick. Ch. Rep. 15, in which the chancellor refused to dismiss a bill filed for the specific performance of a contract for the sale of land, although the parties had stipulated for the repayment of certain sums, by the defendant, in case he failed to deliver a deed. In the language of the contract, the sums were to be paid “in the event of the failure of the vendor to deliver the deed, at the time and place named.” Chancellor McGill held that the failure mentioned in the contract meant a failure after a Iona fide effort to make title. Inasmuch as such Iona fide effort did not appear in the bill, the case was said, by the chancellor, not to involve the question raised in the cases of Crane v. Peer and St. Mary’s Church v. Stockton, supra.

Now, if the payment of the sum fixed in that case was to be alternative with the performance of the contract only in case of a failure to perform after a bona fide effort to perform, then it must follow that in this case the forfeiture of the $5,000 can be regarded as equivalent to performance only, after a bona fide, but fruitless, effort to pay.

In this contract the defendant “agrees to forfeit the sum of five thousand dollars” (manifestly alluding to the $5,000 paid on executing the agreement) “in case he fails to carry out his part of the agreement.”

His part of the agreement was to pay $170,000.

If the failure of the vendor to make a deed must be after a bona fide effort to do so, then mutuality requires that the failure of the vendee to pay must be after a similar effort. Of course, it does not appear in this bill that such an effort was made by the defendant.

The last of the three cases is that of Brown v. Norcross, 45 Atl. Rep. 605. The contract in this case was to sell a lot of land for the sum of $400, $25 of which were paid, and upon the payment of the remaining $325 a deed was to be given by the complainant. The parties bound themselves to each other for the due performance of the contract in the sum of $100, the said sum to be considered as liquidated damages. Vice-Chancellor Grey, notwithstanding the clause for liquidated damages, decreed that the defendant must perform, by paying the remainder of the purchase-money. The learned vice-chancellor held that specific performance would not be denied because of the presence of a clause for liquidated damages, but only when it appeared that the contract gave each the right to either perform or pay the damages and refuse to perform; in other words, when it appeared that the contract was alternative.

It is true that in this cáse the vendee had entered into possession, and that these circumstances, together with the fact that the parties had bound themselves for the due performance of the contract to pay the mentioned sum, was relied upon, the first as exhibiting an intention on the part of the vendee to perform the contract, and the second as showing that the sum mentioned was inserted to secure the performance of the contract. But the vice-chancellor followed, by remarking: “There is no provision for an alternative, whereby the parties are given an option to perform or refuse to perform.” The latter is the test, as I understand it. There must be something apart from the fact that there is a provision for liquidated damages to show that its payment is to be the equivalent for performance. I find nothing in the clause contained in the contract disclosed by the bill to show an intention of the parties to execute an alternative contract.

The demurrer is overruled.


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    Camden Iron Works v. City of Camden.
    [Filed September 29th, 1900.]
    1. Under an agreement to sell to P., contractor for certain work, such quantities of iron pipe as P. may desire, to be delivered within a certain time after each monthly order for same, there is no liability for pipes not shipped and not ordered by P.
    2. Under a contract for sale, by the pound, of iron pipes, they to be of a certain length and weight, overweight not to be paid for, there can be no recovery for overweight because of an excess in length, where the purchaser does not accept them with knowledge of this.

      3. A manufacturer of iron, who furnished iron pipes to a contractor for construction of city water-works, is within the statute (Gen. Stat. p. 2018) giving a lien to a “mechanic, merchant or trader” who is employed on or furnishes material for a city improvement.
    4. A lien for materials furnished the contractor for a city improvement is not wholly void because for an amount greater than can be enforced, the claim not being fraudulently padded ; but the excess in the claim having arisen from want of care in making it, and the moneys belonging to the contractor being thereby tied up, interest on the claim from the filing of the lien will be disallowed.
    .This is a suit to enforce a lien under the act of March 30th, 1892 (Gen. Stat. ¶. £078), to secure the payment of laborers, mechanics, merchants or traders and persons employed upon or furnishing materials towards the performing of any work in. public improvements in cities, towns, townships and other municipalities in this state.

      Mr. Edward A. Armstrong and Mr. David J. Pancoast, for the complainant. ■ „

      Mr. Samuel H. Grey, for the defendant George Pfeiffer.
   Reed, V. C.

Mr. George Pfeiffer, Jr., entered into a contract with the city of Camden on June 24th, 1899, to construct a municipal waterworks. Some dispute having arisen in respect to the execution of the work, and in respect to the amount due by the city, the matters were settled on May 25th, 1899, by an agreement which fixed the amount still due at the sum of $120,000; of this sum there is still in the hands of the city, to the credit of Mr. Pfeiffer the sum of $38,759.04. Under date of May 18th, 1898, the Camden Iron Works served a notice upon the city of Camden, claiming that Mr. Pfeiffer owed it the sum of $32,228.45.

The claim attached to the notice displayed a demand for castings shipped, the sum of $54,971.65, with a credit of $36,307.55, leaving a balance due amounting to $18,664.10. The charges were at the rate of $22.50 per two thousand pounds.

