text:
    The Franklin Society for Home Building and Savings v. John T. Thornton et al.
    [Decided September 6th, 1915.]
    1. On a bill to foreclose a mortgage standing partly as a purchase-money mortgage and partly to secure a loan advanced and to be advanced, with answer by the mortgagor alleging that nothing was due on the mortgage by reason of an extension of payment, and similar answers by parties claiming mechanics’ liens for labor and material furnished the defendant mortgagor prior to the mortgage, the litigation called for a final hearing before a judge of the chancery court, with appeal directly to the court of errors and appeals, and the cause might be referred to a vice-chancellor for a final hearing, to an .advisory master, or to a master of the court pursuant to Chancery act (P. L. 1902 p. 544 § 104), and was not properly referred, by consent of parties, to a special master to report the amounts, if any, due the mortgagor and the lienors, and the order and priority of their claims, with the right to except to his report and review of his determination as to the priority of the mortgage.
    2. Such case was one not within operation of rule 29, which provides for a reference of a foreclosure suit to a master when no answer sets up any defence or question except such as in the opinion of the court may be properly referred to a master.
    3. On such bill it would not be proper for the vice-chancellor to disturb the finding of the master, filed without opinion, unless he plainly erred, where the parties might obtain a review of the decision of the chancery court, rendered through the special master in the court of errors and appeals.

      4. Under Mechanics’ Lien law (P. L. 1898 p. Sl/Z § 14), providing that under advance-money mortgages the building erected on the land shall he liable for the payment of any debt for labor performed or material furnished in its erection, prior to the lien of such mortgage, and section 15, providing that every mortgage on the land shall have priority over any claim under the Lien act to 'the extent of the money actually advanced by the mortgagee and used in the erection of buildings on the land, a mortgage standing partly as a purchase-money mortgage and partly as a mortgage to secure a loan to the purchaser and builder was entitled to a priority over the liens of parties performing work and furnishing material to the builder.
    5. The' Mechanics’ Lien law is to be construed strictly, so far as it established an encumbrance upon the property of one person for another person’s debt, and where a doubt remains as to whether a mechanics' lien is prior to a purchase-money mortgage, also standing as security for money loaned for the erection of a building on the mortgaged land, it should be solved in favor of. the mortgage.
    Op exceptions to a. master’s report.
    ilir. Nathan II. Pendergast, for the complainant.

      Mr. John IF. De Toe, for the defendant Irvy Myers, ex-ceptant.

      Mr. Peter IF. Btagg, for the defendants P. M. Valle & Company, exceptants.
   Stevenson, V. C.

This canse, although coming before the court technically upon exceptions to a master’s report, made in pursuance of an interlocutory order of reference substantially in the form commonly employed in foreclosure suits, in fact, presents an instance of a rehearing of important litigations set forth in the pleadings which already have been heard and decided by a judge of this court of the parties’ own choosing. The practice which has been followed in this case, in my judgment, is not to be commended— in fact, should be discouraged:

Two foreclosure suits have been tried together, the questions presented being the same, although separate final decrees will be entered. The decision of the matters presented in either case involves a corresponding decision in the other case.

The bill of complaint in the cause which will be particularly considered, sets forth a bond and mortgage upon real estate to secure $4,600, dated October 6th, 1911. The mortgage was executed by the defendant John T. Thornton and his wife to the complainant, and recites that at its date the said Thornton was justty indebted to the complainant in the sum of $4,600, and provides for the payment of such debt in monthly installments of $46, until the whole of the principal and interest shoirld be paid. As a matter of fact, when the bond and mortgage were executed and delivered, October 6th, 1911, the sum of $4,600 was not due from Thornton to the complainant; only a portion of the money secured, or intended to be secured, by the mortgage was then paid over to the mortgagor.

The transactions between the parties which led up to the execution and delivery of the bond and mortgage were as follows: On the 9th day of May, 1911, the complainant and the defendant Thornton entered into a contract under seal, whereby the complainant, in consideration of the sum of $1,000, agreed to convey to Thornton on or before the 1st day of July, 1911, a certain lot of land laid down on a map entitled, “Map of property belonging to the Franklin Society, Haworth, N. J., section 3.” The defendant Thornton expressly agreed to pay the consideration of the conveyance in two installments, namety, $5 on execution of the agreement, and $995 in cash on delivery of the deed which was to be effected “on or before the 1st day of July, 1911.”

By a written paper, entitled “Loan Application,” bearing date May 10th, 1911, the defendant Thornton applied to the complainant for a loan of $4,600. This loan application appears to have been made upon a blank or form employed by the complainant in its business. The form does not seem to have been fully filled out, important details being lacking.

The land offered as security consisted of a lot one hundred by ninety-five, being the same land subsequently conveyed by the complainant to Thornton, and mortgaged back by Thornton to the complainant on October 6th, 1911, as above stated. The value of the land is given as $1,000. The value of the buildings is given as $4,800, but the questions in the application calling for the dimensions and character of the building or buildings appear to be left unanswered. It may be inferred that the parties had agreed upon the plans and specifications of the building or buildings to be erected.

On the 23d day of May, 1911, the complainant and Thornton entered into a further agreement based upon Thornton’s application. This instrument recites that the borrower, Thornton, “is the owner, or is about to become the owner,” of the land above mentioned, and

“has applied to the lender, the complainant, for a loan of $4,600, to aid the borrower in the erection on said land of a two-story and attic frame dwelling, from plans and specifications heretofore mutually agreed upon and filed by said borrower with his application for said loan.”

The complainant expressly accepts the defendant’s application and agrees to make, and tire borrower agrees to take, the loan so applied for. The borrower, Thornton, further agrees to proceed continuously with the erection of the building, so that the same will be completely finished and ready for occupancy on the 1st day of September, 1911. Upon Thornton’s so proceeding with the erection of the building and keeping his agreements, the complainant agrees to lend $4,600, to be advanced by three installments, -the first two of $1,533 each, and the third of $1,534. The first installment was to be advanced at a certain stage of the construction of the building; the second at a more advanced stage, and the last when the work was completely finished.

The parties to these instruments, the complainant and defendant Thornton, utterly disregarded some of the most important agreements which they had formally entered into as above set forth. The defendant Thornton, who was engaged in erecting a number of houses, appears to have proceeded forthwith, or shortly after the execution of the agreements of May 9th, 1911, to erect the contemplated frame dwelling-house according to the plans and specifications agreed upon, and for that purpose and in that work is alleged to have incurred the debts for labor and material for which the liens of the defendants Irvy Myers and P. M. Yalle & Company, respectively, were subsequently filed. At the time this material was furnished the defendants, the lienors, had full notice that the land upon which the defendant Thornton was erecting the building was vested in the complainant as owner. They also knew, or could have learned by inquiry, that the complainant was not bound to make the mortgage loan, which would enable Thornton to pay for the building, until Thornton had paid the complainant $995 in cash and taken his deed. These lienors gave credit to the defendant Thornton personalty, and if he had not only failed to pay the $995 to the complainant, but had failed to obtain title to the land, a very different case would not have been presented between these lienors and the complainant as legal owner of.the land in which a number of questions would have been raised which need not be considered. On October 6th, 1911, the title to the land remained vested legally in the complainant. It may be inferred that the building had to a very considerable extent been erected by Thornton. It does not appear that the parties up to this time had made any change in their contract relations. The defendant Thornton had broken his agreement to pay the $995 and take title to the land on or before July 1st, 1911. No explanation has been offered of this default for three months.

The parties, however, met on October 6th, or 7th, 1911, and thereupon the whole deal between them was in a most essential matter vitally changed. The complainant executed and delivered to the defendant Thornton, a warranty deed with full covenants, conveying the land in question, subject to certain specified restrictions, the consideration as recited being one dollar “and other good and valuable consideration.” At the same time the defendant Thornton executed and delivered to the complainant the bond and mortgage for $4,600 above described. Thornton, however, did not pay the $995 in cash, which was the balance due of the actual purchase price of the land, but this amount was deducted from the first installment of the mortgage loan ($1,-533), which the complainant then paid in pursuance of the agreements between the parties as they were then and there modified and altered by mutual consent. The complainant made out two checks to the order’of Thornton, one for $995 and the other for $538, and thereupon Thornton endorsed the check for $995 and delivered it back to the complainant. The result of this transaction was that in fact the total loan which the complainant agreed to make to Thornton was reduced from $4,600 to $3,605, such reduction being effected by the first installment being made $538 instead of $1,533. The check for $995, of course, was a mere form, no money in fact being paid. The entire transaction amounted to this, that the mortgage instead of being a mortgage to secure an advance then made, and other future advances agreed upon, stood as a purchase-money mortgage to the extent of $995, and as a mortgage to secure the reduced loan of $5,605, a portion of- which ($538) was then advanced and the remaining portion of which was thereafter to be advanced in accordance with the agreement of the parties.

