author: Howell, Y. C.

text:
    Edith R. Hopping et al. v. George R. Gray et al.
    [Submitted November 10th, 1913.
    Decided November 22d, 1913.]
    1. Testator gave the income of one-third of his estate to his daughter L. for life, the income of another third to his son F. for life, and the remaining third he devised absolutely to his daughter E. on her attaining the age of twenty-four; the executors, also named as trustees, being-directed to lease or sell the property in the meantime as might be necessary and pay the income to the beneficiaries quarterly.—Held, .that, testator not having devised the remainder of the estate devised to F. for life, the legal title to such third did not pass to the executors or trustees, but instead descended to testator’s heirs-at-law, subject to be divested by the exercise of the power by the trustees.
    2. Where, under testator’s will, his son took the right to receive the income of one-third of the estate during his life, also immediate legal title to an undivided one-ninth of the estate because of testator’s failure to dispose of the remainder after his life estate in an undivided third, the son’s equitable life estate to the extent of one-third thereof merged in the remainder to the extent of one-ninth thereof immediately on testator’s death, and hence such ninth was subject to execution by the son’s creditors.
    3. A trustee may not assert a legal title by adverse possession against the cestui que trust, the trustee’s title being that of the cestui que trust.

    4. Where devisees held property as tenants in common, one of them could not claim adversely against one who claimed an interest in the share of one of such cotenants purchased at an execution sale, under the rule that one cotenant, in the absence of ouster, cannot assert title by adverse possession against another.
    On exceptions to master’s report.

      Mr. Charles D. Thompson and Mr. Edward Q. Keasbcy, for the exceptants.

      Mr. Cecil II. MacMahon, contra.

   Howell, Y. C.

This suit is brought for the partition of lands of which George D. Eandall died seized. The master to whom the cause was referred was directed to report upon the right, title and interest of Frederick L. Eandall, a son of the testator, and of William McMurtry and George M. Keasbey, who claim to have succeeded to the interest of the said Frederick, in the real estate sought to be partitioned. The question involves a construction of the will of George D. Eandall, and an ascertainment therefrom of the rights of the litigants. Mr. Eandall died in 1889, leaving three children, Lillie E., Frederick L. and Edith. By the third paragraph of his will he gave the income of one-third of his estate to his daughter Lillie E. during her life, and the income of another third thereof to his son, Frederick L., during his life; such income to be paid to them quarterly. • The remaining third he devised absolutely to his daughter Edith on her arriving at the age of twenty-four years; but his executors were directed to pay her the income thereof quarterly until she arrived at that age.

McMurtry recovered a judgment against Frederick L., and levied upon his interest in the estate of his father under the will, sold the same at sheriff’s sale and took a deed therefor, over twenty years ago. He transferred an undivided quarter of the interest which he got under that deed to Keasbey; but neither he nor Keasbey was ever in possession. In the present partition suit the controversy is between McMurtry’s interest and the Eandall children over what passed to McMurtry by virtue of the sheriff’s deed. It is conceded on all hands that Frederick took a life estate in one-third of the income of the residuary fund, and that there is no testamentary disposition of the remainder of this one-third of the residue. Therefore, as to the one-third, the income of which is devised to Frederick during his life, the testator died intestate.

Upon Mr. Bandall’s death the legal title to this one-third could not be held in abeyance; it either descended to his heirs-at-law by force of the statute of descents, or it went, as is claimed by the Eandall heirs, to the “trustees” named in the will, or their successor in the trust. By the eighth paragraph of the will the testator appointed Gray and Duryea “executors and trustees” of his will,'and authorized them to sell any or all of his real estate, or rent the same whenever in their judgment it would seem to them most advantageous to his estate to do so, and to invest the proceeds thereof, and from the income of said investment to pay the several legacies provided for in his will. If the title went to the “trustees,” the judgment and execution of McMurtry never became a lien on the disputed share, cr any part of it, and he acquired nothing by virtue of the sheriff’s deed. If, on the other hand, it descended to the lieirs-at-law, then the interest of Frederick in the real estate in question was a life estate in one-third and a fee-simple in an undivided one-ninth, and it was subject to the levy.

It must be conceded that there was no express devise of the legal title of the land to the so-called “trustees;” neither do I think that there was any.transfer thereof to them by implication. What the trustees got was a mere power to sell and to lease, to which the estate was subservient so long as it was necessary that it should be so in order to effectuate the purposes of the will. I must, therefore, reject the insistment of the Kandall heirs that the title went, by virtue of the devise, to Gray and Duryea, as trustees. It is well settled that in such cases (where there is intestacy) the real estate of which the testator died seized descends to the heirs-at-law, subject, however, to be divested or otherwise varied by a proper execution of the power. Moores v. Moores, 41 N. J. Law (12 Vr.) 440; Fluke v. Fluke, 16 N. J. Eq. (1 C. E. Gr.) 478; Romaine v. Hendrickson, 24 N. J. Eq. (9 C. E. Gr.) 231; Todd v. Wortman, 45 N. J. Eq. (18 Stew.) 723; Bonnell v. Bonnell, 47 N. J. Eq. (2 Dick.) 540. There is an earlier opinion on the same point by Chancellor Williamson in Brearley v. Brearley, 9 N. J. Eq. (1 Stock.) 21, in which the facts were quite similar to those now under consideration. There the testator made provision for his wife in real and personal estate, and then empowered the executors to sell the residue thereof and to rent it until sold, and gave them directions about the investment of the money, but did not devise the remainder in the lands. The clause of the will which made this provision is as follows:

“It is my will and I do hereby for that purposé authorize and empower my executors hereinafter mentioned to sell all my estate, both real and personal, excepting such parts thereof as are disposed of either at public or private sale, as they may deem advisable, the said real estate to be rented at their discretion until such time as a fair price can be obtained for the same or any part thereof * * * And I do further devise and request my said executors that all the moneys arising from the sales of my real and personal estate, or which shall come to their hands from any other source or sources whatsoever, shall be placed at interest on good freehold security at the discretion of my executors until such time as the same or any part thereof shall be needed for the purpose of carrying into effect the provisions of this my last will and testament.”

It was held under this clause that the powers of sale and of lease were mere naked powers, and that the title to the land of which the testator died seized devolved by operation of law upon the heirs-at-law, but subject to the powers, and that the power given to them as to rents and profits carried no interest in the land.. The chancellor says: “But here is no devise of occupation or of the rents and profits; the power of the■ executors to take the rents is only by implication, * * * as the power to rent implies the power to collect the rents, the executors possess the power of collecting; but it will be seen the interest given them in those rents and profits is very far from conferring upon them any title to the land.”

In my opinion, it is very clear that a naked power was conferred by the will upon the so-called “trustees;” it may be that that power may require that the trustees should have the management of the estate during the terms of the life tenants, in order that the provisions of the will relating to the income may be observed. Or, perhaps, we might go further, and say that the so-called trustees axe entitled to the actual possession of the estate for the purposes of the will. But such power of management, of leasing and of taking possession, if the argument may go so far, does not carry the legal title, and I am therefore constrained to hold that an undivided one-ninth in the real estate, in question descended to Frederick immediately upon the death of his father, and became amenable to the judgment and execution of McMurtry.

It is next urged that the judgment and execution of McMurtry could not be a lien upon the right of Frederick to receive the income of one-third of the estate during his life, because that was an equitable interest to which a levy could not attach. This argument' is met by the exceptants by urging that upon the death of the testator there was a merger of this equitable estate into the larger legal -estate which had devolved upon him by reason of the intestacy above mentioned. That such a merger may take place appears from the authorities cited on the brief of the exceptants. Wills v. Cooper; 25 N. J. Law (1 Dutch.); 137; Bolles v. State Trust Co., 27 N. J. Eq. (12 C. E. Gr.) 308; Harrison v. Moore, 64 Conn. 344. Chancellor Kent evidently considered that estates of different quantities might 'merge pro tanto (4 Kent Com. 99) ; that is to say, the equitable life estate of Frederick, to the extent of one-third thereof, will merge in the remainder to the extent of one-ninth thereof. This view operates to give to Frederick seizin of a fee-simple title in one-ninth of the lands in question on which the judgment and execution o C McMurtry were a lien, and by the sheriff’s sale and the sheriff’s deed such-title and interest were transferred to the judgment creditor.

The Eandall devisees claim that inasmuch as McMurtry has made no attempt to take possession under his sheriff’s deed for a period of over twenty years, the McMurtry interest has lost the right of entry, and that the statute of limitations has run against him and his assigns. It is not competent for a trustee to assert a legal title by adverse possession against the cestui cjue trust; his title is that of the cestui que trust, and there are none of the elements of adverse possession in the relation between them; neither can the Eandall devisees claim adversely to McMurtry and his assigns. One tenant in common holds possession for all tenants in -common, and except under very peculiar circumstances one cannot assert title by adverse possession against another. Foulke v. Bond, 41 N. J. Law (12 Vr.) 527. I, therefore, conclude that McMurtry and his assigns are seized in fee-simple of an undivided one-ninth in the lands in question, and that there remains to Frederick L. the equitable right to receive two-ninths of the net income from the lands in suit. I will advise a decree in accordance with these views.


source: Caselaw Access Project

author: Howell, V. C.

license: Public Domain

text:
    Godfrey M. Hyams v. Old Dominion Copper Mining and Smelting Company.
    [Submitted November 4th, 1913.
    Decided November 25th, 1913.]
    1. Evidence held to require a finding that money proposed ?b be distributed by a corporation as dividends was surplus arising from the corporation’s business, and was subject to distribution as authorized by Corporation law (act April 21st, 1896, P. L. p. 286 § 80), as amended by act March 28th, 1904 (P. L. p. B75).

