source: Caselaw Access Project

author: Pitney, Ordinary.

license: Public Domain

text:
    Mahlon Pitney, Ordinary.
    Edwin Bobert Walker, Vice-Ordinary.
    In the matter of the alleged will of John Cassidy, deceased.
    [Decided February 27th, 1912.]
    1. An orphans court is a court of general jurisdiction over the subjects within its cognizance and partakes of the powers of the chancery and prerogative jurisdictions..
    2. P. L. 1898 p. 115, creating the orphans court, is remedial in its nature and is to be liberally construed.
    3. Under P. L. 1898 p. 115 § t, which declares that the orphans court shall have “full power and authority to determine all controversies respecting the existence of wills,” and section 174 et seq., which provides for process to compel the appearance of any person before the orphans court and the making of orders for publication and for the enforcement of decrees, it has the power to inquire whether a writing executed as a will, and that was in existence unrevoked at the time of the testator’s death, has been since lost or destroyed, and, if so, to prove the contents thereof.

      On aqrpeal from Sussex orphans court.

      Mr. Henry Huston, for the appellant.

      Mr. Henry C. Hunt, for the respondents.
   Pitney, Ordinary.

Application was made to the orphans court by Samuel Oassidy, Jr., setting- up that John Cassidy, deceased, had left a paper-writing purporting to be his last will and testament, of which the petitioner was the sole executor; that at the time of John Cassidy’s death the paper-writing was in existence, and that since that time it had been lost. The petitioner prayed that the orphans court, upon proper proof being made of the contents of the paper-writing, would admit it to probate and issu'e letters testamentary thereon to the petitioner. The orphans court dismissed this petition upon the ground that the court had not power and jurisdiction to try the matters alleged in the petition and grant the relief prayed for.

By the act respecting the orphans court, &c. (P. L. 1898 p. 715), it is in section 2 enacted that

“The orphans court shall have full power and authority to hear and determine all controversies respecting- the existence of wills * * * and all causes in said court may be heard in a summary way and determined by the court.”

Subsequent sections provide for the issuance and service of "process for the appearance of any person before the orphans court,” including service on non-residents and the making of an order of publication; provide for the taking of testimony and the enforcement of decrees, &c. P. L. 1898 p. 782 § 174, and succeeding sections.

It has been repeatedly held that the orphans court is a court of general jurisdiction over the subjects committed to its cognizance; that it partakes of the powers of the chancery and prerogative jurisdictions, and that the statute creating it, being remedial in its nature, is to be liberally construed. See cases cited in Koch. Orph. Ct. Pr. 1, &c.

It seems to me that the grant of "full power and authority to hear and determine all controversies respecting the existence of wills/’ fairly includes the power to inquire whether a paper-writing, that was executed as a will and that, was in existence unrevolced at the time of the testator’s death, has been since lost or destroyed, and if so, to prove the contents thereof. I do not see that this function is essentially different from the function of determining whether a paper-writing that is in existence has been revoked in whole or in part. See Frothingham’s Case, 75 N. J. Eq. (5 Buch.) 205; 76 N. J. Eq. (6 Buch.) 331, and similar cases.

The decree under review will be reversed, and the record remitted to the orphans court, to the end that further proceedings may there he taken in accordance with the law and the views above expressed.


text:
    In the matter of the estate of Catherine Behring, deceased. John Lohman, executor, appellant, v. Mary Ast, administratrix, &c., of George Ast, deceased, respondent.
    [Decided February 29th, 1912.]
    1. Testatrix, in possession of a bank book showing' a balance due to her, had her daughter’s name entered upon the book, so that the account appeared to be payable either to the mother or to the daughter, and retained the book in her possession until her death, and it was not taken by the daughter until a week later.—Held, that the transaction was not a gift inter vivos.

      2. Testatrix, a short time before her death was in possession of a bank book showing a balance due to her, and had her daughter’s name entered therein, so that the account appeared to be payable either to her or the daughter; but the book remained in her possession until the day of her death, when she asked her daughter for the satchel containing it, and, after taking it, handed it back to the daughter, saying that the bank book -was in there, and the daughter put it down again, and did not take it out of the satchel until a week later.—Meld, that the transaction was not a gift causa mortis.

    On appeal from a decree of Union county orphans court.

      Mr. Robert S. Hudspeth, for the appellant.

      Mr. Samuel ICoestler, for the respondent.
   Pitney, Ordinary.

At the instance of Mary Ast, administratrix of George Ast, deceased, a judgment creditor of Catherine Behring, deceased, the orphans court issued a citation to John tollman, exefeutor, &c., of Catherine Behring, deceased, requiring him to show cause why he should not pay the judgment. At the return of the citation the executor exhibited a petition representing the estate of Catherine Behring to be insolvent, and praying for relief under section 100 of the Orphans Court act. P. L. 1898 p. 752. Together with the petition he exhibited what was alleged to be a true account and inventory- of his estate, in which he stated as the entire amount of the estate which had come to his hands, knowledge or possession the sum of $1,125, “received from bond and mortgage.” To this account Mrs. Ast, administratrix, &c., as a creditor, fled exceptions under section 104 of the act, on the ground, among others, that the estate of Catherine Behring, included other moneys and assets for which the executor had not accounted. After the hearing of the exceptions the orphans court made an order surcharging the account and inventory (inter alia) with the sum of $275, as the “amount shown to be on deposit in the bank book owned by the said Catherine Behring at the time of her decease.”

Prom this part of the order, and from this part only, the executor appeals to this court. ■

It is not disputed that at the time of the death of the testatrix she was in possession of a savings bank book upon which there was a balance of $275 due to the depositor. It appeal’s, however, that some time before the death of the testatrix she took her daughter, Dora Kron, with her to the savings bank, and had the daughter’s name entered upon the book, so that the-account appeared to be payable to Catherine Behring or Dora Kron. This was done, as the daughter testified, to enable the daughter to draw the money in case of "anything happening” to the mother; or, to use the daughter’s own words, "She said that if anything happened, if she was sick or anything of that sort, then I would be able to get the money.” The bank book remained in the mother’s possession until the time of her death, it being kept in a satchel. The daughter testified that she never saw the bank book from the time her name was written in it until the day of the mother’s death, when the daughter was called into the bedroom and the mother handed her the satchel, and the daughter took it, and without opening it put the satchel back under her bed. The daughter’s account of this occurrence, upon the witness-stand, is:

“Slie (meaning the mother) said to me, ‘Dora, hand me my satchel,’ and I handed it to her, and she handed it back to me, and she said, ‘My bank book is in here,’ and then she handed it back to me, and 1 put it back again under her bed.”

The mother died later in the day, and the daughter did not take the bank book out of the satchel until a week later. She then called the attention of the executor to the matter, telling him that she had the bank book, and he told her to pay the undertaker’s bill, amounting to $175.50, out of the money in the bank, and this she did. The executor, in an amended account and inventory filed after the hearing of the exception? and before the making of the decree thereon, prayed credit for payment of the funeral expenses, hut did not charge himself with the amount of the savings bank book.

The learned counsel for the appellant, upon the argument before me, claimed that the evidence showed that the testatrix had given the savings bank account to the daughter, Dora Kron, either by gift inter vivos or by gift causa mortis. In my opinion the evidence does not show a gift of either sort, hut clearly shows that the daughter’s name was put into 'the book only to enable the testatrix to use the daughter as her agent lor drawing moneys in the event of the another being overcome by illness.

It is objected that the orphans court illegally admitted testimony of Mary Ast respecting a declaration by the testatrix concerning the amount due iaa the bank book. I have rejected the disputed evidence, and have based my conclusion upon the other evidence in the case and the adanissions iaa the briefs.

The decree mador review should be affirmed.


author: Walker, Vice-Ordinary.

text:
    In the matter of the paper-writings purporting to be the last will and testament and codicil thereto of Julia H. Chadwick, deceased.
    [Decided February 27th, 1912.]
    3. “Dictum” is of two kinds, “obiter” and “judicial.” “Obiter dictum” is an expression of opinion by the court or judge on a collateral question not directly involved, or mere argument or illustration originating with him, while, “judicial dictum” is an expression of opinion on a question directly involved, argued by counsel, and deliberately .passed on by the court, though not necessary to a decision.. While neither is binding as a decision, judicial dictum is entitled to much greater weight than the other and should not be lightly disregarded.
    2. The will of a non-resident may be originally proved in New Jersey if he has property to be administered in that state.
    3. P. L. 189S p. 721 §§ 23-25, provide for proof of foreign wills after probate in a foreign state or country, and page 718, sections 13 and 14, provide tha’t the application for probate of a will of any resident of the state shall be made to the surrogate of the county in which the testator resided at the time of his death.—Reid, that, sections 13 and 14 relate exclusively to the probate of domestic wills, sections 23-25 being the only provisions under which foreign wills may be proved before a surrogate, and that such officer is therefore without power to grant original probate of foreign wills not already proved at the decedent’s domicile, which probate can only be had in the prerogative court.
    4. The surrogate of a county having no jurisdiction to grant original probate of a foreign will, jurisdiction could not be conferred by consent; and, therefore', contestant could not be estopped by prior acquiescence or consent from thereafter objecting thereto.

