text:
    Nemeth Karoly et al. v. Hungarian Reformed Church of New Brunswick, New Jersey, et al.
    [Submitted 'June 22d, 1914.
    Decided July 24th, 1914.]
    1. In a suit to set aside a conveyance of church property, evidence held to require a finding that the grantor corporation and its adherents were affiliated with the Presbyterian Church of North America, and was not an independent body without ecclesiastical affiliation.
    2. Though one or any number of members of a church organization may secede at will, no number, however great the majority, may secede and take with them the church property to a new affiliation, so long as there remains a faction which abides by the doctrines and rules of the church government which the united body professed when the property was acquired, in which case the property can be disposed of only in accordance with the method prescribed by the judicatory of the original body.
    On final hearing on bill, answer, replication and proofs.
    This is a controversy between two ecclesiastical bodies and their adherents over the ownership and possession of a church edifice and lands situated in New Brunswick. The claim on the part of the complainants is that the property in suit belongs to a corporation which is affiliated with, the Presbyterian denomination.
    The defendants, on the contrary, claim that it now belongs to a corporation which is affiliated with an ecclesiastical body known as the Reformed Church of Hungary, having its situs and headquarters in the Empire of Austria.
    Prior to 1904 there were many of Hungarian birth and speech in New Brunswick who had formed a voluntary association for the purpose of having divine service held in their native language. Dr. Knox, then and now the pastor of the Eirst Presbyterian Church of New Brunswick, took an oversight of these people, performed their marriages, attended at their funerals and administered such spiritual comfort as he was able to, and it gradually came to be looked upon as a sort of Hungarian annex to the Eirst Presbyterian Church. As early as the spring of 1903 the standing committee on Synodical Home Missions of the Presbytery of New Brunswick made a report to the Presbytery concerning this voluntary association, and introduced to it Mr. Paul E. B. Hamborszky, then a student in the Princeton Theological Seminary, who had been devoting his time and attention to this Hungarian body; and thereupon, in April of 1903, Mr. Hamborszky presented a request from one hundred and sixty Hungarians belonging to that body asking to be taken under the care of the Presbytery. Such proceedings were had in the Session of the Eirst Presbyterian Church and in the Presbytery of New Brunswick, that shortly thereafter one hundred and seventy-one persons were admitted to membership in that church from the Hungarian voluntary association above mentioned.
    In the early part of 1904, the committee on Synodical Home Missions, to whose care the Hungarian body had been committed, recommended that they should be dismissed from the Eirst Church of New Brunswick and should constitute a separate mission congregation, in pursuance of which recommendation there was organized, on August 5th, 1904, under the laws relating to religious societies, a corporation having the name th e “Hungarian Presbyterian Church Evangelic Reformated Church.” Of this corporation the one hundred and seventy odd Hungarians who had joined the First Presbyterian Church became members. For reasons, which do not appear plainly, the name of this corporation was changed, on October 24th, 1905, to “Magyar .Evangelically Reformed Presbyterian Church of Brunswick, New Jersey;” and later on, on December 9th, 1909, its name was again changed to “'Magyar Evangelical Reformed Church of New Brunswick, New Jersey,” by which name it claims the title to and ownership of the church property in question.
    The contesting claimant is a corporation likewise formed under the general laws of this state concerning the incorporation of religious societies, on July 12th, 1912, by the name of the “Hungarian Reformed Churc-h of New Brunswick, New Jersey.” Three days later, and on July 15th, 1912, the officers of the old corporation conveyed, or attempted to convey, the premises in question to the new corporation in consideration of “one dollar and other valuable considerations.” This was done by two deeds which the complainants pray may be declared to be null and void. The certificate of incorporation of the new corporation (the Hungarian Reformed Church of New Brunswick, New Jersey) provides that it
    “shall be and remain in inseparable connection with and under the ecclesiastical jurisdiction of the Hungarian Reformed Church in America and the Reformed Church of Hungary,”
    and that it
    “shall have power from time to time to adopt, alter and amend such by-laws as shall be expressly approved in writing by the Hungarian Reformed Church in America and the Reformed Church of Hungary,”
    and that
    “no transfer, sale, conveyance, alienatiop, disposition, lease, encumbrance or mortgage of any of the property of said church or congregation shall be binding or valid for any purpose whatsoever, unless it be made by and with the express consent in writing of the Hungarian Reformed Church in America and the Reformed Church of Hungary.”

      Tlie Hungarian Reformed Church, in America therein referred to is the highest American judicatory of the Reformed ■Church of Hungary.
    It will thus be seen that if the conveyances in question shall ■stand) the property in suit is irrevocably taken from the Presbyterian connection and is irrevocably transferred to a connection with a foreign ecclesiastical dominion.

      Messrs. Hutchinson & Hutchinson (Mr. Conover English on the brief), for the complainants.

      Mr. Alfred F. Skinner and Mr. Morris Cukor (of the New York bar), for the defendant.

      Mr. Walter C. Sedara (of the New York bar), for Rev. Paul 3?. B. Hamborszlcy.
   Howell, Y. C.

The principal question of fact is whether the old corporation ■and its adherents were affiliated with the Presbyterian denomination, or whether they were an independent body without ec■clesiastical affiliation with any other body of Christians. If they were so affiliated with and had so become a part of the Presbyterian denomination, then their secular affairs are governed by plain rules of law relating to the ownership of ecclesiastical property, and if they shall be found to be an independent body, they are then governed by other rules which are quite as plain. I have no doubt but that the old corporation and its •adherents were Presbyterians and were affiliated with the Presbyterian denomination in every sense of the word, and that they broke the tie of brotherhood in an irregular and disorderly manner. For do I think it can be said that any fraud or imposition was practiced upon these non-English speaking people, us has been suggested, because the things that they did and saw ■and took part in could not fail to impress the most ignorant •■and careless persons that they were connecting themselves Avith and were a part of the old corporation with all its Presbyterial íormalities. I may pause at this point for a moment to explain the government of the Presbyterian Church. There is first the congregation or worshiping unit, consisting of individual members in every walk of life, who stand on an equality with each other so far as their ecclesiastical relations are concerned. These are governed spiritually by a body called the Session, chosen from their own number. The Session is governed by the Presbytery, a body consisting of delegates elected from each individual church within a certain prescribed geographical area. The Presbyteries, in turn, are spiritually controlled by the Synod, a representative body, meeting for each state, and the Synod by the General Assembly oE the Presbyterian Church. Thus is formed a compact and strongly-knit ecclesiastical body having a common purpose, with common objects, an.d bound together by valid promises and agreements, which promises and agreements may not be lightly broken, but, so far as property rights are concerned, are as binding and cogent as are agreements made concerning other rights of property.

We have seen what interest the Presbyterians of New Brunswick took in this struggling association prior to its organization into a corporation. We have seen that this corporation carried as part of its name the word “Presbyterian,” and that when its name was changed in the following year the word “Presbyterian” was retained. After its incorporation and its segregation from the First Presbyterian Church of New Brunswick, other things were done which still more strongly indicate to my mind' the intention of these people to form and retain the Presbyterian connection. The one hundred and seventy odd Hungarians who became members of the First church were dismissed to the new congregation after its formation, and until the final attempt at separation in 1912 the Presbyterian Church by its Presbytery, its synodical committee and its Session of the First church, exercised a fostering care over the spiritual welfare of this body of Hungarians, and gave them material aid in maintaining their organization. During the whole period of its existence they furnished money for its support, and in every way possible encouraged them by contributions and by advice to continue in their work. On April 9th, 1907, the Rev. Mr. Hamborszky was installed as pastor of the church; he was a Presbyterian in fact and in name; he was a graduate of a Presbyterian theological seminary; he had been a member of Presbytery of Lackawanna, and later became a member of the Presbytery of New Brunswick. His call from the congregation was presented to the Presbytery in full Session in his presence, and then and there acted upon by the Presbytery, and accepted by him. The installation ceremony took place in their own church building. It was widely advertised and took place in open meeting; a large crowd was in attendance, the church being full. There was a sermon in the Hungarian language, containing a charge to the pastor, and likewise- a charge to the people in the same language by one of the clergymen present, and tlie assent of the whole congregation to the whole proceeding was manifested by a vote of approval, in which there were no negatives. On one occasion the Presbytery met in the church building of the Magyar church on Hale street, and the women of the congregation furnished a noon-day meal to its members. They made a mortgage in 1905 on the Hale street property to the board of church erection fund of the Presbyterian Church, which, by the terms of the mortgage, ran without interest so long as the property remained in the Presbyterian connection. They contributed to the funds of the Presbytery; they sent delegates to its regular meetings, made to it reports of their progress, and submitted the minutes of the meetings of the Session of the church to it for examination and approval.

All these proceedings point in but one direction. They indicate beyond question that the Hungarians who belonged to the old corporation fully understood that they were Presbyterians and were bound by their Presbyterian connection. Least of all, can the Rev. Mr. Hamborszky find any excuse whatever for his unseemly and disorderly conduct in his endeavor to release himself from the Presbyterian control. It cannot be said that he did not understand what he was doing;- he is an educated man, perfectly familiar with the English language, and he fully understood every step which he was taking and which he was advising his congregation to take.