    2. Where a corporation has sufficient money or property with which to pay a proposed dividend without in any manner or to any extent impinging on its moneyed capital, whether such dividend shall be declared and paid and the amount, time and terms, are matters solely for the determination of the directors acting within their discretion.
    3. Where the declaration of a dividend by the directors of a corporation was a proper exercise of their discretion, it was not material that they in so doing were dominated by another corporation owning a majority of defendant’s stock, and that the distribution was pursuant to an agreement between defendant stockholders and the stockholders of such dominating corporation, to which neither defendant corporation nor its directors were parties.
    4. Where a corporation was organized to hold the stock of defendant and another corporation, and trust certificates were issued to stockholders in exchange for their shares, and an .agreement entered into between the stockholders as a management of the corporations, &c., the fact that plaintiff, a minority stockholder, purchased one hundred shares in the trust which he transferred on the books of the trustees to his own name, and that other shares stood in the names of other persons for him, and that he appeared by counsel at a meeting of stockholders at which the doings of the officers of the company during the preceding years were approved and the report of directors ratified, did not estop him from objecting to the declaration of' a specified dividend by defendant’s directors on the ground that it was an illegal misappropriation of capital.
    5. Where, on the filing of a stockholders’ bill to restrain the declaration of a dividend, an order was made restraining the directors of the corporation from declaring the dividend pendente Ute, and, while the injunction was in force, a quorum of defendant’s directors passed a resolution directing the president and treasurer to pay a special dividend from the fund in question as soon as counsel advised that the same could be done or an injunction restraining the same removed, such resolution constituted a direct contempt which precluded defendant from obtaining a decree dismissing the bill to which it would otherwise have been entitled until the resolution had been rescinded.
    On final hearing on bill, answer, replication and proofs.
    The facts presented in this ease are substantially the same as those dealt with by Vice-Chancellor Stevenson in the case of Pieres v. Old Dominion Copper Mining and Smelling Co., 67 N. J. Eq. (1 Robb.) 399. The Old Dominion Copper Mining and Smelting Company, the defendant in this suit, was organized under the laws of this state on July 8th, 1895. Its original authorized capital stock was $3,750,000. This was afterwards increased to $5,000,000, of which shares of the aggregate par value of $4,050,000 were issued and outstanding at the time of the filing of the bill. The original issue of stock was made for the purpose of purchasing a mining property in Arizona, which the company now owns. The transaction was promoted by Albert S. Bigelow and Leonard Lewisohn, who, as was alleged, made a secret profit in tire promotion scheme which made them liable to the company for either a large block of stock or a large amount of illegal profits and damages received by them in the course of the promotion transactions.
    The control of the company appeal's at that time to have been in Bigelow and his friends.
    In 1902, the control of the company became vested in the persons who controlled its affairs at the time of the filing of the bill herein; on October 7th, 1902, the defendant corporation instituted two suits in equity in the supreme court of the State of Massachusetts against the said Bigelow, the first for an accounting for one hundred thousand shares of the capital of the defendant company received by him as undisclosed promoter’s profits on the sale of the said mining properties to the defendant, with an alternative prayer for damages by reason thereof, and the second to obtain a rescission of a sale made by Bigelow and Lewisohn of what ivas denominated as outside properties, together with a return to the defendant of thirty thousand shares of its capital stock issued therefor, with a like alternative praj^er for damages suffered by the company thereby.

      Similar suits were instituted against Lewisolm in tlie Federal jurisdiction. Demurrers to the Lewisohn suits were allowed and the allowance sustained on appeal and the bills dismissed. 148 Fed. Rep. 1020.

    . Such proceedings were afterwards had in the Bigelow suits that final decrees were entered therein against him as follows: In the first suit there was a decree against him for $480,000, with interest from September 18th, 1895, amounting at the date of the decree to $832,160, with costs; and in the second suit for $700,000, with interest from September 18th, 1895, aggregating $1,213,566.67, besides costs. These decrees were affirmed by the supreme court of Massachusetts, on appeal (203 Mass. 159), and a further appeal to the supreme court of the United States was dismissed upon tlie ground that no federal question was found in the case. 225 U. S. 111. From time to time payments have been made on account of these decrees, which payments aggregated, on August 26th, 1913, $1,933,565.60. This fund is invested partly in securities and partly in the form of loans.
    In October, 1903, a plan was formulated by the persons who had control of the defendant corporation, to purchase a mining property in Arizona known as the United Globe Mines, and to consolidate it with the defendant corporation as provided in exhibits A (page 379), B (page 379) and G (page 382). This plan was enjoined by this court on January 12th, 1904, in a suit known as the Elliott suit. Beyond tlie fact that there was such a plan and such a litigation I find nothing in the circumstances that throws any light upon the present controversy. ’
    This litigation arises out of circumstances which begin with an agreement dated December 30th, 1903, made between stockholders of the defendant corporation, stockholders of the United Globe Mines and F. S. Moseley & Company, of Boston, the assenting stockholders evidencing their assent by signing their names to the agreement. The agreement provided that the Old Dominion stockholders should cause a corporation to be organized under the laws of the State of Maine with a capital stock of three hundred and fifty, thousand shares of the par value of $25 each, making a capital stock of $8,750,000, and authorized E. S. Moseley & Company to exchange stock of the assenting stockholders in the Old Dominion company for stock in the Maine company on the basis .of share for share, provided that such exchange should not be made unless two-thirds in interest of all the outstanding stockholders of the Old Dominion company should assent thereto, and so exchange their stock;, nor unless the whole stock of the United Globe Mines and $350,-000 in cash should also be acquired prior thereto or simultaneously therewith by the Maine company. The Globe stockholders authorized Moseley & Company to purchase for their account one hundred and thirty-eight thousand shares of the Maine company stock, and agreed to pay therefor by the delivery to Moseley & Company of the whole of the outstanding stock of the Globe company and the sum of $350,000 in cash. This agreement was assented to by all the stockholders of the United Globe Mines and by over two-thirds of the stockholders of the defendant corporation, the result, being that the Maine corporation, whose creation is provided for in the agreement, is now the owner of all the shares oí the United Globe corporation and of one hundred and fifty-five thousand two hundred and forty-five shares of the defendant corporation, leaving outstanding, and in the hands of private stockholders, six thousand seven hundred and fifty-five shares, of which the complainant owns three thousand and fifty-six shares, purchased by him in October, 1908, or over one-half of the shares which, did not assent. The shares of the defendant, which belong to the Maine corporation, stand on the defendant’s books in the names of Charles S. Smith and D. Blakeley Hoar, as trustees, and any dividends which might be declared by the defendant on the shares held by the said trustees would be payable to them. This trust is evidenced by certain agreements— exhibit G (page 398), exhibit II (page 403), exhibit I (page 40?).
    The trustees have issued certificates signed by themselves by which they certify that the holder thereof is entitled to shares in the trust known as the Old Dominion Trust) created by the agreements just mentioned, which trust certificates are transferable only in writing on the books of the trustees by the shareholder in person, or by bis authorized attorney, and upon the surrender of the certificate therefor. The complainant, Hyams, is the holder and. owner of one of these certificates for one hundred shares in the Old Dominion Trust. It is dated November 2d, 1907.
    The agreement of December 30th, 1903, provides in a general way for the division oE the properties of the Hnited Globe company, and the defendant, for the purposes of the agreement, into two classes by paragraphs 4, 5 and 6 thereof, and for the division pro rata among the stockholders of the respective companies of such of the assets as were intended to be segregated by that agreement, and the agreement provides that the Maine company shall make provision therefor by by-laws or agreements, or both, and that so far as relates to the Old Dominion interest, it shall provide that the net proceeds of such assets shall be taken to be the surplus from the proceeds of such assets remaining after deducting therefrom all debts and liquidated claims of the Old Dominion company incurred prior to January 1st, 1904, otherwise than for construction, and which exceed $25,000 in amount, and deducting also the amount required for the payment of counsel fees and incidental expenses of the Old Dominion interest.
    The next step in the transaction was the organization of the Maine corporation on January 15th, 1904, and the adoption by it on that day of a by-law, wherSby*it agreed to cause the defendant to carry out the terms of the agreement of December 30th, 1903; and a few days later, on January 21st, 1904, the defendant adopted a resolution, a copy of which is found in the bill of complaint. (Record, page 6.) It is conceded that by that resolution the Bigelow money, together with the other items mentioned therein, were held as a separate fund, apart from other moneys and property of the corpora lion.
    The defendant company now proposes to pay a dividend of $10 per share out of the assets which were segregated by the resolution of January 21st, 1904. The complainant, as a stockholder, will receive his proportionate share of the fund so to be divided. The fund includes the moneys received on account of the decrees against Bigelow.
    On October 12th, 1912, the present bill was filed. It prays that the defendant and its officers and directors may be enjoined from declaring as a dividend the whole or an3r portion of the money received by it from the Bigelow decrees, and from recognizing in. any way or doing anjr act in furtherance of the agreements thereto annexed and designated as schedules D, G-, H and I. These axe the agreements to which specific reference has already been made. No attempt was made to declare such a dividend until June 3d, 1913. On that day the board of directors passed the following resolution:
    “70. Voted that the president and treasurer be and they hereby are authorized to pay a special dividend from the special fund of ten dollars per share, as soon as counsel advises that the same can be paid, or the injunction restraining payment of same is removed.”
    The directors of the defendant corporation and of the Maine corporation at the time of the filing of the bill herein were each seven in number. Three of them—C. S. Smith, Altmiller and J. V. Smith—were directors of both corporations.
    Mr. Edward M. Colie, for the complainant.

      Mr. Gilbert Collins and Mr. Edward F. McClennon (of the Massachusetts bar), for the defendant.
   Howell, V. C.