      Oil appeal from a decree of the Hudson county orphans court admitting to probate certain paper-writings purporting to be the last will and. testament and codicil thereto of Julia H. Chadwick, deceased.

      Mr. Gilbert Collins, for the appellant.

      Mr. Richard Boardman and Mr. Robert H. McCarter, for the' respondents.
   Walker, Vice-Ordinary.

On May 19th, 1910, two of the executors named in the will of Mrs. Chadwick, the other having renounced, propounded the will and codicil for probate before the deputy surrogate of Hudson county, and on the same day, formal proof of the execution of the papers having been made, they were admitted to probate.

On August 18th, 1910, Julia H. Chadwick, daughter and only heir-at-law and next of kin of the deceased, appealed to the orphans court from the order for probate. On July 12th, 1911, an order was made in the orphans court sustaining the jurisdiction of the deputy surrogate to admit the papers.

The petition for probate stated that the testatrix departed this life at Washington, D. C., May 6th, 1910, being at the time of her death a resident of East Hampton, Suffolk county, State of Hew York, and left her surviving her daughter, Julia H. Chadwick of the same place, her only heir-at-law and next of kin.

Objections made to the jurisdiction of the deputy surrogate are—first, that original probate of a will must be made at the domicile of the deceased; second, that the decedent left no real or personal property in Hew Jersey; third, that a surrogate, or his deputy, can only admit to probate the will of a resident of his county.

It is conceded that Chancellor McGill, sitting as Ordinary, in Gordon's Case, 50 N. J. Eq. (5 Dick.) 397, held that the will of a testator domiciled in another state at the time of his death may be proved in this’ state although it has not been probated at the place of domicile, if the testator left property here to be administered. He cites the following cases establishing this doctrine: Stevens v. Gaylord, 11 Mass. 256, 268; Varnar v. Bevil, 17 Ala. 286; Hyman v. Gaskins, 5 Ired. 267; Jacques v. Horton, 76 Ala. 238; Wood v. Matthews, 73 Mo. 477, 482.

Counsel for the appellant contends that the decision of this question in Gordon’s Case is dictum. To this I assent. Chancellor McGill concedes it when he says (at p. 400) :

“Question as to the domicile of .Mr. Gordon, although urged on both sides at the argument, does not appear to me to be necessarily in issue at this time.” The second branch of the case presented the question upon which it was decided, namely, that of forgery. Gordon’s will was decided to have been supposititious and was denied probate, which rendered the decision of the question of domicile unnecessary.

The contention made on behalf of the appellant that the above cases cited by Chancellor McGill as authority for the dictum that the will of a non-resident decedent may be probated here if there be property here to administer, is, that they do not sustain the position taken by the learned chancellor and are not authority for his dictum. I incline to agree to this proposition. Nevertheless, I am not prepared to go the length of overruling that late chancellor’s opinion, for this dictum was not obiter, but judicial; that is, it was not the expression of an opinion upon a collateral question, but oue directly involved, argued by counsel and deliberately passed upon by the court, and was not a mere argument or illustration originating with the chancellor himself. Judicial dictum, like obiter dictum, is not binding as a decision, nevertheless, the former is entitled to much greater weight than the latter, and should not be lightly disregarded. Therefore, on the authority of Chancellor McGill’s judicial dictum in Gordon’s Case, now twenty years old (and, I believe, universally regarded as the law since its enunciation), I do not feel at liberty to hold that original probate of the will of a testator domiciled elsewhere, may only be had at his place of residence, even though I incline to the opinion that that is—or rather was—the better law.

The orphans court of Camden county admitted the will of a non-resident decedent to probate on the strength of the decision in Gordon's Case. See Burr v. Burr, 53 N. J. Eq. (8 Dick.) 627, 629.

Gordon's Case was affirmed in the court of errors and appeals (Gordon v. Old, 52 N. J. Eq. (7 Dick.) 317), but without that court touching at all upon the question of domicile as related to probate.

In Brachers' Case, 60 N. J. Eq. (15 Dick.) 350, it appears that the testator was non-resident and that his will had not been proved, and, because it was clear that he had property in this state at the time of his death, Vice-Ordinary Reed observed that the power of this court to grant letters upon original foreign wills was established In re Coursen’s Will, 4 N. J. Eq. (3 Gr. Ch.) 408. The case cited by the learned Vice-Ordinary (In re Coursen's Will), upon close inspection will hardly appear to be authority in support of the power generally to admit foreign wills to probate here—for all that the Ordinary said (In re Coursen's Will) (at p. 415), was that he had not the least doubt of his power to probate the will of a non-resident when it had already been proved at his domicile. The learned Vice-Ordinary who decided Brachers’ Case probably had in mind Gordon's Case wherein Chancellor McGill broadly asserted the power to probate foreign wills without domiciliary probate first had, citing cases to sustain his decision, but among which eases is not to be found that of In re Coursen's Will.

Ho matter upon what authority Vice-Ordinary Reed predicated his decision in Brachers' Case, the fact is that he expressly decided that the will of a non-resident testator could be proved here if he had property to be administered here. This, at least, is a decision which I think I must follow, quite irrespective of the holding in Gordon's Case.

In my opinion the proofs establish that Mrs. Chadwick had property in Hudson county in this state, and, therefore, her will could be probated here, without having been proved at the place of her domicile, according to the practice of this court as established by its decisions.

The next question to be considered is whether the deputy surrogate had power to prove the will in view of the fact that Mrs. Chadwick did not reside in his county.

There is a subdivision of our Orphans Court act entitled “Foreign Wills.” P. L. 1898 p. 721. It comprises three sections, viz., 23, 24 and 25. They relate to the proofs of foreign wills here after admission to probate in a foreign state or country; the filing in this state of a copy of any will or of the record of any will admitted to probate in a foreign state or country; and the supplementing of the foreign probate of any will with proofs here to show that it was executed in the manner required by our laws to affect the title to real estate situate in this state.

Another subdivision of the Orphans Court act is “Probate of Wills.” Ibid. 718. It provides in section 18 that the surrogates of the several counties shall admit wills to probate, and section II provides that application for the probate of a will of any person who was a resident of 'this state at liis decease shall be made to the surrogate of the county in which the testator resided at the time of his death.

These provisions, in my judgment, are to be read together and given a harmonious construction. Such construction, to my mind, requires that the provisions of sections 88, 81, 85, relating to foreign wills, are the only ones under which foreign wills may be proved here before a surrogate; and that the provisions concerning the probate of wills in sections 18, II, refer exclusively to the probate of domestic wills, and that the general language of section 18—that the surrogates of the several counties shall admit wills to- probate, does not extend to clothe those officers with power to grant original probate of foreign wills not already proved at the domicile of the decedent.

These views lead to a reversal of the decree of the orphans court sustaining the deputy surrogate’s probate of the will in question.

After the argument of this case, which was had upon the record brought up from the orphans court, counsel for the proponents applied to this court for. leave to open the proofs and take further testimony. This was opposed by counsel for the appellant. The power of this court to take such testimony is undoubted, but the propriety of the exercise of that power in this case would appear to be at least questionable. However, that point is not decided, because, the decree below being reversed, .the proponents may offer the'will of Mrs. Chadwick for original probate in this court, and all questions of evidence will necessarily have to be passed upon on that proceeding. If, however, the proponents choose to stand on the probate before the deputy surrogate and take an appeal from the decree to be made in this cause, then all other questions involved in the litigation between the parties may be reserved until after the decision of the court of errors and appeals, in accordance with the stipulation which appears in the record.

The question upon which this decision has turned, namely, that of power, or rather want of power in the deputy surrogate to probate the will of a foreign decedent, was not decided in the court below, and, apparenüy, was not raised. It was, however, raised and insisted upon in this court, and is, therefore, necessarily decided here.

Before leaving the subject I ought to state that it was claimed in this case by the proponents that the appellant consented to the probate of the will in Hudson county, and, after probate, aided in the administration of the estate. As to this my holding is, that consent could not and did not confer jurisdiction where it was lacking—assuming that the declarations and acts of the appellant amounted to consent and acquiescence. The question is one of power under legislative enactment, not of power bestowed by the parties. They were impotent by their acts to bestow a grant of power that could only be made by the legislature. Equally the doctrine of estoppel invoked by the proponents does not apply.


author: Gummere, Chiee-Justice.

text:
    Mary C. Adams v. Alfred Adams, Jr.
    [Argued March 20th, 1911.
    Decided April 19th, 1912.]
    1. An order to show cause why a defendant should not be attached for contempt adjudicates nothing against him, and. is not appealable.
    2. A reference to a vice-chancellor of the hearing of an order to show cause why defendant should not be adjudged guilty of a contempt of court, containing- instructions to that officer to submit to the chancellor a report of the proceedings had before him' and to advise what order should be made thereon, is legally unobjectionable.
    3. An allowance of alimony is not a “debt” within the meaning of the constitutional provision forbidding imprisonment for debt, and its payment may be enforced by an attachment for contempt.