The defendant Thornton, after October 6th, 1911, proceeded with the work of completing the building, and the complainant made further advances, aggregating $1,533. The full amount of the mortgage loan as reduced by agreement ($3,605) was not, however, advanced. Thornton failed to complete the building. The total amount advanced by the complainant was established without contention at the 'Sum of $3,111, which amount, with the unpaid purchase-money ($995), makes the mortgage stand as an undisputed security for $3,166 and certain small amounts paid by the complainant for insurance and taxes.

(1) The-pleadings in this case present a variety of important and novel questions arising from the obscure terms of this extraordinary specimen of American class legislation, called “the Mechanics’ Lien law.” Answers to the foreclosure bill were filed by the defendant Thornton, who was the builder and owner, and ¡by the defendants Irvy Myers and P. M. Valle & Company, who are two lienors who present the same claim—the same case for the consideration of the court. The sole question to be determined is whether the complainant’s mortgage or these mechanics’ liens are to be accorded priority.

The case as it stood -when tire order of reference was made, and as it stood before the master, embraced a number of important litigations. The defendant Thornton, the mortgagor, set up in his answer and offered proof before the master, to show that nothing was due upon the mortgage—that subsequent to the execution of the mortgage a new agreement had been made extending the terms of payment. The defendants, the lienors, among other matters, set up this same defence that the mortgagor had not made default on account of the extension agreement which had been made, and also that the complainant was a foreign corporation not entitled to transact business in New Jersey. The lienors in their answers claimed priority to the complainant's mortgage.

It is evident that this litigation, as presented to the court of chancery by these pleadings, was not the proper subject-matter of a reference to a master under the ancient established practice of courts of equity in England and this country. It is also evident that the case was not one within the operation' of rule 29 promulgated by Chancellor Runyon in 1879, which provides for a reference of a foreclosure suit to a master when no answer sets up any defence or question except such as in the opinion of the court may be properly referred to a master. The case presented by the pleadings and tried before the master was one which under our practice called for a final hearing before a judge of this court, from whose decision an appeal would lie directly to the court of errors and appeals. The cause might have been referred, and in the usual course of business would have been referred, to a vice-chancellor for a final hearing; it might have been referred to an advisory master; it might have been referred by the chancellor to a master of the court, who was a counselor-at-law of five years' standing, pursuant to section 104 of the Chancery act. In case a reference of the cause had been made in either of the above-mentioned methods, the decision of the judge so appointed by the order of reference would have been final so far as the court of chancery is concerned. Any party dissatisfied with the decision so obtained in this court, in the absence of special circumstances affording grounds for a rehearing, would have been obliged to take an appeal to the court of last resort in order to obtain a reconsideration and review of his case.

The complainant and the answering defendants in this cause did not follow the established practice as above set forth. They consented to an order, which of course was signed by the chancellor without any knowledge of the nature of the litigation presented by the pleadings, by which order it was referred to “one of the special masters of this court to ascertain and report the amount due, if anything, to the said complainant” upon its mortgage, and also the amount due, if anything, to the defendants upon their respective claims, and to report accordingly, and also to ascertain and report the order and priority of the mortgage and claims respectively, &c.

The question of “order and priority” referred to the master in this case is not the simple question of that nature which is so often referred to a master in foreclosure suits, where there is a series of encumbrances. The question of priority in this case was the important issue raised by the pleadings, and its determination involved an elaborate study of several sections of the Mechanics’ Lien law, and constituted at the start the principal controversy between the parties, and subsequently stood as the sole controversy.

According to the well-settled practice of this court, I think it is plain that if the attention of the court had been called to the character of the litigation between the parties, no order of reference to a master to whose report exceptions could be filed, would have been made; the parties, if they agreed upon the judge who was to hear their cause, would have been required to take their order of reference under section 104, so that the decision of the master, like the decision of a vice-chancellor, would have been final so far as the court of. chancery was concerned.

The whole cause was tried before the special master, the equity judge whom the parties selected, under the terms of the order which directed the master to ascertain and report the amount, “if anything,” due to the complainant on its mortgage. The validity of the mortgage might have been contested under the allegations of the lienors’ answers.

The mortgagor, Thornton, actually put in his defence, set up his answer, that there was nothing due on the mortgage because a supplementary agreement had been made extending the mortgage. Testimony was taken before the master on five different days, which occupies three hundred and five printed pages. A stenographer took down and reported the testimony and proceedings before the master. The trial was conducted in all respects as if it were before a vice-chancellor or advisory master. The cause was then argued and the master made his report in the usual form, giving priority to the complainant’s mortgage, and stating the amount due on all the encumbrances.. The master, however, in accordance with the practice, filed no opinion exhibiting his conclusions upon the points which had been argued before him, and upon the determination of which the decision of the whole litigation depended.

Exceptions were filed by the lienors, Myers and Valle & Company, which present to this court for review the single question, complex and difficult, decided by the master, as to the priority of the complainant’s mortgage to the mechanics’ liens of the ex-ceptants. The defendant Thornton filed no exceptions and evidently abandoned his defence.

Without the aid of any opinion from the master, the equity judge, who was obliged to consider this case with care after hearing elaborate arguments, this court is now asked to determine a number of difficult questions in regard to the construction of the Mechanics’ Lien law of New Jersey, all of which questions were argued before and decided by the special master whom the parties selected as their judge.

In my judgment, it would not be right in this case to disturb the finding of the master unless it is plain to the court that he erred. The parties in this case have had their day in court— ■in the court of chancery; they have tried their case to a finish before a judge of this court upon whom they agreed. They may obtain a review of the decision which this court has already rendered through the special master in the court of errors and appeals.

(3) The question of priority decided by the master involves the consideration and construction of two or three of the most obscure and badly-drawn sections of our Mechanics’ Lien law, viz., sections 14 and 15. Our reports indicate that the construction of our Mechanics’ Lien law is a matter of great difficulty, the final interpretation frequently being reached by a decision of the court of errors and appeals, reversing the court of chancery by a divided court.

Without undertaking to analyze and discuss minutely the provisions of the above-mentioned sections of the Mechanics’ Lien law, I shall, for the purpose of this case, merely state my conclusion that the view is tenable, that in this case the complainant’s mortgage comes within the provisions of section 14 and should therefore be considered as a purchase-money mortgage taken for a portion of the price of the land sold, and also as security for money, “in excess of the purchase-money,” advanced or to be advanced by the mortgagee for the purpose of enabling the mortgagor to erect a building upon the land. It follows that the complainant’s mortgage is entitled to the priority over the liens which the master accorded to it.

(3) It may be that the master also found that the liens of the defendants were not valid as against the mortgage of the complainant because of the failure of the proofs to show that the material and labor were “furnished for the erection and construction” of the building covered by the mortgage. The mortgagor,. Thornton, builder and owner, was erecting five buildings on different lots at the same time, and he appears to have purchased material for all of them. The defendant Myers stated to a witness that Thornton had requested him “to furnish him lumber for five houses which Mr. Thornton was to build at Haworth.”

No apportionment of Mr. Myers’ charges for material furnished for the five buildings was attempted. His lien was filed upon the theory that it embraced material furnished for this particular building covered by the complainant’s mortgage. The extent of this particular claim seems to have been partly, at least, determined by .a subsequent measurement or estimation of the amount of the material furnished which actually went into the building covered by the complainant’s mortgage.

It is possible that the master might have found that the lien of the defendant (Myers) for material was not valid as against the complainant’s mortgage, while he came to a different conclusion in regard to the lien of the defendants Valle & Company,■which was founded upon a contract for furnishing labor and materials for mason work, &e. A review of the master’s decision as to the validity of these liens as against the complainant’s mortgage, if the master made any decision on that subject, could not be satisfactorily made without an examination of all the exhibits, some of which do not appear in the printed book. Under the circumstances, I do not find it necessary to raise or determine this question as to the validity of these liens, the same not having been directly raised in the pleadings.