It is now proposed by the defendant and its directors to pay to its stockholders a dividend of $10 per share, giving to each his proper proportion thereof, from the funds which have been called the “segregated, assets” of the company, and which consist very largely of the moneys recovered by the enforcement of the decrees against Bigelow. Such a dividend will require the sum oí $1,620,000, some $300,000 less than the amount collected to this date upon the decrees. It is objected that the Bigelow money is capital and not surplus, and that to distribute it to the stockholders in the form of dividends would be a violation of section 30 of the Corporation law as amended in 1904. P. L. 190J+ p. 275. Consequent^, the first question to be decided is whether the Bigelow money belongs to and is part of the money capital of the corporation, or whether taking an account of all the assets and liabilities of the corporation fixere remains a surplus out of which, the proposed dividend may be lawfully declared. The statute (P. L. 1901 p. 246) now declares that unless otherwise provided in the incorporation papers or in by-laws adopted by at least a majority of the stockholders tire directors shall, in January of each year, after reserving a working capital fixed by the stockholders, declare a dividend among the stockholders of the whole of its accumulated profits exceeding the amount so reserved and pay the same to such stockholders on demand, but that the directors shall not make dividends except from the company’s surplus or from the net profits arising from its business. P. L. 1904 P- 27-5. Therefore, before reaching any conclusion on the question of the ability of the corporation to pay dividends lawfully, we must inquire into its assets and liabilities and ascertain whether, after payment and satisfaction of all liabilities, taking into account the liability to redeem the capital stock at par there still remains a fund out of which the proposed dividend can be paid without impairment of the capital, or whether there are net profits arising from the business which can be used for that purpose. Goodnow v. American Writing Paper Co., 73 N. J. Eq. (3 Buch.) 692.

It appears that on Juty 31st, 1913, the books of the company show total assets of $9,344,639.3?, and liabilities of $4,808,-861.33 (including the capital stock liability), leaving a‘surplus of $4,535,778.04. Obviously, if these figures are correct, there is in the possession of the company sufficient surplus for the purpose of the dividend. It was argued that inasmuch as the decrees went against Bigelow because of the abstraction by him of moneys claimed to belong to the cash capital of the company, the recovery when made should have been credited to capital account for the purpose of restoring the capital which had been depleted by his act in the promotion scheme. But, on the other hand, it now appears when the Bigelow recovery is included that the company has sufficient assets over all its liabilities to make good its capital, which has been accumulated from its current net profits, and that consequently the Bigelow money is not needed for the purpose of meeting anj7 impairment of the money capital. It, therefore, belongs to that portion of the confpany’s funds which is denominated surplus. It was originally carried on the books of the company in an account entitled “Old Dominion Special Account,” and it was'subsequently entered in the ledger under the name “Special Fund Account.” Later on, and after the bringing of this suit, it was transferred to an account which was called “Deserve Account for the Payment of Dividends.” But it makes aro difference whether it is carried as surplus or as segregated assets or ira a special fund account or otherwise. ' It is money which beloaags to the corporation and is under the control of its directors, and it is subject to distribution among the stockholder's if the directors see fit to make distribution of it. Bassett v. United States Cast Iron Pipe and Foundry Co., 74 N. J. Eq. (4 Buch.) 668; affirmed on appeal, 75 N. J. Eq. (5 Buch.) 539.

The only items in the defendant’s statement of assets arad liabilities as of July 31st, 1913, which are subject to criticism, are the items relating to mines and mining claims, and new plant, and construction. Mines and mining claims belonging to the company are carried on the books at $3,414,856.81. This appears, from the testimony, to'be a careful and conservative statement of the values of those items. As testified to by the president of the company their value is from four1 to five million dollars, exclusive of any of the plant improvements. The complainant, who is a mining engineer of large experience, and who was the man that was depended upon at the time of the original purchase to advise the officers and directors -as to the development of the mine, and who has a perfect knowledge of the mines and mining claims, was asked whether, in his opinion, the president’s valuation was high or low. His answer was that it was low. I think that I must assume from these statements that the real value of the mine and mining claims exceeds the sum at which they are carried on the company’s books by a large amount. ' The other item, which is called new plant and construction, and aggregates $3,013,754.37, was largely discussed by counsel on the argument. It represents moneys expended on the construction and erection of the operating plant and machinery, and so far as I can see, it represents actual expenditures and actual values. It cannot be said that the operating plant of a mine has little or no value simply because it is used as a factor in the development and working of a wasting property. It, or its equivalent, is necessary to the operation of the mine, and its valuation for that purpose must be left to the honest judgment of the board of directors. No case of fraud in the valuation of this item is shown, and a mere mistake of judgment, if honestly arrived at, must stand as the final act of the directorate.

The total surplus of $4,535,778.04 is carried on the books of the company in four items:

Reserve against special fund............... $1,956,483.08
Plant renewals........................... 759,344.37
Mine renewals ........................... 867,073.91
Profit and loss........................... 952,846.68
Total ............................. $4,535,77S.04

If these figures are correct there can be no doubt but that the company, after providing for all its liabilities upon a full adjustment of all its affairs, including a proper charge for depreciation and renewals, has sufficient money or property with which to pay the proposed dividend without in any way or to any extent impinging upon the fund known as the company’s money capital. Having reached this conclusion, it is hardly necessary to say that the question of the declaration of a dividend and its amount, time and terms of payment, are entirely within the honest discretion of the board of directors. Murray v. Beattie Manufacturing Co., 79 N. J. Eq. (9 Buch.) 604; Blanchard v. Prudential Insurance Co., 80 N. J. Eq. (10 Buch.) 209.

The next objections relate principally to the situation in which the directors of the defendant company find themselves. It is urged that in declaring the dividend in question the directors are acting under the compulsion of an agreement made between the defendant’s stockholders and the stockholders of the United Globe Mines, and the agreements supplemental thereto, and that the presence of three common directors of itself is sufficient to render invalid any act in which the two companies may be interested. It will be remembered that the defendant corporation is not a party to any of the agreements complained of. Neither have its directors or officers in the remotest way become parties to it. The Maine corporation, by reason of its large holdings of the stock of the defendant company, undoubtedly dictates the personnel of the defendant’s directorate, and when it agreed that it would compel the performance of the agreements in question b3r the defendant, who was not a party to them, it did, so far as I can see, merely what it had a right to do as the predominant holder of the defendant company’s stock. The point of these last-mentioned objections seems to have been considered.by Vice-Chancellor Stevenson in his opinion in Pierce v. Old Dominion Co., 67 N. J. Eq. (1 Robb.) 426; and in view of the expression of the court of errors .and appeals in that case (74 N. J. Eq. (4 Buch.) 450), it may well be argued that the reasoning of the vice-chancellor on the injunction motion was approved by the appellate court. This view appears to me not only to be reasonable, but, under the circumstances, the only view that could be taken of the situation. The argument of the complainant is that on account of the circumstances in which the directors of the defendant are, it is impossible that there should be any relations between the' companies at all. The other view is that so long as the defendant’s directors confine themselves to lawful acts, this court will not interfere in an honest exercise of their discretion. The fact that the Maine corporation holds nearly all the stock of the defendant corporation casts upon it the duty of seeing to it that the alfairs of the defendant company are projoeriy and fairly and honestly managed with respect to ’the rights of all the defendant shareholders. This appears to me to have been accomplished. The complainant who now objects to the declaration of a dividend is being treated in the same manner in which the other stockholders are being treated, and he must and will receive his pro rata share of the moneys to be divided, without discrimination or distinction.

Einalty, it is argued on behalf of the defendant that the complainant is estopped from questioning the validity of the proposed action, for the reason that he ratified evei^hing that had been done, with full knowledge of all the details thereof by the purchase of one hundred shares in the Old Dominion Trust which he had transferred on the books of the trustees to his own name, and besides other shares which stand in the names of other persons for him- I do not think that this is an acquiescence in the scheme of sufficient force and cogency to operate as an estoppel. Neither do I think that his motives in making these purchases can be inquired into as the case now stands. Hodge v. United Steel Corporation, 64 N. J. Eq. (19 Dick.) 111. Neither do I think that his appearance at the meeting of April 6th, 1910, by his counsel, Mr. Tyler, can be so construed, or that the vote by the stockholders on that day, approving all the doings of the officers of the company during the preceding year, and accepting the report of the directors containing- the report of the treasurer, can be held to be a ratification of all the company’s acts. It is likewise urged that an estoppel grows out of the fact that the complainant holds four hundred shares of the defendant company’s stock, two hundred of which were once owned by Mr. Smith, both of whom were concluded by the decision in the Pierce suit, or actively assented to all the matters concerning which the complainant now complains. It may be true that the predecessors in title of these four hundred shares of stock have acquiesced .in the policy of which the complainant now complains, but his remaining shares are not subject to the same disability, and I think it quite clear that he may sue with respect to his rights in them.

There is an incidental matter mentioned lastly, but of the first importance. Upon the filing of the bill in this cause on October 10th, 1912, an order was made which is still in force by which the defendant and its directors were restrained from declaring as a dividend to the defendant’s stockholders the whole or any part of the moneys received by reason of the decrees against Bigelow. While this injunction was in force, and on June 3d, 1913, a quorum of the directors of the defendant passed the resolution above recited. This action of the directors seems to me to be a violation of the terms of the injunction, and sufficient to charge the defendant with process of contempt. I shall not assume that the contumacy was either wanton or intended as a manifestation of contempt. It is a technical violation of the injunction, however, and the court will not entertain any motion for a final decree on behalf of the defendant until this resolution shall have been rescinded.


author: Howell, Y. 0.

text:
    Carrie S. Beam v. Paterson Safe Deposit and Trust Company et al.
    [Submitted November 12th, 1913.
    Decided December 6th, 1913.]
    1. The burden of proof of the .“exercise of good faith and reasonable discretion,”'within the meaning of .the statute with respect to a trustee in continuing investments made by a decedent in his lifetime (P. L. 1899 p. 286), is cast upon the trustee, under the peculiar facts in this case.
    2. In a suit against a trustee (a trust company) for an accounting with respect to losses occasioned to a trust fund in the continuing such investments made by a testatrix in her lifetime, and where it appeared that the trustee, instead of insisting upon cash, accepted from the executors the securities in question, which then were considered by investors generally to be of the first quality, and about a year after the beginning of the trust the market values of such securities began to depreciate, and so continued thereafter to depreciate, until the commencement of this suit, evidence examined, and held that the trustee had not sustained the burden of proof cast upon it by the statute respecting the exercise of a “reasonable discretion,” although there is no lack of the exercise of “good faith.”
    3. There are probably no securities in which people invest their money which can be said to be safe at all events and under all circumstances. There is always some element of chance which time may develop. When, however, a security comes within the region of doubt it is the part of prudence and discretion to eliminate it from a trust fund at the earliest possible moment, and defendant trustee having neglected to do so, in this case, is liable to the complainant upon this ground.
    On final hearing on bill, answer, replication and proofs.

