text:
    Johnson & Johnson v. Seabury & Johnson.
    [Decided June 1st, 1905.]
    1. In a suit to enjoin defendant from selling absorbent cotton in packages and under labels resembling- those used by complainants, evidence held to show that defendant’s action in simulating- complainant’s packages and labels tends to mislead the public as to the origin of the goods.
    2. The fact that the symbol used by complainant to mark and identify its goods had been commonly used by the public for ornamental and advertising- purposes before its adoption by complainant on its label, does not entitle defendant to use- the same label on the same class of goods manufactured by complainant where such use is intended to mislead purchasers as to the origin of the goods.
    &. Where defendant had occasionally used a certain symbol on some of the packages containing its goods, such use being for ornamentation and not for the purpose of identifying its goods or indicating their origin, complainant is entitled, after having made use of the symbol for the purpose of distinguishing its goods from others, to restrain defendant from employing it in the same manner on similar goods.
    4. The fact that complainant had formerly falsely represented in its circulars that it had, by act of congress, exclusive right to use the devices which its labels bore, does not disentitle it to relief, the false claim having been withdrawn three years before this suit was brought.
    On bill, &C.

      Mr. Willard P. Voorhees, Mr. Archibald Cox and Mr. Charles Cr. Coe (of the Yew York bar), for the complainant.

      Messrs. Bririlcerhoff <& Fielder and Messrs. Pryor, Melliss & Harris (of the Yew York bar), for the defendant.
   Bergen, Y. C.

The result sought is an injunction restraining defendant from marketing, in competition with the complainant, its goods, so dressed, in shape, color of package and trade symbols, as to resemble those of complainant, and thereby mislead a purchaser as to the origin and character of his purchase.

The prayer for relief is not rested upon a trade mark right, but upon the principle that unfair competition in business, resuiting in the confusion and sale of the goods of one as those of another, to the injury of the consumer, and loss to the party whose goods have been simulated, will be enjoined.

The complaint is that after complainant had, by distinctive packages, the use of unique labels, of which a red Greek cross was a prominent feature, and by liberal and extensive advertisement, acquired in the market the names of “Red Cross Cotton,” “Red Cross Gauze” and “Red Cross Goods,” for the articles manufactured and put up by it, and obtained, under such descriptive names, a very large and extensive sale for its goods, the defendant, for the purpose of acquiring the benefit of such reputation, and to induce the sale of its goods as and for such of the goods of the complainant, as to which it was a competitor, adopted the shape and color of complainant’s packages, and, in connection therewith, the red cross symbol, the effect of which is a misrepresentation of the origin and ownership of the goods, which equity will restrain.

The defendant’s answer sets up a prior use of the red cross symbol, not only by it, but by the public, of so general a character as to make the symbol publici juris, so that neither of these parties have any such special right thereto as- will justify this court in interfering, and that as to- the color and shape of the packages the use of such by the defendant antedated that of the complainant.

The prayer of the bill seeks to enjoin the use of the red cross on packages of absorbent cotton, gauze and medicated cottons, and in connection with the use of the symbol the imitation by the defendant of the color and style of package used by the complainant in offering them to the public. As to medicated cottons, it was admitted on the argument that their sale, never important, was passing away, and that they do not enter into competition with absorbent cotton, an article so superior for similar uses as to have substantially displaced it in market. This admitted condition leads me to dismiss from further consideration borated, carbolated and salicylated cottons, classed as medicated cottons, as not being, sufficiently competitive to justify the awarding of an injunction, and leaves as the real question for consideration whether, as to absorbent cotton and gauze, the complainant has presented such a case as will entitle it to relief.

The consideration of this cause has required the careful reading of over four thousand pages of testimony and an examination of a large part of one thousand five hundred exhibits. This statement is sufficient to demonstrate the impracticability of any detailed analysis or comparison of the testimony, much of which is irrelevant, and I shall limit myself to a statement 'of the facts proven by a preponderance of evidence. Both parties are corporations under the law of this state, engaged in a similar business, in which, as to the goods in dispute, they are active competitors. The complainant was incorporated in 1887, and the defendant, under the laws of New York, in 1893, and later under the laws of this state, in 1896. Previous to the first incorporation, and from the year, 1874, the defendant’s predecessors had conducted a business to which it succeeded. Immediately after its incorporation the complainant became an active competitor of the defendant’s predecessors, particularly in the sale of absorbent cotton and gauze, and by invention and care in preparation produced ánd offered to the public a grade of absorbent cotton superiof to any that' had theretofore been offered, and-for the purpose of attracting trade and inducing the public to buy its goods, as well as of distinguishing its products from that of other producers, interleaved its layers of cotton with a blue tissue paper, enclosed it in dark blue cartons of a proper size to contain the quantity in weight desired, ranging from parts of a pound to a pound, and upon these packages placed a label of conspicuous size and color, the prominent feature of which was two red crosses. ' The color, style of package, interleaving with blue tissue and label, presented an appearance entirely distinct from the packing in use by the defendant at that timé, which was principally a granite carton without interleaving tissue. The quality of complainant’s production, and the attractive form in which it was put up, appealed so strongly to the public that the demand for it grew to unusual proportions, and the style and character of the label acquired for it in the trade, and from the public, the name of “Eed Cross Cotton.” The defendant at first assailed the use of the interleaving tissue, upon.the ground that the purchaser was paying for cotton and getting paper, but failing in this effort to retard the sale of complainant’s goods, and observing the public demand therefor, in the year 1890 or 1891, commenced to put up an inferior grade of its cotton in similar packages, but without the red cross label, using, at first, on the ends of the larger packages and on the outside of the wrapping used to hold smaller packages, a seal without a red cross. Succeeding this, it commenced the use of a seal with .a small red cross in the centre, being a seal used by them in 1884 for the covering of cork stoppers to bottles not containing absorbent cotton, and since the commencement of this suit they have so enlarged this cross as to make it a prominent and very conspicuous feature of the label, which enlargement has been made a subject-matter of this controversy by a supplemental bill and an answer thereto.

There is but one conclusion to be drawn from the testimony, and that is that the absorbent cotton of the complainant has for many years past been known to the trade and public as “Red Cross Cotton,” induced by the prominent display on its packages of a red cross, and that the action of the defendant in simulating complainant’s packages and symbol creates a confusion of goods tending to mislead the public as to the origin and ownership of defendant’s goods, and to induce their sale as and for the goods of the complainant, because the imitation cannot be said to be for the purpose of inducing the. public to buy the goods as the cotton of the defendant. If so, it would strive for such a radical distinction as would prevent complainant’s goods from being mistaken for it. The defendant does not deny the similarity of package, and its attempt to sell its cotton under the red cross label, but justifies on the ground that prior to the introduction by the complainant of its goods the defendant had used a seal with a red cross in the centre on other of its goods, and that such use, together with its use of blue paper as a wrapper for bundles of lint j'ears ago, entitles it to extend the use of the red cross and blue wrapper to absorbent cotton, even if in so doing it produces a fac-simile of complainant’s package.

It is undoubtedly true that in 1884 the defendant began to use a seal, in the centre of which was a small red cross, but it'is equally clear that the red cross seal was not used on packages of absorbent cotton or gauze until after the complainant, by its use of the red cross symbol, had established in the market a name for its goods under the title of “Red Cross,” and that its use by defendant was, in the beginning, confined to a class of goods differing from absorbent cotton and gauze, and even to" the extent used was never accepted by the public as a distinctive mark of the origin or ownership of articles to which it was applied, or in any way looked upon as a mark distinguishing the goods of the defendant from the like product of other manufacturers, and there is also abundant proof that a red cross was used by numerous persons, on goods of a different character, as ornaments and for general advertising purposes, prior to complainant’s use of the cross, upon which the defendant, in connection with its prior use on a part of its productions, bases a claim to use it upon all of its manufactured articles, without regard to the special use made by the complainant, whereby it has become in the mind and eye of the public the well-known indicia of complainant’s cotton. The use of a red cross has been so general that its adoption by anyone, except in cases where it would create confusion in the public mind and result in what the law calls unfair competition, can hardly be questioned. On the other hand, this public use can confer on the individual user no higher property in the symbol than the right of such individual to use his own name in marketing his goods in competition, which is condemned when intentionally selected for the purpose of misleading a purchaser as to the origin of the article sold in’order that the seller'may derive a profit from another’s trade reputation. International Silver Co. v. Rogers Corporation, 67 N. J. Eq. 646.

. The prior use by the defendant of a seal with a red cross in the centre, applied to its products other than absorbent cotton, cannot, under the conditions disclosed in this cause, be extended by it to the latter class of goods, to the injury of the complainant and the public, nor prevent its exclusive use by the complainant to indicate the ownership and origin of its absorbent cotton, because its prior use by the defendant, as testified to by its manager, was rather ornamental than for the purpose of distinguishing its goods.from others. It was not intended to, nor did it, signify to the public a particular trader’s goods. Whatever prior use the defendant may have made of the disputed symbol, it is verj^ certain the public never looked upon it as an indicia of the defendant’s goods, or of their origin, and its subsequent use by the complainant did not result in that confusion or unfair competition, which the law condemns, that only arose when the defendant simulated the complainant’s packages and adopted the use of the red cross after the complainant had established its meaning to be “Red Cross Cotton manufactured by Johnson & Johnson.” Any prior use, to be of value, must be such as to denote the origin of the product as to which it is claimed to be a trade mark. Holt v. Menendez, 28 Fed. Rep. 869; Menendez v. Holt, 128 U. S. 514. Whatever value the red cross has as a brand for absorbent cotton was given it by the complainant, and as was said by Judge Coxe in George v. Smith, 52 Fed. Rep. 830; “It is their seal of genuineness and guaranty to purchasers that the goods so labeled arp of a superior quality. The advantages of higher prices and larger demand exist because of the established excellence of the goods. These are advantages which belong to the complainants. * * * To transfer the good will thus secured by years of arduous and conscientious endeavor to the defendant, or throw it open as a poaching ground for the general public would be doing the complainant gross injustice.”