There is no doubt about the right of individual members of a church organization to secede therefrom at will. The same is true of any number of members of sucli organizations; but no number, however great the majority may be, has the right to secede and take the church property with it to the new affiliation, so long as there remains a faction which abides by the doctrines, principles and rules of the church government which the nnifed body professed when the land was acquired. True Reformed Dutch Church of Paramus v. Iserman, 64 N. J. Law 506. The question of law on this point was decided in the case of Schilstra v. Van Den Heuvel, 82 N. J. Eq. 155, affirmed March term, 1914, in the court of errors and appeals on this point. It was there said: “The rules of law relating to freedom of action by independent churches and congregations are different from those rules which apply to congregations which are affiliated with and are subordinate to higher judicatories. Independent churches may do what they please with their property, provided legal action is taken to that end, but when a religious society becomes affiliated with other religious societies and they unite to construct and maintain for their mutual advantage higher judicatories to which they subject themselves, then the individual society or worshiping unit holds its property and temporalities under an obligation to continue the affiliation until it can be broken by mutual consent, and if secession is attempted by a faction, however large or however small, such faction will not be allowed to carry the church property with it, certainly not so long as there is a loyal body which is recognized by the superior judicatory.” Citing American Primitive Society v. Pilling, 4 Zab. 653; True Reformed Church v. Iserman, 64 N. J. Law 506; Pullis v. Iserman, 71 N. J. Law 408; 24 Am. & Eng. Encycl. L. 354.

1 have, therefore, arrived at the conclusion that the original corporation was allied and affiliated with the Presbyterian denomination, as a matter of fact, and that the members understood and believed that they were so connected, and that, as a matter of law, it was not competent for the seceding members of the congregation to appropriate to themselves the church property described in the two deeds hereinabove mentioned, and that the deeds should be declared to be null and void and the property restored to its former owner, the Magyar Evangelical Beformed Church of New Brunswick, New Jersey.

I will advise a decree in accordance with these views.


source: Caselaw Access Project

author: Lewis, Y. C.

license: Public Domain

text:
    Battery Park National Bank v. Williams A. Hunt et al.
    [Decided June 8th, 1914.]
    1. In a creditor’s suit in aid of an attachment to recover property, the title to which was in the name of the debtor’s brother, evidence held to show that the purchase price of the property, the amount of a mortgage subject to which it was purchased, and the cost of improvements on the property, were paid with the debtor’s money, though part of the payments were made by means of checks drawn on accounts standing in the brother’s name, and hence the debtor, by virtue of a resulting trust, was the sole beneficial owner of the property.
    2. Evidence held sufficient to show that an assignment of a mortgage by the debtor to his brother was with intent to hinder, delay and defraud his creditors.

      Messrs. Conflict, Conflict & Boarflman, for the complainant.

      Mr. William L. Rae, for the trustee in bankruptcy.

      Messrs. BumTamblyn •& Colyer, with whom was Mr. Frederick Durgan (of the New York bar), for the defendants Williams A. Hunt and Ered M. Hunt.
   Lewis, Y. C.

This cause was brought to trial on the bill, answers and replications and cross-bill and answer to cross-bill and proofs. The original bill was filed by the Battery Park Fational Bank of New York, in aid of an attachment issued out of the supreme court of New Jersey at the suit of the complainant, against the property of Fred M. Hunt, one of the defendants.

The property described in the bill consists of a plot of land on Washington street, Newark, upon which there stood at the time of the filing of the bill three brick residences, a stable and a garage. The title to this land is in the name of Williams A. Hunt,, a brother of Fred M. Hunt. The bill charges, however, that the beneficial ownership of this property is in Fred M. Hunt, and that Williams A. Hunt holds the bare legal title as trustee for Fred M. Hunt.

The property was originally purchased from Luella K. Beecher, by contract dated November 20th, 1911. The agreed purchase price was $33,000, to be paid by the assumption of a first mortgage of $15,000, and of a second mortgage (called t-lie Katz mortgage in the testimony) of $6,500, and the payment of $11,500 in cash.

The purchase price was actually paid as follows: by the assumption of the two mortgages and the pajmient of three checks to the order of Beecher, on the Bankers Trust Company of New York, upon an account standing in the name of Williams A. Hunt. These checks were as follows:

November 20th, 1911........................$1,000 00
November 23d, 1911...............‘.......... 4,000 00
December 4th, 1911......................... 5,683 86
Or a total of.........................$10,683 86

The defendant Hunt accounts for the discrepancy between the $11,500 cash payment called for by the contract, and the $10,683.86 actually paid, by saying it was a credit allowed the purchaser on adjustment of interest on the mortgages and the taxes.

After the filing of the bill in this cause, Fred M. Hunt, on September 13th, 1912, filed a petition of voluntary bankruptcy in the southern district of New York; George F. D. Trask was appointed trustee in bankruptcy of his estate.

The said trustee thereupon filed a petition in this cause to be made a party. His petition being granted, he filed an answer by way of cross-bill, in which he claimed that the property described in the bill and now vested in him by operation of law as a part of the estate of his bankrupt. Fred and Williams Hunt answered the original bill and Williams Hunt answered the cross-bill.

An order was made by the Hnited States district court of the southern district of New York, under section 6W of the Bankruptcy law, preserving the lien of the above-mentioned attachment for the benefit of the estate of the bankrupt. This order has been made a file of this court in this cause.

The trustee has filed, pursuant to the provisions of the Bankruptcy act, in the register’s office of Essex county, a copy of the decree adjudicating Fred Hunt to be a bankrupt.

The complainant and trustee in bankruptcy have a common interest. The complainant makes no claim under its attachment to preference over the other creditors.

The complainant and the trustee in bankruptcy take the position that the proofs in this cause are sufficient to sustain their claim that Fred M. Hunt was the beneficial owner of the property in question upon any one of three grounds, that is to say — ■ first, that the admissions of Williams Hunt, coupled with the evidence of the dominion exercised by Fred M. Hunt over the property, is sufficient to establish the existence of an express trust agreement between the two brothers, whereby Williams agreed to hold the property in trust for Fred, and secondly, that the dominion exercised by Fred M. Hunt over the bank account, out of which the original purchase price was paid, and 1he proved fact that Fred expended his own money in paying off a second mortgage on the property, and in erecting an expensive stable and a garage upon the-property, establish a trust estate in Fred resulting from the payment by him of the purchase price, and thirdly, that if it be assumed that it was originally intended by the two brothers that Williams should be tlie beneficial owner, it is apparent that payments made by Fred for the property, and for improvements upon the property, were voluntary conveyances made by Fred and accepted by Williams for the purpose of hindering, delaying and defrauding the creditors of Fred, whereby a constructive trust or equitable lien exists in favor of Fred’s creditors. I shall consider the case as one of a resulting trust.

Williams Hunt was examined at great length before the referee in bankruptcy proceeding. A part of his examination in that matter has become a part of the testimony in this cause. His account of the payment of the purchase price was that the property was taken subject to a first mortgage of $15,000; that $1,000 was paid by the check of November 20th, 1911, and that $18,000 was paid Beecher in cash. “In bills,” “all currency,” “cash.” The examiner was called to the telephone. Hpon his return, it appears by Williams Hunt’s testimony in the present case, that the following took place:

“Q. As I left the room your brother, the bankrupt, spoke to you. What did he say to you?
“A. My brother?
“Q. Yes. Mr. Durgan, is that competent?
“Mr. Boardman — Certainly; the witness is on the stand, and he spoke to the bankrupt, or the bankrupt spoke to him.
“The Witness — I will have to ask him (indicating the bankrupt).
“Mr. Durgan — See what he said.
“The Bankrupt — -I will tell you.
“Mr. Boardman — Never mind.
“The Witness — He said in regard'to when I paid the $18,000. I should have — it should have been mentioned there that $1,000 was deposited, and that there was $17,000 instead of saying $18,000.
“Q. That is what your brother told you, is it?
“A. Yes, sir.
“Q. You had forgotten that?
“A. I had forgotten that. I supposed, in fact, you would take it for that.”

It is impossible to reconcile this evidence with, any theory of a beneficial ownership of this property vested in Williams A. Hunt. Either he was in such darkness as to the transactions as to discredit any notion that he owned it, or he was engaged in a conspiracy with his brother to conceal the true facts concerning the purchase. The conclusion necessary to be drawn from that hypothesis is the same as the other, for if Williams was the true, beneficial owner, there was no reason for the concealment of the fact that the purchase price had been paid by his own checks.

He went further in his examination before the referee. He stated that this $18,000 cash had been taken from a mahogany money box, which he owned, and in which he kept a portion of his wealth. This box had contained, according to his account, $80,000 on January 1st, 1901. The origin of this fund, as accounted for, in the bankruptcy proceeding, was his honest toil for a period of a few years. He was cross-examined further as to this fund of $80,000, in the present case, and he testified that it had its origin in two very remarkable gambling transactions, each of which netted him the precise sum of $15,000. This fund of $80,000 has been used, if the Hunt brothers are to be believed, in paying for the property in question, and in the purchase from Ered of other portions of his estate, and for no other purpose. I am forced to the conclusion that the story of this fund of $80,-000 is a fable.

As has been said, the $10,683.86 actually paid to Mrs. Beecher was drawn from a bank account in the Bankers Trust Company standing in the name of Williams A. Hunt. The body of these checks were, in each instance, written by Ered Hunt. They Avere merely signed by Williams, and Williams testified that Ered Hunt had full authority to sign checks on this account. Williams’ ignorance as to the facts in connection with this account is equal to his lack of information as to the facts relating to the purchase of the property. The account was originally opened Avith the Mercantile Trust Company, which company was after-wards merged with the Bankers Trust Company. Williams has never been either to the Mercantile Trust Company nor to the Bankers Trust Company. He does not know how long he has had the account. He never “’bothered” with his bank deposit book. He does not knoAv Avhen the merger between the two trust companies took place. He says that part of the money in this account came out of the mahogany box, but he cannot tell how much of the money that came out of the box went into the bank account.