      Mr. Pierre P. Coolc, for the complainant.

      Messrs. Griggs .& Harding, for the defendants.
   Howell, Y. 0.

The claim of the conrplainant in this case, and the facts upon which she relies, are fully stated in the opinion of Yice-Chaneellor Stevenson on tlie motion to strike ont/'the bill of complaint herein. Beam v. Paterson Safe Deposit Co., 81 N. J. Eq. (11 Buch.) 38, and in the same matter on appeal, 81 N. J. Eq. (11 Buch.) 196. It was held by the court of errors and appeals on the allegations of the bill that the fact that securities which had come to the hands of a trustee, and which had steadily depreciated in value from the beginning of the trust until the shrinkage amounted to nine-tenths of the value, made a prima - facie ease of lack of good faith, or a failure to exercise reasonable discretion on the part of the trustees, and that such a dealing with the trust funds called for an explanation by the trustees of their action in holding on to securities which were steadily declining until they had shrunk to one-tenth of the value which they had at the time they became part of the trust estate. The burden of proof of the “exercise of good faith and reasonable discretion,” to use the words of the-statute (P. L. 1899 p. 236) is thus thrown upon the trustee, and the only question now before the court is whether the trustee has met that burden. I am constrained to reach the conclusion that it'has not. It appears that the securities in question were investments made by the testatrix in her lifetime, and that when the time came for the executors to transfer the fund in question to the trustee, the trustee, instead of insisting upon cash, accepted the securities in question without objection. This was in 1905. The securities at that time were considered by investors generally to be of the first quality. The market, values began to depreciate about a year after the beginning of the trust, and continued thereafter to depreciate until the present time. The trustee watched the decline in value, consulted with investors in relation thereto, discussed the matter at meetings of its finance committee, procured tire appointment of its president and a member of its finance committee as directors of one of the companies which issued some of the securities, and otherwise kept in view the declining values. It owned and held as an investment some of the same securities which it held in-trust for the complainant, so that its treatment of the trust fund was the same as was accorded by it to its own property. It appears to have done everything- that 'it coulcl have done in the way of informing itself of the disasters which finally overtook and wrecked the securities, but failed to perceive the inevitable outcome which now appears to be so plain..

I therefore think that, as a matter of fact, there was no lack of good faith on the part of the trustee, nor do I find any affirmative averment which can be construed into such a charge. That leaves open the question of the exercise by it of a reasonable discretion in holding on to the securities after they had begun to decline. On this question the judgment must be for the complainant. It must have sufficiently appeared to the trustee from the early part of 1906 forward that the securities held by it were doubtful in character, else there would have been no need of the exercise of the great watchfulness and anxiety testified to on the part of the defendant. There are probably no securities in which people invest their money which can be said to be safe at all events and under all circumstances. There is always some element of chance which time may develop. When, however, a security comes within the region of doubt, in my opinion, it would be the part of prudence and discretion to eliminate it from a trust fund at the earliest possible moment. That the trustee neglected to do. It is upon this ground that I deem the defendant to be liable to the complainant.

For the purpose of ascertaining the amount with which the defendant should be charged, it will be necessary to fix the date at or about the time of which the securities should have been sold. As nearly as I can get at it there was sufficient decline by August 1st, 1906, to inform the trustee that a doubt about their value existed. Without having heard argument on this point, this date seems to me to be approximately correct. However, the point will be left open, and may be discussed at the time of settling the decree.


text:
    The Morristown Trust Company, executor, &c., v. The Mayor and Board of Aldermen of the Town of Morristown et al.
    [Decided December 20th, 1913.]
    1. A bequest appropriated for the erection of a bronze and granite base for the flag staff in the Morristown park when the proper consent shall have been obtained for the erection of the same from the trustees of the park and from the municipal authorities of Morristown, the same to bear an inscription that it was erected in memory of the testator’s father, must fail and fall into the residuary estate because it does not come within any of the definitions of charitable uses, nor is it in any sense a devotion of the money therein mentioned to charitable purposes. It is a mere private trust, and is violative of the rule against perpetuities.
    2. Trusts for charitable uses defined.
    3. The impossibility of procuring the consent of the trustees of the Morristown green or park, and of the municipality, to the erection of the structure provided for in this bequest is another reason why such bequest must fail, the consent of the trustees being made one of the conditions upon which the validity of the bequest depends, without which the physical construction could not be carried on.
    4. Another legacy under the same will to the Society for Providing Medical Attendance to the Worthy Poor of the Township of Morris must likewise fail and fall into the residuary estate, it appearing that there was a voluntary association of the residents of Morristown and vicinity called by the name of the intended legatee, which existed from January 14th, 1889, until January 9th, 1911, when it disbanded and thereby became dissolved; the dissolution occurred after the testator’s will was executed and after his death, but without any attempt to collect this legacy.
    5. There is a distinction well settled by the authorities between the class of cases in which there is a gift of charity generally, indicative of a general charitable purpose, and pointing out the mode of carrying it into effect, and another class of cases which the testator shows an intention, not of general charity, but to give to some particular institution, and then if it fails because there is no such institution the gift does not go to charity generally, and this last bequest is not a bequest to charity generally, but as one to the particular legatee, which terminated its own existence within a year after the testator’s death and before the legacy became due and payable according to law.

      On final hearing on bill and answers.

      ■Mr. Willard IF. Cutler, for the complainant.

      Mr. Stephan II. Little, for the residuary legatees. .

      Mr. Carl V. Vogt, for the town of Morristown.
   Howell, Y. C.

The two legacies in question, under the will of Augustus L. Severe, must fail, and the amounts thereof must revert to the residuary fund. The first legacy appropriates $5,000 for the erection of a bronze and granite base for the flag staff in the Morristown park when the proper consent shall have been obtained for the erection of the same from the trustees of the park and from the municipal authorities of Morristown; the same to bear an inscription that it was erected in memory of the testator’s father. This bequest must fail because it does not come within any of the definitions of charitable uses, nor is it in any sense a devotion of the money therein mentioned to charitable purposes.. It is a mere private trust, and is violative of the rule against perpetuities. Mr. Justice Gray, of the Massachusetts supreme court, in Jackson v. Phillips, 96 Mass. 539, defines a charity as follows: “A charity in its legal sense may be more fully defined as a gift to be applied consistently with existing laws for the benefit of an indefinite number of persons either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies of disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works, or otherwise lessening the burdens of government. It is immaterial whether the purpose is called charitable in the gift itself, if it be so described to show that it is charitable in its nature.” This definition was approved by our court of errors and appeals i'n MacKenzie v. Trustees, 67 N. J. Eq. (1 Robb.) 652. Lord Macnaghten, in Commissioners of Income Tax v. Pemsel (1891), A. C. 531; 61. L. J. Q. B. 290, defines trusts for charitable purposes as follows:

(1) Trusts for the relief of poverty.

(2) Trusts for the advancement of education.

(3) Trusts for the advancement of religion.

(4) Trusts for other purposes beneficial to the community not falling under any of the preceding heads and not being for the purpose merely of sport or hospitality.

It is quite apparent that this bequest does not fall within, either of the above definitions.

There is another reason, however, which must be looked at, and that is the impossibility of procuring the consent of the trustees of the Morristown green or park, and of the municipality, to the erection of the structure provided for. The facts are that the consent of the trustees was sought; that they entertained an application for permission to make the construction in accordance with the terms of the will; that the same was considered and discussed by them, and was finally refused. This state of facts brings the ease within Teela v. Bishop of Derry, 168 Mass. 341, where a legacy failed, very largely because the bishop of the diocese Refused to assist in maintaining' a chapel or supporting a priest, and that without his help the people could do neither. That situation is analogous to the one now in hand, for the reason that the consent of the trustees is made one of the conditions upon which the validity of the legacy depends, besides which the physical construction could not be carried on without their consent. Their refusal, therefore, operates as a rejection of the leg'acy. If there were no other reason for its invalidity, this makes it impossible of enforcement, and for this reason also it must fail.

The other legacy to the Society for Providing Medical Attendance to the Worthy Poor of the Township of Morris must likewise fail, but for a different reason. It appears by the allegations of the pleadings that there was at one time a voluntary association, composed of residents of Morristown and vicinity, called the Society for Providing Medical Attendance to the Worthy Poor of the Township of Morris, which existed from January 14th, 1889, until January 9th, 1911, when it disbanded, and thereby became dissolved. This dissolution occurred after the testator’s will was executed and after his death, but without any attempt to collect the legacy.

In Brown v. Condit, 70 N. J. Eq. (4 Robb.) 440, Vice-Chancellor Stevenson dealt with bequests to legatees who were not in existence either at the date of the will or at the date of the testator’s death, and held that in either of those two cases the legacy, even though charitable, would lapse, and the amount thereof would fall into the residue. In the case at bar, the legatee did not go out of existence until about eight months after the testator’s death; the members then having full knowledge of the bequest, voluntarily dissolved, although it might possibly have continued its existence and in some way have taken advantage of the bequest.