Every case of this class must be dealt with • according- to the facts in each, having in mind the rights of the public as well as those of the parties. In the case under consideration, the complainant, by conspicuous and continuous use of and by extensively advertising its goods under the red cross symbol, so impressed the public that it came to rely upon the red cross as indicating complainant’s goods, and to look upon the red cross symbol as indicia of origin, and from this grew the habit of the consumer when desiring complainant’s goods to call for “Red Cross Cotton,” as in a similar manner was applied the word “Angostura,” in Siegert v. Findlater, 17 Ch. Div. 801, so that by the act of the public these words became the usual designation of the article, which the court will protect. Levy v. Waill, 61 Fed. Rep. 1008-1011. Thus, because 'of complainant’s use of the red cross, has its cotton acquired'in the market under such title a most favorable consideration and a trade reputation of great value, which the defendant seeks to destroy because of its prior use of a red cross seal upon certain other medicated articles, a use exercised in a desultory and inconspicuous way, and which, because of the manner of its use, the public never recognized or applied as denoting the origin or ownership of the goods in connection with which it was used. A claim of this character has no standing in equity, and the use asserted will not prevent another from acquiring an exclusive right to the use of the symbol on other articles, although sold in competition and -likely, by reason of their superior properties or the skill of the introducer, to supplant the use of the goods of the other.

The principle of law is general and without exception. It is that no one may so exercise his own rights as to indict unnecessary injury upon his neighbor. It is that no one may lawfully palm off the goods of one manufacturer or dealer as those of another to the latter’s injury.

The fact that others as well as the defendant have used the red cross for different purposes, and that the complainant has no ownership thereof, does not meet the question. Complainant is the owner of tb,e good will of a large and lucrative business under the name of “Red Cross Cotton,” which is about to be -injured if the defendant be not restrained. Ownership of the means by which a fraud is to be'committed is not essential to entitle one to enjoin its perpetration; it is sufficient if the complainant be entitled to the custom and the good will of a business likely to be injured by the palming off of another’s goods as his. Shaver v. Heller & Merz Co., 108 Fed. Rep. 821.

The defendant here makes no claim that because of its use of the red cross in the manner stated it has acquired any right to its exclusive use as to any of its articles, or that its goods have ever acquired a distinctive name because of the use made by it of the red cross, but puts its defence upon the ground that whatever business reputation the complainant may have established through the use of the red cross as a symbol has been accomplished in defiance of the fact that many persons were using the red cross upon their products, and for that reason all the world now have a right to simulate the packages and emblems of the complainant. To this contention I cannot give pny approval. There is no evidence in the cause to justify the claim that there was any use by the defendant of the red cross indicating any prior appropriation of the symbol as a trade mark, or for the purpose of indicating origin or tire character of the goods, which would prevent complainant from making its absorbent cotton distinctively known under that mark. That it was used by many persons as an incidental ornament, or to indicate that the article or appliance in connection.with which it was used belonged to a class desirable in aid of human ills or for the relief of the suffering, certainly appears; but this fact has no influence on the question being considered. The red cross upon the side of certain wagons has, by its use, come to be accepted by the public as indicating an ambulance, but it does not indicate the origin of that particular vehicle, or the name of the person who built it, and any such general use would not prevent the complainant from using the mark for the purpose of indicating origin and ownership, and to distinguish its absorbent cotton from that of other productions. There can be no doubt that the defendant, in changing its style of package on absorbent cotton to correspond so closely to that of the complainant’s as to be almost identical in appearance, and in adopting the use of the red cross on such packages, had in view but one purpose, and that was'to mislead the public into the belief that in buying defendant’s packages they were getting the goods of the complainant. Eor more than fifteen years past the complainant has marketed its absorbent cotton in the manner stated, and at great expense acquired a name and reputation, confessedly a most valuable property, which the conduct of the defendant, if not restrained, will most seriously affect, if not destroy, and against which according to every equitable rule the complainant is entitled to protection.

The views which I have above expressed with reference to. absorbent, cotton apply in a much stronger degree to “gauze,” the only other article subject to my consideration, for the evidence of unfair business competition in this connection is too plain to warrant discussion. This gauze was put up by both parties in what they call glass containers, the complainant using a square one and the defendant a round one. The round jar was superior to that of the square jar used by .the complainant,, both as to construction and convenience in taking out the contents. When' the demand for the complainant’s goods became a. serious menace to the defendant’s business, the defendant changed the shape of its jar so as to simulate that of the complainant, and in 1899 or 1900 began to label its gauze packages with the symbol of a red cross, it having previous to this time used a seal, in the centre of which was a figure of Mercury, being the same seal that was used by the defendant on its absorbent cotton until its infringement of the complainant’s red cross label.

This disposes of the case with the exception of one point raised by the defendant, which is that the complainant is not entitled to relief because it does not come into the court with clean hands. That claim is based upon-the following facts: In 1895 the house of representatives of the congress of the United States had before it for consideration an act, by the terms of which the American National Eed Cross Society was given the exclusive use of the symbol of a red cross, with power to license its use, subjecting all users other than such licensees to severe penalties. The passage of this bill the complainant resisted and seems to have been able to delay congressional action. In order to remove its opposition, the officers of the American National Eed Cross Society entered into a contract with the complainant, by the terms of which its exclusive right to the red cross as a symbol was recognized and confirmed, and thereafter, its opposition being removed, the bill passed the house. At a subsequent session of congress the bill was amended, passed by the senate and house, but failed to become a law for want of the president’s approval. During this contest, and before the making of the agreement, the complainant had obtained from its counsel an opinion that any such law would be unconstitutional. The charge of the defendant is that with knowledge of the fact that the bill had not become a law, and of its supposed unconstitutionality if it was enacted, it caused to be inserted in its annual price list for 1895, and in the succeeding year, a notice that by act of congress the right to the use of a red cross as a symbol had been vested in the American "National Eed Cross Society, and that the complainant had been granted the right to the exclusive use of the red cross as a symbol. Without considering the propriety of such an advertisement, which perhaps was issued in anticipation of what the complainant supposed was likely to happen, it is enough to say that if it was a misrepresentation, such as if present when the bill of complaint was filed would justify the court in withholding its aid, the advertisement complained of was withdrawn at least three years before the suit was instituted. The refusal to hear a party who comes into court with unclean hands is based upon the conditions existing when the party applies for aid. Worden & Co. v. California Fig Syrup Co., 102 Fed. Rep. 334, 336.

The complainant is entitled to an injunction order restraining the defendant as prayed in the bill of complaint, so far as the prayer relates to absorbent cotton and gauze.


source: Caselaw Access Project

author: Bergen, Y. C.

license: Public Domain

text:
    The Pennsylvania Railroad Company v. Delia F. Warren et al.
    [Decided June 6th, 1905.]
    1. Where the by-laws of a beneficial association require that on a change of beneficiary the member shall designate the substituted beneficiary in writing, a person whom the member intended and attempted to substitute as beneficiary, but who has not been actually substituted in writing, is not entitled to the fund, although the association has paid it into court.
    2. An antenuptial parol agreement by a husband to make the wife beneficiary in a mutual benefit certificate is void under the provision of the statute of frauds that an agreement made in consideration of marriage must be reduced to writing and signed.
    On bill of interpleader, &c.

      Mr. Bayard Sioclcton, for the defendant Delia E. Warren.

      Mr. Fergus A. Dennis, for the defendant Sarah C. Warren.
   Bergen, Y. C.

On May 25th, 1892, Franklin P. Warren, then, and until his death, April 10th, 1903, in the employ of the Pennsylvania Railroad Company, applied in due form to be admitted a member of- the Relief Eund of that company, a beneficial order instituted and managed under the direction of the company for such of its employes as choose to join and submit to a monthly deduction from their wages to be applied in payment of their dues. The application contained the consent and agreement of the applicant to be bound by the regulations of the association then in force, or which might thereafter be'adopted by its directors, and was approved- by the proper officers, after which the required certificate, bearing date June 1st, 1892, was issued to the applicant and continued in force until his death.

One of the regulations provides .that “an applicant may, in his original application or subsequently in the prescribed form, designate a beneficiary or beneficiaries, who shall, upon the approval of • the designation by the superintendent of the relief department, be entitled to receive Ms death benefit,” and a subsequent regulation makes death benefit's payable to the beneficiary designated in the member’s principal application, or subsequently in the prescribed form, when such designation shall have been approved by the superintendent.

In the case under consideration the original application designated as the person to whom death benefit should be payable “my niece Sarah 0. Warren, * * * or to such other person or persons as I shall subseqiiently designate in writing, in substitution therefor.” At the time of his death the applicant had not designated in writing any substitute for the beneficiary named in the original application, although it appears that he had determined to substitute his wife Delia in the place of his niece, and in furtherance thereof left his certificate with the agent of the company, giving him instructions to have the change made. The agent communicated with the proper officer of the association, notifying him of the applicant’s desire, but before the necessary written designation required by the contract was executed by the applicant he died. The fund, amounting to $500, being claimed by the widow and also by the niece through her guardiari, Mary E. Warren, the association has paid the money into court under a bill of interpleader and taken a decree against the claimants, thus raising the question, which of these- claimants is entitled to the fund ?