      4. A decree, made in a suit brought by a wife under the statute to compel her husband to support her, which orders a husband to pay as alimony a sum agreed upon by the parties in open court, is not one to enforce the performance of a contract. The obligation of the husband to support the wife arises out of the marital relation and not out of the agreement between them. Such agreement merely liquidates the amount of money which the wife is entitled to receive for her support.
    5. An order adjudging a defendant to be in contempt for non-payment of alimony, and directing his commitment for such contempt, should definitely state the sum of money which he is required to pay in order to purge himself and be discharged from imprisonment.
    On appeals from orders made by the court of chancery advised . by Vice-Chancellor Learning.

      Mr. Ulysses G. Styron and Mr. Edward A. Armstrong, for the appellant.

      Messrs. Gashill & Gashill, for the respondent.
   The opinion of the court was delivered by

Gummere, Chiee-Justice.

The complainant, Mary C. Adams, filed a bill against her husband, the defendant, for alimony under the statute. He answered the bill, admitting the marriage, and on the hearing agreed, through his counsel, to have a decree made against him requiring him to pay to the complainant alimony at the rate of $2,500 per year in quarterly installments. A decree was there upon made, dated the 19th day of September, 1905, reciting this agreement, and adjudging that in pursuance thereof the complainant was entitled to alimony to be paid by the defendant, and that the defendant should pay to the complainant alimony at the rate of $.8,500 per year, the same to be paid in quarterly installments in advance; the first payment to be made on the 1st day of October, 1905. Having fallen in arrears in the payments to be made under the decree, the defendant, on the 31st of March, 1909, filed a petition praying to have the amount of alimony adjudged against him reduced. The court refused to consider the application. so long as the arrears of alimony remained unpaid, and made an order, under date of February 14th, 1910,

“that unless payment of any and all installments of alimony now due and payable, but unpaid, be paid and satisfied by the defendant to -the complainant at once, that the necessary proceedings for contempt may be taken out forthwith.”

On the 5th day of July, 1910, the complainant applied to the chancellor for an attachment against the defendant, upon the ground that he had failed to pay the arrears of alimony in compliance with the order last referred to. This application was supported by affidavits, and the chancellor thereupon made an order requiring the defendant to show cause why he should not be adjudged guilty of a contempt of 'court, and why an order -should not be made directing a warrant to issue for Ms commitment because of liis refusal

“to obey the order of the court ordering and directing him to pay all alimony then in arrears to the complainant, pursuant to the order or decree made in the cause on the 19th day of September, 1905,”

and referred the hearing on the order to Yiee-Chancellor Learning, with instructions to the vice-chancellor to submit to him a report of the proceedings had before him (the vice-chancellor), and to advise him what order should he made thereon. This order to show cause was immediately appealed from by the defendant. Notwithstanding the appeal, the order was prosecuted to a conclusion before the vice-chancellor, who then reported the proceedings to the chancellor for his consideration, and advised him that an order should be made adjudging the defendant to be guilty of misconduct in failing to pay the arrears of alimony in compliance with the mandate of the order of February 14th, 1910, and directing that he

“stand committed to the common jail of the county of Atlantic, there to remain charged upon this commitment, until he shall have fully complied with the orders of this court touching the payment of said alimony, and shall have paid a fine of $50 for the use of the state, unless the court shall see fit sooner to discharge him, and that a warrant issue against the said Alfred Adams for that purposé.”

The chancellor, having received from the vice-chancellor the report of the proceedings before him and his advice as to what action should be taken thereon, made an order in strict accordance with that advice and in the language above quoted. From this order also the defendant has appealed.

The appeal from the order to show cause why the defendant should not be attached for contempt was improvidently taken. No appeal will lie from an order of the court of chancery the purpose of which is to bring a party into court to answer for an alleged contempt. The reason is that • it adjudicates nothing against him, and he, therefore, cannot be said to be aggrieved by it; and unless he be aggrieved, he is not entitled to an appeal. Such is the rule declared by this court in Coryell v. Holcombe, 9 N. J. Eq. (1 Stock.) 650; and adopted as the basis of decision by this court in Doland’s Case, 69 N. J. Eq. (3 Robb.) 802.

The appeal from the order to show cause must therefore be dismissed.

The first ground upon which the order adjudging the defendant to be in contempt and directing his commitment to the common jail of the county of' Atlantic is attacked is that the reference to the vice-chancellor of the matter for hearing was without warrant of law, for the reason that this officer had no power to hear and adjudicate upon the matter. It is enough, in disposing of this contention, to say that the course pursued was substantially that adopted by the chancellor and approved by this court in the case of Seastream v. New Jersey Exhibition Co., 72 N. J. Eq. (2 Buch.) 377.

It is further contended that the order is null and void because the decree of September 22d, 1905', is itself a nullity, for the reason that it contains no adjudication that the defendant and complainant were husband and wife; or that the defendant had separated himself from the complainant without justifiable cause and refused and neglected to maintain and support her; or that the amount which he was decreed to pay was suitable for such support and maintenance. We find this contention also to be without merit. The adjudication that the complainant is entitled to alimony to be paid to her by the defendant is, by necessary implication, a finding that the parties are husband and wife, and that the statutory conditions which authorize the court of chancery to award alimony exist. It does not lie in the mouth of the defendant, after having agreed in open court as to the amount which he should be decreed to pay as alimony to his wife, and induced the court to make a decree on the basis of that agreement, to now assert that the amount was excessive. Much less can he be heard to say that it was insufficient to suitably maintain and provide for his wife.

It is further argued that, even if the validity of the decree for alimony be affirmed, it is not enforceable by an attachment for contempt for failure to perform its mandate, but only by fieri facias and process of sequestration. Aspinwall v. Aspinwall, 53 N. J. Eq. (8 Dick.) 684, is relied upon as authority for this contention. That decision, however, does not support it, in our judgment. The question there before us was whether a decree for the payment of money, due under a contract hetween the parties, was enforceable bjr process of contempt; and we held that such a method of enforcement of decrees, resting upon such a basis, had been done away with by the constitutional provision abolishing imprisonment for debt on any judgment founded upon contract, and that this was recognized by the legislative enactments for the enforcement of such decrees which were referred to in the opinion. That the decision was not intended to have the scope attributed to it by defendant’s counsel would seem to have been assumed by this court in its opinion in Jernee v. Jernee, 54. N. J. Eq. (9 Dick.) 657, decided only two terms later, in which a commitment by the court of chancery for contempt in failing to comply with a decree directing the payment of alimony was set aside, not for lack of power in the court to make the order of commitment, but because of the failure to specify in the commitment the amount of money which the defendant was required to pay in order to entitle him to a discharge from imprisonment. Such a disposition of the ease, so soon after the decision in Aspinwall v. Aspinwall, can only be accounted for upon the theory that the commitment of a defendant for contempt for disobedience of a decree commanding him to pay alimony was not considered by the court to be a violation of the constitutional provision prohibiting imprisonment for debt.

The question whether the enforcement of decrees for the payment of alimony, by attachment for contempt, is prohibited by statutory or constitutional jnovisions forbidding' imprisonment for debt, has frequently received consideration in the courts of our sister states; and the great weight of authority is that an allowance of alimony is not a debt within the meaning of such provisions, and that an order for the enforcement of its payment by attachment for contempt does not violate them. Murray v. Murray, 84 Ala. 363; Ex parte Perkins, 18 Cal. 60; Lyon v. Lyon, 21 Conn. 185; Carlton v. Carlton, 44 Ga. 216; Wightman v. Wightman, 45 Ill. 167; Chase v. Ingalls, 97 Mass. 524; Hurd v. Hurd, 63 Minn. 443; Pain v. Pain, 30 N. C. 322; Sheafe v. Sheafe, 36 N. H. 155; Andrew v. Andrew, 62 Vt. 495. We concur in this view, and hold that the order now under consideration cannot be reversed upon the ground just discussed.

It is suggested that the present decree is for the payment of money due under a contract between tire parties, and so is within the very letter of the decision in the Aspinwall Case. But this is clearly not so. In the Aspinwall Case the complainant sought to compel the performance of a contract previously entered into by herself and her husband, one of the provisions of which required the payment of a certain sum of money by him to her at stated intervals. In the present ease, the bill was filed to compel the performance by the defendant of the marital duty which he owed his wife of providing for her support. The contract between them, made upon the hearing, did not create the obligation, .but merely liquidated the amount of money which he should pay her from time to time in discharge thereof.