(4) The Mechanics’ Lien law is to be construed strictly, so far as it establishes an encumbrance upon the property of one person for another person’s debt. If, when the whole confused mass of crude and loosely-drawn legislation is carefully considered, a doubt remains as to whether a mechanics’ lien is prior to a purchase-money mortgage,, which also stands as security for money advanced in good faith for the erection of a building on the mortgaged land, such doubt, I think, should be solved in favor of the mortgage.

(5) For the reasons indicated above, my conclusion is that the exceptions to the master’s report should be overruled, and that decrees in favor of the complainant should be made in accordance with that report.


source: Caselaw Access Project

author: Leaming, V. C.

license: Public Domain

text:
    The City of Northfield et al. v. The Board of Chosen Freeholders of the County of Atlantic et al.
    [Submitted July 12th, 1915.
    Determined July 20th, 1915.]
    That the erection and operation by a county on its own land of a hospital for patients afflicted with pulmonary tuberculosis, would materially reduce the market value of adjacent real estate, did not justify injunctive relief against the erection and operation of such hospital, where no danger to health existed or could be reasonably apprehended from the operation of the hospital, since a person cannot be denied the right to' make a lawful use of his property merely because such use injures the market value of his neighbor’s property.
    On bill for injunction. Hearing on return of order to show cause for preliminary injunction.

      Messrs. Bolte, Sooy & Gill, and Messrs. Bourgeois & Coulomb, for the complainants.

      Mr. Enoch A. Higbee, for the Board of Chosen Freeholders; Messrs. Endicoit ■& Endicott, for J. Mathis & Son.
   Leaming, V. C.

The bill is filed by the city of Northfield and several property holders of that municipality and prays that the board of freeholders of Atlantic county be enjoined from erecting and conducting at a certain place within the city of Northfield, a certain hospital which the board has determined to erect for the care of patients afflicted with pulmonary tuberculosis.

The county of Atlantic is the owner of a tract of land containing in area about one hundred and fifty acres, the major portion of which is within the boundaries of the municipality •of Northfield; on this county tract the county asylum for the insane and the county almshouse are now located. The tract has a frontage on the shore road of seven hundred and seventy-five feet and extends back therefrom that width in a northwesterly direction something over three thousand feet. The insane asylum and almshouse are each located on this tract near and facing the shore road. The proposed hospital is to be erected in the rear of these buildings and at a point approximately in the centre of the county tract. This will place the hospital building about one thousand six hundred feet away from the other coiufiy buildings and about one thousand nine hundred feet from the shore road, and no part of the proposed building will be nearer than two hundred and fifty feet from the side boundaries of the county tract.

The complainant, city of Northfield, is a sparsely settled municipality, its territory consisting chiefly of farms and woodland; in area the municipality is about two miles square and contains a population of eight hundred and sixty-six according to the census of 1910; since that time the population has increased little if any. The individual complainants are property owners in the vicinity of the county tract, and some of them own farm land adjacent thereto.

The residence nearest to the proposed hospital building is that of complainant, Benjamin Eisley, and is about nine hundred feet awajr; the residence of complainant, William Eisley, is about one thousand two hundred feet away; that of complainant, Harry Collins, about one thousand five hundred feet away; no others appear to be nearer than one thousand eight hundred feet.

By act of April 21st, 1909 (P. L. 1909 p. 421), our legislature declared tuberculosis to be an infectious and communicable disease, and dangerous to the public health. That act contained various provisions designed to afford protection against the spread of tuberculosis. At the same session of the legislature (P. L. 1909 p. 548) a joint resolution made provision for a commission to investigate and report advice touching appropriate means to prevent the spread of tuberculosis. Pursuant to the report of that commission the legislature of 1910 (P. L. 1910 p. 129) made provision for the establishment of county hospitals for tuberculosis patients. In 1912 (P. L. 1912 p. 840), another similar and more complete act made provision for the establishment of county tuberculosis hospitals. It is under the provisions of the latter act that the present hospital is being erected. By act of March 21st, 1910 (P. L. 1910 p. 93), it is made unlawful for any hospital for the treatment of pulmonary tuberculosis to be located or established without first obtaining the consent and approval of the state board of health. The act provides for an application to the state board accompanied by a descriptive map of the premises proposed to be devoted to the use stated, and requires the state board then to fix a time and place for a hearing on the application and specifies the notices of the hearing to be given. After the hearing the board either authorizes or refuses to authorize the establishment of the proposed hospital. Pursuant to this act application was made by defendant board to the state board of health for leave to construct and operate the hospital here in question at the place where it is now being constructed, and notice of the application was given pursuant to the requirements of the act. At the time fixed by the state board a hearing was had and the matter of location was considered and the state board determined the proposed location a suitable one and permission was then given for the defendants to establish the hospital at the place where it is now being constructed.

This legislation establishes a special tribunal to pass upon the question of appropriate location of hospitals of this nature. After an adjudication by that statutory tribunal, based on a hearing on adequate notice, that a given location is a proper location it would seem that this court cannot properly review that question or base relief upon the claim that the location is not a proper location. There is, howéver, some doubt in my mind whether that statute can be said to have been intended to include tuberculosis hospitals established by municipalities.

But I think it unnecessary fully to consider or determine what force should be here given to the adjudication of the state board touching the suitableness of the site selected.

The evidence submitted does not justify a conclusion that any danger to health exists or can be reasonably apprehended from the operation of this institution, providing it is properly operated. In this view the only possible ground for relief is the claim that the establishment of the hospital is operative to materially reduce the market value of the adjacent real estate. That claim, standing alone, cannot justify the relief here sought. There are some authorities apparently to the contrary, but the weight of authority is clearly to the effect stated. A person cannot be denied the right to make a lawful use of his property merely because such use is operative to injure the market value of his neighbor’s property; he will not be permitted to disturb the quiet enjoyment of his neighbor’s habitation by interference with the atmosphere by unreasonable noises, odors or gases; he will not be permitted to physically'disturb bis neighbor’s property, as by backing water upon it or otherwise physically interfering with it, but the mere disturbance of market value is not regarded as an infringement of an existing right in the party damnified and cannot be made the basis of relief of this nature. The rule is stated in Wood Nuis. (2d ed.) § 3, as follows:

. “In order to create a nuisance from a use of property, the use must be such as to work a tangible injury to the person or property of another, or as renders the enjoyment of property essentially uncomfortable. It is not enough that it diminishes the value of surrounding property. It is not enough that it renders other property less salable, or that it prevents one from letting his premises for as large a rent as before, or to as responsible or respectable tenants. It must be such a use as produces a tangible or appreciable injury to the property, or as renders its enjoyment essentially uncomfortable or inconvenient. When the fact of nuisance is established, by showing it to be productive of results that bring it under that head, then the depreciation of the salable or rental value of the property may be considered in determining the damages therefrom; but the fact that the use produces such depreciation of itself is not sufficient to make the use complained of a nuisance.
“Thus, a business that, by reason of the fumes or vapors that arise from it, produces a visibly injurious effect upon vegetation by preventing its growth, or seriously injuring or destroying it, or that produces a visible damage to buildings or other property, may he a nuisance even though it does not render the enjoyment of life less comfortable, or produce any ill effects to the occupants of surrounding premises. So, too, a use of premises that, by reason of it's peculiar results, renders the enjoyment of life uncomfortable, is a nuisance, although it produces no visibly injurious effect upon property of any kind: such as noise, so continuous and excessive as to produce serious annoyance, or vapors, or noxious smells that render the enjoyment of life uncomfortable, or that by reason of its extremely hazardous character creates a reasonable apprehension of injury therefrom, either to the lives or property of those in its vicinity—such as powder-mills or magazines in a town or city, or near dwellings or public roads. There are many unpleasant, and, indeed, offensive things, that must be borne with by the owners and occupants of estates, because although offensive to the eye or cultivated tastes of people, they do not trench upon any recognized legal right; and this is the case, even though the thing complained of materially lessens the value of surrounding property. An unobstructed prospect may greatly enhance the value of a dwelling, but this circumstance does not prevent the owner of adjacent estates from making erections thereon that completely hide or destroy it; so the presence of elegant buildings upon a street greatly enhance the value of property upon the street, either for dwellings or business purposes, hut this does not prevent an owner of property there from making any species of erections thereon, however rude or cheap, which is not otherwise a nuisance. A tomb or cemetery near dwellings is by no means calculated to be pleasant, either to the eye or the mind, and may, indeed, be a source of great annoyance to ordinarily nervous people, and, generally, it is likely to detract from the eligibility of a locality, either for habitation or for the purposes of business, and consequently detracts from the value of surrounding property ; but neither a tomb, whether public or private, nor a cemetery in a city or village, is a nuisance, unless it in some manner affects the physical health of the occupants of dwellings in its vicinity, or becomes offensive by reason of stenches emitted therefrom. It may be stated as a rule reasonably well settled that neither a private or public tomb, or cemetery, is a nuisance, unless it corrupts the atmosphere by unwholesome or noxious stenches, or corrupts the water of wells or springs in the vicinity, or, because of the peculiar nature of the soil, impregnates it with unwholesome or noxious gases or substances. Such use of property is but a just exercise of dominion over property by the owner or occupant thereof, unless by some of the modes referred to it comes under the head of nuisance.”