The claim on behalf of the niece is rested entirely upon the fact of the original designation undisturbed by any such substitution. as the contract requires. The insistment of the widow is —first, that the attempt of her husband to substitute her is effective in equity as between these claimants, and second, that by an antenuptial agreement her husband promised, in consideration of her marriage to him, that he would-make her the beneficiary of this fund. In support of the first point it is urged that the requirement of a written substitution was only intended for the-protection of the compan}', which they waived by paying the fund into court, and that the rights of the parties are not controlled by that stipulation in the contract, at least not so far as to prevent the court from carrying out the expressed but unexecuted intention of the donor, and the stakeholder being eliminated, an intention to make a new designation may be proved and enforced.

The adjudged cases in this court do not support this contention. On the contrary, the rule has been laid down “that no person can'successfully assert a right to a fund payable on the death of a member unless he can show that he has been appointed a beneficiary by said member in the manner required by the contract.” American Legion of Honor v. Smith, 45 N. J. Eq. (18 Stew.) 466.

In Grand Lodge Ancient Order United Workmen v. Connolly, 58 N. J. Eq. (13 Dick.) 180, the beneficiary named was a wife who predeceased her husband. After the wife’s death the husband applied to the officers of the local lodge to have the certificate made payable to his children, and was informed by them that it was only necessary to hand the certificate to his children. This was'done, and no formal designation of the children as beneficiaries was made. The husband married again, and on his death the widow and children each claimed the fund; whereupon the holder filed a bill for interpleader and deposited the fund in court. The constitution of the association required, if a new direction as to payment was desired, a written request, surrender of the certificate and the issue of a new one, and as this had not been done the court held that the attempted designation of the children failed, and there being no beneficiary named, the widow took under a provision to that effect in the constitution. In the case last referred to it was urged that the bill was for inter-pleader, and the money in court to be paid as the decree might direct; that the regulation respecting the appointment of a new beneficiary was only for the benefit of the order issuing the certificate, and that if it raised no objection the widow could not, and that an intention to make a new appointment could be proved in any manner, and if proved would be regarded and enforced.

■ The foregoing reasons are substantially those advanced in this case, hut were not considered controlling by Vice-Chancellor Eeed; who applied the- rule “that, a member must revoke his designation of a beneficiary and appoint a new one in the way pointed out by the laws of the organization."

The second ground upon which the widow of the applicant places her claim is that previous to her marriage, and as a consideration therefor, her husband agreed to make her the beneficiary of this fund, and that this promise was an-antenuptial agreement which she, having performed on her part, is entitled in equity to have carried out, although the alleged promise was not in writing. The parol agreement set up falls under the ban of our statute against frauds, under which no action can be sustained to charge a person upon any agreement made in consideration of a marriage unless reduced to writing and signed by the party sought to be charged. It therefore follows that if the promise cannot be enforced, no legal duty arises, for marriage alone is not such a part performance as will remove the bar of the statute. Manning v. Riley, 52 N. J. Eq. (7 Dick.) 39, and cases there cited; Russell v. Russell, 60 N. J. Eq. (15 Dick.) 282.

My attention was called to the case of Pennsylvania Railroad Co. v. Wolfe, 203 Pa. St. 269; 52 Atl. Rep. 247, in which the supreme court of Pennsjdvania held, under circumstances similar, that when the marriage contract was complete the wife had an equitable claim to the certificate or to the benefit it represented, a right not dependent on his will, “but one no longer in his power as between him and her to confer or withhold.” This adjudication, as expressed in the opinion of the court, certainly bears out the contention made on behalf of the widow here, but it does not appear that the court, in reaching its determination, was restrained by any statute requiring such a contract to be in writing, and the presumption is that no such statute existed in that state, otherwise it will be difficult to reconcile the view of the court with such prohibitive statute, and as a consequence the rule governing antenuptial parol promises, as established in Pennsylvania by that,case, has no standing in a jurisdiction where the enforcement of such a parol promise is forbidden by statute.

According to the conclusions which I have reached, the guardian of Sarah C. Warren is entitled to be paid the fund, and I will advise a decree to that effect.


author: Bergek, V. C.

text:
    Matthew C. Cunningham v. Alryan Woolen Mills.
    [Decided June 20th, 1905.]
    1. A chattel mortgage will cover after-acquired property only when such intention clearly appears in the instrument.
    2. Where property of a corporation was placed in the hands of a receiver and the realty was expected to realize more than enough to pay a mortgage thereon, and the receiver expended money in care of it while endeavoring to find a bidder, but on a sale it did not realize enough to pay the mortgage debt, the mortgagee should not be required to contribute to the general fund of the estate the amount spent for repairs.
    On petition for distribution.

      Mr. James Buchanan, for Barker Gummere, Jr., receiver. .

      Mr. Sherrerd Depue, for Frederic G. Lee, mortgagee.

      Mr. Alan H. Strong, for the Trenton Trust and Safe Deposit Company.

      Mr. Frank S. Katzenbach, Jr., for the labor claimants.
   Bergek, V. C.

This contest arises over the proper distribution of funds reported by the receiver in his hands for that purpose. The claimants are the Trenton Trust and Safe Deposit Company, Frederic G. Lee and numerous employes of the insolvent corporation. For the purpose of considering the question raised, the moneys may be divided into three different funds—first, $1,809.95, the proceeds of the sale of certain chattels which were subject to the lien of a chattel mortgage held by the Trenton Trust ■ and Safe Deposit Company, which it is admitted should go to the trust company, unless under the claim advanced for the employes they have an equitable right to have it, or some portion of it, applied towards the satisfaction of their claims; second, $1,994.01, representing the proceeds of the manufacture of goods from materials on hand when the receiver took possession, which sum is now claimed by Frederic G. Lee, under a chattel mortgage held by him; third, the residue of the fund, which it is conceded goes to the employes.

Mr. Lee does not contest the priority of the trust company mortgage, or its right to be paid the $1,809.95, but insists that, although all of the material represented by the $1,994.01 was purchased by the insolvent corporation and brought on the premises after the making of his mortgage, nevertheless, according to its terms, such after-acquired property is subject to the lien thereof. This claim is disputed by the labor claimants and its determination must depend upon the construction to be given to the mortgage, which covers not only the real estate and machinery, but is also a chattel mortgage on certain of the personal property of the company. The due execution and recording of this instrument, both as a real estate and chattel mortgage, is admitted, and the fact that the personal estate, the proceeds of the sale of which is sought to be held, was acquired after such execution and registry, * is so completely proven that counsel for Mr. Lee made no contest in that regard, and based his argument upon the existence of such conditions. The mortgage, after describing the real estate, pledged the running gear, tools, implements and “working stock” of the woolen mills “now upon said premises, and everything thereon pertaining or in any way belonging to the said mills and the business of the same.” From these -words it is urged that the parties contemplated that after-acquired materials became subject to the lien of the mortgage as effectively as if the instrument had by its terms expressly so stated, and that such inference i§ properly to be drawn because the class of personal property the subject of this investigation was likely, in the ordinary course of business, to be converted into manufactured product, and that product to bo sold before the maturity of the mortgage, and consequently would be of no substantial importance as a security unless all materials after acquired for the purpose of manufacture should be made subject to the lien of the mortgage. It is claimed that this contention is supported by the determination of the court in Johnston v. Morrow, 60 Mo. 339, but I do not so read that case, for there the mortgage was to be a lien “'on all buildings, mill and machinery in said mill, until said notes are paid,” and tire court held that additional machinery introduced for convenience and profit, or to replace parts broken and worn out, were subject to the lien of the mortgage because its terms were sufficiently comprehensive to include all the machinery in the mill when the notes became due.

In the case we are considering, the -words “and everything thereon pertaining or in any way belonging to the said mills, and the business of the same,” must be read in connection with the next preceding words, “now upon said premises.” Nevertheless, if this construction be too narrow, I am unable to discover in the language used any intention to extend the lien of this mortgage to after-acquired property. The power of extending a chattel mortgage to personalty thereafter to be

acquired is well settled; on the other hand, the intention to exercise such a power or right should be clearly manifested by the instrument used for that purpose. In Williamson v. New Jersey. Southern Railroad Co., 29 N. J. Eq. (2 Stew.) 311, 320, Mr. Justice Depue, speaking for the court of errors and appeals, said: “In equity, a mortgage of personal property afterwards to he acquired by the mortgagor attaches to the property as soon as it is acquired by the mortgagor^, * * * but this doctrine is founded on the maxim that equity considers that to be done which ought to he done, and is applicable only where the contract of the mortgagor to transfer to the mortgagee the after-acquired property is such as, under the circumstances, would he the subject of a decree for specific performance.”

.If the mortgage contains an express stipulation that it shall be a lien upon after-acquired property, persons dealing with the mortgagor would be bound to take notice that the chattels they were selling to the mortgagor would, upon coming to his possession, be subject to the hen of such mortgage, but certainly it cannot successfully be contended that this mortgage gave notice of any such condition.

My conclusion is that this mortgage does not apply to after-' acquired property, and that The mortgagee is not entitled, by virtue of it, to any preference in the distribution of the fund resulting from the sale of that class of property, and that the $1,994.01 is held by the receiver free and discharged from any such lien. But the labor claimants also insist that as the receiver has expended more than $1,809.05 in the care of the real estate, which at the sale thereof did not realize a sufficient sum to pay the mortgage debt due the Trenton Trust and Safe Deposit Company, therefore the trust company should be required to contribute at least that amount to the general fund of.the estate, the claim being that as large sums have been taken to preserve the real estate from waste, which alone inured to the benefit of the mortgagee, it is inequitable to cast the entire cost of maintenance and care of the real estate upon the labor claimants, it being admitted that this addition to the general fund will not malee it sufficient to pay the preferred claims of the employes.

