text:
    Peoples Water Company of Millville, New Jersey, respondent, v. City of Millville, appellant.
    [Decided January 25th, 1924.]
    On appeal from an order of the court of chancery advised by Yice-Chancellor Learning, who filed the following opinion:
    “The only issue here involved is the ascertainment of a basis of accounting between complainant and defendant. No essential facts are in dispute. When the manner of accounting shall have been ascertained, a master can easily state an account between the parties.
    “In 1901 complainant was the owner of a system of water works which included not only a water supply station but also the pipes in the streets of defendant municipality, and contracted with defendant to supply it with water for a period of twenty-five jrears at specified rates. During that period the municipality was to sell to consumers the water so supplied and was to receive on its own account all revenues from such sales. An option of purchase by the city was also contained in the contract, but that option was not exercised.

      “During the progress of operations under that contract disputes arose between the water company and the city touching the amounts earned by the company for water supplied under the contract, the municipality claiming that by subsequent arrangements it had become entitled to water at the flat rate of $10,000 per annum, and each quarter thereafter the municipality would pay to the water company $2,500, and each quarter the water company would make claim to a greater amount. In July, 1920, the claims made by the company against the city, in excess of the $10,000 per year which the city had paid, aggregated $32,271.09 as of May 20th, 1920. The city also had claims against the water company for unpaid taxes.
    “In this situation, on July 21st, 1920, the water company made a written proposition to the city for the sale of the plant to the city and for a compromise of all matters in dispute. This proposition was an offer to sell the plant to the city for $125,000, clear of all encumbrances, and waive all claims against the city for the balance claimed to be due it; the city to also waive its claims for delinquent taxes. The offer further proposed that if the city would accept the offer conditional on a ratification by the electors of the city and submit the proposed settlement to the electors at the succeeding November election, and the election should be favorable to the purchase on the terms proposed, settlement should be made on or before January 1st, 1921.
    “That offer was accepted by the city subject to the approval of the electors, and at the election in the following November the acceptance by the city was approved. The result of the election was duly certified and reported to the water compan \j November 22d, 1920.
    “On January 1st, 1921, the day provided for the consummation of the contract, both the water companjr and the city were ready, willing and desirous of making settlement pursuant to the contract, but were unable to do so by reason of two writs of certiorari which had been issued a day or two before that date. One writ was to review and determine the validity of the contract of the city for the purchase of the water works, the other to review and determine the validity of a bond issue which had been authorized by the city in contemplation of the purchase. Since these writs prevented the city from consummating the purchase at the time agreed upon, and the necessity to supply water to the inhabitants of the city was paramount, the water company continued to operate the plant as theretofore from the necessities of the situation, that is, the water company continued to operate the pumping station to supply water for the city, and the city continued to supply the inhabitants with water and to collect its water rates from the inhabitants. No negotiation or agreement was had between the water company and the city touching their mutual resultant obligations between the date agreed upon for the settlement and such time as the city should be privileged to make settlement under the contract of sale.
    “The validity of the contract for the purchase of the plant was subsequently affirmed by the supreme court and later by the court of errors and appeals, and the remittitur of the latter court was filed February 15th, 1922. The certiorari relating to the bond issue was sustained on motion of the city because the bonds which were authorized were not serial as required by ordinance.
    “A supplementary ordinance was then adopted by the city authorizing the bonds and providing for their delivery on April 18th, 1922. That ordinance was removed to the supreme court by certiorari and the certiorari was by that court dismissed November 17th, 1922. An appeal from that order of the supreme court was dismissed February 28th, 1923.
    “It will be observed that these writs of certiorari relating to the proposed bonds were operative to prevent the city from issuing the bonds it desired to issue until February 28th, 1923. The certiorari to review the contract of sale was also operative to prevent the city from accepting a deed of conveyance for the plant until ten days after February 15th, 1922, the date on which the remittitur was filed. A few days thereafter the water company tendered a deed of conveyance, which deed, the city was unable to accept because of the pending writ of certiorari to review the proceedings for the issuance of the bonds.
    “Since this bill was filed, and on March 9th, 1923, conveyance of the plant was made to the city and the purchase price of $125,000 was paid by the city to the water company. This was done by stipulation under a court order in this suit, the order providing that the transaction should in no way be operative as a waiver of the claims of either of the parties touching their respective rights or obligations which have arisen since the contract of sale was by its terms to have been consummated. Accordingly, the prayer of the bill for specific performance of the contract has been satisfied in all respects except that of an accounting between the parties.
    “It follows that the primary inquiry at this time is the ascertainment of the basis of an accounting between the parties from the date on which the contract of sale should have been consummated until it was consummated, that is, from the beginning of the year 1921 to March 9th, 1923.
    “The water company invoked the well-established rule that in contracts for the sale of land, the contract is regarded, for most purposes, as if specifically executed on the day agreed upon; the purchaser then becomes the equitable owner of the lands, and the vendor the equitable owner of the purchase-money; each is trustee for the other from that date. This rule, if applied, will charge the city with the cost properly incurred by the water company in the operation of the water station from the agreed date of settlement until the city actually took over the plant, and also will charge the city with interest on the purchase price during the same period, and the city will retain all revenues from consumers during that period.
    “This equitable rule, above referred to, with its applications and exceptions, has been so frequently considered in this state that little appears to remain for inquiry touching it. In Haughwout v. Murphy, 22 N. J. ISq. 531 (at p. 51-6), Mr. Justice Depue points out its general application and effect and collects prior authorities of this state. Later autliorities iii this state are collected and reviewed by Vice-Chancellor Stevens in Jersey Gily v. Flynn, 74 N. J. Fq. 104 (at pp. 115, 118, 121). The accepted rule is that in an accounting between the parties in the absence of stipulations to the contrary the purchaser is to be deemed the owner of the property and the seller the owner of the money from the time fixed for the completion of the contract. Jersey City v. Flynn, supra (at p. 115). But, as pointed out in that case, this rule, equitable in its origin and nature, is subject to exceptions and modifications based upon equitable considerations incident to a given case. Thus in King v. Ruckman, 24 N. J. Fq. 556, it is determined that where the delay in consummating the contract is due to the fault of the vendor the rule cannot equitably be enforced for his benefit. In Jersey City v. Flynn, supra, the accepted equitable rule was held to be overcome by the express stipulations of the parties.
    “Neither stipulations of the parties nor equitable considerations appear to exist in this case to remove it from the normal operation of the rule above stated. On the day agreed upon for making title complainant was ready to deliver a deed of conveyance, but the city could not properly then accept a deed of conveyance by reason of the existence of a writ of certiorari which had been issued to review the validity of the contract, and another writ which challenged the validity of the bonds from the proceeds of which bonds the city was to procure the money to pay for the plant. The writ directed against the contract in no way questioned the power of the water company to convey; it was based upon want of power of the city to buy. The other writ questioned the validity of the bonds and in no way concerned complainant. Accordingly the non-consummation of the contract on the day agreed upon was through no fault of the vendor. Its title was perfect and it was ready and anxious to perform on the day. No case nas been brought to my attention in which the normal operation of the rule has been denied to a vendor in the absence of fault on his part. The inability of a vendor to deliver a perfect title on the agreed day by reason of defects in his title is obviously a fault attributable to the vendor. The writ was subsequently determined to have been wrongfully sued out. Conveyance was promptly tendered as soon as that writ was dismissed. Accordingly the lawful contract of the parties and all equitable considerations accompanying it contemplated that on the agreed date of settlement the vendee should become the owner of the plant and the vendor the owner of the purchase price. The contract was, in effect, that on that date the purchaser should assume all the benefits and burdens arising from the operation of the water supply plant and the seller should in like manner enjoy the purchase price. There appears to be no reason why the parties should not be permitted to enjoy their lawful engagements in that respect; no act of either of the parties, save the error of the city touching its bonds, prevented consummation on the due day. No deed was then tendered, but a tender would have been futile, since the city could not accept it. It also may be said that the city was not in fault, except to the extent of creating an invalid bond ordinance; but the contract contemplated a compromise settlement as of that day in which the city should become the owner of the plant from that day and the water company the. owner of the money, and both parties then desired that settlement carried into effect at that time.
    “Also it may be noted that the situation which existed on the day for performance appears to render it peculiar1} equitable, that in an accounting the contract shall be deemed to have been consummated on that day in accordance with the then mutual desire and purpose of the parties. In the contract of sale the water company had irrevocably waived its claim against the city for a large sum of money which it claimed was due to it, and for the recovery of a part of which suits were pending against the city at the time the contract was made. That waiver of claim was necessarily based upon the assumption that on and after the contract dav for performance the water company would be relieved from the burden of further operation of its water supply plant and would enjoy the purchase price. In the meantime the water company had also paid off its mortgage indebtedness in anticipation of the settlement on the agreed day. It cannot reasonably be assumed that the water company would have waived its claim of indebtedness of the city for operations under the contract to settlement day with any notion of thereafter operating under the same contract in any event. A waiver by the water company of what it claimed as contract rates of operation for a longer period would have called for additional consideration for such extended waiver.
    “When the performance day arrived and settlement could not be made the water company did the only thing it could do. It continued to operate the water supply plant and to furnish water to the city ex necessitate. The inherent plan and quality of the contract of settlement was that the old water supply contract should be abrogated at the time set for settlement. The waiver of the rate of compensation claimed up to that time by the water company was not only irrevocable, but was necessarily based upon the expectancy of the plant passing to the city at that time. To' extend the contract terms of operation beyond that time unseats the whole basis of settlement. The suggestion’that subsequent to that time the old contract, with all the disputes connected with it, should be deemed revived and be made the basis of accounting from that date, not only violates the equitable rule touching the transmission of equitable title, but is obviously unjust, since the waiver of the amount claimed up to that time was, as already stated, necessarily based upon the expectancy of cessation of operations under the contract and receiving the purchase price at that time.
    “This also appears probably to have been the view entertained by the parties in the early part of the operation of the plant after the settlement day, although no definite agreement was made touching the terms of operation subsequent to the date fixed for settlement. At the end of the first quarter after the date for settlement the water company rendered a bill to the city for $5,000, accompanying the bill with a letter in which it was stated, among other things, that