When, in November, 1912, he was examined in the bankruptcy proceedings, he could not tell whether he then had a check book for this account or not. He could not then recall the number of checks he had draAvn on this account during the year 1912. He could not tell whether it would be more than twenty or less than twenty. In fact, he had “no recollection whatsoever.” The one definite assertion that he ventured to make was, that his balance in this account on January 1st, 1912, was about $10,-000. A copy of this account was produced in this cause and showed the balance on that day to have been $758.48.

On the other hand, Fred M. Hunt had complete dominion over this account. He drew all the checks and could sign any check that he chose to sign.

The check for $1,000, of November 20th, 1911, mentioned above, was produced and offered in evidence before the referee in bankruptcy. It bore the serial number 7100. An examination of a copy of this account, furnished by the banks, shows this check as the sixth withdrawal. A later check, in this same series, is numbered 8. On the stand, Fred Hunt admitted that the number had been changed, but denied that any sinister purpose had prompted the alteration.

A small pocket check book, purporting to show this account, was produced before the referee. From the-cross-examination of Williams Hunt in this cause it appears that the earlier stubs had been torn out from this book, and all the entries intended to show the dealing with the account in question were crowded upon two stubs. This book should have shown the three Beecher checks. But, if it did, counsel who examined the witness apparently failed to detect it.

This check book, though called for by the complainant, was not produced at the trial of this cause. Fred Hunt was examined as to the method employed in keeping this check account. He stated that each check -was entered upon a corresponding stub. It is evident, therefore, that the stub cheek book produced before the referee was not a genuine document.

It is quite evident, therefore, that the money that went into the purchase of this property was the mcney of Fred M. Hunt, though drawn from an account carried in the name of his brother.

The property was combed by Mrs. Beecher to Williams A. Hunt, subject to a second mortgage of $6,500. This mortgage was paid off on January 8th, 1912, by three checks of Fred M. Hunt, drawn.on the Battery Park National Bank, .two of which were drawn to the order of one Katz.

After the election of Mr. Trask as trustee, Fred M. Hunt produced before the referee and delivered to Mr. Trask a bundle of about three hundred checks, drawn on the Battery Park account, covering a period of several years. He also produced a bundle of checks drawn on an account that he carried in the Mechanics and Metals National Bank of New York, and six checks drawn on an account in the Bankers Trust Company, standing in his own name.

He also produced what purported to be a stub check book on the Battery Park National Bank, another on the Mechanics and Metals bank. He testified that his bank book and stub book on the Bankers Trust Company account had been “lost in the shuffle.” This last account, by the way, was by far the largest account carried by 'Fred M. Hunt, showing deposits during a period of eighteen months of $89,344.99, and except for the months of January, February and April, 1913, this account was the least active of all his numerous accounts.

The three so-called Katz checks were not. among the large bundle of Battery Park checks delivered to Mr. Trask. It is quite apparent that they were withheld; and further, that the stub check books delivered to Mr. Trask at the same time were manufactured for the occasion. There are many things that point to this conclusion. Only one need be referred to — that is, that the checks covering the period in question, all, or practically all, bore the vignetted picture of a ship with an appropriate motto. The checks remaining in the stub book bore no such vignette. Yet, Fred M. Hunt had testified before the referee, speaking of these checks and stub books: “I will not say they correspond in number, but they were taken from those books'’

In the face of this testimony, the story of these brothers, to the effect that Williams gave Fred $0,500 in cash with which to pay this mortgage, which money Fred gave out in driblets to his customers and friends, and gave in its place his own checks in payment of the mortgage, is entitled to little, if any, weight. The brothers contradicted each other as to the date of this payment by Williams to Fred, and the friend that they bring in to corroborate them, contradicts them both. That this mortgage was paid by Fred M. Hunt with his own money is proved to my satisfaction.

Since the purchase of this property there has been erected upon it a stable and a garage. The stable was erected by William L. Blanchard, or what seems to he the same thing, by the William L. Blanchard Company.

There was paid to Blanchard, on account of this work, $17,-250. Of this sum, $7,000 was paid by six checks drawn by Fred M. Hunt on his account in the Bankers Trust Company. Fred M. Hunt now admits giving three of these cheeks, or $3,500, but the payment of the whole $7,000 is so completely proved by Blanchard’s hooks and the records of the Federal Trust Company of Newark and the Bankers Trust Company of New York, that counsel for defendant did not attempt to dispute the fact. Before the referee, however, Fred had testified, speaking of the checks drawn on this very account, as follows:

“Q. Do you want to swear that none of these went to William L. Blanchard?
“A. No, sir.
“Q. None of them did?
“A. No, sir.
“Q. Did, any of them go to the Newark contract?
“A. No, sir.
“Q. Did any go to Newark?
“A. No, sir; I don’t think so.”

These are the checks that have been “lost” by Fred M. Hunt.

Two thousand dollars of this $17,250 was paid by checks drawn on accounts standing in the name of Hunt Brothers. But it is clear that Fred M. Hunt’s signature alone was recognized by the banks. Two other cheeks were given to Blanchard, one for $750 and one for $500, drawn on the Newark Trust Company, on an account opened by Fred M. Hunt on May 8th, 1912, in the name of Williams A. Hunt. When Fred opened this account, he filed with the bank a power of attorney from Williams, authorizing him, Fred, to sign Williams’ name to checks and notes. At the time Fred opened this account, he had broken with the complainant, he was heavily indebted to the Mechanics and Metals National Bank, and liis balance in the Bankers Trust Company was reduced to $105.97. He had made every preparation to fail. During the preceding two weeks he had given notes to five o£ his creditors. There had been recorded a deed of his home property to his friend Fred Brown, an assignment to Blanchard of a mortgage of $4,500, an assignment to his sister of an interest in another mortgage, and on the same day, an assignment of his interest in his uncle, Samuel I. Hunt’s estate to Williams A. Hunt, for a stated consideration of $12,000.

These two payments to Blanchard, made by checks on this account, were clearly made with Fred’s money.

The mortgage of $4,500, assigned to Blanchard as above mentioned, was assigned rvitliout consideration, and wdien redeemed by two payments of $2,000 and $2,500, respectively, credits for those sums were given by Blanchard on account of this construction work.

The balance of the payments to Blanchard w7ere made in cash by Fred M. Hunt, who took receipts therefor in the name of his brother.

Other and smaller sums were paid to other contractors, while the evidence in connection with these payments is not as clear and satisfactory as in respect to the payments of Blanchard, yet the preponderance of evidence is in favor of their having been made by Fred M. Hunt. There is no satisfactory proof of their having been made l)}7 Williams A. Hunt.

It is therefore clear that Fred M. Hunt was, at the time of the filing of the bill in this cause, and at the time of the filing of the petition in bankruptcy, by virtue of a resulting trust, the sole beneficial owner of the premises described in the bill of complaint.

The cross-bill seeks further to set aside a conveyance of a one-half interest in a certain mortgage given by one Churchman to Fred and Williams A. Hunt. This half interest Fred assigned to Williams by assignment dated October 10th, 1911, which assignment w7as not recorded, however, until April 27th, 1912. On the last-mentioned day, Fred M. Hunt handed to Blanchard this assignment, together with a deed of his home, made out to Ered Brown, and an assignment of the $4,500 mortgage above mentioned. He asked Blanchard to have the deed and the assignment of the Churchman mortgage recorded in the Essex county register’s office. Blanchard understood the errand and performed it through his own attorneys, as the records show. It is not necessary to rely upon the declarations of Ered M. Hunt made to Blanchard to find this' assignment fraudulent. Ered had the custody of this unrecorded assignment six months after the date of its execution. There are no witnesses to the payment of the consideration for this assignment. Williams says that he got tire money, $1,150, to pay Ered out of his pocket. That seems to him a perfectly satisfactory explanation as to the source and origin of this fund.

Williams A. Hunt’s alleged reason for not recording the assignment is practically a confession of fraud.

“Q. Was there any reason connected with your brother why you did not record these papers and these instruments at the time when they were given?
“A. I thought more than likely he would regain his feet again — come to the front; that he being a brother of mine, I did not want to publish him all over. * * *
“Q. Did you say anything to him about the hazardous character of his business or anything like that?
“A. Nothing more than that I thought he was not doing extra good, as he wanted to be borrowing all the time.”

The foregoing was brought out by his own counsel upon direct examination.

This admission has a double bearing on the case. It was argued by counsel for the Hunts that it was impossible to believe that Ered and Williams had begun as early as December, 1911, to make plans for the protection of Fred’s property from his creditors. Yet, here we have Williams testifying that that object was in his mind as early as October 10th, 1911.

My conclusion is that this assignment of the Churchman mortgage was given by Ered and accepted by Williams with the intent tc hinder, delay and defraud the creditors of Ered, and is therefore void. Williams is chargeable with one-half of the interest collected upon this mortgage since its assignment to Mm.