The argument, it seems to me, rests upon false premises. The property was preserved, not for the mortgagee alone, but for all of the creditors of the estate, general as well as preferred. The property was a large one and supposed to be of. great value, and with an allowance for all reasonable depreciation was expected to realize a sum sufficient not only to pay the mortgage indebtedness and the labor claims in full, but a considerable portion, if not all, of the general indebtedness of the company. The receiver made divers efforts to sell at public auction, but for a long time was unable to secure any bidders. Under the theory of these claimants it became the receiver’s duty to abandon the property and make no effort to realize anything from it. Such a course would not have met with the approval of any of the parties in interest. The receiver exercised his judgment in a way which I deem was reasonable and businesslike. His possession was the possession of the court, and during all the time he was carrying the property and endeavoring to sell it, anyone of these claimants was entitled to apply to the court and object to the further holding of the property. Having stood by and tacitly acquiesced in the conduct of the receiver, in the hope, as I believe, that the receiver’s expectations would be realized and they thereby benefited, I do not think it would be equitable to now deprive this mortgagee of a fund, the direct result of the sale of property subject to its mortgage, and I will therefore advise the payment of the $1,809.95 to the company. Upon presentation of a decree drawn in accordance with the views here expressed, I will advise it.


author: Beegen, Y. C.

text:
    John J. Fleming et ux. v. The Fleming Hotel Company of New Jersey.
    [Decided June 23d, 1905.]
    1. Where a lease to a corporation provided that if any rent should be due and unpaid the lease should become void, and the lessor might re-enter, the fact that after default in the rent a receiver was appointed for the lessee, and the lessor accepted rent from such ■ receiver while he was in, possession, does not of itself constitute a waiver of the right to re-enter for the rent remaining unpaid, but the lessor is not entitled to forfeit the lease until it appears that the receiver is unwilling or unable to pay the overdue rent.
    2. A covenant not to sell or assign a lease is not broken by an assignment by a receiver appointed for the lessee after execution of the lease.
    On petition, &c.

      Mr. Marry 0. Valentine and Mr. Edwin B. Wallcer, for the petitioner. • .

      Mr. John T. Van Gleef, receiver, pro se.

      Mr. William B. Piper and Mr. Edtum G. Long, for the creditors.
   Beegen, Y. C.

The defendant corporation was, on the 6th day of April, 1905, decreed to be insolvent, and a receiver duly appointed according to the law applicable to such cases. At the time of ■the insolvency the corporation was conducting a hotel business in a building owned by Ogden D. Wilkinson, on State street, in Trenton, under a lease between Wilkinson and the defendant, ■which contained the following covenant:

“tliat if any rent shall be due and unpaid * * * then this lease shall cease and become void, and it shall be lawful for the party of the first part, without notice and without demand for said rent, to re-enter the said premises and remove all persons therefrom..”

The lease also contained a covenant that the lessee would not assign the lease without the written consent of the owner. At the date of the appointment of the receiver the past-due rent amounted to $2,435.04, which yet remains unpaid. Since his appointment the receiver has continued the business- and remained in the occupation of the property, for which usé and occupation the owner has been .paid at the rate reserved in the lease. The owner files his petition, setting forth, in substance, the foregoing, alleging a breach of the covenant for the payment of rent, and prays an order requiring the receiver to surrender the property to him. The receiver resists this application, and claims that because the owner has accepted rent from him for the period of his occupancy he has thereby waived his right to a re-entry. This objection, standing alone, would not support the contention of the receiver, for he was bound to pay for the use and occupation of the building during the time he held the property, even if he should determine to abandon the lease and surrender the property.

The answer filed by the receiver to the petition shows that the only business of the insolvent corporation was that of keeping a hotel on the leased premises, and that a sale thereof as a going business is necessary to secure the best results for the benefit of the creditors of the corporation; that an inventory of the property of the defendant shows that the same will be sufficient to meet the claim of the petitioner in full, and that as soon as a sale thereof can be made in the manner above indicated he will have on hand funds sufficient to satisfy the defendant’s claim for rent in full and pay a substantial dividend to the general creditors of the company; that if ousted from the possession of the hotel propert3r, he will be unable-to sell the hotel business and its good will as a going concern, a result which will work great injury to the unsecured creditors.

The claim of the petitioner is based—first, upon the ground that the non-payment of the rent avoids the lease; second, that because, of the insolvency of the company the receiver has no interest in this lease, and that any sale of the leasehold interests by him would be in violation of the covenant not to assign the lease without the written consent of the owner. With reference to the first point, it is well settled that the clause of re-entry is mainly inserted for the landlord’s security, and will not be enforced when the lessee, upon proper demand, satisfies the rent due and compensates the landlord for any damages he may have sustained because of a breach of the covenant, and a court of equity would protect a defendant where the breach results from the neglect to pay money, the interest' upon which can readily be calculated and the landlord thereby compensated for the inconvenience sustained because of the payment withheld.

I am of opinion that under the circumstances of this case the landlord should not be allowed to forfeit this lease, upon the ground first stated, until it shall appear that the receiver is unable or unwilling to pay the accrued rent, a condition not likely to exist in view of the amount of property in the receiver’s hands applicable to this purpose.

As to the second point, I take it to be well settled that a covenant not to sell or assign the lease is not broken where the assignment is by operation of law, and that an assignment of this lease by the receiver, as the agent of the law, to a purchaser of the leasehold interest, would not work a forfeiture. That the covenant under consideration only applies to voluntary sales, and is not subject to forfeiture unless the proceedings at law under which the leasehold interest is disposed of were voluntary and collusive with a view to defraud the landlord of his rights, is well supported by the authorities. Jackson v. Corliss, 7 Johns. 531; Jackson v. Silvernail, 15 Johns. 278, 280; 1 McAd. Land. & T. (ed. 1900) § 235; Allen v. Bennett, 1 Fed. Cas. 214; Riggs v. Pursell, 66 N. Y. 193; Farnum v. Hefner, 79 Cal. 575; 12 Am. St. Rep. 174; Bemis v. Wilder, 100 Mass. 446, and also Stockton v. Mechanics and Laborers Savings Bank, 32 N. J. Eq. (5 Stew.) 163, 169, where the court said: “The liability of the receiver in insolvency in such case is precisely the same as that of an assignee in insolvency or bankrupt, who may retain or surrender the lease according as it may seem most advantageous for the estate of the debtor.” The case is not unlike that of an executor whose assignment of a lease is not considered voluntary, but affected by operation of law, and is not a breach of a covenant not to assign, as where the assignment is in insolvency. 1 Tayl. Land. & T. (9th ed.) §§ 408, 409. It therefore follows that the petition must be dismissed, with costs.

It is the duty of the receiver to act with all reasonable promptness, and he should dispose of this property, including the leasehold interest, without unnecessary delay, and satisfy the petitioner for the rent due to him. In case of the receiver’s 'refusal or neglect to act with promptness, I shall be inclined to listen with considerable favor to an application for such an order as will expedite the administration of this estate and the satisfaction of the debts due to creditors.


author: 'Bergen, Y. C.

text:
    The Camden Safe Deposit and Trust Company v. Citizens’ Ice and Cold Storage Company et al.
    [Decided July 5th, 1905.]
    1. Where a contract with a corporation has been completed by the other party, and the corporation has had the benefit of it, the plea of ultra vires is not admissible to estop the party who had performed from the enforcement of the agreement unless the transaction is contrary to public policy, forbidden by law, or immoral.
    2. Where bonds of a corporation were not, owing to the character of the corporation’s business, readily marketable, and unavailing efforts had been made to sell them to other parties than the creditor whose debt they were issued to secure, after which such creditor bought them at a price which was not unconscionable, though less than their face value, a director of the corporation was not, in the absence of fraud or unjust advantage, precluded from purchasing the creditor’s interest in the bonds at its market value and recovering the face value of the bonds.

      Mr. George J. Bergen, Mr. Peter V. Voorhees and Mr. John Divide, Jr., for tlie complainant.

      Mr. Norman Grey and Mr. Wilfred B. Wolcott, for the defendants.
   'Bergen, Y. C.

The object of this suit is the foreclosure of a mortgage given by the defendant the Citizens’ Ice and Cold Storage Company to the complainant, as trustee, to secure the payment of forty bonds of $1,000 each, payable fifteen years from June 1st, 1897, the date' of the mortgage, with interest semi-annually. The mortgage contains a covenant that if interest be in default for 'thirty days, an option to declare the principal sum due is vested in the mortgagee, and it appears that this condition is present and justifies tire complainant in the exercise of the option, and under it to ask the court to decree the whole amount to be due. The owner of all of the bonds is James Brown. There are numerous defendants, holders of subsequent liens and encumbrances on the mortgaged premises, but since this cause was instituted the mortgaged premises have been sold by the receiver cf the Citizens’ Ice and Cold Storage Company, an insolvent corporation, free and discharged of all the encumbrances, except the complainant’s mortgage to Lewis Audenried, who holds the same in trust for the Pennsylvania Iron Works Company, which company held a mortgage for $28,000 on the premises when this suit was instituted, it being one of the encumbrances affected by the receiver’s sale. The real contest is between Brown, the holder of the bonds, and the Pennsylvania Iron Works Company, for whom the title is held in trust. The mortgage is assailed because, as alleged, it was executed and delivered for purposes outside of the objects stated in the charter, by which authority to mortgage the corporation property was conferred. The objects for which the company was formed, as stated in its articles of association, were the purchase, manufacture and sale of ice, distilled water, hay, straw, feed, grain, coal, kindling wood and all other articles of fuel, and the maintenance of a plant for those purposes,

“including the acquiring, by purchase, lease or otherwise, of all necessary lands and buildings thereon, equipments thereof and machinery, and other articles necessary or convenient for use in connection with the carrying on of the business of manufacturing and selling as aforesaid; and in general the engaging in any and all other business whatever necessary or convenient in connection with the business of said company, and the doing of any other act or acts, thing or things, incidentally to grow out of or connected with said business or any part or parts thereof; to issue bonds secured by mortgage or mortgages upon- the property and franchises of said corporation, and to sell the same for the purpose of raising money with which to erect machinery and otherwise to improve said lands.”

