text:
    Hill Dredging Company v. Ventnor City.
    [Heard July 6th, 1910.
    Determined July 7th, 1910.]
    1. A municipal corporation cannot be bound by an engagement which it has no power to make, and the corporate powers of such a corporation cannot be extended by the operation of the doctrine of estoppel. •
    2. The corporate powers of defendant corporation as defined by the statute relating to the government of cities (P. L. 1891 p. 46) failing to include any power of common council to grant the privilege of laying-pipes for the purpose named in or upon the public streets within the municipality, such a grant is void.
    3. Even if the privilege be valid for one purpose, it is the duty of the court to refuse to restrain the municipality from interfering with acts for other purposes in excess of the grant.
    On bill for injunction. Hearing at return of order to show cause.

      Messrs. Thompson ■& Qole, for the complainant.

      Mr. George A. Bourgeois, for the defendant.
   Leaming, V. C.

I will advise an order denying a preliminary writ.

First. A municipal corporation cannot be bound by an engagement which it had no power to make; and the corporate powers of such a corporation cannot be extended by the operation of the doctrine of estoppel. It follows that the defence of ultra vires is available to a municipal corporation. These principles appear to be well established; they arise from the public necessity of limiting the powers of the officers of such corporations to such engagements as are within the scope of the powers conferred upon the municipality by the legislature. 1 Dill. Mun. Corp. (3d ed.) § 457. An examination of the corporate powers of defendant corporation and its officers, as defined in P. L. 1897 p. 40, fails to disclose any power of the common council to grant to or for the benefit of complainant the privilege of laying pipes in or upon the public streets within the municipality for the purpose named in the bill. The grant must be treated as void.

Second. Should the permission which was granted be regarded as valid and binding upon the municipality, the affidavits filed in behalf of defendant disclose that the pipes have not been used for pumping sand to the beach front, as named in the permission, but have been used to pump mud and sewer filth and have thus endangered the public health. As these statements are not denied they must be assumed to be true. The duty of this court to refuse to restrain defendant municipality from interfering with acts of the nature stated seems manifest.


source: Caselaw Access Project

author: Leaming, V. C.

license: Public Domain

text:
    Susie B. Rider et al. v. Mary E. Clarkson et al.
    [Heard July 13th, 1910.
    Determined July 14th, 1910.]
    1. Although it is lawful for a person to keep a vicious dog', it is unlawful to keep such a dog in such manner that neighbors are unnecessarily exposed to danger. And where is appears that the dog in question is only restrained by a fence over which he can jump at will, and that the owner refuses to adopt suitable measures to prevent the dog’s escape, and that the complainants are in danger of being attacked as they leave their home, a preliminary injunction will be issued restraining the owner from longer keeping the dog on the premises in question without the adoption of suitable measures to prevent him from escaping therefrom.
    2. The joinder as complainants of parties, similarly affected by such a vicious dog is proper in such a ease.
    On bill, &e., for injunction.

      Mr. 8. Cameron Hinlcle, for the complainants.

      Messrs. Thompson '•& Cole, for the defendants.,
   Leaming, V. C.

Defendants have been duly served with a copy of the hill and accompanying affidavits and an order to show cause why preliminary relief should not be granted, and have not denied the truth of the matters charged. These matters must, therefore, at this time be deemed to be true.

It is lawful for a person to keep a vicious dog. DeGray v. Murray, 69 N. J. Law (40 Vr.) 458. But it is not lawful for a person to keep a vicious dog in such manner that neighbors are unnecessarily exposed to danger. It is no less'a nuisance for a neighbor to keep a vicious dog without appropriate restraint, and in such manner that the dog can, and will, escape and inflict bodily harm, than it is for such neighbor to conduct a lawful business in such negligent manner as to endanger the health of residents in the vicinity. The undisputed facts are that the dog in question is vicious, and is only restrained by a fence over which he can jump at will; and that the owner of the dog refuses to adopt suitable measures to prevent the escape of the dog; and that complainants are in danger of being attacked by the dog at such times as they leave their homes. The dog has been ordered by the municipality to be killed, pursuant to the provisions of a local ordinance, but the execution of that order has been prevented by a writ of certiorari; in the meantime the' unlawful conduct of defendants renders it unsafe for complainants to pass to and from their homes. I think it the undoubted duty of a court of equity to extend immediate relief against the continuance of such conditions.

I see no reason why complainants may not appropriately join in the bill. They suffer special injury by reason of the proximity of their properties to the property occupied by defendants, and the wrongful conduct of defendants affects them in a similar way and at the same time. See Rowbotham v. Jones, 47 N. J. Eq. (2 Dick.) 337.

I will advise a preliminary injunction restraining defendants from longer keeping the dog on the premises in question without the adoption of suitable measures to prevent the escape of the dog from the premises.


text:
    Gloucester Turnpike Company v. American Pipe Company et al.
    [Decided July 29th, 1910.]
    1. Under the powers conferred by the general act concerning water companies (2 Gen. Stat. p. 2202), a water company in the lawful exercise of its rights is authorized to locate its pipes in a public highway operated as a turnpike, without the consent and against the will of the turnpike company.
    2. For the purpose of preliminary relief it must be considered that such water company is also empowered by the legislature under this statute to lay its pipes in highways without the necessity of a precedent municipal consent, provided the pipes are laid in the manner stated in the statute.
    3. A consolidated water company is within the provisions of this statute.
    4. On an application for preliminary relief in a court of first instance, the constitutionality of a statute may be assumed.
    5. The title to this statute embraces townships in its enumeration of “cities, towns and villages.”
    On bill, &c., for injunction.

      Mr. William T. Bead and Mr. fiamuel H. Bicharás, 'for the complainant.

      Messrs. Gaskill & Gaskill, for the defendants.
   Leaming, V. C.

Complainant is a turnpike company and seeks to enjoin defendant water company from laying its water pipes in ‘the road operated by complainant as a turnpike. Defendant water company claims the right to locate its pipes’in the road without the consent and against the will of the turnpike company.

Complainant was created by a special act of the legislature, approved March 5th, 1850. Prior to that time the road in question was a common highway. The act of incorporation authorized complainant to construct a turnpike road, at least thirty-two feet in breadth, along the middle, as nearly as possible, of the then highway, and cast upon the company various burdens, including the burden of maintenance, and imposed various penalties for its failure to discharge its duties, and also conferred various privileges in connection with the construction and operation of the turnpike road, including the privilege of collecting certain tolls for its use by the public. The act also provided that it should not take effect until the highway upon which the turnpike was authorized to be located and made should be vacated as a public highway. The highway w^as vacated in April, 1850, and since that time has been maintained and operated by complainant,as a turnpike or toll road.

In the light of Wright v. Carter, 27 N. J. Law (3 Dutch.) 76, and Borough of Chambersburg v. Manko, 39 N. J. Law (10 Vr.) 496, there can be little doubt touching the relation of a turnpike company to its road and to the public, and ifts right to secure from the courts adequate protection against unlawful occupancy or use of its road by others. The corporate act of the turnpike company in the case first cited was in many respects .similar to the corporate act of complainant. The act contemplated the vacation of the highway before the turnpike company should occupy it, and, like the corporate act of complainant, provided that compensation should be made by the turnpike company for all damages which the owners of the land over which the road passed should sustain by reason of the construction of the road, and also for all damages done to adjoining lands, and all materials taken therefrom; but made no provision for compensation for the value of the soil occupied by the road. It was there held that the title to the soil was not changed, but remained, as it was before, in the owner of the adjoining soil; that the vacation of the road could not be regarded as an adjudication that it was not longer necessary as a highway, in view of the obvious legislative plan of merely transferring the burden of maintenance from the public to the turnpike company; and that the easement or right of way which existed before the passage of the act and before the vacation of the highway continued thereafter. In the latter case it is shown that the local authorities having charge of highways may maintain ejectment or procure relief in equity against any person unlawfully encroaching upon them, and that this arises from and is dependent- upon the fact that the duties of the local authorities-in regard to streets are such as require a right of exclusive possession; it is also there shown that where the charter of a turnpike company imposes the duty of constructing and keeping in repair a turnpike, and a highway is vacated pursuant to a legislative plan to transfer the duty of maintaining the road from the public to the corporation, the right of possession which had existed in the public authorities only because it was charged with the duty of maintenance, and which was a mere adjunct of the duty, passed with the obligations from the public authorities to the turnpike company. The locus in quo is, therefore, a public highway over which the public are entitled to travel, subject only to the obligation to pay toll. In view of the principles thus defined there can be no doubt of the right of complainant to equitable relief against a defendant who unlawfully enters upon a turnpike and destroys the surface thereof; for such acts are clearly destructive of a proper performance of the duty which the law has east upon complainant.

But there can be no doubt of the power of the legislature to authorize a water company to lay its water pipes in highways. If defendant company is in the lawful exercise of such a legislative right, no relief can be afforded to complainant. .

Section 12 of the act under which defendant claims its corporate existence and rights (2 Gen. Stat. p. 2202 provides that water companies incorporated under that act are thereby

“authorized and empowered to iay their pipes beneath such public roads, streets, avenues and alleys, as they may deem necessary * * * free from all charge to be made from any person or persons, or body politic whatsoever, for said privilege, and also such hydrants at the crossings or intersections of said streets and alleys; provided, that the said pipes shall be laid at least three feet below the surface of the same, and shall not in anywise unnecessarily obstruct or interfere with the public travei, or damage public or private property; and provided, that the consent shall be obtained of the corporate authorities, if any there be, of the town through which the same may be laid.”