I shall advise a decree in accordance with these views.


text:
    Anna M. Decker and Joseph Diebold, executors, &c., of Pauline Diebold, deceased, v. Scottish Union and National Insurance Company of Edinburgh. Anna M. Decker and Joseph Diebold, executors, &c., of Pauline Diebold, deceased, v. Commonwealth Insurance Company of New York.
    [Decided June 30th, 1914.]
    Complainants, in a suit against an insurance company, were not entitled to reformation of an insurance policy so as to make it payable to themselves as executors instead of a third party to whom it was made payable, where there was no mutual mistake upon the part of the parties to the suit and no fraud upon the part of the insurance company.

      Mr. Cecil S. MacMahon, for the complainants.

      Mr. Alfred S. March, for the defendants.
   Lewis, Y. C.

The complainants desire a reformation of a policy of insurance covering the property of one Joseph Diebold. As is apparent from the pleadings, the right of Joseph Diebold to have it insured is unquestioned. The bill asserts that Joseph Diebold and Anna M. Decker are executors of Pauline Diebold, deceased. Among the assets of the estate of Pauline Diebold which came to the hands of her executors was a mortgage. A policy of insurance had been issued to Joseph Diebold acting, not as an executor, but as an individual. This bill is hied to reform the said policy of insurance so that it may be made payable to the executors of Pauline Diebold. It is quite evident from an examination of the papers in this case that there was no mutual mistake on the part of the parties to this suit and no fraud on the part of the defendants is alleged. There was no contractual rélationship between the parties. The executors of Pauline Die-bold were not parties to the contract of insurance and never became parties to it. Joseph Diebold says he told one Harrison to have the polic3r issued to the executors of Pauline Diebold and Harrison evidently did not carry out these instructions. The insurance companies had no notice whatever of the wish of Die-bold in this respect. The complainants’ bills therefore fail to show any mutuality of mistake-or right of reformation. The case as presented by the bill is one of mere neglect for which reformation cannot be had in equity. The fact that the com■pla inants are not parties to the contract of insurance, it seems to me, disposes of their right of consideration in this court, but aside from this, assuming that they were such parties, I do not feel that they present a case for equitable relief. The cases referred to by the solicitor of the defendants on his argument sustain the position taken by him. Doniol v. Commercial Fire Insurance Company of New York, 34 N. J. Eq. 30; Henderson v. Stokes, 42 N. J. Eq. 586, 589; Ordway v. Chace, 57 N. J. Eq. 478; Rowley v. Flannelly, 30 N. J. Eq. 612; all deal with the questions involved in this issue. The opinion of Vice-Chancellor Howell in the case of John Plockzek v. St. Paul Fire and Marine Insurance Co., not reported, but brought to- the attention of the court, is very much in point.

My conclusion is that the demurrers must be sustained and the bill of complaint dismissed.


text:
    Frederick K. Fish v. A. Gould Harrison et al.
    [Decided July 10th, 1914.]
    Evidence held to require a finding that complainant was a stockholder in a certain corporation as distinguished from a holder of the shares thereof as collateral to a loan, and was entitled to maintain a bill against the corporation’s treasurer for an accounting.

      Mr. Edward Maxson, lor the complainant.

      Mr. Robert II. McQarter and Mr. J. Henry Harrison, for the ■defendants.
   Lewis, Y. C.

This is a bill asking for an accounting from A. Gould Harrison, treasurer of the Harrison Milling Company, and that ■fifteen shares of stock now held by him be transferred to the corporation, it being alleged that they were purchased with the funds of the corporation.

The complainant’s right to an accounting is resisted, in the first instance, on the ground that he is not a stockholder of the Harrison Milling Company as is alleged in the bill. It is asserted that he merely made a loan to the company of $4,-000 and never purchased forty shares of its stock for this amount but held the stock as collateral security for his loan. The only basis for this claim that I find is the evidence of the complainant himself when undoubtedly he inadvertently speaks of taking the stock “'as collateral for my money.” No other testimonj'- whatsoever is offered to indicate 'that the stock was taken as collateral for a loan. The books show no record of a loan made by the complainant, but they do show the issuance of forty shares of stock to Frederick K. Fish. He exhibits a certificate of stock for these forty shares. The resolution of the board of directors passed June 18th, 1903, directed the sale of the stock to Fish. He was the president of the corporation for many years and a member of the board of directors. He attended the meetings of the corporation and participated in its business affairs. He was not paid interest on his money but was paid a salary of $100 per month and dividends. I am satisfied by the evidence that he is the 'bona fide holder of forty shares of the capital stock of the company.

The bill sets up several alleged overdrafts on the part of the treasurer, Harrison. There is no doubt ,that at the time when Fish in 1903 acquired his stock Harrison had overdrawn his account to a considerable extent. It is undoubted also that when Fish became such stockholder he was informed of the practice of overdrawing, it being explained to him by Harrison, and some time in 1905 he was informed further by the defendant that he had drawn his salary which up to this time amounted to $20 per week, and, in addition thereto, had overdrawn to the extent of $4,500. It was at this time that the complainant assented to the proposition that the salary be increased to $40 per week, and that the overdrafts be charged off and the defendant be relieved of responsibility for it.

After this complainant appears to have taken a new stand. He says that he assented to no further overdrafts, although the evidence indicates that they continued; for in August, 1906, we find an overdraft of $1,000 above the salary; in August, 1908, an overdraft of $1,500 appears; and in 1909 about $1,000 drawn in excess of salary is shown. These were all overdrafts bjr the treasurer. The defendant claims that there was a clear understanding between complainant and himself that the practice of overdrawing should continue and it is urged by his counsel that the resolution of 1905' is strong corroborative evidence of the truth of their client’s claim. While it appears from the testimony that Fish knew about some of the overdrafts— one at least — it being shown that he, Fish, wrote an entry in the minute book, page 40, immediately after one of these later resolutions, i. e., later than the resolution of 1905. He denies seeing the resolution, and says that he had no knowledge of these acts of Harrison and that he never assented to the situation.

In March, 1910, Eish complained of the management of the corporation and called a meeting. He alleges that he asked for an audit of the books, which was refused by the defendant. It is apparent that at this meeting the question of the overdrafts subsequent to 1905 and the general financial affairs of the corporation were a matter of serious controversy. After this meeting Eish brought his action in this court. It is urged that Eish, as president of the corporation and the holder of forty shares of stock, could have asserted his position some time before, while he was in close touch with the affairs of the company, and thus have avoided lengthy litigation, still on the demurrer to the bill filed by the defendant the court has said that the complainant has not been guilty of laches. A. Gould Harrison was in actual charge of the business, and the complainant claims to be in the dark as to the condition of its affairs. The books were kept in such manner as would necessarily make it difficult to ascertain the exact financial condition of the company without careful examination. The accounts are not intricate, but they are entangled. They, however, can be analyzed and explained. In such a case equity has jurisdiction, if the complainant’s right to apply is established. Charges have been made that Harrison has been guilty of improper conduct in the management of the affairs of the corporation. He may be entirely innocent of these charges, but an accounting alone can establish that fact. I am satisfied that in this case the complainant is entitled to the relief he seeks. In what manner and by whom the account shall be stated, I shall determine at the time the application is made to me to settle the decree.

As to the second question involved in this controversy, I am not satisfied that the Beyea stock was purchased with the funds of the corporation, and I shall not dispose of this issue until the account has been taken. Some further evidences of this transaction which may throw light upon it may develop upon the accounting. I feel satisfied that the brother of the defendant has told the truth about his part in the transaction. The money received from the purchase the defendant claims to have loaned to the company. The expert employed by the complainant fails to find an entry on the books showing the loan by Harrison, while he admits that the books do disclose that the company received $1,800 from some source or other. The defendant claims that he applied the money thus loaned to his purchase of the Beyea stock. However, I deem it advisable, under the circumstances, to retain the disposition of this question until an accounting has been had.

A decree will be advised in accordance with the views herein expressed.


text:
    The Mayor and Council of the Town of Boonton v. United Water Supply Company.
    [Decided July 25th, 1914.]
    1. Where a contract by a water company to supply water to the inhabitants of a town provided that the town might purchase the works and “at any and all times” might inspect the books and vouchers of the company, the town was entitled to exercise such right of inspection, though it did not exercise its option to purchase; nor was it a valid objection that the inspection privilege was not mutual.
    2. Where a water company’s contract with a town provided that the town at any and all times should have the right to inspect the water company’s books and papers, the town was not limited to mandamus to enforce such right, but properly sought such relief by suit in equity.

      Mr. Frank II. Pierce, Mr. Charles E. Scribner and Mr. Robert II. McCarter, for the complainant.

      Mr. Elmer King, for the defendant.
   Lewis, Y. C.

This is an application by the town of Boonton for an inspection of the books and vouchers of the United Water Supply Company. This right is claimed under the terms of a contract made between complainant and Lewis Yan Duyne and the Boon-ton Water Company. The defendant succeeded to the Boonton Water Company by purchasing all its property, including the contract with the town, at a sale in foreclosure proceedings.

Erom my examination of the case I have reached the conclusion that the relief prayed for by the complainant should be granted. There is no doubt in my mind that read in connection with the other provisions of the contract the words “at any and all times,” which appear in paragraph 11, mean that the water company bound itself to give the inspection, even if The town did not exercise its option to purchase. The privilege, it appears, was incorporated in the contract to give Boonton a chance to know the true conditions before it should agree to exercise its option. This is frequently done where the public is concerned and is to be the purchaser. And it is no doubt true, that without such right it would be difficult to get the people at large to sanction the making of a contract such as the one under consideration. There is, of course, consideration for the agreement to give this inspection as the town has been using the water supplied by the water company and paying for the same under the agreement ever since-it was executed.