The defence set up is that the proceeds of the bonds secured by the mortgage under foreclosure were used by the officers of the company in part for the payment of debts contracted for other purposes than those last stated, and therefore the mortgage, by way of security, is ultra vires, and cannot stand as a preference, and that this is especially so because Brown was, at the time the mortgage was made, one of the directors of the company. The debt represented by these bonds had its foundation in the advancement of moneys, by one Charles A. Eurbush, to the company amounting to something over $41,000, a large proportion of which, certainly more than $35,000, was used in providing buildings and otherwise improving the real estate of the company. As this debt had to be satisfied, the companjr, in due form, executed its mortgage in 1894 to secure the payment of its bonds to the extent of $35,000, and after a reasonably fair effort to sell and dispose of the bonds to other parties, they were sold to Mr. Eurbush for $26,250, and the balance due to him was satisfied by the issue of $15,000 of the preferred stock of the company. On the 1st of December, 1898, a new mortgage was given to the same trustee, being the mortgage now in controversy, to secure the payment of $40,000 represented by forty bonds of $1,000 each. These bonds were delivered to the trust company, the trustee, in return for the bonds originally issued, amounting to $35,000, and the cancellation of two prior mortgages on the same premises of $2,500 each. The dealings of Mr. Furbush with this company were conducted in the name of “Charles A. Furbush joint account,” of which account Mr. Brown, the present holder of the bonds, was a half owner, and to- whom Mr. Furbush. subsequently sold his interest in the bonds. Some nf the buildings were destroyed by fire, resulting in the company’s receiving from insurance something over $11,000, of which $8,000 was taken to redeem eight of these bonds, leaving yet outstanding $32,000 of bonds at par. It was shown that over $100,000 was expended in the purchase of the jiroperty, the erection of buildings thereon and the improvement of the plant, and while it undoubtedly appears that some of the money advanced by Furbush was used to pay wages and carry on the operations of the business, the amount actually used in preparing the plant was greater than the amount for which the mortgage was given, and the application by the company of small portions of the money advanced by Furbush towards the operation or conduct of the business is not sufficient to justify us in finding that the amount represented by the mortgage was-not expended for the plant and the improvement. It is not claimed that the moneys this mortgage was given to secure were not honestly advanced for the benefit of the company, and it. abundantly appears that the company received the money and applied it in liquidation of its debts. The purpose for which che mortgage was made was to provide funds to liquidate the-debt- due for moneys advanced to build the plant by Furbush. For want of another purchaser, he was induced to take the bonds and stock in satisfaction of his claim and fund the debt. The great weight of authority favors the rule that where the contract has been completed, and the corporation has had the benefit of it, the plea of ultra vires is not admissible to estop the party who-has performed from the enforcement. of the agreement, unless the transaction is contrary to public policy, forbidden by law, or immoral. Camden and Atlantic Railroad Co. v. Mays Landing, &c., Railroad Co., 48 N. J. Law (19 Vr.) 530.

In Bradley v. Ballard, 55 Ill. 413, notes were given by a corporation for money borrowed to enable it to prosecute a business which the lender knew it had no right to undertake, but the court enforced the doctrine of estoppel, saying “that it would he pressing the doctrine of ultra vires to an extent that can never be tolerated, even though the lender knew that the corporation was transacting a business beyond its corporate powers, provided the business itself was free from any intrinsic immorality or illegality,” to permit such a plea and to aid a corporation in the avoidance of “the simplest and commonest sense of honesty.” The violation by a corporation of its chartered authority subjects it to a forfeiture of its corporate existence at the hands of the state, and any mischief which might arise should a corporation undertake to exercise powers not granted, to the injury of the public, could be corrected in proceedings instituted by or on behalf of the state.

I have no doubt that, so far as the bonds are concerned, they are held by Brown free from any defence rested upon the doctrine ultra vires.

The right to hold the mortgage as a security for the debt is governed by the rule that the creditor seeking the aid of the mortgage as a security must establish it as an encumbrance which the corporation could lawfully make. But in this case, even if we consider the clause in the charter as restrictive, as urged by the defendant, the mortgage would be, as to innocent parties, a valid security, because the power to make the mortgage for a special purpose is expressly granted, and such purchaser of its bonds could not control the application of the proceeds.

The defendant, however, insists that, as Brown is a director and a silent partner of Furbush, he is not in a position to assert his Innocence, and took the bonds with knowledge of the alleged infirmity. The testimony shows that from the outset of the business Furbush advanced large sums of money for the company, most of which was used in accordance with the terms of the charter. To illustrate, on August 20th, 1894, he advanced $2,500, of which $2,406.07 went into the plant; in September, 1894, $10,000, of which $9,164 was so applied, and so through all the items the great bulk of the money was properly applied, the total of such applications being $35,557.35, from which it will appear that at least more than the required amount was expended as required hy the charter, if we hold its terms as restrictive, as defendant insists, and the mortgage given for a sum within the amount of the expenditures on plant account.

It is also insisted that as Furbush purchased the' bonds for less than their face value, Brown, being a director, ought not now to recover more than the amount paid by Furbush, but there is nothing in the case to justify such a result, for the bonds were not, owing to the character of the business the company was engaged in,f readily marketable. Efforts.had been made to sell to other parties, and after failure to find another purchaser, Fur-bush bought them at a price which cannot be said to have been unconscionable in view of all the circumstances, and unless fraud be shown or some unjust advantage taken of a situation, there is no reason why the officers of a company may not purchase its bonds at their market value.

In my judgment the defence has not been sustained, and the complainant is entitled to a decree.


author: Gakkison, Y. C.

text:
    George F. Perkins et al. v. Trinity Realty Company.
    [Decided June 14th, 1905.]
    1. A mortgage given as part of a business transaction can be foreclosed only when it secures a* debt.
    2. Where a debt was past due, and the creditor demanded payment or security, whereupon the debtor tendered and the creditor accepted a mortgage, executed by a corporation on its property, but did not release the debtor or expressly extend the time of payment, the mortgage is supported by a consideration, ■ ■
    3. In an action on a contract made in a foreign state, the defendant can claim the benefit of the law of that state only by pleading it.

      4. Accommodation notes given by a business corporation are not valid as against corporate creditors or dissenting stockholders.
    5. A corporation is estopped to plead that accommodation notes given by it with the consent of all the stockholders were ultra vvi'es, or that a mortgage similarly given to secure such notes was ultra vires.

    Heard on bill, answer and agreed state of facts.

      Messrs. Tennant & Haight, for the complainants.

      Mr. Franlc Durand, for the defendant.
   Gakkison, Y. C.

This is a bill to foreclose a mortgage. The mortgage was given by the Trinity Realty Company to George F. Perkins and others on the 28th day of February, 1903. It was given to secure the payment of seven promissory notes, aggregating $5,000, payable at intervals of one month each, with provision that the non-payment of one should make all due.

Three of these notes, aggregating $1,500, were subsequently paid to the complainants by a corporation named The Household Ledger Publishing Company. Default was then made.

The complainants now claim $3,500, with interest, as due upon this mortgage.

The defendant answers that the mortgage was without consideration, and that under the law of New York, where the defendant company was incorporated and where the mortgage was made, it was ultra vires the corporation, and that the mortgage is null and void and unenforceable.

I will deal first with the question of the defence based upon the want of consideration.

The cases in our state upon this subject leave it, I think, in a confused condition.

It will be found that the court of chancery, in dealing with the question of the defence of want of consideration, has held that “a bond and mortgage * * * is good if it is shown that none [consideration] was given. And neither courts of law or courts of equity will allow the consideration to be inquired into for the sake of declaring the instrument void for want of consideration, hut they will for the purpose of ascertaining what is due upon it.” Farnum v. Burnett, 21 N. J. Eq. (6 C. E. Gr.) 87 (at p. 89) (Chancellor Zabriskie, 1870); Shotwell v. Shotwell, 24 N. J. Eq. (9 C. E. Gr.) 378 (at p. 385) (Chancellor Runyon, 1874).

It will he observed that these decisions are prior to the act of April 6th, 1878, concerning evidence in respect to sealed instruments and permitting oral testimony to be given with respect to the consideration thereof.

But after that act was passed, the court of chancery held: “It cannot be doubted that even now a valid mortgage may be given where no valuable consideration exists. Otherwise, the absolute control of the owner over his property is taken away, for he would not be permitted to give it away in his lifetime by deed. The mere fact that there was no consideration would not now render the mortgage invalid.