      “ ‘because of the delay in settlement the water company had been without the use of the purchase price since January 1st, 192.1 [contract date for settlement], and in addition has been paying the cost of operation of the plant since said date, the aggregate amount of interest on the purchase price and the operating expenses, exclusive of taxes, since January 1st, 1921, amounting to a sum in excess of $5,000, and whereas said water company, in view of its contract with the city, settlement under which was to have been made on or before January 1st, 1921, and settlement as of which date will be made under the terms of the contract, if and when the litigation now pending, or any other litigation which may hereafter be instituted, shall result favorably to the city, the said water company is in the position of operating the plant from and after January 1st, 1921, in the interest of the city, which is chargeable with interest on the purchase price, and operating expenses since said date; and whereas, if said litigation result in a determination that said contract of purchase is invalid, then there would be due to the Peoples Water Company from the city of Millville, for water supplied since November 1st, 1920, under the terms of the contract entered into under Ordinance No. 73, of the city, a sum in excess of $5,000. Therefore the Peoples Water Company respectfully requests the city of Millville to pay to it, on account, the sum of $5,000, without deduction for delinquent taxes, waiver of which is to be included in the agreed purchase price of the water plant, if the pending litigation be decided in favor of the city.’
    “'That bill was paid by the city May 21st, 1921, with the following letter accompanying the payment.: ‘Enclosed herewith please find order on the treasurer of the city of Mill-ville in the sum of $5,000, which is tendered in accordance with bill presented by your Mr. E-oth to the board of commissioners of the city of Millville, at their regulaf meeting on Friday, May 20th, 1921, and in conformity with agreement attached to said bill.’
    “While this $5,000 would have been the amount due under the old contract at the rate contended for by the city, the bill, as presented, clearly sets forth that the water company was operating from and after January 1st, 1921, with the understanding that in the event of the settlement contract being sustained by the courts, the cost of operating the plant from January 1st, 1921, and interest on the purchase price from that date were to be paid by the city. The answer by the city appears to have accepted that view. Some subsequent payments have been made by the city of lesser amounts in response to bills accompanied by letters similar to the one above quoted. Certain extensions of the water mains were also made by the water company after January 1st, 1921. Under the old contract such extensions would have been made at the expense of the water company; but these extensions were made under and by reason of a resolution of the city commissioners in which the city promised to pay the cost of the extensions providing the contract of sale should thereafter be sustained by the courts in the then pending litigation already referred to. That stipulation clearly negatived any notion of the parties that on January 1st, 1921, the water company had been relegated to operations under the old contract.
    “It also is contended on behalf of the city that while the sale of the plant to the city included real estate, it also included the water pipes in the public streets of the city, which pipes, it is urged, are personal property. With this contention the following text of 39 Qyc. 161/2 [tit. ‘Vendor and Purchaser’’], is invoked as an exception to the equitable rule above stated: cIt is also held that the rule does not apply in the case of an entire contract for the sale of both real and personal property/ The text above quoted is based on Clinton v. Hope Insurance Co., 1/5 N. Y. 1/51/, and Listman v. Hiclcey, 19 N. Y. Supp. 880; affirmed, 11/3 N. Y. 630. Neither of these cited cases can be said to be applicable to the circumstances of this case. In Clinton v. Hope Insurance Co. the question was touching the right of an insurance company to be subrogated to the rights of an insured vendor who had contracted to sell a mill and its machinery, the machinery being in part personalty. A fire had destroyed the mill and the machinery after the date of the contract and before the date for consummation of the contract. The additional and material circumstance was also there present, that at the time of the fire the vendee held as a tenant of the vendor at an agreed rental by express stipulation of the parties. The loss was held to be the loss of the vendor. In Jersey City v. Flynn, supra [at p. 1151, the rule is defined as follows: Ht [the rule as to transmission of the equitable title] is kept within reasonable limits by the perfectly well-settled rule that in the absence of express stipulation the purchaser takes the rents and profits and pays interest on the purchase-money only from the time fixed for the completion of the contract, not from the time of its execution. Fry Spec. Per. § 891; King v. Ruclcman, 2^ N. J. Eq. 298; DeVisme v. DeVisme, 1 McN. & Gor. 336. And, as I shall show hereafter, not always as early as that.’ [The instances of later dates for the operation of the rule, due to default of the vendor, are pointed out by the learned vice-chancellor at pp. 120, 121-1 The other case cited in Qyc. [Distman v. Hicheyl also is a case in which the property was destroyed by fire before the date agreed upon for performance, and the vendor was not, in consequence, able to perform at the time contemplated by the contract for performance. In 'the present ease, with the vendor without fault and able and willing to perform on the day fixed for performance and with no intervening event in any way changing either the nature or value of the property, there seems to be no sound reason for deriving to it the application of the eqrritable rule now contended for by complainant merely because the contract of sale includes, in addition to real estate, water mains which defendant contends are in the nature of personal property and which are admittedly an essential and necessary and integral part of the plant which was sold for a gross amount as a complete and operating plant. In this view it becomes unnecessary to inquire whether water mains of a water company which are located in public streets can be regarded as personal property as between the parties to a contract of this narure; but it may be appropriately noted that even though considered personal property the water mains would clearly fail within that special class of personal property to which all equitable rules touching specific performance and its incidents obtain. See Pom. Gont. [Spec. Perf.1 §•§ 10, 11.

    “It is further urged on behalf of defendant that the city could not have lawfully contracted for complainant to operate the plant as its trustee or agent and in consequence cannot be held to liability on any equitable grounds the result of which are not in harmony with the powers of the city by direct action. A sufficient answer to this is that the contract of purchase and its terms were in all respects lawful and within the powers of the city. The liabilities of the city under that contract flow from the contract and are to be considered a part of the contract, and in no sense a new contract by the city. The equitable status of the parties from the day fixed for performance flows from the contract and not from any newr agreement or new obligation of the city; the accounting is an accounting wholly based on the rights of the parties lawfully created by the contract. Recognized equitable obligations flowing from the contract are a part of the obligations of the contract to the same extent as similar legal obligations.
    “My conclusions are that complainant can equitably only be regarded as having operated the plant subsequent to January 1st, 1921, for defendant, and in the accounting is entitled to charge defendant with the reasonable cost properly incurred in operating the plant from that date to the date the plant was physically taken over and operated by defendant, and is also entitled to charge defendant six per cent, interest on the agreed purchase price of the plant from January 1st, 1921, to the date the purchase price was paid, and that defendant is entitled to credits for the several payments made on account for water supplied to it during that period, and is entitled to retain all moneys collected by it for water rents from consumers, and no account is to be taken of -water used by the city for fire and flushing or other city purposes during that period.
    “Contention also exists touching the liability of the city to pay the cost of construction of certain extensions made by complainant to water mains during the period the plant was operating subsequent to January 1st, 1921. The city desired these extensions made and passed a resolution to the effect that the cost incurred by complainant in making the extensions would be paid by the city in addition to the purchase price of the plant in the event of the contract of sale of the plant being sustained by the courts. -A copy of the resolution will be found in Franlclin v. Horton, 116 Ail. Rep. [at p. 176“]. These extensions were admittedly made by the water company on the faith of that resolution of the city commissioners and no claim is made that the cost was excessive. Subsequently, on certiorari, in the case last cited, the resolution was declared to be contrary to the provisions of the Welsh act, in that it was adopted without remaining on file for two weeks before its final adoption as required by that act. The city has since taken over the plant and is in enjoyment of these extensions. Counsel for the city declares the city’s willingness to pay, but doubts its right to do so.
    “It seems clear that there can be no present recovery of this claim, notwithstanding the fact that it is a just claim and the further fact that the city is now enjoying the extensions which the water company in good faith has supplied in reliance upon the solemn promise of the board of commissioners to pay for the cost of construction. In this class of claims the essential inquiry is touching the power of the municipal corporation. Defendant municipality enjoyed the p'ower to order this work and to agree to pay for it, but the power so enjoyed is a specifically restricted one. By section 6 of the Walsh act, as amended by P. L. 1912 p. 649, as pointed out in Franklin v. Horton, supra, that power can be exercised only by ordinance or resolution adopted in the manner there prescribed. The legislative restriction touching the exercise of the power is no less potent than the power affirmatively conferred. No other source of power has been brought to my attention. Obviously, the implied promise to pay arising from the acceptance of the work cannot rise above an express promise to pay for the same work, and the express promise has been declared to be unauthorized by law and void because of the statutory restriction touching its exercise. In Frank v. Board of Education, 90 N. J. La/w 278, consistently with Bourgeois v. Freeholders of Atlantic County, 82 N. J. Law 82, our court of errors and appeals has clearly defined the effect of ratification and implied liability to be wholly dependent upon and only co-extensive with the power to contract. If defendant municipality desires to respect this admittedly honest obligation there appears to be no obstacle to its doing so at any time by an ordinance or resolution directing payment; it is a just debt. But the power to authorize its payment must be exercised by ordinance or resolution passed in the manner specifically required by the statute.