This view appears to have been uniformly entertained by this court. Wolcott v. Melick, 11. N. J. Eq. 204; Ross v. Butler, 19 N. J. Eq. 294, 303; Cleveland v. Citizens Gas Light Co., 20 N. J. Eq. 201; Duncan v. Hayes, 22 N. J. Eq. 25, 29; Board of Health v. Trenton, 63 Atl. Rep. 897; Ventnor v. North American Home, 77 N. J. Eq. 464. See also Barry v. Smith (Mass.), 77 N. E. Rep. 1099; Frazer v. Chicago, 186 Ill. 480.

T am obliged to deny preliminary restraint and will dismiss the order to show cause'.


author: Leaking, V. C.

text:
    Philip Marvel et al. v. Mordecai T. Endicott et al.
    [Submitted July 5th, 1915.
    Determined September 9th, 1915.]
    1. Where the highest appellate court of the state has passed on a final decree, a bill of review based on a claim of error appearing on the face of the decree will be dismissed, since the highest court has in effect pronounced it proper.

      2. Where the directors of a corporation, through an unlawful appropriation by them of its stock, received moneys .in excess of what was lawfully their due, in a suit to recover such moneys they were liable for interest, since the law charged them with knowledge that they had no right to the stock.
    On bill of review. On hearing on motion of defendants to • dismiss bill.

      Messrs. Bourgeois <£• Coulomb, for the complainants.

      Messrs. Enclicott & Endicott, for the defendants.
   Leaking, V. C.

Complainants herein have filed a bill of review to set aside the unexecuted p'ortion of a certain final decree of this court heretofore made against them at the suit of defendants herein.

Defendants herein have moved to dismiss the bill.

The bill of review is wholly based upon a claim of error appearing on the face of the decree. The error alleged is that the decree should not have required the payment by complainants herein of interest on the money which had been received by them respectively in excess of the amounts due. to them. Complainants have performed all of the decree except the payment of the interest referred to.

The bill of review contains a synopsis of the pleadings in the former suit and a copy of the final decree, and also sets forth that an appeal has been heretofore taken by complainants from said final decree to the court of errors and appeals, and that the decree has been by that court affirmed and the cause duly remanded to this court.

I am convinced that the motion to strike out the bill of review must be sustained.

In Putnam v. Clark, 35 N. J. Eq. 145, Chancellor Runyon, speaking for the court of errors and appeals (at p. 150 of the reported case), says: “It must be borne in mind that there is a distinction in practice between an application for a review on the ground of error on the face of the decree, and one based on newly-discovered evidence. In the former, no bill of review can be filed after a decree has been passed upon by the appellate tribunal, but in the latter it is otherwise. ‘Where a decree/ says Judge Story, ‘has been affirmed in parliament, it may well be doubted whether a bill of review for errors, appearing on the face of the decree, can be brought; for the highest appellate court has pronounced, in effect, that it is not erroneous. The same objection does not apply where the bill of review is for matter of newly-discovered evidence/ ”

The matter above quoted was not directed to the specific issue before the court; but it forms a part of a learned discussion in an opinion filed for our court of last resort of the principles controlling the office of bills of review, and cannot be here reviewed or disregarded with propriety.

The arguments in support of the bill of review have been largely based upon matters not appearing on the face of the decree. If the entire record is to be thus considered, I am unable to discern any error in the interest charge. When the money due the directors was received by them their lawful claims against their corporation were fully discharged; the money thereafter received by them was received by them without right. That money was the fruit of an unlawful appropriation by them of stock belonging to the corporation which they represented. If they did not in fact know that they had no right to appropriate the stock, they should have known it, for the law charged them with that knowledge; the money received by them was accordingly the fruit of their own unlawful conduct and they should restore it with interest. It requires no extraordinary intelligence or conscience for a director of a corporation to realize that it is his first duty to represent the best interests of his corporation.

I will advise an order dismissing the bill.


author: Leaking, Y. C.

text:
    Lida T. Allen v. Charles S. Allen.
    [Submitted April 14thb, 1915.
    Determined September 15th, 1915.]
    1. In a suit to annul a marriage on account of defendant’s concealment of a taint of hereditary insanity, hearsay evidence as to his earlier mental condition and that of his family was inadmissible.
    2. Where the defendant husband at the time of the marriage was sane and capable of entering into the marriage relation, the fact that he concealed that he was afflicted with hereditary insanity is no ground for the annulment of a marriage, the husband being capable at the time of fulfilling all marital duties, and the taint not being transmissible to the wife, for fraud will not warrant annulment of a marriage, unless of the most serious character.
    3. That the defendant husband^ who was a physician, confessed to his wife after marriage that he had concealed from her his belief that he was affected with a taint of hereditary insanity, does not establish such fact.
    On bill for annulment of marriage.

      Messrs. Wescott & Weaver, for the complainant.

      Mr. G. Dore Cogswell, for the defendant.
   Leaking, Y. C.

By the bill filed herein complainant seeks a decree annulling her marriage to defendant on the ground that at the time of her marriage defendant knew that he was afflicted with a taint of hereditary insanity, and with that knowledge stealthfully concealed the fact from complainant. Defendant is now insane and an answer has accordingly been filed and a defence made in his behalf by a guardian ad litem appointed for that purpose.

The evidence discloses that the parties were married in July, 1895. The husband was then a graduate physician and thirty-one years of age; the wife was twenty; they each lived with their parents and had been reared on nearby farms. About two years after their marriage the wife became heavy with child, and without knowledge on the part of the wife touching the husband’s purpose he performed on her an abortion. This occasioned a confession by the husband that his determined avoidance of offspring was made necessary by reason of his having inherited insanity, and that he had concealed his affliction at the time' of his marriage, knowing that its disclosure would have prevented the marriage. It is this intentional concealment by the husband at the time of his marriage of the fact that he was afflicted with hereditary insanity which is now urged as such a fraudulent procurement of complainant’s consent to marriage as will at this time justify a decree in behalf of the wife annulling the marriage.

The abortion and confession above referred to were established by the testimony of complainant and complainant’s sister, who was present at the time of the confession. These events occurred in Noyember, 1897. Shortly thereafter the husband determined to enter the practice of his chosen profession, and for some four years thereafter was engaged in the practice of medicine. At the end of that period—in 1901—his mental condition became such as to necessitate his confinement in an insane hospital; since then he has grown worse and now appears to be permanently insane. During the four years intervening between the husband’s disclosure of his condition to his wife, and the time of his commitment to an asylum, during which time the husband was engaged in the practice of medicine, his wife resided with him as a wife, but her statement is that by mutual purpose no. sexual intercourse occurred between them.

There is no doubt of tire husband’s mental capacity to marry at the time of his marriage. Nor does there seem to be any reason to doubt that about two years thereafter he made the confession already referred to. It must, therefore, be accepted as a fact that at the time of his marriage he believed that he was afflicted with hereditary insanity and concealed his belief because of the fear that its disclosure would have defeated his purpose. Nor is there any doubt that six years after his marriage he became violently insane and has since remained in that condition. But aside from the husband’s manifest belief that he had inherited insanity, and that the. unfortunate inheritance would have fallen to his offspring, there is little evidence to establish the fact. Certain hearsay testimony which was introduced touching the husband’s earlier mental condition and touching his father’s condition must, of course, be excluded. There is evidence that a maternal uncle and a paternal cousin of defendant have been insane; but no evidence establishing the fact that any lineal ancestor of defendant has at any time been insane. The only evidence that defendant’s insanity is hereditary, aside from his own belief, is to be found in the opinion of Dr. Cort to that effect. That opinion appears to be chiefly based upon the present symptoms of defendant and the circumstance of insane collateral relatives. On what defendant based his belief that he was infected with hereditary insanity does not appear1.