This action of the legatee seems to have the effect of a rejection of the legacy, and, if so, is the fund to be administered cy pres, or does it fall into the residue? The solution of this question involves a consideration of the intention of the testator; the point is well illustrated by the opinion of Vice-Chancellor Kindersley in Clark v. Taylor, 1 Drew. 642. There the testator bequeathed a legacy of fifty pounds to the treasurer for the time being of the female orphan school in Greenwich, patronized by Mrs. Enderby, for the benefit of that charity. The will was made in March, 1839; ho died in October, 1840. Mrs. Enderby continued to carry on her school until November, 1846. The bequest not having been paid, the question was whether it failed, and whether it was dedicated to charity and was to be disposed of cy pres. The vice-chancellor held that the bequest failed entirely, and that it became part of the residue. He says: “The question is whether the gift in this will is to be considered as a gift intended for charitable purposes generally, or whether it was simply intended for the benefit of a particular private charity.

“Now, there is a distinction well settled by the authorities. There is one class of cases in which there is a gift to charity generally, indicative of a general charitable purpose, and pointing out the mode of carrying it into effect. If that mode fails the court says the general purpose of the charity shall be carried out. There is another class in which the testator shows an intention, not of general charity, but to give to some particular institution, and then if it fails because there is no such institution, the gift does not go to charity generally. That distinction is clearly recognized, and it cannot be said that wherever a gift for any charitable purpose fails it is nevertheless to go to charity.” The vice-chancellor then holds from the particular words of the gift that there was no contemplation of a charitable purpose generally, but that a benefit to the particular school mentioned was intended. And so I read the bequest in question in this case, not a. bequest to charity generally, but as one to the particular legatee, which terminated its own existence within a year after the testator’s death and before the legacy became due and payable according to law. In re University of London (1909), 2 Ch. 1.

It has been said that Clark v. Taylor (1853), supra, was in opposition to the decision of Sir John Leach, master of the rolls, in Hayter v. Trego, 5 Russ. 113, in, which, on similar facts, tire master of the rolls administered the fund cy pres; but it will be found upon careful reading of the cases that in Hayter v. Trego there was a general charitable intention expressed by the will which would be sufficient to control the decision. Clark v. Taylor, supra, was followed by In re Ovey, Broadbent v. Barrow, 29 C. D. 560; 51 L. J. Ch. 752, and by In re Rymer v. Stanfield (1895), 1 Ch. 19; 64 L. J. Ch. 86, in the court of appeals.

. Again, there is no scheme furnished by the testator for the administration of the fund, provided it were held valid. There is no use defined nor any term fixed within which the money shall be expended, nor any establishment of an endowment to the extent of the gift, and thus the purposes of the gift are indefinite and uncertain and could not be effectuated without the formulation of a scheme by the court for the administration of the fund. "While this would not be an insuperable objection, it is one which presses itself upon my attention.

The trustee under the will of the deceased will be instructed accordingly.


text:
    Oscar Keen, trustee, &c., v. A. Gifford Plume et al.
    [Submitted July 1st, 1912.
    Decided July 11th, 1912.]
    1. By the residuary clause of her will the testatrix after giving five-sixteenths of the residue to her son, Archer Gifford Plume, and five-sixteenths thereof to his daughter, Mary Josephine Lockwood, gave the remaining six-sixteenths thereof to trustees upon certain trusts therein declared, and then divided this trust fund into three parts, and disposed of two-thirds of said remaining six-sixteenths so given to trustees as aforesaid in manner following: “And I do further order and direct that upon my said grandson John I. Plume attaining the age of twenty-one 3rears the said trustees or the survivor of them shall pay to him out of the remaining two-thirds of said equal undivided six-sixteenths parts of said residue of my estate so by them held in trust the sum of $4,000, but if nw. said grandson shall not live to that age, then to pay the whole income arising from said two-'thirds of said equal undivided six-sixteenths parts of said residue of my estate to my said son Samuel W., and upon his death the said two-thirds, or if the same shall have been sold, the proceeds thereof, to convey to or pay to my three children Mary Josephine Lockwood, Sarah Virginia and Archer Virginia Plume, the same to be held or equally divided between them share and share alike.”—Held, that the foregoing quoted clause created a remainder in testatrix’s said three children, Mary Josephine Lockwood, Sarah Virginia Tugman and Archer Gifford Plume, therein named, which vested upon the death of the testatrix, and that the fund in question be divided into three parts, giving to Archer Gifford Plume, the representatives of Mary Josephine Lockwood, and the representative of Sarah Virginia Tugman, each one-third.
    2. Vested and contingent remainders defined and distinguished.
    3. Where the real estate of a testatrix has been in fact turned into personalty under a power of sale contained in the will, the result as far as the distribution of the estate is concerned, is the same as if the will contained a direction to convert.
    4. A power of sale as distinguished from a trust for sale does not operate as a conversion of property. The direction to sell must be imperative in order to operate as a conversion, but if it be exercised the property will be converted according to law unless there be a trust declared of the proceeds sufficient to reconvert it.
    5. It is a physical change of land to money, effected by a valid testamentary power to perform an act evidently in the contemplation of the testatrix, which establishes the rule upon the foundation of reason. The estate will therefore devolve under the provisions of the will as personalty.

      On final hearing on bill, answer, replication and proofs.

      Messrs. Pitney, Hardin .& Slcinner, for the complainant.

      Mr. J. H. Thayer Martin, for the defendant John I. Plume.
    ilír. J. Edward,'Ashmead, for Harry D. Lockwood and others.

      Mr. Qonover English, for A. Gifford Plume.

      Messrs. Young é Bigelow, for Henry Young, Jr., administrator, and Edward C. Plume.
   Howell, Y. C.

The controversy in this cause involves the construction of the will of Susan Plume, who died in 1861. The last life tenant died in 1909, and the fund in the hands of the complainant, as trustee, are now ready for distribution. There are several claimants for it, and the trustee seeks the aid’ of the court in the premises.

The difficulty arises under the seventeenth paragraph of the will which disposed of the residue of the estate. By that paragraph the testatrix gave five-sixteenths of the residue to her son Archer Gifford Plume and five-sixteenths thereof to his daughter Mary Josephine Lockwood; the remaining six-sixteenths she gave to trustees upon certain trusts therein declared. She then divided this trust fund into three parts. One part (one-third) thereof has been disposed of, so that we have only to deal with two-thirds of the six-sixteenths or one-fourth of the residue of her estate. The portion of the will which is in dispute reads as follows:

“And I do further order and direct that upon my said grandson John I. Plume attaining the age of twenty-one years the said Isaac Van Wagenen and Charles L. C. Gifford (the trustees) or the survivor of them, shall pay to" him out of the remaining two-thirds of said equal undivided six-sixteenths parts of said residue of my estate so by them held in trust the sum of $4,000, but if my said grandson shall not live to that age, then to pay the whole income arising from said two-thirds of said equal undivided six-sixteenths parts of said residue of my estate to my said son Samuel W., and upon his death the said two-thirds, or if the same shall have been sold, the proceeds thereof, to convey to or pay to my three children Mary Josephine Lockwood, Sarah Virginia and Archer Gilford Plume, the same to be held or equally divided between them share and share alike.”

■ Archer Gifford Plume, the son, and John I. Plume, the grandson of the testatrix, are still living: Sarah 'Virginia Tugman died in 1866 intestate and without issue. Samuel W. Plume, the son of the testatrix, died in 1909.

The claimants to the fund are as follows: Archer Gifford

Plume claims the whole fund upon the ground that the clause of the will above quoted created a contingent remainder, the contingency being that only the survivor of the three children of the testatrix succeeds to the fund. .John I. Plume claims the whole fund on the ground of an implied gift. John I. Plume, ns personal representative of his father, Samuel W. Plume, claims the entire fund upon the ground of an implied gift. The personal representative of John V. Plume claims that the •testatrix died intestate as to the fund in question and prays that he may be included in the distribution. Edward C. Plume, the son of the said John V. Plume, makes a similar claim. The representatives of the estates of Sarah Virginia Tugman and Mary Josephine Lockwood claim that the said clause created a remainder which vested upon the death of the testatrix, and that the fund should be divided into three parts, giving to Archer Gifford Plume, the representatives of Mary Josephine Lockwood and the representative of Sarah Virginia Tugman each one-third. If the above-quoted clause created a remainder in Archer Gifford Plume, Mary Josephine Lockwood and Sarah Virginia Tugman, which vested upon the death of the testatrix, then their contention is correct and the fund will be disposed of accordingly, and it will be unnecessary to examine into the claims of any of the other defendants.

In my opinion, the testatrix created a vested remainder, the vesting of which happened upon her death. As a preliminary matter it may be stated that in doubtful cases every intendment of the law is in favor of the vesting of estates, for the reason that it must be presumed that a person who goes through the formality of making a will,intends to dispose of liis whole estate unless the contrary clearly appears. This canon of construction is so well known as to need no citation of authorities, but we are not compelled to appeal to it in the case at bar, for the reason that there can be no doubt upon the words of the will, but that the testatrix did create the estate above indicated.

Chancellor Kent says: “An estate is vested when there is an immediate right of present enjoyment or a present fixed right of future enjoyment. It gives a legal or equitable seisin. The definition of a vested remainder in the New York revised statutes appears to be accurately and fully expressed. It is 'when there is a person in being who would have an immediate right to the possession of the lands, upon the ceasing of the intermediate ox precedent, estate/ ” 4 Com. 202.

Mr. Washburne quotes the foregoing view of Chancellor Kent with approval and adds: “The present capacity of taking effect in possession, if the possession were now to become vacant, and not the certainty that the possession will become vacant before the estate limited in remainder determines, universally distinguishes a vested remainder from one that is contingent. By capacity, as thus applied, is not meant -simply that there is a person in esse interested in the estate, who has a natural capacity to take and hold the estate, but that there is further no intervening circumstance, in the nature of a precedent condition, which has to happen before such person can take. As for instance, if the limitation be to A for life, the remainder to B, B has a capacity to take this at any moment when A may die.” 2 Washb. Real Prop. 504. These views axe universal at common law and have been followed and adopted in this state in a long line of cases, to only a few of which reference will be made.