The suggestion made by counsel for the defendant, that the relief should not be granted because there is a want of mutuality if this is done before the town exercises its option, cannot prevail in view of our decisions, and further, this contract by its terms’ gives this right of inspection to the town authorities — a right not given to the company.. In other words, one party to this contract has a right which the other has not. The principle of mutuality cannot apply under these circumstances. The opinion of Chief-Justice Gummere in Marvel v. Jonah, which Mr. McCarter called to the court’s attention upon argument and which ivas filed on July 17th last, deals with this subject with great clarity and is very much in point. See, also, Page v. Martin (Court of Errors and Appeals), 46 N. J. Eq. 585; Madison, &c., Association v. Brittin, 60 N. J. Eq. 160; Philadelphia Ball Club v. Lajoie, 51 Atl. Rep. 973.

I have given consideration also to the argument made by counsel for defendant, that mandamus was the proper procedure for complainant in this issue, but I think that the action has been properly taken in the court of chancery, and that the remedy for the town is not as urged by counsel for the defendant. In the case of State v. Elizabethtown Water Co., ante p. 216, which was cited, it was the statute that gave the state water commission the right to inspect the books of the water, company. ■ Proceedings to enforce the said right in a court of competent jurisdiction were provided for by the statute. The right in the case now before us arises out of the contract between the parties; in the Elizabethtown Case the right to examine arose purely out of a legal statutory duty enforceable only in the supreme court by mandamus.

Fo hardship is suffered by the water company by an order for inspection, as such order can be so framed as to prevent the inquisitive but disinterested person or any competitor, if there be one, from coming to knowledge of the company’s affairs.

In accordance with these views an order for inspection may be entered.


author: Lewis, V. C.

text:
    McClintic Marshall Construction Company v. The Board of Chosen Freeholders of the County of Hudson et al. William B. Waldo v. The Board of Chosen Freeholders of the County of Hudson et al. Edmund B. Vanderbilt et al., partners, &c., The Board of Chosen Freeholders of the County of Hudson et al.
    [Decided September 8th, 1914.]
    1. A contract for the construction of a steel and concrete viaduct provided that the contractor should pay the board of freeholders of the county for delay in completing the work, if any, beyond the time fixed for completion at the rate of $1,500 per month on the first section, $600 per month on the second section, and $650 per month on the third section, which sum was stipulated to be the true value of the use of the land to the board of freeholders and the true damages it would sustain by such delay, which the board was authorized to retain out of any moneys due or to become due to the contractor. — ■Seli, that the damages provided for were liquidated damages, and not a penalty.
    2. Where three contracts were entered into between defendant board of freeholders of a county and a contractor for the construction of a viaduct, and each provided that the board or its engineer should designate the day and place or places when and where the contractor should commenee work, and that the contractor should complete the same within eighteen months thereafter or be subject to specified deductions for delay as liquidated damages, the contractor was entitled to a notice from the board or its engineer, plainly stating when the contract term would begin to run against him as to each section of the work, and, no such notice having been given, he was under no liability for delay.
    On pleadings and proofs.

      Messrs. GortlanM & Wayne Parker, for tlie complainant, Mc-Clintic Marshall Construction Company.

      Mr. Randolph Perkins, associated with Mr. Frank M. Patterson (of the New York bar), for the complainant, 'William B. Waldo, and his trustee.

      Mr. Thomas F. JJaight and James J. Murphy, for the defendant the Board of Chosen Freeholders of the County of Hudson.

      Mr. Joseph 8. Parry, for Edmund T). Vanderbilt and Henry H. Vanderbilt, executors of the estate of Jacob Vanderbilt, deceased.

      Mr. Joseph. F. Av.tenrieth,, for Robert W. Hunt Company.

      Mr. Theodore Rurode, for Mack Manufacturing- Company.

      Messrs. Hudspeth., Rysdyk <6 Garrison, for Citizens National Bank of Toranda and Mechanics Bank of Groton.
   Lewis, V. C.

These actions have been consolidated. They were brought under the approved March 30th, 1892, and by the decision in the court of errors and appeals in this state in the case of Delafield Construction Co. v. James R. Sayre, Jr., et al., such actions must be brought in the court of chancery.

“Act to secure the payment of laborers, mechanics, merchants, traders and persons employed upon or furnishing materials toward the performing of any work in public improvements in cities, towns, townships and other municipalities in this state,”

By stipulation of counsel the question of damages has been submitted to this court, counsel of the respective parties having , reached an agreement among themselves in regard to the other questions involved in the suits.

The suits are brought for the purpose of obtaining money alleged to be due to the various complainants for work done and materials furnished in the construction of a municipal improvement known as the “Fourteenth Street Viaduct.” This structure was erected under three separate contracts, which were entered into between the Owego- Bridge Company, a corporation, and the board of chosen freeholders of the county of Hudson, in June, 1907. For the purpose of erection the viaduct was divided into three sections and a separate contract was entered into for each section. The viaduct is built in the shape of the letter “Y,” the first section extending from Willow avenue, Hoboken, to the point where the two branches of the “Y” separate; the second section is the projection on the left, and the third section is the projection on the right. The contracts were subsequently assigned by the Owego Bridge Compaq to the Syracuse Bridge Company, one of the defendants in these actions, this being done with the consent of the board of freeholders, and the Syracuse Bridge Company took upon itself the fulfillment of all the duties and obligations contained in the original contract. The complainants and the other defendants are subcontractors. The Mc-Clintic Marshall Construction Company had the subcontract for the steel work; William B. Waldo had the subcontract for the concrete, paving, excavation, &e., and the other parties various other works. The first and second sections were completed on June 1st, 1912, and the third section on November 7th, 1912.

The county seeks to deduct from the moneys which would otherwise be due, damages for delay in completion, which is resisted by the other parties to the suit.

Each of the contracts provides (paragraph D, page 54 of printed book)

“that the contractor shall commence work on such day and at such place or places as the board of chosen freeholders or the engineer may designate, and progress therewith so as to complete the work in accordance with this agreement, on or before the expiration of one year and six months after being directed to begin work,” etc.

The contract further provides (same section) as follows:

“And in the computation of said time (expressed in days or parts of days) during which the work, or any part or section thereof, has been delayed in consequence of the condition of the weather, or by any act or omission of the parties of the first part (the board of freeholders), or strikes beyond the control of the party of the second part (the contractor) whereby the receipt of material is delayed (all of which shall be determined by the engineer, who shall certify the same in writing), and also the time during which the prosecution of the whole work is suspended by the engineer, shall be excluded. But if the performance of the contract shall require work or materials in greater or less amounts or quantities than those mentioned and set forth in the engineer’s estimate, then the said time will be increased or diminished as much as the engineer shall deem just and reasonable and fairly proportionate to the amount of said increase or diminution.”

It appears that the contractor, which was then the Owego Bridge Company, was ordered to begin work on September 19th, 1907, at the intersection of the West Shore railroad and Fourteenth street, Hoboken. The communication containing this order is dated September 5th. 1907, and is signed by the engineer. This communication was acknowledged on September 6th, 1907, by the Owego Bridge Company. The place which was designated to begin the work was on section 1. On September 27th, 1907, the Owego Bridge Company wrote to the engineer, as follows:

“We find that the board of freeholders have not secured any property whatever on the line of the Fourteenth street viaduct, in Hoboken, so we can commence the sub-structure work to any advantage, being confined to the street entirely. This, as you know, is a great disadvantage to us, and will make us extra expense in doing this work. We, therefore, want to give you notice that all this will be taken into consideration as to the time that we commence the contract. We will want to be allowed all extra time that we lose in any delay caused by our not having the entire right of way and property so we can work to an advantage.”

On December 31st the engineer wrote:

“Mr. A. B. Mattery,
“Owego Bridge Company.
“In reply to your question for the extension of time for the three contracts known as sections 1, 2 and 3, and specifications for the 14th Street, Hoboken, viaduct, I am advised by our counsellor, Mr. John Griffin, that this work is not officially commenced until all the land is secured on each of the sections. The land for the first section will be secured about the 15th of February, 1908, and the eighteen months specified in your contract should commence on that date, if the land is secured. At present writing we cannot even give an idea when all .the land will be secured for the other sections. We will most likely secure the Holland property next month, which will give you sufficient area to secure crushed stone for foundations and permit the erection of the steel work.”

The last piece of property on the right of way of section 1 was acquired on September 30th, 1907, but the owner was not actually ejected from the property until November 1st, 1908. The last piece was acquired on section 2 from the owner on June .25th, 1909, and on the third section, the last piece was acquired on July 3d, 1908.

Work was started on the first section in the latter part of October, 1907. The board of freeholders contend that the contractor was verbally notified to begin work on the second section on April 1st, 1908, and it will be noticed that this alleged notification was before all the land on that section had been acquired. The board of freeholders also contend that work on the third section began in September, 1908.

The contract provides, clause “E” (page 55 printed form) :

“that the contractor shall pay the board for delay in the completion of the said work, if any, beyond the time fixed for completion (unless the same be extended by a proper authority, or permissible under this contract) at the rate of (different amounts as to each section, as will be hereinafter set forth) per month, which said sum it is hereby stipulated and agreed is the true value of the use of said land to the board and the true damages it will sustain by such delay, which said sum the said board is authorized and empowered to retain out of any moneys due or to grow due to the contractor.”