      “A question has also been raised touching taxes. Admittedly, the taxes prior to January 1st, 1923, had been discharged by the settlement agreement. I see no reason why, as to subsequent taxes, the general rule should not be followed exempting a vendor from the burden of taxes from the date the equitable title passes to the vendee.
    “In the briefs it is stated that at the time the plant was turned over to the city certain supplies, such as coal and other material used in operating the plant, was turned over to the city. Defendant contends that these are properly to be considered a part of a. going concern and are covered by the purchase price of the plant, and further urges that if not so considered no recovery can be had for such supplies because the Home Rule act of 1917 as wrell as the Crimes act requires all purchases of supplies in excess of $500 in amount to be by advertising
    “I find nothing in either the bill or answer relating to these supplies or their nature and do not think it proper to include a consideration of that controversy in these conclusions.
    “A reference will be made to a master for an accounting pursuant to these conclusions.”

      Mr. John D. McMullin, for the appellant.

      Mr. Louis H. Miller, for the respondent.
   Pee Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Learning.

For affirmance — The Chief-Justice, Trenchard, Parker, Minturn, Kalisch, Black, Katzenbach, Campbell, Heppenheimer, Ackerson, Van Buskirk, Clark —12.

For reversal—None.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    William Richman, appellant, v. Standard Oil Company, respondent.
    [Decided January 18th, 1924.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Learning, who filed the following opinion:
    “Complainant, as vendor, seeks a decree for specific performance by defendant, as vendee, of a certain contract for the sale of real estate. It is conceded that the contract calls for a ‘clear titled Defendant’s refusal to accept a conveyance is based upon the claim that complainant’s title is unmarketable.
    “Complainant’s title is through a conveyance from Alonzo M. Loudenslager. The title of Alonzo M. Loudenslager is under the codicil to the will of his grandfather, Moses Ale. By that instrument the locus in quo is. disposed of as follows: To Alonzo M. Loudenslager,

      “ ‘for the term of his natural life, and remainder in fee to the heirs of his body lawfully begotten, but if the said Alonses Monroe Loudenslager should depart this life without leaving heirs of his body, then in such case the said house and lot, Bullett Lane lots and property above mentioned shall then descend and vest in the surviving brothers and sisters of the said Alonses Monroe Loudenslager, share and share alike.’
    “After testator’s death a petition was filed by Alonzo in the court of chancery invoking the provisions of our statute for the sale of lands of infants, said petition setting forth that his two infant children were owners of the locus in quo subject to his life estate under the provisions of the codicil above quoted and praying for a sale of the land. In that proceeding the land was sold and purchased by Alonzo. Then followed the conveyance from Alonzo to complainant.
    “Alonzo is still alive and at tins time has one living son.
    “Defendant urges: 1. That should! Alonzo have more children who should survive him such additional children would become entitled to a share in the estate. 2. That should the living son of Alonzo have a child and die before Alonzo, such child would take. 3. That should Alonzo die without issue or the issue of issue, the brothers and sisters of Alonzo would take.
    “Complainant contends: 1. That the chancery decree for sale is conclusive as to the title. 2. That the provisions of the codicil vest a fee in Alonzo under the rule in Shelley’s Case.

    “1. Touching complainant’s first contention it is clear that the proceedings for sale cannot be given a conclusive force touching the title. The court of chancery sold what interest the children of Alonzo had that could be sold; it could sell no more. Nor could that proceeding bind anyone except the parties to it and those holding under them. It could neither bar after-born children of Alonzo, nor after-born children of Alonzo’s son, nor Alonzo’s brothers and sisters as to any claim either of them may hereafter make. They are all entitled to a day in court as to any claims they may make to the locus in quo. This seems elementary. Indeed, the proceedings for the sale of the estates of infants do not purport to finally adjudicate questions of title.
    “2. Touching complainant’s second claim, I think that Lamprey v. Whitehead, 61+ N. J. Eq. 1+08, is conclusive. See, also, Dome’s Case, 68 N. J. Eq. 11. In these two cases Chancellor Magie has carefully reviewed all prior decisions touching the construction and force to be given to sections 10 and 11 of our Descent act. The provisions of the will under consideration in Lamprey v. Whitehead were essentially the same as the provisions of the codicil here involved. No consideration was there given to the provision over in the event of the death of the life tenant without issue because possible claims of that nature had been extinguished by conveyances. Nor need any consideration be here given to the possible rights of the brothers and sisters of Alonzo, since it is clear that possible after-born children of Alonzo or possible after-born children of Alonzo’s living son who might survive Alonzo will have claims of too substantial a nature to justify this court in forcing a title upon defendant subject to such claims. Lamprey v. Whitehead not only holds that under provisions of a will similar to the one here in question 'a child of a child of the life tenant who survives the life tenant will take if his father predeceases the life tenant, but also holds that such a title as is here involved cannot be forced upon an unwilling vendee. The recognized rule in specific performances is that while many legal objections to the title should be disposed of by the court, specific performance should not be decreed if there is ground for saying that the question is not settled by previous authorities, or if there are decisions or dicta of weight which show that another judge or another court having the question before it might come to a different conclusion. L'ippmcolt v. Witcojf, 61+ N. J. Eq. 107, 120; Richards v. Knight, 61+ N. J. Eq. 196.

      “A decree will be advised dismissing the bill.”

      Messrs. Waddington cG Matthews, for the appellant.

      Mr. James H. Hayes, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated, in the opinion filed in the court below by Vice-Chancellor Learning.

For cufw-mmce — The Chief - Justice, Trenchard, Parker, Mintuurn, Iyalisch, Black, Katzenbach, Campbell, Heppeni-ieimer, Gardner, Ackerson, Van Bus-kirk, Clark—13.

For reversal—None.


author: Per. Curiam.

text:
    Fortunato Colantuoni, appellant, v. Max L. Balene, respondent.
    [Decided January 24th, 1923.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Fielder, who filed the following opinion:
    “Defendant is the lessee of certain real property for the term of twenty-one years, commencing March 1st, 1918. By the terms of his lease he was required to and did deposit with his landlord $5,000 as security for the performance of his covenants contained in the lease. On December 27th, 1918, he sublet the property’' to complainant at an annual rent of $6,500, for a term to end December 31st, 1928, by a written lease which contained the following provision:
    “ ‘The said tenant has deposited with the landlord the sum of thirty-five hundred ($3,500) dollars, receipt whereof is hereby acknowledged, to secure the faithful performance by the tenant of all the terms, covenants, conditions anti agreements on the part of the tenant to be performed, as hereinbefore or hereinafter contained; it being understood and agreed that if the tenant shall keep and perform all the terms, covenants, conditions and agreements herein-before or hereinafter agreed to be performed on his part and behalf and pay the rent and all other sums by him to be paid as herein-before and hereinafter contained, said landlord will, on the 1st day of January, 1929, refund to him the balance then unpaid, after the deduction of any damages and payments to secure which the said sum is deposited; it being understood and agreed that the landlord will allow the tenant four and one-quarter per cent, rate of interest annually on the balance then unpaid, on the first day of January of each and every year during the term hereof.’
    “On or about December 1st, 1919, complainant assigned his lease, with defendant’s consent in writing, which consent was given subject to the express proviso that it should not be construed to give complainant the right to claim or demand the said deposit of $3,500 and that the same should continue to be and remain as a deposit for the faithful performance of all the terms and conditions of the lease made by defendant to complainant.
    “Complainant charges that defendant holds the sum of $3,500 as trustee for complainant and because defendant admits that he has mingled the money with his own funds and has dealt with it as his own and intends to continue to so deal with it during the period he is entitled to hold it, that the fund should be safeguarded by a decree of this court, and to that end complainant prays that the fund be decreed to be paid to a receiver to be appointed by this court, or to the clerk of this court, to be held for the benefit of complainant and defendant in accordance with the terms of their agreement.
    “It is complainant’s contention that where a person has or accepts the possession of money, with the express understanding that he is not to hold it as his own absolute property, but is to hold it for certain specified purposes, a valid and enforceable trust exists and the trustee is subject to the directions of this court in the event that he shall violate his duties as trustee. The application of this proposition,- how-: ever, depends upon the agreement or transaction under which the money came into possession, and when the agreement or transaction is examined it may be found that it was not the intention of the parties to create a trust but to enter into some ordinary contractual relation. When the transaction and agreement in this case are examined, it will be found that it was the intention of complainant and defendant to create the relation of pledgor and pledgee and not of trustee and cestui que trust. Kaufman v. Williams, 92 N. J. Law 182. The deposit was made by complainant as collateral security for the performance of his covenants and agreements contained in the lease. The title to a sum of money equivalent to the deposit remained in him and the right to its possession, coupled with a special interest in it for the purpose for which it was pledged, passed to defendant. Security Trust Go. v. Edwards, 90 N. J. Lem 558, and cases cited. The lease or agreement gives defendant the right to hold the sum deposited until January 1st, 1929, and it malees it his duty to repay it on that day to complainant, provided complainant has fulfilled the terms of the agreement. Any unauthorized use or disposition of the sum deposited which would put it out of defendant’s power to repay it would constitute a conversion. Donnell v. Wyclcoff, 49 N. J. Law 48; Dimoclc v. Ü. S. National Bank, 55 N. J. Law 296. Nothing is to be found in the agreement which defines the manner in which defendant shall hold or invest the fund. It certainty was not the intention of the parties that the identical bank bills deposited should be returned to complainant, and it appears clearly that the defendant was entitled to make some use of the money whereby profit, interest or income would accrue on it, at least to the extent of four and one-quarter per cent, per annum, because that rate of interest is to be paid- by defendant to complainant annually. Defendant appears to have invested the money in his business, which is the purchase, sale and development of real estate. It is admitted that he has an equity in his real estate holdings of at least $30,000 above all liens and encumbrances thereon and in excess of the $3,500, and therefore is not insolvent. I do not think that his failure to keep the fund intact or that the manner in which he has invested and thus holds it, is unauthorized under the agreement between the parties and amounts to a conversion, and I am not willing, on the state of facts here developed, to alter the terms of the agreement by taking the deposit from the possession of defendant and delivering it to some other person and thus subject defendant, should the occasion arise, to inconvenience, delay and probable expense in satisfying a new depositary that he is entitled to receive some or all of it to answer some default by complainant under the agreement.
    “It is conceded that no payment of interest, as provided by the agreement, has been made by defendant to complainant. I do not regard this breach of the agreement as ground for the intervention of this court by the appointment of a receiver of the fund, or for a decree in favor of complainant for the amount of such interest. Complainant has a complete remedy at .law to secure the interest due him.
    “The bill of complaint will be dismissed.”