In Greene v. Howell, 30 N. J. Law (1 Vr.) 326, Mr. Justice Yredenbuxg stated the rule as follows: “When the absolute property in a fund is bequeathed in fractional interests in succession at periods which must arrive, the interest of the first and subsequent takers will vest together.” The point-was reviewed in the court of errors and appeals in the case of Howell v. Greene, 31 N. J. Law (2 Vr.) 570, in an opinion by Chancellor Green, from which this extract is made: “It is a well-settled rule of construction that a gift of a legacy ‘at’ or ‘when’ or ‘after’ a given event occurs vests only upon the happening of the event * * * where the time is annexed, not to the payment merely, but to the gift itself, the legacy does not vest until the period arrives. Gifford v. Thorne, 9 N. J. Eq. (1 Stock.) 705. On the other hand, it is an equally well-settled rule of construction that where an absolute property in a fund is bequeathed in fractional interests in succession at periods which must arrive, the interests o£ the first and subsequent takers will vest together.”

The use of the phrase “after her decease” in that case corresponds very closely to the use of the phrase “and upon his death” in the present case, which is much relied upon by counsel on behalf of Arthur Gifford Plume as the true criterion of a contingent remainder. An earlier case in our common law reports is Moore v. Rake, 26 N. J. Law (2 Dutch.) 574, in the opinion in which Mr. Justice Vredenburg says: “An estate is vested when there is an immediate fixed right of present or future enjoyment; the law favors the vesting of remainders and does it at the first opportunity. It is the present capacity of taking effect in possession if the possession were to become vacant that distinguishes a vested from a contingent remainder. It is the uncertainty of the right which renders the remainder contingent, not the uncertainty of the actual enjoyment. A remainder limited upon an estate tail is held to be vested, although it is uncertain if the possession will ever take place.”

In this court, following the court of errors and appeals in the two cases above cited, the same rule has been expressed many limes and by many equity judges. In Havens v. Seashore Land Co. Vice-Chancellor Van Fleet quotes the statement of Mr. Justice Vredenburg above cited from Moore v. Rake, giving it the sanction of his approval, as does Vice-Chancellor Pitnej'' in his opinion in Kinkead v. Ryan, 64, N. J. Eq. (19 Dick.) 454. The portion of the opinion of the vice-chancellor which dealt with this question was affirmed on appeal, 65 N. J. Eq. (20 Dick.) 726. In Voorhees v. Singer, 73 N. J. Eq. (3 Buch.) 532. Vice-Chancellor Learning defined a vested remainder as follows: “The distinction between a vested and contingent remainder, in a case like the present one, is well defined. The former is one that is so limited to a person in being and ascertained that it is capable of taking effect in possession or enjoyment on a certain determination of the particular estate without requiring the concurrence of any collateral contingency. The uncertainty as to the remainderman ever enjoying the estate, which is limited to him by way of remainder, will'not render such remainder a contingent one, providing lie has, by such limitation, a present absolute right to have the estate the instant the prior estate shall determine, but the absence of such absolute right renders the estate a contingent remainder.”

I know of no rule of law that is better settled. Applying it to the case in hand, it is very clear that Mr. Plume, Mrs. Lockwood and Mrs. Tugman at the date of the death of the testatrix had a present fixed right of future enjoyment in the said fund, and that if the intermediate particular estate were removed they would have a present fixed right of present enjoyment. This distinguishes the ease from cases involving contingent remainders. Here the limitation depends upon death, which is certain, and not upon the happening of any uncertain event. The result is that the one-fourth of the estate of the testatrix now in the hands of the trustee must be divided into three equal parts, one of which must go to Arthur Gifford Plume, another to the personal representatives of Mrs. Lockwood, and the third to the personal representative of Mrs. Tugman. Having thus disposed of the fund, it is unnecessary to consider the claims of the other defendants.

When the memorandum was filed in this case on July 11th, 1912, no mention was made of the question whether there had • been an equitable conversion of the estate of Mrs. Plume from realty into personalty. In fact, it seems to have been assumed that the conversion -had taken place and that the whole estate now in the hands of the trustee should be regarded as personal property. Since then a very full and complete argument has been had on that point, and I have reached the conclusion that the conversion has taken place and that the whole estate now in the hands of the trustee should be considered and treated as personalty. The only question now is when did the conversion take place.

It might well be asserted that the conversion took place- at the death of the testatrix, for the obvious reason that she treated all her property as a single fund to be converted into cash and invested as a single fund for the benefit of certain legatees with a devise over of the proceeds of the sale if the same should have been made, thus raising a case which would compel the court to hold that the conversion took place upon her death for the purposes of the will and for the purposes .of distribution; but it is not necessary to decide the case on that point. There is another plain reason why the property must now be held to be personalty.

Treating the power of sale as a mere authorization and power to the trustees to make sale of the premises in their discretion, it must be held that whatever right the devisees took in the estate was subject to the power of sale. Wurts v. Page, 19 N. J. Eq. (4 C. E. Gr.) 365; Condict v. Condict, 73 N. J. Eq. (3 Buch.) 301. There has been no attempt on the part of any of the devisees or legatees to defeat the power of sale by an election to take the land instead of the money, and hence the power of sale continued as a valid power which might be exercised and which was exercised by the trustees in their discretion. The cogent fact is that a conversion has actually been made and the property actually transmuted from realty to personalty without objection; the change took place with regard to each separate parcel of land at the time when the power to sell was exercised and the actual transmutation of the property took place. This rule is found in our own state in Wurts v. Page, supra; in Cook v. Cook, 20 N. J. Eq. (5 C. E. Gr.) 375; Kouvalinka v. Geibel, 40 N. J. Eq. (13 Stew.) 443, and McKiernan v. McKiernan, 74 Atl. Rep. 289. The English rule is the same. I quote- from Mr. Justice FarwelFs work on Powers (at p. 548) : "A power of sale as distinguished from a trust for sale does not operate as a conversion of property. The direction to sell must be imperative in order to operate as a conversion (Fletcher v. Ashburner, 1 Bro. Ch. C. 497), but if it be exercised, the property will be converted according to law unless there be a trust declared of the proceeds sufficient to reconvert it. Walter v. Maunde, 19 Ves. 424; DeBeauvoir v. DeBeauvoir, 3 H. L. C. 525; Greenway v. Greenway, 29 L. J. Ch. 601; 2 De G. F. & J. 128; Sugd. Pow. 856.”

It is the physical change of land to money, effected by a valid testamentary power to perform an act which was evidently in the contemplation of the testatrix, which establishes the rule upon the foundation of reason. The estate will therefore devolve under the provisions of the will as personalty.


text:
    Frederick R. Maddock, administrator, &c., v. Marjorie Heath Connolly et al.
    [Decided June 5th, 1913.]
    1. The rule that a party seeking to establish a lost instrument such as a deed of conveyance or a will, or to recover upon a lost instrument such as a mortgage or a promissory note, manifestly casts the burden of proof on the party claiming under the lost instrument, and it is consonant with reason that the burden of proof shall not only be sustained by him, but that the evidence as to the existence, execution and delivery of the lost instrument should be clear and cogent.
    2. Upon a bill for the foreclosure of a mortgage, assuming that the complainant h^s established the fact that an instrument of the sort mentioned in the bill once existed either (1) to secure a present loan, or (2) to secure future advances to be made under it, evidence examined and Held to fail to show that the mortgagor owed the mortgagee anything at all either at the time of the making of the mortgage, or that any money was advanced by the mortgagee to the mortgagor by way of a future advance on the mortgage itself, and hence the burden of proof has not been met by the complainant.
    On final hearing on bill, answer, replication and proofs.

      Mr. Ralph E. Lum and Mr. Egbert J. Tamblyn, for the complainant.

      Mr. Gortlanclt Parher, for the defendant Marjorie Heath Connolly.

      Mr. Edward A. Bay, for the defendant Carlotta Heath.

      Mr. Algernon T. Sweeney and Mr. John B. Hardin, for Bertha Baker Heath and other defendants.
   Howell, V. C.

Whether a complainant seeks to establish a lost instrument such as a deed of conveyance or a will, or seeks to recover upon a lost instrument such as a mortgage, or a promissory note, the burden is on him in the first instance to prove that a document of the sort alleged in the bill once existed, that it was properly executed and delivered, that it has been lost, and that proper search has been made for it; and when these points shall have been proved the court will then take secondary evidence as to its contents. This rule manifestly casts the burden of proof on the party claiming under the lost instrument, and it is quite consonant with reason that the burden of proof shall not only be sustained by him, but that the evidence as to the existence, execution and delivery of the lost instrument should be clear and cogent. Maryotl v. Swaine, 28 N. J. Eq. (1 Stew.) 589. The authorities on tire point in this state are very meagre, but the question has received attention elsewhere. Connor v. Pushor, 86 Me. 300; 29 Atl. Rep. 1083; Moses v. Morse, 74 Me. 472; Day v. Philbrook, 89 Me. 462; 36 Atl. Rep. 991; Edwards v. Noyes, 65 N. Y. 126; Scurry v. Seattle, 56 Wash. 1; 104 Pac. Rep. 1129; 134 Am. St. 1092; Taylor v. Riggs, 1 Pet. 591.

I am of opinion that the burden of proof so resting upon the complainant in this case has been fully met, and I shall assume without further statement or argument that the complainant has established the fact that an instrument of the sort mentioned in the bill once existed, and that it was of the tenor and effect therein set out. I base my conclusion as to this fact upon the testimony of Mr. Mad dock and the introduction of the certified copy of the registry of the mortgage, which I think is evidential on. this point.