On the first section the damages were fixed at the sum of fifteen hundred dollars ($1,500) per month; on the second section, six hundred dollars ($600) per month, and on the third section, six hundred and fifty dollars ($650) per month.

Counsel for tlie various claimants have raised two questions regarding the right of the county to claim allowance for delays—

First. That the moneys specified in the contracts-to he paid by the contractor for delays are penalties and not liquidated damages.

Second. That the county itself caused delay to the contractor in the prosecution of the work, and is, therefore, not entitled to avail itself of -the right to claim the damages which the contract provides is payable to it for delays.

Of course, the county board will be held to a strict performance of the contracts — that is, it must perforin all the conditions which are requisite for it to perform before the contractor can be held liable for liquidated damages. Outside of the question of liquidated damages, however, compensatory damages would be allowed if there were unreasonable delay in the prosecution of the work.

There is no doubt, in my mind, that the damages provided for in the contract are, under the cases in this state;, liquidated damages.

See Monmouth Park Association v. Wallis Iron Works, 55 N. J. Law 132: Robinson v. Centenary Fund, 68 N. J. Law 728; Moore v. Durnam, 63 N. J. Eq. 96; Brown v. Norcross, 59 N. J. Eq. 427; Gussow v. Beineson, 76 N. J. Law 209; Jersey City v. Flynn, 74 N. J. Eq. 104; affirmed, 76 N. J. Eq. 607; Tilton v. McLaughlin, 83 N. J. Law 107; Van Buskirk v. Board of Education, 78 N. J. Law 650.

Under the evidence, however, I do not feel that liquidated damages could be allowed — that it would be inequitable. There were three 'contracts and each one contained the clause that the board of chosen freeholders or the engineer were to designate the day and the place or places when and where the work was to commence. I shall find that the contractor was entitled to three distinct notices, one for each of the sections, clearly notifjdng him when the eighteen months began to run against him in each case. I think he was clearly entitled to that, and if he was left in doubt about such a vital matter, he should have the benefit of it. He was notified by the engineer (who had the necessary power under the contract to give such notice) to commence work on section 1. Afterwards, the engineer clearly countermanded that order, according to my view, by his letter to Mr. A. H. Mallerj1' on December 31st (supra), and thereafter, my finding is, that the contractor did not receive any sufficient notice that would bind him to pay the liquidated damages, and the same is true as to sections 2 and 3, so far as the lack of proper notice sufficient to bind the contractor to pay liquidated damages is concerned.

In the case of Hoey v. Jarman, 39 N. J. Law 523, I find the rule there stated to be, that where there is ambiguity or obscurity which the other parts of the instrument do not explain, it is to be construed against the party giving the contract.

As I have already found, I do not feel that liquidated damages should be allowed, and I do not think that there has been any sufficient evidence produced from which I could draw any conclusion with respect to the allowance of compensatory damages. The evidence convinces me that the entire course of conduct and dealings between the board and the contractor was such as to evince an acquiescence on the part of the board in the length of time actually taken to complete the work.


author: Backes, Y. C.

text:
    Edmund Wilson, attorney-general of the State of New Jersey, v. Board of Chosen Freeholders of the County of Gloucester.
    [Argued March 5th, 1914.
    Decided June 1st, 1914.]
    1. A monument erected by the state on land owned by a county, though firmly imbedded in the ground and intended to be a permanent structure, retains its independence of the realty and its character as a removable fixture, and title thereto does not pass to the county; an agreement being implied from the county’s consent to its erection that it was to remain personal property.

      2. A county, by contributing the land for a monument erected by the state in commemoration of a battle, ceded the use of the land to the state, and the state acquired an easement to endure as long as the land should be used for the purpose to which it was dedicated.
    3. Under P. L. 1905 p. 168, providing for the erection of a monument, and giving its care and supervision to the board of chosen freeholders of the county of Gloucester, and Joint Resolution No. 5 (P. L. 1909 p.-51/9), authorizing a patriotic society to place upon such monument inscriptions explanatory of the battle in commemoration of which the monument was erected — Held, such society, in making room for the tablets bearing such inscriptions, had power to remove a tablet officiously put on the monument by the commission which erected it.
    4. If the inscription on one or more of the tablets placed on a monument erected by the state pursuant to Joint Resolution No. 5 (P. L. 1909 p. 51/9) violated the law, the power to correct it was a prerogative of the state to be effectuated through proper channels, and the board of chosen freeholders of Gloucester county, entrusted by statute with the care and supervision of such monument, had no right to forcibly remove the tablet.
    On information, &c.

      Mr. Nelson B. Qaslcill, assistant attorney-general, for the state.

      Mr. John Boyd Avis, for the defendant.
   Backes, Y. C.

The state erected a memorial statue on park lands of the defendant known as Fort Mercer, in Gloucester county, to commemorate the battle of Bed Bank fought during the revolutionary war, which upon being completed was delivered into the "care and supervision” of the board of freeholders of Gloucester county, the defendant, as provided by chapter 79 of the laws of 1905, p. 163. A commission appointed under the act chose the design of the monument and contracted for its completion, and selected the site in the park, as it was empowered to do. The Sons of the Bevolution in New Jersey placed on each of the four sides of the monument a tablet with inscriptions explanatory of the battle, as authorized by a joint resolution of the legislature of 1909. P. L. 1909 p. 519. The tablets had 'the approval of the committee named in and as required by the resolution. In putting on these tablets it was necessary to displace one which the monument-building commission had affixed, the inscriptions upon which dealt chiefly with facts attending the building of the statue. Evidently piqued at what was regarded as an intrusion upon its dominion over the monument, the board of freeholders promptly removed the displacing tablet and substituted the original. Thereupon the attorney-general filed this information to compel the restoration of the removed tablet and to restrain further interference. The charge in the information that the board would repeat what it had done if the offending tablet were restored, is not denied by the answer and must be taken as admitted.

The board of freeholders in justification of its conduct, sets up that the monument having been erected upon its land, it became a part of the realty and that the title thereto passed out of the state and the control over it, beyond the legislature. Although the monument is firmly imbedded in the ground, and within the scope of its usefulness and purpose, was intended to be a permanent structure, it nevertheless retained its independence of the realty and the character of a removable fixture. It was built on the lands of the county with the permission and consent of the board of freeholders, from which unqualified circumstance an agreement is to be implied between the state, as licensee, and the board, as landowner, that it was to remain personal property. Bron. Fixt. 145; Pope v. Skinkle, 45 N. J. Law 39. This rule obtains between individuals and, a fortiori, should it be applied when public property is involved. The language of the act under the authority of which the monument was erected plainly indicates that its erection upon the lands of the county was not to work a conversion of property and that the state’s right of ownership in it ■ should remain unimpaired and exercisable whenever and however the legislature saw fit so to do. The provision that upon its completion, only “the care and supervision of said' monument or statue shall devolve upon and be vested in the board of chosen freeholders of the county of Gloucester,” negatives any notion of a change of title and is an implied assertion of its retention b3r the state, in which the board, by accepting the care and supervision, acquiesced.

But a vindication of the state’s right, to the statue may be rested upon a broader basis than the rule of law applicable to removable fixtures. The contribution by the board of chosen freeholders of the land for a statue intended to be a permanent and lasting memorial of the valor and success of the colonial troops, was more than a mere permission or license. It was a cession by the county to the state of the use of the laird, by which the state acquired an easement, to endure as long as the land should be used for the purpose to which it was dedicated.

Thus, in the exercise of its right of ownership the state appropriated funds for and delegated power to the patriotic organization already named, to purchase tablets with inscriptions explanatory of the battle and to place them on the monument. This work the defendant has prevented and threatens to continue to obstruct, which will be enjoined unless two additional grounds urged by counsel have merit. One is that as caretaker having the supervision of the monument, the duty was imposed upon the board, to preserve the monument intact, as completed by the building commission and delivered to the board, and in this to prevent the removal of the commission’s tablet ;■ the other, that the inscription on the tablet substituted for the original is not explanatory of the battle, as required by the joint resolution. The answer to these contentions is that by the provision of the act above quoted, the state committed simply the "care and supervision” of the monument to the board of chosen freeholders, as its agent, subject at all times to the legislative control and direction, which relation the legislature undoubtedly has the power at any time to terminate as it has the right to add to, take from or altogether remove the monument if in its wisdom it should so elect; and that when the Sons of the Revolution, with the approval of the committee appointed by the joint resolution, selected four tablets, it was well within that body’s power in making room for them on the monument to remove the one officiously put there by the building commission; and further, that if in its judgment the inscription on one or more of the four tablets was not to the taste of the board or violated the law, it was not the board’s right to forcibly interpose. The power to correct was the state’s prerogative, to be effectuated through other channels. The board of freeholders, even though it had the care and supervision of the monument, in interfering with the work directed by the state, was as much a trespasser and wrong-doer as if the acts complained of had been committed by a stranger.

There will be an injunction perpetually restraining the board of chosen freeholders of the county of Gloucester from in any manner obstructing the Sons of the Revolution in New Jersey in removing from the said monument the building commission’s tablet and in replacing the tablet heretofore removed by the board; and thereafter from removing the four tablets of the Sons of the Revolution or in any manner interfering with the same. This is not, however, to be construed as taking from the board its duty of care and supervision.