It is clear that the legislature has here conferred upon water companies the right to lay its pipes in public highways without consent of others except so far as the latter proviso of the act may be held to require municipal consent; and I also think it entirely clear that the turnpike road of complainant is a public highway within the meaning of this section, for, as already stated, the road now in question is an ancient highway which has been merely delivered to the turnpike company for purposes of maintenance and control, and the public rights to traverse that highway have been unchanged except to the extent of the burden of toll. But it is urged in behalf of complainant that the legislative authorization also contemplates a precedent municipal consent. In Atlantic City Water Co. v. Consumers Water Co., 44 N. J. Eq. (17 Stew.) 427, 432, this section was construed contrary to the present contention of complainant. It is there held that the proviso must be understood merely to compel the water company to submit to such local regulation in the use of the streets, while putting down its pipes, as should be necessary to prevent all improper or unnecessary interference with public travel, and to render the water company’s occupation of the streets as little inconvenient to the public as possible. The view is there taken that a corporation, formed under that statute, acquires, by force of the statute itself, the moment it becomes a body politic and corporate, a franchise, investing it with power to lay its pipes in the public ways, and that the only control which the municipal authorities can exercise over such a corporation, in the use of its franchise, is to prevent the corporation from using its franchise in such manner as will unnecessarily obstruct or otherwise interfere with public travel. A different view is adopted in Township of Franklin v. Nulley Water Co., 53 N. J. Eq. (8 Dick.) 601. It is unnecessary to here adopt the view first stated; the mere statement of that view by so eminent an authority is sufficient reason for deeming the necessity of municipal consent doubtful. It must, therefore, for the purposes of preliminary relief, be here considered that a water company is empowered by the legislature to lay pipes in highways without the necessity of previous consent, provided the pipes are laid in the manner stated in the statute.

Various infirmities in the incorporation of defendant water eompanjr are urged in behalf of complainant. If defendant company is not such a water company as is authorized to exercise the rights already referred to as conferred by our statutes, it would seem to necessarily follow that the statute already referred to can afford no protection to it, even though defendant be a de facto water company. In 1897 two water companies were incorporated under the Water Company act (2 Gen. Stat. p. 2199), one in Deptford township and one in West Deptford township. Later in that year the two companies were consolidated pursuant to the provisions of P. L. 1&9S p. 121. Defendant is the consolidated corporation. It is urged that the statute referred to did not authorize a consolidation of these two water companies. I am unable to adopt that view. It is also urged that the Water Company act, as it existed in 1897, was unconstitutional, in that it applied only to municipalities having between five hundred and fifteen thousand inhabitants. On this application for preliminary relief, in a court of first instance, the constitutionality of the act may be assumed. It is also urged that the title to the Water act of 1897 did not include townships in its enumeration of “cities, towns and villages.” In Township of Franklin v. Nutley Water Co., 53 N. J. Eq. (8 Dick.) 601, 605, the word “town,” as used in the twelfth section of the act, is held to include townships. I am unable to give the word a narrower significance as used in the title of the act.

I am unable to reach the conclusion that complainant’s rights are sufficiently clear to warrant preliminary relief. If the rights of complainant have been invaded, such rights can easily be asserted and established and the wrongs redressed by an action at law.


text:
    Samuel Rosenberg et al. v. Thomas G. Sheen et al.
    [Heard October 3d, 1910.
    Determined October 7th, 1910.]
    1. Under a municipal ordinance providing that an unsafe building must be repaired, or that it may be ordered to be torn down if the building inspector declares that it cannot be made safe, an adjudication by the city building department, condemning the building as unsafe and ordering it to be torn down, without any previous finding by the building inspector that it cannot be made safe, and without notice to the owner and opportunity to the owner to be heard, is void.
    2. The owner of a building condemned as unsafe by a void adjudication of a municipal building department is entitled to a preliminary injunction against the execution of the order of destruction.
    On bill, &c., for injunction.

      Messrs. Garrison <& Voorfiees and Messrs. Iligbee ds Coulomb, for the complainants.

      Mr. George A. Bourgeois and Messrs. Thompson & Cole, for the defendants.
   Leaming, V. C.

I ain satisfied that complainants are entitled to a preliminary-writ.

The adjudication of the building department of Atlantic City in condemning the building in question as unsafe is made the basis of the claim of right upon the part of defendant Sheen to destroy the building. That adjudication is manifestly void. It is neither in accordance with the ordinance under which it is made, nor in accordance with well established and fundamental rules of law. The condemnation ordinance contemplates that an unsafe building shall be repaired or torn down, unless the building inspector shall declare that the building cannot be made safe, in which latter event it may be ordered torn down.

In the present case no adjudication appears to have been made to the effect that the building cannot be made safe; the building is ordered torn down without any declaration of that nature. If such a declaration was made the evidence of it rests alone in the mind of the building inspector, and is wholly a matter of inference. But it is entirely manifest that no action upon the part of the building inspector can be supported as a justification for the destruction of complainants’ property rights unless some opportunity has been first given to complainants to be heard. A condemnation of a building made in the manner in which the condemnation in question has manifestly been made cannot be treated as in any sense a judicial determination. Without some notice to complainants it is of no more force than though it had not been made. It is, at most, a ministerial act; it'fails to embody the first essential element of an adjudication. As the present conduct of defendant Sheen in attempting to tear down the building can find justification only in the claim that a lawful condemnation of the building has been made by the city, it is manifest that complainants are entitled to relief against his acts.

The claim is made that this court cannot enjoin a landlord from evicting a tenant because of the legal remedy of a tenant under the covenants in his lease. That question is not here presented. Defendant Sheen is tearing down the building pursuant to an order from the city and justifies under that order. He makes no claim of right except under that order.

I will advise the issuance of an injunction pendente lite.


author: Howell, V. C.

text:
    In re Kenneth Williams, an infant.
    [Submitted June 28th, 1910.
    Decided July 19th, 1910.]
    1. In a suit by an orphanage to recover the possession of a child which had been given respondent on trial, evidence held to show that her financial circumstances were too precarious to warrant a decree giving the child into her permanent custody, but that it should he returned to the care of the orphanage.
    2. An orphanage which has received a child under an agreement with its parent and undertaken the care of it, stands in loco parentis, and may bring suit for the recovery of the child where it has come into the possession of a third person.
    3. Where an orphanage has received a child under an agreement with its parent and undertaken the care of it, its care must be exercised under the supervision of a competent court.
    4. Where an orphanage had given a child to respondent on six months’ trial, it could regain the child within that time subject to the approval of the court.
    5. The chancery court takes cognizance of cases involving the custody of children legally domiciled within this state, both by virtue of its general jurisdiction, and under laws 1902 (P. L. 1902 p. 259), and by virtue of its general jurisdiction has the same authority and control over the care and custody of infants who are actually residents of this state as it has over those that are domiciled here.
    6. P. L. 1901 p. 890, providing for the regulation of the importation of dependent children and imposing a penalty for violation thereof, has nothing to do with a judgment touching the custody of children in a contentious proceeding.
    On application for custody of a child.

      Mr. Thomas L. Raymond and Mr. Henry W. Stiness (of the Bhode Island bar), for the petitioner.

      Mr. Charles R. 8. Simpson, for the respondent.
   Howell, V. C.

This is an application by St. Mary’s Orphanage, a Bhode Island corporation, for the custody of Kenneth Williams, a child about six years of age, now in the keeping of the respondent, Sara Y. Murray, of East Orange, in this state. The child was born in Ehode Island, where its parents lived, in 1894. Soon after its birth the father deserted the wife and child; his whereabouts at the present time are unknown. The mother committed the child to the care of the orphanage on October 6th, 1905, by a document signed by her whereby she relinquished and surrendered the infant to the institution in consideration that it would provide him a home and education until he should arrive at the age of ■-- years, agreeably to its by-laws, promising not to interfere in the management or control of him in any way until that time. She agreed to pay to the orphanage the sum of $1.50 per week for each and every week that the child should remain at the institution, and that if at any time the weekly payments should remain due and unpaid for the space of thirty days, then she would relinquish and forever quit-claim to the institution all her right to the control of her child during his minority. The orphanage appears to have statutory authority for whatever it did concerning the child.

hTothing has been heard from the mother since September 24th, 1908. At that time she wrote a letter to the matron of the orphanage in which she stated that she did not think that she would ever be able to care for the child herself, and she hoped he would find some place where he could be cared for.