“A mortgage may be sustained as against all except creditors whose claims existed at the time of giving it, although it was intended merely as a gift, and, when executed and delivered, it is as valid as if it were based upon a full consideration, and it is not open to the objection that it is a voluntary executory agreement, but it may be enforced according to its terms as an executed, conditional transfer of the real estate mortgaged. Brooks v. Dalrymple, 12 Allen 102; Bucklin v. Bucklin, 1 Abb. App. Dec. 242; Jones Mort. § 614.” Campbell v. Tompkins, 32 N. J. Eq. (5 Stew.) 170 (at p. 172) (Chancellor Runyon, 1880) ; affirmed, 33 N. J. Eq. (6 Stew.) 362.

And in this same case the chancellor speaks of the validity of a “voluntary mortgage” by a wife..

Our courts, however, hold that a mortgage is to be regarded as a mere incident or security of the debt. Shields v. Lozear, 34 N. J. Law (5 Vr.) 496 (at p. 503) (Court of Errors and Appeals, 1869); Blue v. Everett, 56 N. J. Eq. (11 Dick.) 455 (at p. 458) (Court of Errors and Appeals, 1897).

In the case of Farnum v. Burnett, supra, it will be seen that a debt became due to one who had advanced money upon a bond, to secure which the mortgage in question was "given, and in numerous other cases which have followed this case, and which cite it, the same or similar conditions will be found to exist. Brown v. Kahnweiler, 28 N. J. Eq. (1 Stew.) 313 (Chancellor Runyon, 1877); Wood v. Condit, 34 N. J. Eq. (7 Stew.) 434 (Chancellor Runyon, 1881); Sweeney v. Williams, 36 N. J. Eq. (9 Stew.) 627 (Court of Errors and Appeals, 1883).

I shall not consider the question as to whether or not a mortgage given to, secure a voluntary bond or note, which latter was intended as a gift, would be sustained or not, since that question is not involved in this suit, and it is not necessary to deal with it.

I shall only deal with that aspect of the question which concerns the foreclosure of mortgages given to secure bonds or notes where there is no evidence of any donative purpose in the giving of the bond or note, but the transaction must be viewed as one of contract solely.

In such cases I think that the mortgage may only be foreclosed or rights under it enforced where there was a debt to secure which it was given.

Of course, the debt need not have been one due from the mortgagor. One owning property, either personal or real, may pledge it for the payment of the debt of another person.

If there be no debt, then there is no right to enforce the mortgage, and the matter of consideration may be inquired into for the purpose of showing that there was no debt.

Such confusion as exists with respect to the right to plead and prove no consideration arises, I think, out of the failure to distinguish between the mortgage and the debt -which the mortgage is given to secure.

There need not be proven, and there need not exist, as I understand it, any consideration between the mortgagor and the mortgagee for the defeasible conveyance manifested by the mortgage itself. The owner of the land may, as has been before stated, make a defeasible conveyance of his property, the condition of the defeasance being that upon payment of a certain debt the conveyance is void. But this fact does'not relieve one who seeks to enforce such a defeasible conveyance from the necessity of showing that there was a debt, to secure which the mortgage was given.

The mortgage itself is an executed conveyance, defeasible upon the carrying out of an executory contract. This executory contract is subject to all the laws applicable to contracts, and must, of course, be supported by consideration.

That consideration need not move to the mortgagor, and the debt to secure which the mortgage is given may be the debt of another person.

But this does not militate against the necessity of finding, in each instance (excepting where the question is one of gift), that there was an executory contract, upon consideration,, to secure which the executed defeasible conveyance was made.

In the case of Bliss v. Cronk, 63 N. J. Eq. (17 Dick.) 496 (Vice-Chancellor Pitney, 1901), the court, speaking with reference to a mortgage that contained within itself the promise to pay, said (at p. 499):

“The deed has a dual character—first, it contains a covenant by-Mrs. Cronk to pay a sum of money to the complainants, stated to he a pre-existing debt due from her to them; second, a conveyance of land to secure that debt.

“The first is an executory contract by a married woman, and the second an executed conveyance whose validity and liability to .be enforced depends upon the enforceability of the executory contract.”

“It is held in Hew York that the court will inquire into, the consideration of a mortgage sought to be foreclosed, and that “it is the debt which gives the mortgage vitality as a charge upon the land, and generally where there is ho debt or obligation there is no mortgage.” Baird v. Baird, 145 N. Y. 659 (at p. 664).

Jones on Mortgages (3d ed.), § 1610, says: “A mortgage, like every other contract, must be founded upon a valuable consideration.” And in section 612 he says: “Want of consideration, or the failure of it, is a good defence to an action upon a mortgage.”

Our own courts, as lias been heretofore shown, have always held that they would inquire into the consideration for the purpose of ascertaining what is due upon the mortgage, and it seems to me that such inquiry must necessarily lead to the same end, because if there was no debt there is nothing due.

I shall not pursue this subject further, because I think it sufficiently appears that the matter of the consideration of the executory contract which this mortgage was given to secure must be inquired into in this ease.

The agreed state of facts with respect to the matter of consideration is as follows:

“1. That the Every Month Publishing Company, a corporation of the State of New York, was indebted prior to February, 1903, to the complainants in the sum of five thousand dollars, some of said indebtedness being past due, and about that time the complainants insisted that said Every Month Publishing Company make immediate payment of its past due indebtedness or give security for said debt; the publishing company then offered as security the mortgage in question, which the complainants agreed to accept. * * *
“6. That the Every Month Publishing Company was not, by the giving of said mortgage, released of its debt to the complainants.”

Tire complainants contend that it sufficiently appears in this ease that they extended forbearance to their debtor in consideration of the contract by the defendant to give security for the debt.

It will be observed that there is no express agreement by the complainants to extend the time of the payment of the debt due to the complainants by the Every Month Publishing Company, the original debtor.

If the case were one of novel impression in this state, I should have grave doubt in determining that the facts proven should be held to establish an agreement to forbear. But there is a precedent directly in point, upon facts so nearly similar to those in the ease at bar as to be indistinguishable for the purpose of the application of the principle.

In the case of Hockenbury ads. Meyers, 34 N. J. Law (5 Vr.) 346 (Supreme Court, 1870), it was held that an agreement to forbear “may be either expressed or, inferred from the facts and circumstances of the case.” In that case'two men were indebted to Mrs. Meyers, the plaintiff. Their debt was evidenced by a promissory note which was then past due. “The plaintiff threatened prosecution unless security was given,” and the defendant signed this overdue promissory note under the names of the original makers. The court, upon this state of facts, held (at p. 348): “The natural and fair result of the proof, circumstantial and direct, is that the defendant signed the note as surety in consideration of forbearance to sue upon it, and that such was the agreement between the defendant and the plaintiff.”

In the case at bar the agreed state of facts is that the complainants insisted

“that said Every Month Publishing Company make immediate payment for its past due indebtedness or give security" for said debt; the publishing company then offered as security the mortgage in question, which the-complainants agreed to accept.”

It will be observed in the Hocheribury Case that since the defendant placed his name on the overdue note under the names of the makers, there was no evidence before the court of any of the terms of the new agreement as to time of extension, whereas, in the ease at bar, promissory'notes, payable at different intervals, were given, which a fortiori should be held to imply an agreement to extend the time of payment of the original debt to the periods named in the notes.

The Hocheribury Case is therefore direct authority for the ease at bar.

I therefore find that there was consideration for the-mortgage.

It now becomes necessary to consider the other defence pleaded, namely, that of ultra vires.

The agreed state of facts upon this point shows that the Trinity Realty Company was a corporation of the State of Yew York, and that at a meeting at which all of the stockholders were present they unanimously voted for and passed the following resolution:

“Whereas, the Every Month Publishing Company, a corporation, is indebted to the firm of Perkins, Goodwin & Co., of the city of New York, in the sum of $5,000, for goods sold and work done between the first day of August, 1002, and the twentieth day of January, 1003 ;
“Now, therefore, in order to secure the payment of said indebtedness, and as an accommodation to the Every Month Publishing Company,
“It is Resolved, That the Trinity Realty Company be and it is hereby empowered and directed to execute and deliver to the said firm of Perkins, Goodwin & Co. its promissory notes, payable to the order of said firm, as follows, viz.: One note for $500, payable August 1, 1903; one for $500, payable September 1, 1903; one for $500, payable October 1, 1903; one for $500, payable November 1, 1003; one for $1,000, payable December 1, 1903 ; one for $1,000, payable January 1, 1904, and one for $1,000, payable February 1, 1904, all bearing interest at 6 per cent, per annum until paid; and that in order to secure the payment of said notes, the Trinity Realty Company be and it is hereby empowered and directed to execute and deliver to George F. Perkins, J. Fred. Ackerman, Frank Squier and John I-I. Duffy, partners as Perkins, Goodwin & Co., composing- the said firm, its mortgage upon that certain tract of land owned by it and situated at Port au Peck, in the township of Eaton-town, county of Monmouth, in the State of New Jersey, subject to the lien of a mortgage for $10,000 now on said land, and that the president of the Trinity Realty Company be and he is hereby directed to execute said notes and mortgages.”

■I do not deem it necessary in this case to determine whether the validity of this mortgage should depend upon the construction to be placed upon the laws of the State of New York or of the laws of the State of New Jersey. The defendant, in its answer, appeals to the laws of New York as rendering the mortgage invalid, but does not plead the same, as it should have done had it desired to take advantage thereof. Boehme v. Rall, 50 N. J. Eq. (6 Dick.) 541 (at p. 545) (Vice-Chancellor Green, 1893).

But since, for the purpose of this decision, I propose to hold that the mortgage is invalid as against anyone having the right to attack it, I, as stated above, deem it unnecessary to determine by the law of which state the validity thereof should be determined.