In Carris v. Carris, 24 N. J. Eq. 516, our court of errors and appeals determined that this court has inherent jurisdiction to annul a marriage for fraud. It is there held, however, that, unlike ordinary contracts induced by fraud, in voidable as distinguished from void contracts of marriage (that is, contracts in which the parties have actually contracted marriage with a purpose, desire and capacity to marry as distinguished from contracts of empty form without mutual intent or capacity to marry, such as duress, marriage in jest, misapprehension of the party, and mental incapacity to contract), fraud is insufficient to annul the marriage unless three elements are found to exist— first, the fraud must be extraordinary or extreme in kind or degree; second, it must relate to the essentials of the marriage relation; third, it shall not, in any circumstance, avoid the marriage contract against sound considerations of public policy. It will be readily conceded that neither of these three requirements, in manner stated, is sufficiently inflexible or definite to be easily applied to a concrete case other than the one then before the court. It is, however, there explicitly pointed out that false representations in regard to family, fortune or external conditions, or even antenuptial incontinence, are not sufficient grounds for a decree of annulment, whereas fraudulent concealment of pregnancy at the time of marriage, the husband being innocent, is there held sufficient, providing there has been no acquiescence upon the part of the husband after discovery of the fraud. As incontinence was there stated to be insufficient, it necessarily follows that the basis of the decree was pregnancy. That was declared by the court to relate to the essentials of the marriage relation because it rendered the wife, for the time being, incapable of being impregnated by her husband; the necessity which the fraud imposed upon the husband of accepting or repudiating issue not his own was also held to render the decree of annulment consistent with public policy. In the later case of Crane v. Crane, 62 N. J. Eq. 21, a decree of annulment was made based upon the husband’s concealment of his syphilitic condition at the time of his marriage. In that case the basis of the conclusion of the learned chancellor appears to have been that the disease named necessarily or appropriately terminates the marriage relation because that relation could not continue except at the risk of infection by the wife. In considering what misrepresentations can be deemed to affect an essential of the marriage relation, the learned chancellor (at p. 26 of the reported case), says: “Misrepresentation as to freedom from disease in general or concealment of the existence of a disease, although one in common apprehension, communicable and transmissible to offspring, 'cannot, in my judgment, be so regarded. They fall'within the line of false representations as to family, fortune or external conditions, declared by Mr. Justice Bedle, in Carris v. Carris, supra, to be insufficient to justify the annulment of marriage. As to such and like matters the parties take each other for better or for worse. 1 Bish. Mar., D. & S. § 459.” From the above quotation it is obvious that in the opinion of that learned chancellor the ground upon which the bill in the present case seeks a decree is insufficient. The adjudicated eases in other states afford little aid. In a recent case in the supreme court of New York—Sobol v. Sobol, reported in N. Y. Law Jour. of December 7th, 1914 (at p. 927)—tubercu-losis, concealed at marriage, was held to afford ground for annulment. While the opinion in that case refers to the effect of the disease upon offspring, the primary ground of the decision appears to be that the danger of infection from tuberculosis, like syphilis, renders contact dangerous and accordingly affects an essential of the marriage relation. A somewhat extended review of earlier cases will be found in Lyon v. Lyon, 230 Ill. 366.

I think it will be found that- in the absence of statutes specifically authorizing a decree of annulment, or declaring the marriage unlawful at the time it was contracted, no satisfactory •authority exists to support the view that a marriage contract, voidable only, can be annulled bjr a court of equity for fraudulent concealment by a party touching his or her physical condition except in the extreme instances already referred to of disease of either party of a nature to render contact seriously dangerous to the other or pregnancy of the wife. The importance of healthful offspring cannot be overestimated, but that consideration appropriately belongs to the legislature.

In cases of impotency, involving as they do total failure of issue, this court has refused relief by either decree of annulment or dissolution of the marriage contract until our legislature authorized a divorce on that ground. Anon., 24 N. J. Eq. 19.

But I am convinced that the relief here'sought must be denied, in any event for want of adequate proof of the fact that defendant was at the time of his marriage afflicted with a taint of insanity which would have been inherited by his offspring. Defendant’s confession of his belief to that effect cannot be properly accepted as sufficient to establish the fact, and the basis for Dr. Cort’s opinion in the matter is too uncertain. The fact must be determined with reasonable certainty to justify a decree of that nature.

I feel obliged to advise a decree dismissing the bill.


text:
    Ellis L. Pierson, trustee, &c., v. Hannah W. Phillips et al.
    [Submitted April 7th, 1915.
    Determined September 29th, 1915.]
    1. Where, from a time prior to the death of a trustee charged by the trust instrument with the duty of paying the interest of a fund for the support of the trustor’s daughters, a brother of such daughters made payments for their support from a sense of duty as a brother, and without reference to the trust, such brother could have no decree of subrogation in his behalf against what remained of the original trust fund in the hands of the trustee’s heirs.
    2. Where trust funds can be traced into any real or personal property of which the original trustee died seized or possessed, a trust will be impressed' upon such assets of the deceased trustee and enforced as a lien against them, except as against superior rights of bona fide purchasers.
    8. Where trust property cannot be identified either in its original or a substituted form in the hands of heirs of the original trustee after his death, a court of chancery can afford the beneficiary no .relief by enforcing a lien upon the property as trust property; the sole remedy of the oesiui in such ease being that of a creditor, not administered in chancery.
    On final hearing on bill to impress a trust on property and for an accounting.

      Mr. Henry D. Phillips, for the complainant.

      Mr. Linton Satterthiuaite, for the defendants.
   Leaming, V. C.

By the bill filed herein complainant, who is a substituted trustee, seeks to impress a lien in favor of tire trust upon certain property of which the original trustee died possessed, and also to enforce against the heirs of the deceased trustee an obligation to discharge the trust, the asserted obligation arising from their enjoyment of the property of the deceased trustee.

By a cross-bill filed by Theodore E. Phillips it is sought to establish his right to be subrogated to any interests of the cesiuis que trust in the trust funds.

April 1st, 1866, Henry D. Phillips, Sr., delivered to John E. Phillips, his son, $4,000 in trust. The trust was on. that date declared by the trustee, in writing, as follows:

“Lawrence, April-1st, 1866.
“This is to certify that I have received from Henry D. Phillips, Senior, Pour Thousand Dollars of lawful money which I am to hold in trust as principal, the annual interest of which 'at the rate of six per cent., per annum is to be paid to Juliet A. Titus for the keep and support of Maria M. Phillips.
“The conditions of this article are such that if through sickness or any extra expense the annual interest of the above amount the above rate is not sufficient to pay the expenses of the support of the above Maria M. Phillips, then she has the privilege of drawing on the principal to make up the deficiency. Also, whatever amount is left of the above sum after decease of said Maria M. Phillips is to be divided equally between Juliet A. Titus and Margaret Bush, or to their heirs.
“(Signed) John P. Phillips.”

Maria, named in tlie declaration of trust, was a mentally deficient daughter of the trustor; Juliet A. Titus and Margaret Bush, therein named, were also daughters of trustor.

John E. Phillips, the trustee, pursuant to the trust, paid to Juliet A. Titus the annual interest referred to in the declaration of trust until December, 1893. No payments appear to have been made by the trustee subsequent to that date, and no part of the principal fund appears to have at any time been paid by the trustee.

The trustee died intestate March 14th, 1895. No administrator of his estate has been appointed. His personal estate was sold after his decease under execution; his real estate, heavily encumbered, has since his decease been enjoyed by his widow and some of his heirs-at-law, and is still in their possession.

Complainant herein' has recently been appointed substituted trustee of John E. Phillips and has filed the present bill to enforce his trust in manner above stated.

The widow of the original trustee and his heirs have answered. By the cross-bill filed by Theodore E. Phillips, a brother of the original trustee, it is claimed that he has wholly discharged the trust by paying to Juliet A. Titus, for the support of Maria M. Phillips, monthly payments from a time prior to the death of the original trustee; his claim is that these monthly payments, and some-other payments made by him, have discharged, not only the annual payments called for by the trust, but also the principal, as authorized by the declaration of trust.