      Messrs. Insley, Vreelmd & Decker, for the appellant.

      Messrs. Auienreilh & Gannon, for the respondent.
   Per. Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Fielder.

For affirmance — The Chief - Justice, Trenci-iard, Parker, Minturn, Kalisch, Black, Katzenbaci-i, Campbell, Heppeni-ieimer, Gardner, Ackerson, Van Buskirk, Clark—13.

For reversal—None.


text:
    Universal Security Company et al., appellants, v. American Pipe and Construction Company, respondent.
    [Decided January 18th, 1924.]
    On appeal from a decree of the court of chancer}’ advised by Vice-Chancellor Fielder, who filed the following opinion:
    “The House Supply Company, a corporation of this state, changed its corporate name to Universal Security Company and under its new name is one of the complainants in this cause. For convenience the corporation will be referred to herein as the complainant company.
    “Prior to and after December 1st, 1919, complainant company was engaged in developing and improving, for residential purposes, various tracts of land, some of which it owned at above date and the balance of which it afterward acquired, all situate on a peninsula extending into the Shrews-bury river, called Gooseneck Point. In the fall of 1919 defendant had a contract with the United States government for dredging a channel in the Shrewsbury river and its hydraulic dredge was engaged on that work. Complainant company, being desirous of having its low lands filled, negotiated with defendant for such work and the result was a written contract in which complainant company is the first party and defendant is the second party, bearing date December 1st, 1919, and containing the following clause:
    " ‘The second party agrees that it will, immediately after it has completed its contract with the United 'States government for dredging the Shrewsbury river, New Jersey, place with its dredge one hundred thousand (100,000) cubic yards of hydraulic fill and as much more as is desired by the party of the first part, on the property of the first party and the property immediately adjoining (consents therefor to be obtained by the first party) on Goose Neck Point, opposite Portaupeck, Monmouth county, New Jersey, at the points and to the grade to be indicated by the first party.’

      ‘"Henry TV. Ennvon, an officer of tlie complainant company, became surety for the performance of his company’s obligations under the contract and he is the other complainant in this suit.
    “Defendant started to fill the lands on Gooseneck Point on or about September 1st, 1920, and quit November 23d, 1920, maintaining that the work contemplated by the contract was fully completed. Complainant company insists that defendant failed to fully perform its contract, in that it did not fill a tract located on-the point, called the Hance tract, to which defendant replies that it did not contract to fill the tract because complainant company neither owned it, nor had consent to fill it, and also because it did not immediately adjoin property owned by complainant company. The complainant company refused to pay for the work performed and defendant commenced suit in the New Jersey supreme court against both complainants herein, to recover about $20,000, in which suit complainants filed a counter-claim for $15,000 damages for failure on defendant’s part to fill the Hance tract. On the trial of that action complainants sought to prove that complainant company had control of the Hance tract and that it was not the intention of the parties to the contract to exclude therefrom lands of which complainant company had control and which did not immediately adjoin other lands owned by complainant company and that it was the intention of the parties to the contract that all lands controlled by complainant company while the work was in progress (which included the Hance tract) should be filled by defendant. The trial judge overruled complainants’ offer to make such proof on the grounds that parol evidence could not be received to affect or vary the unambiguous terms of a written contract and judgment was rendered in favor of the defendant herein and against complainants herein for upward of $17,000. Complainants have paid defendant the difference between complainant company’s claim for damages and the amount of the judgment and have given bond to pay the balance, and defendant has been restrained until the further order of this court, from proceeding to collect the balance of the judgment.
    “This suit is brought to reform the portion of the contract quoted, so that it will accord with what complainants maintain was the actual intention and understanding of the parties, but which by mutual mistake is not clearly expressed, namely, that defendant should Jill all the lands at Gooseneck Point which complainant company might own or control before defendant had completed the filling work and the complainant’s counsel suggests that such reformation can be accomplished by adding at the end of the quoted clause the following words:' ‘Provided such property shall be owned or controlled by the party of the first part in time to- make a continuous fill under this contract.’
    “Complainants also pray that defendant may -be decreed to have broken the contract as reformed and that the damages resulting from such breach be ascertained and defendant required to credit the same upon its judgment.
    “The evidence shows that in or about September, 1919, complainant company sent a letter to defendant’s main office in Philadelphia stating its desire to have defendant fill lands on Gooseneck Point, which letter came to the hands of defendant’s general superintendent, who sent Judge, who was in charge of the dredging operations for defendant under its government contract, to look over the property of complainant comparn1, ascertain what lands were to be filled, the extent of the fill and the things in general relating to the proposed work; that Judge thereafter, by appointment, met Shera, the president, and Kunyon, the vice-president and treasurer of complainant company, at Gooseneck Point; that Judge, Shera and Bunyon walked over the property, discussed the enterprise in which complainant company was engaged, and Judge was then informed by Bunyon and Shera that their company owned some of the lands and were expecting to acquire all property on the point, except the Jones tract, and that complainant company would obtain permission to fill all tracts on the point not owned by it which it desired filled; that Judge subsequently mailed or delivered to complainant company a proposed contract, prepared at defendant’s office, which contract was changed in some particulars by complainant company, rewritten, signed by the officers of complainant company December 1st, 1919, and mailed or delivered to Judge; that such contract was executed by defendant December 22d, 1919, and a copy delivered to complainant company and is the contract in controversy; that no representative of defendant, other than Judge, had any negotiations or dealings with complainant company prior to the execration of the contract by defendant.
    “The question whether the contract should be reformed so that by its terms defendant would be required to fill all lands at Gooseneck Point which complainant company might own or control before defendant had completed its filling work, in its practical application refers to the Hance tract alone, because defendant has filled all other tracts which complainant company desired filled. Complainant company held an option for the purchase of the Hance tract before November, 1920, when defendant claims its work was completed; but it did not actually acquire title until after that date. That tract does not immediately adjoin any property owned or controlled by complainant company, but is entirely separated therefrom by the Jones tract, which complainant company neither owned nor controlled.
    “On the subject of reformation of a contract on the ground of mistake, the syllabus in Giammares v. Allemmia Fire Insurance Go., 91 N. J■ Fq. 11J¡., sums up the law as laid down by our court of errors and appeals, as follows:
    “ ‘A written contract will not be reformed in equity because of a mistake, in the absence of fraud, unless it is mutual, that is, common to both parties and each under the same mistake as to its terms.
    “ ‘To reform a writing to meet the alleged intent of one party who avers a mistake, when it accurately expresses the agreement as understood by the other, would be as far from expressing the agreement as before and injure one party at the cost of precisely an equal wrong to the other, and therefore to warrant a reformation for mistake, the demonstration of mistake must be clear and satisfactory, such as produces a strong conviction of the truth.’
    “It is therefore necessary for complainants to show that defendant was aware of the desire of complainant company to hare all the lands owned or controlled by it at Gooseneck Point filled, whether or not such controlled lands were contiguous to [immediately adjoining] other lands owned by complainant company and concurred in that desire and intended by the contract prepared by it, to express such concurrence.
    “Defendant’s knowledge of what work complainant company wanted done could only have been acquired from its agent, Judge, because he was the only person connected with defendant who talked with Shera and Eunyon on the subject-matter of the contract prior to its execution by defendant. There was no correspondence between the parties prior to the execution of the contract by defendant on the terms and conditions of the contract. Defendant is bound by the statements made by Judge to the extent that the power to bind defendant was conferred on him by the charter, by-laws or corporate action of defendant’s stockholders, or board of directors or can be inferred from the powers expressly conferred, or which are incidental thereto, or where the statements made were within the apparent powers which defendant caused Shera and Eunyon to believe it had conferred upon him. Aerial League of America v. Aircraft Co., 117 Atl. Rep. 70b.