In the early part of 1910 the respondent came into communication with the officers of the institution, and an arrangement was made, with the authority of the directors, by which the infant was to be committed to her custody; and a direction was given to the matron by a writing which is in evidence, signed by Mrs. Foster, who was chairman of the committee on admissions and dismissals, to dismiss two boys, one of them being the infant in question, to the care and custody of the respondent, for six months on trial for adoption. This document was dated January 29th, 1910, and was delivered to the matron. I do not find any testimony going to show that it was ever exhibited to the respondent; but although the question of fact was much disputed at the hearing, I find enough evidence to convince me that the respondent knew, at the time the child was committed to her care and custody, that it was for a probationary period of six months, and that she took him with that understanding. The child was actually delivered to the respondent at a hotel in New York by a Miss Mason, who had brought him there from Providence for the purpose. There is considerable discrepancy in the testimony as to whether Miss Mason delivered the child unconditionally or whether it was delivered for the probationary period. I find, however, that Miss Mason had no authority to make any agreement for the institution, and that the sum of her power was to deliver the child in accordance with the previous understanding between the respondent and Mrs. Poster. I therefore conclude that the child was delivered to the respondent on trial only, for the period of six months from the date of delivery. The petition praying for its return to the custody of the institution was filed within that period, so that it has the benefit, if benefit it be, of that fact.

[Here follows a discussion of the evidence, which is omitted at the request of the vice-chancellor.]

In this situation the court is called upon to deal with the permanent custody of this child, and is asked to award it to the respondent, with her purpose and intent to legally adopt it under the laws of this state, fully before the court. If the subject of this controversy were the only child in contemplation it might be very doubtful whether it would be to its interest to disturb its present custody, but when it is considered that the respondent has undertaken to care for, maintain, support and educate, and eventually adopt eight or ten almost helpless infants upon the precarious and unsubstantial basis on which this enterprise is founded, a different situation is presented. In determining what is best for the child' in the long run all these elements must be carefully considered. The controversy now pending is perhaps the most important event that will happen in this child’s life.

The award of the custody of this child to the respondent, and its adoption by her, would be practically the final and irrevocable disposition of it, for the reason that it appears to have been abandoned by both father and mother; its good or ill fortune during its childhood, and probably during the whole course of its life, will depend on the success of the respondent and her husband in their benevolent and religious endeavors. This looks to me like a chance to which this child ought not to be subjected, and I am not minded to place its future at the risk of a failure of a scheme which appears to have such an uncertain footing.

Upon this ground alone I then conclude that the child should not remain with the respondent. I gladly acquit her of all the charges of immorality and other personal unfitness so unwarrantably made in the original petition. The embarrassment that must come from possible, if not probable, financial failure, is the only reason why the respondent and the child should be separated.

In addition to wliafc has been said, it appears that the petitioner stands in loco parentis to the subject of this action. When the child was surrendered by its mother, it was upon the promise that it should be properly cared for. While ajL agreement between a parent and a third person as to the custody of a child would not be binding on the parent (State v. Baldwin, 5 N. J. Eq (1 Halst. Ch.) 454; People v. Mercein, 3 Hill 399) I venture the suggestion that such agreement would bind the other party, and while either the father or the mother might disregard the agreement made by the mother in this case, the petitioner cannot evade or avoid its responsibility thereunder. The agreement binds it and places it in loco parentis as against the world. It stands as a sort of guardian with a duty imposed upon it of supervising the care and custody of its quasi ward, but still subject to the paramount supervision of a competent court. These facts give to the petitioner a standing in court and confer on it rights which should be respected; at least, it is not an intruder and a stranger. Under the terms of the agreement between the parties hereto, it had tire right, subject to the approval of the court, if such approval were sought, to resume the custody and possession of the infant, and again to take up its self-imposed duty.

The respondent questions the jurisdiction of the court to entertain the petition or to make any order thereon, upon the ground that the infant is legally domiciled in the State of Rhode Island, such being the domicile of its origin, and it not having yet attained to an age when it might have a domicile of choice. The fact that the child is actually within the territorial jurisdiction of this court is lost sight of in this argument.

As to children who are legally domiciled here there is no doubt of the jurisdiction of this court over them. It takes cognizance of cases involving their custody either under the statute (P. L. 1902 p. 259) or by virtue of its general jurisdiction. Baird v. Torrey, 19 N. J. Eq. (4 C. E. Gr.) 481; Richards v. Collins, 45 N. J. Eq. (18 Stew.) 283. The statute above mentioned, by its terms, does not apply, but I see no reason in the nature of things why this court, by virtue of its general jurisdiction over infants, does not acquire the same authority and control over the care and custody of infants who are actually resident in this state, as it does over infants who are actually domiciled here. To hold otherwise would, to put an extreme case, permit designing and evil-minded persons to import infants into the state to become castaways and dependents. Proper superintendence must abide somewhere; the law has assigned it to this court.

I have not been able to find- any case in our reports in which there was a controversy over the custody of a child between parties who were strangers in blood to it; but in my opinion the fact that the child is actually here, and that grounds appear for a real controversy over its custody, are sufficient to justify the court in adjudicating upon the questions raised. In Johnstone v. Beattie (1843), 10 C. & F. 42, the house of lords approved of the appointment by the court of chancery of England of a guardian for air infant who was domiciled in Scotland where all her property was. The judgment was strongly dissented from, but the prevailing opinion has been followed with little question. The real ground was that the infant was within the jurisdiction, and that was sufficient to give the court power to appoint a guardian.

It was held in Re Barry, 61 N. J. Eq. (16 Dick.) 135, that this court had never assumed the authority to appoint guardians for infants. This duty is imposed upon the prerogative and orphans courts. The power seems always to have been exercised by the English, chancery as part of its general supervision of the affairs of infants. This difference, however, does not militate against the argument deduced from the Johnstone Case, because the appointment of a guardian for a foreign infant carried with it all the questions touching the custody of the ward. When, therefore, the court appointed a guardian, it was bound to hear and determine all controversies over the ward’s custody. Both branches of the jurisdiction are derived from the same principle and stand on the same foundation.

Dawson v. Jay (1854), 3 De G. M. & G. 764, is another ease in which the lord chancellor took jurisdiction, although eventually he declined to interfere. There the infant was the daughter of an Englishman who had removed to New York and had become a naturalized citizen of the United States. Her father and mother were dead; her property was in New York; she was taken to England by a paternal aunt, with whom she resided in England. A maternal aunt, who had been appointed guardian in New York, sought to have the infant delivered to her with a view to taking her back to America. The fact that the question of jurisdiction was not raised shows that it was not doubted. In Hope v. Hope, 4 De G. M. & G. 328. the lord chancellor says, speaking of the jurisdiction which is exercised over foreign children in England: “The reason that the jurisdiction exists over foreign children in this country is that foreign children, just like adults while they are in this country, are, to a certain extent, the subjects of the crown oE England. The courts have decided that for this purpose they are, and I think on very good grounds.” The same jurisdiction was declared in Stuart v. Bute (1861), 9 H. L. Cas. 440, in which Lord Campbell, then lord chancellor, who had dissented .in Johnstone v. Beattie, supra, said that if there was a foreign child in England, with guardians duly appointed in the child’s own country, the court oE chancery might, without any previous inquiry, make an order for the appointment of English guardians, and quoting Lord Langdale, who concurred in the judgment of Johnstone v. Beattie, he says: “If it should unhappily become necessary to call upon the courts of the two countries to exercise their power, I know of nothing that would render it impracticable for the English court of chancery to order a guardian resident in England to deliver up the infant to the guardian resident in Scotland,” showing that the house of lords considered the jurisdiction to be undoubted. In Nugent v. Vetsera (1866), 2 L. R. Eq. Cas. 704, Vice-Chancellor Wood says: “I hold the court has power to appoint guardians, for the simple reason that it may well happen that foreign children may be found here who are not being looked after or cared for or the like, or who may even be placed in such a position that they are likely to be despoiled of their property and robbed by those who ought to protect them; they would come here for the protection which this court would afford them.” In re Willoughby, 30 C. D. 324, an infant born in France was the daughter of a French woman, but was a British subject. The father died intestate and the mother thereupon by the French law was restored to her nationality and became legally entitled to the guardianship of the infant. Notwithstanding the non-residence of the infant and the fact that its property was all in France, the chancery division appointed a guardian on the ground that the infant was a British subject, although living in France, and this was affirmed by the court of appeals, a decision which carries the doctrine almost to the very verge.

In Woodworth v. Spring, 4 Allen 321, there was a controversy over an infant whose father and mother were both dead. The child had been brought from Illinois, the state of its domicile, to Massachusetts, with the consent of the guardian. The child lived with its aunt in the latter state, and she, without the knowledge of the Illinois guardian, procured herself to be appointed guardian in Massachusetts. The Illinois guardian sought his custody. Chief-Justice Bigelow says: “In determining the question of his legal custody in this commonwealth, he is therefore to be regarded as a foreign child who is lawfully within the jurisdiction of this state, having been brought within its limits, not forcibly or clandestinely, but with his own consent and with that of the petitioner, his duly-appointed guardian, under the laws of Illinois, who had the lawful custody of his person in that state, * * * he is now lawfully within the territory and under the jurisdiction of this commonwealth, and has a right to claim the protection and security which our law affords to all persons coming within its limits, irrespective of their origin or of the place where they may be legally domiciled. Every sovereignty exercises the' right of determining the status or condition of persons found within its jurisdiction. The laws of a foreign state cannot be permitted to intervene to affect the personal rights or privileges even of their own citizens, while they are residing in the territory and within the jurisdiction of an independent government. Effect may be given by way of comity to such laws by judicial tribunals of other states and territories, but, ex proprio vigore, they cannot have any extraterritorial force or operation. ’ The question whether a person within the jurisdiction of a state can be removed therefrom depends not on the law of the place whence he came, or in which he may have his legal domicile, but on his rights and obligations as they are fixed and determined by the laws of the state or country in which he is found.” There is much more in the opinion to the same effect.