It is clear that the notes, to secure which this mortgage was given, were not for any purpose of the defendant comparry, and were not given in the due course of its business, and were given as an accommodation -to a third party. I think, therefore, it is obvious that the mortgage could not be sustained if attacked by any creditor of the corporation or by any stockholder who did not assent to it. But since it is not shown that there are any creditors, and no question of public policy intervenes, and every stockholder assented to this disposition of the company’s property, I find that this mortgage, given for a valuable consideration, should not be declared invalid at the instance of this defendant.

Without attempting to formulate a definition, I think it may be properly said that the doctrine of ultra, vires is that at the instance of thé state where public policy requires it, or at the instance of stockholders or creditors whose rights would otherwise be injuriously affected, corporations will be held powerless to do anything not clearly within the terms of their charters or statutory provisions.

Our courts, however, hold that the plea of ultra vires will not avail a corporation with respect to an act for which it has received consideration in any case where the status quo ante cannot be restored, and in such cases the corporation is estopped to set up the plea of ultra vires. Camden and Atlantic Railroad Co. v. Mays Landing, &c., Railroad Co., N. J. Law (19 Vr.) 530 (Court of Errors and Appeals, 1886); Breslin v. Fries-Breslin Co., 70 N. J. Law (41 Vr.) 274 (Court of Errors and Appeals, 1904).

And in a case in which no question of public policy is concerned, and therefore the rights of the state or of the public are not involved, and where no creditors exist, and all of the stockholders have assented to the action, I do not see upon what basis the plea of ultra vires can be rested.

When the rights of the state, the public and creditors are eliminated, and only the rights of stockholders are involved, the form of the fictional bodjr termed a corporation does not hamper the court in the least in dealing with the rights of the parties. And that which the individuals composing the corporation might do, and will be held to have done among themselves, will be dealt with without regard to the immaterial fact that they were members of a fictional body.

'S 0 citation of cases is necessary to establish the well-settled doctrine that courts of equity will disregard the corporate form where justice requires it and its retention is not needed to protect some interest requiring protection.

To permit stockholders of corporations to unanimously make a disposition of the corporate property where no one else’s rights are in any way prejudiced, and afterwards to repudiate their action upon the ground that it was beyond the power of the fictional body to do the act, could serve no useful purpose, qpd would be merely available in aid of fraud.

To hold that under such circumstances those who have unanimously done the act cannot repudiate it is certainly consonant with good morals and fair dealings, and violates no principle which is necessary to the protection of the rights of those concerned in and with corporations.

In eases where stockholders have all assented to corporate action, and no rights of the state or creditors intervene, the doctrine of estoppel is fully applicable, and the plea of ultra vires is unavailing. Breslin v. Fries-Breslin Co., supra.

Text-writers and cases in other jurisdictions are in accord with this principle. Tayl. Corp. § 266 et seq.; McCampbell v. Fountain Head Railroad Co., 111 Tenn. 55; 77 S. W. Rep. 1070 (1903); Martin v. Niagara Falls Paper Mfg. Co., 122 N. Y. 165; Holmes v. Willard, 125 N. Y. 75.

In the suit at bar the complainants were induced to forego their right of immediate action against a third party, their debtor, upon the defendant’s giving security for the payment of the debt.

The status quo ante cannot be restored, and no one’s rights in the corporation are affected save the rights of those who agreed that they should be so affected. The defendant, therefore, has no right to invoke the doctrine of ultra vires.

I conclude that the complainants are ’entitled to a decree, and will so advise.


author: G-aurison, Y. C.

text:
    Charles H. Mayer v. Samuel Kane et al.
    [Decided June 14th, 1905.]
    1. Where a wife did not know that her husband had taken the title to property, for which she furnished the purchase-money, in his name, instead of in hers, she is not estopped to assert title as against his creditors.
    2. As between a wife and creditors of her husband, she is entitled to have a resulting trust in real estate, in the absence of any estoppel, to the extent of her contribution toward the purchase price, and to the extent that her money has been used for repairs, taxes, &c., over and above her proportion of the purchase price.
    3. Money received by a wife from the keeping of boarders or otherwise, not acquired by her in a business carried on separately from her husband, and contributed toward payment of an encumbrance on real estate owned in common, inures to the husband’s benefit.
    This is a bill filed by Charles H. Mayer against Samuel Kane and Sarah, his wife. The purpose of the suit is to have declared fraudulent and void two certain conveyances of real estate made by the husband to the wife through an intermediary. These conveyances took place respectively on the 3d of October, 1903, and on the 26th of October, 1903.
    The complainant is a judgment creditor of Samuel Kane, and has a judgment against him for four hundred odd dollars, which was obtained in 1904,- and under which an execution was issued and levied upon the premises in question.
    Heard on bill, answer and proofs in open court.

      Messrs. Grey, McDermott & Enright, for the complainant.

      Mr. Max Salinger, for the defendants.
   G-aurison, Y. C.

In 1869 Samuel Kane was married to Sarah Muller. She had been a servant up to the time of her marriage and had accumulated some money, and had in the neighborhood of $1,000 in a savings bank in the city of New York. He was a driver in receipt of $14 a week wages. They lived in New York City for four years' after their marriage. Beginning with the end of the first year there was a boarder in the family, and the wife received the money from this boarder.

In 1873 they learned of a piece of property, No. 101 Stuyvesant avenue, Jersey Citj1, which was for sale, and they came here to inspect it. Subsequently a bargain was made by which the property was to be acquired for $2,300, of which $1,200 'was represented by an existing mortgage, which was assumed, $300 by a second mortgage, and the balance, $800, was paid in cash.

The wife gave to the husband this $800 and he had the property conveyed to himself, thereby assuming the existing mortgage of $1,200, and he gave a $300 purchase-money mortgage, due in one year.

Both the husband and wife testified that the property was bought for the wife, and that she was led to believe that the title was in her name. She can neither read nor write, and is dense.

They moved into the house, and she continued to take boarders, and her testimony and that of her husband is that she gave to him, from moneys other than those that he gave her from his wages, $300 with which he paid off the $300 purchase-money mortgage.

Each of them was an owner of ten shares of stock in a building association in Jersey City.

The original $1,200 mortgagee, desiring his money, the husband pledged his stock with the building association, and he and his wife gave a mortgage to the building association for $1,400 and took this money and paid off the mortgage. Whether the whole of it was taken for this purpose—that is to say, whether there was interest accumulated on the mortgage to the extent of $200—does not appear.

The husband went on paying off the shares in the building association, and when they were paid off the mortgage was canceled.

The wife testifies that she repaid $1,000 to the husband on account of this money.

Iier testimony concerning this is very indefinite. She was under the impression, she said, that this mortgage was $1,000, and she testified that the mortgagee wanted the money, and her husband raised it and paid it off, and she paid it back to the husband in installments. But upon inquiry as to the method and manner and fact of this repayment her answers were very unsatisfactory, and I am not inclined to believe that she did repay this money.

The wife always collected and kept the rents from this property when the same was rented—that is to say, when they themselves were not living in it. She and her husband each testify that she always paid the taxes, or rather, that she gave him the money to pay the taxes. It appears that he did not pay the taxes, and that the property was advertised to be sold under the Martin act, and that she borrowed $700 on her shares from the building association and paid the taxes with this money.

When her building association shares matured she took the balance, $1,300, and expended it upon repairs upon this property and, I understand, also upon the property next hereafter to be mentioned.

This other property was acquired in 1887.

The testimony is that the purchase price was $2,200. The fact is that $400 was paid in cash and $1,800 was represented by an existing mortgage. This $400, the defendants say, was made up of $160 that the wife had received from an insurance company upon a policy held upon the life of her aunt, $100 was money that the wife borrowed from some stranger, and $140 was her savings out of moneys from boarders and rent, over and above the weekly money given her by her husband to pay household expenses.

The testimony of the defendants is that the wife paid all the repairs and all the taxes that were ever, paid upon these properties.

Some time in September or October, 1903, the defendants were desirous of borrowing $1,600 upon the property 101 Stuyvesant avenue, which was, as we have seen, now clear of all encumbrance. The wife testifies that she wanted some little money, but this' is discredited by the fact that she did not get any and that the husband testified that he took all the money to pay his debts with. However this may be, it is a fact that by a mortgage, acknowledged on the 23d of October, 1903, made to the New Jersey Title, Guarantee and Trust Company, the company advanced $1,600 in a check which was made out to Mrs. Kane, and which she turned over to her husband, and which he had cashed, and the proceeds of which he paid to his creditors.

It was during the negotiations for this mortgage that the wife says she, for the first time, learned that the title to either of these properties was not in her name, and it was because of the knowledge thus gained that she insisted upon her husband transferring the titles to her.

The insistment of the defendants is that Mrs. Kane advanced the money to her husband to make each of the purchases, and that there was a resulting trust to her in each instance, and that when the legal title was conveyed to her there was a joinder of the legal and equitable estate in her, and that such estate was not subject at any time to the creditors of her husband.

The contentions of the complainant are that there was no resulting trust, and that the properties were the husband’s, and that if the wife has any right at all, it is for the amount of money of hers that she put into the property, and this amount, they contend, is only the first payment of $800, with respect to the first property, and is only $260 (that is, the insurance money and the borrowed money) put into the second property. They contend that since she permitted her husband to have this title in his own name, and thus apparently to be the owner thereof, she is estopped to deny as against them that he was the owner.

The case is not without difficulty. I find that in the main . the wife truthfully stated tlie circumstances. In only one particular do I find that she was untruthful. I am not satisfied, as I before stated, that she paid off, out of her own moneys, the mortgage of $1,200 that rested upon the first property at the time they bought it.