    “Complainants rely on testimony of Shera and Eunyon as to statements made by them to Judge and by Judge to them before complainant company had executed the contract, and subsequently and before the contract was executed by defendant. Such testimony, in effect, is that on the occasion of Judge’s first visit to Gooseneck Point, the Hanee tract was pointed out to him by Shera and Eunyon as one of the tracts to be filled and he was told that complainant company was in course of acquiring title to it; that Judge then stated that defendant would fill all lands on the point owned by complainant company and all lands owned by others for which complainant company could obtain permission to fill, including the Hance tract; that relying upon such statement, complainant company executed the contract December 1st, 1919; that later in that month and before defendant had executed the contract Judge called again on Shera and Bunyon at Gooseneck Point and stated that defendant wished to know whether, under the words ‘property of the party of the first part,’ as contained in the contract, defendant would be expected to fill that part of the Hance tract which lies west of the Seven Bridge road, and, if so, defendant was not willing to execute the contract; that Judge was then informed that only that part of the Hance tract which lies east of the Seven Bridge road was to be filled and he was then taken to the Hance tract and shown the boundaries of that portion of it which complainant company desired'filled and he said it was all right and perfectly satisfactory to defendant; that Shera and Bunyon then told Judge that if there was any question that the contract did not properly describe the lands which they and Judge understood were to be filled, to return the contract to them to be redrawn and that Judge said it was not necessary to do so, as he had charge of the matter and understood what was to be done and that to have the contract sent back and redrawn would mean great delay in having it executed by defendant; that Shera and Runyon accepted Judge’s assurances:
    “The evidence on the part of defendant is that Judge was its agent merely for the purpose of ascertaining what work complainant company desired performed and to report that desire to his superiors and a denial that Judge had power or authority to negotiate the terms of a contract with complainant company or to enter into any agreement on behalf of defendant. Defendant further denies that Judge at any time up to the execution of the contract by it reported to defendant the desire of complainant company to have all lands at Goose-neck Point which it might own or control during the progress of the work, filled by defendant, or that he reported to them the desire of complainant company to have the Hance tract filled. Defendant also denies that Judge did in fact agree that the defendant would fill the Hance tract-
    “Complainants offered no proof to show that Judge’s authority to act for defendant ivas fixed or defined by charter, by-laws or corporate action of defendant’s stockholders or directors; hence to succeed in this suit complainants must demonstrate that the statements and representations made by Judge to Shera and Runyon, were within the apparent powers which defendant had caused Shera and Runyon to believe it had conferred on Judge; or that defendant sent Judge to see Shera and Runyon after December 1st, 1919, to obtain further information as to the property to be filled and that defendant is bound by the information which Shera and Runyon say they then gave Judge.
    “In response to a letter written by complainant company to defendant, the defendant sent Judge to see the officers of the complainant company. The latter informed Judge as to what was wanted and asked Judge for a. price on the work, to which Judge replied that he could not name a price, as that would have to be settled at defendant’s office. Manifestly, the price could not be fixed until Judge had reported to defendant the nature and extent of the work required. At this interview Shera' and Runyon informed Judge that complainant company did not own the Hance tract, but hoped to acquire it, and that it did not own and did not expect to acquire the J ones tract, which completely separated the Hance tract from the other tracts which complainant company'owned or expected to control, either by consents to fill or by subsequent purchase. It is admitted that the extent of the assurance then given by Judge was that defendant was equipped to do the work and that there was no representation that defendant would enter into a contract to do it. Certainly no agreement was then made by Judge that any lands would be filled or what the cost per cubic yard would be, and it is clear'that Shera and Runyon understood that Judge was to report the substance of the interview to his superiors and that they [Shera and Runyon] would hear later from defendant. It would seem that no stronger evidence could be given Shera and Runyon that the extent of Judge’s authority was to investigate and report. The next step in the negotiations was that Judge delivered to complainant company a form of contract prepared by defendant setting forth what it proposed to do. My construction of so mucli of that contract as is material to this issue is that defendant proposed to fill all property at Gooseneck Point owned by complainant company and the property immediately adjoining such owned property, for which complainant company could obtain consents to fill and that the time to which the ownership and consents referred was not the date of the contract, but the date when defendant should commence work, or during the progress of the work. It is not material for present purposes which time was intended. This contract was examined by Shera and Runyon, changed ,in some particulars, but not as to the property described therein, executed by complainant company and returned to defendant. Assuming, without deciding, that Shera and Runyon had told Judge that they wanted the Hance tract filled and that Judge so reported to defendant, when Shera and Runyon received this form of contract from defendant it was notice to them that defendant did not propose to bind itself to fill that tract unless it came within the description as given by defendant of the property it intended to fill and it would not be embraced within such description unless complainant company became the owner of it during the progress of the work because, if complainant company had simply a consent to fill it, it did not immediately adjoin property owned by complainant. The form of contract was also notice to Shera and Runyon that if Judge had assumed authority to promise that defendant would fill the Hance tract, defendant would agree to fill it only in the event that it came within the description of lands to be filled as set out in the contract. Subsequently and before defendant had executed the contract Judge made his second call on Shera and Runyon. Defendant denies that this interview was by its request or direction and there is no evidence that it was, except that Runyon and Shera say [which Judge denies] that Judge told them he had been sent by defendant, and consequently defendant cannot be bound on the theory that, having sent Judge to obtain information with respect to the contract, it is chargeable with knowledge of all information he obtained, whether he reported it in full or not. Neither is there any evidence that anything which transpired in this interview was related by Judge to his superiors. Shera and Runyon maintain that at this second interview they again told Judge that they expected defendant to fill the Hanee tract and that if the conract as executed by complainant company did not include that tract, to have it returned to them for correction and that Judge replied 'that he understood the Iiance tract was to be filled and that it was not necessary to make any change in the contract to cover that point. The question now is: Had the course pursued by defendant in its dealings with complainant company led Shera and Runyon to believe that defendant had conferred power on Judge to negotiate or settle the terms of a contract, or to modify, alter or interpret the terms as expressed in the contract prepared by defendant and offered to complainant company ? I do not think such an inference can be drawn from the testimony, but rather that it should have been apparent to complainant company that Judge had no such power.
    “Defendant completed its filling work November 23d, 1920. At that time complainant company had not acquired title to the Hanee tract and the option which it held to purchase that tract, cannot be construed as a consent given by the owner or owners thereof that it might be filled under the direction of complainant company and the tract did not immediately adjoin other property owned or controlled by complainant company. Therefore, defendant was under no obligation, by the terms of its contract, to fill that tract, and because it does not appear to my satisfaction that defendant intended to agree to fill it under conditions other than specifically defined in the contract, I cannot find that there was a mutual mistake in the terms of the contract and the bill of complaint must be dismissed.”

      Mr. Walter L. McDermott, for the appellants.
    Messrs. Collins & Corbin, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Fielder.

For affirmance—-The Chief-Justice, Trenohard, Parker, Minturn, Ivalisci-i, Black, Katzenbacii, Campbell, Gardner, Ackerson, Van Buskirk, Clark—12.