Lastly, it is argued that this order is invalid because it fails to specify the amount which the defendant is required to pay in order to purge his contempt. It will be perceived from the recital of the various orders which followed the making of a final decree, in September, 1905, that at no time was there any ascertainment or adjudication by the court of chancery of the amount of alimony which was in arrears. The order of February 14th, 1910, which is the foundation of the contempt proceedings, provides that

“unless payment of any and all installments of alimony now due and payable, but unpaid, be paid and satisfied by tlie defendant to the complainant at once,”

contempt proceedings may be instituted; but contains no ascertainment and determination as to what installments are due, or how much money the defendant shall pay in order to avoid being proceeded against for contempt. The order to show cause is likewise silent upon this point, merely directing that the defendant should show cause why he should not he adjudged guilty of a contempt of court, and why an order should not 'oe made directing a warrant to issue for his commitment

“because he has refused to obey the order of the' court made on the 14th day of February, then last past, ordering and directing him to pay all alimony then in arrears to the complainant.”

What has been said wifh relation to these two orders is also true with relation to the order adjudging the defendant to be in contempt and directing his commitiiient to the common jail of Atlantic county. That order recites that the defendant has not complied with the order, or decree, of Eebrhary 14th, then last past, and has not paid to the complainant any of the alimony then in arrear and ordered to be paid, and then directs that the defendant stand committed to the common jail of the county of Atlantic, there to remain until he shall have fully complied with the orders of the court of chancery touching the payment of the alimony, and shall have paid a fine of $50 for the use of the state.

In the case of Jernee v. Jernee, supra, the defendant had been committed to the coitfniy jail of Middlesex county for contempt on account of his failure to pay alimony. The warrant, after the usital recitals, contained the following order:

“Therefore, we command you that you take the body of the said William R. Jernee, and him safely and closely keep in your custody in the common jail of the county of Middlesex until he shall have paid to the said complainant the alimony now due her, and the costs of such contempt to be taxed; and- also a fine ($5) for the use of the state, together with the costs of this writ, or until our said court shall make order to the contrary.”

Application was made to the court of chancery for the discharge of the defendant upon the ground that this commitment was fatally defective, inasmuch as neither it nor the order that authorized it specified the amount of the alimony to be paid. The application was refused upon the ground that it was the proper practice in such cases for the defendant to secure his discharge by an application to the court, upon satisfying the court that he had purged his contempt. Upon an appeal to this court from the order refusing h'is discharge, it was held that the defendant's right to be released from imprisonment was complete upon his competing with the order, i. e., upon payment of the'alimony in arrears. We there said: “The punishment for the contempt has already been determined and announced, and the method of purgation has also been made known. Why should tire contemner be again set before the court ? The only result would be a reiteration of the existing mandate to pay the fine, the alimony and the costs, and then go free. Besides, this recurrence to the court is inconsistent with the command of the writ, which did not direct the bringing in the appellant for further judgment, but simply his imprisonment until he had paid certain moneys. There was no order that he should be confined until he should be again placed before the chancellor, and his imprisonment for such a purpose would, therefore, have been obviously illegal. * * * The sole purpose of the process was to enforce the right that had been adjudged in favor of the respondent in this appeal, and such a writ is, in substance, not to be distinguished from a capias ad satisfaciendum founded on a judgment at law. There seems to be no good reason why the moneys to be levied by them respectively should not be definitely stated as well in the one case as in the other. Our conclusion is that the appellant was entitled to a discharge from imprisonment upon the payment by him of the alimony, fine and costs, and that to effectuate that right it was necessary that the amounts so to be paid should have been specified in the warrant of commitment. There being a defect in this particular, the decree before us must be reversed.”

Although the matter presented for decision in the case cited related to the contents of the warrant of commitment, the reasoning of it would seem to apply equally to the order directing the commitment to issue, for that order is final in its character, and reserves nothing for future hearing and determination. Its mandate is that the warrant of commitment shall issue, and it practically declares the terms which must be complied with by the defendant in order to be discharged from imprisonment under the warrant. In the Jernee Case we held that the defendant was not obliged to present himself to the court and satisfy it that he had complied with the order which he had been charged with contemning, but that he was entitled to be released from custody by the sheriif upon payment to that officer of the sum of money .mentioned in the warrant of commitment. It would seem to be equally his right to avoid incarceration by paying to the complainant, or into court, the amount of money which the order for commitment required him to pay as a prerequisite to his release. As the matter now stands, the defendant is subject to be confined in the county jail of Atlantic county for an indefinite period, without ability to purge himself of his contempt, until the court of chancery shall see fit, at some subsequent time, to ascertain the exact amount of alimony in arrears at the time of the making of the order of February lith, 1910, and shall advise him of the amount so ascertained.

We conclude, therefore, that so much of the order >of July 11th, 1910, as directs that the defendant stand committed to the common jail of the county of Atlantic until he shall have fully complied with the orders of the court of chancery touching the payment of alimony, is invalid and must be reversed.

For affirmance—Hone.

For reversal—The Ci-iiee-Justice, Garrison, Swayze, Trenoiiabd, Bergen, Yooriiees, Minturn, Bogert, Yredenburgh, Congdon—10.


author: Gummere, Ci-iiee-Justioe.

text:
    William B. Cragin, Jr., v. Maysie Bruce Cragin.
    [Argued March 11th, 1912.
    Decided March 12th, 1912.]
    On appeal from an order of the court of chancery advised by Vice-Chancellor Emery, made in a divorce proceeding, providing for'the custody of an infant child of the parties.

      Mr: Malcolm G. Buchanan, for the appellant.

      Mr. Edward A. Day, for the respondent..
   The opinion of the court was delivered by

Gummere, Ci-iiee-Justioe.

The order appealed from is attacked upon the ground that, in making it, the court was not acting for the best interests of the child. We find that the contrary is the fact.

The order under review will be affirmed.

For affirmance—The Chief-Justice, Garrison, Syvayze, Trenci-iard, Parker, Bergen, Voori-tees, Minturn, Vredenrurgi-i, Congdon, White, Treacy—12.

For reversal—None.


author: Garrison, .J.

text:
    Snyder Pasteurized Milk Company v. John W. Burton.
    [Submitted March 25th, 1912.
    Decided June 20th, 1912.]
    1. A person who has sold the good'will of his business-may, unless he has otherwise covenanted, set up a rival business, but he may not solicit the custom of those who have previously dealt with him.
    2. A person by his inequitable conduct may deprive himself of a right he might otherwise lawfully claim.
    On appeal from an order of the court of chancery advised by Vice-Chancellor Walker.

      Mr. John A. Ilartpence, Messrs. Vredenburgh, Wall & Carey, for the appellants.

      Mr. William J. Baches, for the respondent.
   The opinion of -the court was delivered by

Garrison, .J.

This is an appeal from- an order of the court of chancery directing the issuance of an injunction to restrain “the defendant from soliciting any of the customers of the complainant, who had, prior to the sale of the property and good will of the milk business of the said defendant to the complainant, been his customers, to deal with or to purchase milk and cream from him and not to purchase their milk and cream from the complainant; also from selling’ or delivering milk and cream to any of the customers of the said complainant who had, prior to the sale of the property and good will of the milk business of the defendant 'to the complainant, been his customers and who have ’been (i. e., prior to the filing of this bill) solicited by him to purchase their milk and cream of him/’

This order indicates the scope of the litigation and the nature of the transaction out of which it arose. In brief, the defendant, John "W. Burton, having sold to the complainant the personal property used by him in carrying on his milk business together-with the good will, engaged in a competing business, owned either by himself or by his wife, and solicited his former customers to deal with him; and at the time of the filing of the bill the defendant was serving a large number of his former customers whose custom -he had secured by such solicitation.

The defendant having made no express covenant may engage in a competing business. This, which is the recognized rule, is admitted by the complainant.

The controverted question is whether the defendant having sold the good will of his business and engaged in a competing business may be enjoined from soliciting his former customers to deal with him.

Upon this question judicial opinion in this country is not in entire unanimity and in England after a period of vacillation the question was set at rest by the house of lords only as recently as 1896.

In this state the trend of decision in the court of chancery and of dictum in this court favors the rule that was applied in r the present case.

Thus in Althen v. Vreeland, 36 All. Rep. 479 (not otherwise reported), in which there was a covenant, that was unreasonable, because of its territorial extent, the court of chancery enjoined the vendor from soliciting his old customers not by force of his covenant but on general principles deemed applicable to the circumstances of the case.

In Newark Coal Co. v. Spangler, 54 N. J. Eq. (9 Dick.) 354, which was not a soliciting case but one in which the defendant had advertised his former connection with the business he had sold, Vice-Chancellor Emery rehearses the English decisions on the subject of soliciting as part of the argument of his opinion, without adverse comment as to the rule finalty adopted.

In Scudder v. Kilfoil, 57 N. J. Eq. (12 Dick.) 171, in which there was a restrictive covenant, Vice-Chancellor Reed said obiter: “The sale of the good will would have only precluded the vendor from soliciting trade from old customers.”