The principle seems to be one of universal application, and, applying it to the case in hand, we must come to the conclusion that this court has jurisdiction to entertain applications touching the custody of foreign children who are within the territory of the state.

It was argued on behalf of the petitioner that "An act to regulate the importation of dependent children and providing a penalty for violation thereof,” approved May 10th, 1907 (P. L. 1907 p. 390), was applicable to the case in hand, but I have not found it necessary to appeal to it for authority to advise a decree for custody. It does not deal with that subject. It may establish a public policy on the part of the state, but cannot be the basis of any judgment touching the custody of children in a contentious proceeding.

I therefore conclude that the child should be returned to the petitioner, and I will so advise.

If the details relating to the delivery of its custody to the petitioner’s agent cannot be arranged by counsel, the time and manner of delivery will be settled by the decree.

Memorandum on Application to Settle the Decree.

The proofs in this case were opened for the purpose of giving the respondent an opportunity to lay before the court a more particular statement of her income and the sources thereof. Further evidence was taken, and the same has been submitted to the court, with fresh arguments on the whole case. This new evidence has not changed my conclusions with regard to the point on which the case was decided at the first hearing. I still think that the resources of the respondent and those of her husband also are too precarious and uncertain to justify this court in leaving the Williams boy in her custody with the added likelihood of his adoption. Mr. and Mrs. Murray happen at the present to be in receipt of an income of perhaps seven thousand five hundred dollars to eight thousand dollars. This, under ordinary circumstances, would, be sufficient to justify the court in leaving the child in Mrs. Murray’s custody. This income, however, is derived not from investments of funds, but is a sort of hand to mouth income derived from the exploitation of new views of psychotherapy, which seem to have originated with Mr. and Mrs. Murray. There seems to be no solid foundation for it and no certainty that it will last. The respondent is therefore conducting a private charity which appears to me to be in danger of being overloaded at the first approach of adverse fortune. It may be doubted whether this charity is of such a nature as places it under the visitatorial jurisdiction of the attorney-general. This officer may institute suits for the correction of abuses in public charities. There does not appear to be any case in which the court has acted upon a charity of this nature. Public charities are such as the court can see to the execution of, but how can this private charity of Mrs. Murray’s be controlled or carried into execution, and in case of a collapse of the enterprise, who would be sufficiently interested to look after the welfare of the children who might thus be thrown upon the world without guardianship? The situation of the petitioner is entirely different. It is a public charity and is subject to state supervision. It has a foundation with an organization of people devoted to its interests and to the promotion of the welfare of the inmates. Besides it has been specially charged with the care and keeping and the nurturing and the oversight of the particular infant in question.

I will advise an order directing the delivery of the child to the petitioner.


text:
    Gas Light Company of the City of New Brunswick and Public Service Gas Company v. Borough of South River.
    [Submitted August 2d, 1910.
    Decided August 9th, 1910.]
    1. Where an act conferring power on a gas light corporation has been in force forty years, and gas mains have been laid under its authority for nearly thirty years with the acquiescence of.the public, and such acquiescence has encouraged the corporation to extend its gas mains beyond the city limits for the accommodation of the people residing there, the court, on a motion for a preliminary injunction to restrain interference with the laying of mains beyond the city limits, will not hold that the right of the corporation to lay the mains does not exist.
    2. The power conferred on a gas light corporation by an act authorizing it to continue and lay its gas mains beyond the limits of a city and within- designated counties as it may from time to time be deemed expedient is not exceeded by the corporation extending its mains to a borough in one of the counties and into territory which has never been supplied with gas.
    3. The question whether a gas light corporation suing to restrain a municipality from interfering with the laying of gas mains has by lapse of time lost the right to lay the mains will not be decided on a motion by the corporation for a preliminary injunction.
    4. The forfeiture of a corporate franchise for non-user can only be effectuated at the suit of the state.
    5. An a'ct and its supplements are construed as one law.
    6. Gonst. Amend. 1S75 art. 1¡. § 7 ¶ 11, prohibiting the piassage of local or special laws granting to any corporation anj* exclusive privilege, does not affect local or special laws in operation before its adoption, and hence does not apply to a special statute granting to a gas light corporation the right to extend its mains into described territory.
    7. The object of Gonst. Amend. 1875 art. 1¡ § 7 ¶ 11, prohibiting the passage of local or special laws granting-to any corporation exclusive privileges, is to prevent the legislature from granting corporate powers to one set of applicants and refusing to another set similar corporate powers.
    S. Act April 21st, 1S76 (P. L. 1876 p. 285), making it lawful for any corporation to file before the expiration of its charter a certificate declaring its purpose that the period of its existence shall be extended not exceeding a specified time, &c., must be so construed as to effectuate the purpose of Gonst. Amend. 1875 art. 1¡ § 7 ¶ 11, prohibiting the passage of any local or special law granting to any corporation exclusive privileges, and must not be construed so as to give to any one corporation any special privilege which it does not give to any other corporation applying therefor.
    9. Under P. L. 1876 p. 309, authorizing the formation of gas light corporations, and act April 21st, 1S76 (P. L. 1876 p. 235), authorizing a corporation to extend its period of existence by filing with the secretary of state a certificate, a gas light corporation authorized to continue and lay its mains beyond the limits of a city and within designated counties, filing with the secretary of state a certificate declaring its desire that the period of its existence shall be extended, does not thereby acquire any special privileges not procurable by other corporations; but, if the certificate vests exclusive privileges in the corporation, the certificate is void as to the exclusive privileges.
    10. The power conferred by the Borough act (P. L. 1897 p. 285), empowering borough councils to pass ordinances prescribing the manner in which corporations shall exercise any privilege granted in the use of any street or in digging up the same for any purpose, is a mere regulative one, and does not authorize an arbitrary refusal to permit a gas light corporation to lay its mains in the streets of the city, and the arbitrary refusal of the mayor of a citj' to grant such a permit amounts to a prohibition and is unauthorized.
    11. Where a corporation suing to restrain a municipality from interfering with the laying of gas mains asks for a preliminary injunction, the court on granting the injunction will require the corporation to file a stipulation consenting that the court on the municipality succeeding on final hearing may require the corporation to remove the work done by it pending the litigation.
    On. motion for preliminary injunction.
    The Gas Light Company of the City of New Brunswick, one of the complainants, was incorporated by an act of the legislature approved March 19 th, 1851; the title of the act was “An act to incorporate the Gas Light Company of the City of New Brunswick.” It authorized the company to manufacture and sell gas for the purpose of lighting the streets, buildings, manufactories and other places situated in New Brunswick, and to lay down gas pipes and erect posts and burners in the streets, alleys, lanes, avenues or public grounds thereof, and to do all things necessary to light the said city and the dwellings, stores and other places situated therein. The act by its terms was to continue in force for thirty years. The company therefore was given the franchise until March 19th,'1881.

      On February 3d, 1870, the legislature passed an act entitled “A supplement to 'An act to incorporate the Gas Light Company of the City of Yew Brunswick/' approved March nineteenth, eighteen hundred and fifty-one.” This act recites that it was represented that certain persons residing outside of the corporate limits of the city of Y ew Brunswick were desirous of being supplied with gas by the Yew Brunswick company, and that they desired that the company be invested with power so to supply them. Thereupon the company was authorized to continue and lay its gas mains so far beyond the corporate limits of the city of Yew Brunswick and within the counties of Middlesex and Somerset as they might from time to time deem expedient and necessary to supply gas to the persons who then or thereafter might reside outside of the said corporate limits, and to erect gas posts and burners, supply gas, and charge for the same in as full and ample a manner as they had authority under their charter to do the same thing in the city of Yew Brunswick. On September 28th, 1875, the amended constitution went into effect, whereby the legislature was prohibited from passing private, local or special laws granting to any corporation, association, or individual any exclusive privilege, immunity or franchise whatsoever, and directing it to pass general laws providing for such cases. The legislature was thereby prohibited from passing any special act which conferred corporate powers, and they were directed to pass general laws under which corporations might be organized and corporate powers of every nature be obtained. On April 21st, 1876, the legislature passed an act by which it was provided that it should be lawful for any corporation theretofore or thereafter created under or by virtue of any law of this state, at any time before the expiration of its charter or of the period named in its certificate of organization, to file in the office of the secretary of state a certificate under its common seal, attested by the signature of its presiding officer, declaring its desire that the period of its existence as such corporation should be extended for any time therein mentioned not exceeding fifty years, and that upon making and filing such certificate the period of the existence of such corporation should be extended as declared in such certificate as fully as if the said period had been named in the original charter or certificate of organization of such corporation. On May 29th, 1878, the New Brunswick company filed in the office of the secretary of state a certificate of the character provided for in the act of 1876 for the object and with the purpose of extending the duration of its existence for a period of fifty years from the time of the expiration of its original charter. Subsequently, the Public Service Corporation of New Jersey was organized, to which corporation the gas company leased all its property and franchises except its franchise to be a corporation, which leased rights subsequently became vested in another corporation called the Public Service Gas Company, which is one of the complainants in this suit.
    The complainants now desire to lay gas mains and gas pipes within the limits of the borough of South River, a borough which is located within the boundaries of the county of Middlesex, and they made application to the mayor for permission to open the streets and highways for that purpose. This application was in compliance with the requirements of an ordinance of the borough which has been in operation since July 19th, 1905. Section 1 of the ordinance provides that no corporation or individual shall dig up a street or road for any purpose whatever without a permit in writing from the mayor, and that the mayor may refuse such permit unless the applicants shall enter into a bond to the borough in the penal sum of $1,000, with surety, to be approved by the mayor, conditioned that the applicant will carefully make such digging or excavation and be responsible for any damage or injury that may occur to anyone by reason of neglect or carelessness in prosecuting the work, and that they will properly refill and ram and puddle the earth and suitably restore the pavement and leave the pavement and street in as good condition as it was before. The mayor refused to grant the permission sought by the complainants. No reason whatever is assigned for his action. The complainants then proceeded with the contemplated work, but were interfered with by the borough authorities, and they now seek an injunction to prevent the borough and its officers from interfering with or preventing the laying of gas mains beneath the surface of the streets of the borough.