For reversal—None-


text:
    Russel Marston, appellant, v. William G. Lentz et al., respondents.
    [Decided March 3d, 1924.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Foster, who filed the following opinion:
    “By consent of counsel these causes were consolidated, and were submitted on a stipulation of facts and certain exhibits consisting of maps and deeds.
    “The controversy is over a restrictive building covenant, and Marston as complainant asks to have the defendants Lentz and Lenart enjoined from building more than one dwelling on a plot known as the DeGomme lot, on the southwesterly corner of Charlton and Raymond avenues, in South Orange. In case Marston succeeds, then Lentz asks to have it determined that between him and Lenart he has the right to build on the one-third portion of the lot which is owned by him, and if he prevails Lenart will be unable to- build on the remaining two-thirds of the lot.
    “From the facts agreed-upon it appears that one John G. Vose, between 1864 and 1866, acquired title to- tracts of land aggregating two hundred and ten acres. Under date of January 1st, 1867, he had a map made, which was not filed, on which the lands are shown divided into plots of various sizes from about one to over seven acres. Between January 1st, 1867, and September 19th, 1868, Vose conveyed in the vicinity of the premises in question plots and parts of plots shown on this map, and he restricted some of the- plots so conveyed to one house, and others to two-, three and four houses respectively.
    “On September 19th, 1868, Vose conveyed to DeGomme the lot in question, which is the easterly portion of plot S, as shown on the 1867 map, having a frontage of one hundred and forty-five and two-tenths feet on Raymond avenue and a depth of three hundred feet. This deed recited that the premises conveyed were a part of ‘the estate called Mont-rose/ and it contained a restrictive covenant specifying in great detail the kind and character of the buildings that could not be erected, and the -lines of business that could not be conducted thereon, the pertinent part of this covenant being:
    “That the said premises * * * shall not at any time hereafter be used or occupied * * * for the erection of any buildings of any kind or description, excepting one diwelling-house with appropriate gardeners’ cottages. &c., * * * appropriate for a gentleman’s country residence; * * the covenant aforesaid shall be attached to the said premises and run with the land and shall be inserted in any and all further conveyances,” &c.
    “In November, 1869, a new map of the property, entitled ‘Map of Montrose showing lands of John G. Vose, &c./ was filed. This showed the names of the owners of plots sold since January, 1867, and it differed from the map of 1867 by ‘showing at the northeasterly corner of the tract at a point over two thousand feet from the DeGomme lot, a 'new street and changes in the subdivision of the plots; it also showed a new street at the northwesterly comer of the tract over one thousand five hundred feet from the DeGomme lot and three plots on the map of 1867 containing about twenty-one acres were shown to be subdivided into fourteen plots; it also showed a new street now known as Irving avenue, and to produce this street two of the Grove road plots are shown to have been reduced in area. And the original plot L is shoAvn as two plots each marked L and each containing over two and fifty hundredths acres. -Some time between September, 1868, and December, 1872, Charlton avenue was laid out through plots T and II, and it is not shown on either of the maps mentioned.
    “On December 31st, 1872, Voso conveyed to one Freeland a lot on the easterly side of Charlton avenue on'e hundred feet south of Raymond avenue, having a frontage of one hundred feet on Charlton avenue and a depth of two hundred feet; this conveyance contained the same recitals and covenants as the deed to DeGomme.
    “By an agreement dated May 5th, 1873, between Vose and: DeGomme, they rmdertook to modify the restrictions on the DeGomme lot to permit the erection of three houses thereon, and in the map of 1873 the DeGomme plot is shown' as three lots.
    “In November, 1873, a map showing part of the Vose tract and lands of other parties was filed, and this shows that the westerly part of lot L and plots M, T, II, E and D, as shown on the maps of 1867 and 1869, have been divided into forty-seven smaller lots. It also appears that, with the exception of the plots owned by Marston and his wife, the whole of plots V and II, and the westerly half of L, as shown on the map of 1869, and in fact the unsold portions of the Vose holdings, were lost to him by foreclosure in 1877.
    “Marston derives title by mesne conveyance from Free-land, his wife owns the next plot north, one hundred by two hundred feet, at the corner of Charlton and Bavmond avenues. Both plots are improved as one and used as a residence by the Marstons. The house stands on the wife’s plot, and the husband’s plot is used as part of the lawn and gardens and the garage stands on it.
    “The defendant Munther acquired title to the DeGomme 'lots by mesne conveyances from DeGomme, and May, 1922, he conveyed the southerly one hundred feet front on Charlton avenue to Lentz, and in September, 1922, he conveyed the balance of the plot to Lenart. The latter proposes to erect two houses on his lot and Lentz proposes to erect one house on his part of the plot, but if complainant prevails only one house can be built on this entire plot, and Lentz claims the-prior right to build his house on his one-third of the plot because of the priority of title, and this contention, if sustained, will leave Lenart in the ownership of the remaining two-thirds of the plot and unable to erect any building or structure of any kind thereon.
    “It also appears that by the foreclosure proceeding of Yose’s unused holdings, and by the expiration of the restrictions on adjoining plots or on plots in the immediate vicinity of Charlton, Kaymond and Ealston avenues and Grove road, that complainants’ and defendants’ properties are to a great extent isolated in an unrestricted neighborhood.
    “It further appears that Mars ton acquiesced in the erection of two houses several years ago on what is known as the Fort property, directly across the street from the lot owned by him or his wife, although this property was restricted to one house, and it also appears that complainant further acquiesced in the violation of the restrictions on the Turrell lot, about three hundred feet from his property; for he was made a party defendant in an action in this court, brought by Turrell against Donwitzer, to have this restriction declared void, and with knowledge of the purposes of this litigation complainant permitted a decree by default to be taken against him, and the restriction was declared void as to the Turrell lot.

      “It is stated that the houses which the defendants Lentz and Lenart intend to bnild are to cost $25,000 each, and that they arc to be of the character suited to the neighborhood, as to expense and style.
    “From; these facts it is apparent that whatever plan or scheme Vose had in mind in 1866 for the development of his property into “Gentlemen’s Country Residences,’ while it may have been a general, it was not a uniform scheme, and what-, ever it was, it was abandoned almost from its inception, and his plans and plotting of the property were radically changed from time to time, such change being indicated by reduction in the size of the plots, by changes in the number of houses that could be built thereon, by the opening of streets and by the subdivision of plots, ,&c.
    ‘“During the fifty-five 3rears that have elapsed since these restrictions were imposed great changes have taken place in the character of the neighborhood with a pronounced increase in its population, as well as a great increase in the demand for housing accommodations, due in part to the improvement in the transportation facilities now available for reaching this property.
    ““Complainant and others interested have recognized these changes, and because of them or for other reasons satisfactory to him and them, have acquiesced in the violation of this restriction.
    ““In Fort v. FielcL, Vice-Chancellor Fielder had occasion to consider these restrictions and the changes in the circumstances I have indicated, and he reached the conclusion, in which I fully concur, that there had been such a pronounced change in the character of the neighborhood, and such a general acquiescence by those interested in the violation of this restriction, that it amounted to an abandonment and estoppel.
    ““My conclusion is that whatever scheme of development Vose originally had was abandoned, and that complainant by his continued acquiescence in repeated violations of this restriction is now estopped from invoking its protection in this action.

      “My conclusion in this matter is strengthened by the fact that to grant the restraint complainant seeks would be a great hardship upon one or both defendants, and would probably result in leaving Lenart in the ownership of part of a lot which he could never improve nor derive any benefit from. A denial of the restraint will not produce any material injury or inconvenience to complainant or his property, particularly in view of the character of the dwellings Lentz and Lenart intend to build on their respective properties, and I will therefore advise that the bill be dismissed.”

      Messrs. Wall, Iiaight, Carey & Bartpence, for the appellant.

      Messrs. Osborne, Cornish & Scheck; Messrs. Hopkins & Herr, for the respondents.

      Messrs. Hopkins & Herr, for William C. Lentz.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Foster.

For affirmance—The Chief-Justice, Trenchakd, Min-turn, Kalisch, Black, Katzenbacii, Campbell, Heppest-t-ieimer, Gardner, Van Buskirk, Clark—11.

For reversal—None.


author: Per C.uriam.

text:
    Abraham Freidman et al., &c., appellants, v. Max Slaff et al., respondents.
    [Decided March 3d, 1924.]
    On appeal from an order of the court of chancery advised oy Advisory Master Stevenson, who filed the following opinion :
    “My conclusion in the above-stated cause is that the complainants have failed to establish their case by sufficient evidence and that therefore the bill of complainant must be dismissed.
    “1. A complete discussion of the pleadings and evidence in this case, the study of which has brought me to the conclusion above stated, will not be attempted. The case is in many respects perplexing and difficult. The bill of complaint is extremely unsatisfactory and defective and indicates (although this may be a mistake), that the definite claims advanced on behalf of the complainants by their counsel in his argument and brief were not at the start clearly defined.
    “When we come to the evidence we find a large number of matters of fact about which the complainants and the defendant Max Slaff contradict each other flatly. It is difficult to adopt any theory which will explain these contradictions and absolve the partie,,, or one of them, from the charge of willful perjury.
    “After perusing and reperusing the record in this case, I find it impossible to satisfy myself on which side the truth lies. The burden being upon the complainants, under a well-settled rule, to convince the court by a preponderance of evidence of the correctness of their contention, I can only say that after having given to the cause the most careful study and consideration in my power, my mind remains unconvinced in respect to the propositions of fact upon which any decree for the complainants must be based. It must be conceded most amply that this conclusion of fact may be erroneous. 1'f the truth could be established, it may be that the complainants by the dismissal of their bill lose a .remedy to which they are entitled. Such a result often is reached in courts of law and courts of equity because of the necessarily imperfect instruments and processes which must be employed in the attempt to administer justice.