In Richardson v. Peacock, 33 N. J. Eq. (6 Stew.) 597, which was in this court and in which there was a restrictive covenant, Mr. Justice Dixon said: “The case is not one of a mere implied contract growing out of a sale of the good will of a business. Such a sale, without more, while it does not prevent the vendor from carrying on a similar business and, perhaps, dealing with the old customers, will prevent his soliciting the old customers by any means other than the general advertisement of his business,” citing Laboucherc v. Dawson, L. R. 13 Eq. 322.

Although this was dictum and although at the time, viz., 1881, the law of England was not settled by the case cited, we think that the rule stated was the one we should adopt upon the reasoning and authority of the later case of Trego v. Hunt, 65 L. J. Ch. 1. This case came before the house of lords in 1895 and was decided upon the opinion of Lord Hersehell in which the state of the law upon the subject was exhaustively considered with the result that the case of Labouchere v. Dawson, which had been questioned in some quarters and finally 'overruled by the court of appeal in Pearson v. Pearson, 27 Ch. Div. 145, was declared to har^e been correctly decided. The rule of the English courts thus established is that a person who has sold the good will of his business may set up a rival business but is not entitled to solicit the custom of those who have previously dealt with him.

We can add nothing to the exposition contained in the opinion in Trego v. Hunt, which may be conveniently consulted with the annotation of American decisions in 12 Eng. Rul. Cas. 442.

The court of chancery in the present ease having properly enjoined the defendant from soliciting his old customers property enjoined him also from serving those he had obtained by such solicitation. This is within the principle of decision and essential to the remedy based thereon. The argument that such customers might without solicitation have returned of their own accord is answered by what we said as to a similar argument in Stone v. Grasselli Chemical Co., 65 N. J. Eq. (20 Dick.) 756, 762; the principle being that one by his own inequitable conduct may practically deprive himself of what otherwise he might rightly claim.

The conflict of testimony as to whether the owner of the rival business is the defendant or his wife is not significant upon this appeal. The injunction is against John W. Burton. Whether its effect will be to deprive him of an inequitable advantage as owner or as an agent is an immaterial consideration. If he be an agent his chief asset as such, so to speak, is his influence with his old customers, which he is not entitled to trade upon either as enhancing the value of his services as agent or as something that he can swing to an employer.

The order of the court of chancery is affirmed.

For affirmance—The Chief-Justice, Garrison, Swayze, Teencitard, Parker, Bergen, Voorhebs, Minturn, ICalisch, Bogert, Yredenburgii, Yroom, Congdon, White, Treacy —15. '

For reversal-1-Hone.


author: Swayze, J.

text:
    William S. Van Clief, trustee, complainant, v. Frank Melville et al., defendants.
    [Submitted March 25th, 1912.
    Decided June 20th, 1912.]
    1. Annulment of a mortgage by a corporation given for the benefit of assenting creditors, on the ground that it was a fraudulent conveyance as to non-assenting creditors,' does not deprive the assenting creditors of their right to share pro rata with the non-assenting creditors in the proceeds of the mortgaged property.
    2. Where complainant, who was made a trustee of a mortgage given by a corporation for the benefit of assenting creditors, was induced by the assenting creditors to advance money in reliance upon the mortgage, he is entitled to subrogation to the rights of the assenting creditors, to the extent required to repay his advances, on distribution of the proceeds of the mortgaged property in the hands of a receiver, after the mortgage was declared void as constituting a fraudulent conveyance as to non-assenting creditors.
    On appeal of William S. Van Clief, trustee.

      Messrs. Roberson & Demaresi, for the appellant.

      Messrs. Gondict, Gondict .&■ Boardman, for the respondent.
   The opinion of the court was delivered by

Swayze, J.

We held, when the case was formerly before us, that the mortgage sought to he foreclosed in this suit was void as to non-assenting creditors, and that such equities as might have arisen by reason of the assent of other creditors would arise in the court of chancery upon the distribution of the fund in 'the hands of the receiver. The learned vice-chancellor conceived that the effect of our decision was to give non-assenting creditors a preference, and he has therefore modified the decree by directing that they he paid in full and that the balance only he paid to the complainant.

We pass over the fact that this decree of distribution is made in a suit to foreclose a mortgage which has been pronounced void as to the very persons who are to benefit by the decree of distribution. Strictly speaking, the distribution of the fund in the hands of the receiver representing the mortgaged property should be by proceedings in the administration suit in which the receiver was appointed, hut the objection is perhaps only formal as all creditors seem to have been made parties to the foreclosure. We pass therefore to the merits. By adjudging the mortgage to he void as to non.-assenting creditors we deprived the assenting creditors of any benefit or priority that the mortgage might give them; but we did not deprive them of their rights as creditors to share pro rata with non-assenting creditors in the assets that might come to the hands of the receiver. No such issue was made in the suit, which was an ordinary foreclosure. Since, however, the creditors who assented to the scheme of the mortgage had thereby induced the complainant to advance money in reliance on the mortgage, it would be inequitable to allow them to receive a dividend on their claims before the advances are repaid. The complainant can be protected by subrogating him to the rights of the assenting creditors to the extent required to repay his advances.' The result puts the non-assenting creditors in the same position they would have had if the mortgage had not been made; they receive a pro raía dividend on their claims. It puts the assenting creditors in the same position in which they agreed to be placed, subject to the, prior lien of the complainant for his advances. They are estopped to deny the priority of the complainant for the advances made on the faith of their assent, but they are not estopped to assert their right io> share pro rata with other creditors; the latter have not been misled into any change of position. It is true that this may enable Yan Clief to recoup himself for part of his advances, but it is not at the expense of the non-assenting creditors who will receive their full pro rata share of the assets.

The decree must be reversed and the record remitted for further proceedings in conformity with this opinion.

For affirmance—None.

For reversal—Ti-ie Chief-Justice, Garrison, Swayze, Trenoi-iard, Parker, Bergen, Yoorhees, Minturn, ICalisch, Bo-GERT, YREDENBURGH, YrOOM, CONGDON, WlIITE, TrEAOY-15.


author: Teeroi-iaed, J.

text:
    Joseph Ogden et al., complainants-respondents, v. Delaware River and Atlantic Railroad Company, defendant-respondent, and Walter N. Boyer et al., claimants-appellants.
    [Argued March 18th, 1912.
    Decided June 20th, 1912.]
    1. Section 87 of the General Railroad law (P. L. 1908 p. 690, as amended, P. L. 1908 p. 119) treats the money deposited with the state treasurer at the time of filing the certificate of organization as the moneys of the corporation, and the receiver of an insolvent corporation, to whom such money is paid upon the order of the chancellor, must distribute it, after payment of the expenses of the 'receiver, to such creditors or stockholders as may by law be entitled to receive the same.
    2. Parties who, at a time when all real stockholders of a railroad corporation were personally acting, at the request of such stockholders and promoters, advanced for the company the deposit of $2,000 per mile of the proposed line, as then required by section 46 of the General Railroad law (Gen. Btat. p. 2649), upon an agreement for repayment out of sales of stock, and that stock equal • at par to the amount advanced should be deposited with a trust company as collateral security, which agreement was never carried out, will be deemed, as against the objection of those claiming under such consenting stockholders, as stockholders pro Jiao ■vice, i. e., as entitled to protection as such on the basis of their having full paid stock to the amount of their cash payment, in the distribution of the fund by the receiver pursuant to section 87 of the General Railroad law (P. L. 1908 p. 690, as amended, P. L. 1908 p. 119).

    3. Equity looks upon that as done which ought to be done.
    4. Stockholders of an insolvent railroad corporation who procured stock from the company for which they paid nothing are not entitled to any part of the fund deposited with the state treasurer as required by section 46 of the General Railroad law (Gen. 8tat. p. 2649) on the distribution thereof by a receiver pursuant to section 87 of the General Railroad law (P. L. 1908 p. 119) when such fund is insufficient to pay in full those who in equity hold full paid stock, and of which equity they knew and were instrumental in creating.
    5. Whatever puts a party on inquiry amounts in judgment of law to notice, provided the inquiry becomes a duty, and would lead to a knowledge of the facts by the exercise of ordinary intelligence and understanding.

      G. Stockholders of an insolvent railroad corporation who knowingly procured stock from the company by paying only a part of its par value, are not entitled to more than they paid, with interest, out of the fund deposited with the state treasurer as required by section 46 of the General Railroad law (Gen. Stat. p. 2649) on the distribution thereof by a receiver pursuant to section 87 of the General Railroad law (P. L. 1908 p. 119) when such fund is insufficient to pay in full those who in equity hold full paid stock.
    On appeals from an order of the court of chancery advised by Vice-Chancellor (now Chancellor) Walker.

      Mr. Lewis Slarr and Mr. D. Stewart Bobmson (of the Pennsylvania bar), for the appellants Walter N. Boyer, Zaccur P. Boyer,.Jr., and Charles P. Reilly & Company.