      Mr. Frank Bergen, for the motion.

      Mr. Alan II. Strong, contra.

   Howell, V. C.

The following objections are interposed to the relief prayed by the complainant: First, that the title of the act of 1870 does not express the object which the legislature had in view, namely, the extension of the powers of the corporation beyond the limits of the city of New Brunswick. I do not think tire defendant can prevail on this point. The act has been in force for forty years, and gas mains have been laid under its authority for nearly thirty years, during all of which time the public have, acquiesced, and the complainant, by such acquiescence, has been induced and encouraged in the extension of its gas mains beyond the city limits for the accommodation of the people residing there. Under these circumstances, this court, on a preliminary motion, ought not to hold that the right does not exist. The question seems to be one which might very properly be litigated in the common law courts. There are, however, decisions which uphold the view of the complainant.

In Gifford v. New Jersey Railroad Co., 10 N. J. Eq. (2 Stock.) 171, the facts were that the Newark aird Bloomfield Eailroad Company was incorporated in 1852; it had authority to construct a railroad from some suitable place in Bloomfield township to intersect the Morris and Essex Eailroad Company in Newark, and also to intersect the railroad of the New Jersey Eailroad and Transportation Company. In 1853 a supplement was passed to this act authorizing the railroad company to bridge the Passaic river. The title to the supplement was “A supplement, to an act entitled ‘An act to incorporate the Newark and Bloomfield Eailroad Company,’ approved March 26th, 1852.” It was said by the court with reference to the constitutional provision: “The design of this provision is declared to be to prevent improper influences which may result from intermixing in one and the same act such things as have no proper relation to each other. The objects in that statute, however, are parts of the same enterprise and cannot be said to have any improper relation to each other.”

In Paterson Railway Co. v. Grundy, 51 N. J. Eq. (6 Dick.) 213, this court passed upon a similar question. In that case the title of the original act was “An act to incorporate the Paterson and Little Ealls Iiorse and Steam Kailroad Compaq,” and it conferred power to construct and operate a railway from some point in Paterson to Little Ealls. A supplement thereto passed in 1870 had this title, “A supplement to ‘An act to incorporate the Paterson and Little Ealls Iiorse and Steam Eailroad Company/ approved April 9th, 1866.” This gave authority to the railway company to construct its railway longitudinally through certain designated streets in the city of Paterson. It was argued that this was unconstitutional for the reason that it violated the provision of the constitution above referred to. Concerning it, Vice-Chancellor Green says: “It is next claimed that the act of 1870 is void because the object of the act is not expressed in the title. It was argued that the object of the act is to confer upon the company named in the title authority to construct and operate a railroad in certain streets in the city of Paterson solely, whereas the title of the act refers to a horse and steam railroad company between Paterson and Little Ealls. This idea is the result of construing the designation of a Compaq by its name as the statement of the object of the act in its title. The object of the act was to confer additional privileges upon the company which was originally incorporated by the act of 1866 under the name mentioned in the title to the supplement. It was no more necessary to refer in the title to all the powers to be given by the supplement than it was to set out in detail every franchise granted to the corporation by its charter. The title to such acts were generally nothing more than to incorporate a company designating its corporate name. While it is true that no power could be granted by the supplement which would have been unconstitutional if incorporated in the original act, that argument does not invalidate the supplement because it would have been entirely competent for the legislature in 1866 to have granted under the original act the powers which are given by the supplement of 1870.” The same principle was settled in the same case with relation to the stringing of wires under the act of March 10th, 1892.

The next objection that is urged is that the act of 1870 does not purport to grant to the company the right to extend its mains throughout the counties of Middlesex and Somerset. The words granting the power referred to axe much broader than they arc in the Madison Case or the Millville Case. Madison v. Morristown Gas Light Co., 65 N. J. Eq. (20 Dick.) 356; Millville Gas Co. v. Vineland Light Co., 72 N. J. Eq. (2 Buch.) 305. In those cases the authority extended to the prescribed territory and its “vicinity.” A much wider significance of the words used in this case is apparent at a glance. Here the company was authorized and empowered to continue and lay their gas mains so far beyond the corporate limits of the city of New Brunswick and within the counties of Middlesex and Somerset as they from time of time might deem expedient and necessary to supply gas to persons who then or thereafter might reside outside of the corporate limits. While there necessarily would have to be some limit to an extension of the gas mains and to the operations of the company, it does not seem to me that the limit has been exceeded by an extension to the borough of South Eiver, across and into territory which has never been supplied with gas by this or any other company.

Another question raised is, that if the right now claimed for the company ever existed, it has been lost by lapse of time, and therefore cannot now be exercised. This also appears to be a question which should properly be litigated at law and not be decided on a mere motion. It is true that a corporation may forfeit its franchise by non-user, but such forfeiture can only be effectuated and declared by an action brought by the state on behalf of the public. In Jersey City Gas Co. v. Dwight, 29 N. J. Eq. (2 Stew.) 242, a private citizen was allowed to set up the invalidity of franchises that were claimed by a corporation; whether a municipal corporation may do so or whether it must be remitted to the public remedies is a question that I do not find it necessary to decide.

The principal question that was argued on the hearing of this .motion related to the power of the gas company to exercise its franchises beyond the limits of the city of New Brunswick. It was claimed on the part of the defendant that the original charter limited the operations of the company to that city; that the act of 1870 was unconstitutional because of its defective title; that the act of 1876 could not be so construed as to extend the operation of the act of 1870 (even though it were originally constitutional) beyond the period fixed in the original charter for its ex» piration; that if a construction contrary to this view should be made, then the act of 1876 will contravene the constitutional provision above quoted, for the reason that it would thus be made an instrument for extending a special privilege and would be equivalent to special legislation, and therefore inimical to tha constitutional provision.

It is settled that an act and its supplements are to be construed as one law. Van Riper v. Essex Public Road Board, 38 N. J. Law (9 Vr.) 23; Barnaby v. Bradley & Currier, 60 N. J. Law (31 Vr.) 158.

It is likewise settled that the amended constitution did not affect local and special laws if they became operative before the adoption of the constitutional provision forbidding such laws. Kirkpatrick v. New Brunswick, 40 N. J. Eq. (13 Stew.) 46; Stockton v. Central Railroad of New Jersey, 50 N. J. Eq. (5 Dick.) 52.

We must, therefore, say that when the constitutional provision went into effect in September, 1875, it found the gas company with a charter which would expire March 19th, 1881, by which it had authority to extend its mains beyond the city of New Brunswick into the counties of Middlesex and Somerset. The adoption of the constitution did not affect the charter or any of the rights held under it, nor were the same affected by the act of 1876, except so far as that act must be held to operate as an amendment to the charter of the company. Coming then to May 39th, 1878, we find the gas company with its rights unimpaired by the constitutional provision, and with further corporate powers conferred upon it by the act of 1876, because it is undoubted that that act did confer corporate powers (Grey v. Newark Plank Road Co., 65 N. J. Law (36 Vr.) 51; Jersey City v. New Jersey Street Railway Co., 73 N. J. Law (44 Vr.) 176) bjr which, on their face, the company had the consent of the state to extend the period of its own existence. Iiow far then did the consent of the state go and to what corporate powers did it reach? The purpose, object and scope of the constitutional provision in question was considered by the supreme court in Jersey City v. North Jersey Street Railway, supra. Chief-Justice G-ummere says: “The object of the constitutional provision appealed to is not to prevent corporations from being vested with exclusive powers, privileges and franchises, but to prevent the legislature from granting corporate powers, privileges and franchises to one set of applicants and refusing to another set of applicants precisely similar corporate powers, privileges and franchises.” And discussing the effect and operation of the act of 1876, he says that “if it preserved to any corporation which takes advantage of its provisions a power, privilege or franchise which no other corporation of the state of a like character holds or can acquire, it would contravene the constitutional provision referred to to that extent.” That is to say, the constitutional requirement was that everybody should be treated alike, and that the act of 1876 must be so construed as to effectuate the constitutional purpose, or, in other words, that it must not be construed so as to give to anyone any special power, privilege or franchise which it did not provide for giving to anyone else who might apply for it. This means that if the document which was filed by the company in 1878 for the purpose of extending the duration of the life of the company should produce the effect of vesting exclusive powers, privileges and franchises in the company which filed it, then and in such case the instrument so filed would be void so far as exclusive franchises are concerned and no exclusive rights could be acquired thereunder. What powers, privileges or franchises did the certificate of 1878 confer upon the company that filed it which were peculiar to it and which could not have been acquired by anybody else? There was in force at that time a general law which authorized the formation and regulation of gas light corporations. P. L. 1876 p. 809. It became a law on the same day with the act authorizing corporations to extend the period of their existence. So far as I can see, the certificate of 1878 and the legislation which authorized it did not give to the New Brunswick company any power, privilege or franchise either in New Brunswick or in the oiitlying counties of Somerset and Middlesex which was not procurable by others at that time under the general act to which I have referred. It was only necessary to organize a corporation with sufficient capital to build the works and lay the mains, and immediately the new company would become vested with power to supply gas to the borough of South Eiver in as full and ample a manner as the right is now claimed to exist in favor of the New Brunswick company.