Costs will be awarded against the board.


author: Backes, V. C.

text:
    John T. Cook and Susanna T. Cook, his wife, v. Mason M. Cook et al.
    [Submitted May 18th, 1914.
    Decided June 5th, 1914.]
    1. A tenant of farm land for a term, certain or uncertain, may after the expiration of his term enter on the premises and cut and carry away all the grain sown but not ripe when his term expired.
    2. A sale under decree of partition of farm land in possession of a tenant in common under an agreement with his co-tenants, whereby he should have possession until a sale, passes to the purchaser the growing crops unless specially reserved, but the tenant has an equity in the proceeds for the value of the crops.
    3. Where, in partition of a farm in possession of a tenant in common with the consent of the co-tenants, an order directing the reference master to report the value of the tenant’s interest, by reason of his ownership of the growing crops, was entered by the solicitor of the complainant with the consent of the tenant’s attorneys, the parties understood that the crops should not be reserved from the sale, so that the tenant was entitled to an equity in the proceeds for the value of the crops.

      In partition. On exceptions to master’s report.

      Mr. William J. Baches, for the complainants.

      Messrs. Wicoff & Banning, for the defendants.
   Backes, V. C.

Mason M. Cook, his two brothers and two sisters, were tenants in common of a farm in Lawrence township, Mercer county. Mr. Cook was the tenant in possession from the time of his mother’s death, from whom the farm was inherited, until it was sold under the decree in this suit. This was by reason of an agreement which he had with his brothers and sisters, whereby he was to have the use of the farm until it was sold, upon the promise by him to pay the interest on a mortgage, the taxes and insurance premiums. At the time the farm was sold, June 18th, 1913, there were growing crops which Mr. Cook had planted and sown. They were not reserved in the master’s deed. In his answer to the bill, Mr. Cook set up a yearly tenancy in addition to his estate as tenant in common. By the interlocutory decree the matter was referred to a master to ascertain the interests of the respective parties, and by a supplemental order he was further directed to ascertain and report whether Mason M. Cook was the owner of any particular estate in the premises and if so, what its fair and reasonable value was. The master reported the respective estates of the tenants in common, and father that Mr. Cook had such an estate which would terminate when the premises were sold, and possession given to the purchaser, and that its value measured by the probable reap, was $101.05, which should be allowed to him. The final decree confirmed the master’s report, except as to the part relating to Mr. Code's particular interest and concerning which leave was given to file exceptions. The proceeds of sale have been divided, with the exception of $1,500, which the selling master has paid into court, to await the disposition of the exceptions. The matter is-before me on exceptions filed by the complainant and Mason M. Cook, and on an order to show cause why the remaining moneys should not he equally distributed. The exceptions attack only the amount and not the propriety of the allowance. The right to it is raised by the petition upon which the order to show cause was granted. The petition will be regarded as a further exception.

Did the growing crops pass to the purchaser by virtue of the sale and the master’s deed, is the main and underlying question for decision. Mason M. Cook’s tenure in the undivided interests of his co-tenants in the farm, acquired by his agreement with them, was uncertain as to termination, and as to them, or their vendees, he was entitled to harvest the crops he had sown. A tenant of farm land, whether for a term certain or uncertain, has a right, after the expiration of his term, to enter upon the demised premises and cut and carry away all the grain which he has sown but which was not ripe when his term expired. Corle v. Monkhouse, 47 N. J. Eq. 73. But this rule is inapplicable as between Mason M. Cook and his vendee, viz., the purchaser under the master’s sale. Mr. Cook occupied the farm in his own right of tenant in common, and his' possession was made exclusive by the agreement with his brothers and sisters. Had he and his co-tenants joined in a voluntary conveyance of the farm to the present purchaser, without reserving the crops, there could be no doubt as to their passing by the deed. Terhune v. Elberson, 3 N. J. Law 297. The sale and conveyance by the' master accomplished the same result.

In Bloom v. Welsh, 27 N. J. Law 177, which was an action to recover the value of winter grain growing on land purchased by the defendant at a sale under a common law execution, and which grain had been purchased by the plaintiff from the execution debtor between the recovery of the judgment and the sale, it was held that the crop passed to the purchaser of the land under his deed. In that ease, Chief-Justice Green said: “It will not be questioned, as a well-settled rule of law, that a conveyance of real estate, either by the owner of by the sheriff, under a sale by judgment and execution, carries with it the growing crops as an incident, unless there be an express reservation in the deed.”

In Cropper v. Brown, 76 N. J. Eq. 406, Vice-Chancellor Garrison, in discussing the status of purchasers under judicial sales, said: “In my view there is no real distinction in this state in respect to the principles to be applied respecting the rights of the parties between judicial sales and other similar sales voluntarily made between parties. The judicial sale is made by the officer in whom the law has lodged the power to make the sale. The fact that it is in invilum, and that the officer is only exercising a power and has not title, does not, in my view, in any way alter the rules to be applied when the contract has once been made.” * * * “By what seems to me to be a perfect analogy, it must therefore be held that when this legal agent, namely, the judicial officer, observing proper legal formalities, at a public sale strikes off the property to a purchaser, who thereupon signs the conditions of sale, thereby entering into a contract to purchase the premises named at the price named, the situation is exactly the same as if the contract were between private parties. The sheriff is vested by law with the power, on behalf of the persons against whom he holds the writ, to sell the propert3r. This he does, and a written contract satisfying the statute of frauds is then made. I cannot perceive a^ reason why the same principles should not control the parties with inspect to this contract as would control private parties voluntarily entering into a similar one.” The doctrine of these two cases is applicable to sales made by virtue of decrees in partition suits. In Calhoun v. Curtis, 4 Met. 413, Chief-Justice Shaw held that where one of several tenants in common of land, without leave or objection from his co-tenants, occupied it exclusively, and sowed it with grain, and partition of the land was made while 'the grain was growing, that the grain, growing on the purparty of each1 owner of the land, became the property of each in severalty. He states the reasons for so holding to be that the case of the tenant who sowed was “not within the equitable principle on which emblements are allowed b3r law to an outgoing tenant, because, when he sowed the rye, he knew that the land was at any time-subject to partition, on the application of his co-tenants, or any of them, and of course might be divided and assigned to another co-tenant, in severalty, before the crop could come to maturity.” And so it follows tliat where land is cultivated by one tenant, with the consent of the others, and, because it is not partible, is sold under statutory authority, the court’s officer becomes the agent of all of the parties in conveying the land, which conveyance carries with it the crops as an incident to the soil, unless especially reserved.

The passing of the title'to these crops gave Mason M. Cook an equity in the proceeds, which, upon the plainest principles •of justice, ought to be protected. The state of cultivation to which he had brought the farm at the time of the sale was undoubtedly a feature which enhanced the purchase price and to that extent he is entitled to compensation.

There is another reason, arising out of the circumstances of this case why the allowance should stand. There seems to have been a tacit understanding between the parties to the suit that the crops should pass by the sale, and that Mr. Cook should be reimbursed out of the proceeds. While the matter was pending before the reference master, the supplemental order was made directing him to ascertain and report the value of Mason M. Cook’s special interest by reason of his ownership of the crops. This order was entered by the solicitor of the complainant, with the consent of Mr. Cook’s attorneys, and to my mind clearlj evinces that it was understood that the crops could not be harvested before the sale; that they should not be reserved from the sale, and that they should form a part of it: for, why the order, if this was not in contemplation? The exceptions, which were filed before the sale, give the intimation that this was the attitude of mind of both exceptants. Any question as to the right of the crops seems to have been an after-thought, first raised by the petition for the distribution of the money paid into court. If the question has been raised in Umini Mr. Cook might, and probably would, have protected himself by application to the court to except the crops from the operation of the sale. The supplemental order and the proceedings thereunder were assurances to him that he was to be allowed for them out of the proceeds of the sale.

Holding as I do that Mason M. Cook is entitled to compensation, and as the amount thereof, as ascertained and reported by the master, although excepted to, was not challenged upon the argument or in the briefs of counsel, I will advise an order overruling the exceptions, and that the money in court be distributed by paying first to Mr. Cook the amount found by the master. Costs of these proceedings will be allowed out of the fund.


text:
    David A. Henderson et al. v. Joseph G. Champion et al.
    [Submitted June 9th, 1914.
    Decided June 30th, 1914.]
    1. The right to enforce a building restriction, incorporated in all the deeds given by the owner, who was improving and developing a tract according to a general building scheme, inures to each grantee as members of a class, and they may join in a suit to enjoin a breach by other grantees of the covenant, the wrong being common to them all.
    2. An objection for misjoinder of parties, first made on final hearing, will be disregarded, where no injustice will be done the parties by the decree.
    3. Where an owner, improving and developing a tract pursuant to a general building scheme, executed deeds of parcels containing building restrictions — Held, that the restrictive covenants were made for the benefit, not of the grantor alone, but of all who, as purchasers, participated in the project, and they could sue to restrain a breach thereof, though the deeds stipulated that the grantee covenanted with the grantor not to violate the restrictions.
    4. A building restriction provided that no building shall be erected within twelve feet of-the lot line facing the street or within four feet of the side lines of the lot, embodied in all deeds of lots of a parcel improved and developed pursuant to a general building scheme — Held, that the side line of a corner lot is a “line facing the street,” and the erection of a building nearer than twelve feet from this side line is a violation of the covenant. Also held, that facing the building on the side line, not within the restricted area, is not a violation of the covenant.
    5. Where the right to enforce a building restriction is doubtful, equity will deny injunctive relief.'