His prayer is to be subrogated to any rights which may now exist in favor of the cestuis que trust.

I am satisfied that the claim of cross-complainant to the right of subrogation, by reason of the payments which he claims to have made, cannot be sustained. The evidence fully establishes the fact that all payments which have been made by him have been payments which he has made from a sense of duty as a brother, and in no sense with reference to the trust; indeed, it may well be doubted whether he knew that an undischarged trust existed. His payments were purely voluntary payments to his sisters, and were made as gifts to them, and in no way by reason of or with reference to any trust. In these circumstances there can be no decree of subrogation in his behalf.

But I am, nevertheless, unable to reach the conclusion that complainant can obtain relief under his bill.

The $4,000 which constituted the original trust fund came to the hands of the original trustee in the year 1866. If this money could be traced into any real or personal estate of which the original trustee died seized or possessed a trust would be impressed upon such assets of the deceased trustee and by this court enforced as a lien against such assets, except as against superior rights of bona fide purchasers. But the evidence has not traced the trust funds into any specific property. What actually became of the trust funds is not known, and it is impossible in such circumstances to determine that the money was in or formed a part of any asset of intestate’s estate in the absence of any evidence to that effect. Where the trust property cannot be identified either in its original or a substituted form; this court can afford no relief of the nature here sought; in such case the remedy of the cestui que trust is that of a creditor and is administered elsewhere. The following adjudicated cases, of this state fully exemplify the views herein expressed: Ellicott v. Kuhl, 60 N. J. Eq. 333; Collins v. Lewis, 60 N. J. Eq. 488, 491; Heinisch v. Pennington, 73 N. J. Eq. 456, 463; Harrison v. Fleischman, 70 N. J. Eq. 301, 303; Smith v. Combs, 49 N. J. Eq. 420, 423.

I will advise a decree dismissing the bill and cross-bill.


author: Teaming, Y. C.

text:
    August H. Generotzky v. Barnay Hotel Company.
    [Submitted October 4th, 1915.
    Determined October 19th, 1915.]
    1. Where the owner of a hotel seized under a distress warrant money lying in the hotel safe, such seizure being after the appointment of a receiver for the hotel company tenant, but before the receiver had qualified, the seizure was without right, since title to the money vested in the receiver immediately upon his appointment.
    2. The seizure of money under a distress warrant by the owner of a hotel building as belonging to a former tenant of the hotel, who had assigned his lease to another tenant with the owner’s consent, was without right as against the receiver of the second tenant, where the money belonged to the second tenant.
    3. Seizure of property of a corporation, after appointment of a receiver but before he takes possession, is a contempt of court.
    On hearing on return of order to show cause why certain money should not be surrendered to receiver.

      Messrs. Wootton, Harcourt .& Steelman, for the complainant.

      Messrs. Endicott & Endicott, for the defendant John Jamison.
   Teaming, Y. C.

The facts herein are not in dispute. On the da.y that a receiver of the Bamay Hotel Company was appointed, but after the order, of appointment had been made, a distress warrant was issued by the owner of the hotel occupied by the insolvent corporation and certain money of the insolvent corporation was thereunder seized and taken from the safe in the office of the corporation. The parties who seized the money were at the time apprised of the fact that a receiver in insolvency had been appointed. The money is still held intact awaiting the determina^ti on of the rights of the receiver.

At the time the money was seized the receiver had not qualified by filing his bond and oath of office, and it is urged that in consequence the title to the money so seized had not vested in the receiver.

That position is clearly untenable. In Gallagher v. True American Publishing Co., 75 N. J. Eq. 171, it is held that under section 68 of our Corporation act (2 Comp. Stat. p. 1644) title to the property of the insolvent corporation vests in its receiver immediately upon the appointment being made, and that the statutory requirement for a bond and oath of office is not a prerequisite to the vesting of title in the receiver. It is also there held that the hours of the day on which rights arise will he ascertained by the court to determine priority of rights arising on the same day. It follows that at the time when the monejr here in question was seized title to the money had vested in the receiver. The money seized was, 'in consequence, no longer the property of the insolvent corporation, and a creditor of that corporation had no right to seize it.

It also appeared at the hearing that the distress warrant under which the money was seized was issued against the goods and chattels of Bernard Koban. The money taken was not and had at no time been the property of Bernard Koban. Koban had been a former tenant of the hotel and had long before assigned his lease to the corporation, and the owner of the hotel property covered by the lease had therefore fully recognized the assignment by collecting rent under the lease from the corporation.

It therefore adequately appears that the fund in question was seized without right and was, and still is, the property of the receiver.

It has been repeatedly held that the seizure of property of a corporation after the appointment- of a receiver, and before the receiver takes possession, is a contempt of court. ■ In the present case, no proceedings for contempt have been taken, but an order to show cause for the return of the money to the receiver has been issued, and at the return of the order the facts above stated Were ascertained.

I will advise an order directing the return of the money. A failure to return the money pursuant to the order may be made the basis of contempt proceedings.


text:
    Charlotte B. Vaiden et al. v. William L. Edson et al.
    [Submitted December 14th, 1914.
    Determined February 26th, 1915.]
    1. An additional right accruing to a complainant during the pendency of the suit should be-set up by way of supplemental bill, and this may be done for purpose of vauying the relief as such newly-occurring facts may demand.
    2. Where, in an administration suit an original bill was filed to procure the distribution of the assets, the sale of the testator’s real estate, and to speed the settlement of the estate then in progress in the orphans court, a decree for sale has been made by this court and a partial distribution together with the filing of a final account in the orphans court within a prescribed period is directed, a supplemental bill -is the appropriate procedure, where the ground of complaint is a delay of over two years subsequent to the period thus fixed for the filing of the final account, and where the attorney for the substituted administrator defendant while acting in that capacity, bought some of the real estate, and for that reason was made a party defendant by the supplemental bill and relief in respect of him was sought for the profits made in the transaction.

      3. In such case this court has jurisdiction to entertain a suit at i the instance of a legatee under the testator’s will.
    4. If it be true, as alleged in the supplemental bill, that the" attorney thereby made a party defendant, while acting as attorney for the substituted administrator defendant, acquired the real estate which it was alike his duty, and the duty of his client, to sell at the best possible advantage for the estate represented by both of them, he 'necessarily became by that purchase a trustee ex maleficio for the estate which he was representing, and cannot, in equity, be permitted to enjoy a profit from the purchase. If he has made a profit, that profit belongs to the estate; if he made a loss, the loss is his.
    5. The substituted administrator must be made the recipient of thalt profit when its amount is ascertained; the primary duty to recover that profit being reposed in him. If the profit has been made and the substituted administrator will not seek its recovery, then the legatees, as the parties secondarily in right, though primarily in interest, are clearly privileged to ask this court to enforce its payment from the attorney to the substituted administrator for their ultimate benefit.
    6. Over such a suit the orphans court cannot exercise jurisdiction, and a settlement of the estate wholly final should not be made in the orphans court until the fruits of such suit are obtained.
    On demurrer.

      Mr. Louis II. Miller, for the complainants.

      Mr. Leverett Newcomb, for the defendants.
   Leaking, V. C.

The original bill, a copy of which is embodied in the supplemental bill, was filed July 24th, 1909, and .its purpose was to procure a distribution of the assets then in the hands of the substituted administrator among the several devisees, and also to cause the real estate to be at once sold pursuant to the requirements of the will, and also to speed the settlement. The gravamen of the bill was that more than a year had transpired since the appointment of the substituted administrator and the real estate had not been sold as directed by the will and no proper reason for the delay had existed. The decree recited in the supplemental bill discloses that on October 30th, 1911, by consent of the parties, this court directed the sale of the real estate and a reference to a master to determine certain offsets against the devisees. The supplemental bill then refers to the further delay of the substituted administrator, alleging that he failed to file his final accounts in the orphans court within thirty 'days as ordered by this court and that no final accounts were in fact on file at the date of the filing of the supplemental bill, which date was June 22d, 1914. ■

The facts touching the orders of this court are not accurately set forth in the supplemental bill. The variance is of little” or no importance so far as the present demurrers are concerned, but will be here referred to in order to avoid possible future error. The decree of this court which ordered a sale of the real estate was dated June 26th, 1911. That decree, except as to-its date, is accurately set forth in the supplemental bill save as to that part which states that a reference to a master was made to ascertain set-offs against the several legatees. The decree in fact specifically fixed the amount of the offsets against the several legatees. The decree of this court directing the substituted administrator to file his final accounts in the orphans court within thirty days was dated October 30th, 1911. That decree also ordered $20,-936.92 distributed among the several legatees.