I think it must be conceded that if the certificate of 1878 and the legislation upon which it was based should be found to perpetuate any special power, privilege or franchise, which would be exclusive in its operation, the result would be, not that the legislation and the certificate thereunder would be absolutely void, but that the special and peculiar franchises in so far as they were exclusive would be invalid and unenforceable. The act of 1876 was held to be general. It is general in form, but the law will not give countenance to any act done in accordance with the forms which it prescribed that will work out a result in contravention to the fundamental law.

I therefore conclude that the right claimed by the New Brunswick company and its lessee to lay gas mains within the limits of the borough of South Eiver is an existing right, held under legislative sanction, and that it is enforceable by the ordinary lawful methods.

I have also, in this connection, made a cursory examination into the powers of the borough government in connection with this litigation, although no point was made of it at the hearing or any argument adduced in relation to it. By the Borough act of 1897 (P. L. 1897 p. 285) the council of the borough has power to pass ordinances, among other things, to prescribe the manner in which corporations shall exercise any privilege granted in the use of any street, road or highway, or in digging up the same for any purpose whatever. The council has passed an ordinance in relation to this subject, a copy of which is appended to the bill, and the first section of which is herein above referred to. This power, however, is a mere regulative one, and does not extend so far as to permit an arbitrary refusal or an unreasonable regulation or requirement, much less dees it authorize a flat prohibition. Vice-Chancellor Stevens says of it in Madison v. Morristown Gas Light Co., supra, that the act authorizes the borough council to prescribe the manner in which corporations or individuals may exercise any privilege granted to them in the use of any street, and that it plainly authorized regulation, not prohibition, and that, consequently, an ordinance authorizing the street committee arbitrarily to refuse a permit was invalid. The supreme court made the same ruling with relation to township ordinances in Cook v. North Bergen, 72 N. J. Law (44 Vr.) 119; affirmed, 73 N. J. Law (44 Vr.) 818. The complainants in this case made application to the borough authorities for permission to dig into and open the streets for the purpose of laying their mains. The application appears to comply in every particular with the terms of the ordinance. The mayor, in whose discretion the- permission lies, has refused to grant it. 3STo reason is assigned for his refusal. It does not appear from the motion papers that he ever considered it. His refusal, therefore, amounted to a prohibition, and as such is manifestly void. Having complied with the terms of the ordinance, it became the duty of the mayor to grant the permit, and his action in refusing it may be disregarded.

The result is that an injunction must issue in accordance with the prayer of the bill, but it must be upon terms.

In case the defendant shall succeed upon final hearing, it will have the right to demand that all the work done by the complainants pendente lite must be removed, upon the principles laid down by Vice-Chancellor Emery in Morrow v. Hasselman, 69 N. J. Eg. (3 Robb.) 612. The defendants ought not to be put to the expense of a new and independent litigation to effect their removal. 1 shall therefore require that the complainants file a stipulation consenting that the court may, in this cause, by a mandatory injunction, or otherwise, as shall be most convenient, direct the removal of the mains which may be laid pending the suit, in ease it shall be decided that they were wrongfully laid.


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    William L. Mellon et al. v. Mississippi Wire Glass Company.
    [Submitted September 19th, 1910.
    Decided September 30th, 1910.]
    1. Documents forming part of a contract must be construed by giving the words used therein their ordinary meaning.
    2. Where the stockholders, through the corporation, whose property defendant purchased under an agreement to issue preferred stock in payment therefor to the stockholders of the selling corporation, accepted the certificates of preferred stock tendered to them by defendant without objection thereto or to the form of defendant’s charter amendment authorizing the issuance of such preferred stock, they thereby ratified any variance between the terms of the contract by which the corporate property was sold to defendant, and defendant’s amended certificate of incorporation and the preferred certificates, issued pursuant thereto.
    3. A corporation, of which complainants were stockholders, sold its property to defendant corporation, in part consideration of the issuance to the selling corporation, of a certain amount of preferred stock; the contract providing that such stock should be entitled to dividends at the rate of five per cent, per annum, and that the certificates should provide that no preferential or co-ordinate lien should be created without the consent of the holders of the majority of such preferred stock, and that it should be redeemable on any dividend day at a certain price and accrued dividends. Defendant amended its certificate of incorporation in order to issue such preferred stock, and the amended certificate provided that the holders of such stock should be entitled to five per cent, dividends before any dividend should be paid on the common stock, and that the remainder of the net earnings should be declared-as dividends on the common stock, and, upon dissolution of defendant corporation, the preferred stockholders, should receive from its assets, the par value of the preferred stock, the remainder of the assets to be paid to the common stockholders. The certificates of preferred stock issued entitled the holders to receive from the net profits, dividends at the rate of five per cent, per annum, cumulative, and payable before any dividends on the common stock were paid, and if in any year such dividends were not paid, the deficiency should be payable before dividends wore paid upon the other stock, the remaining net earnings to be available to pay dividends upon the common stock, and that upon dissolution the preferred stockholders should receive from the corporate assets the par value of the shares and unpaid dividends before anything should be paid to the common stockholders. — Held, that the contract for the sale of the corporate property to defendant, defendant’s amended certificate of incorporation, and the certificates of preferred stock issued, if construed together as a contract, did not require defendant to set aside a certain amount as a sinking fund out of which to pay complainants as preferred stockholders, the par value of their stock upon dissolution.
    4. Preferred stock certificates provided that upon liquidation or dissolution of the corporation, the preferred stockholders should be entitled to be paid in full out of the assets of the corporation, the par value of the shares and the unpaid dividends accrued thereon, before anything should be paid to the holders of the common stock. — Held, that the corporation would not be compelled, at the suit of the preferred stockholders, to establish a sinking fund out of which to pay the par value of the preferred stock on dissolution of the corporation, on the ground that when the patents expired, in which nearly the whole capital stock of the corporation was invested, there would be no property out of which to pay the par value of the preferred stock; there being no legal obligation upon the corporation to do so in absence of contract.
    Tlie bill is filed by holders of preferred stock of the defendant company; it prays that it may be compelled by final decree to establish a deficiency fund which shall be available to redeem the preferred stock at par upon the dissolution of the corporation, and that it may be enjoined from declaring any further dividends among its common stockholders, until such fund shall have been provided. The defendant corporation holds a perpetual charter and there is no dissolution pending or contemplated. The complainants and one other person who is now dead were the sole stockholders of a Pennsylvania corporation called the Brownsville Company. On March 27th, 1903, the Brownsville Company entered into a contract with the defendant by which it sold to the defendant all its assets and property of every kind, excepting cash in bank and bills and accounts receivable, in consideration of the payment of $20,000 cash and $80,000 in five annual installments, and of the issue to the Brownsville Company of preferred stock of the defendant of the par value of $400,000 which the contract says
    “shall be preferred as_to dividends and distribution and entitled to dividends at the rate of five per cent, per annum payable quarterly from April 1st, 1903, said dividends to be cumulative; said stock to be nonvoting stock, and the certificates for said stock shall provide that no preferential or co-ordinate lien or claim shall be created without the consent of the holders of a majority of such preferred stock, and such preferred stock shall be redeemable on any dividend day at §105 and accrued dividends, such redemption to be made pro rata among all the holders of such preferred stock.”
    There were further provisions for the purchase by the defendant of certain merchandise and raw materials of the Brownsville Company, but inasmuch as these were to be paid for in cash on an appraisement, they cut no figure in this case. The defendant at that time had a capital share of $1,500,000 common stock, of which $1,200,000 had been issued. In order to provide for the preferred stock which it was bound to deliver to the Brownsville Companj’, it on April 6th, 1903, amended its charter so as to provide for the issuing of $400,000 preferred stock; the amended certificate contains these words:
    “The preferred stock shall entitle the holders thereof to receive out of the net earnings dividends at the rate of but never exceeding five per centum per annum payable quarterly, cumulative from the first day of April, 1903, before any dividends shall be set apart or paid on the common stock; the remainder of said net earnings shall be declared as divi-''''dends upon the common stock; upon dissolution the holders of the preferred stock shall be entitled to receive from the assets 6f the corporation the par value thereof; the remainder of said assets shall be paid to the holders of the common stock.”
    When the amendment of the certificate was completed, the Brownsville Company transferred to the defendant the property which it had agreed to transfer, and the defendant paid to it the cash and issued to it the preferred stock which had been bargained for. The certificates therefor provided that the holders of the preferred stock should be entitled to receive when and as declared from the surplus or net profits of the corporation dividends at tire rate of five per centum per annum from April 1st, 1903, quarterly; that such dividends should be cumulative and should be payable before any dividends on the common stock or any other stock of the corporation might be paid or set apart,
    fc^“so that if in any year dividends amounting to five per centum shall not have been paid thereon the deficiency shall be made payable before any dividends shall be paid upon the common or any other stock or set apart therefor; the remaining net earnings shall be available for the purpose