      Mr. John G. Horner and Mr. Edwin L. Kalish, .and Mr. Theron Davis (of the New York bar), for the appellant Charles G. Braxmar.

      Messrs. Berry & Biggins and Mr. L. Stauffer Oliver, Mr. A. S. Weill and Mr. Jos. DeF. Junkin (of the Pennsylvania bar), for the appellant John R. Yorks.

      Messrs. Berry & Biggins and ilír. L. Stauffer Oliver and Mr. A. 8. Weill (of the Pennsylvania bar), for the appellant John B. Grier.

      Mr. Norman Grey and Messrs. Ehrlich & Archbald and Mr. Lester B. Johnson (of the Pennsylvania bar), for respondents Gnstavns A. Muller and Anna W. S. Keator, assignee of Virtue C. Sweatman.

      Messrs. Bleakly & Sioclcwell, for the respondent Henry J. West, trustee for William J. Thompson.
   The opinion of the court was delivered.by

Teeroi-iaed, J.

These are six appeals from the decree of the court of chancery confirming the report and adjudication of William S. Casselman, receiver of the Delaware River and Atlantic Railroad Company, an insolvent corporation, upon claims filed. The court' of chancery adopted the receiver’s findings of fact, and the decree follows the report.

■ The certificate of incorporation of the railroad company was filed July 11th, 1899, and on the same day there was deposited with the state treasurer $104,000, being $2,000 per mile of the proposed line, as then required by section 46 of the General Railroad law. Gen. Stat. p. 2649. The company became insolvent, and this fund was finally paid over to the receiver pursuant to section 87 of the General Railroad law (P. L. 1903 p. 690; as amended, P. L. 1903 p. 119), who disposed of it according to his report as follows: First, to the satisfaction in full of the claims of bona fide creditors; secondly, to the repayment to certain stockholders the amounts actually paid by them for the stock; and thirdly, the residue to Muller, Thompson and Sweat-man (or their respective representatives), who advanced the money to the railroad company to enable it to make such deposit to the state treasurer.

As this latter award is the most important on these appeals, and is challenged by all the appellants, we will consider it first.

The claim of these persons, or their representatives, are in a broad sense based upon the fact that, at a time when all real stockholders of the corporation were personally acting, and at the request of the promoters and stockholders, they advanced for the company this fruid so deposited, upon an agreement for repayment out of sales of stock, and that stock equal at par to the $104,000 should be deposited with a trust company as collateral security, which agreement was never carried out. The case shows that Zaccur P. Boyer, Walter H. Boyer and Zaecur P. Boyer, Jr.> conceived and promoted the scheme of building this railroad from Gloucester to Atlantic City, and being unable to raise money for that purpose by ordinary stock subscriptions organized a construction company, which in effect became the subscriber for substantially the whole amount of one hundred and twenty thousand shares of the capital stock of the railroad companjq although the certificate of incorporation indicates that there were other stockholders. To the certificate of incorporation there waS attached an affidavit of the three Boyers, Henry Pennington and Frederick Nicholson, that they were directors of the railroad company; that $104,000 of the stock had been in good faith subscribed and paid for in cash to the directors of the association, and that the amount subscribed and paid was at least $2,000 for every mile proposed to be made.

•On June 26th, 1899, the construction company entered into a written agreement with Muller. This agreement recites that the construction company had made a contract with the railroad company to construct its railroad, and that under the laws of the state it was requisite that there be deposited with the treasurer of the state the sum of $2,000 a mile, and that the construction company had applied to Muller to advance to and for the use of the railroad company for deposit the sum of $104,000. It then declares that it is agreed that, if Muller should deposit the money to the credit of the railroad company, then within four months there should be paid to Muller the money advanced or deposited by him. This contract also contained a covenant by the railroad company which was that if the construction company failed to make the arrangement and .refund the nioney to • Muller that it, the railroad company, would execute all papers necessary to enable Muller to have returned to him from the state treasurer such part thereof as the railroad company would be entitled to under the laws of the state. The railroad company further agreed that one hundred and eight thousand shares of the one hundred and twenty thousand shares issued, or to be issued, should be issued to the Security Trust and Safe Deposit Company'for the use aud benefit of Muller, to continue until the amount of money subscribed and paid for the said stock shall equal the amount of money advanced by Muller and until it be paid to him. This we take it must mean that this stock was to be deposited with the security trust company and as sold the proceeds applied to discharging the money advanced by Muller. This agreement was signed by Muller, the railroad eompan}'- and the construction company. It does not appear that the stock was ever deposited, but the agreement is useful as indicating the intention of the parties concerning the fund in question.

On June 30th, 1899, and before the articles of association were filed, the railroad company made an agreement with the construction company for the building of the railroad for which it was to be paid the whole of the capital stock of the railroad company. That agreement to build was never carried out. . The contract of the construction company and the railroad company with Muller, though executed before the company was incorporated, binds the company, because the record shows that it was ratified by the railroad company after its organization. It further appears in this record that Muller did not alone advance the money, but that he procured Thompson and Sweatman to join with him, and they are of course entitled to the equal benefit of any equities which flow to Muller.

We are of opinion that the award to Muller, Thompson and Sweatman was proper.

The fund of $104,000 came into the hands of the receiver of the insolvent railroad company, and not in due course as an ordinary asset, but by force of section 87 of the General Railroad law. P. L. 1903 p. 690, as amended, P. L. 1908 p. 119. This-statute has two material features—first, it treats the money deposited with the state treasurer at the time of filing the certificate of organization as the moneys of the corporation; and second, the receiver of an insolvent corporation to whom such money is paid upon the order oí the chancellor, must distribute it, after payment of the expenses of the receiver,, to such creditors or stockholders as may by law be entitled to receive the same.

All arguments based on the proposition that this fund is not, in any sense, the money of the corporation, can avail the appellants nothing, because if it is not, the receiver can make no effective order. His special jurisdiction depends upon the facts that the fund he is to distribute is the money of the corporation.

Treating it as such, the receiver directed certain payments out of the fund to certain bona fide creditors and stockholders. These pajments are not now challenged, excepting that some of the stockholders, hereafter more particularly referred to, who were awarded only the amount they paid the corporation for it, with interest, now contend that the par value thereof should have been paid to them.

After these payments, the residue, about $70,000, was awarded to Muller, Thompson and Sweatman, and we think that this action was justified upon the theory that they were, in equity, stockholders, and were thus entitled to such residue.

In equity; they were stockholders within the amendment of the General Railroad law under which the receiver was acting.

We have pointed out that, at a time when all the real stockholders of the’corporation were personally acting, it was agreed that stock equal at par to the $104,000 advanced should he deposited with a trust company as collateral security for Muller, Thompson and Sweatman in consideration of their depositing the $104,000 with tire state treasurer for the corporation.

hi view of the maxim that “Equity looks upon that as done which ought to be done,” as against the objection of those claiming under such consenting stockholders, Muller, Thompson and Sweatman are to be deemed as stockholders pro hac vice, i. e., as entitled to protection as such in the distribution of the fund created on the basis of their having full paid stock to the full amount of their cash payment for the benefit of the corporation to enable it to contract for construction of its road.

This conclusion practically disposes of the most important questions raised upon all the appeals.

The appellants Waller U. IWer and Zaccus P. Boyer, Jr., appeal from so much of the decree as disallows their respective claims as stockholders.

But it plainly appeared that they paid nothing for their stock, and they are not entitled to any part of the fund which, as we have seen, is insufficient to pay in full those who in equity held full paid stock, and of which equity the Boyers knew and were instrumental in creating.

The appellant Zaccus P. Boyer, Jr., also appeals from so much of the decree as disallows his claim for salary. But, this claim appears to have no basis in fact.

The appellants Charles G. Braxmar and Charles P. Reilly & Compan3r appeal from so much of the decree as disallows their claims as creditors of the Bo3rers who had assigned to them stock, standing in the name of the Bo3rers, as collateral security.

We have seen that had this stock been in the hands of the Boyers it could not, under the circumstances, share in the distribution,'because nothing was paid for it. And we are of opinion that in the hands of these pledgees its rights rise no higher under the circumstances of this ease. The evidence strongly indicates that it was taken with actual knowledge of the situation. But .if that be not so, clearly the surrounding circumstances put these pledgees on inquiry. .And whatever puts a party on inquiry amounts in judgment of law to notice, provided the inquiry becomes a duty, and would lead to a knowledge of the facts by the exercise of ordinary intelligence and understanding. Gale v. Morris, 30 N. J. Eq. (3 Stew.) 285. It follows that constructive notice is imputed to these pledgees.

The appellants John R. Yorks and John B. Grier appeal from so much of the decree as allows to them only the amount of money they paid to the company for their stock, with interest.