      Messrs. Bleakly & Stockwell, for the complainants.

      Mr. William B. Davis and Mr. Herbert A. Drake, for the defendants.
   Backes, Y. C.

The object of this bill is to enjoin the breach of a restrictive covenant. The Ocean City Gardens Company reclaimed a tract of waste land adjoining Ocean City, in Cape May county, and subdivided it into streets, blocks and lots, according to a plan thereof hied with the clerk of that county. Eor the purpose of improving and developing the tract, a general building scheme was formulated and by covenants incorporated in all of its deeds to purchasers, one of which reads as follows;

“No building of "any description whatever and no porch, fence or other structure of any kind, shall at any time be erected on or over the lots hereby conveyed within twelve feet of the lot line facing the street, or within four feet of the side lines of said lot (excepting where a party may own two or more contiguous lots, in which case a dwelling or hotel may he erected on any part of the lot or lots the owner thereof may desire without regard to the intervening line or lines; provided the same is not built within four feet of the outside lines of said contiguous lots, nor within twelve feet of the lines thereof facing the street).”

There are others which have no bearing on this dispute. The four complainants own, separately, lots in blocks 9 and 10, fronting on Bay road. Block Fo. 9 is bound by Bay road and Simpson road, Battersea road and Forth'street, parallel streets, respectively. The defendant owns six adjacent lots in block 9; three front on the easterly side of Bay road and three on the westerly side of Simpson road, abutting in the rear, and are numbered on the map as 901, 902 and 903; 942, 943 and 944. Lots 901 and 944 are bounded on the southerly side of Forth street. The complainants and defendant hold immediately from the Gardens company, and all of the deeds contain the restrictions- above quoted, except that buildings, &c., on the lots fronting on the westerly side of Bay road, are restricted to twenty instead of twelve feet from the street. On lot 903, facing Bay road, and lot 942, facing Simpson road, being the lots furthest from North street, the defendant erected two dwelling-houses, in compliance with the restrictions. The remaining four lots he divided transversely into six lots, and on two built houses, facing North street four feet from the street line, but more than twelve feet from either Bay or Simpson roads, which constitute the breach complained of. A demurrer ore terms in bar of a recovery was interposed and three grounds were assigned.

The first is that there is no such unity of interests as would justify a joint action by separate lot owners. In pointing out the instability of this objection, it need only be suggested that the right to enforce the covenant inures to each of the complainants as members of a class who may join in seeking redress of a wrong which is common to them all. Marselis et al. v. Morris Canal and B. Co., 1 N. J. Eq. 31. Besides, an objection for misjoinder of parties, first made on final hearing, will be regarded as immaterial where it appears that no injustice will be done the parties by the decree. It should have been pleaded. Story Eq. Pl. § 544.

The next ground is that the covenant is personal to, and enforceable onty by, the defendant’s grantor, the Ocean City Gardens Company. The principle, that uniform restrictive covenants regarding improvements, as a part of a community scheme, are made for the benefit of all who, as lot owners, participate in the project, has been so firmly established by numerous authorities both in this country and England that in this day it is not open to serious discussion. De Gray v. Monmouth Beach Club House Co., 50 N. J. Eq. 329; Morrow v. Hasselman, 69 N. J. Eq. 612; Barton v. Slifer, 72 N. J. Eq. 812. And, indeed, the defendant does not question it, but he urges that the rule is not applicable because of a subjoined limitation in all of the deeds which he argues vests all interest in the covenants absolutely in the grantor. It reads:

“The description by metes and bounds herein set forth shall be conclusive upon the parties, their heirs, successors and assigns, and shall never be construed so as to enlarge said description or embrace land or rights in land not within said metes and bounds.”

It- does not so impress me. The stipulation simply defines the exclusive construction to be given to the description of the land as contained in the deed and leaves unimpaired the rights which flow to other lot owners from the covenant which, as Chief-Justice Beasley said, in Brewer v. Marshall, 19 N. J. Eq. 537, are enforced “upon the principle of preventing a party having knowledge of the just rights of another from defeating such rights, and not upon the idea that the engagement enforced created easements or are of a nature to run with the land.” Moreover, the defendant fails to accord the proper significance to be given to a further- covenant which reads:

“And the said party of the second part hereto (defendant) for himself, his heirs, executors and administrators and assigns, doth hereby covenant, promise and agree to and with the said party of the first part hereto (common grantor) its successors and assigns, not to violate nor fail to comply with any or all of the above-mentioned conditions, restrictions, regulations or provisions, but faithfully to keep and perform the same.”

This embraces the complainants. They, and all other purchasers of lots, are assigns, in the true sense of the word. No one, other than the grantees of the Cardens company, come within that category. So, we have in expressed terms the defendant’s agreement that his undertakings should vest beneficially in the complainants.

The remaining point is that the complainants are not damaged. In support of this, it is contended that facing the defendant’s houses on, and erecting them four feet from, North street, obstructs neither the light, air or view to the complainant’s premises which are on Bay road, “around the comer” from the defendant’s houses. The answer to this is that the interdependent covenant of the defendant easts an equitable burden on his land, or raises an equity, in favor of each of the owners of lots on the tract, and this, no matter how remote may be his location. And in this instance there is a very cogent reason for the application of this doctrine. Ocean City Gardens is essentially residential, and broad avenues, from house line to house line, inviting, if not insuring, floral decorations in front of homes, are obviously important factors in its exploitation, the advantage of which redounds to the whole community, especially in the enhancement of the value of lands within its limits. Can it then be said that a lot owner, however distantly situated, is not materially injured by an infraction of this feature of the general scheme? Equity courts will not refuse relief in cases of this kind unless it clearly appears that the violation complained of will be so harmless that the maxim de minimis applies. Kirkpatrick v. Peshine, 24 N. J. Eq. 206; Morrow v. Hasselman, supra; Lignot v. Jaekle, 72 N. J. Eq. 233.

We will, therefore, consider whether the erection of the defendant’s houses four feet from North street is a violation of that portion of the covenant which provides that no building shall be erected within twelve feet “of the lot line facing the street.” The side lines of the defendant’s lots, as shown on the map, are undoubtedly those which run at right angles to Bay road and Simpson road and parallel with North street, and while the exterior longitudinal line of lots 901 and 944, bounded by North street, is a side line of these two lots, it is also “the lot line facing the street” and within the prohibition of the covenant forbidding buildings within twelve feet. The primary object of the -parties, to be inferred from the covenant, as has already been observed, was to keep all buildings and structures that distance away from the highway, and the restriction in that respect in nowise conflicts with nor is it modified or qualified by the provision that buildings should not bo erected within four feet of the side lines, because it clearly appeal's that the purpose of the side line restriction was solely for the benefit of adjoining lot owners. This was the view of Yice-Ohaneellor Reed in the unreported case of Waters v. Collins (docket 19, p. 426), referred to by Yice-Chancelior Bergen in Chelsea Land and Improvement Co. v. Adams, 71 N. J. Eq. 771, in enforcing a covenant “that no building shall at any time be erected within twenty feet of the front property line of any street or avenue;” which, as will be noted, was couched in language much less definite in application than the one now considered. And this, after reflection, seems to have been the construction placed upon his covenant by the defendant himself, for, after the bill was filed, he moved his houses back from Berth street a distance of twelve feet, and on the argument claimed immunity from further prosecution. With this altered situation the complainants are not content. They contend that the general scheme, deducible from the covenants in the deeds and the plan to which the deeds refer, contemplates that buildings should be erected with the fagade exposed to the street upon which the lot fronts. All that need be said on this score is that I find in neither one anything to this effect binding upon lot owners. The only limitations in ihe deeds as to buildings relate to their location and a minimum cost. The map, it is true, shows front and side lines of lots, but nothing to indicate that purchasers are required to erect their buildings fronting on the street. The division lines of the lots, as laid clown on the plan, point to no such exactions. Bather, the impression gathered from the map is that it was intended as an illustration of the scheme of improvement and for the more convenient identification of the location of the lots by numbers. The side-line restriction in the deeds is, as I have said, for the benefit of adjoining owners, who alone have the right to enforce, or relieve from, its observance. This is manifested by the exception contained in the covenant which provides that in case of the ownership of two or more contiguous lots by one person, the intervening side lines may be disregarded and a building erected over them; from which follows that if one person purchased all of the forty-four lots in block 9, and erected a hotel covering the block, be could face it in a court, with rears to the four streets, or face it upon' any one or more streets with the back to the remaining streets, without breaking his covenant, provided he remained beyond the inhibited twelve feet. And, logically, if he owns but one lot, he may build the style of house or as many houses as his land will permit, facing them, to suit his convenience or fancy, so long as they are of the minimum cost and not within the restricted area.

The utmost that can be said in favor of the complainants’ contention, on this- phase of the case, is that their right to enforce the covenant is doubtful, which leads to- a denial of the relief they pray in this respect. Howland v. Andrus, 81 N. J. Eq. 175.

A decree may be entered granting an injunction restraining the defendant from building on his land, within twelve feet of North street, but issuance of the writ will be withheld until the further order of the court; motion for which may be made whenever the exigency of the case requires. This course is taken because of the insistence of the defendant at the hearing that he has the right to build on each of his six lots now fronting on North street, to within four feet of that street, notwithstanding that he forestalled the complainants by removing the two already bruit to their present location. The complainants are entitled to costs.