I find that she believed that her husband had purchased the properties in her name, and that she did not learn until October of 1903 that they were not in her name.

There is not, therefore, present in this case the element of participation on the part of the wife which causes the application of the principle illustrated in the cases cited in the case of Mertens v. Schlemme, 68 N. J. Eq. 544 (Vice-Chancellor Garrison, 1905). These cases all rest upon a finding of fact that the wife permitted her property to stand in the name of her husband, and by that fact is estopped to deny, as against his creditors who trusted him upon the faith of his apparent ownership, that he was the owner.

Since there is no occasion to apply the doctrine of estoppel to the wife in this suit, then the equities of the creditors of the husband and the equities of the wife must be adjusted with respect to each other.

Each of these is entitled to an equity.

In view of the decisions, I think that the equities of each are as follows':

The wife is entitled to have, in her favor, a resulting trust in the property to the extent of her contribution towards the purchase price thereof, and also to the extent that her'own money has been used in keeping down encumbrances and in improvéments and repairs over and above her proportion thereof. In other words, I find that the disposition of our courts is to treat a husband and wife, situated as these are, as owners in common, each holding an interest in the property in proportion to the amount of purchase price advanced by each; and further, that where a wife’s separate estate is contributed towards the improvement of such property (and no estoppel is effected) she is also entitled, as against the husband and his creditors, to a lien for repayment of siich sums. ■ • ■ '■

The equity of the creditor is to have a lien upon whatever interest the husband has in the property.

This is the result of the general principle that a wife, whose money is used by a husband in the purchase of real estate, has a resulting trust therein, for which no citation is necessary, and of the principle laid down in the case of Wheeler & Wilson Manufacturing Co. v. Litwin, 57 N. J. Eq. (12 Dick.) 660 (Court of Errors and Appeals, 1898), and in Adoue v. Spencer, 62 N. J. Eq. (17 Dick.) 782 (Court of Errors and Appeals, 1901).

The rights of the creditors are commensurate with the rights of the husband.

The application of these principles to the ease in hand results as follows:

Respecting 101 Stuyvesant avenue: The wife paid all of the cash consideration that was paid at the time of the purchase, namely, $800. There was given at that time by the husband a purchase-money mortgage for $300, and in the deed which he accepted, and which ran to him, he assumed the payment of a $1,200 mortgage then on the property.

Since the wife had no separate source of income during the year elapsing between the time of the purchase and the time of the payment of the $300 mortgage, I hold that this payment must enure to the benefit of the husband. My reasons for this are that, while the wife may have had the money in hand as the, income from boarders or otherwise, she did not acquire it in any business carried on separately from her husband, and hence cannot claim that her husband took her money and owes her therefor. Clinton, &c., Manufacturing Co. v. Hummell, 25 N. J. Eq. (10 C. E. Gr.) 45 (Chancellor Runyon, 1874).

This results in finding that the wife’s interest in 101 Stuyvesant avenue is eight hundred-twenty-three hundredths and the husband’s is fifteen hundred-twenty-three hundredths.

From the time of the purchase to date the testimony shows that the wife has collected all of the rents and has also paid all of the taxes that have been paid. With respect to these, I find that equity requires that she should be charged with all of the rents and credited with eight hundred-twenty-three hundredths thereof, and should be credited with all of the taxes paid by her and charged with eight hundred-tweirty-three hundredths thereof.

With respect to the amounts paid for repairs, I find that the wife should be credited with the whole of such amounts so paid by her and charged with eight hundred-twenty-three hundredths thereof.

The contribution by the husband to this property, i. 101 Stuyvesant avenue, consisted in the making of the mortgage for $300 and the assumption of that for $1,200, and thus originally bis interest was wholly encumbered. This situation is not changed in this suit by the paying off of these mortgages by the husband, because he subsequently obtained the whole amount, together with $100 more, for his own purposes, when he obtained the cash from the $1,600 mortgage now upon the property.

There must be a reference to a master to ascertain and report with respect to the expenditures by the wife for taxes and repairs and the receipt by her of rents. These will be apportioned as hereinbefore stated.

The respective interests of the husband and wife will then be found and declared, and the complainant will be entitled to a lien on the husband’s interest in the property.

With respect to the second property, 91 and 93 Stuyvesant avenue, I find that the wife advanced $400 and the husband gave a purchase-money mortgage, dated August 23d, 1887, for $1,800, so that the respective interests in this property are four hundred-twenty-two hundredths for the wife and eighteen hundrecl-twenty-two hundredths for the husband.

The receipts of rent by the wife from this property and her expenditures thereon for taxes and repairs will be apportioned in the above-stated proportions, in a similar manner to that provided with respect to the first property purchased.

I will advise a decree in accordance with these views, the decree to be settled on notice.


author: Garrison, Y. 0.

text:
    John C. Farr, Jr., v. Theresa Hauenstein and Louis Hauenstein.
    [Decided June 29th, 1905.]
    1. Where a conveyance from husband to wife was not fraudulent when made, but the husband afterwards, and after incurring indebtedness, paid taxes on the property, interest on a mortgage which encumbered it, &c., his creditors are entitled to have a charge against the property for such sums.
    2. Mere delay in enforcing a demand does not constitute laches in a case where the debtor could not be prejudiced thereby.
    Heard on bill, answers, replications and proofs in open court.

      Mr. Leon Abbeti, for the complainant.

      Mr. Jcimes F. Minium, for the defendants.
   Garrison, Y. 0.

This is a bill filed by the holder of a judgment against Hauenstein and another, the purpose of which is to have certain real estate, the title of which ‘is in the name of the wife of Hauenstein, declared to be subject to the lien of the complainant’s judgment.

Hauenstein & Weiss were in business-as brewers in Union Hill in the seventies and eighties. Some time in the seventies Hauenstein bought two lots of land at Union Hill, the cost of the lots being somewhere between $500 and $600. His wife’s mother, a Mrs. Sehoening, at the expense of $3,500, had a house erected upon these lots. The title to the lots stood in the name of Hauenstein. There was a mortgage in favor of one Fick for $1,000 upon the property.

Tn 1884 Hauenstein & Weiss, needing some financial backing to secure some credits, applied to Mrs. Schoening, and she made it a condition of her extending the credit, that Hauenstein should deed this house and the lots to his wife. The papers to do this were prepared in the office of Eabe & Keller, in Hew York, and were properly executed, the conveyance from the husband and wife being made to Mr. Keller and the conveyance to the wife being made by Mr. Keller.

Eor some reason, which is not disclosed, these papers were not recorded until 1885, more than sixteen months after their execution.

In August, 1887, a sale in foreclosure took place under the Eick mortgage, and the property was purchased in the name of the wife, Mrs. Theresa Hauenstein. They borrowed on mortgage from one Yix the sum of $1,000, with which they paid off the principal of the Eick mortgage, settling the interest and costs with other moneys.

Subsequently money was borrowed from one Simon, on mortgage, and the Yix mortgage was paid off, and after that $2,000 was borrowed from the Hudson Trust Company on mortgage, and the Simon mortgage was paid off.

Under the circumstances of this case, I do not think that the title of the wife can be successfully attacked by this complainant. While it is true that the husband bought the lots and subsequently conveyed them -to the wife without any consideration passing from her to him, in the first place it should be noted that it is not shown that at that time the husband was indebted to the assignor of the complainant, or that there was any reason why he might not make this conveyance as a gift to the wife.

It should also be taken into account that the mother of the wife had, at an expense of $3,500, built the house upon this land, and that she, at the time that the conveyance was made to the wife by the husband, procured it to be so made as a consideration for her aiding the husband in his business.

But with respect to the expenditures made by the husband of his own money'in the payment of taxes, interest on the mortgage and other encumbrances on this property, I do think the assignor of the complainant, as a creditor, has a right to have a charge against the property for such sums. Walsh v. Rosso, 41 Atl. Rep. 669 (Vice-Chancellor Pitney, 1898); S. C. on final hearing, 50 N. J. Eq. (14 Dick.) 123 (Vice-Chancellor Stevens, 1899).

This is so unless the laches of the complainant disentitles him to enforce this right.

The defendants insist that the laches of the complainant bars him, and cites a number of cases in which complainants were barred on account of their conduct with respect to bringing suit. I do not think it necessary to make an extended review of these cases, because I think that in each one it will be found that the laches was of such a character as made it inequitable on account thereof to enforce the complainant’s rights.

Mere delay does.not, however, necessarily result in any such result. Vice-Chancellor Green said, in Tynan v. Warren, 53 N. J. Eq. (8 Dick.) 313 (at p. 321) : “I do not understand that mere delay in bringing a suit will deprive a party of his remedy, unless such neglect has so prejudiced the other party by loss of testimonjr- or means of proof, or changed relations, that it would be unjust to now permit him to exercise his right.” Lundy v. Seymour, 55 N. J. Eq. (10 Dick.) 1 (at p. 9) (Chancellor McGill, 1896).

The defendants failed to show that they are prejudiced in any way by reason of the delay of the complainant in bringing his suit, and there is no aspect of the case in which the lapse of time has affected or could affect the defendants’ opportunity to procure or produce testimonjq hence the ease is not within the ruling in Lutjen v. Lutjen, 64 N. J. Eq. (19 Dick.) 773 (Court of Errors and Appeals, 1902).

I will advise a decree^that a master ascertain the moneys of the husband expended to pay taxes, interest on mortgage, &c., on this property, and that the total thereof, or so .much as will satisfy the amount due the complainant; is a charge against this property, which, unless paid by the wife within a reasonable time, to be fixed, may be made out of the property by a sale thereof.