These appellants are Iona fide stockholders. They purchased from the company knowing that they paid therefor only thirty-three and one-third per cent, of the par value thereof. They were allowed the amount that they paid, with interest, and in our opinion have no cause for complaint under the circumstances disclosed by the record.

The decree of the court o£ chancery will be affirmed.

. Ho. 93—

For affirmance—Tite Chief-Justice, Gabbison, Swayze, Tkehoitabd, Pabeeb, Bebgent, Yoobi-iees, Mdsttukh, Kalisch, Bogebt, Ybedentsubgii, Yboom, Coygdoh, White, Teeaoy—15'.

For reversal—Hone.

Ho. 94—

For affirmance—Ti-ie Ciuef-Justioe, Gabbisojst, Swayze, Tkehohaed, Pabkeb, Beegent, Yoobi-iees, Mihtubh, Kalisch, Bogebt, Yeedenuburgh, Yeoom, Corgdoh, White, Teeacy—15'.

For reversal—Hone.

No. 95—

■ _ For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Kalisoh, Bogert, Yredenburgh, Yroom, Congdon, White, Treacy—15'.

For reversal—None.

No. 96—

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Kalisoh, Bogert, Yredenburgh, Yroom, Congdon, White, Treacy—15.

For reversal—None.

No. 97—

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Kalisoh, Bogert, Yredenburgh, Yroom, Congdon, White, Treacy —15.

For reversal—None.

No. 98—

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Kalisoh, Bogert, Yredenburgh, Yroom, Congdon, White, Treacy —15.

For reversal—None.


author: Parker, J.

text:
    Louisa Schulz, complainant and respondent, v. Louisa Ziegler, defendant and appellant.
    [Submitted March 25th, 1912.
    Decided June 20th, 1912.]
    1. The right of possession of husband and wife existing by virtue of an estate by the entireties as modified by the Married Woman’s act, amounts in its essential features to a tenancy in common for the joint lives with remainder to the survivor.
    2. By the husband’s conveyance of his interest in such an estate the grantee becomes tenant in common with the wife but only for the joint lives of husband and wife.
    3. Such grantee may maintain partition against the wife, but the right is limited to the aforesaid tenancy in common for the joint lives.
    4. A motion to strike out a bill, under chancery rule 213, is in the nature of a demurrer.
    5. Demurrer will not lie to the whole hill when the prayer is too broad, but should be restricted to that part of the relief prayed to which complainant is not entitled.
    On appeal from order advised by Vice-Chancellor Walker, denying motion made under rule 213 of the court of chancery to strike out the bill of complaint. The vice-chancellor filed the following memorandum:
    “Walker, V. C. This is a bill for partition. The complainant is the daughter of the defendant. The lands sought to be partitioned were deeded to the defendant and her husband who thereupon became tenants of the premises by entirety. The husband and father conveyed all his right, title and interest in the lands to his daughter, the complainant, and thereupon the mother and daughter, the bill alleges:
    “ ‘Became seized thereof as tenants in common in fee-simple in the said premises for and during the joint lives of the said Jacob Ziegler and said Louisa Ziegler, his wife.’
    “It is of course erroneous to plead that parties, complainant and defendant, became seized ‘in fee-simple’ during the joint lives, &e. A life estate is not a fee-simple. What they became by virtue of the father’s eonvej'unce to the daughter was tenants in common for the joint lives of the parents. The father’s conveyance to the daughter did not operate in anywise to limit the estate' of the wife or her -right to the survivorship; and it seems that it will not defeat his right of survivorship, but that it amounts only to a conveyance of his right of possession during his life, and that it cannot operate to let in a third party as tenant by entirety with his wife. That estate exists only between husband and wife, and neither can dispose of any part of it without the assent of the other, the peculiar interest and estate not being severable. Den v. Gardner, 20 N. J. Law (Spenc.) 556. The husband can, however, alienate his interest in the estate for his own life. Ibid. See also Servís v. Dorn, 76 N. ,7. Eq. (0 Buck.) 271. Life tenants may be tenants in common and their estates may be partitioned. Roarty v. Smith, 53 N. J. Eq. (8 Dick.) 253, 255.

    “The defendant is entitled to the enjo3onent of her estate in the lands during the lifetime of herself and her husband by virtue of the Married Woman’s act of 1852. Servis v. Dorn, supra.. The complainant is entitled to the enjoyment of the estate and interest in the lands which she derived from her father’s conveyance, during the joint lives of her father and her . mother, the defendant.
    “The first section of our Partition act (P. L. 1898 p. 644; Comp. Stat. p. 3897), gives the right to partition to tenants in common, and the parties to this suit are such. True, their estate is less than a fee-simple, but it is an estate for the joint lives of the parents of the complainant, and such an estate is partible.
    “If the premises should prove not.to be susceptible of. division between the parties, and shall be ordered to be sold, the purchaser’s estate will terminate upon the death of either Mr. or Mrs. Ziegler.
    “The motion to strike out the bill must be denied, with costs.” •

      Mr. George S. Silzer, for the appellant.

      Mr. Charles T. Cowenhoven, for tlie respondent.
   The opinion of the court was delivered by

Parker, J.

We concur in the result reached bjr the court below and for the most part, upon the grounds expressed in the foregoing memorandum of Vice-Chancellor (now Chancellor) Walker.

In Buttlar v. Rosenblath, 42 N. J. Eq. (15 Stew.) 651, it was decided that- by virtue of the Married Woman’s act the .estate by entireties was affected in such a way as to endow the wife with the capacity, during the joint lives, to hold in her possession as a single female one-half the estate in common with her husband, the right of survivorship still existing as at common law. The same ease holds that the act did not turn the estate by entireties into a tenancy in common'; but this must be read in view of the decision below (7 N. J. L. J. 143), which was that it was a general tenancy in common, i. e., in fee; such an estate, in other words, as would have vested under the statute by a deed to two persons not husband and wife, without words of joint tenancy. Comp. Stat. p. 1538 § 15. The essential point guarded by our decision was the preservation of the right of survivorship as at common law. Whatever the estate during the joint lives may be called, it is in effect a tenancy in common between husband and wife, or between the husband’s grantee and the wife, during the joint lives, with remainder to the survivor. The essential feature of a tenancy in common is the unity of possession, as distinct from unity of title, interest, or time of creation. 2 Bl. Com. 191. Such a tenancy is partible by the express language of the statute. Were this not so, the creditors who in Buttlar v. Rosenblcuth enforced their claims against the husband’s interest would be compelled to sit idly by and wait to see which would die first, the husband or the wife, or else enter during his lifetime into joint occupancy of the premises with her.

We hold, therefore, that by virtue of an estate by entireties, as modified by the Married Woman’s act, the seisin of husband and wife during the joint lives is essentially a tenane3r in conimon, terminated on tile death of either, with remainder in fee to the survivor; and that the right of the husband may be transferred by him to a third party who thereby becomes tenant in common for the joint lives in the husband’s place; and that partition may be had between such purchaser and tire wife of this tenancy in common, but without affecting in any way the common law right of survivorship.

It is suggested that the bill should have been struck out because the prayer is too broad in asking for the absolute sale of the premises instead of limiting such sale to the right of possession during the-joint'lives. But a motion to strike out a bill under the rule now numbered 213, which for present purposes is identical with rule 224 prefixed to 41 N. J. Eq. (14 Stew.) reports, is in the nature of a demurrer; Stevenson v. Morgan, 63 N. J. Eq. (18 Dick.) 707; Hanneman v. Richter, Id. 753; Holton v. Holton, 72 N. J. Eq. (2 Buch.) 312; and a demurrer will not lie -to the whole bill when the prayer is too broad, but only to the part of the relief to which complainant is not entitled. Whitbeck v. Edgar, 2 Barb. Ch. 106.

The order appealed from will be affirmed.

For affirmance—The Chief-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Yoorhees, Minturn, Kalisci-i, Bogert, Vredenburgh, Yroom, Congdon, White, Treacy— 15.