      “2. If, viewing this case in one aspect, there is room to argue that the remedy which the complainants ask for is within the discretion of the court, it may be worth while to note that the amount of money which the complainants claim they supplied for the purchase of these lands is very small— that there is no dispute between the parties as to the amount of this fund, which the defendant claims was a personal loan-for which he is liable and which it does not appear he cannot readily pay.
    “3. I find in this ease no fiduciary relation which could materially affect business transactions between the complainants and their uncle, the defendant Max Slaff. The complainants have been in business for five or six years or more and apparently have been successful. From time to time they have lent money to their uncle. They appear to be shrewd, strong-minded young men, abundantly able to take care of themselves in a business transaction. The important point in this connection is that these complainants, according to their own admission, saw fit to disregard the most obvious, well-settled rules of business, which all men should follow in matters so important as the purchase of twenty or thirty thousand dollars worth of real estate. The amount of money which they put in is trifling compared with the amount paid, or to be paid, by the execution or assumption of mortgages by the defendant Max Slaff. The complainants are not children who confidingly committed themselves to their uncle. They knew that they were doing business and they deliberately refrained from taking any writing, even a receipt, to sliow the character of the small advance of money which they made. It may be remarked here that practically at the same time when the land in controversy was purchased the defendant purchased a large and valuable property on account of himself and his nephews, the complainants, and in this transaction the complainants advanced $2,000, and subsequently the defendant executed an ample instrument showing the interests of both parties in the purchased land. -
    “I think that it is safe to state that the sound policy of the law is to compel business men to transact business according to business rules. Courts of equity in large numbers of instances must protect women, children and incompetents from fraud perpetrated by cunning individuals, who take advantage of the trust and confidence reposed in them. In many such cases the statute of frauds is cast aside and when the facts are proved an ample equitable remedy is granted. This, in my judgment, is not that kind of a- case. If any guessing is to be done I think that it should be against the claims of the complainants.”

      Mr. Ilarry Weinberger, for the appellants.

      Messrs. Baches & Baches, for the respondents.
   Per C.uriam.

The order appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Advisory Master Stevenson.

For affirmance — The Chief-Justice, Trenchard, Parker, Minturn, Kalisoh, . Black, Katzenbaoi-i, Campbell, I-Ieppeniieimer, Gardner, Van Buskirk, Clark—12.

For reversal—None.


text:
    Victor E. Bullen et al., exrs., &c., appellants, v. Frank W. Brindle, respondent.
    [Decided March 3d, 1924.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Church, who filed the following opinion:
    “This is a case for specific performance. It appears that a lease was entered into between Frank W. Brindle and Jane Freeman in her lifetime, which contained a clause giving the lessee the privilege of purchasing the property in question, the Hamilton Hotel at Paterson, under certain condi-' tions, for $40,000.
    “The conditions Avith which the lessee should comply are fully set forth in the lease itself. Unfortunately, those who would be best qualified to testify in this case are either dead or without the jurisdiction of the court. The main feature of the lease and the most important question to be decided is whether or not the complainant complied with that prolusion in the lease which required him to give notice that he would exercise his option to purchase the property on or before October, 1919.
    “On this point the evidence is contradictory. The complainant testifies that he prepared a no dee in accordance with the terms of the lease, showed it to his assistant at the hotel, and asked him to serve it. This assistant swears that he did serve it on the lessor and is corroborated by two witnesses. There is also testimony to siioav that the lessee, believing he had complied with the terms of the lease, spent a large sum of money on the improvement of the hotel and entered into a contract to advertise his ownership of it for five 'years.

      “The defendants, executors of the estate of the lessor, testify that the notice could not have been served. The reason given is that Mrs. Freeman, the lessor, was too ill to receive the notice claimed to have been served upon her. One of the executors, her physician, swears that in July, when the notice was supposed to have been served, she was too ill to go downstairs into the hallway and receive the notice. He says he visited her every day in that month and she could not go downstairs. He admits that in the month before she could have done so, and in the month thereafter she did do so. He says he only saw her for fifteen or twenty minutes each day. His opinion is that it would have been impossible for her to descend the stairs during July. In the face of the direct evidence of two persons that they saw her receive the notice I am constrained to decide that the doctor is mistaken and that the notice was properly given under the terms of the lease, because in his absence she might have descended the stairs to receive it.
    “It is also contended that the rent was not paid according to the lease. While it was not paid on the first of every month it was paid within the month, and the lessor held, and still holds,-$500 to make good any possible deficiency. I think the lease was fully complied with in this respect.
    “A further claim is made by defendants that improvements were made to the property without the lessor’s consent. These improvements were acquiesced in by the lessor or her agent; were for the benefit of the property, and in view of the fact that the lessee spent a large sum of money on these improvements, apparently with the acquiescence of the lessor, I do not think that is a breach of the contract of lease.
    “I will advise a decree directing the specific performance prayed for in the bill.”

      Mr. Frank Smii, for the appellants.

      Messrs. Ward & McGinnis, for the respondent.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in' the opinion filed in the court below by Vice-Chancellor Church.

For affirmance—The Chibe-Justice, Trenci-iard, Min-turn, Kalis oh, Black, Katzenbach, Campbell, IIeppenhbimbr, Gardner, Van Buskirk, Clark—11.

For reversa1—None.


text:
    In the matter of the probate of the last will and testament and codicil thereto of George T. Lippincott, deceased.
    [Decided January 25th, 1924.]
    On appeal from a decree of the prerogative court advised by Vice-Ordinary Learning, who filed the following opinion:
    . “The essential facts are sufficiently outlined in the opinion filed in the orphans court.
    “While the arguments have taken a wide range, it is apparent that the single inquiry here involved is purely a question of identity. Is the will which has been presented the will to which testator referred in the codicil which he subsequently executed?
    “When executed, this will was by testator placed in the custody of his 'attorney for safekeeping. As late as 1915 testator gave directions to his attorney touching this will that fully recognized it as his last will at that time. Two years later, a.nd while this will -was still in the attorney’s' 'custody as testator’s will, the codicil now offered for probate was executed, and.in like manner by testator was placed -in the custody of the same attorney with the specific direction on the part of testator that it 'be placed with the will then in the attorney’s custody. These directions of testator were faithfully complied with on the part of the attorney, and after testator’s death the will and codicil were produced by the attorney in the envelope in which the attorney had kept them. The testimony of the attorney, which cannot be properly doubted, is that ‘Mr. Lippincott [testator] handed me that codicil and asked me to place it with the will which I had of his in my strong box in the Atlantic Safe Deposit and Trust Company. I did that, and it remained there, together with the will,'until Mr. Lippincott’s death, when I removed the two which were in the envelope, and which papers I handed to the surrogate.’
    “It is difficult to' conceive how testator could have more forcefully identified this will as the will to which the codicil referred. A reference in a codicil to the date of the will ordinarily might afford a more satisfactory identification, but it is far from clear that an erroneous reference to the date of the will would not he fully overcome by acts of a testator of the nature above narrated, and in the absence of satisfactory evidence that any other will had at any time been executed by testator.
    “Little assistance is to be found in adjudicated cases in which the effort is to identify which of several instruments, either existing or known to have existed, a codicil may refer to. Here diligent search has found no other will, and the codicil was with this will, and it is not known that testator ever executed any other will, and it is known that testator, not only ordered this codicil kept with this will, but also intended that it should be kept with this will as its codicil, since no other sane purpose could have existed. Is this manifest and unmistakable intent upon the part of testator to be overthrown by the circumstance that certain provisions of the codicil do not harmonize with this will? It is.by no means unusual for provisions contained in a single will to conflict and disclose in one part of a will a misapprehension on the part of testator of other provisions in the same will, and the same is equally true of the provisions of a will and its undoubted codicil. It is clear that this testator did not intend to make his deceased wife his executrix, but at the time he made the codicil he may well have liad in mind that some other person was named in his will as his executor. To exclude from probate an adequately executed codicil which testator is known to have caused to be placed with his will as its codicil, which will also had been adequately executed, upon the assumption that it refers to another will, or does not refer' to the will with which it was deposited as a codicil, when it is now known that another will ever existed, the evidence of the truth of that assumption should, in my judgment, be strong enough to enable a probate court to say with positiveness and certainty that the codicil was not intended by testator to refer to that will, and this, I think, is equally true whether such evidences are from the language of the codicil- or from matters external. In this case the established history of’this will and codicil so clearly discloses the testator’s intent that the latter was to go with and form a part of the former that the burden of overthrowing that intent as manifested from the testator’s acts has been cast upon appellants; that burden they have not sustained.

      “A decree will be advised confirming the decree of the orphans court.”

      Messrs. McCarter & English and Mr. Wilfred B. Wolcott, for the appellant: ■

      Messrs. Cole c& Cole, for the respondent.
   Per Curiam.

The decree order appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Ordinary Learning.

For affirmance—The Chibe-Justice, Tree chard, Parker, Minturn, Black, Katzenbach, Campbell, Heppenheimer, Gardner, Ackerson, Van Buskirk, Clark—12.

For reversal—None


text:
    Jonathan Ackerman Coles, appellant, v. City of Newark et al., respondents.
    [Decided March 3d, 1924.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Baches, whose opinion is reported in 95 N. J. Eq. IS.

   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Baches.

Eor affirmance—The Chief-Justice, Trenchard, Min-turn, Kalisch, Black, Katzenbaci-i, Campbell, Heppenheimer, Gardner, Van Buskirk, Clark—11.

For reversal—None.


text:
    Georgianna Booth et al., appellants, v. Robert Howard Beattie et al., respondents.
    [Decided January 18th, 1924.]
    On appeal from a decree of the court of chancery advised bj7 Vice-Chancellor Backes, who filed the following opinion:
    "After a thoughtful consideration of the carefully prepared briefs of counsel and a study of the cases cited I have reached these conclusions:
    “1. The resolution of the stockholders fixing the salary (extra compensation) of the managing directors is not voidable simply because it was passed by the votes of the stockholders-direetors benefited thereby; that is to saj7, it is not voidable at the option of a dissenting stockholder as are similar resolutions similarly passed by a board of directors, but it is re viewable in equity as to the fairness and reasonableness of the salary at the instance of such stockholder! _ The rule is that contracts made by a board of directors with one of their number are, regardless of merits, voidable at the option of a dissatisfied stockholder, while such contracts sanctioned bj7 a majority of the stockholders will be set aside by the court if it is disadvantageous to the minority stockholders. Equity will investigate.