      of dividends upon the common stock; in the event of any liquidation, dissolution or -winding up (whether voluntarily or involuntarily) of the corporation, the holders of the preferred stock shall be entitled to be paid in full out of the assets of the corporation, both the par amount of the ; shares and the unpaid dividends accrued thereon before any amount shall j be paid to the holders of the common or other stock.”
    There is likewise a provision forbidding co-ordinate or preferential liens upon the company’s property without the consent in writing of the holders of the majority of the preferred stock issued.
    Upon the dissolution of the Brownsville Company, and the division of its assets, the whole issue of the preferred stock of the defendant was divided amongst its shareholders, and in this way the complainants became shareholders in the defendant corporation.
    The balance sheet of the defendant as of January 1st, 1909, shows total assets of $2,058,206.88, nearly all represented by patents, good will and the Brownsville purchase, which also represented patents to the extent of $'-100,000.
    The company has been successful and has made large profits, has already paid the dividends on the preferred stock and has likewise paid large dividends on the common stock, in recent years as much as sixteen per centum per annum. The complainants assert that if this course of business continues, at the time of the expiration of the patents, in which nearly the whole capital stock of the company is invested, there will be neither patents nor good will nor propertjr of any particular value left from which the defendant will be able to realize money to pay the par value of the preferred shares upon dissolution, and they claim therefore that the company should be compelled for their protection to establish a deficiency or sinking fund for the protection of the outstanding preferred stock.

      Mr. Sherrerd Depue, for the complainants.

      Mr. John T-F. Griggs and Mr. Arthur J. Baldwin (of the New York bar), for the defendants.
   Howell, V. C.

Counsel will recall the manner in which the foregoing facts were presented. When the final hearing was moved, counsel on both sides desired to take the opinion of the court upon the question of law which appears so prominently on the face of the bill before proceeding- to offer proofs. In considering and deciding this question, I have taken as true the undisputed and acknowledged facts set out in the bill. If after reading my conclusions counsel desire to submit proofs, I will fix a day for that purpose.

The case, as now presented, must be adjudged in accordance with the well-settled principles of the Contract Ia,w which apply to corporate action. The complainant can succeed only by showing either an express contract or a contract which may be implied from the documents in the case, or an obligation or duty cast upon the defendant by the law, for the protection of what the complainants claim to be tlieir right. A careful examination of the amended certificate of incorporation discloses no express contract on the part of the defendant to provide any such fund as the complainants desire to have established. This the complainants concede, but they say that taking together the Brownsville Company contract, the amended certificate of incorporation, and the stock certificates which were issued to the complainants out of all these writings, arises an implied contract to establish such a fund. The documents must be construed with reference to the common and ordinary meaning of the words. I have sought therein to find facts from which a contract might be implied, but have not succeeded. I must therefore say that there is nothing in the documents in the case - which indicates to the slightest degree any purpose on the part of either the complainants or the defendant to establish a deficiency fund for the benefit of the preferred stockholders.

On the other hand, still treating the case as a ease of contract, we find that the amended certificate of incorporation expressly provides for a situation quite at variance with that sought to be established by the complainants; it provides for the preferential dividends “before any dividends shall be set apart or paid on the common stock. The remainder of said net earnings shall be dedared as dividends upon the common stock.” The same genera] idea is expressed in the stock certificates which the complainants hold; there the phrase is “the remaining net earnings shall be available for the purpose of dividends upon the common stock.” If these words mean anything it is that the preferred stockholders bargained for a stated dividend and consented that all the remaining net earnings or profits might be divided among the common stockholders.

But it is said on the part of the complainants that the amended certificate and the certificates of stock do not coincide entirely with what the defendant agreed to give to the Brownsville Company by tlio contract. This may be true; there are verbal variations which may or may not be important. But this is not a case for the reformation of the contract or for the correction of any errors or mistakes winch may have crept into the transaction between the two companies. The Brownsville Company, and through it the complainants, accepted the certificates of stock tendered to them by the defendant in the form in which they are without objection thereto and without objection to the form of the charter amendment which authorized the issue, and to this extent they ratified any variation that may exist between the terms of the Brownsville Company contract on the one hand and the amended certificate of incorporation and the stock certificates on the other hand.

It is obvious that the Brownsville Company and the complainants might have protected themselves by their contract, but no mention of a deficiency fund or sinking fund appears in the negotiations or in the contract itself. I think therefore that under-the contract the defendant is not bound to make any provision of the character demanded by the complainants.

But it is urged that a duty or obligation is cast upon the dofendant by the law to see to it that in case of dissolution at some distant and indeterminate period of time, the current assets of the corporation shall he maintained at such a value over and above the liabilities as will protect the complainants. There is no statutory warrant for this contention, nor do the complainants’ counsel call my attention to any case in which such a position was taken and was maintained. On the contrary, the principle seems to have been decided by the English court of appeal in Lee v. Neuchatel Asphalt Co. (1889), 41 C. D. 1; 58 L. J. Ch. 408. That was a bill by a common stockholder to restrain a corporation from paying a dividend out of profits for a certain year upon the ground that the fixed capital of the company was an asphalt deposit which was being reduced from day to day and so became what was termed a wasting asset, the theory being that if the dividends continued the fixed capital would be eventually entirely consumed in dividends. It was decided that when the assets of a company are in the nature of a wasting character depreciated by efflux of time or exhaustion of material, such as mines, patents ox leaseholds, if, for the purpose of carrying on the business of the company and getting a profit the annual consumption of that capital is necessary, then apart from any regulation in the articles, there is no obligation by law or statute, to create a reserve fund out of revenue to recoup the wasting nature of the capital, and that the division among the shareholders of the surjDlus produced from such wasting property, after retaining enough to pay the company’s creditors, is not a return of capital and as such prohibited by the statute.

This case did not reach the house of lords, nor has the principle been decided, so far as I can find, by the English court of last resort, but it has been followed and approved in many cases, and its principle is practically adopted by our court of errors and appeals in the case of Goodnow v. American Writing Paper Co., 73 N. J. Eq. (3 Buch.) 692.

This appears to me to be decisive of the case as now presented; if there are no other facts than those which are here mentioned, the defendant must have the decree.


text:
       Congregational Church Building Society v. Trustees of the Society of the First Congregational Church of Jersey City et al.
    [Submitted July 31st, 1908.
    Decided September 22d, 1908.]
    The complainant is a corporation affiliated with the Congregational church at large, whose principal business consists in furnishing weak and struggling churches with funds with which to erect church buildings and parsonages, securing any advances made by it by two methods, one called a “grant” mortgage and the other a “loan” mortgage. In a suit brought by the complainant to foreclose a mortgage made by a needy church to a trustee to secure a sum due to certain of its creditors and assigned to the complainant to secure to it the repayment of advances made by it to another such church (one of the defendants), into which the mortgagor church had become merged upon the terms that the latter should pay the debts of the church so merged (secured by the mortgage), said defendant claimed that in the taking of the assignment it was complainant’s intention to collect for the benefit of said defendant by general subscription for the purpose indicated such amount of money as could be collected for the purpose, and that the remainder should be advanced by the complainant to said defendant in the form of a mortgage known as a “grant” (practically a gift), evidence examined, and held that such contention was untenable, and that a decree for the complainant should be' made for the sum actually advanced by it.
    On final bearing on bill, answer, replication and proofs.

      Mr. Corra N. Williams and Mr. Edward M. Colie, for the complainant.

      Mr. Fra.nlc I-I. Hall and Mr. Max Rosenberg, for tlie defendant trustees.

      Mr. William G. Cudlipp, for the defendants Louis Darmstadt and others.
   Howell, V. C.