For reversal—Rone.


author: ÍOORHEES, J.

text:
    George N. Gerhard et al., respondents, v. Benjamin L. Welsh et al., appellants.
    [Argued November 27th, 1911.
    Decided March 6th, 1912.]
    1. The directors of a building and loan association, organized under the general law (Gere. Stat. p. 331) and having a constitution empowering its directors to loan its funds to others than shareholders on undoubted security, are not authorized to purchase outright shares in a manufacturing corporation, such purchase being in no sense a loan.
    2. The exercise of the power to purchase and hold stocks of other corporations conferred by section 51 of “An act concerning corporations,” Revision 1896 (P. L. 1896 p. 294; 2 Comp. Stat. p. 1633) as an incidental power is not necessary or convenient for the attainment of the objects for which a building and loan association created under the general law (Gere. Stat. p. 331) is organized.
    ■ 3. From equivocal circumstances positive affirmance by shareholders of unauthorized acts of directors will not be inferred, and prompt disaffirmance is unnecessary and mere delay by the shareholders in bringing suit, which has not occasioned loss or prejudice to the defendants, does not raise an estoppel and will not deprive the complainants of their remedy.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Stevens.
    The bill in this ease was filed August 24th, 1905, by George H. Gerhard and twenty-one others, stockholders of the Millstone Building and Loan Association of East Millstone, Hew Jersey, in behalf of themselves and all other stockholders, against said association and also Benjamin L. Welsh and others, directors thereof, for the purpose of requiring the directors to make good to said association the amount which had been invested by them in the purchase of twenty-five shares of the preferred capital stock of the Somerville Woolen Mills, a manufacturing corporation of this state.
    Two purchases of this stock are charged, the first about the 1st day of January, 1896, of ten shares for $1,000. The second, about the 1st of November, 1896, of fifteen shares for $1,500.
    The Somerville Woolen Mills, in September, 1904, was placed in bankruptcy, and in such proceedings, its property being sold, the not proceeds were not sufficient to pay its creditors in full, so that the stockholders sustained a total loss.
    The stock at the time of its purchase was intended to pay six! per cent, non-cumulative dividends, and such dividends were in fact paid from that time to and including July, 1901, when they ceased. In March, 1902, the directors considered that the loan stock had matured by attaining the value of $800 per share, and discontinued receiving from the shareholders further monthly installments. One hundred and eighty-seven dollars and fifty cents had been paid upon each share, the difference necessary to make up $200 being represented by the shares of the woolen mills stock. Eb further settlement has been made with the shareholders of the association, owing to the inability to realize anything upon the stock.
    Edward Y. II. Yoorhees, one of the directors in office at the time of said purchase, died about April 1st, 1898. Another, Arthur Thomas, removed from the state and ceased to be a director soon after the purchase of stock, and has since died. The places of these two directors, after the purchases had been made, were filled by Peter Sutphen and Peter Garretson, who, with the five survivors of the original directors, are sought to be held liable.
    The final decree adjudges that the defendants, the survivors of the directors who were in office at the time of the making of the investments, and the estates of Edward V. II. Yoorhees, Arthur Thomas and Benjamin L. Welsh, then directors, who have since died., shall make good to the Millstone Building and Loan Association the moneys so improperly and unlawfully paid for said stock, together with interest thereon from July 1st, 1901, amounting' in the whole to $4,061.64, but that the defendants, Peter Sutphen and Peter Garretson, who became directors after the purchase of said shares of stock, are not liable.
    From this decree appeal has been taken by the surviving direc'tors only.

      Mr. John F. Reger, for the appellants.

      Mr. George E. Pace ancl Mr. Alan Ii. Strong, for the respondents.
   The opinion of the court was delivered by

ÍOORHEES, J.

The question involved in this appeal concerns the personal liability of directors of a building and loan association for losses arising from an investment, of the funds of the association in the stock of a manufacturing corporation. The insistence is that the purchase of such shares is not allowed by law.

The association was organized April 1st, 1890, under the general act then in force. Gen. Stat. p. 331. The same directors originally elected continued in office by re-elections until 1895, with the exceptions noted in the foregoing statement of facts.

Section 8 of the act above cited (Gen. Stat. p. 333) directs that

“every company formed * * * shall adopt a constitution. * * * The investments of every such association shall be made either in loans to, or a redemption of the shares of, or in purchasing lots and erecting dwellings for the members or in ail of said modes, or in such other ways as the constitution of the particular association shall provide.”

The constitution of this association did provide another way .for the investment of the funds, as follows:

“In the event of the funds of the association lying unproductive, the directors are empowered to loan them to shareholders and others than ‘‘shareholders, on undoubted security.”

Without at this point stopping to determine whether a manufacturing stock was a proper investment for the funds of an association of this character, we pass at once to consider the limitations imposed by the statute and the constitution, adopted under it, upon-the directors in rendering the funds productive.

To purchase a security is one thing; to loan upon security is quite another. In the former transaction, title is taken to the thing bought; in the latter, it is given with a promise of repay-merit, made sure not only by such promise of repayment involving the personal responsibility of the promisor, but as well by the “undoubted security” exacted by the constitution, and reasonably to be expected to be accepted at a part only of its actual value.

The learned vice-chancellor in the court below thus tersely puts it:

“Now, what they did was, not to loan on undoubted security, but to purchase an industrial stock—an altogether different thing—different for the reason that I have pointed out, and different also for the reason that on such a stock the loan would • ordinarily be made not up to its full market value, but for a lesser sum. Either way you look at it the distinction is not a technical one, but real and substantial. It cannot be the law that directors, directed by statute as to what they may do, may go be-3rond that statute and do something else which results in loss.”

We, therefore, conclude that the directors of a building and loan association, organized under the general law (Gen. Stat. p. SSI), and having a constitution empowering its directors to loan its funds to others than shareholders on undoubted security, are not authorized to purchase outright shares in a manufacturing corporation, such purchase being in no sense a loan.

Liability will result from unauthorized acts under such circumstances, although willful wrong-doing is not intended. Cook Stock. (3d ed.) 632; Citizens’ Building and Loan Association v. Coriell, 34 N. J. Eq. (7 Stew.) 383; Williams v. McKay, 46 N. J. Eq. (1 Dick.) 25, 26.

But it is argued that the purchase of stock made in November, 1896, was not contrary to law and in the absence of fraud or gross negligence, the directors should not be held liable. It is asserted that the defendants were careful in their inquiries about the standing and financial strength of the woolen company, that in their judgment founded upon such investigation, the shares were a safe and productive investment, and one which, under the “Act concerning corporations,” Revision of 1896 (P. L. 1896 p. 277), which went into effect July 4th, 1896, the association was authorized, to purchase and hold.

Particular reference is made to section 51 of that act which reads as follows:

“Any corporation may purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock or any bonds, securities or evidences of indebtedness created by any other corporation or corporations of this or any other state, and while owner of such stock may exercise all the rights, powers and privileges of ownership including the right to vote thereon.” P. L. 1896 p. 291/.

The difference between this section and the supplement of 1893 (P. L. 1893 p. 301) is pointed out, namely, that the latter was limited in its application to corporations created under the General Corporation act, while in the former, such limitation has been omitted, whereby additional powers are conferred.

We are unable to give our assent to the argument that this enactment conferred upon the association power to purchase and hold the stock in question.

This court has declared concerning this legislation, that the power thus conferred primarily exists only when the purpose to exercise it is expressed in the certificate of incorporation, and that its incidental existence depends upon whether its exercise is necessary or convenient to enable the holding corporation to attain the objects for which it was created. State v. Atlantic City and Shore Railroad Co., 77 N. J. Law (48 Vr.) 465.

The certificate does not and could not express the purpose to exercise the power, and it is not perceived how its exercise as an incidental power is either necessary or convenient for the attainment of the objects for which the loan association was organized. The holding of shares in a manufacturing business corporation is quite apart from the objects expressed in the general act under which the defendant in this case was organized.

It is lastly urged that because of acquiescence in the acts of the directors in the purchase of these shares, and ratification of them ■by the stockholders, the complainants are not entitled to relief.

Acquiescence and ratification are founded upon knowledge of the facts brought home to the parties to be bound. Proof that annual statements were issued by the directors from the years 1897 to 1902, both inclusive, and circulated among the stockholders, showing that these shares were carried as assets of the association, and that the same directors were, in the face of these statements, continued in office by annual elections by the stockholders, has been • adduced' upon this point to show such knowledge.

Moreover, it is said that no complaint was ever received from a stockholder while the woolen mills paid dividends. Protests came when the dividends ceased.

These annual statements were not explicit. They varied in each year. In those of the first two years, the item is “Somerville Woolen Mills Stock $2,500.” In the next two, “Loaned on Stock $2,500.” In the fifth, “Woolen Mills Stock $2,500,” and in the ' last, “Loaned on Stock $2,500.”

Those of the statements which indicate that the shares are held b3r the association, are not inconsistent with the idea that the stock might have been pledged to it and so acquired, while those which state that a loan had been made are untruthful.

From these equivocal circumstances positive affirmance will hot be inferred, and prompt disaffirmance by the shareholders was unnecessary, and mere delay on their part in bringing suit, which has not occasioned loss or prejudice to the defendants, does not raise an estoppel, and will not deprive the complainants of their remedy. Tynan v. Warren, 53 N. J. Eq. (8 Dick.) 313; Holzer v. Thomas, 69 N. J. Eq. (3 Robb.) 515; Lutjen v. Lutjen, 64 N. J. Eq. (19 Dick.) 773; Lowrey v. Hawaii, 215 U. S. 554. The appellants on this point cannot prevail.

The amount of the. decree does not seem to be'incorrect.

The decree will be affirmed.

For affirmance—Garrison-, Swayze, Parker, Bergen, Yoor-HEES, ICAMSC.I-1, YREDENBURGI-r, VROOM, CdNGDON-, WHITE-10.

For reversal—None.