In addition to this claim there was another for two hundred and twenty-five pieces of thirty-inch and thirty-four pieces of thirty six-inch pipe, made and held subject to order, amounting in price to $11,714.70. These two claims together with interest amounting to $1,324.21, made up the entire amount of the claim, namely, $32,228.45.

The claim for $11,714.70 for pipe not shipped, must be disallowed. There were two contracts between Mr. Pfeiffer and the Camden Iron Works, one for furnishing a stand-pipe, and another dated October 31st, 189 G, for castings. It is under the contract of October 31st, 1896, that the claim for castings not shipped, but held subject to order, must fall. ’ Under that contract the Camden Iron Works agreed to sell such quantities of straight pipes and special castings as Mr. Pfeiffer may desire at the price of $21.64 per ton of two thousand two hundred and forty pounds for all straight pipe, and $24 per ton of two thousand two hundred and forty pounds for all ball joints, and two and one-quarter cents a pound for all special castings, delivered f. o. b. cars at Camden, consigned to such freight station or stations between certain points on the Pennsylvania railroad as Mr. Pfeiffer should from time to time designate. The pipe and eastings were to be delivered at such designated stations within thirty days after each written monthly order for the same.

The pipes not shipped were never ordered by Mr. Pfeiffer, either verbally or by writing. It appears, also, that these pipes have been sold to other parties by the complainant. Under the terms of the contract, Mr. Pfeiffer is not liable to pay for them.

In respect to the claim for the pipes actually shipped, there is an overcharge in the price charged per ton. The castings included in this claim are “all pipes and special castings,” and the prices are fixed by the contract of 31st October. Instead of adhering to the prices designated in this contract, charges are made at the rate of $22.50 for two thousand pounds. There should be a- reduction for the difference.

Then there must be a reduction for overweight. The contract provides that any overweight in excess of one per cent, is not to be paid for. The contract states that the water pipe, hub and spigot, shall be twelve feet lengths. Now the total weight divided by the number of lengths, shows an excess in weight of more than one per cent. In explanation of this, it is said th'at the pipes as actually cast, run from three to four inches over the strict measure. But there is no proof aside from this •general statement that these did, and that Mr. Pfeiffer, knowing this, accepted them.

■ HTor is there proof of a general usage in the trade, of which Senator Pfeiffer must have had notice, that when the length of cast pipes is stated in a contract, it is understood to mean three or four inches more than the lengths stated. There must be a reduction for this excess in weight.

Then it is admitted that there must be a reduction for the tool-house of $48.69.

I think there should be also a reduction for pipes No. 36 and No. 215, as I think they were defective.

So far in respect to the merits of the claim itself.

The defence, however, does not rest upon a claim of overcharge, but it is insisted that the bill to enforce the lien should be dismissed. In support of this insistence, it is urged that this claim is not included within the provisions of the act of March 30th, 1S92, because the complainant does not stand in the posture of a laborer, mechanic, merchant or trader, and it is only the class of persons mentioned in the first section of the act that can claim the benefit of its provisions. It is ¡perceived that the title of the act is broader than the first section, inasmuch as the title covers, not only the class mentioned, but also persons employed upon or furnishing materials towards the performing of any work in public improvements, &c. I am of the opinion that the term “mechanic, merchant or trader/' is broad enough to include the Camden Iron Works who furnished material towards the performance and completion of this contract.

■ It is secondly insisted that the bill should be dismissed upon the ground that the lien as filed was for an amount so greatly in excess of that due the lienor as to exhibit a fraudulent purpose. If I were satisfied that the excess in the claim so filed was introduced into the claim for the purpose of tying up the money due to Mr. Pfeiffer, and to coerce him into making a settlement upon the claimant’s terms, I would not hesitate a moment to dismiss the bill. If any creditor willfully files a claim for an amount in excess of what he knows is due to him, he perverts the purpose of the statute, and no court would assist him in his fraudulent purpose. But a claim which may seem to a judge to be without legal foundation, may seem to a creditor and his lawyer to be valid, or to have at least a chance of judicial establishment; and because the attorney may have been mistaken and the claim turns out to be partially invalid, it does not follow .that the whole claim should be branded as fraudulent and the lien discharged. I do not think the present claim was fraudulently padded. So far as to the excessive price charged, counsel relies upon the agreement previous to October 31st, 1896, and in respect to the charges for the manufactured and unshipped castings, upon a general understanding that he could go on and manufacture in advance of specific orders. But while I do not regard the claim as fraudulently made, I do think it was made without that care which should attend the filing of a lien under the statute. The effect of it was to tie up moneys which belonged to Senator Pfeiffer, in the hands of the financial officers of the city of Camden, thus depriving him of the interest and use of the same; for this reason I think interest upon the claim' should be disallowed, at least from the time of the filing of the mechanics’ lien.

■ Unless counsel can agree upon the amount which a calculation in accordance with the views herein expressed will produce, I will refer it to a master.