The bill in this ease was filed by the Congregational Church Building Society, a New York corporation, against the trustees of the Society of the First Congregational Church of Jersey City, hereinafter called the Congregational church, to foreclose a mortgage made March 1st, 1895, by the South Bergen Reformed Church to David Henry, trustee, to secure the sum of $10,744.85 due to several creditors of the mortgagor on account of work done and materials furnished for the erection of a church in Jersey City. The facts as developed upon the hearing are as follows: The South Bergen Reformed Church corporation, some time prior to 1895, erected a church building which cost much more money than the church corporation had in hand to expend on it; creditors to the amount named in the above-mentioned mortgage remained unpaid, and in order to secure the payment, the said mortgage was made covering the church premises, but subject to a prior mortgage of $15,000 which was held as an investment. The South Bergen Reformed Church, after the giving of the mortgage, found that its financial needs were so great and its means of support so small that it -would shortly be obliged to go out of existence. Negotiations were thereupon entered into between the South Bergen Reformed Church and the Congregational church looking to the absorption of the South Bergen Re■formed Church, its members and its property, upon condition that the Congregational church would pay its debts which were secured by the mortgage. The Congregational church was willing to enter into this agreement provided it could be furnished with the money necessary for that purpose, and to this end it made application to the complainant for assistance in this enterprise. The complainant is a corporation affiliated with the Congregational church at large, whose principal business consists in furnishing weak and struggling churches with funds with which to erect church buildings and parsonages. It has two methods of securing any advances which may be made by it, one of which is called a “grant” mortgage and the other a “loan” mortgage. These are described by Mr. Charles E. Hope, the treasurer of the complainant, as follows: Grants are made principally to the more needy churches. The conditions annexed to “grants” are that they shall remain Evangelical Congregational churches, shall keep insured, shall pay taxes and assessments, if any, shall maintain public worship and shall make an annual contribution to the societj1', i. b., the complainant. It takes from the church corporation a mortgage in a special form evidencing the contract. When the complainant makes a “loan,” the conditions are the same, except the “loan” is required to be returned by installments without interest. In the case of a default in the conditions contained in what is known as a “grant” mortgage so that the money becomes due, interest is charged from the date of the loan of the money.

On November 17th, 1896', negotiations between the Congregational church and the complainant, which had been carried on theretofore in a .somewhat informal manner, culminated in a formal written application, signed by the trustees and deacons, addressed to the complainant requesting the complainant to furnish to it the sum of $10,500 to.aid in purchasing the church property which was then the property of the South Bergen Reformed Church. A special meeting of the persons composing the complainant corporation was held on November 19th, 1896, to consider the request. At this meeting a resolution was passed by which the complainant professed to guarantee the payment of the mortgage in question, provided the title to the property should be satisfactory, and that the amount of the mortgage was all the indebtedness on the church with the exception of the first mortgage of $15,000, and appointed a committee to make special collections for the purpose, with the understanding that the property should belong to the Congregational church, which is known in the resolution as the Tabernacle Congregational Church, and that the complainant should protect by trust mortgage its paj1-ments and collections.

It was shortly after determined that this resolution did not express the exact intention of the complainant, and thereupon a second special meeting was called and held on November 27th, 1896, at which, after discussion, the following resolution was passed:

“Resolved, That the Congregational Church Building Society grant to the trustees of the First Congregational Church of Jersey City the sum of $2,700 to aid in the purchase of the church property of the South Bergen Beformed Church of Jersey City, the same to be paid to said trustees of the First Congregational Church of Jersey City upon receipt of a mortgage in the usual form upon the property so purchased having prior encumbrances not exceeding $24,000.”

Two days before the passage of this resolution a deed of conveyance was executed and acknowledeged from the South Bergen Reformed Church to the Congregational church covering the premises in question. At the end of the description of the property in this deed occurs this clause:

“Subject to a certain mortgage to Daniel Henry, trustee, dated March 1st, 1895, and recorded in book 330, page 15, of mortgages for Hudson county for ten thousand seven hundred and forty-four dollars and eighty-five cents ($10,744.85).”

This deed was recorded in the office of the register of deeds of Hudson county on December 1st, 1895, at nine o’clock a. m.

Some time prior to these events, a judgment had been recovered against the South Bergen Reformed Church, and the property sold by the sheriff of Hudson county by virtue of an execution issued on the judgment to George M. Craig, who received a sheriff’s deed therefor, which deed of conveyance placed the legal title to the said premises in the said George M. Craig. On November 35th, 1896, Craig and wife executed and acknowledged a deed of conveyance for the said church premises to the Congregational church in consideration of one dollar, and at the end of the description thereof occurs this clause:

“Also subject to a certain mortgage to David Henry, trustee, dated March 1st, 1895, and recorded in book 330, page 15, of mortgages of Hudson county, for ten thousand seven hundred and forty-four dollars and eighty-five cents ($10,744.85).”

This deed was recorded in the office of the register of deeds of Hudson county on December 1st, 1896, at nine o’clock a. m.

These two deeds gave to the Congregational church the title to the said premises. On the same .November 35th, 1896, the Congregational church executed a mortgage to the complainant to secure the sum of $3,700, covering the premises in question, -which mortgage ivas in the form called in the case a “grant” mortgage. This mortgage was acknowledged on November 28th, 1896, and was recorded in the office of the register of deeds on December 2d, 1896. On November 30th, 1896, the complainant drew its check to the order of the Congregational church for the said sum of $2,700, for which the trustees oE that church gave a receipt by which they acknowledged receipt from the' complainant of the sum of $2,700, to aid in the purchase of the house of worship of the South Bergen Eeformed Church by the First Congregational Church of Jersey City, subject to all the provisions and conditions mentioned in the mortgage dated November 25th, 1896. It appears that the transaction was closed on the last day of November, 1896, and that the Congregational church was then put in possession of the property, subject to the first mortgage of $15,000, and subject also to the mortgage that was originally made to David Henry, trustee, on account of which the case shows $2,700 was paid, being the $2,700 which had been advanced by the complainant.

The pressure on the Congregational church for money seems not to have ceased, because on December 9th, 1896, at a meeting of the trustees of the complainant, the following resolution was passed:

“Voted that $6,000 be paid out temporarily from the grant fund, in the discretion of the finance committee, secretary and treasurer, with which, in addition to special collections for the same purpose to take up the second mortgage on the First Congregational Church of Jersey City, or any claims secured by it, said mortgage to he assigned to this society.”

This appears to be the last formal official action taken by the complainant with reference to the matter. The case shows, however, that on February 20th, 1897, David Henry, the holder of the mortgage in question, made an assignment of it in the usual form to the complainant, at which time Mr. Henry covenanted that there was owing upon the said bond and mortgage the sum of $11,500.

In the meantime both the complainant and the Congregational church, and its pastor, Mr. Scudder, employed themselves in securing subscriptions to aid.the complainant and the Congregational church in paying the indebtedness which the church had assumed. The total amount paid to David Henry was $11,488. This was made up of three items — first, the so-called grant money of November 30th, 1896, $2,700; second, collections amounting to $3,976.22, and third, $4,811.78 advanced by the complainant. The complainant has held the Henry mortgage from February, 1897, and until the beginning of this suit, does not appear to have demanded any interest or any installment of, principal, and during all that time neither party appears to have thought of the mortgage or to have raised any discussion about its terms. I do not remember to have seen a more negligently conducted piece of important business. If the Congregational church had been diligent, it would have seen to it that proper measures were taken by the complainant and proper records made to show what the facts were or to substantiate the claim that it now makes. It now claims that it was the intention of the complainant to collect for the benefit of the Congregational church by general subscription for the purpose indicated such amount of money as could be collected for the purpose, and that the remainder should be advanced by the complainant in the form known in the case as a “grant,” which is practically a gift, as appears by the conditions set out in Mr. Hope’s testimony. In the face of the action taken by the trustees of the complainant at its meetings November 19th, November 27th and December 9th, 1896, I am unable to come to such a conclusion. The resolution of November 19th, 1896, purports to guarantee the payment of the Henry mortgage, but just what that means it is not easy to determine. It certainly did not authorize the complainant’s officers to advance any money out of its treasury for the benefit of the Congregational church. The, first authority to pay money was the resolution of November 27th that plainly authorized the officers of the company to make a “grant” of $2,700 upon receipt of what they knew as a “grant mortgage,” but the thing which to my mind clinches the position taken by the complainant is the resolution of December 9th, in which the trustees of the complainant authorized the officers to pay temporarily $6,000 from the grant fund to aid in taking up the mortgage in question, "said mortgage io 'be assigned io this society!’ If the complainant had intended at that time to advance the money in the form of a “grant,” how easy it would have been to say so, and why direct the officers of the complainant to see to it that the mortgage so to be purchased with the funds of the complainant should be assigned to the complainant?

This resolution of December 9th, 1896, is the last official act of the complainant that has been laid before the court. I have been unable to find in the case any fact which would justify me in holding that the complainant intended to make a practical gift of all this money to the Congregational church, or to do anything beyond what appears in the complainant’s minutes as its official and formal conclusions. In the face of this resolution, how could any officer of the complainant feel authorized to advance so large a sum as was eventually advanced, bn the security of a “grant” mortgage? The resolution requires that the mortgage should be assigned to the complainant. This was done. Nothing else would have satisfied the complainant’s requirements.

I have no doubt but that the assignment of this mortgage to the complainant was understood by all the parties. It was necessary undoubtedly for the Congregational church and its officers to have accounted to the complainant for the amount of the collections made by it and its pastor in order that the complainant should know how much money it would be required to advance in order to take the mortgage from the hands of Mr. Henry. There is no testimony showing that this was so, but I do not see how the transaction could have been completed without the full knowledge of some at least of the officers of the Congregational church. The assignment was then taken in accordance with the resolution of the trustees of the complainant corporation, and so far and to that extent, the action of the complainant seems to be entirely consistent, and to be quite at variance with what the Congregational church now attempts to maintain.

I shall therefore advise a decree for the complainant for the sum actually advanced by it. If counsel cannot agree on the amount, I will either refer it to a master or attempt to fix the amount myself upon the settlement of the decree.

The same course will be taken with the Darmstadt claim. This is a judgment which is subject to the lien of the complainant’s mortgage.