      “2. The resolution is not as a matter at law invalid because of its permanence. ’That element may have a bearing on the motive and good faith of the vote supporting it. If passed and maintained in good faith annual reiteration ■ would be mere form.
    “3. The resolution is not as a matter of law invalid because the salary (additional compensation) is contingent upon the dividends. Nor is it objectionable as a business proposition. The method is practical, commercially sound and obtains in corporate management.
    “4. The resolution was not brought about by unfair or improper means and is not illegal or fraudulent or oppressive towards stockholders who oppose it.
    “5. The resolution was passed in good faith and in the interest of the -company. That the managing directors by whose vote it was passed share in the advantages is an unobjectionable incident. The cases I have examined which are apparently adverse to this view all have a taint of fraud, or a ■touch of overreaching.
    “6. The resolution is not invalid because it does not define the duties of the managing directors for which the extra compensation was allowed. They were charged with full responsibility for the successful operation of the company, and their duties were so varied and comprehensive as to be incapable of specification except in the most general and sweeping term. They were well known to the stockholders.

      “7. The complainants are estopped from an accounting for the additional compensation to and including the fiscal year of 1921.
    “8. The additional compensation was to the managing directors as a unit, and the death of Robert Beattie, 3d, did not work a lapse or an abatement—the survivors having shouldered his dirties and responsibilities with the assistance of John A. Beattie, and to the knowledge of the complainants, and they are estopped.
    “9. The two managing directors have not been overpaid. In my judgment their services to the company since .the adoption of the resolution were worth at least what they received. The company could, no doubt, hire managers at less pay, much less, but not managers who could produce results as these did. They could be replaced, but not duplicated. They are not merely carpet men but Beattie carpet men, skilled and trained to make and market Beattie rugs—a distinctive line in the trade and at the top. They, the third generation (now breaking into the fourth) are as intensive and tireless as were their forbears and the enormous earnings of the company are due to their devotion to its affairs. The company is immensely rich in property much of which would be dead weight if their spirit were not in the work. This, I fear the women folks of the Beattie family—-the objecting minority stockholders—do not appreciate, probably because they ha\e been imperfectly informed.
    “10. The apprehension of the complainants, expressed in their brief, that the resolution is applicable to future dividends of the vast surplus piled up by the defendants-managing directors, is labored. The resolution has been defined by their conduct and the remedy will be handy if there are encroachments.
    “The bill will be dismissed. If an appeal is taken, counsel will advise me so that I may elaborate my views.”

      Mr-. Henry II. Snedelcer, for the appellants.

      Messrs. Collins & Corbin, for the respondents.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Backes.

For affirmance — The. Chiee - Justice, Trenchard, Parker, Minturn, Kalis ch, Black, Katzenbach, Campbell, Heppenheimer, Gardner, Ackerson, Van Buskirk, Clark—13.

For reversal—None.


author: Pee Curiam.

text:
    George K. Light, petitioner-appellant, v. Etta A. Light, defendant-respondent.
    [Decided April 4th, 1924.]
    The judges being equally divided on the question whether the judgment should be reversed, the judgment is affirmed solely because of such division, which renders any opinion by the court impossible.
    On appeal from the court of chancery advised by Advisory Master Charles Y. D. Joline, who filed the following conclusions :
    “The petition in this case was filed on the 28th day of July, 1922, and alleges that the defendant deserted the petitioner in the month of May, 1916, and that said desertion has been willful, continued and obstinate. There was a previous caso between the said parties in chancery of New Jersey, the docket number being 38/35. Te petition in that case was filed April 22d, .1914, and alleged that the defendant, Etta Light,-deserted the petitioner, George Iv. Light, in the month of September, 1908.
    “Depositions were taken in said cause before the late William H. Francis, one of the special masters of this court, and he made a report on the 23d day of August, 1915, the same being filed on the 24th day of August, 1915.
    “The master in said cause found that the desertion occurred on or about the 29th day of September, 1901, and that at that time the petitioner, George K. Light, was a bona fide resident of, and that his permanent home was in, Brooklyn, in the State of New York.
    “He also found as follows: ‘And I further find and report that, when the petitioner’s cause of action arose, on or about the 29th day of September, 1903, the said petitioner, George K. Light, was still a bona, 'fide resident of, and having his permanent home in, Brooklyn, in the State of New York, and the said defendant, Etta A. Light, was also a bona, fide resident of the same place, and that at the time when said cause of action arose, the cause of action alleged in the petitioner’s petition [desertion], was not and is not now recognized in the said State of New York as a ground for the relief asked for by the petitioner in his petition filed in this cause.’
    “A decree of dismissal was signed in said case on the 29th day of October, 1915, and filed the same day, and is rea judicata upon the matters alleged in the petition and estab lislied by the testimony. It establishes .that the desertion occurred in Brooklyn in September, 1901, and that the cause of action arose in September, 1903, when the parties were living in Brooklyn, New' York. To justify the present suit the petitioner relied upon the testimony of his son, Harris K. Light, who says that in the month of May, 1916, at the request of his father, he called upon his mother, who was then living in Morristown, where she now resides, and has resided to his knowledge from May, 1916, up to the present time, except for a short period, when she resided at Summit, New Jerse3r, being a nurse in the Overland Hospital at Summit; that he called upon her at the solicitation of his father to endeavor to effect a reconciliation; that he told her that his father would be glad to live with her, and asked, her if she would come back and live with him. She refused, and said that she did not want to have anything to do with him, and did not want his name brought in in any conversation: that she was going under her maiden name, Etta A. Haggerty ; that she did not want to have airvthing about her that reminded her of the petitioner. He further testified that he saw her on an average of four times that year, and on all of these occasions brought up the subject of her going back to live-with his father; that she abs^s detested the subject, and said she would never live with him and did not want to have anything to do> with him. This was during the year of 1916. 'lie then saw her on an average cf four times a yeai up to 1921, but never brought up the subject, because he saw her niind was so fixed and that it was useless. She never asked him about his father or manifested any interest in him.
    “The question for decision is whether, after having first been denied a divorce in the State of New Jersey on the ground that the desertion occurred in New York in 1901, and the right of action accrued in 1903, when the petitioner was still living in Brooklyn, he can now allege and affirm that there was a new desertion in May, 1916, by reason of his having asked his wife to return to him, and her refusal so to do. I am of the opinion that this, as a legal proposition, is not correct. It is the duty of a husband at all times to use sincere efforts to induce his wife to return to him, and if the proposition advanced in this matter were true, then every attempt on the part of a husband to induce his wife to return would constitute a new desertion, for instance, in a case where the desertion occurred in Brooklyn in 1901, and-the petitioner came to live in New Jersey in 1910, he could try to induce his wife to return to him, and if she refused, he could allege the desertion to have occurred at the latter date, when in fact it did occur in 1901. In this way, the court of chancery of New Jersey could be made a medium of fraud. It is well known that a divorce for desertion cannot be granted in New York. If parties separate in New York, all that a husband would have'to do would be to come to New Jersey to live, ask his wife to return to him, and if she refused to do it, allege that she deserted him on that day.
    “If .1 am wrong in this conclusion, still I think that'the means adopted by the husband to induce his wife to return to him were not sufficient. He evidently wanted to get a divorce from her. The evidence shows that, after the previous suR was decided adversely to him, he sent his son to see the wife, evidently to lay a foundation for a new suit. I don’t think his attempt to have her return to him was sincere and made in good faith. If he had been sincere, and if his attempt had been made in good faith, he would have gone himself to see his wife, or he would have written her a letter, or would have done something more than to have perfunctorily sent his son to see her and accepting her refusal as final.

      “The ease of Schmidt v. Schmidt, 117 Ail. Rep. ^00, T think, is the latest case upon this subject. I quote from it as follows: fIt does not appear but that he could have at any time returned and resumed his position in the household, and .by effort and tact possibly restored connubial relations with his wife. Did he make reasonable effort towards the recon ciliation? He says he wrote a number of letters to her, asking that he be taken back, only one of which was answered, and that one he does not produce, and after a lapse of time sent two women acquaintances to solicit her to do so, and that she refused. Letter writing was not the way. Personal communication—heart to heart talk—might have brought favorable results.' The use of women missioners was tactless, and an affront which any spirited wife would resent, as this one undoubtedly did.’
    “Being of the opinion that the defendant’s refusal to return to her husband did not constitute a new desertion on her part, and that his efforts to induce her to return were not sincere, I will advise a decree of dismissal.”

      Mr. George W. W. Porter, for the appellant.
   Pee Curiam.

The decree under review herein is affirmed by an equally divided court.

For affirmance—The Chiee-Justice, Tren chard, Min-turn, Katzenbach, Campbell, White—6.

For reversal- -Parker, Kalisch, Black, Gardner, Van Buskirk, Clark—6.