But in my opinion the complainant has wholly failed to prove that there was any consideration for the mortgage in question, or that there was ever any money advanced upon it. The mortgage wap executed either (1) to secure a present loan, or (2) to secure future advances to be made under it. There is ho evidence whatever to the effect that the mortgagor owed the mortgagee anything at all at the time of the making of the mortgage; in fact, a searching investigation of the books of the parties made by á competent accountant fails to disclose any present indebtedness. In fact, the books rather show, if they show anything at all, that there was no indebtedness from the son to the father at the time the mortgage purports to have been made. Neither is there any evidence that any money was advanced by the mortgagee to the mortgagor by way of a future advance on the mortgage itself. The mortgage appears to have been dated on December 8th, 1892, and to have been registered on July 16th, 1900, after the death of the mortgagor. There is an account in the books of the firm, which was composed of the mortgagor and mortgagee, showing that on the day after the mortgage was dated the firm’s check was drawn to the order of the mortgagor for $1,750, and that this amount was charged on the firm’s books to the mortgagee, indicating possibly that $1,750 had been on that day taken from the assets of the firm by the mortgagor and charged against the mortgagee, from which I am asked to infer that there was created by that transaction an indebtedness from the mortgagor to the mortgagee. This course seems to have been continued according to the books from December 9th, 1892, until April 5th, 1893, up to which time this particular account reached an aggregate of $32,132.16; but I do not think that I would be justified in assuming without any evidence at all that this account represents a transaction or a series of transactions connected in any way with the mortgage. It has always been held that future advances on a mortgage should not be encouraged because of the facility they afford for the commission of fraud, inasmuch as the proof of the advances generally lies wholly in parol, and this observation applies with much more force to a case in which a recovery for future advances on a lost instrument is sought to be had. The burden of proof on this point lies with the complainant, and it is quite apparent that the burden has not been met, and I must therefore advise a decree dismissing the bill.


author: Lewis, Y. C.

text:
    John T. Wyckoff v. Lydia B. Holmes.
    [Decided October 31st, 1913.]
    1. Neither a collateral mortgagor, her subsequent grantee, nor her subsequent mortgagee, are necessary parties in a suit to foreclose the principal mortgage.
    2. A mortgagee secured by collateral mortgage, where the collateral mortgage is to become void on the payment of the principal mortgage, is not bound to sue on the bond given with the principal mortgage for a deficiency, but may foreclose on the collateral mortgage instead.
    3. Where the mortgagee of the principal mortgage forecloses, and buys the property in himself for less than the amount due, and then sells the property, making himself more than whole thereby, he may still foreclose on the collateral mortgage for the deficiency, or sue on the bond of the principal mortgagor.
    4. The words of a guaranty contained in a collateral mortgage will be construed most strongly against the guarantor.
    Oil pleadings and proofs.

      Mr. Clarence Con-over and Mr. Frank P. McDermott, for tbe complainant.

      Mr. John B. Foster, for the defendant.
   Lewis, Y. C.

This action is brought to foreclose a collateral mortgage in order to collect a deficiency of $1,664.71 alleged to be due complainant, with interest from May 5th, 1911, under the following circumstances:

On May 26'th, 1909, Adelia N. Holmes, a maiden lady nearly eighty years old, was the owner of two mortgages, one for $3,000 made by Elizabeth A. Kennedy and James E. Kennedy, her husband, to her, on lands at Long Branch, to secure the payment of $3,000 with interest; and the other mortgage made to her by Ella V. Vail and Charles D. Vail, her husband, on lands at Keansburg, to secure the payment of $3,500 with interest.

At the same time Jacob and Joseph M. Wyckoff were the owners of a house and lot on the corner of Broad and Cross streets, in the borough of Keyport.

On the day named Miss Holmes purchased from the Wyckoffs this property, for the sum of $6,500, and paid the purchase price therefor by assigning to the Wyckoffs the above mentioned Kennedy and Vail mortgages, totaling $6,500, and at the same time she also executed and delivered to the Wyckoffs a mortgage on the Broad and Cross streets property in which she then resided as a tenant, for $6,500, and after reciting the assignment of the two mortgages to them, she stated therein that the condition of this collateral mortgage which she then and there gave was as follows:

“Provided always, and it is agreed by and between the parties to these presents, that if one Elizabeth A. Kennedy and James F., her husband, do and shall well and truly pay, or cause to be paid to the said party of the second part, or to their certain attorney or attorneys, heirs, executors, administrators or assigns, the principal and interest of a certain mortgage for the sum of three thousand dollars, covering lands in the city of Long Branch, Monmouth county, New Jersey, made by said Elizabeth A. Kennedy and husband to said Adelia N. Holmes on October the tenth, nineteen hundred and eight, and recorded in the Monmouth county clerk’s office in book 363, page 466, &e.
“And provided further, that if one Ella Y. Vail and Charles D., her husband, do and shall well and truly pay, or cause to be paid to the said party of the second part, or to their certain attorney or attorneys, heirs, executors, administrators or assigns, the principal and interest of a certain mortgage for the sum of three thousand five hundred dollars, covering lands at Keansburg, Monmouth county, New Jersey, made by said Ella Y. Vail and husband, to said Adelia N. Holmes on October the third, nineteen hundred and eight, and recorded in the Monmouth county clerk’s office in book 365, page 201,—this said mortgage being collateral security for the payment of the said mortgages above referred to, assigned by the said party of the first part to the said party of the second part, then and from thenceforth these presents and said obligation and everything herein and therein contained, shall cease and be void, ans'thing herein and therein contained to the contrary in anywise notwithstanding.”

Ai» the time of acquiring title Miss Holmes instantly conveyed the property which she had just purchased for $6,500 to a niece, Minerva Roberts, for tbe sum of $6,000, and accepted from said Minerva Roberts a mortgage upon the said property for $6,000 in payment of tbe purchase price therefor. Mrs. Roberts entered into possession of the property and Miss Holmes continued to live with her.

Joseph M. Wyckoff died some time after the assignment of the two mortgages to himself and his brother, Jacob, and subsequently, by assignment from Jacob and the executors of Joseph M. Wyckoff, the two mortgages were eventually assigned to John T. Wyekolf, who proceeded in 1910 to foreclose the Kennedy mortgage, and the amount due thereon was realized at the foreclosure sale.

Complainant in Ma3q 1911, also foreclosed the Vail mortgage and obtained a decree with costs, &c., for the sum of $4,164.71. At the foreclosure sale on May 5th, 1911, the Vail mortgage, complainant bought in the property for the sum of $2,500, and left an apparent deficiency of $1,664.71 due on his decree.

Mrs. Minerva Roberts held the title of the premises now attempted to be foreclosed until February 2d, 1912, when she conveyed to John P. Lloyd, who, in turn, conveyed to Lydia B. Holmes, on February 29th, 1912.

On December 27th, 1910, Adelia M. Holmes assigned to the said Lydia B. Holmes the mortgage for $6,000 made by Minerva Roberts.

Persons by the name of Finks purchased the property from the Va'ils and assumed the payment of the mortgage thereon.

In neither of these foreclosure proceedings was Adelia M. Holmes, Minerva Roberts, or the defendant, Lydia B. Holmes, made a party.

In September, 1911, complainant soLd the Vail-Fink properly, which he had purchased at the foreclosure sale for $2,500, to Dr. R. PI. Downes and his wife for $4,700 cash. During the four months the complainant had owned the property he had had the house painted and made some other repairs to it at a total cost of between $200 and $300. He had, therefore, come out ahead whether or not he sued on the Vail bond or foreclosed the collateral mortgage.

The complainant never demanded the payment by, or brought suit on the bond, or in any other way attempted to recover the amount of this deficiency from the Vails, the parties primarily liable for the payment therefor, as the original obligors and mortgagors; or from the Finks, the parties who purchased the property from the Vails and assumed the payment of the mortgage thereon.

In November, 1911, complainant brought this action to foreclose the collateral mortgage.

No bond was given with the collateral mortgage.

It is contended by the defendant that Adelia N. Holmes, 3[inerva Roberts and herself were necessary and proper parties in the suit brought to foreclose the Vail-Fink mortgage. I find that this contention is untenable.

In Jarman v. Wiswall, 24 N. J. Eq. (9 C. E. Gr.) 267, the-chancellor stated that a guarantor is not a necessary party to a foreclosure suit, but that he was a proper party. This was under the act of 1861', that:

“It shall be lawful for the chancellor in any suit for the foreclosure or sale of mortgaged premises, to decree the payment of any excess of the mortgage debt above the net proceeds of the sale by any of the parties to such suit who may be liable either at law or in equity for the payment of the same.” -

That statute is no longer in force, and I do not think that the guarantor is even a proper party.

The second contention of the defendant is that by the condition of the collateral mortgage the complainant should have exhausted his remedy against Mr. and Mrs. Vail before commencing an action to foreclose the collateral mortgage, and that it was necessary for the complainant to have exhausted his remedy against the Vails’ mortgaged premises, and their other property, if any, for the entire amount due on the bond and mortgage, before resort- could be had to the property of the surety pledged by the collateral mortgage.

The condition of the collateral mortgage is that if the Kennedys and Vails paid the principal and interest of their respective mortgages, then and from thenceforth the obligation of the collateral mortgage should cease and be void.

Under that condition in the collateral mortgage it is my opinion that the complainant could (if he had chosen so to do) have brought suit on the collateral mortgage after the due date of the two mortgages, without any further steps being taken. If there is any doubt as to- the construction of the guarantee the rule in this state is that the construction against the grantor is to be followed. See Hoey v. Jarman, 39 N. J. Law (10 Vr.) 523.

The complainant, if he had chosen so to do, could have sued on the Vail bond for the deficiencj', but he was not bound so to do.