It will be observed either from the averments of the supplemental bill or from the more accurate statement above set forth, that the fruits of the original bill in this court were an immediate sale of the unsold real estate and a partial distribution of the proceeds and a refusal on the part of this court to remove the final settlement of the substituted administrator’s accounts to this court, with an order in effect requiring a prompt settlement in the orphans court. Both orders of this court above referred to reserved leave to either party to apply to this court in the original cause for further direction or relief.

The gravamen of the supplemental bill, aside from1 its charges against Mr. Newcomb, are the same as in the original bill. It complains of over two years delay in settlement subsequent to the order of this court directing an immediate settlement and like the original bill aims to have the final settlement of the accounts of the substituted administrator removed to this court for settlement. The supplemental bill also charges that Mr.. Newcomb, while acting as attorney for the substituted administrator, purchased some, of the real estate, and it accordingly makes Mr. Newcomb a party and seeks an accounting from him to the end that there may be a recovery against him for the profits so made.

I am convinced that neither of the demurrers can be sustained.

Whether or not the excessive delay of the substituted administrator in making final settlement is sufficient to justify this court in removing the orphans court settlement to this court on this the second application for that purpose on that ground is, I think, at this time immaterial; but in view of the order of this court contemplating a prompt settlement the excessive dela]', in the absence of any satisfactory explanation of its cause, would seem to go far to justify the order sought. If it be true, however, as averred.in the supplemental'bill, that Mr. New-comb, while acting as attorney for the substituted administrator, acquired the real estate which it was alike his duty and the duty of his client to ¿ell at the best possible advantage for the estate represented by both of them, he necessarily became in that purchase a trustee ex maleficio for the estate which he was representing, and cannot, in equity, be permitted to enjoy a profit from the purchase. If he has made a profit, that profit belongs to the estate; if he made a loss, the loss is his. The substituted administrator must be made the recipient of that profit when its amount is ascertained; the primary duty to recover that profit is reposed in him. If the profit has been made as alleged, and the substituted administrator will not seek its recovery, then the legatees, as the parties secondarily in right, though primarily in interest, are clearly privileged to ask this court to enforce its payment from Mr. Newcomb to the substituted administrator for their ultimate benefit. The supplemental bill does not specifically aver that the substituted administrator will not sue for recovery against Mr. Newcomb, but, assuming all the averments of tire supplemental bill to be true, that condition is reasonably obvious; we cannot, with confidence,, reasonably anticipate the prompt and vigorous prosecution of such a suit by the substituted administrator against the attorney who is presently representing him in the pending orphans court final settlement. In such a suit brought by a legatee the substituted administrator is a necessary party defendant, and the remaining legatees, or their assignees, are proper, if not necessary, parties.

I am unable to doubt the jurisdiction of this court to entertain a suit of that nature at the instance of a legatee under the circumstances stated. If Mr. Newcomb is wrongfully in enjoyment of assets of the estate in the manner stated, the estate is entitled to the prompt restoration of such assets. The equitable principles which confer the right of action upon a legatee in the circumstances stated are essentially the same as those involved in a suit by a stockholder of a corporation for a recovery in behalf of the corporation. Over such a suit the orphans court cannot exercise jurisdiction, and a settlement of the estate wholly final should not be made in the orphans court until the fruits of such a suit are obtained.

Nor am I able to doubt that a supplemental bill is an appropriate procedure for the purpose stated. The order made by this court under the original bill, while refusing to remove the settlement of the estate to this court, expressly held the bill open with leave for any. of the parties to apply for further relief pending final settlement. The further relief here sought is in 'part, if not wholly, based upon matters which have since transpired in the settlement of the estate. The recovery here sought by force of this new matter necessarily requires a postponement of a final settlement in the orphans court and to that extent requires a modification of the existing order of this court which contemplates, and in effect, directs an immediate final settlement in the orphans court. The original bill was essentially in aid of the settlement of the estate pursuant to the requirements of the will of testator and the purpose of the supplemental bill may be properly said to be to the same effect. An additional right accruing to a complainant pending the suit should be set up by way of supplemental bill, and this may be done for the purpose of varying the relief as such newly-occurring facts may demand. 16 Cyc. 358; Hoppock v. Cray (Court of Chancery), 21 Atl. Rep. 624; Crompton v. Wombwell, 4 Sim. 628, 633; Malcolm v. Scott, 3 Hare 39; Story Eq. Pl. § 336.

I will advise an order overruling the several demurrers.


author: Lewis, V. C.

text:
    Battery Park National Bank v. Frederick Brown et al.
    [Decided July 2d, 1915.]
    1. In an action by the creditor of a bankrupt to set aside a conveyance as having been made to defraud the bankrupt’s creditors, evidence Held sufficient to show fraud.
    2. Where the owner of realty conveyed it to defraud his creditors, the grantee participating in the purpose, declarations and acts of such owner disparaging title, subsequent to the conveyance, but when he was in possession of the property and was holder of the record title, were admissible in evidence in a suit against the grantee to set aside the conveyance,for the principle that a declaration of.a party after he had parted with his interest in the subject-matter of the litigation cannot be received to disparage the title or right of a party acquired in good faith previous to the time of making such declaration, is inapplicable in cases of fraudulent conveyances.

      Messrs. Gondict, Gondict .& Boardman, for the plaintiff..

      Mr. Carl- Lentz, for the defendant.
   Lewis, V. C.

■ The complainant files a bill to set aside a conveyance of the land and premises No. 519 Washington street, Newark, New Jersey, made by Frederick M. Hunt to Frederick Brown, dated on the 3d day of December, 1910.

It is alleged in the bill that the conveyance was fraudulent; that it was made for the purpose o'f defrauding the creditors of Frederick M. Hunt.

The purchase price of the property was $12,000, and Mr. Brown says he arranged for the purchase on the 21st day of November, 1910, by paying $2,500 on account. The balance of the purchase price was to be paid when the deed was delivered. The testimony discloses that the transaction was completed in the office of L. E. Hart, Esq., a member of the bar of this state. Mr. Hart says that on the 3d day of December, 1910, Frederick M. Hunt, Mr. Brown and a Mr. Harding appeared at his office in Westfield, New Jersey, and that Hunt asked him to take his acknowledgment to a deed. He did so, having' first examined it, and that Mr. Brown, the purchaser, then handed him the sum of $9,500 in bills, which he counted, and then handed to Mr. Hunt. No attempt is made by the complainants to impeach -the testimony of Mr. Hart, but they count on the fact that there is enough in the case to convince the court that the payment of the money in Hart’s office was a bare pretence.

The deed was not recorded until the 27th day of April, 1912. On September 13th, 1912, Frederick M. Hunt filed a voluntary petition in bankruptcy in the Hnited States District Court for the southern district of New York, and was on the same day adjudged a bankrupt. George F. Trask was appointed trustee of the bankrupt’s estate, and was subsequently, upon petition, made a party in this ease. He filed a, cross-petition against Frederick Brown, claiming the property in question as part of the bankrupt’s estate. Brown has answered this cross-bill.

The evidence before the court deals with a rather singular transaction. Frederick Brown, the purchaser, is shown to be a man having no very great resources and employed most of his life at a moderate salary. He says he purchased the property for investment.

The source of his money with which he did this does not clearly appear. The solicitor for the defendants contends that he had sufficient financial ability to make it. Bank books were in evidence showing that he had some $5,000 to his credit in the Security Savings Bank of Newark, New Jersey, $3,200 of which he drew out in March and April of 1910. A bank book of the Howard Savings Institution was also offered in evidence, showing a balance of $3,500 to Mr. Brown’s credit, from which he drew $2,400 in March, 1910. The sums which were drawn from these two banks, he says, he placed in a box and used to purchase the Hunt property. The necessity of transferring the money from the banks to the box is not shown by the evidence, and, of course, these two sums that were withdrawn are not sufficient to make up the purchase price. Mr. Brown, however, says they were mingled with other moneys given Mm and which he had saved and placed in the box. He says he saved the larger part of his salary, among oilier things. The testimony does not indicate that any of the money paid by Mr. Brown to Frederick M. Hunt found its way into the latter’s bank account.