At the time of the sale under foreclosure of the Vail-Fink property Minerva Roberts was the owner of the propertjr embraced in the mortgage now under foreclosure, and the defendant, Lydia B. Holmes, held the legal title to the mortgage for $6,000. The owner of the property, Minerva Roberts, was notified of the foreclosure, and Lydia B. Holmes on the witness-stand admitted her knowledge of the foreclosure and sale in the Vail-Fink foreclosure case.

It is true that the complainant bought the Vail property in at the foreclosure sale for $2,500, leaving a deficiency of over $1,600, and that within four months thereafter he sold the property, having first made some improvements on it, and made a profit out of the transaction; it is also true that by section 48 (at ¶. 31/.21) of the Compiled Statutes of New Jersey, suit on the bond for the deficiency must be begun within six months from the date of the sale; it is also true that had the complainant brought an action on the bond and had then proceeded against the collateral mortgaged estate, the equity of redemption would have been opened and this defendant could have come in, paid the deficiency claimed by the complainant and redeemed the premises. The complainant, therefore, makes a profit out of the transaction, while Vail escapes his liability on the deficiency through the neglect or ignorance of the defendant, who may have assumed that everything would come out all right-in the end.

If there were any evidence before the court of any fiduciary relationship existing between Adelia M. Holmes and the Wyckoffs, I should find that there was a constructive trust; but, although in the brief of Judge Foster there is an intimation that Miss Holmes made the purchase of the property and executed the complainant’s mortgage without independent advice, yet there is no proof whatever on the subject, and nothing in the pleadings to make such proof pertinent or relevant.

I shall, therefore, advise a decree that the defendant pay the full amount asked in this suit.


text:
    The Oak Ridge Company v. John Toole.
    [Decided November 1st, 1913.]
    1. Where the parties to an agreement stipulated at the time it was made that it was to have no binding effect upon them, such an agreement, though executed, was of no force and effect at law or in equity.
    2. Parol evidence is admissible in equity to show for what purpose a written agreement to repurchase land was executed.

      Mr. Maximülian M. Stallman, for the complainant.

      Mr. Frank Smit, for the defendant.
   Lewis, Y. C.

The defendant in this case entered into a written agreement with the complainant to convey a tract of land on East Thirty-third street, in the city of Paterson, New Jersey, fifty feet by one hundred and twenty-five feet, as part consideration for a house and lot conveyed to the defendant. The defendant in making the conveyance presumed that he had legal title to the lots but after entering into the agreement, the parties discovered that he had title only to a tract one hundred feet in depth. When the complainant discovered the defective title, he called upon the defendant to secure the additional twenty-five feet provided for in his deed to the complainant. They had some consultations about the matter and finally met in the office of Sherwood & Lockwood, real estate agents in the city of Paterson, New Jersey; at the time of the meeting they were accompanied by their respective attorneys. After some discussion of the subject of meeting, they entered into an agreement wherein the defendant contracted that if he didn’t perfect his title to the premises, 298 and 300 East Thirty-third street, Paterson, New Jersey, the tract in question, within two months from that date, that he would purchase from the Oak Eidge Company said premises at the price of $2,000. The agreement is as follows:

“Patebson, N. J., April 13th, 1912.
“Whereas on the thirteenth day of April, nineteen hundred and twelve, John Toole and Margaret Toole, his wife, of the city of Paterson, did give a warranty deed of property known as Nos. 298 and 300 East 33d street, Paterson, N. J., to the Oak Ridge Company, a corporation of the State of New York, and whereas it appearing that the said John Toole and wife did not have title to the rear portion of said lots, fifty by twenty-four feet, now therefore, it is agreed by and between the parties hereto that if said John Toole does not perfect his title to the said parcel within two months from the date hereof by delivering to Mr. H. J. Hapgood, treasurer of the Oak Ridge Company, evidence that he, the said John Toole, has secured and recorded a deed for said rear portion, it is further agreed by and between the parties hereto that if the said John Toole is unable to perfect title as herebefore stated then and in that event, he agrees to purchase from the Oak Ridge Company the said property, Nos. 298 and 300 East 33d Street, for and at the price of two thousand dollars.
“In witness whereof the parties hereto have hereunto set their hands and seals the day and year first above written.
“Signed, sealed and delivered in the presence of • “Albín Smith.
“Signed, John Toole.
“Signed, The Oak Ridge Co.,
“H. J. Hapqood,
“T-reasurer.”

The evidence of the complainant was that the defendant did not perfect his title in the manner aforesaid and that it is entitled to a decree compelling the defendant to repurchase the land for $2,000. The defendant admits the execution of the agreement and insists that the contract in question was -signed by the parties for “selling purposes,” on the understanding that it would not be considered binding on the defendant. The treasurer of the Oak Ridge Company at the hearing was the only witness for complainant and insisted that no such understanding had been had or arrangement been made. The defendant alleged that he had given complainant the agreement upon the representation of Mr. Hapgood, that there would be no trouble about it, that it would not be used at any time, and that his company simply wanted it for “selling purposes.” The defendant was corroborated by the testimony of his attorney, Mr. Lynch, and by a witness, Miss Lockwood; both these witnesses stated that they heard the conversation between Mr. Toole and Mr. Hapgood, treasurer of the Oak Ridge Company, to the effect that the price named in the agreement was placed there for “selling purposes” and that there was no understanding between the parties that Toole should take back the lots at the sum of $2,000.

The complainant’s attornejq who was as heretofore stated, present at the time of the meeting in the office of Sherwood & Lockwood, testified that his understanding at the time of the execution of the agreement was that the sum of $2,000 was inserted in it for “selling purposes.” It has transpired since the making of the agreement that the defendant has perfected his title to the premises in question and that he has offered to deed the complainant the additional property. A letter was offered in evidence' showing that in July, about two or three months after the two months had expired, fixed in the agreement for the payment of the $2,000, the complainant called upon Toole to make good his agreement. There was a further extension of time granted to the defendant Toole, by the complainant, but what period of time that extension covered is not shown clearly by the evidence, except that it was very indefinite. It is unnecessary, however, for the disposition of this case to deal with the evidence regarding the extension of time granted by the complainant to the defendant for the fulfillment of his contract. The defendant’s solicitor, did not urge this branch of the case upon argument. He rests his defence upon the ground that the agreement, while signed by his client, was to have no binding effect upon him. I think his position is well taken and I agxee with his view of the case. In O’Brien v. Paterson Brewing and Malting Co., 69 N. J. Eq. (3 Robb.) 117, practically all the questions involved in this issue are thoroughly and exhaustively discussed by the learned vice-chancellor. This case, it seems to me, establishes the rule, that if the parties to an agreement stipulated at the time that it was made that it was to have no binding effect upon them, then, notwithstanding their execution of the agreement, such a contract is of no force and effect at law or in equity. The rule now so well established in equity, admitting parol evidence to show for what purpose the written agreement was executed, was properly invoked by the defendant. The evidence leaves no doubt in the court’s mind that in this issue the agreement between the complainant and the defendant was made for the purpose as stated by the latter and his witnesses. It is inequitable and unjust, therefore, for the complainant to enforce the agreement of April 13th. I think the defendant in finally offering a deed to the complainant for the additional property, has done all that is required of him, and if the complainant asks it, will give him relief by a decree directing the defendant to make the conveyance as aforesaid.

The precise terms of the decree may be settled by me upon notice.


author: Lewis, V. C.

text:
    Charles A. Long v. F. R. Long Company et al.
    [Decided December 9th, 1913.]
    A bill whereby a stockholder of a corporation sought injunctive relief under general equity jurisdiction to preserve the corporate existence, and also sought the appointment of a receiver under the statute relating to insolvent corporations, is multifarious, the two proceedings being inconsistent.

      'Mr. Peter 17. Stagg. for the complainant.

      Mr. Archibald Hart and Mr. William B. Gourley, for the defendants.
   Lewis, V. C.

The state of facts presented in the case of Robson v. C. E. Fenniman Co., 83 N. J. Law (54 Vr.) 453, differ materially from those in the Long proceeding, and the court finds another test of stockholder’s right to sue, i. e., his liability to assessment on his stock. There may be no doubt that the fact has been established that the complainant was a stockholder, but there is the further question, Can a court of conscience sustain his claim to general equitable relief in view of the facts presented? The evidence discloses that the certificate of stock issued to Charles A. Long remained attached in the certificate book undelivered to him for twelve years, while the certificates of all other stockholders were taken away. In his testimony (page 25) Mr. Long admits that there is no evidence to show that he paid one dollar for the stock. The conversation between Thomas and' the complainant (page 56) is to the effect that he had paid nothing for the stock. The stock certificates did not come into his possession until after the death of his brother, Frank E. Long, the principal stockholder of the F. E. Long Company, and, as the testimony shows, its moving and controlling spirit. The certificate was then taken from the book by the complainant. In the face of this evidence it seems that the right of the defendant to obtain equitable relief is a matter for grave consideration. However, it is not necessary for me to dispose now of this question. The bill presented must be dismissed on the ground that it is multifarious. There are two radically different proceedings which complainant undertakes to conduct under it. One is a suit under the general equity jurisdiction of the court to secure an injunction to protect the complainant. The other is an action under our statute in relation to insolvent corporations, the object being to obtain the appointment of a receiver. The proceedings are entirely different in their nature. One has in view the preservation of the corporate existence and the corporate property, and the prevention of injuries inflicted, or threatened to be inflicted, upon this corporation and its property by the defendants. The other proceeding is aimed directly at what is practically the corporate life- of the F. B. Long Company—to terminate its corporate existence and distribute its assets among its creditors and stockholders. If this court should hold, upon a proper application, that a receiver should be appointed for the F. B. Long Company, then he would, in the exercise of the functions of his office and as representing all the creditors and stockholders, be the appropriate party to maintain a bill. It is quite apparent that two such different, and in many respects inconsistent remedial proceedings, should not be joined in the same bill. Such a bill must be held to be multifarious. Pierce v. Old Dominion, &c., Smelting Co., 67 N. J. Eq. (1 Robb.) 399, &c.