Mr. Brown says, that after the final payment had been made of the purchase price that he did not visit the property until the latter part of the month. Then, he says, he offered it to Mrs. Jacques, a sister of Frederick M. Hunt, at a rental of $50 per month’ she to pay the water rates» Mrs. Jacques was examined in the Frederick M. Hunt bankruptcy proceedings, and during the progress of her examination what was said to be twenty-three rent receipts from Mr. Brown to her were produced. Bequest was immediately made to have the receipts left with the trustee, but counsel for the bankrupt refused, on the ground that he had not Mrs. Jacques’s consent. These receipts were not produced before me, although called for, and they seem to have disappeared.

Brown says that in 1906 he lent Frederick M. Hunt $8,500 in cash from money that he took from a secret place he had in his room at his home. Thirty-seven hundred dollars of this money came from an uncle. The money was loaned him on a promissory note, and when it came due Frederick M. Hunt failed to pay it, but Williams Hunt, a brother, discharged the obligation. No proof is offered to show where this money went.

Brown says that in November, 1910, Frederick M. Hunt again applied to him for a loan, but that he informed him that he did not feel like advancing it, but he would like to buy some property. He says that. Frederick M. Hunt then asked him, “How about buying my house?” Blunt stated to him that he wanted $12,000 for it. Brown says he thought the price was all right and that is how he decided to purchase it. He says that the purchase price was all paid in cash, i. e., the $12,000. Of this, about $11,000 was taken out of the box in which his grandmother had kept her money, and was part of her estate. This box was kept in a secret closet in the house where he lived. It was not in the same room that the $8,500 to make the loan to Frederick M. Hunt was kept. One thousand dollars, however, was taken from his own box. Brown, in the bankruptcy proceedings, testified that he had taken the money for the house and the money for the loan out of the same box. He says that the $2,500 of the purchase price was paid at the stable of Hunt Brothers, in Newark, in cash—large bills—and Brown says he took a receipt, which he turned over to his former lawyers. It was not produced at the hearing before me.

In the bankruptcy proceeding Brown said that the payment was made in the presence of Dr. Oldman. In this court he testified that Dr. Ortman was not present, and in the former proceeding Frederick M. Hunt says that Dr. Ortman was present, while in this case all agree that he was not there.

Frederick M. Hunt further testified that Dr. Ortman was present at Westfield when the final payment was made, and that they went there in Dr. Ortman’s automobile. Dr. Ortman says he was not present on either occasion. A pencil memorandum was exhibited to him at the trial, and he identified it as having been given by Frederick M. 'Hunt in December, 1912, with a request that he memorize it and be prepared to testify to the allegations' stated by it. The memorandum was as follows:

“Fred M. Hunt to Fred Brown, $2500. Nov. 21st, 1910, a/c house 519 Washington Street. Balance to be paid time deed made out. Amount to $9500, total $12,000.”

This memorandum was subsequently given to William L. Blanchard, a witness in this case, and found its way to the hands of one of the solicitors of complainant, Mr. Bichard Boardman. Frederick M. Hunt, a short time after Dr. Ortman had presented William L. Blanchard with this memorandum, testified to the very facts he had urged Ortman to memorize so that he might be able to relate them.

Mrs. Ortman was a witness before me and identified a draft of an affidavit in the Frederick M. Hunt bankruptcy case, in which her husband ivas named as an affiant; the tale of the payment of $2,500 at the stable in the presence of her husband; the trip to Westfield in his automobile and the payment of $9,500 and the delivery of the deed are all set forth in the affidavit. This paper, Mrs. Ortman says, Frederick M. Hunt persistently urged her to persuade her husband to sign. The story of Dr. Ortman’s part in these proceedings is apparently a mere invention.

William L. Blanchard, a contractor of the city of Newark,, who, at the time, was building a garage for Frederick M. Hunt, testified that on April 27th, 1912, Hunt came to him at the garage and, taking him aside, gave him two assignments of mortgages and one deed, which was the deed in question, for the premises 519 Washington street, Newark; that Hunt told him that he had borrowed quite a sum of money from the banks-in New York, and that

“He was afraid they were going to put the screws to him, and he had to get somebody to date the instruments back, and he wanted to know if I would not get them right on record.”

Blanchard says he took the three papers to his lawyer’s office and that he filled his own name in as assignee of one of the mortgages; that he gave the deed to 519 Washington street in question and one‘of the assignments to his lawyer to have recorded in the Essex county register’s office. His lawyer, who recorded these papers, corroborates him. The deed itself also corroborates his statement, the time of recording being eleven-twenty-five a. M., on April 27th, 1912.

In the bankruptcy proceedings, Frederick Brown says he gave the deed to Lum, Tamblyn & Colyer to record. He could not recall, however, what year, or when he had done so. He said that it might have been in the year 1911, but he was not certain. Between April 1st, 1912, and April 9th, 1912, the complainant in this case lent Frederick M. Hunt $10,800 on several demand notes, and to many of his creditors Frederick M. Hunt gave notes on or about April 27th, 1912, the date the deed was recorded.

Frederick M. Hunt lives in the property with his sister, he says, as a boarder, and pays her $5 a week. He occupied the premises prior to the transfer of the property to Mr. Brown.

Mr. Brown says, upon return from Mr. Hart’s office, that he put the" deed in a box in his room. The deed remained there for sixteen months. His explanation for not recording it was, that he was a sick man at the time of the purchase, and that part of the sixteen months he was out of the state traveling for his health. He tells a different story before me as to the recording of the deed from that which he related in the bankruptcy proceedings. He says that a few days before April 27th, 1912, he was in the stable of Mr. Williams A. Hunt, which he frequented often, and that he handed the deed to Williams A. Hunt to have it recorded.

Evidence that the property was assessed for taxes to Frederick M. Hunt, in 1911, was introduced, and that the taxes were paid that year by the check of Hunt Brothers. Mr. Brown says that he was about to go away, and he handed the money for the taxes to Williams Hunt and requested him to pay the same, which Williams Hunt did, by the check just before mentioned.

If you take out of the case the happenings in the office of Mr. Hart, there is nothing before the court that could possibly lead it to conclude that there had been a bona, fide transaction between Frederick M. Hunt and Frederick Brown. The stories of the defendant and his witnesses are full of contradiction and bear the stamp of being highly improbable.' Brown says he bought the property for investment, but the facts are these: He never had the title searched; he never had the property insured; the return is very small on the investment, smaller, according to the calculations made, than the money would have earned if left on deposit in a trust or savings bank in this state, and Frederick M. Hunt, the former owner and occupant, is still living in the house, he says, as a boarder, with his sister, Mrs. Jacques, the tenant of Mr. Brown.

The defendants’ counsel contends that the declarations and acts of Frederick M. Hunt are not properly admissible in this case, as they were subsequent to the purchase by Mr. Brown. The evidence does not sustain this contention. The representations to the bank were made at the time when Hunt was not only in possession of the property, but was the holder of the record title. The admissions of fraud to Blanchard were made when Frederick M. Hunt held the record title and he handed to Blanchard ffhe Brown deed.

The general rule undoubtedly is, that a declaration of a party after he has parted with his interest in the subject-matter of the litigation cannot be received to disparage the title or right of a party acquired in good faith previous to the time of making such declaration, but, as is stated in Carnahan v. Wood (Tenn.), 2 Swan 500, 502, “this very just and reasonable -principle must be taken as inapplicable in cases of fraudulent sales of property.”

In Outcalt v. Ludlow, 32 N. J. Law 239 it is held that the acts and declarations of a party while in possession are competent evidence for or against those who claim under .him to show the character of his possession during the period covered by them in their claim of title.

I think from the evidence in this case that Frederick Brown participated in a fraud, and, therefore, it takes it out of the line of cases suggested by counsel for the defendants, as dispositive herein, i. e., Merchants National Bank v. Northrup, 22 N. J. Eq. 58; New York Fire Insurance Co. v. Tooker, 35 N. J. Eq. 408; Muirheid v. Smith, 35 N. J. Eq. 303.

His conduct and acts regarding the transaction are most extraordinary and unusual. It seems clear that the court must conclude that the property on Washington street, Newark, is part of the estate of Frederick M. Hunt, and that the deed to Brown should be set aside as fraudulent.

A decree will be accordingly advised.